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 INSURANC E 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. Hathaway2 WEAVER, J. This Court originally granted leave to appeal to consider whether MCL 500.3104(2) obligates the Michigan Cata strophic Claims Association (MCCA) to reimburse a member insurer for personal pr otection insurance (PIP) benefits paid to a claimant without regard to the reasonableness of th e 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 co verage 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 Mi dwest filed motions for rehearing. We granted the plaintiffs’ moti ons for rehearing, and these cases were resubmitted for decision without further briefing or oral argument. 2
We now hold that the indemnific ation obligation set forth in MCL 500.3104(2) does not incorporate the re asonableness standard that MCL 500.3107 requires between claimants and member insurers. Furthermore, the powers granted to the MCCA in § 3104(7) are limited to adju sting the “practices and procedures” of the member insurers a nd do not encompass adjustment to the

1 United States Fidelity Ins & Guaran ty Co v Michig an Catastrophic Claims Ass’n , 482 Mich 414, 417; 759 NW2d 154 (2008).
2 United States Fidelity Ins & Guarant y Co v Mich Catastrophic Claims Ass’n , 483 Mich 918 (2009).3 payment amount agreed to between claima nts 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 reasonablen ess 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 Insura nce & Guaranty Co v MCCA In the first case in these consolidated appeals, Daniel Migdal was injured in a 1981 car accident in which he sustaine d catastrophic injuries. His injuries included a traumatic brain injury with cere bral 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 19 88, Michael Migdal (Mr. Migdal), Daniel’s father and the conser vator of Daniel’s estate, sued the nofault insurance provider, United States Fidelity Insu rance & 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 liab ility for nursing care provided before May 10, 1989. Additionally, USF&G agreed to pay $17.50 an4 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 car e. 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 co mpounded based on the pr evious year’s rate. Pursuant to the consent judgment, USF&G paid Mr. Migdal the consentedto 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 exceed ed 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 mana ge 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 Da niel 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 b ooks, 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 insuranc e coverages in excess of the following amounts in each loss occurrence . . . . At the time of both accident s involved in these consolid ated appeals, the threshold amount was $250,000.5 unreasonable. In 2003, USF&G filed a comp laint in the Oaklan d Circuit Court for a declaratory judgment that the MCCA must reimburse USF&G for the total amount that USF&G paid to Mr. Migdal u nder 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 agreedupon rate of $54.84 an hour was unreason able 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 move d for summary disposition. It contended that there was no question of material fact th at the payments made by USF&G to Mr. Migdal were unreasonable. Moreover, th e MCCA argued that the no-fault act only required reimbursement of payments th at are reasonable. In a countermotion for summary disposition, USF&G argued th at 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 be en subject to judicial modification on the ground that the payment amount it ca lled 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 c oncerning the “unreasonableness” of the consent judgment. The trial court granted USF&G’s mo tion 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 tria l court denied the MCCA’s motion for summary disposition. The trial court en tered a judgment requiring the MCCA to reimburse USF&G in the amount of $1,725,0 72 under the no-fault act and holding the MCCA liable for future payments cons istent with the cons ent judgment. The parties agreed to stay th e 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 consolidat ed appeals, Robert Allen was injured in a 2001 car accident in wh ich he sustained catastrophi c 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 th e nurse. In 2003, Hartford ag reed to pay an increased rate

8 MCL 500.3104(2).7 of $30 an hour for Allen’s care. Soon th ereafter, 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. Hartfo rd 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 M CCA must reimburse Hartford for the total payments above the $250,000 threshold, regardless of the reasonableness of the payments. After the initial filing, Ha rtford moved for su mmary disposition, arguing that the no-fault ac t required the MC CA to reimburse Hartford for the entire amount paid to Allen that exceed ed 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 amoun t of the payments. The circuit court ruled that reasonableness was an elemen t in determining how much the MCCA must reimburse Hartford and that there wa s insufficient discovery to determine if the payments were reasonabl e. 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 ‘reas onableness’ requirement and requires the MCCA to reimburse insurers for the actual amount of PIP benefits8 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 C ourt of Appeals and remanding for further proceedings, while holding th at “when a member insure r’s policy only provides coverage for ‘reasonable charges,’ the MCCA has authority to refuse to indemnify unreasonable charges.” 11 Subsequently, plaintiffs Un ited States Fidelity Insurance & Guaranty Company and Ha rtford Insurance Company of the Midwest filed motions for rehearing. We granted the pl aintiffs’ motions for rehearing and this case was resubmitted for decision without fu rther briefing or or al argument. 483 Mich 913 (2009). 12

