Court Opinion

ID: 836309
Source: CourtListenerOpinion
Date Created: 2013-03-01 21:13:29.898875+00
Date Added: 2024-06-11T08:35:01.220458
License: Public Domain

Michigan Supreme Court
                                                                       Lansing, Michigan
                                                Chief Justice:       Justices:

Opinion                                         Marilyn Kelly        Michael F. Cavanagh
                                                                     Elizabeth A. Weaver
                                                                     Maura D. Corrigan
                                                                     Robert P. Young, Jr.
                                                                     Stephen J. Markman
                                                                     Diane M. Hathaway

                                                                 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 INSURANCE COMPANY OF THE
 MIDWEST,

       Plaintiff-Appellee,

 v                                                                 No. 133468

 MICHIGAN CATASTROPHIC CLAIMS
 ASSOCIATION,

       Defendant-Appellant.

 BEFORE THE ENTIRE BENCH

                                    1
WEAVER, J.

       This Court originally granted leave to appeal to consider whether MCL

500.3104(2) obligates the Michigan Catastrophic Claims Association (MCCA) to

reimburse a member insurer for personal protection insurance (PIP) benefits paid

to a claimant without regard to the reasonableness of the 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 coverage 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 Midwest filed motions for rehearing. We

granted the plaintiffs’ motions for rehearing, and these cases were resubmitted for

decision without further briefing or oral argument.2

       We now hold that the indemnification obligation set forth in MCL

500.3104(2) does not incorporate the reasonableness standard that MCL 500.3107

requires between claimants and member insurers.         Furthermore, the powers

granted to the MCCA in § 3104(7) are limited to adjusting the “practices and

procedures” of the member insurers and do not encompass adjustment to the

       1
        United States Fidelity Ins & Guaranty Co v Michigan Catastrophic
Claims Ass’n, 482 Mich. 414, 417; 759 NW2d 154 (2008).
       2
         United States Fidelity Ins & Guaranty Co v Mich Catastrophic Claims
Ass’n, 483 Mich. 918 (2009).

                                         2
payment amount agreed to between claimants 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 reasonableness 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 Insurance & Guaranty Co v MCCA

      In the first case in these consolidated appeals, Daniel Migdal was injured in

a 1981 car accident in which he sustained catastrophic injuries. His injuries

included a traumatic brain injury with cerebral 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 1988, Michael Migdal

(Mr. Migdal), Daniel’s father and the conservator of Daniel’s estate, sued the no-

fault insurance provider, United States Fidelity Insurance & 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 liability for nursing care

provided before May 10, 1989. Additionally, USF&G agreed to pay $17.50 an

                                         3
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 care. 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 compounded based on the previous year’s rate.

       Pursuant to the consent judgment, USF&G paid Mr. Migdal the consented-

to 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 exceeded 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 manage 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 Daniel 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 books, 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 insurance coverages in excess of the
       following amounts in each loss occurrence . . . .
At the time of both accidents involved in these consolidated appeals, the threshold
amount was $250,000.
                                          4
unreasonable. In 2003, USF&G filed a complaint in the Oakland Circuit Court for

a declaratory judgment that the MCCA must reimburse USF&G for the total

amount that USF&G paid to Mr. Migdal under 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 agreed-

upon rate of $54.84 an hour was unreasonable 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 moved for summary disposition. It contended that

there was no question of material fact that the payments made by USF&G to Mr.

Migdal were unreasonable. Moreover, the MCCA argued that the no-fault act

only required reimbursement of payments that are reasonable. In a countermotion

for summary disposition, USF&G argued that 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 been subject to judicial modification on
the ground that the payment amount it called for had become unreasonable with
the passage of time.
                                         5
unreasonableness regarding the amount paid. Alternatively, USF&G argued that

there was a question of material fact concerning the “unreasonableness” of the

consent judgment.

