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Department of Social Services v. American Commercial Liability Insurance

Supreme Court of Michigan
Aug 28, 1990
460 N.W.2d 194 (Mich. 1990)

Opinion

Docket No. 85493.

Decided August 28, 1990.

On application by the defendant for leave to appeal, the Supreme Court, in lieu of granting leave, reversed the judgments of the Court of Appeals and the circuit court and remanded the case to the circuit court for further proceedings.

Rehearing denied 437 Mich. 1201.

Robert S. Welliver for the plaintiff.

Christopher G. Manolis for defendant American Commercial Liability Insurance Company.

Ernst W. Kuck for defendant State Farm Insurance Company.

Timothy J. Batton for defendant Allstate Insurance Company.


An uninsured motorist collided with a motorcycle operated by Gerald Wilson, seriously injuring him and killing his passenger, Monique Wilson. Neither the owner nor the operator of the automobile was insured. The Wilsons were covered by three policies that had been issued by three different insurers to their aunt with whom they lived. The policies issued by State Farm Insurance Company and Allstate Insurance Company provided for coordination of benefits; the policy issued by American Commercial Liability Company did not. The Department of Social Services, as subrogee of Gerald Wilson and Monique Wilson, brought two actions in the Ingham Circuit Court against the insurers, seeking recovery of insurance proceeds owed to the Wilsons, after failing to obtain reimbursement from the insurers of the Wilson's medical expenses paid by the department through its medical assistance program. The cases were consolidated in the circuit court. The court, James R. Giddings, J., granted summary disposition for State Farm and Allstate and entered judgment against American Commercial. The Court of Appeals, MacKENZIE, P.J., and WEAVER and E.A. QUINNELL, JJ., affirmed in an unpublished opinion per curiam, holding that by operation of the coordination of benefits clauses, State Farm and Allstate were made secondary insurers and American Commercial became the primary insurer (Docket No. 107100). American Commercial seeks leave to appeal.

In an opinion per curiam, signed by Chief Justice RILEY and Justices BRICKLEY, CAVANAGH, BOYLE, ARCHER, and GRIFFIN, the Supreme Court held:

A full-benefits no-fault policy that has the same statutory priority as a coordinated no-fault policy is not "other health and accident coverage" within the meaning of MCL 500.3109a; MSA 24.13109(1). Thus, a no-fault insurer that has issued a coordinated policy may not coordinate benefits so as to place the full obligation to pay on a no-fault insurer that is of equal statutory priority and that has issued a full-benefits policy. In this case, each insurer must share the cost of the personal protection insurance benefits.

"Other health and accident coverage" clearly means coverage other than personal protection insurance benefits payable under a no-fault policy. The purpose of MCL 500.3109a; MSA 24.13109(1) was to eliminate duplicate coverage. There is no duplicate coverage under the no-fault act, however, because insurers are given priorities, and, where the priorities are equal, the liability is divided, not duplicated.

Reversed and remanded.

Justice LEVIN stated that leave should be granted in this case. Peremptory reversal should be reserved for cases in which the law is settled.


The defendants are insurance companies that cannot agree with regard to their respective liability for personal protection insurance (first-party) benefits that are payable to the plaintiff's subrogors. The Court of Appeals has concluded that the obligation must be borne by defendant American Commercial Insurance Company. We conclude, however, that the Legislature has directed that the obligation be shared equally by these defendant insurers.

MCL 500.3107; MSA 24.13107.

I

This case arises out of an accident that occurred on August 22, 1985. An automobile collided with a motorcycle operated by Gerald Wilson. His passenger was Monique Wilson. Mr. Wilson was seriously injured; Ms. Wilson was killed.

Neither the owner nor the operator of the automobile was insured. The owner of the motorcycle was likewise uninsured. Further, neither Wilson had purchased an insurance policy. They were, however, covered by three policies that had been issued to their aunt, Mary N. Taylor, with whom they lived.

