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Michigan Supreme Court 

Lansing, Michigan 48909 

Chie f Justice Justices 

Maura D. Corrigan Michael F. Cavanagh 

Elizabeth A. Weaver 

Marilyn Kelly 

Clifford W. Taylor Opinion Robert P. Young, Jr. 

Stephen J. Markman 

FILED APRIL 1, 2003
 

AUTO-OWNERS INSURANCE COMPANY,
 

Plaintiff-Appellant,
 

v No. 119403
 

AMOCO PRODUCTION COMPANY,
 

Defendant-Appellee.
 

AUTO-OWNERS INSURANCE COMPANY,
 

Plaintiff-Appellee,
 

v No. 119410
 

AMOCO PRODUCTION COMPANY,
 

Defendant-Appellant.
 

BEFORE THE ENTIRE BENCH
 

MARKMAN, J.
 
We granted leave to appeal to consider whether plaintiff,
 

a no-fault insurer, is entitled to invoke the doctrine of
 

equitable subrogation in order to receive full reimbursement
 

from defendant, an employer that is self-insured for worker’s
 

compensation, for medical expenses that plaintiff paid on
 

behalf of its insured, an employee of defendant who was
 

injured during the course of his employment. The Court of
 

Appeals affirmed the finding of the Worker’s Compensation
 

Appellate Commission (WCAC) that plaintiff’s reimbursement was
 

limited by the cost containment rules in the Worker’s
 

Disability Compensation Act (WDCA). The Court of Appeals also
 

affirmed the magistrate’s award of ten percent interest
 

pursuant to MCL 418.801(6). Because we conclude that
 

plaintiff is entitled to full reimbursement from defendant on
 

the basis of the doctrine of equitable subrogation, we reverse
 

the judgment of the Court of Appeals on this issue. Because
 

the interest issue was not properly preserved, we decline to
 

rule on this issue. We remand to the WCAC for a finding
 

regarding the amount of medical expenses paid and the amount
 

of reimbursement owed to plaintiff.
 

I. FACTS AND PROCEDURAL HISTORY
 

After he arrived at work on January 30, 1994, Leroy
 

Smithingell, an employee of defendant, was injured in an
 

accident involving his motor vehicle. Defendant denied his
 

application for worker’s compensation insurance benefits on
 

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the basis that the injury was not work related. Smithingell
 

filed a claim with plaintiff, his no-fault automobile insurer,
 

which paid no-fault benefits, including wage-loss and medical
 

expenses.
 

Plaintiff filed a petition to determine reimbursement and
 

future rights, arguing that Smithingell was injured during the
 

course of his employment and therefore defendant was liable
 

for all past and future benefits. The worker’s compensation
 

magistrate ruled that the accident was, in fact, work related
 

and that plaintiff was entitled to reimbursement from
 

defendant for medical expenses paid.1 However, the magistrate
 

determined that the amount of reimbursement was subject to the
 

worker’s compensation administrative cost containment rules,
 

promulgated pursuant to MCL 418.315(2), which cap the fees
 

that health care providers may charge employers or worker’s
 

compensation carriers for treatment of work-related injuries.
 

The WCAC affirmed the magistrate’s decision.
 

After two remands to the WCAC,2 the Court of Appeals
 

1 The magistrate also ruled that plaintiff was not


entitled to recover from defendant for the wage-loss benefits


it paid. Plaintiff has not appealed this ruling, and thus, it


is not before this Court at this time.
 

2 On November 6, 1998, the Court of Appeals remanded the


case to the WCAC for reconsideration in light of Perez v State
 

Farm Mut Automobile Ins Co, 418 Mich 634, 650; 344 NW2d 773


(1984), Luth v Detroit Automobile Inter-Ins Exchange, 113 Mich


App 289, 294; 317 NW2d 867 (1982), and MCL 418.852(1). On
 

remand, the WCAC again affirmed the magistrate’s decision.


(continued...)
 

3
 
granted plaintiff’s application for leave to appeal and
 

affirmed the decision of the WCAC. 245 Mich App 171; 628 NW2d
 

51 (2001). The Court of Appeals concluded that MCL
 

418.315(1), which requires an employer to reimburse an
 

employee for reasonable medical expenses paid by the employee
 

for a work-related injury, does not authorize full
 

reimbursement to the no-fault insurer because the payments
 

being reimbursed were not made by the employee. The Court
 

also found that the magistrate correctly awarded plaintiff ten
 

percent interest under MCL 418.801(6) and remanded the case to
 

the WCAC for a finding regarding the amount of medical expenses
 

paid by plaintiff and the amount of reimbursement owed by
 

defendant. 


