United States District Court, Eastern District of Michigan; Docket No. 83CV-6322-AA; Published
Written Opinion by Judge Charles W. Joiner
Official Federal Reporter Citation: 590 F Supp 615; Link to Opinion 
STATUTORY INDEXING:
Coordination with Other Health and Accident Medical Insurance [§3109a]
Coordination with Other Health and Accident Disability Insurance [§3109a]
TOPICAL INDEXING:
Group Disability Insurance (MCL 500.3600, et seq.)
CASE SUMMARY:
This written Opinion by Federal Judge Charles W. Joiner is a significant decision regarding the right of an injured accident victim to recover under his no-fault policy and also under a policy of health insurance issued by a foreign insurer.
Plaintiff was a Michigan resident insured under a Michigan no-fault policy who sustained serious injuries in an automobile accident which occurred in Michigan. Plaintiff was also insured under a group health insurance policy through his employment written by Plaintiff, New England Mutual. The policy was written in Minnesota and delivered to plaintiff in Michigan. The policy contained a "subrogation" clause which stated:
"If benefits are paid by the Insurance Company [defined elsewhere as New England Mutual Life Insurance Company] for expenses resulting from injury for which a third party is liable, the Insurance Company shall be entitled to reimbursement from the proceeds of any recovery from such third party, whether by judgment, settlement or otherwise, after the deduction of reasonable and necessary expenditures, including attorneys fees, incurred in effecting such recovery, to the extent of the total amount of benefits paid."
Plaintiff recovered medical expenses under his no-fault policy and also medical expenses under the New England health insurance policy. When New England discovered that plaintiff had recovered no-fault benefits, it filed suit against plaintiff seeking reimbursement. Judge Joiner denied New England's claim for reimbursement for the following reasons:
1. New England was not entitled to enforce the subrogation provision of the insurance policy because it failed to file a copy of the insurance policy with the Michigan Commissioner of Insurance and obtain the Commissioner's approval of the policy before it took affect. Such prior filing and approval is required by MCLA 500.3606. Judge Joiner held as a matter of law that when an insurer issues a group disability policy, beneficiaries of which live and are employed in Michigan, and sends a certificate of insurance to the beneficiaries/employees in the state, it has "issued or delivered" a policy of insurance in this state, and must therefore comply with the terms of MCLA 500.3606. Furthermore, the State of Michigan has a sufficient interest in the application of its law for the protection of its residents to require that the foreign insurance company bear any hardship involved in complying with the filing and approval requirements of Michigan law. Thus, the Court concluded, "when the insure has failed to fulfill its statutory obligation to obtain the approval of the Commissioner of Insurance for a policy that covers employees who live and work in this state, it will be denied the benefits of a subrogation provision contained in the policy."
2. Judge Joiner also held that New England's construction of the "subrogation" provision in its policy was tantamount to contending that the provision was in reality a "coordination of benefits provision between co-insurers." The Michigan Uniform Disability Insurance Policy Provisions Law [UDIPPL-MCLA 500.3400 to MCLA 500.3475) requires that insurers who seek to coordinate payment of benefits with co-insurers so as to avoid double recovery by the insured must do so by adopting the coordination of benefits provisions set forth in MCLA 5003437 and MCLA 500.3440. These provisions are explicitly made applicable to policies of group disability by MCLA 500.3610. Michigan case law has clearly held that the failure of an insurer to conform its coordination of benefits provisions to the statutory language precludes the insurer from taking advantage of those provisions (Siller v Employers of Wausau, item number 634). Thus, the failure of New England to conform to the statutory language regarding coordination of benefits precludes it from enforcing its subrogation provision.
3. Finally, Judge Joiner held that the actual language of the subrogation provision demonstrated that if is designed only to cover those claims against the party who causes the injury, i.e., the tortfeasor. The language of the provision speaks in terms of a "third party" being liable. Judge Joiner held, "the clear implication of this language is that the policy term 'third party' is intended to be the tortfeasor who caused the injury." It is "hornbook law" that any ambiguities in a policy of insurance are to be construed strictly against the insurer. Thus, by its very terms, New England's language would only extend to tort recoveries and then, only to the extent that the tort recovery was duplicitas.
