Court Opinion

ID: 9655618
Source: CourtListenerOpinion
Date Created: 2023-08-23 19:18:03.993214+00
Date Added: 2024-06-11T18:13:20.721950
License: Public Domain

Levin, J.
(concurring). This is an appeal from an order of the circuit court remanding this cause to the Commissioner of Insurance for an expanded hearing pursuant to the Administrative Procedures Act.1 We agree with the Court of Appeals that the APA does not provide for a hearing of the claims asserted by the plaintiff skilled nursing facilities (SNFs) against Blue Cross and Blue Shield of Michigan (BCBSM) and the Commissioner of Insurance.
*274A
The SNFs claim that BCBSM is a quasi-public corporation and that the Due Process Clause requires that the SNFs be provided a hearing before the provider contracts between the SNFs and BCBSM are modified.
The Due Process Clause does not require that any hearing that may be constitutionally required be conducted pursuant to the APA. Assuming that BCBSM is subject to the Due Process Clause, it is not, as a matter of statutory construction, a state "agency” within the meaning of the APA.2
B
The Commissioner of Insurance is a state "agency” but the SNFs have no substantive right under the BCBSM enabling legislation3 which was *275adversely affected by the action of the commissioner in approving the revised rates of payment to the SNFs set forth in the modified provider contracts which BCBSM had proposed.
The BCBSM enabling legislation does not provide that SNFs are entitled to "fair and reasonable” rates of payment.
The determination by the Commissioner of Insurance that the revised rates of payment which BCBSM was willing to pay were not "excessive” could not adversely affect the SNFs unless they have a substantive right to a higher rate of payment.
Unless the SNFs establish that they have a substantive right to a higher rate of payment, there is no predicate for a further hearing by the commissioner to determine whether a higher rate of payment would be excessive. There is no need for a further hearing by the commissioner at this time.
C
We would remand to the circuit court for a hearing on the claims of the SNFs that:
(i) BCBSM’s purported termination of the provider contracts between the SNFs and BCBSM and the proposed new contract with revised rates of *276payment are unconscionable and violative of public policy justifying judicial revision of the contractual relationship between BCBSM and the SNFs; and
(ii) because BCBSM is a quasi-public corporation, the Due Process Clause requires that there be an evidentiary hearing before BCBSM terminates or revises a provider contract affecting the rights of the SNFs.4
I
BCBSM advised the SNFs that it would exercise a right reserved in the provider contracts between BCBSM and the SNFs which authorizes BCBSM to terminate the contractual relationship on short notice. BCBSM offered a new contract with revised rates of payment.
The SNFs commenced this action in the circuit court alleging that BCBSM had acted unconscionably and in violation of public policy and the Due Process Clause. A temporary restraining order was entered. BCBSM answered that the SNFs had failed to state a cause of action. Before there was a hearing on the question whether the temporary *277restraining order should be replaced by a preliminary injunction, the Commissioner of Insurance scheduled a hearing on the question whether the revised rates of payment should be approved under the BCBSM enabling acts. The hearing was held and the rates were approved. The commissioner also issued a declaratory ruling that the SNFs were not entitled to a contested case hearing pursuant to the APA.
The SNFs returned to the circuit court with a petition for review of the actions taken by the commissioner, who, in an amended complaint in the earlier action, was added as a defendant. After a hearing, the circuit court remanded this matter to the commissioner for an expanded administrative hearing. BCBSM acquiesced in the circuit court’s decision that there should be a further hearing before the commissioner, but the commissioner appealed. The Court of Appeals reversed. We granted leave to appeal.
Although this lawsuit was commenced in 1977, there has been no hearing on the disputed factual allegations set forth in the SNFs’ amended complaint. The only issues on this appeal arise out of the petition for review of the circuit court’s decision requiring an expanded hearing pursuant to the APA.
II