       The trial court granted USF&G’s motion 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 trial court denied the MCCA’s motion for

summary disposition. The trial court entered a judgment requiring the MCCA to

reimburse USF&G in the amount of $1,725,072 under the no-fault act and holding

the MCCA liable for future payments consistent with the consent judgment. The

parties agreed to stay the 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 consolidated appeals, Robert Allen was injured

in a 2001 car accident in which he sustained catastrophic 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 the nurse. In 2003, Hartford agreed to pay an increased rate

       8
           MCL 500.3104(2).
                                        6
of $30 an hour for Allen’s care. Soon thereafter, 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.    Hartford 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 MCCA must reimburse Hartford for the total

payments above the $250,000 threshold, regardless of the reasonableness of the

payments.   After the initial filing, Hartford moved for summary disposition,

arguing that the no-fault act required the MCCA to reimburse Hartford for the

entire amount paid to Allen that exceeded 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 amount of the payments. The circuit court

ruled that reasonableness was an element in determining how much the MCCA

must reimburse Hartford and that there was insufficient discovery to determine if

the payments were reasonable. 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 ‘reasonableness’ requirement and

requires the MCCA to reimburse insurers for the actual amount of PIP benefits

                                        7
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 Court of Appeals and remanding for further

proceedings, while holding that “when a member insurer’s policy only provides

coverage for ‘reasonable charges,’ the MCCA has authority to refuse to indemnify

unreasonable charges.”11 Subsequently, plaintiffs United States Fidelity Insurance

& Guaranty Company and Hartford Insurance Company of the Midwest filed

motions for rehearing. We granted the plaintiffs’ motions for rehearing and this

case was resubmitted for decision without further briefing or oral argument. 483
Mich. 913 (2009).12

      9
        United States Fidelity Ins & Guaranty 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 & Guaranty 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 well after the motions for rehearing have been decided
to attack the remaining justices who did not vote to retain this Court’s earlier
decision.
       The dissent erroneously asserts that the justices voting to grant rehearing
erred because Peoples v Evening News Ass’n, 51 Mich. 11, 21; 16 N.W. 185 (1883),
held that this Court is precluded from granting rehearing when the composition of
the Court has changed, absent any new arguments from the parties in the cases.
However, contrary to the dissent’s assertions, this Court merely stated in Peoples
that a change in the composition of this Court cannot be the basis for granting
rehearing.
       Accordingly, if the composition of the 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 court concluded that the challenged opinion
                                        8
                              II. Standard of Review

       Statutory interpretation is a question of law, which this Court reviews de

novo. In re Investigation of March 1999 Riots 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 catastrophic injury.

Specifically, is the MCCA liable for reimbursement 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 overarching rule of statutory construction is

was erroneous, those justices can vote to grant rehearing. The same holds true
whether the deciding vote is a new justice who joined the court after the
challenged opinion was released or whether the deciding vote comes from a justice
who signed the challenged opinion and changed 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 cases. It is up to the moving party to show
palpable error that would lead 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 MCR 2.119(F)(3) states that a motion for
rehearing will generally not be granted if the motion only presents the same
arguments decided in the original disposition of the case, MCR 2.119(F)(3)
explicitly refrains from “restricting 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 granted rehearing in this case.
                                          9
“that this Court must enforce clear and unambiguous statutory provisions as

written.”   In re Certified Question (Preferred Risk Mut Ins Co v Michigan

Catastrophic Claims Ass’n), 433 Mich. 710, 721; 449 NW2d 660 (1989)

(quotation marks omitted). “If the language of [a] statute is unambiguous, the

Legislature must have intended the meaning 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 shares a deep nexus with the intent of

the Legislature. “The primary goal of statutory interpretation is to give effect to

the intent of the Legislature.” Title Office, Inc v Van Buren Co Treasurer, 469
Mich. 516, 519; 676 NW2d 207 (2004), quoting In re MCI Telecom Complaint‚

460 Mich. 396, 411; 596 NW2d 164 (1999). Fundamentally, “[t]his task begins

by examining the language of the statute itself. The words of a statute provide the

most reliable evidence of [the Legislature’s] intent . . . .” Sun Valley, 460 Mich at

236 (citation and quotation 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 U.S. 137,

                                        10
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 grammatical 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 provisions correspond within the

entire statutory scheme. Section 3104(2) requires that the MCCA “shall provide

and each member shall accept indemnification for 100% of the amount of

ultimate loss sustained under personal protection insurance 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 incurred for reasonably necessary products,

services and accommodations for an injured person’s care, recovery or

rehabilitation.” This provision requires that all PIP benefits claimed and paid

between the insurer and the insured must be reasonable. The MCCA argues that

this Court should incorporate the § 3107 definition of “benefits” into § 3104(2)

where § 3104(2) refers to “coverages.” However, 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 increase over time. At the time of both
accidents, the threshold amount was $250,000. In 2008, the threshold amount was
$440,000. See MCL 500.3104(2)(a)-(k).
                                        11
         When the Legislature uses different words, the words are generally

intended to connote different meanings. Simply put, “the use of different terms

within similar statutes generally 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 meaning in both statutory provisions, it

would have used the same word. Therefore, 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 NW2d 775 (1981) (“‘Coverage’,

a word of precise meaning in the insurance industry, refers to protection afforded

by an insurance policy, or the sum of the risks assumed by a policy of

insurance.”). Although the 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) provides, in pertinent part:

