Mitigation Required, but No-Fault Fee Caps Inapplicable, in Medicare Opt-Out Allowable-Expense Tort Actions (MCL 500.3135(3)(c))

I. Introduction

In CANTY v MASON (Mich Sup Ct, July 27, 2026), plaintiff Joseph Canty sued defendant Michael Chester Mason in tort for “allowable expenses” arising from an automobile crash under the post-2019 no-fault amendments. Although Canty carried no-fault insurance, he had opted out of PIP medical coverage under MCL 500.3107d because he had “qualified health coverage” through Medicare Parts A and B.

Two questions drove the appeal:

  1. Mitigation: Does the common-law mitigation-of-damages doctrine apply to a tort claim for allowable expenses under MCL 500.3135(3)(c), requiring a Medicare-covered plaintiff to seek Medicare payment?
  2. Fee caps: Do the provider-reimbursement limitations (the “fee schedule”) in MCL 500.3157 apply to cap the plaintiff’s tort recovery for allowable expenses?

The Wayne Circuit Court denied defendant’s attempt (via MCR 2.116(C)(10)) to impose mitigation and to apply MCL 500.3157 in tort. The Court of Appeals, in a split published decision—Canty v Mason, ___ Mich App ___ (October 4, 2024) (Docket No. 365327)—held for defendant on both issues. The Michigan Supreme Court affirmed in part and reversed in part.

II. Summary of the Opinion

  • Mitigation applies: The Court held that the common-law mitigation-of-damages doctrine applies to tort actions under MCL 500.3135(3)(c). Accordingly, a Medicare-covered plaintiff must make reasonable efforts to minimize damages, which here means seeking Medicare payment for treatment obtained from Medicare-participating providers.
  • MCL 500.3157 does not apply: The Court held that the no-fault provider reimbursement limitations in MCL 500.3157—tied to Medicare rates and framed in terms of PIP-covered injuries—do not cap tort damages in a claim brought under MCL 500.3135(3)(c).

Disposition: Court of Appeals judgment affirmed on mitigation; reversed on applicability of MCL 500.3157; remanded for further proceedings.

III. Analysis

A. Precedents Cited

1. Standards of review and interpretive rules

  • Buhl v Oak Park, 507 Mich 236 (2021): Cited for de novo review of MCR 2.116(C)(10) summary disposition and the “no genuine issue of material fact” standard.
  • Wyandotte Electric Supply Co v Electrical Technology Sys, Inc, 499 Mich 127 (2016): Reinforces Michigan’s commitment to plain-language statutory interpretation as the most reliable indicator of legislative intent.
  • In re Forfeiture of 2006 Saturn Ion, 514 Mich 399 (2024): Supplies the anti-surplusage canon—courts must give effect to every word and avoid constructions that render text nugatory.

2. Mitigation doctrine (common law) and burden allocation

  • Morris v Clawson Tank Co, 459 Mich 256 (1998): The core articulation of mitigation: a tort victim must take reasonable steps to avoid or minimize damages; reasonableness is typically for the trier of fact.
  • Rasheed v Chrysler Corp, 445 Mich 109 (1994): Establishes that failure to mitigate is an affirmative defense and the defendant bears the burden of proof.

3. Statutes and common law: presumption against abrogation

  • Janini v London Townhouses Condo Ass'n, 514 Mich 86 (2024): Supports the premise that the Legislature is presumed aware of the common law when it legislates.
  • Bazzi v Sentinel Ins Co, 502 Mich 390 (2018): Reaffirms the principle that statutes are construed in harmony with the common law unless the Legislature clearly abrogates it.
  • Marquis v Hartford Accident & Indemnity (After Remand), 444 Mich 638 (1994): A pivotal bridge from no-fault to mitigation; the Court previously applied mitigation principles to no-fault work-loss benefits, bolstering the majority’s conclusion that mitigation also fits the no-fault/tort hybrid created by MCL 500.3135(3)(c).

4. Illustrations of “reasonable” mitigation in other contexts

  • Braverman v Granger, 303 Mich App 587 (2014): Medical-malpractice context; refusal of a high-probability life-saving procedure may be unreasonable mitigation.
  • Jefferson Dev Co v Heritage Cleaners, 109 Mich App 606 (1981): Landlord’s duty to mitigate after tenant abandonment—efforts to relet.
  • Lorenz Supply Co v American Std, Inc, 100 Mich App 600 (1980): Contract context; reasonable “cover” efforts.

5. Contextual no-fault background and reform framing (raised in concurrence)

  • Andary v USAA Cas Ins Co, 512 Mich 207 (2023) and Shavers v Attorney General, 402 Mich 554 (1978): Cited (in Welch’s concurrence) for the historic tradeoff at the heart of no-fault—prompt, assured PIP benefits replacing much of the tort remedy—and for understanding the reform-era partial shift back toward tort.
  • Jostock v Mayfield Twp, 513 Mich 360 (2024): Cited (in Welch’s concurrence) to support avoiding interpretations that render statutory text nugatory.

