Michigan Court of Appeals; Docket Nos. 260604 and 271199; Published
Judges Owens, White, and Hoekstra; 2-1 (Judge White concurring); per curiam
Official Michigan Reporter Citation: 274 Mich. App. 184, Link to Opinion 
On December 29, 2008, the Michigan Supreme Court REVERSED the judgment of the Court of Appeals; Link to MSC Summary
STATUTORY INDEXING:
Catastrophic Claims Association: Creation and Membership [3104]
Indemnity Dollar Thresholds [3104]
Reimbursement of Member Claims [3104]
TOPICAL INDEXING:
No-Fault Insurer Claims for Reimbursement: Insurer Reimbursement from MCCA
CASE SUMMARY:
In this 2-1 published per curiam opinion, the Court of Appeals held that the Michigan Catastrophic Claims Association (MCCA) had the duty under MCL 500.3104 to reimburse its member insurers for the actual amount of PIP benefits paid in excess of the statutory threshold contained in MCL 500.3104(2).
In this consolidated case, the Court of Appeals affirmed a circuit court decision in which the lower court determined that the MCCA was required to indemnify its members for the actual amount its members paid in PIP coverage in excess of the statutory cap. The Court of Appeals then reversed a circuit court decision in which the lower court determined that the MCCA could challenge the reasonableness of the member insured’s payments. In so finding, the Court of Appeals determined that although the MCCA is only required to reimburse an insured for reasonable charges, MCL 500.3104 does not contain a reasonableness requirement. Instead, the statute requires the MCCA to reimburse the insurers for the actual amount of PIP benefits paid in excess of the statutory threshold. Further, if the MCCA determines that an insurer is making unreasonable payments, under MCL 500.3104(7)(g) the only sanction the MCCA is authorized to take is that it can review the insurer’s claim handling procedures. In this regard, the court stated:
“We find that MCL 500.3104 does not incorporate a ‘reasonableness’ requirement, but requires the MCCA to reimburse insurers for the actual amount of PIP benefits paid in excess of the statutory threshold. In other words, the MCCA is statutorily required to reimburse an insurer for 100 percent of the amount that the insurer paid in PIP benefits to an insured in excess of the statutory threshold listed in MCL 500.3104(2), regardless of the reasonableness of these payments. . . . Although MCL 500.3105 and MCL 500.3107 indicate that an insurer is only required to reimburse an insured for reasonable charges, MCL 500.3104 does not include a reasonableness requirement. Instead, MCL 500.3104 unambiguously requires the MCCA to reimburse insurers for ‘actual loss amounts that a member is obligated to pay . . . .’ We will not read a ‘reasonableness requirement’ into MCL 500.3104 when the plain language of the statute does not indicate that the Legislature intended for the MCCA to review PIP payments for reasonableness. . . . Instead, by requiring the MCCA to reimburse an insurer for the amount that the insurer, in turn, is obligated to pay in PIP benefits, MCL 500.3104 requires the MCCA to reimburse the insurer for the full amount (above the statutory threshold) of PIP benefits that the insurer is bound to pay to its insured, regardless of the circumstances under which that amount was determined, whether by agreement, judgment, binding arbitration, or otherwise, or the reasonableness of that amount. The MCCA’s reimbursement obligation is reemphasized in MCL 500.3104(7)(a), which provides that ‘[t]he association shall . . . [a]ssume 100% of all liability as provided in [MCL 500.3104(2)].’ Consequently, MCL 500.3104 provides that the MCCA must indemnify an insurer for 100 percent of the actual loss amounts (above the statutory threshold established in MCL 500.3104(2)) that the insurer is obligated to pay in PIP coverages, regardless of the reasonableness of these payments. . . . MCL 500.3104(7)(g) permits the MCCA to review its members’ claims handling procedures and to intervene if it believes that those procedures are ‘inadequate to properly service the liabilities of the association . . . .’ Thus, if an insurer stops reviewing claims for reasonableness when it reaches the statutory threshold, it runs the risk that the MCCA ‘may undertake or may contract with another person, including another member, to adjust or assist in the adjustment of claims for the member on claims that create a potential liability to the association and may charge the cost of the adjustment to the member,’ as permitted by MCL 500.3104(7)(g). MCL 500.3104 does not authorize the MCCA to undertake any other sanctions.”
(emphasis in original)
