Michigan Court of Appeals; Docket No. 230793; Published
Judges Fitzgerald, Bandstra and Gage; 2-1 (Judge Fitzgerald dissenting)
Official Michigan Reporter Citation: 254 Mich. App. 256, Link to Opinion 
STATUTORY INDEXING:
Not applicable
TOPICAL INDEXING:
Employee Retirement Income Security Act
CASE SUMMARY:
In this 2-1 published opinion by Judge Gage, the Court of Appeals held that defendant DAIIE was not obligated to reimburse its insured, Bradley Dunn, for sums that Dunn was required to pay to his self-funded ERISA health plan pursuant to the plan’s right to reimbursement from any third-party tort recovery plaintiff obtained from the party responsible for the accident.
Plaintiff was injured in an automobile accident. Plaintiff’s primary health insurance provider, Rockwell International Corporation Employee Health Plan, provided benefits in the amount of $96,125.65 to cover Plaintiff’s medical expenses. Rockwell is a self-funded group health plan organized under the Employment Retirement Income Security Act (ERISA). At the time of the accident, plaintiff also had a coordinated no-fault insurance policy with defendant, DAIIE. Pursuant to the coordination language of the auto policy, plaintiff’s medical expenses were paid by the self-funded ERISA plan.
Plaintiff also initiated a third-party lawsuit for non-economic damages resulting from the accident. That case was settled for an undisclosed amount. However, the Rockwell Health Plan contained a provision that required plaintiff to reimburse Rockwell from any third-party recovery for any sums expended on plaintiff’s behalf for the accident. Plaintiff therefore reimbursed Rockwell, and then instituted this action seeking reimbursement from DAIIE for the sums that he was required to repay to Rockwell. Plaintiff relied upon the Court of Appeals decision in Yerkovich v AAA, 231 Mich App 54; 585 NW2d 318 (1998), reversed on other grounds, 461 Mich 732 (2000), which held that a no-fault insurer was required to reimburse the insured for sums paid by the insured to an ERISA insurance provider.
The Court of Appeals in this case held that it was not bound to follow the decision in Yerkovich. The court noted that in Taylor v Kurapati, 236 Mich App 315; 600 NW2d 670 (1999), it was determined that where a decision of the Court of Appeals is reversed, even if on other grounds that were dispositive of the entire case, the Court of Appeals is not required to follow that decision. In Yerkovich, the Supreme Court decided that the subrogation clause contained in the ERISA policy in that case did not require plaintiff to reimburse the health fund. Because the Supreme Court had decided that the subrogation agreement did not entitle the ERISA plan to reimbursement for medical expenses it had paid, the Supreme Court never reached the second issue in Yerkovich, i.e., whether plaintiff’s no-fault insurer must refund plaintiff for that reimbursement. Therefore, in reversing on a dispositive issue, the Supreme Court entirely reversed the Court of Appeals and rendered any discussion by the Court of Appeals to be without precedential value. The Court of Appeals therefore held that Yerkovich is not precedentially binding.
The Court of Appeals next addressed whether Yerkovich, although not precedentially binding, could be persuasive authority. In this regard, the court adopted the dissenting opinion of Judge (now Justice) Markman in the Yerkovich Opinion. Accordingly, the Court of Appeals held that defendant was not obligated to reimburse the plaintiff for sums that he had to pay to his health plan. The court reasoned that plaintiff had elected to purchase a coordinated no-fault benefit policy in exchange for a reduced premium. Therefore, plaintiff was not entitled to reimbursement from the insurer. The Court of Appeals found it illogical to hold the no-fault insurer liable for a risk that it did not assume, where plaintiff had purchased a coordinated policy pursuant to section 3109a. The court quoted Judge Markman’s dissent in Yerkovich, in which he stated:
“In this case, plaintiff pocketed the savings generated by electing to coordinate her employer-sponsored health and accident benefits with her no-fault insurance, thereby reducing her no-fault insurance premiums. Yet although she reduced her premiums in this way, she appears to have given up nothing in reality because the liability of the no-fault insurer is apparently unaffected by the reduced premiums under the analysis of the majority. The insurer here is held to have provided coverage exactly equivalent to what would have been appropriate, had it not received a reduced premium.”
In reaching its decision, the majority in the instant case held that it was adhering to Michigan’s most fundamental insurance jurisprudence rule that an insurer can never be held liable for a risk it did not assume and for which it did not charge or receive a premium. Therefore, the trial court finding in favor of the plaintiff was reversed.
In his dissent, Judge Fitzgerald would find Yerkovich, although not binding, to be persuasive authority on the issue. A no-fault insurer cannot seek reimbursement for medical expense benefits paid from an insured’s third-party tort recovery except under the limited circumstances set forth in section 3116. In Sibley v DAIIE, 431 Mich 164; 427 NW2d 528 (1988), the Michigan Supreme Court found that workers’ compensation benefits that plaintiff received, which were later required to be reimbursed from the proceeds of a tort settlement, were not government-provided benefits subject to coordination under section 3109(1) of the No-Fault Act. Citing from Sibley, Judge Fitzgerald noted that where plaintiff was required to refund benefits he had received, he was left without compensation for his medical services and lost wages and, therefore, his only recourse for economic damages was to seek payment from his no-fault carrier. Justice Fitzgerald stated:
“Under Sibley v DAIIE, 431 Mich 164; 427 NW2d 528 (1988), to the extent that plaintiff reimbursed the employer plan for those medical benefits, those benefits went unpaid and cannot be considered paid by an alternative source or provider under the coordination of benefits clause contained in defendant’s no-fault policy. Defendant no-fault insurer has no contractual right to ‘coordinate’ against benefit payments that were effectively revoked by the primary insurer and paid by the insured. Nor should defendant be able to indirectly coordinate medical benefit payments against plaintiff’s tort recovery for noneconomic loss. Great Lakes Insurance v Citizens Insurance, 191 Mich App 589; 479 NW2d 20 (1991).”