We granted plaintiff’s application for leave to appeal
 

(Docket No. 119403) and defendant’s application for leave to
 

appeal (Docket No. 119410). 466 Mich 859; 643 NW2d 578
 

(2002).
 

II. STANDARD OF REVIEW
 

This case requires us to construe certain provisions of
 

Michigan’s Worker’s Disability Compensation Act. Questions of
 

2(...continued)


On May 25, 1999, the Court of Appeals remanded the case


to the WCAC a second time for a determination whether the
 

WDCA’s cost containment rules apply and the amount of


reimbursement. On remand, the WCAC concluded that the cost
 

containment rules applied to limit the reimbursement and


affirmed the magistrate’s ruling again. 


4
 
statutory construction are reviewed de novo as questions of
 

law. Cruz v State Farm Mut Automobile Ins Co, 466 Mich 588,
 

594; 648 NW2d 591 (2002). We must also consider the
 

application of the doctrine of equitable subrogation. An
 

inquiry into the nature, scope, and elements of a remedy is a
 

question of law that is reviewed de novo. Hartford Accident
 

& Indemnity Co v Used Car Factory, Inc, 461 Mich 210, 215, n
 

5; 600 NW2d 630 (1999). 


III. ANALYSIS
 

A. REIMBURSEMENT AND EQUITABLE SUBROGATION
 

The WDCA provides that if an employer fails to furnish an
 

employee with reasonable medical services for the treatment of
 

a work-related injury, the employer shall reimburse the
 

employee for the employee’s reasonable medical expenses
 

arising out of the injury. The relevant statutory provision,
 

MCL 418.315(1), provides:
 

The employer shall furnish, or cause to be


furnished, to an employee who receives a personal


injury arising out of and in the course of
 

employment, reasonable medical, surgical, and
 

hospital services and medicines, or other
 

attendance or treatment recognized by the laws of


this state as legal, when they are needed. . . . If


the employer fails, neglects, or refuses so to do,


the employee shall be reimbursed for the reasonable


expense paid by the employee, or payment may be


made in behalf of the employee to persons to whom


the unpaid expenses may be owing, by order of the


worker's compensation magistrate. . . . 


Under this provision, if Smithingell, the insured, had
 

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paid the medical expenses arising out of his work-related
 

injury, he would be entitled to reimbursement from defendant
 

for the reasonable amount of such expenses.3 The question
 

presented in this case is whether plaintiff may stand in the
 

place of its insured, Smithingell, and be reimbursed fully by
 

defendant for the reasonable amounts that it paid on behalf of
 

Smithingell.4 The resolution of this question involves the
 

doctrine of equitable subrogation.
 

This Court has explained that
 

3 Plaintiff argued alternatively that it was entitled to


reimbursement on the basis of the clause providing that


“payment may be made in behalf of the employee to persons to


whom the unpaid expenses may be owing . . . .” MCL
 

418.315(1). At oral argument and in its brief, plaintiff


suggested that this language was broad enough to provide for


payment to a third party, such as plaintiff here, who paid the


employee’s medical expenses for which the employer was


responsible, and that it did not just apply to “unpaid


expenses” owed directly to the medical provider. Although


this clause may conceivably be read to allow for such payment


to a third party, the clause does not specify what the rate of


reimbursement is to be, i.e., is it the “reasonable expenses”


to be paid to the employee unlimited by the cost containment


rules, or is it the expenses limited by the cost containment


rules? Because this clause does not provide any answer to the


question immediately before us—whether plaintiff is entitled


to full reimbursement of the expenses—we do not rely on it as
 

the basis for our decision. 


4 The Court of Appeals, although allowing defendant to be


reimbursed, limited the amount of reimbursement to the fees


contained in the cost containment rules promulgated pursuant


to MCL 418.315(2). These rules limit the amount that health
 

care providers may charge employers or worker’s compensation


carriers for medical treatment of work-related injuries.


Applying the cost containment rules to a reimbursement amount


due a no-fault insurer, such as plaintiff, can result in the


no-fault insurer being reimbursed for less than what it


actually paid. 