9 United States Fidelity Ins & Guaran ty 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 & Guaran ty 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 we ll after the motions for rehearing have been decided to attack the remaining jus tices who did not vote to re tain this Court’s earlier decision. The dissent erroneously asserts that th e 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 gr anting rehearing when the composition of the Court has changed, absent any new ar guments from the parties in the cases. However, contrary to the dissent’s asse rtions, this Court merely stated in Peoples that a change in the compositi on of this Court cannot be the basis for granting rehearing. Accordingly, if the composition of th e 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 c ourt concluded that the challenged opinion9 II. Standard of Review Statutory interpretation is a question of law, which this Court reviews de

novo. In re Investigation of March 1999 Riot s 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 cata strophic injury. Specifically, is the MCCA liable for re imbursement 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 overarch ing rule of statutory construction is

was erroneous, those justices can vote to grant reheari ng. The same holds true whether the deciding vote is a new justice who joined the court after the challenged opinion was released or whethe r the deciding vote comes from a justice who signed the challenged opinion and ch anged 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 case s. It is up to the moving party to show palpable error that would l ead 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 MC R 2.119(F)(3) states that a motion for rehearing will generally no t be granted if the motio n only presents the same arguments decided in the original di sposition of the case, MCR 2.119(F)(3) explicitly refrains from “restric ting 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 gran ted rehearing in this case.10 “that this Court must enforce clear a nd unambiguous statutory provisions as written.” In re Certified Question (Preferre d Risk Mut Ins Co v Michigan Catastrophic Claims Ass’n) , 433 Mich 710, 721; 449 NW2d 660 (1989) (quotation marks omitted). “If the langua ge of [a] statute is unambiguous, the Legislature must have intended the mean ing 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 shar es a deep nexus w ith the intent of the Legislature. “The primary goal of stat utory interpretation is to give effect to the intent of the Legislature.” Title Office, Inc v Va n Buren Co Treasurer , 469 Mich 516, 519; 676 NW2d 207 (2004), quoting In re MCI Telecom Complaint ‚ 460 Mich 396, 411; 596 NW 2d 164 (1999). Fundamentally, “[t]his task begins by examining the language of the statute its elf. The words of a statute provide the most reliable evidence of [the Le gislature’s] intent . . . .” Sun Valley , 460 Mich at 236 (citation and quot ation 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 gramma tical 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 provisi ons correspond within the entire statutory scheme. Section 3104(2 ) requires that the MCCA “shall provide and each member shall accept indemnific ation for 100% of the amount of ultimate loss sustained unde r personal protection insura nce 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 incu rred for reasonably necessary products, services and accommodations for an in jured person’s care, recovery or rehabilitation.” This provision requires th at all PIP benefits claimed and paid between the insurer and the insured must be reasonable. The MCCA argues that this Court should incorpor ate the § 3107 definition of “benefits” into § 3104(2) where § 3104(2) refers to “coverages.” Ho wever, 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 incr ease over time. At the time of both accidents, the threshold amou nt was $250,000. In 2008 , the threshold amount was $440,000. See MCL 500.3104(2)(a)-(k).12 When the Legislature uses differen t words, the word s are generally intended to connote different meanings. Si mply put, “the use of different terms within similar statutes gene rally 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 me aning in both statut ory provisions, it would have used the same word. Theref ore, 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 NW 2d 775 (1981) (“‘Coverage’, a word of precise meaning in the insurance indu stry, refers to protection afforded by an insurance policy, or the sum of the risks assumed by a policy of insurance.”). Although th e 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) provide s, in pertinent part: Except as provided in subs ection (2), personal protection insurance benefits are payable for the following: (a) Allowable expenses consis ting of all reasonable charges incurred for reasonably necessa ry products, services and accommodations for an injured pe rson’s care, recovery, or rehabilitation. Allowable expens es within personal protection insurance coverage shall not include charges for a hospital room in13 Section 3107 excludes from the definition of “allowa ble expenses” within PIP “coverages” hospital charges in ex cess of reasonable and customary semiprivate room charges and funeral and buri al 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 limite d 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 st atutory language must be read and understood in its gramma tical context, unless it is clear that something different was intended.”). In the grammatical context, the meaning of “coverages” is its common meaning, li mited 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 cust omary charge for semiprivate accommodations . . . or for funera l and burial expenses in the amount set forth in the policy which shall not be less than $1,750.00 or more than $5,000.0 0. [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 agreemen t with the respectiv e insureds. This contractual liability, or coverage, owed by each insurer is the total amount agreed to between the original contracting par ties. The reasonableness of the agreed payment amount is not a factor. The meaning of “coverages” in MC L 500.3107 becomes clearer after considering “‘its placement and purp ose 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.” “Ultima te 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 1 00 percent of the ultimate loss, which reflects the amount to which the insurer and the insured agreed, and subject to PIP coverage. Th e ultimate loss specif ically refers to

