Auto Owners loses fight with hospital over reasonableness of surgical implant charges
Lakeland Hospitals at Niles & St. Joseph sued Auto Owners after the insurer's Home-Owners subsidiary refused to pay the 350% mark-up the hospital charged for surgical implants. AutoOwners argued that the Hospital was artificially inflating the cost of devices in order to force no fault insurers to subsidize other insurance providers. Lakeland won a jury verdict and AutoOwners appealed.
The Court of Appeals ruled that since the No Fault Act does not define "reasonable and necessary" medical expense, the question of the reasonableness of this expense was properly passed on to the jury. The jury accepted the hospital's argument that the inflated cost was necessary to cover overhead and administrative expenses, leaving the insurer with no grounds for appeal.