Auto Club Ins Assoc v Frederick and Herrud, Inc; (COA-PUB, 9/16/1985; RB #866)


Michigan Court of Appeals; Docket No. 79289; Published  
Judges Danhof, R. B. Burns, and Brennan; Unanimous  
Official Michigan Reporter Citation: 145 Mich App 722; Link to Opinion alt    

Coordination with Other Health and Accident Medical Insurance [§3109a]  
Coordination with ERISA Plans [§3109a]

Employee Retirement Income Security Act (ERISA – 29 USC Section 1001, et seq.)    

This important decision by Judge Danhof deals with the question of how conflicts between coordination of benefits clauses in no-fault policies and health insurance policies should be resolved. In this particular case, plaintiff Auto Club issued a no-fault insurance policy which contained a coordination of benefits clause pursuant to §3109a of the no-fault statute. Defendant issued a policy of accident/health insurance to the same insured, which specifically provided that defendant would pay medical benefits for accidental injuries unless the insureds were covered by a no-fault insurance policy, in which case, the no- fault policy would be primary. Thus, both the no-fault insurer and the health insurer were attempting to elevate the other into a primary pay position vis a vis their individual coordination clauses. The issue before the court was whose coordination clause would be enforceable.

The court discussed in detail the recent case law regarding conflicting coordination clauses. In addition, the court extensively examined the legislative history regarding the enactment of §3109a. After doing so, the court concluded:

"In reviewing this history as discussed in Dean v Auto Club (Item No. 791), LeBlanc v State Farm (Item No. 377) and Nyquist v Aetna (Item No. 99), we conclude that it evinces a clear legislative intent that the no-fault insurer provide only secondary coverage under §3109a. . . . The analysis of HB 5724 (subsequently enacted into §3109a) prepared by the House Insurance Committee set forth several arguments in support of, and in opposition to, the bill. Each argument, however, proceeded from the premise that the coordination of benefits envisioned by the bill would make health and accident insurance, including that provided by Blue Cross and Blue Shield of Michigan, theprimary coverage. . . .As is manifest from the legislative analysis, §3109a was intended to offer an option to no-fault consumers to allow them to make their no-fault coverage secondary. We find this conclusion inescapable from the concerns expressed."

Furthermore, in arriving at its holding the court noted that "defendant advances no statutory support for its attempt to make no-fault coverage primary, nor is there evidence on the record that the approval of the Insurance Commissioner has been requested or granted with respect to this clause." See Siller v Employers Insurance of Wausau (Item No. 634) and MCLA 500.3438 and §3440.

Finally, the court specifically rejected the "pro rata" formula for resolving priority disputes set forth in Federal Kemper v Health Ins Administration (Item No. 737).