Michigan Supreme Court 

# Order

Lansing, Michigan

January 12, 2007 Clifford W. Taylor, Chief Justice

Michael F. Cavanagh Elizabeth A. Weaver 129689 Marilyn Kelly Maura D. Corrigan Robert P. Young, Jr. DONNA KROON-HARRIS, Stephen J. Markman, Plaintiff-Appellee, Justices

v SC: 129689 COA: 261146 Court of Claims: 04-000078-MK STATE OF MICHIGAN, Defendant-Appellant.

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On November 1, 2006, the Court heard oral argument on the application for leave to appeal the July 14, 2005 judgment of the Court of Appeal s. On order of the Court, the application is again considered . MCR 7.302(G)(1). In lieu of granting leav e to appeal, we REVERSE the judgment of the Court of Appeals and RE INSTATE the order of the Court of Claims that dismi ssed plaintiff's complaint with prejudice. The long-term disability policy was provided by a group insurance plan approved by the Civil Service Commission. Pursuant to the terms of Civil Service Regulation 5.18, if the plaintiff felt aggrieved by a decision of an administrator of a group insurance plan, she was required to complain under the ex clusive procedure set forth in that regulation. Her failure to exhaust administrative remedies precludes the possibility of relief outside the promulgated procedure. Furt her, any appeal from the Civ il Service Commission lies in the appropriate circuit court, not the Cour t of Claims. Const 1963, art 6, § 28; Viculin v Department of Civil Service , 386 Mich 375, 385 (1971).

C AVANAGH , J., would deny leave to appeal.

W EAVER , J., dissents and states as follows:

I dissent and would not peremptorily reverse because I would grant leave to appeal.

K ELLY , J., dissents and states as follows:

I dissent from the decision to reverse th e judgment of the Court of Appeals by order. In so decidi ng, the majority relies on an issue that was not raised or addressed by_______________________________________ __ 2

the parties in any court. Moreover, the majority’s conc lusory statements regarding jurisdiction do not answer the central question of why this case does not involve a matter of contract. Rather than act peremptor ily, I would grant leave to appeal.

Plaintiff worked as a secret ary for the Department of Natural Resources. She was enrolled in a long-term disability and income protection plan (LTD plan). She received LTD-plan benefits from 2001 to May 2003, when the defendant discontinued her benefits. Defendant contended that plaintiff had failed to demonstrate that she could no longer perform any reasonable occupation fo r which she could become qualified. Plaintiff filed suit in the Court of Claims, ar guing that she had a c ontractual right to the benefits. Defendant c ontended that this case did not in volve a contractual right, and, as such, the Court of Claims did not have jurisdiction. The Court of Appeals ruled in favor of plaintiff. And it was this issue that the parties brought to the Supreme Court.

But it is not this issue that the majority has addressed. Instead, it has decided the case on the basis of plaintiff’s alleged failu re to exhaust her administrative remedies. This issue was not raised by defe ndant in this Court. In fact, it was not raised in or addressed by any court. It is unfair to plaintiff for the major ity to sua sponte decide that this issue is controlling. At the very least, plaintiff should get a chance to respond. Also, the Court needs to decide why the issue was not waived, or at least forfeited, by defendant’s failure to raise it belo w. Instead of goi ng off on this tangent, we should grant leave to appeal to allow the p arties to address this issue.

In its final sentence, the majority’s ord er alludes to the issu e actually discussed by the parties. Without any real connection to the rest of th e order, the final sentence concludes that the circuit court was the appropr iate venue for this case, rather than the Court of Claims. Absent from the order is any mention of the question whether plaintiff’s LTD benefits are c ontractual. If this case is a contractual dispute, it is now undisputed that the Court of Claims would ha ve jurisdiction. This question remains open and needs to be answered.

Because the majority’s order leaves fundamental questions unanswered, it is inadequate. I would grant leav e to appeal and or der the parties to address whether the dispute is contractual, whether plaintiff exha usted her administrative remedies, and, if not, whether defendant waived the issue.

d0109 I, Corbin R. Davis, Clerk of the Mi chigan Supreme Cour t, certify that the foregoing is a true and complete copy of the order entered at the direction of the Court.

January 12, 2007

Clerk