6. Scope of “allowable expenses” (raised in dissent) and supporting authority

  • Johnson v Recca, 492 Mich 169 (2012) and Nasser v Auto Club Ins Ass'n, 435 Mich 33 (1990): Cited (in Zahra’s writing) for the general proposition that allowable expenses encompass medical treatment and rehabilitation.

7. Medicare-related federal authorities (raised by dissent)

  • Justice Zahra’s separate writing relies on federal Medicare billing/collection concepts and cites Rybicki v Hartley, 792 F2d 260 (CA 1, 1986), among other federal provisions, to argue that Medicare’s fee schedules should effectively govern the amounts at issue once mitigation is required. The majority rejects that as a controlling “fee schedule” rule for Michigan tort damages, while acknowledging Medicare rates may be relevant evidence.

B. Legal Reasoning

1. Holding #1: Mitigation applies to MCL 500.3135(3)(c) tort claims

The majority begins with first principles: mitigation is a longstanding common-law doctrine (Morris v Clawson Tank Co) and remains applicable unless clearly displaced by statute (Bazzi v Sentinel Ins Co; Janini v London Townhouses Condo Ass'n). Nothing in the 2019 no-fault amendments expressly abrogated mitigation for this category of tort claim.

The interpretive pivot is the meaning of “without limit” in MCL 500.3135(3)(c). Plaintiff argued “without limit” forecloses any constraint—including mitigation. The Court rejected that reading by tying MCL 500.3135(3)(c) to the incorporated definition of allowable expenses in MCL 500.3107(1)(a), which requires “reasonable charges” for “reasonably necessary” care. Thus, “without limit” addresses the removal of PIP benefit limits (where the plaintiff opted out), not the removal of reasonableness constraints or common-law doctrines that prevent avoidable economic loss.

Practically, the Court identifies “reasonable efforts” in this setting as seeking Medicare payment where the provider participates in Medicare. Importantly, failure to mitigate remains an affirmative defense; the defendant bears the burden (Rasheed v Chrysler Corp), and reasonableness generally remains for the factfinder (Morris v Clawson Tank Co).

The Court also addresses a real-world complication: Medicare is typically a secondary payer under the Medicare Secondary Payor Act, with conditional payments and reimbursement mechanisms. Nonetheless, the Court holds those features do not eliminate the plaintiff’s mitigation duty; they simply affect the payment choreography and potential repayment/coordination.

2. Holding #2: MCL 500.3157 fee caps do not apply to MCL 500.3135(3)(c) tort claims

The Court’s second major holding is a textual and structural interpretation of the no-fault act as amended. MCL 500.3157 caps what providers may recover for treatment of an injury “covered by personal protection insurance.” Plaintiff’s claim, however, is not a PIP-benefits action; it is a third-party tort action authorized by MCL 500.3135(3)(c) when the injured person opted out of PIP under MCL 500.3107d.

The Court of Appeals had reasoned that because MCL 500.3107(1) begins with “[s]ubject to the exceptions and limitations in this chapter,” the entire chapter—including MCL 500.3157—is imported into the tort measure of damages. The Supreme Court rejects this as an over-reading that violates the anti-surplusage principle (In re Forfeiture of 2006 Saturn Ion).

The key surplusage point is the Legislature’s deliberate, narrow cross-reference: MCL 500.3135(3)(c) defines tort-recoverable categories “as defined in sections 3107 to 3110.” If citing MCL 500.3107 automatically dragged the entirety of Chapter 31 into the tort measure of damages, then the statute’s specific designation of “3107 to 3110” would do no work. The Court reads the statute to mean what it says: allowable expenses are defined by those sections, not by MCL 500.3157.

Context reinforces text: the prefatory clause in MCL 500.3107(1) frames what “personal protection insurance benefits are payable” for—i.e., the PIP universe. And MCL 500.3157(1) is expressly keyed to PIP-covered injuries. Those features signal that the Legislature was regulating insurer-provider reimbursement in PIP claims, not setting a tort-damages ceiling for opt-out plaintiffs suing tortfeasors.