The claim asserted by the SNFs that BCBSM is a quasi-public corporation and that the Due Process Clause requires that the SNFs be provided a hearing before BCBSM can modify the provider contracts between BCBSM and the SNFs raises both factual and legal questions. Similarly, the *278parallel claim that the purported termination by BCBSM of the provider contracts between the SNFs and BCBSM and the new contracts and revised rates of payment proposed by BCBSM are unconscionable and in violation of public policy and that, because of the relative positions of the SNFs and BCBSM, the courts are justified in revising the contractual relationship between BCBSM and the SNFs, raises still other factual and legal questions.
Some aspects of the special position of BCBSM appear from the face of the enabling legislation, but there are other aspects which require that evidence be presented in support and that an opportunity be provided BCBSM to offer countervailing evidence in opposition. Because the claims of the SNFs, set forth in their original and amended complaints, that BCBSM is subject to the Due Process Clause and that the courts should revise the proposed provider contracts have not been heard in the circuit court, the SNFs are entitled to be heard on those claims on remand.
When the facts are fully developed, the circuit court can consider, on a fully developed record, the legal claims that BCBSM has become an instrumentality of state government and is subject to the Due Process Clause and that the courts should revise the proposed provider contracts.
Ill
The only issues in this appeal arise under the APA: (i) is BCBSM subject to the APA, and (ii) is the Commissioner of Insurance required to hold an expanded hearing under the APA before approving the revised rates of payments to the SNFs?
*279Both questions are essentially questions of statutory construction.
A
The APA provides:
" 'Agency’ means a state department, bureau, division, section, board, commission, trustee, authority or officer, created by the constitution, statute, or agency action. It does not include an agency in the legislative or judicial branches of state government, the governor, an agency having direct governing control over an institution of higher education, or the state civil service commission.” MCL 24.203(2); MSA 3.560(103)(2).
While the words of the statute might be read as including any instrumentality of state government, including what the SNFs characterize as a "quasi-public corporation”, we are persuaded that the statutory definition of "agency” includes only those instrumentalities of state government expressly "created by the constitution, statute, or agency action”.
The Legislature did not comprehend by the words just quoted a person or entity not designated as a state instrumentality in the constitution, or in a statute, or by agency action. There is no reason to suppose that the Legislature had in mind instrumentalities which have been declared by judicial decision, in the construction of the constitution, to be state instrumentalities and which have not been allocated by law "among and within” one of the "20 principal departments”. Const 1963, art 5, § 2.
B
The lead and dissenting opinions both assume that the "fair and reasonable” rates standard ar*280ticulated in Blue Cross & Blue Shield of Michigan v Ins Comm’r, 403 Mich 399, 413; 270 NW2d 845 (1978), as the authority for the dictum regarding "waste” applies to rates of payment to health care providers.
The Court in Blue Cross & Blue Shield of Michigan v Ins Comm’r, p 413, declared that it was then holding that "[t]he Commissioner’s continuing statutory authority over the rates charged to subscribers by BCBSM for hospital service coverage and the rates paid by BCBSM to hospitals for services rendered includes the power to disapprove a rate increase request to the extent that wasteful expenditures included in the rate base are found to be not fair and reasonable’, but does not include the power to order BCBSM to implement specific cost containment programs. Management of BCBSM has been entrusted to its board of directors”. (Emphasis supplied.)
The 1978 Blue Cross opinion made a number of observations (Blue Cross & Blue Shield of Michigan v Ins Comm’r, pp 428-430), but the only holding was that the Commissioner of Insurance was not authorized to "implement specific cost containment programs”. The declaration regarding waste was not part of the holding.
Assuming that the "fair and reasonable” rates standard for chartering a health care corporation can, as indicated in the opinion of the Court in that case, be properly applied in deciding the scope of the commissioner’s continuing authority with regard to rates charged subscribers and the benefits to be provided to them, there is no basis in the enabling acts for applying such a standard to rates of payment to health care providers.5_