17 Black’s Law Dictionary (7th ed).
18 Black’s Law Dictionary (5th ed).15 coverage, which is broader than benefi ts and is not statutorily limited to reasonable payments. 19 Moreover, the MCCA is no t a no-fault insurer of its member companies, and the member companies are not injured persons en titled to no-fault indemnification. Thus, the relationshi p between the MCCA and its members is not subject to the reasonableness require ments found in MCL 500.3107. Rather, the Legislature provided in § 3104(2) that the MCCA woul d “indemnify” the insuring members for PIP pa yments. The Legislature did not state that the MCCA would “insure” or “reinsure” the members fo r 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 lik e an insurance plan. Instead, it is a set security meant to assist ag ainst 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 an y 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 insu rers will have no incentiv e to make reasonable settlements that do not exceed the statutor y threshold amount because the insurers will not be liable to pay an ything beyond the thresh old amount. However, one incentive comes from high er premiums paid to the MCCA. See MCL 500.3104(7)(d) (requiring that the MCCA a ssess 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 insuran ce 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-fau lt insurers for benefits in excess of the statutory threshold, § 3107 does not directly bind the MC CA; 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 63 7 (1990) (emphasis added). Specifically, it is the insuran ce company that has the right to deny a claim (or part of a claim) for unreasonab leness under § 3107. The insured then has the burden to prove that the charge s are in fact reasonable. See generally Nasser , 435 Mich 33, Manley v Detroit Automo bile 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 co mpany would benefit from not having the burden of proof in one instance agai nst 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 an d will be a disincentive for member insurers to keep payments reasonable. These fears are unfounded. The MCCA is an unincorporated nonprofit associ ation, whose purpose is to provide insurers with indemnification for PIP policies that ex ceed a certain threshold. See MCL 500.3104(1). The Legislatur e created the MCCA “in resp onse to concerns that Michigan’s no-fault law prov ision for unlimited [PIP] bene fits placed too great a17 burden on insurers, particularly small insure rs, 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 clai m payments are unreasonable. Yet, the MCCA acknowledges that a member can take the MCCA to court over a reasonableness dispute, which would le ave a finder of fact as the ultimate authority over whether the pa yments are reasonable. In essence, under the MCCA’s prefe rred outcome, when a member insurer makes an agreement with an insured (often in a litigation setting, whether it be an arbitration hearing, consen t judgment, or declaratory judgment), the member must then sue the MCCA if the MC CA finds that the payment is unreasonable. If this Court were to accept the MCCA’s argumen t, the logical consequence would be that member insurers would be reluctan t to settle with the claimant. Member insurers might then force a jury trial w ith every catastrophically injured claimant in order to secure a verdict with a “rea sonable” stamp on the result. This outcome goes against the legislative purpose of a ssuring 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 accid ents 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 prot ect against unreasonable payments. The18 Legislature specifically laid out powers that the MCCA can exercise to guard against unreasonable settlements of catast rophic claims. MCL 500.3104(7)(b) states that the MCCA shall [e]stablish procedures by which me mbers 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 ultim ately held legally liable for the injuries or damages. Solely fo r the purpose of reporting claims, the member shall in all in stances 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 cl aim. [Emphasis added.] [20] This statutory language requires and empo wers the MCCA to establish procedures to protect itself from unreasonable settle ments 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 wh enever the member reasona bly anticipates that the claim will involv e the MCCA.

