Michigan Court of Appeals; Docket No. 248879; Published
Judges Murphy, O’Connell, and Gage; 2-1 (Judge Murphy dissenting)
Official Michigan Reporter Citation: 264 Mich. App. 302, Link to Opinion 
STATUTORY INDEXING:
Not applicable
TOPICAL INDEXING:
Uninsured Motorist Benefits: Arbitration of Uninsured Motorist Claims
CASE SUMMARY:
In this 2-1 published opinion by Judge O’Connell regarding an uninsured motorist arbitration claim, the Court of Appeals held that the question of whether the plaintiff sustained a serious impairment of body function thus entitling plaintiff to damages under the uninsured motorist endorsement was not a question of “coverage,” but rather was simply a factual dispute that went to the issue of whether the plaintiff’s injuries rose to the level justifying payment of benefits. Therefore, the question was properly decided by the arbitrators, not by the circuit court.
The plaintiff in this case sustained a miscarriage as a result of an automobile accident. The auto accident was caused by an uninsured tortfeasor. The plaintiff had uninsured motorist coverage with Meemic. The plaintiff demanded arbitration under her policy, but Meemic refused to appoint an arbitrator. The plaintiff then filed a lawsuit in the circuit court seeking an order sending the case to arbitration for final decision. The defendant contended that the case could not be sent to arbitration until the circuit court first decided whether plaintiff had sustained a serious impairment of body function, as this issue was an issue of “coverage.” As such, it was not properly subject to arbitration. Therefore, the question presented was whether the “serious impairment of body function threshold” is a coverage issue which must be decided by a court before arbitration occurs, or whether it is simply a factual issue to be determined by the arbitrators.
Judge O’Connell, writing for the majority, found that the term “coverage,” as used in defendant’s uninsured motorist contract, was ambiguous. The contract simply states, “Unless otherwise agreed by express written consent of both parties, disagreements concerning insurance coverage, insurance afforded by the coverage, whether or not a motor vehicle is an uninsured motor vehicle, or the timeliness of a Demand for Arbitration, are not subject to arbitration.” The majority rejected defendant’s argument that the extent of plaintiff’s injury determines whether the injury is “covered.” Under this interpretation, a court would always decide whether an injury rises to the level of serious impairment of body function as a matter of coverage before the case could ever be arbitrated. The court noted that such an interpretation, “would render the arbitration provision a nullity because all disputes involving the payment of benefits could foreseeably fall within the ambit of ‘coverage.’ One can easily envision the insurance company arguing that the policy does not ‘cover’ a particular medical procedure, a certain type of suffering, or a particular injury, whether a miscarriage, whiplash or a broken ankle. These are traditionally aspects of damages and contract interpretation left to an arbitrator, and we are not persuaded that the parties intended the term ‘coverage’ to encompass so much. . . . We eschew any interpretation that permits the division of a dispute.”
The majority then went on to articulate its interpretation of the word “coverage,” given the ambiguity existing in this contract. In this regard, the majority opinion states, “. . . the term ‘coverage’ means the formation and existence of the contract and its various aspects, such as policy life, limits, and riders. Under this interpretation, whether the policy affords ‘coverage’ to an individual strictly depends on the policy’s language and would not require detailed articulation and resolution of issues underlying the instant dispute. Furthermore, a court’s determination of the existence of ‘coverage’ in the narrow sense simply reinforces the court’s role as gatekeeper to the arbitration process and leaves the actual resolution of particular disputes with the arbitrator--just as the parties intended. This interpretation leaves the arbitration provision intact and avoids the improper bifurcation of judicial responsibilities between courts and arbitrators. Therefore, we adopt this interpretation of the term ‘coverage’ as it pertains to this policy.”
The court then noted in a footnote, “If we did not read the policy’s ‘coverage’ language narrowly, the policy would presumably allow the insurance company to determine all issues of liability in court, and then, if found liable, turn its back to the jury and head for arbitration to determine damages. This interpretation would violate the rule against dividing contract disputes between forums.”
Judge Murphy dissented. He contended that the term “coverage” includes the issue of whether an injury constitutes “serious impairment of body function,” inasmuch as it is only those injuries that are compensable. Therefore, Judge Murphy would affirm the trial judge’s decision, which would result in the threshold issue being decided in circuit court and damages being decided at arbitration.