*281In the instant case, the findings of the commissioner distinguish between the standard for rate approval with regard to subscribers and with regard to payment to health care providers. Finding No. 6 states that the proposed reimbursement system challenged by the SNFs will assure "that rates charged to subscribers are fair and reasonable, that payments to participating SNFs are not excessive, and that the system will not work a fraud upon the subscribers”. (Emphasis supplied.)
Whatever standard is to be applied by the commissioner before approving rates charged subscribers, a "fair and reasonable” rates standard does not apply to the approval of rates of payment to health care providers. The commissioner did not err in adopting a "not excessive” standard for the purpose of deciding whether "the rates of payment of the corporation to the * * * nursing facilities”6 shall be approved.
The SNFs are not complaining of the commissioner’s finding that the revised rates of payment are not excessive (wasteful). Their complaint is rather that the rates of payment are insufficient.
The 1978 Blue Cross opinion did not decide that the commissioner has a power of oversight with regard to the management and design of the health care system. Even the dictum regarding the commissioner’s authority to "consider” waste indicates that the powers of the commissioner are circumscribed and that he has no authority to increase a rate of payment to a health care provider: "Second, the Commissioner only has the authority to consider waste in determining if a rate increase is fair and reasonable. No section of the legislation indicates that the Commissioner has the additional authority to prescribe the specific *282remedy which the corporation must utilize to reduce or eliminate the waste. His only powers are to approve or disapprove rates in whole or in part. The management of the corporation has been specifically entrusted to the board of directors, not to the Commisioner.” Blue Cross & Blue Shield of Michigan v Ins Comm’r, p 429.7 (Emphasis added.)
The SNFs are not entitled to a further hearing before the commissioner, as she has no authority under the BCBSM enabling legislation to interfere with the decision of BCBSM to substantially reduce the rates of payment to these health care providers.
The foregoing observations regarding the authority of the commissioner are based on the original BCBSM enabling acts and do not constitute an expression of opinion concerning the meaning of the Nonprofit Health Care Corporation Reform Act enacted in 1980. The constitutionality of that act has been challenged, and, during the *283pendency of that challenge, its enforcement has been enjoined, and the commissioner and BCBSM have been directed to comply with the original enabling acts.8
We would affirm the decision of the Court of Appeals reversing the decision of the circuit court and remand to the circuit court for a hearing on the allegations in respect to BCBSM set forth in the SNFs’ amended complaint.
Kavanagh and Ryan, JJ., concurred with Levin, J.
Williams, J.
(for remand). This case of first impression is of considerable importance. It examines in the vital area of delivery of health care services the evolving relationships between the Blue Cross and Blue Shield of Michigan (hereinafter BCBSM) and the providers of health care services, on the one hand; and between BCBSM and the Commissioner of Insurance, on the other hand. Since about 60% of the citizens of Michigan are subscribers to BCBSM, and since Michigan is a nationwide leader in the field of delivery of health care services, this decision can have a significantly wide impact, particularly since the issues involve how the relationship of private enterprise and government supervision can best be combined to serve the public interest of all the people. In this sense the case is of even wider interest because of the competition in the area of health care service delivery between government-supervised private enterprise and nationalized medicine.
The specific issues here involved are four: First, whether in a contract between BCBSM and a health care provider, the Insurance Commissioner *284must approve the contract rates as "fair and reasonable” upon the basis of a hearing, findings of facts derived from the record and possibly judicial review. Second, if such a process is necessary, whether in this case the Insurance Commissioner’s findings of fact and conclusions of law support his ultimate approval of the BCBSM rate payment schedules as "fair and reasonable”. Third, if such a process is necessary, were the Insurance Commissioner’s findings of fact and conclusions of law that the rates were fair and reasonable supported on the record? Fourth, whether health care providers have the right to an adversary evidentiary hearing either as a matter of fundamental due process or as a contested case under the Administrative Procedures Act of 1969, MCL 24.201 et seq.; MSA 3.560(101) et seq., before the Insurance Commissioner approves a BCBSM change in their rates of payment.