20 Section 3104 includes numerous ot her 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 Asso ciation such information as the Board may require on forms pres cribed by the Board: (a) As soon as practicable after the loss occurrence, Members shall report each claim which, on the basis of th e 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 th e claimant and member insurer have reached a settlement, can the MCCA exercise contro l over the settlement process. Under MCL 500.3104(7)(g), the MCCA must [e]stablish procedures for reviewi ng claims procedur es and practices of members of the association. If the claims procedures or practices of a member are considered inade quate 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 asso ciation and may charge the cost of the adjustment to the member. [Emphasis added.] Thus, when § 3104(7)(g) is read in conjun ction with § 3104(7)(b ), the outcome is that the MCCA is required to review t hose reports by memb ers 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 prot ections 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 concl ude that since the section does not set forth a duty to act in a specif ic way (e.g., review claims), it allows the MCCA to act how it wants regarding member claims , including questioning their reasonableness. This is erroneous. Th e premise and purpose of the MCCA is to indemnify insurers for paym ents beyond the threshold amount, so that insurance firms of all sizes can compete in Michig an’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 th e member’s expense, direct that an authorized representative of the Association (which may be20 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, th e MCCA can protect itself ag ainst later having to pay unreasonable claims from memb er 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 no t 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 in spect such member’s records and compile the required information a nd data. [Art X, § 10.02.]
24 Although § 3104(7)(g) st ates that the MCCA may “ad just or assist in the adjustment of claims,” the practical effect of § 3104(7)(g) is that only the MCCA is able to prescribe proce dures 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 adju stment 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 cl aim with the member insurer, not the member insurer’s reimbursement claim with the MCCA. Accordingly, the MCCA, standing in the shoes of the memb er insurer, is limited to the member insurer’s power to review th e insured’s claim for reason ableness 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 se ttlement 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 provisio ns of this section, which shall provide for the economical, fair, and nondiscriminatory administration of the association and for the prompt and efficie nt 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 interpre t § 3104(8)(g) as granting the MCCA the limited power to further its purpose of prom pt and efficient indemnification of its members. To interpret th at section as granting any further power, such as the power to decline indemnification on th e basis of the reasonableness of the indemnification amount, would be incons istent with the Legislature’s intent. IV. Response to the Dissent The dissent raises the concern that a deci sion in favor of plaintiffs in this case will result in substantia lly increased insura nce costs. Certainly, insurance costs are a critical concern, but they ar e a policy concern that belongs to the Legislature. Nonetheless, we observe th at the concern appears highly speculative and, indeed, unfounded. There is no evid ence that insurers ha ve engaged or will22 engage in slack negotiations. It bears me ntioning here that there is no indication that the settlements in these case s 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 es timated increase in co sts. And there is reason to wonder about this estimate, at le ast inasmuch as it might be based on an anticipated decision from this Court. First, there is no evidence that defenda nt has routinely or even occasionally challenged the reasonableness of insurers ’ settlements with th eir insureds until very recently. It is difficult to unders tand how it will cost defendant extravagant sums to give up a practice it has only recently begun. Sec ond, it is unknown whether the actuarial assessment factored in the effect of defendant’s potential use of the cost-containment pro cedure actually provided by the Legislature in MCL 500.3104(7)(g). As mentioned, the Legislature has provi ded that “[i]f the claims procedures or practices of a member are consider ed inadequate to properly service the liabilities of the association, the association may undertake . . . to adjust or assist in the adjustment of claims for the me mber 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 co st-savings mechanism.23 The dissent additionally fa ils to recognize that th ere is a compelling policy reason to reject defendant’s claim that it may review settlements for reasonableness: namely, to limit litigati on and promote settleme nts. This Court has long recognized that “[t]he goal of the no-faul t insurance system was to provide victims of motor vehicle accid ents assured, adequate, and prompt reparation for certain economic losses.” Nelson v Transamerica Ins Services , 441 Mich 508, 514; 4 95 NW2d 370 (1992) (citation a nd 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 se ttle 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 re asonableness assessments, such as this one, would be inevitable. There is no ev idence that the actuarial assessment on which the dissent relies has accounted fo r the substantial in crease in litigation costs that would result if this Court allo ws defendant the extra-statutory power to question settlements for reasonablen ess after they are made. But, again, these are polic y concerns best addressed by the Legislature. It appears that the Legislature has indeed ba lanced these concerns in the provisions of MCL 500.3104, and there is no reason for this Court to apply a strained24 construction to the statutes to achieve a goal contrary to the purposes of the nofault act. In the unlikely event that insurers become milquetoast negotiators, defendant has the statutor ily provided protection to remedy the situation. V. Conclusion We hold that the indemnification oblig ation set forth in § 3104(2) does not incorporate the reasonableness standard that § 3107 requires between claimants and member insurers. Furthermore, the po wers granted to the MCCA in § 3104(7) are limited to adjus ting the “practices and procedures” of the member insurers and do not encompass adjustment to the paym ent amount agreed to between claimants and member insurers. Finally, we hold th at 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 percen t of the ultimate lo ss 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. HathawayS 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 INSURANC E 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 majority 2 reverses that decision and it does so without even affording the parties an o pportunity to brief and argu e why this reversal is warranted. Although not rele vant to my analysis of th e substantive issue in these

