by George T. Sinas, CPAN Legal Counsel
As CPAN’s General Counsel, I am pleased to report that on December 26, 2012, the Ingham County Circuit Court issued one of the most significant auto no-fault insurance decisions in years. In the case of Coalition Protecting Auto No-Fault (CPAN) and Brain Injury Association of Michigan (BIAMI) v Michigan Catastrophic Claims Association (MCCA) Docket No. 12-68-CZ, Ingham County Circuit Court Judge Clinton Canady III held that the MCCA was subject to the Michigan Freedom of Information Act (FOIA). Therefore, the public has a right to access any information related to the calculation of the auto insurance premiums assessed by the MCCA which are ultimately passed on to consumers. The only information declared by the Court to be unavailable deals with data pertaining to the claims of specific victims.
For years, CPAN and its allies have been asking the MCCA to share more information about how it manages the billions of dollars it controls and explain why the annual assessment charged for each vehicle in Michigan (currently $175 per year) has continued to increase.
Each time CPAN asked for more detailed information about MCCA finances, we were told that the Association was a private nonprofit entity and had no legal duty to disclose any additional information than what was provided on its website. Fortunately, Judge Canady saw the lack of merit in the insurance industry’s position and ruled that:
“The Court agrees with CPAN’s argument that, because the MCCA was created entirely by statute, it comes within the definition of “public body” under FOIA. ln addition, the Court agrees with CPAN’s argument regarding the decision in Shavers v Kelley, that Michigan citizens have a right to know how the insurance premium they pay is calculated to ensure that no-fault insurance is provided on a fair and equitable basis. This concept intertwines with the theories asserted by BIAMI regarding the common law right to information and resulting trusts. Because the MCCA rate charged to insurers is passed on to the insured individuals as part of the premium they pay, it is reasonable to conclude that citizens essentially fund the MCCA reserves by paying that premium; thus, individual citizens have a financial interest in the rate calculation process and how it is conducted. . . . Therefore, the Court concludes that, with regard to BIAMI’s and CPAN’s claims, (1) the MCCA is a “public body” for purposes of FOIA; (2) MCL 500.134 does not carve out a wholesale exemption for all MCCA records, but does subject certain information to the exemption provisions of FOIA (MCL 15.243); and (3) following the rationale articulated in Shavers v Kelley, Michigan citizens have a right to know how the MCCA rate charged to insurers is calculated, because citizens ultimately end up paying that rate as part of the premium charged by the insurers. Specifically, pursuant to the constitutional principles articulated in Shavers, the MCCA must disclose general rate calculation information such as amount of funds contained in MCCA reserves, number of claimants, administrative costs, nature and type of investments of the reserves, amount currently paid by insurers and specific accounting as to increase/decrease in yearly rate calculated, etc. However, as the Court mentioned above, MCCA is not required to disclose personal information regarding individual claims or information that could reasonably lead to extrapolation of individual claimants’ names.”
In response to this decision, the CPAN and BIAMI legal team will now begin the process of assembling a group of consultants with the expertise to help us identify the MCCA financial data that should be produced. These experts will thoughtfully, methodically, and responsibly investigate the MCCA’s finances and advise us about the information necessary to fully assess the status of the MCCA and the appropriateness of its annual premium increases.
It is important that this investigation be done in compliance with the spirit of the Court’s ruling. Therefore, CPAN asks that if its members have thoughts or comments on specific information that they believe the MCCA should provide, please send suggestions to CPAN Administrative Director Martha Levandowski at (517) 882-1096 or via email at mlevandowski@cpan.us. Martha will ensure that all input is provided to the CPAN legal team so that we may consider it in formulating our strategy as the case moves forward.