Title: HARTFORD INS CO OF THE MIDWEST V MICH CATASTROPHIC CLAIMS ASSN

State: michigan

Issuer: Michigan Supreme Court

Document:

1 
 
JULY 21, 2009 
UNITED STATES FIDELITY INSURANCE & 
GUARANTY COMPANY, 
 
 
Plaintiff-Appellee, 
 
v 
No. 133466 
 
MICHIGAN CATASTROPHIC CLAIMS 
ASSOCIATION, 
 
 
Defendant-Appellant, 
 
and 
 
MICHAEL MIGDAL, Individually and as  
Conservator for the Estate of DANIEL MIGDAL, 
a Protected Person, 
 
Defendant. 
 
 
 
HARTFORD INSURANCE COMPANY OF THE 
MIDWEST, 
 
 
Plaintiff-Appellee, 
 
v 
No. 133468 
 
MICHIGAN CATASTROPHIC CLAIMS 
ASSOCIATION, 
 
 
Defendant-Appellant. 
 
 
 
BEFORE THE ENTIRE BENCH 
 
 
Michigan Supreme Court
Lansing, Michigan
Opinion 
 
Chief Justice: 
Marilyn Kelly 
 
 
Justices: 
Michael F. Cavanagh 
Elizabeth A. Weaver 
Maura D. Corrigan 
Robert P. Young, Jr. 
Stephen J. Markman 
Diane M. Hathaway 
 
 
2 
 
WEAVER, J. 
 
This Court originally granted leave to appeal to consider whether MCL 
500.3104(2) obligates the Michigan Catastrophic Claims Association (MCCA) to 
reimburse a member insurer for personal protection insurance (PIP) benefits paid 
to a claimant without regard to the reasonableness of the member insurer’s 
payments of PIP benefits.  This Court issued an opinion reversing the Court of 
Appeals and remanding for further proceedings, while holding that “when a 
member insurer’s policy only provides coverage for ‘reasonable charges,’ the 
MCCA has authority to refuse to indemnify unreasonable charges.”1  
Subsequently, plaintiffs United States Fidelity Insurance & Guaranty Company 
and Hartford Insurance Company of the Midwest filed motions for rehearing.  We 
granted the plaintiffs’ motions for rehearing, and these cases were resubmitted for 
decision without further briefing or oral argument.2   
 
We now hold that the indemnification obligation set forth in MCL 
500.3104(2) does not incorporate the reasonableness standard that MCL 500.3107 
requires between claimants and member insurers.  Furthermore, the powers 
granted to the MCCA in § 3104(7) are limited to adjusting the “practices and 
procedures” of the member insurers and do not encompass adjustment to the 
                                              
1 United States Fidelity Ins & Guaranty Co v Michigan Catastrophic 
Claims Ass’n, 482 Mich 414, 417; 759 NW2d 154 (2008). 
2 United States Fidelity Ins & Guaranty Co v Mich Catastrophic Claims 
Ass’n, 483 Mich 918 (2009).   
 
3 
 
payment amount agreed to between claimants and member insurers.  Moreover, 
we hold that the power granted to the MCCA under MCL 500.3104(8)(g) is 
limited to furthering the purposes of the MCCA and that determining 
reasonableness is not one of its purposes.  Finally, although the MCCA has no 
right to directly challenge the reasonableness of a claim, the no-fault statute does 
provide the MCCA with safeguards against negligent actions of member insurers.  
Accordingly, we affirm the judgment of the Court of Appeals.   
I.  Facts and Procedural History 
United States Fidelity Insurance & Guaranty Co v MCCA 
In the first case in these consolidated appeals, Daniel Migdal was injured in 
a 1981 car accident in which he sustained catastrophic injuries.  His injuries 
included a traumatic brain injury with cerebral spastic quadriplegia, severe oral 
motor apraxia, and dysphasia.  Because of the extent of the injuries, Daniel was 
prescribed, and received, 24-hour-a-day nursing care.  In 1988, Michael Migdal 
(Mr. Migdal), Daniel’s father and the conservator of Daniel’s estate, sued the no-
fault insurance provider, United States Fidelity Insurance & Guaranty Company 
(USF&G), to recover expenses paid for Daniel’s care.  In 1990, the parties entered 
into a consent judgment.  Pursuant to the judgment, USF&G paid Mr. Migdal 
$35,000 in exchange for a release from all contractual liability for nursing care 
provided before May 10, 1989.  Additionally, USF&G agreed to pay $17.50 an 
4 
 
hour for Daniel’s home nursing care for the following year.3  The payments would 
be made regardless of whether Daniel’s parents provided the nursing care or a 
third party was brought in to provide the care.  The hourly rate, fixed for the first 
year after the judgment, was subject to an annual increase of 8.5 percent.  The 
increased rate would be compounded based on the previous year’s rate.   
Pursuant to the consent judgment,  USF&G paid Mr. Migdal the consented-
to hourly wage.4  Once the amount paid to Mr. Migdal had reached the statutory 
threshold amount of $250,000,5 the MCCA began to reimburse USF&G for 
payments made to Mr. Migdal that exceeded the threshold.  However, after the 
hourly rate had increased significantly with the passage of time, the MCCA 
eventually refused to reimburse USF&G for amounts that USF&G paid Mr. 
Migdal under the consent judgment, on the ground that the amounts were 
                                              
3 Mr. Migdal created a company to manage Daniel’s care.  This company 
acted as an intermediary that used the benefit payments from USF&G to pay the 
hired nurses that cared for Daniel and to pay Mr. Migdal for his efforts in Daniel’s 
care.  The judgment contained a provision stating that if Daniel’s condition 
substantially changed, the court retained jurisdiction and could determine whether 
a reduction or increase in the payments was “warranted.”    
4 Mr. Migdal testified that his duties included reading papers concerning 
business management and medical advances, checking and providing maintenance 
of Daniel’s equipment, keeping the books, paying the nurses, and shopping for 
necessary items for Daniel’s care.   
5 MCL 500.3104(2) reads, in pertinent part:  
[T]he 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 . . . .  
At the time of both accidents involved in these consolidated appeals, the threshold 
amount was $250,000. 
5 
 
unreasonable.  In 2003, USF&G filed a complaint in the Oakland Circuit Court for 
a declaratory judgment that the MCCA must reimburse USF&G for the total 
amount that USF&G paid to Mr. Migdal under the consent judgment, regardless of 
the reasonableness of the amount.  At the time, USF&G was paying $54.84 an 
hour to Mr. Migdal for Daniel’s nursing care.6  The MCCA sought to only be 
required to reimburse USF&G at a rate of $22.05 an hour, arguing that the agreed-
upon rate of $54.84 an hour was unreasonable and, therefore, the MCCA should 
not have to reimburse USF&G for the total amount.  Meanwhile, USF&G sought 
to have the consent judgment with Mr. Migdal revised, arguing that circumstances 
had changed when Mr. Migdal hired a third party to care for Daniel instead of 
providing the nursing care himself.  Mr. Migdal filed a motion for summary 
disposition for failure to state a claim.  The court granted Mr. Migdal’s motion.7   
Likewise, the MCCA moved for summary disposition.  It contended that 
there was no question of material fact that the payments made by USF&G to Mr. 
Migdal were unreasonable.  Moreover, the MCCA argued that the no-fault act 
only required reimbursement of payments that are reasonable.  In a countermotion 
for summary disposition, USF&G argued that the no-fault act required the MCCA 
to reimburse it for the full amount paid to Mr. Migdal, despite any 
                                              
6 Mr. Migdal paid $32 an hour of this amount to the nurses (including 
benefits) and kept the rest as compensation for his work. 
7 USF&G did not appeal that decision.  We therefore express no opinion on 
whether the consent judgment would have been subject to judicial modification on 
the ground that the payment amount it called for had become unreasonable with 
the passage of time. 
6 
 
unreasonableness regarding the amount paid.  Alternatively, USF&G argued that 
there was a question of material fact concerning the “unreasonableness” of the 
consent judgment.   
The trial court granted USF&G’s motion for summary disposition, ruling 
that the MCCA must reimburse USF&G for its “ultimate loss,”8 including the 
entire amount that USF&G had to pay Mr. Migdal regardless of whether the 
amount paid was reasonable.  The trial court denied the MCCA’s motion for 
summary disposition.  The trial court entered a judgment requiring the MCCA to 
reimburse USF&G in the amount of $1,725,072 under the no-fault act and holding 
the MCCA liable for future payments consistent with the consent judgment.  The 
parties agreed to stay the enforcement of the order while the MCCA appealed by 
right in the Court of Appeals.  
Hartford Ins Co v MCCA 
In the second case of these consolidated appeals, Robert Allen was injured 
in a 2001 car accident in which he sustained catastrophic injuries.  His injuries 
included right-sided pleuritic effusion, brain injuries, quadriparesis, bilateral 
frozen shoulder, and cardiopathy.  Because of the extent of the injuries, Allen was 
prescribed, and received, 24-hour-a-day care by a licensed nurse.  Hartford 
Insurance Company of the Midwest (Hartford), Allen’s no-fault insurer, initially 
paid $20 an hour for the nurse.  In 2003, Hartford agreed to pay an increased rate 
                                              
