Curing “Real-Party-in-Interest” Defects After Filing:
The New Michigan Rule for No-Fault PIP Litigation

Introduction

In C-Spine Orthopedics, PLLC v. Progressive Michigan Insurance Co. and its companion case Wallace v. SMART, the Michigan Supreme Court (3 July 2025) reshaped no-fault litigation procedure. The Court held that although assigning away a personal protection insurance (PIP) claim strips a plaintiff of “real-party-in-interest” (RPI) status, that defect can be cured after the lawsuit is filed through court-supervised steps such as amendment, substitution or equitable rescission. At the same time, the Court confirmed that (i) plaintiffs still have standing even after such assignments, and (ii) the one-year-back rule in MCL 500.3145(2) limits monetary recovery but does not govern RPI status.

Two fact patterns drove the decision:

• C-Spine – A medical provider had sold (factored) its receivables—including PIP claims—then sued the insurer. Post-filing, the factoring companies executed “counter-assignments” purporting to return the claims.
• Wallace – An injured passenger assigned her PIP claims to her providers, then sued the transit authority. Mid-litigation she obtained “mutual rescissions” of those assignments.

The trial courts reached opposite outcomes; so did separate Court of Appeals panels. The Supreme Court consolidated the appeals and announced a unifying rule.

Summary of the Judgment

1. Standing vs. RPI – Both plaintiffs had statutory standing under amended MCL 500.3112 (direct cause of action) but were not the real party in interest when they sued because of prior assignments.
2. Curing the Defect – An RPI flaw is not automatically fatal. A plaintiff may cure it post-filing only by using court procedures (e.g., amend complaint, joinder, intervention, or recognized rescission).
3. One-Year-Back Rule – MCL 500.3145(2) merely caps retroactive benefits; it does not determine who is the RPI. Whether a cured plaintiff can recover for older charges will depend on the cap & relation-back analysis.
4. C-Spine Outcome – Counter-assignments re-conferred RPI status, but C-Spine must amend in the trial court. Court of Appeals affirmed on alternate grounds; remand for further proceedings.
5. Wallace Outcome – Trial court must decide, in equity, whether the rescissions should be recognized and whether they retroactively cure the RPI defect. Court of Appeals affirmed in part, reversed in part, vacated in part; remand.

Analysis

a. Key Precedents Cited

• Covenant Med Ctr v. State Farm (2017) – Eliminated provider common-law cause of action, triggering widespread use of assignments.
• Miller v. Chapman Contracting (2007) – Stressed actions “should be begun only by” the RPI; relied upon by dissent.
• Bazzi v. Sentinel Ins Co (2018) & Wilmore-Moody v. Zakir (2023) – Clarified equitable rescission and its effect (or lack thereof) on third parties.
• DeLong v. Marston (1944) & Cannon Twp v. Rockford Schools (2015) – Earlier Michigan authority allowing substitution/ amendment to fix RPI glitches.
• Andary v. USAA (2023) – Underlay concurring discussion on pre-2019 injuries and statutory retroactivity.

b. The Court’s Legal Reasoning

Justice Welch (4-Justice plurality) drew three doctrinal lines:

1. Standing is distinct from RPI. Standing is jurisdictional and measured at filing; any statutory cause of action suffices. RPI is a procedural safeguard rooted in MCL 600.2041 and MCR 2.201(B), aimed at protecting defendants from multiple suits.
2. Assignments divest RPI but not standing. A complete transfer of rights (“absolute assignment”) leaves the assignor unable to sue unless the assignment expressly reserves litigation authority.
3. Post-filing cure is permissible. RPI defects can be healed if (and only if) the plaintiff invokes the court’s authority—amended pleadings, joinder, substitution, intervention, or an equitable rescission approved by the court. Once that occurs, the trial court must analyze relation-back (MCR 2.118(D)) and the one-year-back cap.

The plurality rejected insurer arguments that Miller forbids relation back for new parties, noting (a) Miller’s statement was dicta; (b) older state authority and federal analogues allow liberal correction; (c) judicial efficiency and decision on the merits favor a curative approach.

c. Impact of the Decision

• Pleading Practice – Plaintiffs who discover assignment problems after filing now have a roadmap: file a motion to amend or for substitution promptly and be prepared to address relation-back and statutory caps.
• Medical-Provider Litigation – Providers factoring receivables (common in Detroit-area PIP finance) can still sue but must procure counter-assignments before or during suit and formalize them in the record.
• Assignments & Rescissions – Parties can no longer rely on private “revocation letters” alone; rescission must be equitable, balanced, and court-recognized.
• Docket Efficiency vs. Defendant Protection – Defendants lose the hard dismissal remedy for technical RPI errors, but gain clarity on required steps and the continuing shield of the one-year-back cap.
• Future Litigation – Expect motions to amend, substitute and intervene to spike. Trial courts will need to craft scheduling orders that compel early disclosure of assignments.
• Continuing Debate – Justice Zahra’s dissent (standing with two non-participating justices) signals a potential future swing if Court composition changes. Litigants should preserve arguments that RPI defects are incurable.

Complex Concepts Simplified

• Standing vs. Real-Party-in-Interest
  Standing = “Do you have any legal right to be in court?” RPI = “Are you the person who actually owns this claim?”
• Assignment
  A written transfer of a claim’s ownership. If absolute, the assignor keeps nothing unless the document reserves specific rights (e.g., “for collection only”).
• One-Year-Back Rule (MCL 500.3145(2))
  Even if a lawsuit is timely under the general limitation period, recovery of PIP expenses is limited to items incurred within 365 days before the complaint (subject to new tolling under §3145(3)).
• Relation-Back Doctrine (MCR 2.118(D))
  An amended pleading “relates back” to the original filing date if it arises out of the same accident/transaction. Vital for dodging the one-year-back cap.
• Equitable Rescission
  Court-ordered unwinding of a contract because fairness so requires. It restores parties to their pre-contract positions but is not automatic; courts weigh relative fault and prejudice to third parties.

Conclusion

The Michigan Supreme Court has opened a pragmatic but carefully policed door: plaintiffs who inadvertently sue before reacquiring their PIP claims are not automatically out of court. They must, however, take transparent, in-court steps to cure the real-party-in-interest defect, and trial courts must scrutinize whether the cure relates back and whether equitable considerations (including the one-year-back rule) limit recovery.

For insurers, the decision removes the “silver bullet” of automatic dismissal but preserves protections against double exposure and stale claims. For providers, assignees and financing companies, the ruling underscores the critical need for clear contractual language regarding litigation authority and for swift procedural action when assignments change hands.

Ultimately, C-Spine/Wallace balances procedural precision with substantive justice, signaling Michigan’s commitment to deciding no-fault disputes on their merits while still honoring statutory limitation caps and equitable safeguards.