Michigan Supreme Court; Docket Nos. 119403 and 119410
Opinion by Justice Markman; unanimous
Official Michigan Reporter Citation: 468 Mich. 53, Link to Opinion 
STATUTORY INDEXING:
Not applicable
TOPICAL INDEXING:
Workers Disability Compensation Act
CASE SUMMARY:
In this unanimous opinion by Justice Markman, the Supreme Court reversed the Court of Appeals and held that a no-fault insurer (Auto-Owners) who paid medical expenses on behalf of its insured which should have been paid by the insured’s employer or the employer’s insurer, is entitled to receive full reimbursement from the employer/worker’s comp insurer without limitation by the cost containment rules in the Workers’ Disability Compensation Act. In so ruling, the Supreme Court invoked the doctrine of “equitable subrogation” and relied upon its earlier opinion in the case of ACIA v New York Life Insurance Company, [Item No. 1570] which invoked equitable subrogation in a claim by a no-fault insurer against a health insurance company. In applying equitable subrogation to the case at bar, the Supreme Court noted that, under the provisions of the Workers’ Disability Compensation Act, a worker who pays his or her own medical expenses because the employer/worker’s compensation insurer did not pay those expenses, is entitled to full reimbursement from the employer/worker’s compensation insurer “for the reasonable expense paid by the employee.” In this case, the employee did not pay his own medical expenses but his no-fault insurer did. Therefore, the no-fault insurer was equitably subrogated to the right of the employee to recover the full “reasonable expense” from the employer/worker’s compensation insurer. As such, the no-fault insurer was permitted to “stand in the place of its insured” and pursue an equitable subrogation action directly against the employer. Moreover, the claim is not capped by the workers’ compensation fee schedules because the employee would not be capped by those fee schedules in a direct action against the employer. In so holding, Justice Markman stated:
“In light of the decision in New York Life, . . . we disagree with the Court of Appeals conclusion that plaintiff’s reimbursement is capped by the cost containment rules of the WDCA. . . .
Applying the reasoning of New York Life regarding the subrogation issue to the facts of this case, we conclude that plaintiff is entitled to full reimbursement from defendant on the basis of the doctrine of equitable subrogation. . . .
The worker’s compensation magistrate found the defendant was liable for [the employee’s] medical expenses as the worker’s compensation insurer because the injury was work related. If [the employee] had paid his expenses, he would, under the statute, be entitled to full reimbursement from defendant for his reasonable medical expenses because the injury was work related. The principle of equitable subrogation allows plaintiff to assert the right of [the employee], its insured, to receive full reimbursement from defendant. The fact that [the employee] did not pay his own expenses, and plaintiff did, is exactly the reason plaintiff is entitled to assert this right.”