cases, 3 the costs that the majo rity’s decision will impose on Michigan drivers is relevant to assessing the majority’s hurri ed approach and polic y-based reversal of this Court’s prior decision. As I will di scuss later, the majo rity’s decision will cause every Michigan resident who owns and insures an auto mobile to pay a 19 percent higher annual surc harge premium for mandatory catastrophic coverage. The cost of the majority’s decision to th ose with insured auto mobiles will be an estimated $693.8 million more for the coming year alone. 4 I. What Changed? The facts have not changed. The te xt 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 chan ged. Yet, within a matter of months, a

1 United States Fidelity Ins & Guaran ty Co v Michig an 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 ne w 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 re hearing, the Michig an 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 catastrophi c 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 reheari ng, attached hereto as an appendix.3 decision of this Court, thoughtfully brie fed, argued, and considered by seven justices, is no longer wort h 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, 20 08. On November 4, 2008, Justice Hathaway defeated then-Chief Justice Tayl or in the election for his seat on this Court. This case was decided on Decemb er 29, 2008, with former Chief Justice Taylor casting his vote with the majority. The new majority’s opinion today offe rs no new rationale or argument. In fact, it is merely an extended quotati on of Justice Weaver’s former dissent. For over a century this Court has adhe red to the principle that a motion for rehearing should be denied unless a party has raised an i ssue of fact or law that was not previously considered bu t 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 restrictin g the discretion of the court, a motion for rehearing or reconsider ation which merely presents the same issues ruled on by the court, either expressly or by reasonable implication, will not be grante d. The moving party must demonstrate a palpable error by wh ich the court and the parties have been misled and show th at 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 diffe rence is in the membership of this Court. As early as 1883, this Court had the wisdom to re alize 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 ha ving 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 reheari ng 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 ch ange in the Court has taken place, the new majority has overruled the lo ngstanding 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 th at this Court was previously misled. Plaintiffs and the new major ity simply disagree with th is 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 ju stify the reopening of a predecessor’s ruling? It is apparent that the new ma jority feels unencumbered by such principles—even one that has endured for mo re than 100 years. And, perhaps, its members no longer feel a need to be cossete d by the concerns and beliefs that they professed to have for the past deca de when they were members of the philosophical minority of this Court. I ndeed, Chief Justice Kelly once exclaimed that a recent decision of the Court bein g reconsidered “has hardly had time to become outmoded.” 10 Justice Cavanagh similarly prot ested that “[i]f a majority of the Court believes that reconsideration shoul d 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 (199 9) (Kelly, J., dissenting).