8 MCL 500.3104(2). 
7 
 
of $30 an hour for Allen’s care.  Soon thereafter, Hartford’s payments for Allen’s 
care exceeded the $250,000 statutory threshold.   
The MCCA refused to reimburse Hartford for any payments above $20 an 
hour for the services rendered.  Hartford filed a complaint for a declaratory 
judgment that would require the MCCA to pay Hartford $571,847.21 as 
reimbursement for payments exceeding the no-fault threshold.  Additionally, 
Hartford sought a declaration that the MCCA must reimburse Hartford for the total 
payments above the $250,000 threshold, regardless of the reasonableness of the 
payments.  After the initial filing, Hartford moved for summary disposition, 
arguing that the no-fault act required the MCCA to reimburse Hartford for the 
entire amount paid to Allen that exceeded the threshold, regardless of the 
reasonableness of that amount.  The MCCA argued that it only had to reimburse 
Hartford for reasonable payments and that there was insufficient discovery 
concerning the reasonableness of the amount of the payments.  The circuit court 
ruled that reasonableness was an element in determining how much the MCCA 
must reimburse Hartford and that there was insufficient discovery to determine if 
the payments were reasonable.  Hartford immediately appealed the trial court’s 
holding requiring the element of reasonableness to be considered. 
The Court of Appeals Decision 
The Court of Appeals consolidated the USF&G and Hartford cases and 
held that “MCL 500.3104 does not incorporate a ‘reasonableness’ requirement and 
requires the MCCA to reimburse insurers for the actual amount of PIP benefits 
8 
 
paid in excess of the statutory threshold.”9  (Emphasis in the original).  The 
MCCA sought leave to appeal in this Court, and this Court granted leave.10  This 
Court issued an opinion reversing the Court of Appeals and remanding for further 
proceedings, while holding that “when a member insurer’s policy only provides 
coverage for ‘reasonable charges,’ the MCCA has authority to refuse to indemnify 
unreasonable charges.”11  Subsequently, plaintiffs United States Fidelity Insurance 
& Guaranty Company and Hartford Insurance Company of the Midwest filed 
motions for rehearing.  We granted the plaintiffs’ motions for rehearing and this 
case was resubmitted for decision without further briefing or oral argument.  483 
Mich 913 (2009).12 
                                              
9 United States Fidelity Ins & Guaranty Co v Michigan Catastrophic 
Claims Ass’n, 274 Mich App 184, 192; 731 NW2d 481 (2007). 
10 481 Mich 862 (2008). 
11 United States Fidelity Ins & Guaranty Co v Michigan Catastrophic 
Claims Ass’n, 482 Mich 414, 417; 759 NW2d 154 (2008). 
12 Justices Corrigan and Young were simply shown as denying the motions 
for rehearing.  However, Justice Young, in his dissent joined by Justice Corrigan, 
now takes the opportunity well after the motions for rehearing have been decided 
to attack the remaining justices who did not vote to retain this Court’s earlier 
decision. 
The dissent erroneously asserts that the justices voting to grant rehearing 
erred because Peoples v Evening News Ass’n, 51 Mich 11, 21; 16 NW 185 (1883), 
held that this Court is precluded from granting rehearing when the composition of 
the Court has changed, absent any new arguments from the parties in the cases.  
However, contrary to the dissent’s assertions, this Court merely stated in Peoples 
that a change in the composition of this Court cannot be the basis for granting 
rehearing.   
Accordingly, if the composition of the Court changes, and the composition 
becomes such that a majority of the Court sees a reason to grant rehearing, the 
majority is not precluded under Peoples from granting rehearing.  If, for instance, 
four justices on the newly composed court concluded that the challenged opinion 
9 
 
 
II.  Standard of Review 
 
Statutory interpretation is a question of law, which this Court reviews de 
novo.  In re Investigation of March 1999 Riots in East Lansing (People v Pastor), 
463 Mich 378, 383; 617 NW2d 310 (2000).  This Court reviews de novo a trial 
court’s decision regarding a motion for summary disposition.  Herald Co v Bay 
City, 463 Mich 111, 117; 614 NW2d 873 (2000). 
III.  Analysis 
 
The issue before this Court involves how much of a member insurer’s 
coverages the MCCA must indemnify in the event of a catastrophic injury.  
Specifically, is the MCCA liable for reimbursement of PIP payments based on 
potentially unreasonable claims?   
The outcome of these cases depends on this Court’s interpretation of the 
language in MCL 500.3104.  An overarching rule of statutory construction is 
                                                                                                                                      
 
was erroneous, those justices can vote to grant rehearing.  The same holds true 
whether the deciding vote is a new justice who joined the court after the 
challenged opinion was released or whether the deciding vote comes from a justice 
who signed the challenged opinion and changed his or her mind after further 
consideration.  
This practice is consistent with MCR 2.119(F)(3), which creates a 
“palpable error” standard for rehearing cases.  It is up to the moving party to show 
palpable error that would lead to a different disposition in the case.  If a majority 
of the Court is convinced by the moving party, the Court has the discretion to 
grant rehearing.  Furthermore, while MCR 2.119(F)(3) states that a motion for 
rehearing will generally not be granted if the motion only presents the same 
arguments decided in the original disposition of the case, MCR 2.119(F)(3) 
explicitly refrains from “restricting the discretion of the court” to grant rehearing. 
Accordingly, we are not persuaded by the dissent’s attempts to discredit 
this Court’s order that granted rehearing in this case. 
10 
 
“that this Court must enforce clear and unambiguous statutory provisions as 
written.”  In re Certified Question (Preferred Risk Mut Ins Co v Michigan 
Catastrophic Claims Ass’n), 433 Mich 710, 721; 449 NW2d 660 (1989) 
(quotation marks omitted).  “If the language of [a] statute is unambiguous, the 
Legislature must have intended the meaning clearly expressed, and the statute 
must be enforced as written.”  Sun Valley Foods Co v Ward, 460 Mich 230, 236; 
596 NW2d 119 (1999).  However, “what is ‘plain and unambiguous’ often 
depends on one’s frame of reference.”  Shiffer v Gibraltar School Dist Bd of Ed, 
393 Mich 190, 194; 224 NW2d 255 (1974).  In order to ascertain this frame of 
reference, the contested provisions must be read in relation to the statute as a 
whole and work in mutual agreement.  In re Certified Question, 433 Mich at 722.  
See also State Treasurer v Wilson, 423 Mich 138, 144; 377 NW2d 703 (1985).   
Additionally, the frame of reference shares a deep nexus with the intent of 
the Legislature.  “The primary goal of statutory interpretation is to give effect to 
the intent of the Legislature.”  Title Office, Inc v Van Buren Co Treasurer, 469 
Mich 516, 519; 676 NW2d 207 (2004), quoting In re MCI Telecom Complaint‚ 
460 Mich 396, 411; 596 NW2d 164 (1999).  Fundamentally, “[t]his task begins 
by examining the language of the statute itself.  The words of a statute provide the 
most reliable evidence of [the Legislature’s] intent . . . .”  Sun Valley, 460 Mich at 
236 (citation and quotation marks omitted).  This Court must “consider both the 
plain meaning of the critical word or phrase as well as ‘its placement and purpose 
in the statutory scheme.’”  Id. at 237, quoting Bailey v United States, 516 US 137, 
11 
 
145; 116 S Ct 501; 133 L Ed 2d 472 (1995).  “As far as possible, effect should be 
given to every phrase, clause, and word in the statute.  The statutory language 
must be read and understood in its grammatical context, unless it is clear that 
something different was intended.”  Sun Valley, 460 Mich at 237.     
In interpreting § 3104, this Court first must determine how § 3104(2) 
corresponds with § 3107 and how these two provisions correspond within the 
entire statutory scheme.  Section 3104(2) requires that the MCCA “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 . . . . ”13  Section 3107(1)(a) 
defines “personal protection insurance benefits” as “[a]llowable expenses 
consisting of all reasonable charges incurred for reasonably necessary products, 
services and accommodations for an injured person’s care, recovery or 
rehabilitation.”  This provision requires that all PIP benefits claimed and paid 
between the insurer and the insured must be reasonable.  The MCCA argues that 
this Court should incorporate the § 3107 definition of “benefits” into § 3104(2) 
where § 3104(2) refers to “coverages.”  However, we decline to do so because the 
phrase “personal protection insurance benefits” has a distinct meaning from the 
phrase “personal protection insurance coverages” that is found in § 3104(2).    
                                              