                Except as provided in subsection (2), personal protection
         insurance benefits are payable for the following:

                (a) Allowable expenses consisting of all reasonable charges
         incurred for reasonably necessary products, services and
         accommodations for an injured person’s care, recovery, or
         rehabilitation. Allowable expenses within personal protection
         insurance coverage shall not include charges for a hospital room in
                                         12
      Section 3107 excludes from the definition of “allowable expenses” within

PIP “coverages” hospital charges in excess of reasonable and customary semi-

private room charges and funeral and burial 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 limited 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 statutory language must

be read and understood in its grammatical context, unless it is clear that

something different was intended.”). In the grammatical context, the meaning of

“coverages” is its common meaning, limited 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 customary charge for semiprivate
      accommodations . . . or for funeral and burial expenses in the
      amount set forth in the policy which shall not be less than $1,750.00
      or more than $5,000.00. [Emphasis added.]
      15
           Webster’s II New College Dictionary (1995).
      16
           Random House Webster’s Dictionary (2001).
                                         13
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 agreement with the respective insureds. This

contractual liability, or coverage, owed by each insurer is the total amount agreed

to between the original contracting parties. The reasonableness of the agreed

payment amount is not a factor.

      The meaning of “coverages” in MCL 500.3107 becomes clearer after

considering “‘its placement and purpose 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.” “Ultimate 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 100 percent of the

ultimate loss, which reflects the amount to which the insurer and the insured

agreed, and subject to PIP coverage. The ultimate loss specifically refers to

      17
           Black’s Law Dictionary (7th ed).
      18
           Black’s Law Dictionary (5th ed).
                                         14
coverage, which is broader than benefits and is not statutorily limited to

reasonable payments.19

       Moreover, the MCCA is not a no-fault insurer of its member companies,

and the member companies are not injured persons entitled to no-fault

indemnification. Thus, the relationship between the MCCA and its members is

not subject to the reasonableness requirements found in MCL 500.3107. Rather,

the Legislature provided in § 3104(2) that the MCCA would “indemnify” the

insuring members for PIP payments. The Legislature did not state that the MCCA

would “insure” or “reinsure” the members for 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 like an insurance plan. Instead, it is a set

security meant to assist against 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 any 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 insurers will have no incentive to make reasonable
settlements that do not exceed the statutory threshold amount because the insurers
will not be liable to pay anything beyond the threshold amount. However, one
incentive comes from higher premiums paid to the MCCA. See MCL
500.3104(7)(d) (requiring that the MCCA assess 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 insurance premiums will increase greatly.
                                           15
it is also not a reinsurer. Because the MCCA is not a no-fault insurer, but, rather,

an indemnitor of no-fault insurers for benefits in excess of the statutory threshold,

§ 3107 does not directly bind the MCCA; 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 637 (1990) (emphasis added).

Specifically, it is the insurance company that has the right to deny a claim (or part

of a claim) for unreasonableness under § 3107. The insured then has the burden to

prove that the charges are in fact reasonable. See generally Nasser, 435 Mich. 33,

Manley v Detroit Automobile 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 company would benefit

from not having the burden of proof in one instance against 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 and will be a disincentive for member insurers to keep

payments reasonable.       These fears are unfounded.          The MCCA is an

unincorporated nonprofit association, whose purpose is to provide insurers with

indemnification for PIP policies that exceed a certain threshold.         See MCL

500.3104(1). The Legislature created the MCCA “in response to concerns that

Michigan’s no-fault law provision for unlimited [PIP] benefits placed too great a

                                         16
burden on insurers, particularly small insurers, 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 claim payments are unreasonable. Yet, the

MCCA acknowledges that a member can take the MCCA to court over a

reasonableness dispute, which would leave a finder of fact as the ultimate

authority over whether the payments are reasonable.