11 Id. at 1236-1237 (Cavanagh, J., disse nting) (emphasis added). Unlike this case, the defendants in McCready cited new authority for their position. Nevertheless, Chief Justice Kelly and Ju stice Cavanagh were adamant that this Court erred by considering the new author ity on rehearing. It is indeed at least curious that Chief Justice Kelly and Jus tice Cavanagh opposed the remand order in McCready , which was premised on new authority, but freely joined this Court’s order for rehearing “without furthe r briefing or oral argument,” United States Fidelity Ins & Guaranty Co v Mich igan Catastrophic Claims Ass’n , 483 Mich 913 (2009), and the reversal of this Court’s op inion without any new issues being raised. Moreover, I find it odd that Justice Hathaway, who, during her Supreme Court campaign, actively promoted the fa brication 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 a llowing the party opposing the motion to have its day in cour t. See minutes 4:28 to 4:40 at <http://www.youtube.com/watc h?v=_7woWJDk1Qg> (accessed June 3, 2009).6 Because nothing in the facts, argument s, or legal rationale has changed, I continue to support this Court’s origin al 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 of f on the Michigan Catastrophic Claims Association (MCCA), a nonprofit entity crea ted by the Legislat ure to spread the costs associated with catastrophic auto mobile injuries, these “unreasonable” expenses. In our earlier decision, we he ld that the MCCA had explicit statutory authority to resist assuming respons ibility for an insurance company’s unreasonable payouts. Plaintiff United States Fidelity In surance & Guaranty Company (USF&G) entered into a consent judgment with its in sured, 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 ma y 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 insu rance company can agree to overcompensate its insured and escape this burden by having the rest of Michig an 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 insure d, Daniel Migdal, to cover costs associated with his catastrophi c 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, Medical7 Insurance Company of the Midwest (Hartford) ente red into a settlement agreement with its insured, Robert Allen, which requ ired that Hartford pay $30 an hour for
attendant care services. The MCCA refu sed to indemnify USF&G and Hartford beyond a rate of $22.05 and $20 respectively, rejectin g the higher amounts as “unreasonable.” Plaintiffs brought these actions se eking declaratory judgments that the MCCA was required to reimburse the full rate of attendant care services that they paid their insureds. The circuit cour ts entered conflicting judgments and the aggrieved parties appealed. The Court of Appeals consolidated the appeals and held that “the MCCA is statutorily re quired to reimburse an insurer for 100 percent of the amount that the insurer paid in PIP [per sonal protection insurance] benefits to an insured in excess of the statutory threshold listed in MCL 500.3104(2), regardless of the re asonableness of these payments.” 13 The MCCA sought leave to appeal in this Court, wh ich was granted, and th is Court held that “when a member insurer’s policy only pr ovides coverage for ‘reasonable charges,’ the MCCA has authority to refuse to indemnify unreasonable charges.” 14