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[e]quitable subrogation is a legal fiction through


which a person who pays a debt for which another is


primarily responsible is substituted or subrogated


to all the rights and remedies of the other. It is


well-established that the subrogee acquires no


greater rights than those possessed by the
 

subrogor, and that the subrogee may not be a "mere


volunteer." [Commercial Union Ins Co v Medical
 

Protective Co, 426 Mich 109, 117; 393 NW2d 479


(1986) (opinion by WILLIAMS, C.J.) (citations
 

omitted).]
 

When an insurance provider pays expenses on behalf of its
 

insured, it is not doing so as a volunteer. Auto Club Ins
 

Ass’n v New York Life Ins Co, 440 Mich 126, 132; 485 NW2d 695
 

(1992). The nature of the claim asserted by the subrogee is
 

determined by the nature of the claim that the subrogor would
 

have had. Id. at 135. 


Turning to the case before us, it is noteworthy that the
 

facts of New York Life are similar to those presented here.
 

In New York Life, the plaintiff no-fault insurance carrier
 

paid most of the medical expenses of its insured and then sued
 

the defendant health insurance carrier, whose coverage of the
 

insured was primary, for reimbursement. The Court recognized
 

that when an insurance carrier pays the expenses of its own
 

insured pursuant to an insurance contract, it is not acting as
 

a volunteer. Id. at 132, citing Detroit Automobile Inter-Ins
 

Exchange v Detroit Mut Auto Ins Co, 337 Mich 50; 59 NW2d 80
 

(1953). Because the no-fault insurer was protecting its own
 

interests and not acting as a volunteer when it paid the
 

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insured’s medical expenses, it was entitled to invoke the
 

doctrine of equitable subrogation. The Court explained that
 

the no-fault insurer
 

as subrogee, is asserting the insured's right to


"maintain a cause of action against a primary


insurer for the latter's bad-faith failure to
 

[satisfy its policy obligations]." Commercial
 

Union, 426 Mich 119. It "is equitably subrogated to


the position of the insured and acquires no lesser


or greater rights than those held by the insured."


Id. [New York Life, supra at 136.]
 

The nature of a lawsuit by a no-fault insurer as subrogee
 

is to be determined by looking at the nature of the claim that
 

the insured would have had against the primary insurer. In
 

New York Life, the Court found that the no-fault insurer, as
 

subrogee, was asserting the insured’s right to maintain a
 

cause of action against the primary insurer on the basis of
 

the primary insurer’s bad-faith failure to satisfy its policy
 

obligations. The Court relied on precedent that had
 

explained:
 

“Since the insured would have been able to
 

recover from the primary carrier for a judgment in


excess of policy limits caused by the carrier's


wrongful refusal to settle, the excess carrier, who


discharged the insured's liability as a result of


this tort, stands in the shoes of the insured and


should be permitted to assert all claims against


the primary carrier which the insured himself could


have asserted.” [Id. quoting Commercial Union,
 

supra at 118 (citations omitted).]
 

In this case, the Court of Appeals agreed with the WCAC
 

that MCL 418.315(1) was designed to protect only employees,
 

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and not an insurer such as plaintiff. Additionally, the Court
 

rejected plaintiff’s argument that it was entitled to
 

equitable subrogation, finding that because Smithingell had
 

not paid his medical expenses himself, Smithingell had no
 

right to reimbursement from defendant and therefore plaintiff
 

did not have a right to full reimbursement for the amounts it
 

paid on behalf of Smithingell. Instead, the Court concluded
 

that plaintiff’s reimbursement was limited by the WDCA’s cost
 

containment rules. 


In light of the decision in New York Life, however, we
 

disagree with the Court of Appeals conclusion that plaintiff’s
 

reimbursement is capped by the cost containment rules of the
 

WDCA. In New York Life, the no-fault insurer paid most of the
 

insured’s medical expenses and was permitted to recover from
 

the primary insurer by maintaining the cause of action that
 

would have accrued to the insured, had the insured paid his
 

own medical bills. The fact that the insured did not pay his
 

bills was precisely the reason the no-fault insurer, which did
 

pay the bills, was permitted to recover the same reimbursement
 

as that to which the insured would have been entitled had he
 

paid his bills. We believe that the decision in New York Life
 

properly explained and applied the doctrine of equitable
 

subrogation to the facts of that case. In particular, the
 

Court in New York Life explained that “the nature of the
 

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present suit by [the subrogee] is determined by the nature of
 

the claim that [the insured] would have had against [the
 

primary insurer].” New York Life, supra at 135. We believe
 

this reasoning applies with equal force to this case.
 