       In essence, under the MCCA’s preferred outcome, when a member insurer

makes an agreement with an insured (often in a litigation setting, whether it be an

arbitration hearing, consent judgment, or declaratory judgment), the member must

then sue the MCCA if the MCCA finds that the payment is unreasonable. If this

Court were to accept the MCCA’s argument, the logical consequence would be

that member insurers would be reluctant to settle with the claimant. Member

insurers might then force a jury trial with every catastrophically injured claimant

in order to secure a verdict with a “reasonable” stamp on the result. This outcome

goes against the legislative purpose of assuring 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 accidents 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 protect against unreasonable payments. The

                                         17
Legislature specifically laid out powers that the MCCA can exercise to guard

against unreasonable settlements of catastrophic claims. MCL 500.3104(7)(b)

states that the MCCA shall

      [e]stablish procedures by which members 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 ultimately held legally liable for the
      injuries or damages. Solely for the purpose of reporting claims, the
      member shall in all instances 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 claim. [Emphasis added.][20]

This statutory language requires and empowers the MCCA to establish procedures

to protect itself from unreasonable settlements 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 whenever the member reasonably anticipates that the

claim will involve the MCCA.

      20
       Section 3104 includes numerous other 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 Association such information as
      the Board may require on forms prescribed by the Board: (a) As
      soon as practicable after the loss occurrence, Members shall report
      each claim which, on the basis of the 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.
                                          18
       Only then, not after the claimant and member insurer have reached a

settlement, can the MCCA exercise control over the settlement process. Under

MCL 500.3104(7)(g), the MCCA must

       [e]stablish procedures for reviewing claims procedures and practices
       of members of the association. If the claims procedures or practices
       of a member are considered inadequate 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 association and may charge the cost
       of the adjustment to the member. [Emphasis added.]

Thus, when § 3104(7)(g) is read in conjunction with § 3104(7)(b), the outcome is

that the MCCA is required to review those reports by members that anticipate

needing indemnification and to assess the adequacy of the procedures or practices
                    22
of the member.           Upon a finding of inadequacy, the MCCA can adjust the

practices or procedures of the member.23 One of the key protections 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 conclude that since the section
does not set forth a duty to act in a specific way (e.g., review claims), it allows the
MCCA to act how it wants regarding member claims, including questioning their
reasonableness. This is erroneous. The premise and purpose of the MCCA is to
indemnify insurers for payments beyond the threshold amount, so that insurance
firms of all sizes can compete in Michigan’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 the member’s expense, direct that
       an authorized representative of the Association (which may be
                                            19
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, the MCCA can protect itself against later having to pay

unreasonable claims from member 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 not 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 inspect such member’s records and
       compile the required information and data. [Art X, § 10.02.]
       24
          Although § 3104(7)(g) states that the MCCA may “adjust or assist in the
adjustment of claims,” the practical effect of § 3104(7)(g) is that only the MCCA
is able to prescribe procedures 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 adjustment 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 claim with the member insurer, not the
member insurer’s reimbursement claim with the MCCA. Accordingly, the
MCCA, standing in the shoes of the member insurer, is limited to the member
insurer’s power to review the insured’s claim for reasonableness 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 settlement already has
been reached.
                                         20
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 provisions of this section, which shall

provide for the economical, fair, and nondiscriminatory administration of the

association and for the prompt and efficient 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 interpret § 3104(8)(g) as granting the MCCA the

limited power to further its purpose of prompt and efficient indemnification of its

members. To interpret that section as granting any further power, such as the

power to decline indemnification on the basis of the reasonableness of the

indemnification amount, would be inconsistent with the Legislature’s intent.

                           IV. Response to the Dissent

      The dissent raises the concern that a decision in favor of plaintiffs in this

case will result in substantially increased insurance costs. Certainly, insurance

costs are a critical concern, but they are a policy concern that belongs to the

Legislature. Nonetheless, we observe that the concern appears highly speculative

and, indeed, unfounded. There is no evidence that insurers have engaged or will

                                        21
engage in slack negotiations. It bears mentioning here that there is no indication

that the settlements in these cases 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 estimated increase in costs. And there is

reason to wonder about this estimate, at least inasmuch as it might be based on an

anticipated decision from this Court.

       First, there is no evidence that defendant has routinely or even occasionally

challenged the reasonableness of insurers’ settlements with their insureds until

very recently. It is difficult to understand how it will cost defendant extravagant

sums to give up a practice it has only recently begun. Second, it is unknown

whether the actuarial assessment factored in the effect of defendant’s potential use

of the cost-containment procedure actually provided by the Legislature in MCL

500.3104(7)(g).