13 The amounts are statutorily set to increase over time.  At the time of both 
accidents, the threshold amount was $250,000.  In 2008, the threshold amount was 
$440,000.  See MCL 500.3104(2)(a)-(k). 
12 
 
When the Legislature uses different words, the words are generally 
intended to connote different meanings.  Simply put, “the use of different terms 
within similar statutes generally implies that different meanings were intended.”  
2A Singer & Singer, Sutherland Statutory Construction, (7th ed), § 46:6, p 252.  
If the Legislature had intended the same meaning in both statutory provisions, it 
would have used the same word.  Therefore, we disagree with the MCCA and 
hold that the definition of personal protection insurance benefits found in § 
3107(1)(a) (including the reasonableness standard) is not equivalent to the 
definition of personal protection insurance coverages in § 3104(2). 
The distinctive use of the term “coverages” is important.  LeBlanc v State 
Farm Mut Auto Ins Co, 410 Mich 173, 204; 301 NW2d 775 (1981) (“‘Coverage’, 
a word of precise meaning in the insurance industry, refers to protection afforded 
by an insurance policy, or the sum of the risks assumed by a policy of 
insurance.”).  Although the terms “benefits” and “coverages” are related because 
of their close proximity in the statute,14 the proximity of these two terms does not 
mean that they are synonymous. 
                                              
14 MCL 500.3107(1) provides, in pertinent part: 
 
Except as provided in subsection (2), personal protection 
insurance benefits are payable for the following:   
 
(a) Allowable expenses consisting of all reasonable charges 
incurred 
for 
reasonably 
necessary 
products, 
services 
and 
accommodations for an injured person’s care, recovery, or 
rehabilitation.  Allowable expenses within personal protection 
insurance coverage shall not include charges for a hospital room in 
13 
 
Section 3107 excludes from the definition of “allowable expenses” within 
PIP “coverages” hospital charges in excess of reasonable and customary semi-
private room charges and funeral and burial expenses in amounts specified in the 
policy (subject to a range specified in that section).  This leaves all other charges 
open to PIP “coverage.”  The fact that the Legislature limited the exceptions to 
“coverage” so narrowly indicates that the term “coverage” is a broader term than 
“benefits.”  Moreover, because “coverages” is never given a more restrictive 
definition elsewhere in the statute, the word must be afforded its ordinary, 
everyday meaning.  Sun Valley, 460 Mich at 237 (“The statutory language must 
be read and understood in its grammatical context, unless it is clear that 
something different was intended.”).  In the grammatical context, the meaning of 
“coverages” is its common meaning, limited only by the specific statutory 
exceptions. 
“Coverage” is defined in dictionaries as the “[e]xtent of protection afforded 
by an insurance policy [or the] amount of funds reserved to meet liabilities,”15 as 
“protection against a risk or risks specified in an insurance policy,”16 as “the risks 
                                                                                                                                      
 
excess of a reasonable and customary charge for semiprivate 
accommodations . . . or for funeral and burial expenses in the 
amount set forth in the policy which shall not be less than $1,750.00 
or more than $5,000.00.  [Emphasis added.] 
15 Webster’s II New College Dictionary (1995). 
16 Random House Webster’s Dictionary (2001). 
14 
 
within the scope of an insurance policy,”17 and as the “amount, and extent of risk 
covered by insurer.”18  Under the common meaning of “coverage,” the 
contractual liability amount that an insurer agrees to pay an insured is considered 
a part of the insurer’s coverage.  USF&G and Hartford paid funds pursuant to a 
consent judgment and a settlement agreement with the respective insureds.  This 
contractual liability, or coverage, owed by each insurer is the total amount agreed 
to between the original contracting parties.  The reasonableness of the agreed 
payment amount is not a factor.  
The meaning of “coverages” in MCL 500.3107 becomes clearer after 
considering “‘its placement and purpose in the statutory scheme.’”  Sun Valley, 
460 Mich at 236, quoting Bailey, 516 US at 145.  In the statute, “coverages” is 
positioned just after “ultimate loss.”  “Ultimate loss” is statutorily defined as the 
“actual loss amounts that a member is obligated to pay and that are paid or 
payable by the member . . . .”  MCL 500.3104(25)(c) (emphasis added).  The 
obligation of the insurer is to fulfill its duty by honoring its contractual coverages.  
The duty to perform the contract relates back to the ultimate loss insofar as the 
ultimate loss includes payment of the obligation, i.e., the total contracted amount.  
Consequently, the MCCA must reimburse the insurers for 100 percent of the 
ultimate loss, which reflects the amount to which the insurer and the insured 
agreed, and subject to PIP coverage.  The ultimate loss specifically refers to 
                                              
17 Black’s Law Dictionary (7th ed). 
18 Black’s Law Dictionary (5th ed). 
15 
 
coverage, which is broader than benefits and is not statutorily limited to 
reasonable payments.19 
Moreover, the MCCA is not a no-fault insurer of its member companies, 
and the member companies are not injured persons entitled to no-fault 
indemnification.  Thus, the relationship between the MCCA and its members is 
not subject to the reasonableness requirements found in MCL 500.3107.  Rather, 
the Legislature provided in § 3104(2) that the MCCA would “indemnify” the 
insuring members for PIP payments.  The Legislature did not state that the MCCA 
would “insure” or “reinsure” the members for amounts greater than the threshold.  
Black’s Law Dictionary (5th ed) defines “indemnify” as “[t]o restore the victim of 
a loss, in whole or in part, by payment . . . ; to secure against loss or damage . . . .”  
Indemnification is not a contingent plan like an insurance plan.  Instead, it is a set 
security meant to assist against certain circumstances.  Here, those circumstances 
arise when the PIP amount contracted by the insurer exceeds the statutory 
threshold.   
Section 3401(1) states that the MCCA is “not subject to any laws . . . with 
respect to insurers.”  Thus, the MCCA is not a no-fault insurer, and consequently 
                                              
19 The MCCA argues that if there is not a reasonableness factor for it to 
enforce, the member insurers will have no incentive to make reasonable 
settlements that do not exceed the statutory threshold amount because the insurers 
will not be liable to pay anything beyond the threshold amount.  However, one 
incentive comes from higher premiums paid to the MCCA.  See MCL 
500.3104(7)(d) (requiring that the MCCA assess its member companies an annual 
premium on each of their no-fault policies written in Michigan).  If all the 
individual members act in a manner that does not regard the reasonableness of 
their settlements, then insurance premiums will increase greatly. 
16 
 
it is also not a reinsurer.  Because the MCCA is not a no-fault insurer, but, rather, 
an indemnitor of no-fault insurers for benefits in excess of the statutory threshold, 
§ 3107 does not directly bind the MCCA; it only binds the insurer members and 
the insured.  Section 3107 “makes both reasonableness and necessity explicit and 
necessary elements of a claimant’s [insured’s] recovery . . . .”  Nasser v Auto Club 
Ins Ass’n, 435 Mich 33, 49; 457 NW2d 637 (1990) (emphasis added).  
Specifically, it is the insurance company that has the right to deny a claim (or part 
of a claim) for unreasonableness under § 3107.  The insured then has the burden to 
prove that the charges are in fact reasonable.  See generally Nasser, 435 Mich 33, 
Manley v Detroit Automobile Inter-Ins Exch, 425 Mich 140; 388 NW2d 
216 (1986), and LaMothe v Auto Club Ins Ass’n, 214 Mich App 577; 543 NW2d 
42 (1995).  Given that the established burden of proof is on the insured, it is 
counterintuitive to conclude that the member insurance company would benefit 
from not having the burden of proof in one instance against an insured, but having 
the burden in another instance against the MCCA.  
The MCCA maintains that the foregoing statutory constructions will lead to 
higher costs to insureds and will be a disincentive for member insurers to keep 
payments reasonable.  These fears are unfounded.  The MCCA is an 
unincorporated nonprofit association, whose purpose is to provide insurers with 
indemnification for PIP policies that exceed a certain threshold.  See MCL 
500.3104(1).  The Legislature created the MCCA “in response to concerns that 
Michigan’s no-fault law provision for unlimited [PIP] benefits placed too great a 
17 
 
burden on insurers, particularly small insurers, in the event of ‘catastrophic’ injury 
claims.”  In re Certified Question, 433 Mich at 714.  The MCCA maintains that it 
should have the ability to unilaterally stop making indemnification payments to a 
member when it determines that the claim payments are unreasonable.  Yet, the 
MCCA acknowledges that a member can take the MCCA to court over a 
reasonableness dispute, which would leave a finder of fact as the ultimate 
authority over whether the payments are reasonable.   
In essence, under the MCCA’s preferred outcome, when a member insurer 
makes an agreement with an insured (often in a litigation setting, whether it be an 
arbitration hearing, consent judgment, or declaratory judgment), the member must 
then sue the MCCA if the MCCA finds that the payment is unreasonable.  If this 
Court were to accept the MCCA’s argument, the logical consequence would be 
that member insurers would be reluctant to settle with the claimant.  Member 
insurers might then force a jury trial with every catastrophically injured claimant 
in order to secure a verdict with a “reasonable” stamp on the result.  This outcome 
goes against the legislative purpose of assuring efficient and quick recovery for 
claimants in the no-fault system.  Shavers v Attorney General, 402 Mich 554, 578-
579; 267 NW2d 72 (1978) (“The goal of the no-fault insurance system was to 
provide victims of motor vehicle accidents assured, adequate, and prompt 
reparation for certain economic losses.”). 
In response to the MCCA’s concerns, it should be pointed out that the 
MCCA is not without a safeguard to protect against unreasonable payments.  The 
18 
 