Management pays the nurses (who actually provide Daniel’s ca re) an average of $32 an hour ( including benefits! ) and retains the remainder of the USF&G hourly payment for itself. So inflated was th e USF&G payment that, after paying for all of Daniel’s care, Medical Manageme nt earned from this arrangement approximately $200,000 in profits for 2003. Under the ma jority’s new opinion, it will be Michigan policyholders , not USF&G, who will pa y for the profits of Daniel’s father.
13 United States Fidelity Ins & Guaran ty 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 rehearing 15 and the new majority granted this motion “without further briefing or oral argument.” 16
IV. Discussion As previously noted, at issue is wh ether the MCCA has the authority to refuse to indemnify member insurers for unreasonable payments they make to their policyholders. I agree with many po ints of the majority’s new opinion, but the points of my disagreement are signifi cant and the results of our differences will be extremely costly to the citizens of Michigan. I agree that “personal protection insu rance 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 reque sts based on nothing more than a view of a majority of the Justices that the Court’s original opini on 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’ motiv ation for seeking rehearing.
16 United States Fidelity Ins & Guaran ty Co v Michigan Catastrophic Claims Ass’n , 483 Mich 913 (2009).
17 Ante at 11. Justice Weaver assert s 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 statutor y construction, and Justice Weaver offers no authority for it. Indeed, whether se parated by two words or two hundred, I believe that the meaning of benefits a nd 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 (1 981), for the proposition that “‘[c]overage’, a word of9 to protection afforded by an insurance policy or the sum of risks assumed by an insurance policy .” 20 I disagree, however, with th e 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 th e 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 sta ndard 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 insu rance 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) “protec tion against a risk or risks specified in an insurance policy”; (3) “the risks within the scop e 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 a nd 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 th e 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 consen t judgment and settle ment agreement are separate contractual, albeit judicially sanc tioned, agreements. They are distinctly

not “the no-fault personal protection insura nce coverages that are generally the subject of the act, i.e., t hose which were written in th is state to provide the compulsory security requirements of § 31 01(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 Jus tice Markman in his concurrence: The dissent is correct that th e reasonableness requirement of MCL 500.3107 is not inte grated into the indemn ification clause set forth in § 3104(2). [ USF&G I , supra ] at 457 [(Weaver, J., dissenting)]. However, the major ity opinion does not attempt to incorporate this requir ement 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 princi pled 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 insurers 26 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 NW 2d 660 (1989). See also USF&G I , supra at 437-439 (Markman, J., conc urring) (explaining that the consent judgment and settlement agreement are not part of the member insurer’s “coverages” because “[a] me mber insurer that informs the MCCA that it will only pay ‘reasonable’ claims, but then subseq uently modifies the policy after the accident occurs to include unreasona ble claims, has essentially sought reimbursement for claims for wh ich 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 charge d 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 peri od to which the premium applies, multiplied by the average premium per car. The average premium per car shall be the total premiu m calculated divided by the total written car years of insurance pr oviding the security required by section 3101(1) or 3103(1) writte n 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 grantin g rehearing in this case , the MCCA raised its rates by 19 percent per policy (or $693.8 million more pe r MCCA assessment in the aggregate for this year) to create the reserves necessary to pay the more expansive claims for unreasonable charges that the ne w majority’s opinion permits. Contrary to the new majority’s belie f 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 in surer’s incentive to negotiate reasonable settlements. Indeed, instead of providin g insurers a protective shield against unreasonable catastrophic claims, the majori ty opinion provides plaintiffs’ no-fault attorneys a lethal sword agai nst an insurer that insist s on a reasonable settlement. MCL 500.3148(1) provides that a claimant’s attorney fee is ch arged to the insurer “if the court finds that the insurer unr easonably refused to pay the claim or unreasonably delayed in making proper pa yment.” Under the majority’s decision, an insurer has no reason to refuse any cl aim; 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 associ ation shall be recognized in the ratemaking 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 atto rney and an insurer:13 Under the majority’s decision, insure rs will be encourag ed to negotiate

