DISTINGUISHED BRIEF The Distinguished Brief Award is given in recognition of the most scholarly briefs filed before the Michigan Supreme Court, as determined by a panel of eminent jurists. Three briefs are chosen each year and printed in the Thomas M. Cooley Law Review. To preserve the author s style, the brief has been reprinted in its entirety, exactly as submitted to the Michigan Supreme Court. INTRODUCTION GEORGE T. SINAS, LIISA R. SPEAKER and STEVEN A. HICKS UNITED STATES FIDELITY INSURANCE & GUARANTY COMPANY, a foreign corporation, v. Plaintiff/Appellee, MICHIGAN CATASTROPHIC CLAIMS ASSOCIATION, a non-profit Catastrophic Claims Association Defendant/Appellant, The Coalition Protecting Auto No-Fault ( CPAN ) submitted its amicus brief in support of Plaintiff/Appellee, United States Fidelity Insurance & Guaranty Company ( USF&G ). CPAN s Amicus Brief highlights the importance of this case to the continued viability of the Michigan No-Fault system. CPAN s Amicus Brief undertook a statutory construction of MCL 500.3104, the provision which provides for the Michigan Catastrophic Claims Association ( MCCA ) to reimburse its member insurers when those insurers pay their insureds personal protection insurance benefits ( PIP benefits ) beyond the statutory threshold for catastrophic injuries. According to the statutory language, the MCCA is required to reimburse the insurer for 100% of the amounts it pays out to its insureds. Nothing in the statutory scheme permits the MCCA the ability to deny reimbursement or to question the reasonableness of the insurer s claims. The MCCA s refusal to reimburse member insurers claims also interferes with the insurers ability to enter into settlement agreements with catastrophically injured insureds and violates the contracts clause of the Constitution.
212 THOMAS M. COOLEY LAW REVIEW [Vol. 27:1 BIOGRAPHICAL STATEMENT GEORGE T. SINAS Senior partner in the law firm of Sinas, Dramis, Brake, Boughton & McIntyre, P.C. in Lansing, commonly known as the Sinas Dramis Law Firm. His law practice is primarily focused on the representation of seriously injured people and their medical providers. Mr. Sinas received his bachelor s degree from the University of Michigan and his law degree from Wayne State University. He has written two text books and numerous articles on the subject of the Michigan Automobile No-Fault Insurance Act. He is also an Adjunct Professor at the Michigan State University College of Law and general counsel of the Coalition Protection Auto No-Fault (CPAN), a broad based coalition of medical providers and consumer groups working together to preserve and protect the Michigan auto no-fault system. Mr. Sinas has been listed in every edition of the book, The Best Lawyers in America from 1989 to the present in the field of personal injury law. In 2003 he was recognized by Michigan Lawyers Weekly as one of Michigan s 10 Lawyers of the Year. Also, in 2003, he received the Leo A. Farhat Outstanding Attorney Award from the Ingham County Bar Association. In 2005, he received the Professional Service Award from the Brain Injury Association of Michigan for his advocacy on behalf of persons suffering serious brain injury. He is Past President of the Michigan Association for Justice (formerly the Michigan Trial Lawyers Association) and past Chairperson of the Negligence Law Section, State Bar of Michigan. LIISA R. SPEAKER Ms. Speaker specializes in appeals. She founded the Speaker Law Firm, PLLC in 2007, and is the only appellate boutique law firm in mid-michigan. She earned her J.D. from the University of Texas School of Law and is licensed to practice law in Michigan and Texas. Ms. Speaker taught for three years as an adjunct faculty of Moot Court, a class in appellate written and oral advocacy, at Thomas M. Cooley Law School. Ms. Speaker serves as an Officer for the State Bar of Michigan s Appellate Practice Section and also serves on the council for the State Bar of Michigan s Family Law Section. Ms. Speaker has appeared as appellate counsel to the Michigan Association of Justice (MAJ) and Coalition Protecting Auto No-Fault (CPAN) on numerous occasions. STEVEN A. HICKS Mr. Hicks is an appellate attorney with the Speaker Law Firm, PLLC. He specializes in no-fault, personal injury, wrongful death, employment discrimination, and insurance appeals. Prior to joining the Speaker Law Firm as of counsel, Mr. Hicks was an attorney at Sinas, Dramis, Brake, Boughton & McIntyre, P.C. in Lansing, Michigan. Mr. Hicks is licensed to practice in Michigan and Illinois. He received his law
2010] DISTINGUISHED BRIEF 213 degree from the University of Michigan Law School. Mr. Hicks has authored numerous amicus curiae briefs for the Michigan Association for Justice (MAJ) and the Coalition Protecting Auto No-Fault (CPAN) in appeals affecting the rights of injured persons, in particular, the right of persons injured in motor vehicle accidents to recover no-fault insurance benefits.