We hold (1) that the Insurance Commissioner must support his approval of rates by findings of fact and conclusions of law and his ultimate order on the record, (2) that in this case the findings of fact do not support his approval, and (3) the record does not support his findings of fact. As a consequence, we are compelled to remand the matter to the Insurance Commissioner for an appropriate hearing and findings of fact. Because we find against the commissioner and must remand on issues one, two and three, we do not reach the fourth issue as to whether a contested evidentiary hearing is necessary. While we realize it would be useful to the parties to have that issue settled before remand, we consider it more important to leave that question open to see whether the Insurance Commissioner is able to devise a hearing procedure that more adequately meets the requirements of due process than the hearing under *285consideration. This will permit the Insurance Commissioner to attempt to devise a procedure which will meet whatever administrative policy considerations he deems important in the public interest and that will also guarantee to the parties in this case their rightful due process or statutory process, if that is pertinent. This will permit this Court to review the critical question of what process is due after the executive branch has devoted its best attention to the problem. We retain jurisdiction.
I. Facts
We adopt the facts set forth in the instructive and eloquent opinion of our brother Fitzgerald.
II. Commissioner’s Duty
We turn then to the first issue, that is, what the Commissioner of Insurance must find to approve rates and what procedures he must employ to do so. This Court in Blue Cross & Blue Shield of Michigan v Ins Comm’r, 403 Mich 399; 270 NW2d 845 (1978), laid down two standards which we will apply here. First, " 'the rates to be charged * * * are [to be] fair and reasonable’ ”, Id., 428. Second, "the commissioner’s actions are subject to judicial review and the record must support any findings of fact and conclusions of law”. Id., 430.
III. Sufficiency of Findings of Fact
We look next to the second issue, that is, whether the commissioner’s approval was supported by the findings. On what findings of fact, then, did the commissioner rely in approving the *286rates in question as "fair and reasonable”? The most pertinent findings are the following:
"2. The Medicare certification and participation requirement will not impose severe economic burdens on the SNFs [skilled nursing facilities]. It will, however, account for the majority of the BCBSM cost savings which will result in a reduction of rate increases charged to subscribers in the future.
"3. The imposition of ceilings based on Medicare costs is justified in that it should more closely relate reimbursement rates to provider operating costs. The appeals process provision will allow a facility with costs in excess of the ceiling to appeal for special consideration and relief.
"4. In light of the number of currently’participating facilities and anticipated additional participation, there will be an adequate number of SNFs available to allow reasonable access to the service benefits by BCBSM subscribers.
"5. The differing methodology for reimbursement to hospital-based and freestanding SNFs will not result in an improper rate of reimbursement, and in light of the information which is before the commissioner, this methodology appears to be reasonably suited to the differences in cost structures between the hospital-based and freestanding SNF providers.
"6. The proposed SNF reimbursement system will insure that rates charged to subscribers are fair and reasonable, that payments to participating SNFs are not excessive, and that the system will not work a fraud upon the subscribers.”
The salient conclusion on examining these findings is that only number 6 comes directly to grips with the "fair and reasonable” standard. But number 6 finds:
"The proposed SNF reimbursement system will insure that rates charged to subscribers are fair and reasonable * * *.”
*287However, as we noted in the earlier, Blue Cross case, MCL 550.503; MSA.24.6231 reads:
"The rates charged to the subscribers for hospital service, and the rates of payment of the corporation to the contracting hospitals * * * are subject to the approval of the commissioner of insurance.” (Emphasis added.)
And we spoke without distinction between subscribers and hospitals in finding that the rates are to be "fair and reasonable”. 403 Mich 428. In short, the commissioner has performed his duty in finding "the rates charged to subscribers are fair and reasonable”, but more directly in issue in this case is whether "the rates of payment * * * to the contracting hospitals” "are fair and reasonable”.