Legislature specifically laid out powers that the MCCA can exercise to guard 
against unreasonable settlements of catastrophic claims.  MCL 500.3104(7)(b) 
states that the MCCA shall 
[e]stablish procedures by which members shall promptly report to 
the association each claim that, on the basis of the injuries or 
damages sustained, may reasonably be anticipated to involve the 
association if the member is ultimately held legally liable for the 
injuries or damages.  Solely for the purpose of reporting claims, the 
member shall in all instances consider itself legally liable for the 
injuries or damages.  The member shall also advise the association 
of subsequent developments likely to materially affect the interest of 
the association in the claim.  [Emphasis added.][20] 
 
This statutory language requires and empowers the MCCA to establish procedures 
to protect itself from unreasonable settlements in all cases involving claims that 
may exceed the threshold and consequently affect the MCCA.  The MCCA’s plan 
of operation likewise echoes these statutory requirements.21  This language enables 
the MCCA to establish procedures that will enable it to exercise appropriate 
control over settlements whenever the member reasonably anticipates that the 
claim will involve the MCCA.   
                                              
20 Section 3104 includes numerous other rules for the MCCA, such as 
membership requirements, liability, and creation of a “plan of operation.” 
21 Art X, § 10.01 of the plan of operation provides in part: 
Members shall report to the Association such information as 
the Board may require on forms prescribed by the Board:  (a) As 
soon as practicable after the loss occurrence, Members shall report 
each claim which, on the basis of the injuries or damages sustained, 
may reasonably be anticipated to result in a Reimbursable Ultimate 
Loss, and for purposes of reporting the Member shall consider itself 
legally liable for the injuries and damages.  
19 
 
Only then, not after the claimant and member insurer have reached a 
settlement, can the MCCA exercise control over the settlement process.  Under 
MCL 500.3104(7)(g), the MCCA must 
[e]stablish procedures for reviewing claims procedures and practices 
of members of the association.  If the claims procedures or practices 
of a member are considered inadequate to properly service the 
liabilities of the association, the association may undertake or may 
contract with another person, including another member, to adjust or 
assist in the adjustment of claims for the member on claims that 
create a potential liability to the association and may charge the cost 
of the adjustment to the member.  [Emphasis added.]  
 
Thus, when § 3104(7)(g) is read in conjunction with § 3104(7)(b), the outcome is 
that the MCCA is required to review those reports by members that anticipate 
needing indemnification and to assess the adequacy of the procedures or practices 
of the member. 22  Upon a finding of inadequacy, the MCCA can adjust the 
practices or procedures of the member.23  One of the key protections here is that 
                                              
22 The MCCA argued that because part of § 3104(7)(g) uses the term “may” 
instead of “must” in describing some of its potential powers, the MCCA has 
greater power than what directly follows in the statute to limit or control the 
individual member insurers.  The MCCA wishes to conclude that since the section 
does not set forth a duty to act in a specific way (e.g., review claims), it allows the 
MCCA to act how it wants regarding member claims, including questioning their 
reasonableness.  This is erroneous.  The premise and purpose of the MCCA is to 
indemnify insurers for payments beyond the threshold amount, so that insurance 
firms of all sizes can compete in Michigan’s no-fault market without fear of 
sustaining disproportionate catastrophic loss claims. 
23 The plan of operation also echoes the statute in this regard:   
If a Member or 3103 Member refuses to timely submit the 
reports or information required of it pursuant to Section 10.01 or 
otherwise, or if the Board should determine that the reports and 
information submitted by a Member or 3103 Member are unreliable 
or incomplete, the Board may, at the member’s expense, direct that 
an authorized representative of the Association (which may be 
20 
 
the MCCA has the power and duty to adjust only “procedures and practices” of the 
member that produce an unreasonable payment amount; the power does not 
include the power to adjust the amount after a settlement has been reached.24  The 
MCCA has the power to step in before a settlement has been reached and adjust 
situations that it anticipates might otherwise expose it to unreasonable 
indemnification costs.  By requiring submission of proposed settlement 
agreements for approval, the MCCA can protect itself against later having to pay 
unreasonable claims from member insurers.  The exercise of these powers is the 
MCCA’s protection against a member’s neglect of its duties.     
Finally, the MCCA argues that § 3104(8)(g) gives it the power to question 
reasonableness regardless of the statute’s other provisions.  Specifically, § 
3104(8)(g) allows the MCCA to “[p]erform other acts not specifically enumerated 
in this section that are necessary or proper to accomplish the purposes of the 
association and that are not inconsistent with this section or the plan of operation.”  
                                                                                                                                      
 
another member) shall audit and inspect such member’s records and 
compile the required information and data.  [Art X, § 10.02.]   
24 Although § 3104(7)(g) states that the MCCA may “adjust or assist in the 
adjustment of claims,” the practical effect of § 3104(7)(g) is that only the MCCA 
is able to prescribe procedures and practices by which to ensure the reasonableness 
of the amounts that members agree to pay to claimants.  When the MCCA asserts 
its power to adjust or assist in the adjustment of a claim, the MCCA effectively 
steps into the shoes of the member insurer.  The claim that the MCCA reviews for 
adjustment purposes is the insured’s claim with the member insurer, not the 
member insurer’s reimbursement claim with the MCCA.  Accordingly, the 
MCCA, standing in the shoes of the member insurer, is limited to the member 
insurer’s power to review the insured’s claim for reasonableness as spelled out in 
the member insurer’s policy, a settlement agreement, or a consent judgment.  
Thus, even when the MCCA assists in or assumes control over the claims 
adjustment process, the amount payable is still dictated by the amount that the 
member insurer is “obligated” to pay to the insured when a settlement already has 
been reached. 
21 
 
However, this section does not give the MCCA carte blanche to simply avoid a 
member insurer’s agreement that it finds unreasonable.  The power granted under 
§ 3104(8)(g) is limited to accomplishing the “purposes of the association.”  More 
importantly, the exercise of this power cannot be “inconsistent with this section or 
the plan of operation.”  Id.  The plan of operation created pursuant to § 3104(17) 
must be “consistent with the objectives and provisions of this section, which shall 
provide for the economical, fair, and nondiscriminatory administration of the 
association and for the prompt and efficient provision of indemnity.”  MCL 
500.3104(17) (emphasis added).   
Section 3104(8)(g) allows the MCCA to fulfill the specific requirements of 
the statute.  Accordingly, we interpret § 3104(8)(g) as granting the MCCA the 
limited power to further its purpose of prompt and efficient indemnification of its 
members.  To interpret that section as granting any further power, such as the 
power to decline indemnification on the basis of the reasonableness of the 
indemnification amount, would be inconsistent with the Legislature’s intent. 
IV.  Response to the Dissent 
The dissent raises the concern that a decision in favor of plaintiffs in this 
case will result in substantially increased insurance costs.  Certainly, insurance 
costs are a critical concern, but they are a policy concern that belongs to the 
Legislature.  Nonetheless, we observe that the concern appears highly speculative 
and, indeed, unfounded.  There is no evidence that insurers have engaged or will 
22 
 
engage in slack negotiations.  It bears mentioning here that there is no indication 
that the settlements in these cases were unreasonable when made.   
The dissent bases its concern on an affidavit from defendant’s executive 
director in which she refers to an estimate provided by consultants to defendant.  
No basis is given in the affidavit for the estimated increase in costs.  And there is 
reason to wonder about this estimate, at least inasmuch as it might be based on an 
anticipated decision from this Court.   
First, there is no evidence that defendant has routinely or even occasionally 
challenged the reasonableness of insurers’ settlements with their insureds until 
very recently.  It is difficult to understand how it will cost defendant extravagant 
sums to give up a practice it has only recently begun.  Second, it is unknown 
whether the actuarial assessment factored in the effect of defendant’s potential use 
of the cost-containment procedure actually provided by the Legislature in MCL 
500.3104(7)(g).   
As mentioned, the Legislature has provided that “[i]f the claims procedures 
or practices of a member are considered inadequate to properly service the 
liabilities of the association, the association may undertake . . . to adjust or assist 
in the adjustment of claims for the member on claims that create a potential 
liability to the association . . . .”  MCL 500.3104(7)(g).  There is no evidence that 
the actuarial assessment considered the effect of defendant’s implementation of 
this legislatively provided cost-savings mechanism.   
23 
 