       As mentioned, the Legislature has provided that “[i]f the claims procedures

or practices of a member are considered inadequate to properly service the

liabilities of the association, the association may undertake . . . to adjust or assist

in the adjustment of claims for the member 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 cost-savings mechanism.

                                          22
      The dissent additionally fails to recognize that there is a compelling policy

reason to reject defendant’s claim that it may review settlements for

reasonableness: namely, to limit litigation and promote settlements. This Court

has long recognized that “[t]he goal of the no-fault insurance system was to

provide victims of motor vehicle accidents assured, adequate, and prompt

reparation for certain economic losses.” Nelson v Transamerica Ins Services, 441
Mich. 508, 514; 495 NW2d 370 (1992) (citation and 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 settle 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 reasonableness assessments, such as this

one, would be inevitable. There is no evidence that the actuarial assessment on

which the dissent relies has accounted for the substantial increase in litigation

costs that would result if this Court allows defendant the extra-statutory power to

question settlements for reasonableness after they are made.

      But, again, these are policy concerns best addressed by the Legislature. It

appears that the Legislature has indeed balanced these concerns in the provisions

of MCL 500.3104, and there is no reason for this Court to apply a strained

                                        23
construction to the statutes to achieve a goal contrary to the purposes of the no-

fault act. In the unlikely event that insurers become milquetoast negotiators,

defendant has the statutorily provided protection to remedy the situation.

                                  V. Conclusion

       We hold that the indemnification obligation set forth in § 3104(2) does not

incorporate the reasonableness standard that § 3107 requires between claimants

and member insurers. Furthermore, the powers granted to the MCCA in § 3104(7)

are limited to adjusting the “practices and procedures” of the member insurers and

do not encompass adjustment to the payment amount agreed to between claimants

and member insurers. Finally, we hold that 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 percent of the ultimate loss 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. Hathaway

                                        24
                         STATE OF MICHIGAN

                                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 INSURANCE COMPANY OF THE
MIDWEST,

      Plaintiff-Appellee,

v                                               No. 133468

MICHIGAN CATASTROPHIC CLAIMS
ASSOCIATION,

      Defendant-Appellant.

YOUNG, J. (dissenting).

      I respectfully dissent.
      On December 29, 2008, this Court decided these cases.1 Today, just a few

months later, a new majority2 reverses that decision and it does so without even

affording the parties an opportunity to brief and argue why this reversal is

warranted. Although not relevant to my analysis of the substantive issue in these

cases,3 the costs that the majority’s decision will impose on Michigan drivers is

relevant to assessing the majority’s hurried approach and policy-based reversal of

this Court’s prior decision. As I will discuss later, the majority’s decision will

cause every Michigan resident who owns and insures an automobile to pay a 19

percent higher annual surcharge premium for mandatory catastrophic coverage.

The cost of the majority’s decision to those with insured automobiles will be an

estimated $693.8 million more for the coming year alone.4

                                 I. What Changed?

      The facts have not changed. The text 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 changed. Yet, within a matter of months, a

      1
        United States Fidelity Ins & Guaranty Co v Michigan 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 new 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 rehearing, the Michigan 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 catastrophic 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 rehearing, attached hereto as an appendix.
                                        2
decision of this Court, thoughtfully briefed, argued, and considered by seven

justices, is no longer worth 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, 2008. On November 4, 2008, Justice

Hathaway defeated then-Chief Justice Taylor in the election for his seat on this

Court. This case was decided on December 29, 2008, with former Chief Justice

Taylor casting his vote with the majority.

       The new majority’s opinion today offers no new rationale or argument. In

fact, it is merely an extended quotation of Justice Weaver’s former dissent.

       For over a century this Court has adhered to the principle that a motion for

rehearing should be denied unless a party has raised an issue of fact or law that

was not previously considered but 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 N.W. 37
(1886); Thompson v Jarvis, 40 Mich. 526, 526 (1879).
       6
           See MCR 2.119(F)(3), which provides:
               Generally, and without restricting the discretion of the court,
       a motion for rehearing or reconsideration which merely presents the
       same issues ruled on by the court, either expressly or by reasonable
       implication, will not be granted.         The moving party must
       demonstrate a palpable error by which the court and the parties have
       been misled and show that a different disposition of the motion must
       result from correction of the error.