The statute, as amended by 1973 PA 75, treating "nursing facilities” equally with "contracting hospitals”, reads in pertinent part as follows:
"The rates charged to the subscribers for hospital service, and the rates of payment of the corporation to the contracting hospitals, nursing facilities, and home health care agencies are subject to the approval of the commissioner of insurance.” MCL 550.503; MSA 24.623 (emphasis added).
With respect to whether the rates of payment to the nursing facilities were "fair and reasonable”, the commissioner found "that payments to participating SNFs are not excessive”. Such a finding is by no means a finding that such rates "are fair and reasonable”. In fact, there is a possible implication that such rates may be on the low side. In short, the commissioner has not made a specific *288finding with respect to his duty to find that the rates of payment to the contracting nursing facilities, meaning here the plaintiffs, or skilled nursing facilities (SNFs) "are fair and reasonable”.
The other findings, numbers 2, 3, 4 and 5, do not either explicitly or implicitly find that "the rates of payment * * * to the contracting hospitals” (SNFs) "are fair and reasonable”. Number 2 says, "[t]he Medicare certification and participation requirement will not impose severe economic burdens on the SNFs”. Not being subject to "severe economic burdens” is perhaps better than having them imposed, but the result is certainly not necessarily equivalent to "fair and reasonable” rates. Number 3 argues in favor of the efficacy of the proposed BCBSM system but does not remotely relate to whether SNF rates are "fair and reasonable”. Number 4 properly is concerned with whether there will be an adequate number of SNFs to serve BCBSM subscribers but is in no direct way concerned with whether SNFs received "fair and reasonable” rates. Number 5 observes that paying hospital-based SNFs differently will not result in "an improper rate of reimbursement”. Obviously this finding seeks to justify the difference between the two rates rather than explicitly finding that both rates are "fair and reasonable”, although this double negative finding may be the closest approach to the requisite finding. In sum, none of the findings fulfills the requirement that the commissioner find that the "rates * * * are fair ánd reasonable”, nor is there any proper way this Court could deduce from these findings a basis for judgment.
Our conclusion that there are no proper findings that the SNFs’ rates are fair and reasonable is sufficient to remand the matter to the commissioner to take such steps as are necessary to make *289adequate findings of fact based on the record. However, it is appropriate that we indicate in addition whether the present record would provide a justifiable basis for making the necessary "fair and reasonable” findings.
IV. Were the Commissioner’s Findings Supported on the Record?
The record of the administrative hearing consists of approximately 100 pages and includes a 13-page statement by a BCBSM representative and the statements of 13 SNF representatives and one independent witness. The commissioner and his staff asked a few questions during the hearing. Since the SNFs were contesting the reasonableness of the new payment plan, support for the plan must be principally found in the statement of the BCBSM representative.
Examination of the BCBSM statement indicates that the root cause of the new rate plan was a desire to cut the payments to SNFs, which had had a ceiling of 50% of hospital costs. Total SNF payments had been steadily rising over the years. As a consequence, negotiations were entered into by BCBSM and the SNFs to consider alternate reduced reimbursement plans. BCBSM recommended reimbursement related to Medicare. The SNFs opposed such a plan. The BCBSM statement continued:
"As a result of these considerations, and also in recognition of an analysis which indicated that if all participating SNF providers were certified under Medicare, BCBSM payment would be reduced by an estimated $7 million or 45 percent of the total payout for the period ending June 30th, 1976.”
*290The Board of BCBSM thereupon adopted the new plan.
In other words, according to the BCBSM statement before the commissioner, the BCBSM board, with commendable due regard for the costs they and their subscribers would be liable for, adopted the new rate plan for SNFs. The BCBSM board, however, in adopting the new plan, made no equally pertinent statement that the new rate plan was also "fair and reasonable” to the SNFs, as the commissioner was lawfully bound to do.

