Michigan Court of Appeals; Docket No. 64554; Published
Judges T.M. Burns, Walsh, and Simon; 2-1; Opinion by Judge Walsh
Official Michigan Reporter Citation: 131 Mich App 121; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
CASE SUMMARY:
In this 2-1 Opinion, by Judge Walsh, the Court of Appeals reversed the circuit court decision in item number 513 regarding the constitutionality of the Michigan Essential Insurance Act (EIA), MCLA 500.2101 et. seq. Specifically, the majority held that the provisions of the EIA which permit automobile no-fault insurers to cancel insurance policies if the insurer determines that the insured has been at fault in two or more motor vehicle accidents in the three years preceding application for renewal of a policy are constitutional. The circuit court had ruled that a revocation or refusal to renew a policy of insurance based upon the insured's involvement in automobile accidents without a prior judicial determination of fault deprived the insured of his state and federally guaranteed rights to due process of law. The majority based its opinion on the U.S. Supreme Court decision in Mathews v Eldridge, 424 US 319 (1976). Based on Mathews, the majority ruled that due process does not require a prior judicial determination of fault before the assessment of insurance eligibility points for accidents in which the insured is found to be substantially at fault by the insurer. Under the provisions of the EIA, notice of non-renewal must be provided no later than 30 days before the insurance is to expire. The notice must declare the reason for the termination and advise the insured of his rights under the Act. The insured is given a right to a formal conference with the insurer and the insurer must establish reasonable internal procedures to provide the insurer with information pertaining to the denial of insurance and the method of resolving the dispute. If the informal conference procedure is not completed within 30 days of notice of nonrenewal or if the insured is dissatisfied with the insurer's decision after the conference, the insured may appeal the decision to the Insurance Commissioner. The EIA also contains provisions regarding the Insurance Commissioner's review. Pursuant to these dictates, the appeal from the insurer's decision must be brought within 120 days of the decision. The insured person may be represented by another person through the appeal. The Commissioner is directed to review the appeal based on written materials or if requested, based upon a meeting with the parties. Under the procedures, the parties are given a chance to supply the agency with all relevant information. If the insured disagrees with the Commissioner's decision, he can seek review by the Commissioner as a contested matter under the Administrative Procedures Act The majority noted that while a judicial determination concerning "substantially at fault" prior to termination of coverage would reduce the risk of erroneous deprivation, "It would also seriously undercut the public interest involved, which is the administration of a low cost, efficient automobile insurance system."
Judge T.M. Burns vigorously dissented. He noted that the plaintiffs received no prior notice from the defendant that their coverage was in jeopardy or that the defendants were embarking on an ex-parte determination of fault with respect to prior accidents. This lack of notice greatly prejudices the insureds, particularly with respect to the assessment of fault which can come several years after a particular accident In Judge Burns' opinion, "The Act is clearly unconstitutional and I would affirm the trial court."