214 THOMAS M. COOLEY LAW REVIEW [Vol. 27:1 STATE OF MICHIGAN IN THE SUPREME COURT Appeal from the Court of Appeals (Owens, P.J., and White and Hoekstra, JJ) United States Fidelity Insurance & Guaranty Company, a foreign corporation, Supreme Court No. 133466 and 133468 v Plaintiff-Appellee Court of Appeals No. 260604 Oakland CC No. 03-051485-CK Michigan Catastrophic Claims Association, a non-profit Catastrophic Claims Association, Defendant-Appellant AMICUS CURIAE BRIEF OF THE COALITION PROTECTING AUTO NO-FAULT ( CPAN ) IN SUPPORT OF PLAINTIFF-APPELLEE Liisa R. Speaker (P65728) SPEAKER LAW FIRM, PLLC 230 N. Sycamore St., Suite D Lansing, MI 48933 (517) 482-8933 George T. Sinas (P25643) Steve A. Hicks (P49966) SINAS DRAMIS BRAKE BOUGHTON & MCINTYRE PC 3380 Pinetree Rd Lansing, MI 48911 (517) 394-7500 Attorneys for Amicus Curiae Coalition Protecting Auto No-Fault
2010] DISTINGUISHED BRIEF 215 TABLE OF CONTENTS INDEX OF AUTHORITIES... iv STATEMENT OF INTERESTS OF AMICUS CURIAE......................... 1 STATEMENT OF BASIS OF JURISDICTION................................ 3 STATEMENT OF RELIEF SOUGHT... 3 STATEMENT OF QUESTIONS PRESENTED FOR REVIEW................... 4 STANDARD OF REVIEW... 4 STATEMENT OF FACTS... 5 ARGUMENT... 8 I. Introduction............................................... 8 II The MCCA cannot refuse to reimburse a servicing insurer who made payment on a claim for no-fault PIP benefits...................... 9 A. The only purpose of the MCCA is to reimburse its member insurers for the insurers actual losses above the statutory threshold.... 9 B. The MCCA can only exercise the powers specifically enumerated in the No-Fault Act, and none of those enumerated powers permit the MCCA to deny reimbursement.......................... 13 C. The MCCA cannot interpret the provisions of Section 3107(a)(1) so as use its rule-making powers to convert the No-Fault Act into a managed care system... 18 1. The MCCA cannot interpret the provisions of Section 3107(a)(1) so as to limit the obligation of an insurer to pay a claim or limit the obligation of the MCCA to reimburse a claim... 19 2. The No-Fault Act is a fee for services system that cannot be converted into a managed care system without specific legislative approval... 20 D. Permitting the MCCA to deny reimbursement to insurers who pay ii
216 THOMAS M. COOLEY LAW REVIEW [Vol. 27:1 claims will proliferate and complicate litigation, thereby frustrating the purpose of the No-Fault Act... 23 III. The MCCA cannot alter consent judgments and settlement agreements 25 CONCLUSION... 27 RELIEF REQUESTED... 28 PROOF OF SERVICE... 29 iii
2010] DISTINGUISHED BRIEF 217 Cases: INDEX OF AUTHORITIES Fresard v Michigan Millers Mut Ins Co, 414 Mich 686, 694; 327 NW2d 286 (1982).. 26 Gobler v Auto-Owners Ins Co, 428 Mich 51; 404 NW2d 199 (1987)............. 24 Grosse Pointe Park v Michigan Muni Liability & Prop Pool, 473 Mich 188; 702 NW2d 106 (2005)........................................... 26 In re Certified Question: Preferred Risk, 433 Mich 710; 449 NW2d 660 (1989)... 9, 11 JC Penny Casualty Ins Co v Michigan Catastrophic Claims Ass n, 177 Mich App 538; 442 NW2d 712 (1989)... 9 Mercy Mt Clemens Corp v Auto Club Ins Ass n, 210 Mich App 46; 555 NW2d 871 (1996), lv denied 456 Mich 876 (1997)... 22, 23 Munson Medical Ctr v Auto Club Ins Ass n, 218 Mich App 375; 554 NW2d 49, 54 (1996), lv denied 453 Mich 959 (1996);............. 22, 23 Miller v Allstate Ins Co, 481 Mich 601; 751 NW2d 463 (2008).................. 13 Miller v State Farm Mut Auto Ins Co, 410 Mich 538; 302 NW2d 537 (1981)....... 24 Paige v City of Sterling Heights, 476 Mich 495; 720 NW2d 219 (2006)............ 4 Reed v Yackell, 473 Mich 520; 703 NW2d 1 (2005)... 4 Shavers v Attorney General, 402 Mich 554; 267 NW2d 72 (1978)............... 24 Sweebe v Sweebe, 474 Mich 151, 156; 712 NW2d 708 (2006)................. 26 Terrien v Zwit, 467 Mich 56; 648 NW2d 602 (2002)... 26 Travelers Ins v U-Haul of Michigan, Inc, 235 Mich App 273; 597 NW2d 235 (1999)........................................... 24 United States Fidelity Insurance & Guaranty Co v Michigan Catastrophic Claims Ass n, 274 Mich App 184; 731 NW2d 481 (2007)....................... 3, 5, 6, 7 Wilkie v Auto-Owners Ins Co, 469 Mich 41, 51-52; 664 NW2d 776, (2003)..... 26, 27 Statutes: iv