The dissent additionally fails to recognize that there is a compelling policy 
reason to reject defendant’s claim that it may review settlements for 
reasonableness:  namely, to limit litigation and promote settlements.  This Court 
has long recognized that “[t]he goal of the no-fault insurance system was to 
provide victims of motor vehicle accidents assured, adequate, and prompt 
reparation for certain economic losses.”  Nelson v Transamerica Ins Services, 441 
Mich 508, 514; 495 NW2d 370 (1992) (citation and quotation marks omitted).  
Additionally, this Court has stated that “[t]he act is designed to minimize 
administrative delays and factual disputes that would interfere with achievement 
of the goal of expeditious compensation of damages suffered in motor vehicle 
accidents.”  Miller v State Farm Mut Auto Ins Co, 410 Mich 538, 568; 302 NW2d 
537 (1981).  The ability of insurers to settle claims is essential to meeting these 
goals.  Yet, if defendant can reexamine settlements of reasonableness long after 
they are made, then insurers will be very reluctant to make settlements.  Further, a 
new layer of litigation for after-the-fact reasonableness assessments, such as this 
one, would be inevitable.  There is no evidence that the actuarial assessment on 
which the dissent relies has accounted for the substantial increase in litigation 
costs that would result if this Court allows defendant the extra-statutory power to 
question settlements for reasonableness after they are made.   
But, again, these are policy concerns best addressed by the Legislature.  It 
appears that the Legislature has indeed balanced these concerns in the provisions 
of MCL 500.3104, and there is no reason for this Court to apply a strained 
24 
 
construction to the statutes to achieve a goal contrary to the purposes of the no-
fault act.  In the unlikely event that insurers become milquetoast negotiators, 
defendant has the statutorily provided protection to remedy the situation.  
V.  Conclusion 
 
We hold that the indemnification obligation set forth in § 3104(2) does not 
incorporate the reasonableness standard that § 3107 requires between claimants 
and member insurers.  Furthermore, the powers granted to the MCCA in § 3104(7) 
are limited to adjusting the “practices and procedures” of the member insurers and 
do not encompass adjustment to the payment amount agreed to between claimants 
and member insurers.  Finally, we hold that the power granted to the MCCA under 
§ 3104(8)(g) is limited to furthering the purposes of the MCCA, and that 
determining reasonableness is not one of its purposes.   
Accordingly, we affirm the Court of Appeals holding that the MCCA must 
reimburse its member insurers 100 percent of the ultimate loss exceeding the 
statutory threshold for claims without a reduction based on its unilateral 
assessment of the reasonableness of the amount.   
Affirmed. 
 
Elizabeth A. Weaver 
Marilyn Kelly 
Michael F. Cavanagh 
Diane M. Hathaway 
S T A T E  O F  M I C H I G A N 
 
SUPREME COURT 
 
UNITED STATES FIDELITY INSURANCE & 
GUARANTY COMPANY, 
 
 
Plaintiff-Appellee, 
 
v 
No. 133466 
 
MICHIGAN CATASTROPHIC CLAIMS 
ASSOCIATION, 
 
 
Defendant-Appellant, 
 
and 
 
MICHAEL MIGDAL, Individually and as  
Conservator for the Estate of DANIEL MIGDAL, 
a Protected Person, 
 
Defendant. 
 
 
 
HARTFORD INSURANCE COMPANY OF THE 
MIDWEST, 
 
 
Plaintiff-Appellee, 
 
v 
No. 133468 
 
MICHIGAN CATASTROPHIC CLAIMS 
ASSOCIATION, 
 
 
Defendant-Appellant. 
 
 
 
YOUNG, J. (dissenting). 
 
 
I respectfully dissent. 
2 
 
 
On December 29, 2008, this Court decided these cases.1  Today, just a few 
months later, a new majority2 reverses that decision and it does so without even 
affording the parties an opportunity to brief and argue why this reversal is 
warranted.  Although not relevant to my analysis of the substantive issue in these 
cases,3 the costs that the majority’s decision will impose on Michigan drivers is 
relevant to assessing the majority’s hurried approach and policy-based reversal of 
this Court’s prior decision.  As I will discuss later, the majority’s decision will 
cause every Michigan resident who owns and insures an automobile to pay a 19 
percent higher annual surcharge premium for mandatory catastrophic coverage.  
The cost of the majority’s decision to those with insured automobiles will be an 
estimated $693.8 million more for the coming year alone.4 
I.  What Changed? 
 
The facts have not changed.  The text of the statute at issue has not 
changed.  The parties’ arguments have not changed.  And the rationale advanced 
in the opinions of this Court has not changed.  Yet, within a matter of months, a 
                                              
1 United States Fidelity Ins & Guaranty Co v Michigan Catastrophic 
Claims Ass’n, 482 Mich 414; 759 NW2d 154 (2008) (hereinafter USF&G I). 
2 I note that the majority in this case is the new philosophically aligned 
majority: Justices Weaver, Cavanagh, Hathaway, and Chief Justice Kelly.   
3 See USF&G I, supra at 432 n 32. 
4 In response to the motions for rehearing, the Michigan Catastrophic 
Claims Association (MCCA) has conducted an actuarial assessment to detail the 
expected increase in auto insurance premiums that reversal of our original decision 
will produce—19 percent more in catastrophic claims premiums to be precise.  
See the affidavit of Gloria Freeland in support of appellant’s supplement to its 
answer to appellee’s motion for rehearing, attached hereto as an appendix. 
3 
 
decision of this Court, thoughtfully briefed, argued, and considered by seven 
justices, is no longer worth the paper it was written on.  Even the casual observer, 
however, does not really need to ask why.  The reason is obvious:  On January 1, 
2009, the composition of this Court changed.  
II.  Why is this Case being Reheard? 
 
This case was argued on October 1, 2008.  On November 4, 2008, Justice 
Hathaway defeated then-Chief Justice Taylor in the election for his seat on this 
Court.  This case was decided on December 29, 2008, with former Chief Justice 
Taylor casting his vote with the majority. 
 
The new majority’s opinion today offers no new rationale or argument.  In 
fact, it is merely an extended quotation of Justice Weaver’s former dissent. 
 
For over a century this Court has adhered to the principle that a motion for 
rehearing should be denied unless a party has raised an issue of fact or law that 
was not previously considered but which may affect the outcome.5  Indeed, this 
Court codified that principle in our court rules.6 
                                              
5 See Nichols, Shepard & Co v Marsh, 62 Mich 439, 440; 29 NW 37 
(1886); Thompson v Jarvis, 40 Mich 526, 526 (1879). 
6 See MCR 2.119(F)(3), which provides: 
 
Generally, and without restricting the discretion of the court, 
a motion for rehearing or reconsideration which merely presents the 
same issues ruled on by the court, either expressly or by reasonable 
implication, will not be granted.  The moving party must 
demonstrate a palpable error by which the court and the parties have 
been misled and show that a different disposition of the motion must 
result from correction of the error. 
 
4 
 
 
As Justice Weaver’s former dissent in these cases and the majority’s new 
opinion make obvious, the parties have not raised a new issue of fact or law to 
merit rehearing.  The only difference is in the membership of this Court.  As early 
as 1883, this Court had the wisdom to realize that such a change is not a proper 
ground for rehearing.  In Peoples v Evening News Ass’n,7  this Court’s opinion on 
a motion for rehearing stated in its entirety: 
 
This case having been heard and decided when three judges 
only were sitting, and a change in the Court having taken place and a 
further change being [about] to occur on the first of January, a 
motion is now made for a rehearing at the next January term before 
the full Court as it will then be constituted. 
 
