Michigan Court of Appeals; Docket No. 67355; Published
Judges Allen, Maher, and Bell; Unanimous; Opinion by Judge Allen
Official Michigan Reporter Citation: 132 Mich App 800; Link to Opinion 
STATUTORY INDEXING:
Coordination with Other Health and Accident Medical Insurance [§3109a]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous Opinion written by Judge Allen, the Court of Appeals addressed an issue of first impression regarding who has the liability to pay medical expenses as between a health insurance carrier (Blue Cross/Blue Shield) and a no-fault insurer (Auto-Owners) where the auto policy contains a coordination of benefits clause. The specific issue in this case was whether or not the health insurance carrier was liable to pay for medical expenses incurred by the insured as a result of an auto accident which took place while the insured was employed and covered under the Blue Cross policy, but where some of the expenses were actually incurred after the insured's employment and the Blue Cross coverage terminated.
The insured in this case was a school teacher who was injured in an accident in May of 1977. At the time, she was insured through a Blue Cross policy purchased by her employer school district The Blue Cross policy provided that all members of the group were entitled to health coverage only so long as: (1) they remained eligible members of the group, and (2) the school district continued to pay premiums on their behalf. As a result of the very serious injuries sustained by the plaintiff in this accident, she did not return to her employment as a school teacher in September of 1977. She was removed from the payroll in October and the employer stopped paying further Blue Cross/Blue Shield premiums. Upon termination of the insured's employment and cessation of the premiums, Blue Cross ceased making further payments. The insured's auto insurance carrier (Auto-Owners) began paying medical and hospital expenses under its coordinated no-fault policy. Auto-Owners then filed this complaint for declaratory judgment alleging that Blue Cross/Blue Shield should continue to pay the insured's medical expenses and that Auto-Owners was not liable for same under its coordinated benefits provision.
The Court of Appeals found in favor of Blue Cross/Blue Shield and held that it was not responsible to pay for any medical expenses which were incurred by the insured after her employment and her health coverage terminated. The Court relied on several out of state cases in arriving at its holding, most of which focuses on the type of health insurance policy involved. The Court held that it was necessary to examine the language of the policy so as to determine "the particular risk involved." The Court stated its analysis as follows:
"Does the policy insure against expenditures arising out of an accident or does it insure against expenditures for services rendered while the employee is a member of the group? Stated another way, is it a health-accident policy or is it a medical expense policy?
... where the court finds the contract to be a hospitalization and medical expense policy rather than an accident policy and where the language is unambiguous, the insurer is not held liable for expenses incurred after the subscriber is no longer on the payroll."
The Court held that the language of the policy in question clearly demonstrates that the risk insured against was "not an accident or a described illness but instead was the expense for services incurred as a result of such accident or illness during the period of the insured's membership in the group."
The Court was also very careful to point out the context within which its holding was expressed. Specifically, the Court noted that this was not a lawsuit where the insured person was the plaintiff. On the contrary, this was simply a dispute between two insurers. The insured party would continue to have her medical expenses paid no matter who wins the suit.
It should also be noted that in reaching its conclusion, the Court stated that the reasons why the insured failed to convert the group Blue Cross policy to an individual policy was "not relevant" to the issues presented.
[Author's Comment: The Court's characterization of the Blue Cross health policy as a "medical expense policy" as opposed to an "accident and health policy" raises interesting questions under the coordination of benefits section of the No-Fault Act (§3109a). Under that section, a no-fault insurer is permitted to writs a coordinated benefits clause only with respect to "other health and accident coverage on the insured." It is obvious that the Court of Appeals in this case did not feel the Blue Cross policy was an "accident and health" policy. Therefore, an argument could be made that such a policy was incapable of coordination with a no-fault policy by its very nature.]