218 THOMAS M. COOLEY LAW REVIEW [Vol. 27:1 MCL 500.100....................................................... 11 MCL 500.106....................................................... 11 MCL 500.3101....................................................... 1 MCL 500.3104................................................... passim MCL 500.3104(1).................................................. 9, 12 MCL 500.3104(2)......................................... 9, 10, 11, 12, 17 MCL 500.3104(7)................................ 8, 10, 12, 14, 15, 16, 17, 18 MCL 500.3104(8)........................................ 12, 13, 14, 17, 18 MCL 500.3104(10)................................................... 18 MCL 500.3104(12)................................................... 18 MCL 500.3104(21)................................................... 12 MCL 500.3104(25)................................................... 10 MCL 500.3105................................................... 20, 25 MCL 500.3107................................. 10, 13, 18, 19, 20, 21, 22, 23 MCL 500.3109...................................................... 20 MCL 500.3148...................................................... 25 MCL 500.3157...................................................... 22 MCL 500.5000...................................................... 12 MCL 550.1... 12 MCL 550.2009...................................................... 12 Other Sources: v
2010] DISTINGUISHED BRIEF 219 Black's Law Dictionary (6th ed).......................................... 11 15 Corbin, Contracts (Interim ed), ch 79, 1376, p 17..................... 26, 27 Executive Order 2008-2... 11 MCCA Plan of Operation, Art X, Sec 10.07... 16 United States Const, art I, 10, cl 1... 26 vi
220 THOMAS M. COOLEY LAW REVIEW [Vol. 27:1 STATEMENT OF INTEREST OF AMICUS CURIAE The Coalition Protecting Auto No-Fault ( CPAN ) is an organization aimed at sustaining vital benefits for injured victims under the Michigan Automobile No-Fault Insurance Act (the No-Fault Act ), MCL 500.3101 et seq. Specifically, CPAN is geared towards maintaining the protection of the current no-fault system which affords payment of unlimited lifetime medical and rehabilitative expenses for all persons who suffer injuries in motor vehicle accidents. CPAN consists of sixteen (16) major medical groups and eleven (11) consumer organizations: CPAN: Coalition Protecting No-Fault Medical Provider Groups Michigan Academy of Physicians Assistants Michigan Assisted Living Association Michigan Association of Chiropractors Michigan Association of Rehabilitation Organizations Michigan Brain Injury Providers Council Michigan College of Emergency Physicians Michigan Dental Association Michigan Health & Hospital Association Michigan Home Health Association Michigan Nurses Association Consumer Organizations Brain Injury Association of Michigan Disability Advocates of Kent County Michigan Association for Justice Michigan Citizens Action Michigan Consumer Federation Michigan Paralyzed Veterans of America Michigan Partners for Patient Advocacy Michigan Protection and Advocacy Services Michigan State AFL-CIO Michigan Tribal Advocates 1
2010] DISTINGUISHED BRIEF 221 Medical Provider Groups Michigan Orthopedic Society Consumer Organizations UAW Michigan CAP Michigan Orthotics and Prosthetics Association Michigan Osteopathic Association Michigan Rehabilitation Association Michigan State Medical Society Disability Network Michigan This case touches the core of CPAN s interests because the issues presented affect whether insurance companies will settle claims or enter consent judgments with catastrophically injured persons. If this Court adopts the Michigan Catastrophic Claims Association s ( MCCA ) interpretation of MCL 500.3104, which would allow the MCCA to refuse to reimburse the insurer s actual losses when the MCCA unilaterally deems that the expenses are not reasonable, then insurers will not be willing to settle claims or enter consent judgments with the most seriously injured persons for whom the protections of the No-Fault Act were enacted. 2
