Opinion ID: 794595
Heading Depth: 3
Heading Rank: 3

Heading: Dunn v. Detroit Automobile Inter-Insurance Exchange

Text: 25 Defendant, however, asks this Court to apply the Michigan Court of Appeals decision in Dunn, as opposed to the Michigan Supreme Court's decision Sibley. The facts of Dunn are similar to those in Sibley. Id. at 154-55. In contrast to Sibley, however, the no-fault insurance company in Dunn did not attempt to deny coverage pursuant to § 3109 of Michigan Complied Laws, which allows a no-fault insurer to subtract benefits provided, or required to be provided, under federal or state law from its coverage, but rather under the terms of its own policy. Id. at 154, 159-60. The policy at issue was a coordinated benefits plan offered pursuant to MCL § 3109a. Id. at 159-60. The no-fault insurance company argued that the insured had voluntarily selected a lower premium plan for less coverage. Id. Thus, the company argued that it should not have to pay for benefits that the insured agreed to reimburse to another company under another insurance policy. Id. The Dunn court took the position that Sibley did not control the interpretation of a coordinated benefits plan. The court explained: 26 What distinguishes Sibley from the present case, however, is that in Sibley, the insured did not arrange a lower premium on the basis of such federal benefits; rather, insureds generally receive the benefit of lower premiums because the no-fault statute requires that state and federal benefits of that type be deducted from no-fault benefits. Insurers thus calculate actuarially the extent to which the general population of insureds will be able to avail itself of such benefits, and premiums are determined accordingly, without regard to the individual cases. Thus, in Sibley, the Court merely announced to the actuaries that they should consider only benefits to be paid and retained under such federal and state programs as being within the offset allowed. Here, in contrast, the ERISA-plan benefits are not provided under the laws of any state or federal government, that is, from the public treasury, but rather by virtue of funding furnished by plaintiff's employer. 27 Id. at 160. 28 While this Court recognizes that Dunn is more analogous to the instant case than Sibley because the instant case involves the interpretation of a coordinated benefits plan and not the language of the MNFIA, we decline to apply Dunn to this case. This Court is required to apply the law it believes that the Supreme Court of Michigan would apply. Welsh v. United States, 844 F.2d 1239, 1245 (6th Cir.1988). In that inquiry [this Court] may rely upon the analogous cases and relevant dicta in the decisional law of the State's highest court, opinions of the State's intermediate courts to the extent that they are persuasive indicia of State Supreme Court direction, and persuasive opinions from other jurisdictions. . . . Id. This Court, however, is not bound by state appellate court decisions that conflict with decisions of the highest court of the State. See id; J.C. Wyckoff & Associates v. Standard Fire Ins. Co., 936 F.2d 1474, 1485 (6th Cir.1991) (citations omitted). Dunn is a state appellate court decision, which conflicts with Sibley, a state supreme court case, and thus Dunn is not controlling Michigan law and does not bind this Court. 29 Although Dunn interprets an insurance policy, and Sibley interprets a statute inapplicable to this action, Dunn nonetheless conflicts with Sibley. First, MCL § 3109 and MCL § 3109a, mandating coordinated benefits plans, were enacted for identical purposes. Both seek to eradicate duplicative insurance coverage— one by allowing subtraction of benefits provided pursuant to law, and the other by mandating policies that provide coverage only from damages not covered by other policies. Compare Morgan v. Citizens Ins. Co. of Am., 432 Mich. 640, 442 N.W.2d 626, 628 (1989) (discussing the purpose of MCL § 3109) with Smith, 514 N.W.2d at 154 (discussing the purpose of MCL § 3109a) and Auto Club Ins. Ass'n, 485 N.W.2d at 697 (same). Additionally, the language of MCL § 3109 and the coordinated benefits policy in Dunn — and in this case — are similar. MCL § 3109 refers to benefits provided or required to be provided and the coordinated benefits plans refer to benefits paid or payable. Dunn, 657 N.W.2d at 154. Thus, in determining whether a benefit was provided under MCL § 3109 or paid under a coordinated benefits plan, this Court should assume that the Supreme Court of Michigan would take a consistent approach. 30 Second, the Dunn court's primary rationale conflicts with Sibley. The Michigan Court of Appeals based its holding in Dunn on the theory that the insured would receive duplicative benefits if allowed to keep his or her tort recovery and to receive no-fault insurance coverage. Dunn, 657 N.W.2d at 159-60. Sibley expressly holds, however, that such coverage is not duplicative because the tort recovery was for pain and suffering, whereas the insurance coverage was for medical benefits and lost income. See Sibley, 427 N.W.2d at 531. 31 Finally, and perhaps most importantly, the Dunn decision essentially allowed a no-fault insurer to receive reimbursement from tort damages. See generally Dunn, 657 N.W.2d at 153. As the Michigan Supreme Court noted in Sibley, by requiring an insured to pay for his or her own medical expenses from his or her tort recovery, the insurance company is saved from covering medical expenses and the tort victim thereby loses her tort recovery. Sibley, 427 N.W.2d at 531. Thus, in essence, the insurance company is receiving reimbursement from the tort recovery as surely as if its policy required such reimbursement. Id. This is expressly prohibited by Michigan law. Mich. Comp. Laws § 500.3116. 32 Moreover, the Dunn court's argument that one who pays reduced premiums under a coordinated benefits plans should not receive coverage equal to one who pays full premiums is severely misguided. See Dunn, 657 N.W.2d at 158. Persons select coordinated benefits plans because they have two insurance plans and correspondingly two sets of premiums. Persons who pay full coverage and choose not to select a coordinated benefits plan theoretically do so because they do not have other coverage. Thus, they pay one non-reduced premium. Theoretically, neither party is paying more in premiums, and neither is receiving more or less coverage. Instead, the difference is to whom they are paying the premium, and who bears the final cost of coverage. This is implicit in the MNFIA, which expressly defines what a no-fault insurance company must cover. Mich. Comp. Laws § 500.3107. 33 Nonetheless, the concurring opinion would hold that Dunn is distinguishable from Sibley because Dunn, in contrast to Sibley, involved whether a no-fault insurer had an obligation to compensate the plaintiff for funds repaid to a privately funded employer health care plan. Thus, according to the concurring opinion, the Dunn court did not consider the question in this case, namely whether Sibley 's statutory interpretation of what constitutes government benefits should be applied to the employer health care provider's payments. 34 Whether the amount paid is a government benefit or a private benefit is irrelevant to the resolution of this case (as it was irrelevant to the resolution of Dunn ). What is relevant is whether the benefit was paid. Under the express terms of the contract at issue in this case, whether State Farm has a duty to reimburse Plaintiff does not hinge on whether GEHA's payments constitutes government benefits but on whether they constitute amounts paid. The contract states that [b]enefits will be reduced by any amount paid or payable to [Shields] under any . . . individual, blanket or group accident or disability insurance. (J.A. at 275.) In fact, the coordinated benefits clause we are tasked with interpreting in this case does not even mention the term government benefits. (J.A. at 275.) 35 Sibley is relevant to this case not because it interpreted what constitutes a government benefit but because it interpreted when such benefits can actually be considered provided. See Sibley, 427 N.W.2d at 529-31. The Sibley court concluded that an amount was not provided if it had to be repaid. Id. The Sibley court's interpretation of provided informs our interpretation of paid. Consequently, the concurring opinion's attempt to distinguish Dunn is not well-taken. III.