 
Held, unanimously, that a rehearing will not be ordered on the 
ground merely that a change of members of the bench has either 
taken place or is about to occur.[8] 
 
By ordering rehearing simply because a change in the Court has taken place, the 
new majority has overruled the longstanding and clear principle of Peoples.9  Will 
                                                                                                                                      
 
The new majority states that MCR 2.119(F)(3) “creates a ‘palpable error’ 
standard for rehearing cases.”  Ante at 9 n 12.  The actual standard created is: “a 
palpable error by which the court and the parties have been misled . . . .”  Neither 
the parties nor the new majority suggest that this Court was previously misled.  
Plaintiffs and the new majority simply disagree with this Court’s prior opinion for 
the reasons previously stated in the flawed analysis of Justice Weaver’s dissent. 
7 51 Mich 11; 16 NW 185 (1883). 
8 Id. at 21. 
9 The restraint demonstrated by this Court in Peoples has been duplicated 
by other courts denying rehearing when the sole basis is a change in the 
composition of the court.  See Golden Valley Co v Greengard’s Estate, 69 ND 
171, 190; 284 NW 423 (1938); Gas Products Co v Rankin, 63 Mont 372; 207 P 
993 (1922); Wolbol v Steinhoff, 25 Wyo 227, 258; 170 P 381 (1918); Woodbury v 
Dorman, 15 Minn 341 (1870); Stearns v Hemmens, 3 NYS 16 (NY Comm Pl, 
1888). 
5 
 
any change in an assigned judge now justify the reopening of a predecessor’s 
ruling? 
It is apparent that the new majority feels unencumbered by such 
principles—even one that has endured for more than 100 years.  And, perhaps, its 
members no longer feel a need to be cosseted by the concerns and beliefs that they 
professed to have for the past decade when they were members of the 
philosophical minority of this Court.  Indeed, Chief Justice Kelly once exclaimed 
that a recent decision of the Court being reconsidered “has hardly had time to 
become outmoded.”10  Justice Cavanagh similarly protested that “[i]f a majority of 
the Court believes that reconsideration should be granted, then I believe that the 
proper course would be to receive briefs and hear arguments on the defendant’s 
constitutional argument before remanding the case to the trial court.”11   
                                              
10 McCready v Hoffius, 459 Mich 1235, 1236 (1999) (Kelly, J., dissenting). 
11 Id. at 1236-1237 (Cavanagh, J., dissenting) (emphasis added).  Unlike 
this case, the defendants in McCready cited new authority for their position.  
Nevertheless, Chief Justice Kelly and Justice Cavanagh were adamant that this 
Court erred by considering the new authority on rehearing.  It is indeed at least 
curious that Chief Justice Kelly and Justice Cavanagh opposed the remand order in 
McCready, which was premised on new authority, but freely joined this Court’s 
order for rehearing “without further briefing or oral argument,” United States 
Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 483 Mich 913 
(2009), and the reversal of this Court’s opinion without any new issues being 
raised. 
Moreover, I find it odd that Justice Hathaway, who, during her Supreme 
Court campaign, actively promoted the fabrication that former Chief Justice 
Taylor slept through the oral argument of McDowell v Detroit, 477 Mich 1079 
(2007), finds it appropriate to cast her vote to overturn this Court’s decision 
without so much as attending argument on this case or allowing the party opposing 
the motion to have its day in court.  See minutes 4:28 to 4:40 at 
 (accessed June 3, 2009). 
6 
 
 
Because nothing in the facts, arguments, or legal rationale has changed, I 
continue to support this Court’s original decision and do not feel the need to 
restate it in its entirety here. 
III.  Facts and Procedural History 
 
 
The facts and procedural history of these consolidated appeals are simple, 
uncontested, and have been set out by this Court in detail three times.   
 
The central question here is whether an insurance company that strikes a 
bad bargain with its insured may fob off on the Michigan Catastrophic Claims 
Association (MCCA), a nonprofit entity created by the Legislature to spread the 
costs associated with catastrophic automobile injuries, these “unreasonable” 
expenses.  In our earlier decision, we held that the MCCA had explicit statutory 
authority to resist assuming responsibility for an insurance company’s 
unreasonable payouts.   
 
Plaintiff United States Fidelity Insurance & Guaranty Company (USF&G) 
entered into a consent judgment with its insured, Daniel Migdal, which resulted in 
USF&G paying $54.84 an hour for attendant care services.12  Plaintiff Hartford 
                                              
12 The debate here is not whether an insurance company may refuse to fully 
compensate a catastrophically injured insured.  Indeed, the plaintiff insurance 
companies were required to fully compensate their insureds under USF&G I.  The 
question is whether an insurance company can agree to overcompensate its insured 
and escape this burden by having the rest of Michigan policyholders pay for that 
bad bargain.  This very issue is well illustrated by the facts of USF&G itself.  
The rate that USF&G pays its insured, Daniel Migdal, to cover costs 
associated with his catastrophic injuries is so inflated that his father (Daniel’s 
“caregiver”) started a company, Medical Management, to make a profit from the 
arrangement.  From the $54.84 hourly payments that USF&G makes, Medical 
7 
 
Insurance Company of the Midwest (Hartford) entered into a settlement agreement 
with its insured, Robert Allen, which required that Hartford pay $30 an hour for 
attendant care services.  The MCCA refused to indemnify USF&G and Hartford 
beyond a rate of $22.05 and $20 respectively, rejecting the higher amounts as 
“unreasonable.”   
 
Plaintiffs brought these actions seeking declaratory judgments that the 
MCCA was required to reimburse the full rate of attendant care services that they 
paid their insureds.   The circuit courts entered conflicting judgments and the 
aggrieved parties appealed.  The Court of Appeals consolidated the appeals and 
held that “the MCCA is statutorily required to reimburse an insurer for 100 
percent of the amount that the insurer paid in PIP [personal protection insurance] 
benefits to an insured in excess of the statutory threshold listed in MCL 
500.3104(2), regardless of the reasonableness of these payments.”13  The MCCA 
sought leave to appeal in this Court, which was granted, and this Court held that 
“when a member insurer’s policy only provides coverage for ‘reasonable charges,’ 
the MCCA has authority to refuse to indemnify unreasonable charges.”14   
                                                                                                                                      
 
Management pays the nurses (who actually provide Daniel’s care) an average of 
$32 an hour (including benefits!) and retains the remainder of the USF&G hourly 
payment for itself.  So inflated was the USF&G payment that, after paying for all 
of Daniel’s care, Medical Management earned from this arrangement 
approximately $200,000 in profits for 2003.  Under the majority’s new opinion, it 
will be Michigan policyholders, not USF&G, who will pay for the profits of 
Daniel’s father. 
13 United States Fidelity Ins & Guaranty Co v Michigan Catastrophic 
Claims Ass’n, 274 Mich App 184, 192; 731 NW2d 481 (2007). 
14 USF&G I, supra at 417. 
8 
 
 
Because the composition of this Court changed on January 1, 2009, 
USF&G and Hartford sought rehearing15 and the new majority granted this motion 
“without further briefing or oral argument.”16 
IV.  Discussion 
 
As previously noted, at issue is whether the MCCA has the authority to 
refuse to indemnify member insurers for unreasonable payments they make to 
their policyholders.  I agree with many points of the majority’s new opinion, but 
the points of my disagreement are significant and the results of our differences 
will be extremely costly to the citizens of Michigan.   
 
I agree that “personal protection insurance benefits” are not the same as 
“personal protection insurance coverages.”17  I further agree that “the term 
‘coverage’ is a broader term than ‘benefits.’”18  I particularly agree with each of 
the definitions for “coverages” cited by the new majority.19  “‘[C]overage’ refers 
                                              
15 In its reply brief filed February 19, 2009, USF&G argued that “this 
Court’s practice of granting rehearing requests based on nothing more than a view 
of a majority of the Justices that the Court’s original opinion is incorrect . . . is as 
it should be, given this Court’s status as a court of last resort.”  This statement 
both ignores Peoples and betrays the plaintiffs’ motivation for seeking rehearing.   
16 United States Fidelity Ins & Guaranty Co v Michigan Catastrophic 
Claims Ass’n, 483 Mich 913 (2009). 
17 Ante at 11.  Justice Weaver asserts that “the terms ‘benefits’ and 
‘coverages’ are related because of their close proximity in the statute.”  Ante at 12.  
I am unfamiliar with this tenet of statutory construction, and Justice Weaver offers 
no authority for it.  Indeed, whether separated by two words or two hundred, I 
believe that the meaning of benefits and coverages are related, but distinct. 
18 Ante at 13. 
19 Ante at 12, quoting LeBlanc v State Farm Mut Auto Ins Co, 410 Mich 
173, 204; 301 NW2d 775 (1981), for the proposition that “‘[c]overage’, a word of 
9 
 
to protection afforded by an insurance policy or the sum of risks assumed by an 
insurance policy.”20  I disagree, however, with the new majority’s refusal to 
interpret “coverages” consistent with the definitions that it cites—a reference to 
the underlying insurance policy. 
 