222 THOMAS M. COOLEY LAW REVIEW [Vol. 27:1 STATEMENT OF BASIS OF JURISDICTION Appellant Michigan Catastrophic Claims Association ( MCCA ) timely filed its application for leave to appeal from the February 6, 2007 judgment of the Court of Appeals. In an order dated May 16, 2008, this Court (1) granted the MCCA s application for leave to appeal, (2) directed the parties to include among their briefing two issues, and (3) invited certain groups to file amicus curiae briefs, and stated that [o]ther persons or groups interested in the determination of the issues presented in this case may move the Court for permission to file briefs amicus curiae. As described above in its Statement of Interests of Amicus Curiae, CPAN is interested in the determination of the issues presented by this appeal. CPAN accompanies this amicus brief with its motion for leave to file an amicus curiae brief. STATEMENT OF RELIEF SOUGHT CPAN submits this amicus curiae brief to request this Court to affirm the decision of the Court of Appeals, United States Fidelity Insurance & Guaranty Co v Michigan Catastrophic Claims Ass n, 274 Mich App 184; 731 NW2d 481 (2007). 3
2010] DISTINGUISHED BRIEF 223 STATEMENT OF QUESTIONS PRESENTED FOR REVIEW 1. Does Section 3104 of the No-Fault Act mandate that the MCCA reimburse 100% of the member insurers ultimate losses for payments of no-fault PIP benefits, regardless of whether the actual loss amounts arise from a consent judgment, settlement agreement, or jury verdict? CPAN answers: Yes. 2. Is a catastrophically injured person who enters into a consent judgment or settlement agreement for PIP benefits protected by the No-Fault Act from later having the MCCA or the insurer seek to reduce or redetermine such agreements? CPAN: Yes. STANDARD OF REVIEW Resolution of the issues in this case involve the interpretation of provisions of the No-Fault Act. Statutory interpretation is a question of law that this Court reviews de novo. Reed v Yackell, 473 Mich 520, 528; 703 NW2d 1 (2005); Paige v City of Sterling Heights, 476 Mich 495, 504; 720 NW2d 219 (2006). 4
224 THOMAS M. COOLEY LAW REVIEW [Vol. 27:1 STATEMENT OF FACTS This consolidated appeal arises from two insurers attempts to obtain reimbursement from the MCCA for personal protection insurance benefits (commonly known as PIP benefits) paid on behalf of catastrophically injured auto accident victims in excess of the statutory threshold of $250,000. MCL 500.3104(2). The facts and proceedings most pertinent to the legal issues presented in this amicus curiae brief are summarized as follows: Daniel Migdal and Robert Allen were catastrophically injured in motor vehicle accidents, respectively in 1981 and 2001, both requiring long-term and twenty-four hour per day care. USF&G, supra at 187, 190. In 1990, Migdal entered into a negotiated consent judgment with his insurer, USF&G, which set forth the rate for attendant care services plus fixed-rate annual increases based on predicted inflation. Id at 187. In 2001, Allen entered into a settlement agreement with his insurer, The Hartford, which also set the rate for attendant care services, and allowed for increases after 2006. Id at 190. In both cases, the insurers paid out benefits under the respective consent judgment and settlement agreement that exceeded $250,000, the statutory threshold for obtaining reimbursement from the MCCA. Id at 188, 191. In both cases, the MCCA refused to reimburse the insurer, claiming that the amounts spent by the insurers under their consent judgment and settlement agreement were not reasonable because they were paying more per hour for attendant care services than what the MCCA is now claiming is the current standard hourly rate. Id at 188, 190. In Migdal s case, the MCCA reimbursed pursuant to USF&G s consent judgment for 13 years before stopping payment in violation of that judgment. Id at 188. While in Allen s 5
