Michigan Court of Appeals; Docket No. 160244; Published
Judges M. Kelly, Hood, and Stephen Miller; Unanimous; Opinion by Judge Hood
Official Michigan Reporter Citation: 207 Mich App 142; Link to Opinion 
STATUTORY INDEXING:
Health Insurance Liens Regarding Auto Tort Claims [§3116]
TOPICAL INDEXING:
Legislative Purpose and Intent
CASE SUMMARY:
In this unanimous published Opinion by Judge Hood, the Court of Appeals affirmed the trial court's determination that plaintiffs' health insurer (Blue Care Network), was precluded by the provisions of §3116 the no-fault act from making a claim for reimbursement of medical expenses it paid from plaintiffs' third-party tort recovery for non-economic damages.
In an important ruling, the Court of Appeals held that the subrogation clause in plaintiffs health insurance policy did not give Blue Cross a right of reimbursement out of plaintiffs tort recovery, because:
"This clause makes it clear that defendant can only obtain reimbursement under the insurance contract if plaintiff receives a third-party tort recovery representing the medical expenses that defendant already paid. This result is consistent with our holding in Great Lakes Insurance v Citizens, 191 Mich App 589 (1991)."
Under Pennsylvania law, plaintiffs were not entitled to seek recovery in their third-party tort claim for medical expenses or economic expenses. Additionally, the court noted that where the settlement agreement is silent, the court will presume that a third-party tort settlement represented non-economic damages.
Plaintiffs, Michigan residents, were injured in an automobile accident while traveling in Pennsylvania. Defendant Blue Care Network was their health care provider. Plaintiffs had coordinated no-fault coverage making Blue Care the primary provider for plaintiffs' medical expenses. Plaintiffs instituted a third-party tort claim against the driver of the other vehicle, a resident oflndiana. Blue Care sought to assert a lien against plaintiffs' recovery of non-economic damages in that third-party claim, asserting entitlement to reimbursement for medical expenses Blue Care had paid for plaintiffs' automobile accident related injuries. Blue Care claimed entitlement to reimbursement pursuant to its "subrogation clause" contained in its insurance policy which provided that Blue Care "will have the same right as a member to recover expenses for treatment of an injury or illness for which another person or organization is legally liable. . . . "
he Court of Appeals affirmed the trial court determination that Blue Care Network's claim of lien was invalid. The Court of Appeals relied for its decision upon its previous holding in Great Lakes Insurance v Citizens, 191 Mich App S89 (1991) (Item No. 1536), in which it held that the tort reimbursement provisions of §3116 of the no-fault act preclude a health or disability insurer from enforcing its contractual subrogation rights against an insured's non-duplicative third-party auto tort recovery.
In its previous ruling in Great Lakes, supra, the court held that the medical insurance benefits paid by the health provider where the injured party has coordinated no-fault benefits, substitute for no-fault benefits otherwise payable. Under such circumstances, the contractual reimbursement rights of the health provider are subject to the limitations of §3116(4) of the no-fault act which provides:
"A subtraction or reimbursement shall not be due the claimant's insurer from that portion of any recovery to the extent that recovery is realized for non-economic loss...."
In its holding, the Court of Appeals rejected defendant's argument that the Supreme Court, in Auto Club v New York Life Insurance Company, 440 Mich 126 (1992) had overruled or modified the Great Lakes, supra decision. The Auto Club decision involved a dispute between competing statutes of limitations where a no-fault insurer sued a health insurer seeking reimbursement for coordinated medical expenses paid to an insured for injuries sustained in an automobile accident. The Supreme Court in that case held that the action was not controlled by the one year period of limitations set forth in the no-fault act, but instead was governed by the six year period of limitations for contract actions. The Supreme Court held in that decision that although the health benefits became primary because of the fact of coordination in the no-fault policy, it did not follow that the health policy was "transformed" into a no-fault insurance policy. In finding that the Auto Club decision did not overrule or modify Great Lakes, the Court of Appeals herein noted that the Auto Club decision addressed the singular question of which statute of limitations period was applicable to the facts of that case, and nothing more. In Auto Club, unlike Great Lakes, interpretation of §3116 of the no-fault act was of no consequence. Here, Great Lakes is applicable to the present case, and the principle of law set forth in Auto Club was inapplicable. Pursuant to Great Lakes, since, under Pennsylvania no-fault law plaintiffs could not recover medical or economic losses in their third-party tort action, Blue Care Network was not entitled to reimbursement for such expenses it had already paid.
Additionally, the court held that where a settlement agreement is silent, the court will presume that a third-party tort settlement represented non-economic damages. Consequently, the court determined that plaintiffs settlement with the tortfeasor did not include economic losses such as medical costs paid by Blue Care Network, and therefore, Blue Care Network could not enforce its subrogation clause in its health insurance policy.