A. 80th Percentile

The BCBSM statement, however, did not wholly disregard the impact upon the freestanding, i.e., not hospital-connected, SNFs. This is specifically what that statement said:
"The 80th percentile method was eventually selected since this level of benefit payout most closely approximated the BCBSM estimate of aggregate, freestanding provider costs under CLTC [convalescent long-term care] benefit. BCBSM estimated that at the 90th percentile payout would be approximately 15 percent above estimated provider cost and use of a weighted average ceiling would produce a payout 13 percent below cost, while the 80th percentile most nearly approximated cost at 1 percent over.”
The statement then added:
"BCBSM recognized that an 80th percentile ceiling would not cover all costs to all providers. However, one of the objectives was to set a payment level such that providers would be encouraged to provide services in a cost effective manner.”
The statement emphasizes the need to cut costs. We cannot say this was not an appropriate pur*291pose. However, the only significant general consideration given to the SNFs’ receiving an adequate, that is, a "fair and reasonable” rate from the SNFs’ point of view, is the above-quoted paragraph to the effect that:
"The 80th percentile method was eventually selected since this level of benefit payout most closely approximated the BCBSM estimate of the aggregate, freestanding provider costs under CLTC benefit.”2
At least two observations are worth noting about this statement as far as it may support a finding that such rates would be "fair and reasonable”. First, the 80th percentile at 1% over costs only "most closely approximated” SNF costs. Second, the approximation is based on the "BCBSM estimate of the aggregate, freestanding provider costs under CLTC benefit”.
As to the first observation, the 80th percentile is based on the most closely approximated costs, at 1% over costs. However, there is nothing here without more which permits a judgment that this is a "fair and reasonable” rate. Without more elucidation, it is not possible to conclude that receipt of a bare 1% over costs is a "fair and reasonable” rate.
As to the second observation, the basing of the 80th percentile on BCBSM’s estimates, this too is a *292shaky ground on which to base a finding that the rate is "fair and reasonable”. There is absolutely no explanation as to how that estimate was reached.3 Furthermore, the reliability of the statement of such an estimate as a basis for judgment is called into further question, because the representative of one of the SNFs stated that
"Blue Cross Blue Shield has refused all requests from nursing home representatives for backup data that would tell how they arrived at actual dollar figures allegedly representing this 80th percentile rate.”
The SNFs’ witness stated their estimates ran "appreciably higher”.
BCBSM in its brief denies receiving any such request, but goes on to indicate that in any event they reacted in response to a subpoena duces tecum "to prevent its valuable corporate information from being spread upon a public record” but later stipulated to permit plaintiffs to view the material privately. The upshot of this is that whether or not the SNFs requested and were refused this information, it never was and is not now a part of the public record to which this Court must look to see whether the commissioner’s finding is justified by the record.
All in all, while the record probably suggests that BCBSM was acting in the public interest to *293reduce SNF rates, there is nothing in the record on which the commissioner could properly base a finding that the proposed rate was also "fair and reasonable”.
The above conclusions are not affected by the BCBSM appeal process in the new plan, because that process relates only to extraordinary situations and has nothing to do with the establishment of a general "fair and reasonable rate”.4