MCL 500.3114(1); MSA 24.13114(1). (This case would fall within MCL 500.3114[5]; MSA 24.13114[5], but for the inapplicability of paragraphs [a] through [d] in MCL 500.3114[5]; MSA 24.13114[5].)

Each of the defendant insurance companies had insured one of Ms. Taylor's three vehicles. The policies issued by State Farm Insurance Company and by Allstate Insurance Company provided for coordination of benefits. The policy issued by American Commercial Liability Insurance Company did not. The insurers agree that, aside from the possible effect of the coordination-of-benefits clauses, they are of equal priority under the no-fault act.

MCL 500.3109a; MSA 24.13109(1).

Following the accident, the medical expenses of Mr. Wilson and Ms. Wilson were met by the Department of Social Services through its medical assistance program (Medicaid). After paying over $120,000 in medical and related expenses, the DSS sought reimbursement from the defendant insurers. When no payment was received, the DSS exercised its statutory right to bring a subrogation action to recover the insurance proceeds that were owed to the Wilsons.

MCL 400.105 et seq.; MSA 16.490(15) et seq.

MCL 400.106(1)(b)(ii)(b); MSA 16.490(16)(1)(b)(ii)(b).

II

In August 1986, the DSS filed in circuit court a pair of complaints, one pertaining to Mr. Wilson, and one to Ms. Wilson. The circuit court later consolidated the cases.

To date, no genuine controversy has arisen concerning whether the DSS must be reimbursed. All appear to agree that such payment must be made. The issue is whether the burden must be borne by American Commercial alone on the ground its policy provided full benefits, whereas the policies issued by State Farm and Allstate provided coordinated benefits. American Commercial believes that, because the three insurers are of equal priority, each must share the burden equally.

In circuit court, State Farm and Allstate moved for summary disposition, urging that American Commercial alone is liable. After considering the arguments of the parties, the circuit judge granted the motions. The court ordered that the DSS take judgment against American Commercial "for whatever amount of damages are [sic] established," and that a dismissal enter in favor of State Farm and Allstate.

III

The Court of Appeals affirmed the summary disposition. In explaining its decision, the Court relied upon Auto-Owners Ins Co v Farm Bureau Mutual Ins Co, 171 Mich. App. 46; 429 N.W.2d 637 (1988):

Dep't of Social Services v American Commercial Liability Ins Co, unpublished opinion per curiam of the Court of Appeals, decided January 30, 1989 (Docket No. 107100).

We agree with the trial court's decision. State Farm and Allstate both had coordination of benefits clauses in their policies which allowed the policyholder to pay a lower premium. American Commercial did not have a coordination of benefits clause in its policy. By operation of the coordination of benefits clauses, State Farm and Allstate were made secondary insurers and American Commercial became the primary insurer. MCL 500.3109a; MSA 24.13109(1), MCL [500.]3115(2); MSA 24.13115(2); Auto-Owners Ins Co v Farm Bureau Mutual Ins Co, 171 Mich. App. 46, 49-53; [429] N.W.2d [637] (1988). As the primary insurer, American Commercial is solely responsible for the amount owned to DSS. Auto-Owners, supra.

American Commercial then applied to this Court for leave to appeal, urging us to reverse the judgments of the circuit court and the Court of Appeals. After deciding to grant leave to appeal in Auto-Owners, we issued an order holding the present case in abeyance pending our decision in Auto-Owners.

Auto-Owners Ins Co v Farm Bureau Mutual Ins Co, 433 Mich. 880 (1989).

Dep't of Social Services v American Commercial Liability Ins Co, unpublished order of the Supreme Court, dated September 28, 1989 (Docket No. 85493).

The parties in the Auto-Owners case settled their dispute, however, and stipulated to a dismissal of the appeal. Thus we turn again to consideration of the present case.

See n 7.