                                          3
       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 difference is in the membership of this Court. As early

as 1883, this Court had the wisdom to realize 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 having 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 rehearing 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 change in the Court has taken place, the

new majority has overruled the longstanding 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 that this Court was previously misled.
Plaintiffs and the new majority simply disagree with this Court’s prior opinion for
the reasons previously stated in the flawed analysis of Justice Weaver’s dissent.
       7
           51 Mich. 11; 16 N.W. 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 N.W. 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 N.Y.S. 16 (NY Comm Pl,
1888).
                                           4
any change in an assigned judge now justify the reopening of a predecessor’s

ruling?

       It is apparent that the new majority feels unencumbered by such

principles—even one that has endured for more than 100 years. And, perhaps, its

members no longer feel a need to be cosseted by the concerns and beliefs that they

professed to have for the past decade when they were members of the

philosophical minority of this Court. Indeed, Chief Justice Kelly once exclaimed

that a recent decision of the Court being reconsidered “has hardly had time to

become outmoded.”10 Justice Cavanagh similarly protested that “[i]f a majority of

the Court believes that reconsideration should 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 (1999) (Kelly, J., dissenting).
       11
          Id. at 1236-1237 (Cavanagh, J., dissenting) (emphasis added). Unlike
this case, the defendants in McCready cited new authority for their position.
Nevertheless, Chief Justice Kelly and Justice Cavanagh were adamant that this
Court erred by considering the new authority on rehearing. It is indeed at least
curious that Chief Justice Kelly and Justice Cavanagh opposed the remand order in
McCready, which was premised on new authority, but freely joined this Court’s
order for rehearing “without further briefing or oral argument,” United States
Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 483 Mich. 913
(2009), and the reversal of this Court’s opinion without any new issues being
raised.
       Moreover, I find it odd that Justice Hathaway, who, during her Supreme
Court campaign, actively promoted the fabrication 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 allowing the party opposing
the motion to have its day in court.           See minutes 4:28 to 4:40 at
 (accessed June 3, 2009).
                                          5
       Because nothing in the facts, arguments, or legal rationale has changed, I

continue to support this Court’s original 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 off on the Michigan Catastrophic Claims

Association (MCCA), a nonprofit entity created by the Legislature to spread the

costs associated with catastrophic automobile injuries, these “unreasonable”

expenses. In our earlier decision, we held that the MCCA had explicit statutory

authority to resist assuming responsibility for an insurance company’s

unreasonable payouts.

       Plaintiff United States Fidelity Insurance & Guaranty Company (USF&G)

entered into a consent judgment with its insured, 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 may 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 insurance company can agree to overcompensate its insured
and escape this burden by having the rest of Michigan 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 insured, Daniel Migdal, to cover costs
associated with his catastrophic 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, Medical
                                            6
Insurance Company of the Midwest (Hartford) entered into a settlement agreement

with its insured, Robert Allen, which required that Hartford pay $30 an hour for

attendant care services. The MCCA refused to indemnify USF&G and Hartford

beyond a rate of $22.05 and $20 respectively, rejecting the higher amounts as

“unreasonable.”

      Plaintiffs brought these actions seeking declaratory judgments that the

MCCA was required to reimburse the full rate of attendant care services that they

paid their insureds. The circuit courts entered conflicting judgments and the

aggrieved parties appealed. The Court of Appeals consolidated the appeals and

held that “the MCCA is statutorily required to reimburse an insurer for 100

percent of the amount that the insurer paid in PIP [personal protection insurance]

benefits to an insured in excess of the statutory threshold listed in MCL

500.3104(2), regardless of the reasonableness of these payments.”13 The MCCA

sought leave to appeal in this Court, which was granted, and this Court held that

“when a member insurer’s policy only provides coverage for ‘reasonable charges,’

the MCCA has authority to refuse to indemnify unreasonable charges.”14

Management pays the nurses (who actually provide Daniel’s care) an average of
$32 an hour (including benefits!) and retains the remainder of the USF&G hourly
payment for itself. So inflated was the USF&G payment that, after paying for all
of Daniel’s care, Medical Management earned from this arrangement
approximately $200,000 in profits for 2003. Under the majority’s new opinion, it
will be Michigan policyholders, not USF&G, who will pay for the profits of
Daniel’s father.
      13
         United States Fidelity Ins & Guaranty Co v Michigan Catastrophic
Claims Ass’n, 274 Mich. App. 184, 192; 731 NW2d 481 (2007).
      14
           USF&G I, supra at 417.
                                        7
       Because the composition of this Court changed on January 1, 2009,

USF&G and Hartford sought rehearing15 and the new majority granted this motion

“without further briefing or oral argument.”16

                                     IV. Discussion

       As previously noted, at issue is whether the MCCA has the authority to

refuse to indemnify member insurers for unreasonable payments they make to

their policyholders. I agree with many points of the majority’s new opinion, but

the points of my disagreement are significant and the results of our differences

will be extremely costly to the citizens of Michigan.