3. The separate writings sharpen the policy and doctrinal fault lines

  • Justice WELCH (concurring): Agrees with the holdings, but flags a reform-design “anomaly”: a Medicare beneficiary who opted out of PIP (paying lower premiums) may pursue uncapped tort damages at rates not constrained by MCL 500.3157, potentially recovering more than a person who bought robust PIP coverage—creating incentives and liability exposures arguably at odds with the 2019 reforms’ cost-control purpose.
  • Justice ZAHRA (concurring in part and dissenting in part): Agrees that mitigation applies and that MCL 500.3157 does not apply, but argues the majority wrongly implies “no applicable fee schedules.” In his view, once Medicare mitigation is required, Medicare’s own schedules should effectively set (or at least strictly constrain) the reimbursable amounts for Medicare-covered services, and higher charges would be unlawful under Medicare’s billing rules. The majority responds that Medicare schedules are used in Michigan’s PIP fee cap as a metric but are not themselves controlling in Michigan no-fault tort damages; Medicare rates may be relevant evidence among other factors.

C. Impact

1. Litigation behavior and damages proof in opt-out cases

  • Defense strategy: Defendants now have clear authority to plead and develop a mitigation defense in MCL 500.3135(3)(c) cases where the plaintiff has Medicare, focusing on whether the plaintiff reasonably sought Medicare payment and whether treatment choices were reasonable.
  • Plaintiff strategy: Plaintiffs who opted out of PIP should expect discovery into (i) Medicare eligibility, (ii) whether providers were Medicare-participating, (iii) whether Medicare billing was pursued, and (iv) why any non-Medicare pathway was reasonable under the circumstances.
  • Damages measure remains tort-based: By holding MCL 500.3157 inapplicable, the Court preserves a tort-damages framework (reasonableness/necessity) rather than a statutory reimbursement cap for opt-out tort claims.

2. Insurance-market and policy consequences (highlighted by Welch)

  • Potential “premium incentive inversion”: Opt-out insureds may pay less for PIP but preserve a path to potentially higher recoveries in tort than persons who purchased PIP subject to MCL 500.3157 caps.
  • Residual liability pressure: At-fault drivers may face exposure for large allowable-expense claims depending on the injured party’s coverage election—something the tortfeasor cannot control—potentially increasing residual liability premiums.

3. Open questions left for trial courts and future appellate clarification

  • What “reasonable efforts” require in practice: The decision establishes Medicare-seeking as a paradigmatic mitigation step, but reasonableness remains fact-sensitive (e.g., urgency, availability, specialized care, Medicare coverage limits).
  • Role of Medicare rates in proving “reasonable charges”: The majority rejects a categorical “Medicare fee schedule controls tort damages” rule, but acknowledges Medicare schedules are “relevant.” Trial courts will likely see evidentiary battles over benchmarks for reasonableness (Medicare amounts, customary charges, negotiated rates, etc.).
  • Non-Medicare-covered services: Where Medicare does not cover certain services, mitigation may not reduce those components, intensifying the centrality of “reasonable charge” proof and amplifying Welch’s cost-control concerns.

IV. Complex Concepts Simplified

  • PIP (Personal Protection Insurance): The part of Michigan no-fault auto insurance that pays the insured’s own medical expenses regardless of fault. After 2019, some drivers (including Medicare Parts A & B beneficiaries) can opt out of PIP medical coverage under MCL 500.3107d.
  • Allowable expenses: Defined (as incorporated) by MCL 500.3107(1)(a) as “reasonable charges” for “reasonably necessary” care, recovery, or rehabilitation.
  • MCL 500.3135(3)(c): The provision that permits tort suits for allowable expenses (including potentially “without limit” when the injured person opted out under MCL 500.3107d). Here, “without limit” does not eliminate reasonableness or mitigation; it removes the PIP-limit ceiling that would otherwise apply.
  • Mitigation of damages: A common-law rule requiring an injured party to take reasonable steps to reduce avoidable losses. It is not a punishment; it prevents shifting avoidable costs to the defendant. The defendant must prove unreasonable failure to mitigate.
  • MCL 500.3157 fee schedule: A statutory cap on what providers may be reimbursed for treating PIP-covered injuries. The Court held it does not apply to tort damages under MCL 500.3135(3)(c).
  • Summary disposition under MCR 2.116(C)(10): Michigan’s procedural mechanism to decide claims when there is no genuine dispute of material fact; reviewed de novo.

V. Conclusion

CANTY v MASON establishes two consequential rules for post-reform Michigan no-fault litigation involving Medicare opt-outs: (1) plaintiffs suing in tort for allowable expenses under MCL 500.3135(3)(c) remain bound by the common-law duty to mitigate, including by reasonably pursuing Medicare payment when available; and (2) the PIP-oriented reimbursement caps in MCL 500.3157 do not limit those tort damages. The decision simultaneously narrows plaintiffs’ ability to inflate damages by ignoring available Medicare coverage, while preserving a tort-based reasonableness framework (rather than statutory fee caps) for allowable-expense recovery—an outcome that invites further legislative attention and future litigation over how “reasonable charges” should be measured in practice.