Michigan Court of Appeals; Docket No. 129231; Published
Judges Griffin, Gribbs, and Hood; Unanimous
Official Michigan Reporter Citation: 191 Mich App 589; Link to Opinion 
STATUTORY INDEXING:
Health Insurance Liens Regarding Auto Tort Claims [§3116]
TOPICAL INDEXING:
Legislative Purpose and Intent
CASE SUMMARY:
In this important unanimous decision by Judge Griffin, the Court of Appeals, in a case of first impression, held that the tort reimbursement provisions of §3116 of the No-Fault Act preclude a health or disability insurer who has paid medical and/or wage loss benefits in lieu of those that would have been paid by a no-fault insurer, had the no-fault policy not been coordinated, from enforcing its contractual subrogation rights as against its insured's non-duplicative third party auto tort recovery. The insured person in this case was insured under a coordinated no-fault policy, thus elevating his health and accident insurer (Great Lakes) into the primary pay position. The health insurer's policy contained a subrogation clause permitting it to be reimbursed out of any tort recovery. The insured accident victim subsequently obtained an auto tort settlement which did not duplicate any of the benefits paid by the health insurer. Nevertheless, the health insurer argued that it was entitled to reimbursement under the Supreme Court's 1982 decision in Foremost v Waters (415 Mich 303). The trial court rejected the health insurer's argument on the basis that the Supreme Court's subsequent opinion in Federal Kemper v Health Insurance Administration, 424 Mich 537 (1986) (Item No. 897) overruled Foremost by implication.
The Court of Appeals affirmed the trial court's ruling that the health insurer was barred from enforcing its contractual subrogation language, but it did so on another basis. Rather than ruling that the Federal Kemper decision impliedly overruled Foremost, the Court of Appeals distinguished the Foremost decision for three reasons, characterizing it as "an a-typical decision of the Supreme Court It is a short per curiam opinion issued in lieu of granting leave to appeal. We follow its holding but deem it imprudent to read too much into the opinion in view of its limited analysis." In distinguishing Foremost, the Court of Appeals stated that the Foremost decision, "was strictly a case of contract construction," which did not analyze a health insurer's tort subrogation rights in light of §3116 of the no-fault statute. Rather, it focused only on whether subrogation was permitted under the terms of the insurance contract. Second, the court distinguished Foremost on the basis that the tort recovery realized in the Foremost decision was probably, in part, duplicative of the benefits paid by the health insurer, a situation which has now been changed in light of the Supreme Court's subsequent decision in Federal Kemper. Finally, the court distinguished Foremost on the basis that §3116 of the no-fault statute was amended in 1978 and those amendments were not in effect for purposes of the 1974 auto accident at issue in Foremost. Therefore, the Court of Appeals held, "for these reasons, we deem Foremost to be controlling only as to the interpretation of the contract clause. We do not deem it to be precedentially binding on the issue of whether §3116 bars enforcement of a contract."
The court then went on to analyze the history and purpose of §3116 and concluded that the Supreme Court's opinion in Great American v Queen, 410 Mich 73 (1980) (Item No. 376) was controlling as to the right of health insurers to obtain reimbursement out of a plaintiff’s subsequent tort recovery where the health insurer pays benefits in lieu of those that would have been paid by a coordinated no-fault insurer. In Great American, the Supreme Court held that a workers' compensation carrier who pays benefits in lieu of those that would have been paid by a no-fault insurer were it not for the governmental benefits setoff provisions of §3109(1) of the statute, has reimbursement rights that, "are co-extensive with those of the no-fault insurer whose liability it replaces and are thus limited to cases where there is tort recovery for basis economic loss." The court concluded its decision by stating, "we hold that the instant case is controlled by Great American Insurance v Queen. The medical insurance benefits paid by plaintiff, Great Lakes American Life Insurance Company, substitute for no-fault benefits otherwise payable. Under such circumstances, the contractual reimbursement rights of Great Lakes Insurance are subject to the limitations of §3116 of the no-fault act and are therefore unenforceable."