un reasonable settlements and pass these of f onto the MCCA. As stated, any liability that the MCCA must assume is eventually passe d on to anyone in Michigan who must buy auto insurance. Perhaps the majority can explain why th e legislative method for containing costs for Michigan’s no-fault insurance customers is an inferior purpose to their preferred policy objective. In particula r, why is it an inferior purpose at a time when the Governor has requested an auto insurance rate freeze 29 and unemployment in Mi chigan has excee ded 14 percent? 30 My point is not that our decision s hould be premised on keeping no-fault insurance affordable. Ind eed, 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 pena lties too. [MCL 500.3 148(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 Dire ctive 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/B IZ/906180412/1001/Michigan-joblessrate-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 <://www.lansingstatejournal.com/ar ticle/20090618/NEWS01/906180327> (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 ha s seen fit to engage in its own policymaking while relying on errone ous assumptions. This is a lethal combination that will result in harmful, unintended cons equences. 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 actin g on such an altruistic im pulse rather than applying the law results in a negative consequence for the vast majo rity of our citizens. In this context, each of us who must purchas e this mandatory no-fa ult coverage is a “little guy.” 33 Second, the majority empha sizes 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 ‘b ig insurance compan ies 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 middl e-class families and oppose the lavish perks and benefits that Supreme Court jus tices were bestowing on themselves.”).
33 The exception, of course, is the la wyer who makes a living doing no-fault insurance work. Fo r such practitioners, the majori ty’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 shall15 inconsistently but accurate ly) concedes that MCL 5 00.3104(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 s hoes of the member insurer.” 35 I previously agreed with these propositions. 36 Thus, I struggle to comp rehend for what purpose the majority resists the simple proposition that the MCCA is statutorily authorized to adjust claims. Third, “[p]laintiffs argu e[d] that if the MCCA ma y reject member insurer claims on the basis of the reasonableness of the charges, memb er insurers will need to seek assurances th at 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 ne w 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 th at member insurers would be reluctant to settle with the claima nt. Member insurers might then

[e]stablish procedures for reviewi ng claims procedur es and practices of members of the association. If the claims procedures or practices of a member are considered inad equate to properly service the liabilities of the association, the association may undertake or may contract with another person, includi ng another member, to adjust or assist in the adjustment of clai ms for the member on claims that create a potential liability to the asso ciation 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-base d rationale to depart from its own definitions of “coverages” because othe rwise “[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 explai n, 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 settleme nt agreements for approval.” 40 This is the very outcome that the plaintiff insurance comp anies here sought to avoid. Indeed, I believe that “requiring subm ission of proposed settlement agreements” or “seeking assurances that the MCCA will reimburse certain paym ents” 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 w ithin the context of reading MCL 500.3104(7)(g) in conjun ction with § 3104(7)(b), which provides that the MCCA shall [e]stablish procedures by which me mbers 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 ultim ately held legally liable for the injuries or damages. Solely for the purpose of reporting claims, the member shall in all instances cons ider 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 insure rs afford it the opportunity to object to proposed settlements or other agreements before they become binding. Ironically, it appears that ev en the majority does not de ny that the MC CA has this statutory power. Thus, the issue of delay is not re solved 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 $6 93.8 million bill that will be passed onto and shared by every Michigan automobile owner beca use of the increased and uncontrolled liability that the new majority’s op inion will create for the MCCA. We, as jurists, are ill-prepared to make complicated policy-based judgments unrelated to the policy choice s that the Legislature has en acted. 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 ro le as jurists, and the Le gislature’s role as policy-

41 Devillers , supra at 589. Indeed, the new majority’s response to my dissent underscores this point. The new majo rity asserts that “t here is no evidence that defendant has routinely or even occa sionally challenged the reasonableness of insurers’ settlements” and “it is unkno wn 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 Cour t, has the means to obtain the answers to those questions.18 maker, by interpreting the relevant statutor y 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 Legisl ature, 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 po licyholder in Mich igan will pay. Undeterred and aiming to quell the lik ely negative response to its policybased decision, the new majority assert s that my concerns “appear[] highly speculative and, in deed, unfounded.” 42 My concerns will cease to be “highly speculative” and “unfo unded” when they ar e reflected in th e MCCA’s annual assessments. Michigan dr ivers will soon receive their no-fault insurance bills (I have received mine) with the updated highe r MCCA assessment for the fiscal year beginning July 1, 2009. At that point, Michigan drivers will be free to determine for themselves whether my concer ns 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 INSURANC E COMPANY OF THE MIDWEST, Plaintiff-Appellee,
v No. 133468
MICHIGAN CATASTROPHIC CLAIMS ASSOCIATION, Defendant-Appellant.

M ARKMAN , J. ( dissenting ). I concur fully with the discussion in part IV of Justice Young’s dissenting opinion and therefore also dissent.

Stephen J. Markman