IV

In Auto-Owners, the Court of Appeals considered the issue "whether no-fault coverage with a coordination-of-benefits provision is excess coverage over equal priority no-fault coverage without such a clause," which it characterized as "an issue of first impression." Id. at 49-50. After noting that the statutory phrase "other health and accident coverage" has been applied in a variety of contexts, the Court of Appeals turned to our decision in LeBlanc v State Farm Mutual Automobile Ins Co, 410 Mich. 173, 201; 301 N.W.2d 775 (1981). In that decision, we stated:

For example in Nyquist v Aetna Ins Co, 84 Mich. App. 589; 269 N.W.2d 687 (1978), aff'd 404 Mich. 817 [280 N.W.2d 792] (1979), this Court held that Blue Cross-Blue Shield benefits were subject to coordination with personal injury protection benefits payable under a no-fault policy containing the § 3109a clause and offered at a reduced premium. Although Blue Cross-Blue Shield is technically not "insurance," this Court reasoned that the Legislature clearly intended to include this type of medical benefits coverage within the scope of § 3109a. In numerous other decisions, this Court has expanded the scope of coverages included within the meaning of "other health and accident coverage" subject to § 3109a coordination of benefits: Lewis v Transamerica Ins Corp of America, 160 Mich. App. 413; 408 N.W.2d 458 (1987), lv den 429 Mich. 855 (1987) (benefits under Teamsters Welfare Plan); Auto-Owners Ins Co v Lacks Industries, 156 Mich. App. 837; 402 N.W.2d 102 (1986), lv den 428 Mich. 902 (1987) (employer's self-insurance plan); United States Fidelity Guaranty Co v Group Health Plan of Southeast Michigan, 131 Mich. App. 268; 345 N.W.2d 683 (1983) (health maintenance organizations); Bagley v State Farm Mutual Automobile Ins Co, 101 Mich. App. 733; 300 N.W.2d 322 (1980) (military medical and disability benefits). [ Auto-Owners, 171 Mich. App. 50.]

Furthermore, the fact that "other health and accident coverage" immediately follows a reference to "personal protection insurance benefits" compels a conclusion that "other health and accident coverage" clearly means coverage other than personal protection insurance benefits payable under any no-fault policy.

The Court of Appeals panel that decided Auto-Owners chose not to rely upon the quoted statement from LeBlanc, however. The panel observed that LeBlanc concerned whether Medicare benefits were subject to coordination, and predicted that this Court "would reach a different conclusion" if presented with a case directly posing the question found in Auto-Owners and the present case. 171 Mich. 53. Thus the Auto-Owners panel concluded that the insurer that had issued coordinated-benefits coverage (Farm Bureau) should prevail over the insurer that had issued a full-benefits policy (Auto-Owners).

V

In the present case, the insurers agree that they are of equal statutory priority. Each must therefore share the cost of the personal protection insurance benefits that have been paid by the DSS, unless the coordination-of-benefits clauses in the State Farm and Allstate policies can be invoked with respect to the full-benefits policy issued by American Commercial.

It is true, as the Court of Appeals observed in Auto-Owners, that our LeBlanc decision concerned another issue. However, we adhere to our conclusion in LeBlanc that the phrase "other health and accident coverage" clearly means coverage other than personal protection insurance benefits payable under a no-fault policy. We again emphasize that, in crafting MCL 500.3109a; MSA 24.13109(1), the Legislature placed the reference to "other health and accident coverage" immediately after a reference to "personal protection insurance benefits."

Indeed, the holding in LeBlanc has been substantially affected by federal law. See 42 U.S.C. § 1395y(b)(1).

The legislative history of MCL 500.3109a; MSA 24.13109(1) was presented in our LeBlanc opinion. 410 Mich. 194-197. See also Federal Kemper Ins Co, Inc v Health Ins Administration, Inc, 424 Mich. 537, 546-550; 383 N.W.2d 590 (1986). While the legislative history of MCL 500.3109a; MSA 24.13109(1) is not dispositive, it supports our conclusion. That is, the purpose of MCL 500.3109a; MSA 24.13109(1) was to eliminate duplicate coverage, typically where automobile insurance and health insurance would both be available to an injured motorist. However, there is no duplicate coverage under the no-fault act, since insurers are given priorities, and, where the priorities are equal, the liability is divided, not duplicated."