The majority states its holding: “the indemnification obligation set forth in 
MCL 500.3104(2) does not incorporate the reasonableness standard that MCL 
500.3107 requires between claimants and member insurers.”21  That is true but 
unresponsive to this Court’s holding in USF&G I.  This Court did not previously 
incorporate the § 3107 standard for personal protection insurance (PIP) benefits 
into § 3104(2).  Rather, this Court, consistent with the definitions advanced by the 
majority, interpreted “coverages” as the “protection afforded by an insurance 
policy” and explained that “the member insurer’s policy will ultimately control the 
                                                                                                                                      
 
precise meaning in the insurance industry, refers to protection afforded by an 
insurance policy, or the sum of the risks assumed by a policy of insurance.”  The 
new majority also cites the following consistent definitions: (1) the “[e]xtent of 
protection afforded by an insurance policy [or the] amount of funds reserved to 
meet liabilities”; (2) “protection against a risk or risks specified in an insurance 
policy”; (3) “the risks within the scope of an insurance policy”; and (4) the 
“amount, and extent of risk covered by insurer.”  Ante at 13-14, quoting Webster’s 
II New College Dictionary (1995); Random House Webster’s Dictionary (2001); 
Black’s Law Dictionary (7th ed); and Black’s Law Dictionary (5th ed).  See 
USF&G I, supra at 431 n 31. 
20 USF&G I, supra at 431 n 31 (emphasis added), quoting Jarrad v Integon 
Nat’l Ins Co, 472 Mich 207, 217; 696 NW2d 621 (2005).  
21 Ante at 2, 24. 
10 
 
standard for the MCCA’s review because the policy establishes the ‘personal 
protection insurance coverages.’”22 
 
Referring to the consent judgment and settlement agreement at issue, the 
new majority contends that “[t]his contractual liability, or coverage, owed by each 
insurer is the total amount agreed to between the original contracting parties.”23  
The fallacy in this assertion is that the consent judgment or settlement agreement 
is “coverage.”  As amply demonstrated by the definitions that the majority cites, 
“coverage” refers to the underlying policy purchased by the insured.  That policy is 
the only relevant contract.  The consent judgment and settlement agreement are 
separate contractual, albeit judicially sanctioned, agreements.  They are distinctly 
not “the no-fault personal protection insurance coverages that are generally the 
subject of the act, i.e., those which were written in this state to provide the 
compulsory security requirements of § 3101(1) of the no-fault act for the ‘owner 
                                              
22 USF&G I, supra at 430-431; id. at 431 n 31 (“Thus, the terms of the 
policy control the standard for the MCCA’s review.”).  This fundamental 
distinction was underscored by Justice Markman in his concurrence: 
 
The dissent is correct that the reasonableness requirement of 
MCL 500.3107 is not integrated into the indemnification clause set 
forth in § 3104(2).  [USF&G I, supra] at 457 [(Weaver, J., 
dissenting)].  However, the majority opinion does not attempt to 
incorporate this requirement into the MCCA’s statutory power to 
review a member insurer’s claim to ensure it is in compliance with 
the policy.  Rather, it holds that the MCCA can review a member’s 
claim for compliance with the policy, which, as represented by both 
parties, generally includes a requirement that member insurers 
reimburse only reasonable claims based on § 3107.  [USF&G I, 
supra at 434 n 1 (Markman, J., concurring).] 
23 Ante at 14 (emphasis added). 
11 
 
or registrant of a motor vehicle required to be registered in this state’ . . . .”24  
Because the majority offers no principled rationale for departing from the 
definitions that it cites or this Court’s prior interpretation of “personal protection 
insurance coverages,” I must respectfully dissent. 
 
The majority makes additional erroneous assertions.  First, the majority 
asserts that member insurers will have an incentive to make reasonable settlements 
of catastrophic claims because, if they do not, the MCCA premiums will 
increase.25  The majority appears unaware of how incentives, or the MCCA, work.  
The premium that the MCCA charges to cover the liabilities it must statutorily 
assume is evenly distributed among the member insurers26 and then passed on to 
                                              
24 In re Certified Question (Preferred Risk Mut Ins Co v Michigan 
Catastrophic Claims Ass’n), 433 Mich 710, 723; 449 NW2d 660 (1989).  See also 
USF&G I, supra at 437-439 (Markman, J., concurring) (explaining that the 
consent judgment and settlement agreement are not part of the member insurer’s 
“coverages” because “[a] member insurer that informs the MCCA that it will only 
pay ‘reasonable’ claims, but then subsequently modifies the policy after the 
accident occurs to include unreasonable claims, has essentially sought 
reimbursement for claims for which it has not paid premiums”). 
25 Ante at 15 n 19. 
26 See MCL 500.3104(7)(d), which provides in pertinent part: 
 
Each member shall be charged an amount equal to that 
member’s total written car years of insurance providing the security 
required by [MCL 500.3101(1)] or [MCL 500.3103(1)], or both, 
written in this state during the period to which the premium applies, 
multiplied by the average premium per car.  The average premium 
per car shall be the total premium calculated divided by the total 
written car years of insurance providing the security required by 
section 3101(1) or 3103(1) written in this state of all members 
during the period to which the premium applies. 
12 
 
those who buy no-fault insurance.27  Indeed, this Court has been informed that in 
response to the order granting rehearing in this case, the MCCA raised its rates 
by 19 percent per policy (or $693.8 million more per MCCA assessment in the 
aggregate for this year) to create the reserves necessary to pay the more expansive 
claims for unreasonable charges that the new majority’s opinion permits.  Contrary 
to the new majority’s belief that an insurer will have an economic incentive to 
bargain for “reasonable” payments to its insureds, the majority opinion will have 
the perverse effect of eliminating an insurer’s incentive to negotiate reasonable 
settlements.  Indeed, instead of providing insurers a protective shield against 
unreasonable catastrophic claims, the majority opinion provides plaintiffs’ no-fault 
attorneys a lethal sword against an insurer that insists on a reasonable settlement.  
MCL 500.3148(1) provides that a claimant’s attorney fee is charged to the insurer 
“if the court finds that the insurer unreasonably refused to pay the claim or 
unreasonably delayed in making proper payment.”  Under the majority’s decision, 
an insurer has no reason to refuse any claim; thus, a claimant’s attorney can use 
the threat of attorney fees to force an insurer into an unreasonable settlement.28  
                                              
27 See USF&G I, supra at 432 n 32; In re Certified Question, supra at 729 
(explaining that the MCCA premiums are “inevitably” “passed on” to Michigan’s 
no-fault insurance customers); MCL 500.3104(22), which provides that 
“[p]remiums charged members by the association shall be recognized in the rate-
making procedures for insurance rates in the same manner that expenses and 
premium taxes are recognized.” 
28 The MCCA provided a useful hypothetical conversation between a future 
plaintiff’s no-fault attorney and an insurer: 
13 
 
Under the majority’s decision, insurers will be encouraged to negotiate 
unreasonable settlements and pass these off onto the MCCA.  As stated, any 
liability that the MCCA must assume is eventually passed on to anyone in 
Michigan who must buy auto insurance.  
Perhaps the majority can explain why the legislative method for containing 
costs for Michigan’s no-fault insurance customers is an inferior purpose to their 
preferred policy objective.  In particular, why is it an inferior purpose at a time 
when the Governor has requested an auto insurance rate freeze29 and 
unemployment in Michigan has exceeded 14 percent?30   
My point is not that our decision should be premised on keeping no-fault 
insurance affordable.  Indeed, I maintain that such “‘[p]olicy decisions are 
                                                                                                                                      
 
[Attorney]: I know that amount is a bit high for attendant 
care, but that is what we want.  We’ll sue to get it and we’ll seek 
attorney fees and penalties too.  [MCL 500.3148(1)]  Do you want 
that? 
Insurer: Of course not, but that amount is unreasonable. 
 
[Attorney]: What does reasonable have to do with it? [The] 
MCCA has to pay you regardless.  Do you want to incur three times 
that amount in attorney fees instead? 
 
Insurer: Of course not. 
 