2010] DISTINGUISHED BRIEF 225 case, the MCCA only reimbursed The Hartford under its settlement agreement for a portion of its actual losses above the $250,000 statutory threshold. Id at 191. In both cases, the insurer filed an action seeking a declaratory judgment that the MCCA was required to reimburse the insurer for 100% of its actual losses, without regard to the MCCA s assessment of the reasonableness of the payments. Id at 189, 191. In both cases, the amounts paid by the insurer were based on the consent judgment or settlement agreement. Id at 189, 191. In USF&G s case for reimbursement of actual losses paid for Migdal s attendant care services, the trial court granted USF&G's motion for summary disposition and denied the MCCA's motion. Id at 190. The trial court concluded that the statute required full 100% reimbursement of those amounts paid by the servicing insurer. Id at 190-191. The trial court entered a judgment awarding USF&G $ 1,725,072 in reimbursements for PIP benefits paid to Migdal through December 31, 2004. Id at 191. The MCCA appealed by right the trial court s decision. Id at 190. In The Hartford s case for reimbursement of actual losses paid for Allen s attendant care services, the trial court denied The Hartford s motion for summary disposition because there was a fact issue regarding the reasonableness of the PIP benefits paid by The Hartford. Id at 192. The Hartford appealed by leave granted the trial court s decision. Id at 192. The Court of Appeals consolidated these two appeals and issued its decision on February 6, 2007. Briefly stated, the Court of Appeals held that MCL 500.3104 does not permit the MCCA to question the reasonableness of benefits the insurer actually pays pursuant to its consent judgments or settlement agreements. Id at 204. As a result, the 6
226 THOMAS M. COOLEY LAW REVIEW [Vol. 27:1 MCCA is required, as stated by statute, to reimburse insurers for 100% of the actual amounts the insurers pay as PIP benefits under their insurance policies above the statutory threshold. Id at 204. The Court of Appeals held that the statutory requirement for MCCA to reimburse its member insurers does not diminish because the insurer s obligation arose from a settlement agreement or consent judgment. Id at 199. This Court granted the MCCA s application for leave to appeal on May 16, 2008. 7
2010] DISTINGUISHED BRIEF 227 I. Introduction. ARGUMENT This Honorable Court granted leave to appeal on May 16, 2008. In its order, this Court advised the parties to address numerous questions, including (1) Whether factors to consider in determining whether the MCCA is precluded from questioning the reasonableness of the reimbursement claims in these cases include the MCCA s failure to exercise to their full extent, before entry of the consent judgment in Docket No 133466 and the settlement agreement in Docket Number 133468, its powers under MCL 500.3104(7)(b) and (g)... (2) Whether, like the terms of declaratory judgments pertaining to PIP benefits payable in the future, the terms of consent judgments and settlement agreements pertaining to PIP benefits that embody terms that prove over time to call for reimbursement at a higher rate than the actual cost incurred are subject to... [reduction or redetermination]. (Order, 05/16/08). Amicus Curiae CPAN agrees with plaintiff USF&G that the MCCA cannot question the reasonableness of the actual losses incurred by the insurer arising from the insurer s consent judgments and settlement agreements. The MCCA is limited to the remedy provided in the statute that created and empowered it, that is, to take over the claims handling of a member insurer if it believes that the member insurer does not have adequate or appropriate claims handling practices and procedures. MCL 500.3104(7)(g). Amicus Curiae CPAN submits this brief for the purpose of bringing this Honorable Court s attention to additional grounds for affirming the Court of Appeals decision. 8