       I agree that “personal protection insurance 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 requests based on nothing more than a view
of a majority of the Justices that the Court’s original opinion 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’ motivation for seeking rehearing.
       16
         United States Fidelity Ins & Guaranty Co v Michigan Catastrophic
Claims Ass’n, 483 Mich. 913 (2009).
       17
          Ante at 11. Justice Weaver asserts 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 statutory construction, and Justice Weaver offers
no authority for it. Indeed, whether separated by two words or two hundred, I
believe that the meaning of benefits and 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 (1981), for the proposition that “‘[c]overage’, a word of
                                           8
to protection afforded by an insurance policy or the sum of risks assumed by an

insurance policy.”20        I disagree, however, with the 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 the 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 standard 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 insurance 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) “protection against a risk or risks specified in an insurance
policy”; (3) “the risks within the scope 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.
                                            9
standard for the MCCA’s review because the policy establishes the ‘personal

protection insurance coverages.’”22

      Referring to the consent judgment and 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 the 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 consent judgment and settlement agreement are

separate contractual, albeit judicially sanctioned, agreements. They are distinctly

not “the no-fault personal protection insurance coverages that are generally the

subject of the act, i.e., those which were written in this state to provide the

compulsory security requirements of § 3101(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 Justice Markman in his concurrence:
             The dissent is correct that the reasonableness requirement of
      MCL 500.3107 is not integrated into the indemnification clause set
      forth in § 3104(2). [USF&G I, supra] at 457 [(Weaver, J.,
      dissenting)]. However, the majority opinion does not attempt to
      incorporate this requirement 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).
                                          10
or registrant of a motor vehicle required to be registered in this state’ . . . .”24

Because the majority offers no principled 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 insurers26 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 NW2d 660 (1989). See also
USF&G I, supra at 437-439 (Markman, J., concurring) (explaining that the
consent judgment and settlement agreement are not part of the member insurer’s
“coverages” because “[a] member insurer that informs the MCCA that it will only
pay ‘reasonable’ claims, but then subsequently modifies the policy after the
accident occurs to include unreasonable claims, has essentially sought
reimbursement for claims for which 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 charged 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 period to which the premium applies,
       multiplied by the average premium per car. The average premium
       per car shall be the total premium calculated divided by the total
       written car years of insurance providing the security required by
       section 3101(1) or 3103(1) written in this state of all members
       during the period to which the premium applies.
                                         11
those who buy no-fault insurance.27 Indeed, this Court has been informed that in

response to the order granting rehearing in this case, the MCCA raised its rates

by 19 percent per policy (or $693.8 million more per MCCA assessment in the

aggregate for this year) to create the reserves necessary to pay the more expansive

claims for unreasonable charges that the new majority’s opinion permits. Contrary

to the new majority’s belief 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 insurer’s incentive to negotiate reasonable

settlements.   Indeed, instead of providing insurers a protective shield against

unreasonable catastrophic claims, the majority opinion provides plaintiffs’ no-fault

attorneys a lethal sword against an insurer that insists on a reasonable settlement.

MCL 500.3148(1) provides that a claimant’s attorney fee is charged to the insurer

“if the court finds that the insurer unreasonably refused to pay the claim or

unreasonably delayed in making proper payment.” Under the majority’s decision,

an insurer has no reason to refuse any claim; 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 association shall be recognized in the rate-
making 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 attorney and an insurer:
                                        12
Under the majority’s decision, insurers will be encouraged to negotiate

unreasonable settlements and pass these off onto the MCCA. As stated, any

liability that the MCCA must assume is eventually passed on to anyone in

Michigan who must buy auto insurance.