Applying the reasoning of New York Life regarding the
 

subrogation issue to the facts of this case, we conclude that
 

plaintiff is entitled to full reimbursement from defendant on
 

the basis of the doctrine of equitable subrogation. Here,
 

plaintiff, the no-fault insurer, paid for Smithingell’s
 

medical expenses. In doing so, plaintiff, because it is a nofault insurer, was not entitled to limit its payment pursuant
 

to the cost containment provisions of the WDCA. Munson Medical
 

Center v Auto Club Ins Ass’n, 218 Mich App 375, 390; 554 NW2d
 

49 (1996). However, defendant, which was liable for the
 

medical expenses, would have been able to limit its payment to
 

the WDCA cost containment provisions because of its status as
 

self-insured for worker’s compensation, had it actually paid
 

Smithingell’s medical expenses. The worker’s compensation
 

magistrate found that defendant was liable for Smithingell’s
 

medical expenses as the worker’s compensation insurer because
 

the injury was work related. If Smithingell had paid his
 

expenses, he would, under the statute, be entitled to full
 

reimbursement from defendant for his reasonable medical
 

expenses because the injury was work related. The principle
 

10
 
 

of equitable subrogation allows plaintiff to assert the right
 

of Smithingell, its insured, to receive full reimbursement
 

from defendant.5 The fact that Smithingell did not pay his
 

own expenses, and plaintiff did, is exactly the reason
 

plaintiff is entitled to assert this right.6
 

Defendant argues that MCL 418.315(1), which sets forth
 

when an employer will reimburse an employee for reasonable
 

5 We note that the application of the doctrine of


equitable subrogation under these circumstances is consistent


with, and indeed, is supportive of, the general purpose of


subsection 315(1) to provide employees with full reimbursement


for their reasonable medical expenses. When, as here, the


worker’s compensation insurer is found to be responsible for


the employee’s medical expenses, which it previously refused


to pay, and the no-fault insurer honors its contract by making


payment on behalf of the insured at rates that are not capped


by the reduced worker’s compensation cost containment rules,


we see no reason to deny the no-fault insurer full
 

reimbursement for the reasonable expenses that it paid when


the employee would be entitled to such reimbursement.
 

Obviously, to deny the no-fault insurer full reimbursement


would provide disincentive to prompt payments on behalf of the


employee. Further, to cap the no-fault insurer’s
 

reimbursement at the cost containment levels, which benefit


only worker’s compensation insurers, would afford no incentive


for the worker’s compensation insurer to pay the medical


expenses in the first place because it would never have to pay


more than the reduced amounts of the cost containment
 

schedule, even when later ordered to reimburse the no-fault


insurer. Thus, a limitation on reimbursement effectively


penalizes the no-fault insurer for abiding by its contract


with the insured and paying promptly the greater rates to


which it is subject, while providing no incentive to the


worker’s compensation insurer to pay promptly the medical


bills for which it is responsible. 


6 Because we conclude that plaintiff is entitled to


recover pursuant to the doctrine of equitable subrogation, we


need not address plaintiff’s alternative arguments for full


reimbursement.
 

11
 
expenses, applies only to the employee and not to a no-fault
 

insurer like plaintiff. Further, defendant argues that this
 

is the employee’s exclusive remedy, citing MCL 418.131(1),
 

which provides that “[t]he right to the recovery of benefits
 

as provided in this act shall be the employee's exclusive
 

remedy against the employer for a personal injury or
 

occupational disease.” While we recognize that the WDCA
 

contains an “exclusive remedy” provision applicable to the
 

employee, we note that its existence does not prevent
 

plaintiff from seeking to recover under a theory of equitable
 

subrogation, which is separate and independent of the remedies
 

contained in the WDCA. The Court in New York Life addressed
 

the interplay between the no-fault act and the doctrine of
 

equitable subrogation and concluded that the statute of
 

limitations contained in the no-fault act, which by its terms
 

applied to an action to recover personal protection insurance
 

benefits, did not apply to bar a no-fault carrier’s equitable
 

subrogation claim, which was based on the claim that the
 

insured would have had against the primary insurer. In light
 

of this, the common-law equitable subrogation claim fell
 

outside the scope of the no-fault act. New York Life, supra
 

at 135-138. Similarly, plaintiff’s recovery here, which is
 

predicated on the doctrine of equitable subrogation, is not
 

limited by the WDCA. 