B. Comparison of Hospital-Based and Freestanding SNFs

Findings of fact and conclusions of law number 5 reads:
"The differing methodology for reimbursement to hospital-based and freestanding SNFs will not result in an improper rate of reimbursement, and in light of the information which is before the commissioner, this methodology appears to be reasonably suited to the differences in cost structures between the hospital-based and freestanding SNF providers.”
It is entirely probable that this conclusion of the commissioner is a proper one. However, for purposes of review, it must be justified on the record. There are only two portions of the BCBSM statement that appear pertinent.
The first portion of the statement follows:
"The disparity between BCBSM and Medicare rates of per diem payment was less dramatic for hospital-based providers. However, there was a noticeable difference in Medicare allowable costs between hospital-based *294and freestanding providers. To a large extent, such differences were attributable to the methods of overhead expense allocation mandated by third-party costs reimbursement policies related to acute hospital care. Because of this problem, the analysis of alternative reimbursement programs separately considered hospital-based and freestanding providers.”
While this paragraph is arguably supportive of the findings of fact in the last portion of number 5, viz.: "this methodology appears to be reasonably suited to the differences in cost structures between the hospital-based and freestanding SNF providers”, as this clause refers to cost data structures rather than cost reimbursement, it certainly has no application to the statement’s earlier and for our inquiry critical observation "will not result in an improper rate of reimbursement”. Consequently, this portion of the statement is not supportive of the most nearly pertinent conclusion that the "differing methodology for reimbursement * * * will not result in an improper rate of reimbursement” because it speaks not at all to rate of reimbursement.
The second pertinent portion reads as follows:
"Methods of overhead allocation, essentially mandated by already existing cost settlement mechanisms used by cost-based third parties, suggested that retrospective cost-based payment would be an administratively expedient and equitable method of reimbursement for hospital-based SNFs while still satisfying the objective of relating BCBSM payments more closely to allowable provider costs. Use of the ceiling approach for the hospital-based providers would have required that the hospital-based per diem costs be included with those of freestanding SNFs, allowing those facilities a greater spread between cost and ceiling, increasing the profits of the freestanding facilities and reducing the financial viability of the hospital-based SNFs.”
*295Perhaps for hospital administrators this language is more meaningful than it is to the average reader. However, the first sentence only appears to say that a given method of reimbursement for hospital-based SNFs was satisfactory. The second sentence argues against "use of the ceiling approach”. However valid and useful the information in this paragraph, there is no basis here for the commissioner’s conclusions in number 5 that (1) "[t]he differing methodology for reimbursement to hospital-based and freestanding SNFs will not result in an improper rate of reimbursement”, and (2) that "this methodology appears to be reasonably suited to the differences in cost structures between the hospital-based and freestanding SNF providers”.
Conclusion
In this challenge of a new BCBSM reimbursement formula by non-hospital-based skilled nursing facilities, which had for many years relied upon an old and more generous formula, we first reiterate this Court’s decision that the Commissioner of Insurance must in determining approval find reimbursement rates "fair and reasonable” and that he must do so after a hearing in which a record must be established that will support pertinent findings of fact and conclusions of law. Second, we find that the approval by the Commissioner of Insurance of reimbursement rates in the present case was based on inadequate findings of fact and conclusions of law which, third, in any event were not justified by the record. As a consequence, we are compelled to remand the matter to the commissioner for proper findings on a proper record. Fourth, we do not at this juncture address the tremendously important problem whether due *296process or the Administrative Procedures Act requires a contested hearing. We do this to allow the commissioner to attempt to devise a hearing process which will be satisfactory both to the administrative necessities and to the requirements of law. We retain jurisdiction.
J. Blair Moody, Jr., J., concurred with Williams,

 MCL 24.201 et seq.; MSA 3.560(101) et seq.

 MCL 24.203(2); MSA 3.560(103)(2).

 1939 PA 108 and 109; MCL 550.301 et seq.; MSA 24.591 et seq., MCL 550.501 et seq.; MSA 24.621 et seq. These enabling acts were repealed effective April 3, 1981, by the Nonprofit Health Care Corporation Reform Act, 1980 PA 350; MCL 550.1101 et seq.; MSA 24.660(101) et seq., approved with immediate effect December 29, 1980.
The constitutionality of the Nonprofit Health Care Corporation Reform Act has been challenged, and the Ingham Circuit Court has enjoined the enforcement of that act and has directed the parties to comply with 1939 PA 108 and 109, as amended, and this Court has granted leave to appeal from those orders of the Ingham Circuit Court. Blue Cross & Blue Shield of Michigan v Governor, 412 Mich 944 (1982).
BCBSM moved for reconsideration of this Court’s order granting leave to appeal, and this Court took that motion under advisement. Ins Comm’r v Blue Cross & Blue Shield of Michigan and Blue Cross & Blue Shield of Michigan v Governor, 412 Mich 944 (1982).
Following receipt of an executive message of the Governor, pursuant to GCR 1963, 797.1(a), requesting that this Court direct the Ingham Circuit Court to certify certain questions for immediate determination by this Court, this Court entered an order directing the Ingham Circuit Court to certify the controlling question or questions of public law. Comm’r of Ins v Blue Cross & Blue Shield of Michigan *275and Blue Cross & Blue Shield of Michigan v Governor, 413 Mich 856 (1982).
On April 22,1982, the Ingham Circuit Court filed its certification of the controlling questions of public law, and a statement of the need to conduct evidentiary hearings and of the factual issues relevant to the controlling questions. This Court remanded to the Ingham Circuit Court for proceedings in accordance with the proposed schedule of hearings filed by the circuit court. 413 Mich 857 (1982).

