July 20, 2026
/
seva firm
Affiliated Diagnostic of Oakland LLC v. Auto Club Insurance Association: Court of Appeals Vacates Dismissal Where Trial Court Failed to Consider Lesser Sanctions and Misapplied Joinder Rules
By Pratheep Sevanthinathan, Esq. The Seva Law Firm
Case: Affiliated Diagnostic of Oakland LLC v. Auto Club Insurance Association, No. 375692 (Mich. Ct. App. July 20, 2026) (Unpublished)
Court: Michigan Court of Appeals
Panel: Maldonado, P.J., and Riordan and Young, JJ.
Decision: Vacated and Remanded — Per Curiam
Lower Court: Wayne Circuit Court, Case No. 23-008895-NF
- Introduction
In Affiliated Diagnostic of Oakland LLC v. Auto Club Insurance Association, the Michigan Court of Appeals vacated a trial court’s dismissal of a medical provider’s no-fault case, finding that the trial court abused its discretion by dismissing the case without holding a hearing, without considering lesser sanctions, and based on a misapplication of the court rules governing joinder of claims and parties. The decision is a strong reminder that dismissal is the harshest sanction available to a trial court, and it cannot be imposed without proper analysis — especially when the alleged misconduct does not rise to the level of flagrant or repeated violations.
- Facts
Affiliated Diagnostic of Oakland, a medical services provider, performed MRIs on three individuals — Mustafa Allosh, Wadia Soulaka, and Abdulwahab Noman — for injuries they received in separate, unrelated car accidents. All three had coverage through Auto Club Insurance Association. Plaintiff billed Auto Club for the MRIs, and Auto Club paid 195% of the Medicare-allowable amount — less than what plaintiff charged. Plaintiff sued to recover the difference, plus attorney fees.
When filing the complaint on July 13, 2023, plaintiff’s counsel signed a declaration stating that no other civil action between these parties arising out of the same transaction was pending. However, this was not entirely accurate. Soulaka had sued Auto Club for personal injury protection (PIP) benefits three days earlier, on July 10, 2023. Additionally, Allosh sued Auto Club for PIP benefits the day after plaintiff filed suit.
Auto Club moved for summary disposition, arguing that plaintiff was not entitled to more than what it had already paid under MCL 500.3157(2). But the trial court did not address Auto Club’s summary disposition arguments. Instead, the court dismissed plaintiff’s case sua sponte — without a hearing — on two grounds: (1) plaintiff violated MCR 1.109(D)(2) by failing to disclose the related pending cases, and (2) plaintiff’s three claims were improperly joined in violation of MCR 2.207.
Plaintiff’s motion for reconsideration was denied, and this appeal followed.
- Issues
The appeal presented two primary questions: (1) whether the trial court abused its discretion by dismissing plaintiff’s case as a sanction for failing to disclose related pending litigation under MCR 1.109(D)(2), and (2) whether the trial court erred in finding that plaintiff’s claims were improperly joined.
- Holding
The Court of Appeals vacated the dismissal, finding that the trial court abused its discretion on both grounds.
On the disclosure violation: The Court acknowledged that plaintiff’s counsel failed to disclose the related Soulaka case that was pending when the complaint was filed. However, the Court found that the trial court’s response — outright dismissal without a hearing — was disproportionate. Applying the Dean v. Tucker factors, the Court emphasized that dismissal is the harshest sanction available to a trial court and requires evaluation of all available options on the record before being imposed. The trial court did none of this.
The Court further noted that plaintiff’s violation was a single incident, not the kind of “flagrant or wanton” misconduct that typically warrants dismissal. Of the two cases the trial court identified, only one was actually pending when plaintiff filed its complaint — the other was filed one day later. Moreover, Auto Club itself was a party to the related case and could not claim prejudice from not knowing about it. Auto Club never complained of prejudice during the 14 months the case was pending, nor did it raise prejudice on appeal.
On the joinder issue: The Court found that the trial court fundamentally misapplied the court rules. MCR 2.207 governs joinder of parties, not claims — and even if it did apply, its very first sentence provides that “misjoinder of parties is not a ground for dismissal.” The correct rule governing joinder of claims is MCR 2.203(A), under which plaintiff’s decision to join three claims against the same defendant for the same type of alleged underpayment appears proper. Even if the claims were somehow improperly joined, the appropriate remedy would be severance and separate trials — not dismissal.
The Court remanded the case for the trial court to consider Auto Club’s motion for summary disposition in the first instance, particularly in light of the Court’s recent decision in Favot v. Brown.
- Conclusion
The Court of Appeals vacated the trial court’s dismissal and remanded the case for the trial court to address the merits of Auto Club’s summary disposition motion. The Court declined to decide the summary disposition issue itself, directing the trial court to consider it first in light of recent appellate authority.
- What Does This Mean for Our Clients?
This decision is important for medical providers and individuals involved in no-fault disputes with insurance companies. Here is what you should know:
Trial courts cannot dismiss cases without proper process. This case was dismissed without a hearing, without an analysis of lesser sanctions, and without giving the plaintiff a meaningful opportunity to address the court’s concerns. The Court of Appeals made clear that this is an abuse of discretion. If your case was dismissed without the court explaining on the record why lesser sanctions were inadequate, that dismissal may be challengeable on appeal.
A single procedural error does not justify the nuclear option. Failing to disclose a related case — while a violation of the court rules — is not the kind of repeated, flagrant misconduct that warrants dismissal. Courts must consider the severity of the violation, whether it was willful, and whether the opposing party was actually prejudiced before reaching for the most extreme sanction available.
Insurance companies cannot claim prejudice they do not actually have. Auto Club was a party to the related case that plaintiff failed to disclose. It knew about the case because it was a defendant in it. The Court of Appeals noted this apparent lack of prejudice as a significant factor weighing against dismissal.
Joinder of related claims is generally proper — and even if it is not, dismissal is the wrong remedy. Medical providers who file one lawsuit combining claims for multiple patients against the same insurer are generally acting within the court rules. Even in cases where joinder is improper, the remedy is severance, not dismissal.
The fee dispute under MCL 500.3157(2) remains alive. The Court specifically remanded the case for the trial court to address whether Auto Club’s payment of 195% of Medicare was sufficient under the no-fault act, citing recent appellate authority in Favot v. Brown. This is an issue that affects medical providers across Michigan, and the outcome of this case on remand could be significant.
If your no-fault claim has been dismissed on procedural grounds, or if an insurance company has underpaid your bills and you believe you are owed more, contact The Seva Law Firm. Decisions like Affiliated Diagnostic v. Auto Club show that courts will hold trial judges accountable when they cut corners on due process.
Pratheep Sevanthinathan is the owner and managing attorney of The Seva Law Firm, located at 100 W. Big Beaver Rd, Suite 500, Troy, MI 48084. He can be reached at (248) 385-5704.
This article is for informational purposes only and does not constitute legal advice. Every case is different, and past results do not guarantee future outcomes.