228 THOMAS M. COOLEY LAW REVIEW [Vol. 27:1 II. The MCCA cannot refuse to reimburse a servicing insurer who made payment on a claim for no-fault PIP benefits. A. The only purpose of the MCCA is to reimburse its member insurers for the insurers actual losses above the statutory threshold. The Legislature created the MCCA in 1978 because there was a concern that the No-Fault Act s provision granting unlimited lifetime benefits placed too great a burden on insurers, particularly small insurers, in the event of catastrophic injury claims. In re Certified Question: Preferred Risk, 433 Mich 710, 714; 449 NW2d 660 (1989). There was a concern that some insurers would risk insolvency if they were faced with long-term care for a catastrophic injury. Certified Question, supra at 340. To alleviate that risk, the Legislature amended the No-Fault Act by adding Section 3104, thus creating a catastrophic claims association. MCL 500.3104. According to Section 3104, the MCCA is an unincorporated, nonprofit association. MCL 500.3104(1). The statute mandates that each insurer who writes coverage in Michigan must become a member of the MCCA, paying premiums to the association based on the number of automobile and motorcycle policies the insurer writes in Michigan. MCL 500.3104(1), (7)(d); JC Penny Casualty Ins Co v Michigan Catastrophic Claims Ass n, 177 Mich App 538, 540; 442 NW2d 712 (1989). When an insured s injuries are catastrophic, the statute provides protection to insurers who provide PIP coverage by requiring the MCCA to reimburse the insurer for 100% of its actual losses above the statutory threshold. MCL 500.3104(2); JC Penney, supra at 540. The MCCA is not an insurance company or even a reinsurance company; it is a reimbursing entity. As required by statute, the MCCA reimburses its member insurers for 9
2010] DISTINGUISHED BRIEF 229 100% of their ultimate losses when the insurer s actual losses surpass a certain threshold. MCL 500.3104(2), (25)(c). The association shall provide and each member shall accept indemnification for 100% of the amount of ultimate loss sustained under personal protection insurance coverages in excess of the following amounts in each loss occurrence... MCL 500.3104(2). The ultimate loss sustained is the actual loss amounts that a member is obligated to pay and that are paid or payable by the member, and do not include claim expenses. An ultimate loss is incurred by the association on the date that the loss occurs. MCL 500.3104(25)(c). For a motor vehicle accident that occurs today, the threshold is $440,000, while the threshold before 2002 was $250,000. MCL 500.3104(2)(a), (h). In this case, both accidents occurred prior to 2002 and are subject to the $250,000 statutory threshold. The statute enumerates all the powers which the MCCA must perform for its member insurers. MCL 500.3104(7). The very first power requires the MCCA to [a]ssure 100% of all liability as provided in subsection (2). MCL 500.3104(7)(a). As noted above, Subsection (2) emphasizes that the MCCA shall provide indemnification for 100% of the amount of ultimate loss sustained. MCL 500.3104(2) (emphasis added). The MCCA s arguments want to elevate the association to the status of an insurer or a reinsurer who has the ability to question the reasonableness of payments under Section 3107. However, the function delegated to the MCCA by the Legislature is to indemnify or reimburse its member insurers, and the MCCA does not have the power to evaluate reasonableness of claims, which is within the sole discretion of the insurers. Cf MCL 500.3107(1)(a) with MCL 500.3104(2). 10
230 THOMAS M. COOLEY LAW REVIEW [Vol. 27:1 Although this Court commented in Certified Question that in practice, the [MCCA] acts as a kind of reinsurer for its member insurers, by statute the MCCA is neither an insurer nor an reinsurer but instead is an indemnifier or reimburser. Cf Certified Question, supra at 715 with MCL 500.3104(2), (7)(a). A reinsurer is an insurance company which insures insurers and reinsurance is a contract by which an insurer procures a third person to insure him against loss or liability by reasons of original insurance. Black s Law Dictionary, at 1287, 1288 (6th Ed 1990). In contrast, indemnify means to restore the victim of a loss, in whole or in part, by payment, repair, or replacement or to make reimbursement to one of a loss already incurred by him. Black s Law Dictionary, at 769 (6th Ed 1990). Unlike insurance companies, the MCCA is not regulated by the Office of Financial and Insurance Services ( OFIS ). 1 MCL 500.100 et seq. The Insurance Code defines an insurer as any individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyds organization, fraternal benefit society, and any other legal entity, engaged or attempting to engage in the business of making insurance or surety contracts. MCL 500.106 (emphasis added). The MCCA is not in the business of making insurance or surety contracts. Instead, it charges its members premiums based on the policies the members write and reimburses the member insurers in the event one of their claims exceeds the statutory threshold. There is no question that the MCCA is not an insurance company, and therefore, cannot be a reinsurer. Indeed, by the very terms of the No-Fault Act, the MCCA is not subject to any laws 1 OFIS became the Office of Financial and Insurance Regulation, effective April 6, 2008. Executive Order 2008-2. 11