29 See Executive Directive No. 2009-1. 
30 See Louis Aguilar, Michigan’s jobless rate 14.1%, highest since ’83, The 
Detroit 
News, 
June 
18, 
2009, 
available 
at 
<://www.detnews.com/article/20090618/BIZ/906180412/1001/Michigan-jobless-
rate-14.1---highest-since—83> (accessed June 28, 2009); Heather Lockwood, 
State jobless rate of 14.1% is highest--since July ‘83, Lansing State Journal, June 
18, 
2009, 
available 
at 
 
(accessed June 28, 2009). 
14 
 
properly left for the people’s elected representatives in the Legislature’”31 and that 
the Legislature has made the policy decision in this case.  Rather, I raise this issue 
because elections matter.  The majority has seen fit to engage in its own policy-
making while relying on erroneous assumptions.  This is a lethal combination that 
will result in harmful, unintended consequences.  While it may be politically 
expedient to position oneself as “looking out for the little guy,”32 this case is an 
excellent example of how acting on such an altruistic impulse rather than applying 
the law results in a negative consequence for the vast majority of our citizens.  In 
this context, each of us who must purchase this mandatory no-fault coverage is a 
“little guy.”33 
 
Second, the majority emphasizes that the MCCA may only adjust a member 
insurer’s “practices and procedures.”34  The majority then immediately (and 
                                              
31 USF&G I, supra at 432 n 32, quoting Devillers v Auto Club Ins Ass’n, 
473 Mich 562, 589; 702 NW2d 539 (2005). 
32 See, e.g., Todd C. Berg, Hathaway attacks, but sketchy on incumbent’s 
record, Michigan Lawyers Weekly, October 7, 2008, p 14 (“The centerpiece of 
Hathaway’s campaign against Taylor has been her claim that he rules against 
middle-class families and in favor of ‘big insurance companies and corporate 
special interests.’”); Todd C. Berg, Hathaway’s campaign pledge may support 
MSC office closure, Michigan Lawyers Weekly, December 15, 2008, p 1 
(“Justice-elect Diane M. Hathaway ran for the Michigan Supreme Court on the 
platform that she would stand up for middle-class families and oppose the lavish 
perks and benefits that Supreme Court justices were bestowing on themselves.”).   
33 The exception, of course, is the lawyer who makes a living doing no-fault 
insurance work.  For such practitioners, the majority’s opinion creates a new 
submarket of opportunity.  See note 28 of this opinion. 
34 Ante at 20.  See MCL 500.3104(7)(g), which provides that the MCCA 
shall 
 
15 
 
inconsistently but accurately) concedes that MCL 500.3104(7)(g) permits the 
MCCA to “adjust or assist in the adjustment of claims” and “[w]hen the MCCA 
asserts its power to adjust or assist in the adjustment of a claim, the MCCA 
effectively steps into the shoes of the member insurer.”35  I previously agreed with 
these propositions.36  Thus, I struggle to comprehend for what purpose the 
majority resists the simple proposition that the MCCA is statutorily authorized to 
adjust claims.   
 
Third, “[p]laintiffs argue[d] that if the MCCA may reject member insurer 
claims on the basis of the reasonableness of the charges, member insurers will 
need to seek assurances that the MCCA will reimburse certain payments before 
making them, thus delaying payment.”37  The prospect of delayed payment seems 
to be a primary concern that drives the new majority’s analysis.  In support of its 
construction, it contends: 
If this Court were to accept the MCCA’s argument, the 
logical consequence would be that member insurers would be 
reluctant to settle with the claimant.  Member insurers might then 
                                                                                                                                      
 
[e]stablish procedures for reviewing claims procedures and practices 
of members of the association.  If the claims procedures or practices 
of a member are considered inadequate to properly service the 
liabilities of the association, the association may undertake or may 
contract with another person, including another member, to adjust or 
assist in the adjustment of claims for the member on claims that 
create a potential liability to the association and may charge the cost 
of the adjustment to the member. 
35 Ante at 20 n 24. 
36 USF&G I, supra at 430 n 30. 
37 Id. at 432 n 32. 
16 
 
force a jury trial with every catastrophically injured claimant in 
order to secure a verdict with a “reasonable” stamp on the result.[38] 
 
The majority employs this policy-based rationale to depart from its own 
definitions of “coverages” because otherwise “[t]his outcome goes against the 
legislative purpose of assuring efficient and quick recovery for claimants in the 
no-fault system.”39  The majority fails to explain, however, how its alternative 
construction actually resolves the issue.  In fact, it does not.  
The majority concedes that the MCCA has authority to “requir[e] 
submission of proposed settlement agreements for approval.”40  This is the very 
outcome that the plaintiff insurance companies here sought to avoid.  Indeed, I 
believe that “requiring submission of proposed settlement agreements” or “seeking 
assurances that the MCCA will reimburse certain payments” would have been a 
natural consequence of USF&G I, because it actually gave meaning to the plain 
language of this statute.  The MCCA is likely to act on the majority’s advice 
                                              
38 Ante at 17. 
39 Ante at 17. 
40 Ante at 20.  The majority acknowledges this authority within the context 
of reading MCL 500.3104(7)(g) in conjunction with § 3104(7)(b), which provides 
that the MCCA shall 
 
[e]stablish procedures by which members shall promptly report to 
the association each claim that, on the basis of the injuries or 
damages sustained, may reasonably be anticipated to involve the 
association if the member is ultimately held legally liable for the 
injuries or damages.  Solely for the purpose of reporting claims, the 
member shall in all instances consider itself legally liable for the 
injuries or damages.  The member shall also advise the association 
of subsequent developments likely to materially affect the interest of 
the association in the claim.  [Emphasis added.] 
17 
 
(indeed, it should) and mandate that member insurers afford it the opportunity to 
object to proposed settlements or other agreements before they become binding.  
Ironically, it appears that even the majority does not deny that the MCCA has this 
statutory power. 
Thus, the issue of delay is not resolved by the majority’s opinion.  
Moreover, the majority’s opinion does not address circumstances, like the present 
cases, where the MCCA was not afforded an opportunity to reject the agreements, 
which likely explains the $693.8 million bill that will be passed onto and shared 
by every Michigan automobile owner because of the increased and uncontrolled 
liability that the new majority’s opinion will create for the MCCA.   
 
We, as jurists, are ill-prepared to make complicated policy-based judgments 
unrelated to the policy choices that the Legislature has enacted.  We do the least 
damage when we merely follow the Legislature’s lead by giving words of a statute 
a plain reading and enforcing the statute as written.  “The Legislature, unlike the 
judiciary, is institutionally equipped to assess the numerous trade-offs associated 
with a particular policy choice.”41  The Legislature has made difficult choices, and 
it used particular words with particular meanings to convey those choices.  Our 
prior opinion respected our role as jurists, and the Legislature’s role as policy-
                                              
41 Devillers, supra at 589.  Indeed, the new majority’s response to my 
dissent underscores this point.  The new majority asserts that “there is no evidence 
that defendant has routinely or even occasionally challenged the reasonableness of 
insurers’ settlements” and “it is unknown whether the actuarial assessment 
factored in the effect of defendant’s potential use of [MCL 500.3104(7)(g)].”  Ante 
at 22.  The Legislature, unlike this Court, has the means to obtain the answers to 
those questions. 
18 
 
maker, by interpreting the relevant statutory language in a manner consistent with 
the plain meaning of the words chosen by the Legislature.  In an effort to avoid the 
meaning of the words chosen by the Legislature, the new majority has engaged in 
a wandering, policy-based analysis that is as flawed as it is misguided.  It is an 
expensive mistake for which every policyholder in Michigan will pay. 
 
Undeterred and aiming to quell the likely negative response to its policy-
based decision, the new majority asserts that my concerns “appear[] highly 
speculative and, indeed, unfounded.”42  My concerns will cease to be “highly 
speculative” and “unfounded” when they are reflected in the MCCA’s annual 
assessments.  Michigan drivers will soon receive their no-fault insurance bills (I 
have received mine) with the updated higher MCCA assessment for the fiscal year 
beginning July 1, 2009.  At that point, Michigan drivers will be free to determine 
for themselves whether my concerns are sound and based in reality. 
Accordingly, I respectfully dissent. 
 
Robert P. Young, Jr. 
Maura D. Corrigan 
                                              
42 Ante at 21. 
 
 
S T A T E  O F  M I C H I G A N 
 
SUPREME COURT 
 
UNITED STATES FIDELITY INSURANCE & 
GUARANTY COMPANY, 
 
 
Plaintiff-Appellee, 
 
v 
No. 133466 
 
MICHIGAN CATASTROPHIC CLAIMS 
ASSOCIATION, 
 
 
Defendant-Appellant, 
 
and 
 
MICHAEL MIGDAL, Individually and as  
Conservator for the Estate of DANIEL MIGDAL, 
a Protected Person, 
 
Defendant. 
 
 
 
HARTFORD INSURANCE COMPANY OF THE 
MIDWEST, 
 
 
Plaintiff-Appellee, 
 
v 
No. 133468 
 
MICHIGAN CATASTROPHIC CLAIMS 
ASSOCIATION, 
 
 
Defendant-Appellant. 
 
 
 
MARKMAN, J. (dissenting). 
 
 
I concur fully with the discussion in part IV of Justice Young’s dissenting 
opinion and therefore also dissent.   
 
Stephen J. Markman