Opinion ID: 1664239
Heading Depth: 2
Heading Rank: 1

Heading: BCBSM'S Reliance on Dartmouth College Is Misplaced

Text: BCBSM bases its claim of 1980 PA 350's unconstitutionality in no small part on the premise that it is a private corporation and that any intrusion on its operations by the provisions of 1980 PA 350 impairs its contract with the state. The Attorney General, on the other hand, contends that BCBSM is a quasi-public corporation and, as such, has the responsibility to act in the public interest. In support of its claim, BCBSM places great reliance on the well-known case of Trustees of Dartmouth College v Woodward, 17 US (4 Wheat) 518; 4 L Ed 629 (1819). The Dartmouth College case stands for the principle that the charter of a private corporation is a contract and any modification of a corporation charter by a state in the absence of a specific reservation of power violates the Contract Clause. We find BCBSM'S reliance to be misplaced. Dartmouth College reflects an earlier era of Contract Clause analysis. Allied Structural Steel Co v Spannaus, 438 US 234, 241; 98 S Ct 2716; 57 L Ed 2d 727 (1978). Beginning with the landmark case of Home Building & Loan Ass'n v Blaisdell, 290 US 398; 54 S Ct 231; 78 L Ed 413 (1934), the modern United States Supreme Court has construed the Contract Clause as not prohibiting a state from exercising its police power to abrogate private or public contracts if reasonably related to remedying a social or economic need of the community. Under modern Contract Clause analysis, a balancing approach has been adopted by the courts, weighing the degree of the impairment of the contractual rights and obligations of the parties against the justification for the impairment as an act of the state's police power to implement legislation for a legitimate public purpose. Michigan courts have followed this lead. See Van Slooten v Larsen, 410 Mich 21; 299 NW2d 704 (1980) (see in particular Justice LEVIN'S dissenting opinion); Metropolitan Funeral System Ass'n v Ins Comm'r, 331 Mich 185, 194 ff.; 49 NW2d 131 (1951), and federal cases cited therein. [22] This balancing test applies whether BCBSM is a private or quasi-public entity. Consequently, the question of BCBSM'S corporate nature is not paramount to our resolution of the Contract Clause challenge, but, rather, as will be set forth below, the critical issue is whether and to what extent BCBSM has been regulated in the past. The more heavily regulated the industry, the less severe the impairment, if any, effected by state regulation since further regulation in the area should have been expected.