Michigan Court of Appeals; Docket #302384; Unpublished
Judges M. J. Kelly, Fitzgerald, and Donofrio; Unanimous, Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
On September 24, 2012, the Michigan Supreme Court DENIED application for leave to appeal; Link to Order
STATUTORY INDEXING:
Reimbursement of Member Claims [§3104(10)(e)]
TOPICAL INDEXING:
Not Applicable
In this unanimous unpublished per curiam Opinion, the Michigan Court of Appeals upheld the determination of the trial court granting summary disposition in favor of the Michigan Catastrophic Claims Association and finding the MCCA was not obligated to reimburse Old Republic Insurance Company for PIP benefits payable to the injured person in excess of the statutory threshold. The Court of Appeals in its ruling determined that the trial court reached the correct result for the wrong reason. The trial court determined that because the PIP benefits had been paid by the injured person’s employer, Pepsi Bottling Group, as required under Pepsi’s insurance policy with Old Republic, there was no obligation on the part of the MCCA to reimburse Old Republic because Old Republic had not actually paid any PIP benefits. In upholding the trial court determination that no obligation existed to reimburse Old Republic at this time, the court stated that the arrangement between Old Republic and Pepsi was analogous to a deductible that Pepsi was required to pay before Old Republic’s duty to pay benefits was triggered. The court stated the MCCA’s duty to indemnify Old Republic will be triggered only if Pepsi stops paying PIP benefits to the injured person.
In reaching its decision, the court relied upon the definition of “ultimate loss” as contained in MCL 500.3104(25)(c), which defines ultimate loss as “the actual loss amounts that a member is obligated to pay and that are paid or payable by the member, and do not include claim expenses.”
The court noted that in American Home Assurance Co v Mich Catastrophic Claims Ass’n, 288 Mich App 706 (2010), the Court of Appeals previously held that an insurer’s ultimate loss is the amount that is required to be paid under MCL 500.3105(1) “regardless of a policyholder’s payment of a deductible or the existence of a deductible clause in the insurance policy.” The court stated that even if a policyholder is unable or unwilling to pay a deductible, the insurer must pay PIP benefits. However, as stated in American Home, supra, under article X, § 10.06 of the MCCA’s plan of operation, “a member insurer must turn over to the MCCA any amount it recovers from a third party for which the member has already been reimbursed by the MCCA.” The court stated that the MCCA’s obligation to indemnify member insurers is separate from the insurer’s obligation to reimburse the MCCA, and the obligations do not conflict. The MCCA’s indemnification obligation exists even if the insurer recovers nothing from a third party.
The court reasoned that under the facts of this case, the trial court determination in favor of MCCA, based upon the fact that Old Republic had not actually paid any PIP benefits, was inconsistent with the published decision in American Home. That case held that the “ultimate loss” includes benefits that an insurer is obligated to pay, and not just benefits that an insurer has actually paid. However, because § 10.06 of the plan of operation of the MCCA’s plan of operation required Old Republic to reimburse the MCCA for any amounts that Old Republic received from Pepsi, Old Republic would be required to reimburse the MCCA for the amounts paid by Pepsi pursuant to the plan of operation. As the court has held in American Home, supra, trial courts may decline to order the MCCA to make payments only to have those payments reimbursed. Accordingly, the MCCA’s duty to indemnify Old Republic will be triggered only if Pepsi stops paying PIP benefits to the injured person.