2010] DISTINGUISHED BRIEF 231 of this state with respect to insurers... with two very narrow exceptions. MCL 500.3104(1). The MCCA is subject to OFIS commissioners reporting, loss reserve, and investment requirements. MCL 500.3104(1), (21). The MCCA is also subject to the statutory provisions for incorporation and stock issuance rules. MCL 500.3104(2); MCL 500.5000 et seq. Based on these two narrow exceptions, the MCCA is only subject to the provisions governing insurance companies that pertain to investments, corporate organization, and stock issuance. Notably, those provisions do not address claims handling procedures. While the insurance code contains 83 chapters, the MCCA is only subject to one chapter (chapter 50 regarding organization of domestic stock and mutual insurers) and one section (Section 3104). MCL 500.3104(2). In addition to being excluded from the regulations of the Insurance Code with minor exception, the MCCA is also not subject to the general insurance laws under MCL 550.1 through 550.2009. MCL 500.3104(2). The MCCA, thus, is an entity that reimburses insurers for a losses already incurred by the insurer, which is exactly what the Legislature intended by the plain language of Section 3104. If the Legislature had intended to make the MCCA a reinsurer, it would have stated so in Section 3104. Instead, the Legislature chose to refer to indemnification and not to reinsurance. See MCL 500.3104(2) (the MCCA shall provide and each member shall accept indemnification ); MCL 500.3104(7) (the MCCA s plan of operation shall provide for the prompt and efficient provision of indemnity to its member insurers). Indeed, the Legislature provided that the MCCA could seek reinsurance for the amounts it is obligated to reimburse the insurers above the statutory threshold. MCL 500.3104(8)(b). The statute provides that the MCCA has the power to reinsure all or any portion of its 12
232 THOMAS M. COOLEY LAW REVIEW [Vol. 27:1 potential liability with reinsurers licensed to transact insurance in this state. MCL 500.3104(8)(b). Purchasing reinsurance is one method that the MCCA can employ to protect itself from higher than expected requests for reimbursement, such as the claims that the MCCA has attempted to refuse in this case. Regardless of how this Court labels the MCCA (as an indemnifier or even a kind of reinsurer ), the servicing insurer is the gatekeeper who determines what is compensable under the Act, not the MCCA. The servicing insurer is the one that determines what PIP benefits are payable under MCL 500.3107, not the MCCA. Section 3107 defines payable benefits to include allowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person s care, recovery, or rehabilitation. MCL 500.3107(a). Section 3107 is the touchstone by which insurers determine what is payable and the servicing insurer makes those determinations, not the MCCA. B. The MCCA can only exercise the powers specifically enumerated in the No-Fault Act, and none of those enumerated powers permit the MCCA to deny reimbursement. In creating the MCCA, the Legislature required the MCCA to perform certain functions. These functions are the enumerated powers of the MCCA, and the MCCA does not have the statutory authority to act beyond these powers. The enumerated powers are listed in Subsections (7) and (8). Where the Legislature creates a list, and then only includes certain items on that list, the doctrine of Expressio Unius Est Exclusio Alterius (the expression of one thing is the exclusion of another) controls. Miller v Allstate Ins Co, 2008 Mich LEXIS 1385, *13; 481 Mich 601; 751 NW2d 463 (2008) (by statute, the Legislature 13