Michigan Court of Appeals; Docket #315770; Unpublished
Judges Markey, Owens, and Fort Hood; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
Coordinated Coverages [§3109a]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous unpublished per curiam Opinion involving whether an insured was entitled to reimbursement from her no-fault insurer for certain medical expenses that were paid by her employee health plan, the Court of Appeals held the insurer was not obligated to indemnify the insured because she elected to receive only excess no-fault benefits under her coordinated benefits health plan.
In so ruling, the Court of Appeals held that Dunn v DAIIE, 254 Mich App 256 (2002), controlled the outcome of this case and the trial court erred by applying Sibley v DAIIE, 431 Mich 164 (1988), to deny the insurer’s motion for summary disposition. According to the court, Dunn ruled that the Sibley reasoning was inapplicable in the context of coordinated coverages, such as in this case, because an insurer “cannot be liable for a risk it did not assume.”
Plaintiff insurer provided defendant insured no-fault coverage. Defendant insured also had health insurance coverage through Oakwood Healthcare, Inc. Plaintiff insurer’s policy had a coordinated benefits clause, which said the policy only provided excess coverage. Oakwood’s policy allowed it to seek reimbursement for medical expenses paid if defendant recovered noneconomic damages. Defendant insured was injured in a traffic accident and Oakwood paid $31,000 on defendant’s medical expenses, while plaintiff insurer paid the excess amount. Defendant insured sued the driver of the other vehicle for noneconomic damages and obtained a settlement. Oakwood then asserted a subrogation lien against defendant. Defendant insured asked plaintiff insurer to honor the lien, claiming it had to indemnify her against Oakwood’s claim. Plaintiff insurer filed a declaratory action, claiming it was not obligated to indemnify defendant pursuant to Dunn. But defendant insured argued that Dunn was wrongly decided and that the decision ignored precedent set forth in Sibley. The trial court denied plaintiff insurer’s motion, finding Sibley was applicable.
Reversing the trial court, the Court of Appeals said:
“We conclude that the trial court erred by applying Sibley to this case. Sibley addressed whether benefits recouped by the federal government were still considered ‘benefits provided’ under federal law for purposes of MCL 500.3109(1). The issue here addresses whether benefits recouped by a private health plan were still considered ‘benefits paid’ pursuant to the language of a coordination-of-benefits provision in a no-fault policy that is provided for under MCL 500.3109a. Because Dunn directly decided this issue, it applies to this case.”
The Court of Appeals held that Dunn was not modified or overruled, and remains the law in Michigan. The court said:
“The federal cases cited by defendant, … which determined that Dunn is not good law, are not binding on this Court. … Further, Dunn does not conflict with Sibley, as defendant argues. The Court in Dunn … [found] that the Sibley rationale is not applicable in the context of coordinated coverage because the insurer cannot be liable for a risk it did not assume. … Dunn noted that in Sibley, the insured did not arrange a lower premium in exchange for workers’ compensation benefits. … As in Dunn and the present case, however, when an insured elects coordinated coverage it pays a reduced premium in exchange, thereby pocketing savings. … The coordinated coverage only provides for excess medical coverage and is secondary to the insured’s medical insurance. … By requiring the insurer to reimburse the insured for medical expenses that the insured had to repay according to the health plan’s subrogation rights, it is as though the insured never elected coordination at all.”
If defendant’s argument was accepted, the Court of Appeals said the insurer would be paying benefits for which it had never charged or received a premium.
Accordingly, the Court of Appeals concluded:
“[T]he trial court erred by entering judgment for defendant because defendant chose to receive only excess benefits from plaintiff by electing coordinated coverage, and thus cannot hold plaintiff liable for a risk it did not assume.”
