Michigan Court of Appeals; Docket No. 92533 and 94188; Published
Judges MacKenzie, Doctoroff, and Kingslsy; Unanimous
Official Michigan Reporter Citation: 165 Mich App 269; Link to Opinion 
STATUTORY INDEXING:
Coordination with Other Health and Accident Medical Insurance [§3109a]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous Opinion by Judge Doctoroff, the Court of Appeals affirmed the trial court's decision in favor of plaintiff auto insurer's claim that defendant's health insurance coordination clauses were invalid under Federal Kemper (Item No. 897).
Plaintiff’s no-fault policies contained coordination of benefits clauses which provided that when an insured had hospital and accident insurance, the no-fault insurance policy would pay benefits only when the expenses was not covered by the other insurance policies defendant's disability insurance policies included clauses which provided that the defendant would not be liable for damages exceeding $300 where the loss was caused by an automobile accident injury.
The trial courts applied the decision in Federal Kemper, and invalidated defendant's clauses providing for the $300 limitation, and ordered it to pay all of its insured's medical bills to the extent that they were covered under the policies defendant argued on appeal that the trial court erred by applying Federal Kemper to this case defendant claimed that its health insurance clause does not constitute an "other insurance" clause within the meaning of Federal Kemper. Further, defendant argued that the clauses at issue do not conflict with those of the auto insurers, because they do not deny defendant's primary liability, but rather only seek to limit the amount of benefits defendant must pay as the primary insurer to $300.
The Court of Appeals held that defendant's clause was a "modified version of an 'escape' clause" because it enables defendant to restrict or escape liability after payment of $300. Enforcement of defendant's "other insurance" provision which limits its liability to a de minimis amount would contravene the policies articulated in Federal Kemper by enabling the health insurer to circumvent primary liability, shifting it to the no-fault insurer through a reduction of otherwise available benefits. The Court of Appeals declined to enforce this provision, and concluded that defendant health insurer was primarily liable for payment of the insured's medical bills. The court further defined the term "primary" as used by the Supreme Court in Federal Kemper as meaning "principal" or "first in importance," and did not denote "first in time" or refer to "temporal priority."
The court held that the public policy purpose of §3109a was to mandate that no-fault carriers offer coordination of benefits at reduced premiums when an insured has other health and accident coverage. This purpose furthered by denying enforcement of defendant's modified escape clause.