MCL 500.3115(2); MSA 24.13115(2).

A full-benefits no-fault policy having the same statutory priority as a coordinated no-fault policy does not constitute "other health and accident coverage" within the meaning of MCL 500.3109a; MSA 24.13109(1). Thus a no-fault insurer that has issued a coordinated policy may not "coordinate" benefits so as to place the full obligation to pay on a no-fault insurer that is of equal statutory priority, and that has issued a full-benefits policy.

For these reasons, and in lieu of granting leave to appeal, we reverse the judgments of the Court of Appeals and the circuit court, and we remand this case to the circuit court for further proceedings consistent with this opinion. MCR 7.302(F)(1).

RILEY, C.J., and BRICKLEY, CAVANAGH, BOYLE, ARCHER, and GRIFFIN, JJ., concurred.


I would grant leave to appeal. I adhere to the view that peremptory reversal should be reserved for those cases in which the law is settled and no factual assessment is required.

Roek v Chippewa Valley Bd of Ed, 430 Mich. 314, 322; 422 N.W.2d 680 (1988) (LEVIN, J., separate opinion); Grames v Amerisure Ins Co, 434 Mich. 867, 868-875; 451 N.W.2d 304 (1990) (LEVIN, J., dissenting); People v Little, 434 Mich. 752, 769-770; 456 N.W.2d 237 (1990) (LEVIN, J., dissenting).
See Schweiker v Hansen, 450 U.S. 785, 791; 101 S Ct 1468; 67 L Ed 2d 685 (1981) (Marshall, J., dissenting) ("A summary reversal is a rare disposition, usually reserved by this Court for situations in which the law is settled and stable, the facts are not in dispute, and the decision below is clearly in error"); Leis v Flynt, 439 U.S. 438, 457-458; 99 S Ct 698; 58 L Ed 2d 717 (1979) (Stevens, J., dissenting) ("Summary reversal `should be reserved for palpably clear cases of . . . error.' Eaton v Tulsa, 415 U.S. 697, 707 [ 94 S Ct 1228; 39 L Ed 2d 693 (1974)] [Rehnquist, J., dissenting]").

While no factual assessment is required in the instant case, the law is not settled. This Court granted leave to appeal in Auto-Owners Ins Co v Farm Bureau Mutual Ins Co, 171 Mich. App. 46; 429 N.W.2d 637 (1988), lv gtd 433 Mich. 880 (1989), to address the question peremptorily decided in the per curiam opinion filed today.

Auto-Owners was settled, and the appeal in this Court was dismissed. Counsel for defendant-appellees, State Farm Insurance Company and Allstate Insurance Company, will wonder why Auto-Owners was grant worthy, but the decision of the Court of Appeals in the instant case, which adopted the reasoning of Auto-Owners, is not.

The opinion in Auto-Owners was written by a judge sitting by assignment and was signed by two judges of the Court of Appeals. The Court of Appeals per curiam opinion in the instant case was signed by two different judges of the Court of Appeals and a judge sitting by assignment. Four Court of Appeals judges and two judges sitting by assignment have thus so expressed themselves. No contrary authority is cited by the appellant or in the per curiam opinion filed today other than a statement in the opinion that is conceded to be obiter dictum.

This Court's last decision construing § 3109a of the Insurance Code, MCL 500.3109a; MSA 24.13109(1), is Tatum v GEICO, 431 Mich. 663; 431 N.W.2d 391 (1988).

I would, again, grant leave to appeal.


Summaries of

Department of Social Services v. American Commercial Liability Insurance

Supreme Court of Michigan
Aug 28, 1990
460 N.W.2d 194 (Mich. 1990)
Case details for

Department of Social Services v. American Commercial Liability Insurance

Case Details

Full title:DEPARTMENT OF SOCIAL SERVICES v AMERICAN COMMERCIAL LIABILITY INSURANCE…

Court:Supreme Court of Michigan

Date published: Aug 28, 1990

Citations

460 N.W.2d 194 (Mich. 1990)
460 N.W.2d 194

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