      Perhaps the majority can explain why the legislative method for containing

costs for Michigan’s no-fault insurance customers is an inferior purpose to their

preferred policy objective. In particular, why is it an inferior purpose at a time

when the Governor has requested an auto insurance rate freeze29 and

unemployment in Michigan has exceeded 14 percent?30

      My point is not that our decision should be premised on keeping no-fault

insurance affordable.     Indeed, 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 penalties too. [MCL 500.3148(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 Directive 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/BIZ/906180412/1001/Michigan-jobless-
rate-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/article/20090618/NEWS01/906180327>
(accessed June 28, 2009).
                                        13
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 has seen fit to engage in its own policy-

making while relying on erroneous assumptions. This is a lethal combination that

will result in harmful, unintended consequences. 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 acting on such an altruistic impulse rather than applying

the law results in a negative consequence for the vast majority of our citizens. In

this context, each of us who must purchase this mandatory no-fault coverage is a

“little guy.”33

        Second, the majority emphasizes 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 ‘big insurance companies 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 middle-class families and oppose the lavish
perks and benefits that Supreme Court justices were bestowing on themselves.”).
        33
         The exception, of course, is the lawyer who makes a living doing no-fault
insurance work. For such practitioners, the majority’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
shall

                                         14
inconsistently but accurately) concedes that MCL 500.3104(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 shoes of the member insurer.”35 I previously agreed with

these propositions.36      Thus, I struggle to comprehend for what purpose the

majority resists the simple proposition that the MCCA is statutorily authorized to

adjust claims.

       Third, “[p]laintiffs argue[d] that if the MCCA may reject member insurer

claims on the basis of the reasonableness of the charges, member insurers will

need to seek assurances that 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 new 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 that member insurers would be
       reluctant to settle with the claimant. Member insurers might then

       [e]stablish procedures for reviewing claims procedures and practices
       of members of the association. If the claims procedures or practices
       of a member are considered inadequate 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 association 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.
                                          15
       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-based rationale to depart from its own

definitions of “coverages” because otherwise “[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 explain, 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 settlement agreements for approval.”40 This is the very

outcome that the plaintiff insurance companies here sought to avoid. Indeed, I

believe that “requiring submission of proposed settlement agreements” or “seeking

assurances that the MCCA will reimburse certain payments” 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 within the context
of reading MCL 500.3104(7)(g) in conjunction with § 3104(7)(b), which provides
that the MCCA shall
       [e]stablish procedures by which members 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 ultimately held legally liable for the
       injuries or damages. Solely for the purpose of reporting claims, the
       member shall in all instances 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 claim. [Emphasis added.]
                                          16
(indeed, it should) and mandate that member insurers afford it the opportunity to

object to proposed settlements or other agreements before they become binding.

Ironically, it appears that even the majority does not deny that the MCCA has this

statutory power.

      Thus, the issue of delay is not resolved 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 $693.8 million bill that will be passed onto and shared

by every Michigan automobile owner because of the increased and uncontrolled

liability that the new majority’s opinion will create for the MCCA.

      We, as jurists, are ill-prepared to make complicated policy-based judgments

unrelated to the policy choices that the Legislature has enacted. 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 role as jurists, and the Legislature’s role as policy-

      41
          Devillers, supra at 589. Indeed, the new majority’s response to my
dissent underscores this point. The new majority asserts that “there is no evidence
that defendant has routinely or even occasionally challenged the reasonableness of
insurers’ settlements” and “it is unknown 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 Court, has the means to obtain the answers to
those questions.
                                        17
maker, by interpreting the relevant statutory 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 Legislature, 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 policyholder in Michigan will pay.

      Undeterred and aiming to quell the likely negative response to its policy-

based decision, the new majority asserts that my concerns “appear[] highly

speculative and, indeed, unfounded.”42 My concerns will cease to be “highly

speculative” and “unfounded” when they are reflected in the MCCA’s annual

assessments. Michigan drivers will soon receive their no-fault insurance bills (I

have received mine) with the updated higher MCCA assessment for the fiscal year

beginning July 1, 2009. At that point, Michigan drivers will be free to determine

for themselves whether my concerns are sound and based in reality.

      Accordingly, I respectfully dissent.

                                                Robert P. Young, Jr.
                                                Maura D. Corrigan

      42
           Ante at 21.
                                        18
                         STATE OF MICHIGAN

                               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 INSURANCE COMPANY OF THE
MIDWEST,

       Plaintiff-Appellee,

v                                                                   No. 133468

MICHIGAN CATASTROPHIC CLAIMS
ASSOCIATION,

       Defendant-Appellant.

MARKMAN, J. (dissenting).

       I concur fully with the discussion in part IV of Justice Young’s dissenting

opinion and therefore also dissent.

                                               Stephen J. Markman