A. Unruh Chiropractic Clinic v. De Smet Insurance Co. of South Dakota

Henry and Dorothy Lentsch were injured in a car accident caused by Opal Omanson, who was insured by De Smet Insurance Company (De Smet) (defendant). The Lentsches began receiving chiropractic treatment from A. Unruh Chiropractic Clinic (Unruh) (plaintiff). The Lentsches assigned to Unruh their rights to any recovery from Omanson or De Smet up to the amount of any unpaid chiropractic charges. Unruh told De Smet that De Smet must pay any insurance proceeds on the Lentsches’ claims directly to Unruh and name Unruh as a payee on any settlement checks. During the Lentsches’ chiropractic treatments, Henry disputed the cost and necessity of further treating Dorothy, who was incompetent to make decisions regarding her care. Unruh told Henry that Unruh had a lawyer who could handle the Lentsches’ personal-injury claims and get the Lentsches money to pay for treatments. Unruh also threatened Henry with legal action if Henry stopped bringing Dorothy for treatments. The Lentsches’ son subsequently entered settlement negotiations with De Smet on the Lentsches’ behalf. Henry still disputed Unruh’s charges and conduct and refused to settle if Unruh was included as a payee on the settlement check. The Lentsches’ son and De Smet ultimately entered an agreement in which the Lentsches released Omanson and De Smet from further liability in exchange for a monetary settlement. De Smet delivered the settlement checks to the Lentsches directly and did not include Unruh as a payee. When Unruh learned about the settlements, Unruh tried to collect payment for chiropractic services. After the Lentsches and De Smet refused to pay, Unruh sued De Smet to recover. The trial and appellate courts enforced the Lentsches’ assignments of claim proceeds to Unruh, and De Smet appealed to the state supreme court.