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For these reasons, we reverse the judgment of the Court
 

of Appeals limiting the amount of reimbursement to the WDCA’s
 

cost containment provisions. We affirm the judgment of the
 

Court of Appeals remanding the case to the WCAC for a
 

determination of the amount of medical expenses paid and the
 

amount of reimbursement due.
 

B. INTEREST
 

The magistrate awarded plaintiff ten percent interest
 

pursuant to MCL 418.801(6), which provides:
 

When weekly compensation is paid pursuant to


an award of a worker's compensation magistrate, an


arbitrator, the board, the appellate commission, or


a court, interest on the compensation shall be paid


at the rate of 10% per annum from the date each


payment was due, until paid. 


The Court of Appeals found no error in the magistrate’s award
 

and noted that plaintiff was not entitled to twelve percent
 

interest pursuant to MCL 418.852. The Court found § 852,
 

which provides as follows, to be inapplicable because it does
 

not, by its own terms, apply under these circumstances:
 

(1) The liability of a carrier or fund
 

regarding a claim under this act shall be
 

determined by the hearing referee or worker's


compensation magistrate, as applicable, at the time


of the award of benefits.
 

(2) If a carrier or fund originally determined
 

to be liable pursuant to subsection (1) is
 

subsequently determined to not be liable or not to


the same extent as originally determined, that


carrier or fund shall be reimbursed by the liable


party or parties with interest at 12% per annum. 


Defendant argues that the judgment of the Court of
 

13
 
Appeals affirming the ten percent interest award should be
 

reversed. However, neither party requested that the WCAC
 

review the interest award, as required by MCL 418.861a(11),
 

which states that, “The commission or a panel of the
 

commission shall review only those specific findings of fact
 

or conclusions of law that the parties have requested be
 

reviewed.” 


In its appeal to the WCAC, plaintiff asserted error
 

related to two issues: (1) the magistrate’s finding that it
 

was not entitled to wage-loss benefits and (2) the
 

magistrate’s ruling that the reimbursement was subject to the
 

cost containment rules. In its cross-appeal to the WCAC,
 

defendant argued that Smithingell’s injuries did not occur in
 

the course of his employment. Because the interest issue was
 

not presented to the WCAC, the WCAC never specifically
 

addressed the question whether the magistrate properly awarded
 

interest. Rather, the WCAC’s opinions merely affirmed the
 

magistrate’s decision in its entirety. 


In light of the fact that neither party presented the
 

interest issue to the WCAC, it appears that this issue was not
 

properly preserved pursuant to MCL 418.861a(11). The question
 

whether the interest award was appropriate was first raised by
 

defendant in its brief in response to plaintiff’s brief in the
 

Court of Appeals. The Court of Appeals briefly addressed this
 

question and found no error in the magistrate’s award of ten
 

14
 
percent interest.7 Defendant then filed its application for
 

leave to appeal with this Court, asserting that the award of
 

interest should be reversed. 


Accordingly, even though we have concerns about and
 

question the Court of Appeals’ analysis, because the interest
 

issue was not properly preserved, we decline to address
 

defendant’s request for relief on this issue.
 

IV. CONCLUSION
 

We conclude that plaintiff, the no-fault insurer, is
 

entitled to invoke the doctrine of equitable subrogation and
 

to stand in the place of its insured to recover full
 

reimbursement from defendant for the reasonable medical
 

expenses it paid on behalf of the insured. Accordingly, we
 

reverse the judgment of the Court of Appeals limiting
 

plaintiff’s reimbursement to the amounts set forth in the
 

WDCA’s cost containment rules. Because we conclude that the
 

interest issue was not properly preserved, we decline to
 

address it. We affirm the judgment of the Court of Appeals
 

remanding the case to the WCAC for a finding regarding the
 

7

 The Court of Appeals indicated that plaintiff had made


a “cursory request for twelve percent interest . . . .” 245
 

Mich App 178. However, a review of plaintiff’s brief in the


Court of Appeals does not indicate that this argument was


raised. Although the brief quotes MCL 418.852(2), including


the language regarding twelve percent interest, it is not


clear that plaintiff actually asserts that it was entitled to


such a rate of interest. In this section, plaintiff merely


sets forth its general equitable subrogation argument.
 

15
 
amount of medical expenses paid and the amount of
 

reimbursement owed to plaintiff. 


Stephen J. Markman


Maura D. Corrigan


Michael F. Cavanagh


Elizabeth A. Weaver
 

Marilyn Kelly


Clifford W. Taylor


Robert P. Young, Jr.
 

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