 The authorities cited by the SNFs do not support the conclusion that BCBSM, as a "quasi-public institution”, has become an arm of state government. In all but two of the cases cited, a state agency was directly involved in the action which was claimed to give rise to a due process violation, as in Goldberg v Kelly, 397 US 254; 90 S Ct 1011; 25 L Ed 2d 287 (1970), where the State of New York denied welfare benefits to certain applicants without first conducting an evidentiary hearing.
In two of the cases, Coral Gables Convalescent Home, Inc v Richardson, 340 F Supp 646 (SD Fla, 1972), and Langhorne Gardens, Inc v Weinberger, 371 F Supp 1216 (ED Pa, 1974), the state acted, albeit indirectly through a fiscal intermediary, in suspending Medicare payments to providers of health care services.
See Blum v Yaretsky, — US —; 102 S Ct 2777; 73 L Ed 2d 534 (1982).

 The chartering provisions do not speak of rates of payment to providers but only of "the rates to be charged” subscribers. (Emphasis supplied.) MCL 550.305; MSA 24.595, MCL 550.506; MSA 24.626.

 MCL 550.503; MSA 24.623.

 The meaning of "fair and reasonable” (whether applied to "rates charged to the subscribers” or to "the rates of payment” to health care providers) is nowhere defined in this Court’s 1978 opinion beyond the observation that the commissioner can disapprove rate increases on the ground that they are not fair and reasonable "to the extent that wasteful expenditures [are] included in the rate base”.
In a concurring opinion, I agreed that the commissioner can disapprove rates charged subscribers which are not adequate or which would generate excessive funds; and I further expressed the view that even if one concludes that the "fair and reasonable” standard for chartering a health care corporation should be assimilated into continuing rate approval authority, "[i]n context, it appears that 'fair and reasonable’ like the other four criteria there stated * * * relates to the bona ñdes and solvency of health care corporations”. Blue Cross & Blue Shield of Michigan v Ins Comm’r, p 453, fn 11.
Assuming arguendo a "fair and reasonable” rates standard, such a standard does not import that the commissioner is authorized either to oversee the quality or incidence of care or to assure health care providers that they will be adequately compensated. It is our understanding of the BCBSM enabling acts that the words "fair and reasonable” concern bona fides and solvency and do not empower the commissioner to assure health care providers that they are adequately compensated.

 See fn 3.

 MCL 550.501 et seq.; MSA 24.621 et seq., was repealed by 1980 PA 350, eff. April 3, 1981. MCL 550.503; MSA 24.623 may now be found at MCL 550.1207; MSA 24.660(207).

 The BCBSM statement makes three other points relative to the technical reasonableness of tying SNF reimbursement to a Medicare base. First, the Medicare cost report utilizes the same data that SNFs would use. Second, most SNFs are Medicare-certified and fill out Medicare reports. Third, under a recent Michigan law SNFs treating Medicaid patients will soon have to become Medicare-certified. These points are less than persuasive as to 6 of the 7 plaintiffs in this case, because they do not happen to serve Medicare patients. However, the real answer to these points is that while they may support the reasonableness of the method of the ratemaking they do nothing to support the reasonableness of the level of the rate, i.e., 80%, and hence they are only ancillary reasons for approval at best.

 For example, the BCBSM spokesman stated "we would remove from that calculation the weighted per diem costs of many of the Medicare facilities in the sample” but witness Diamond for one of the SNFs said "we have no way of knowing whether the averages used by Blue Cross Blue Shield were weighted or not weighted”. While, conceivably, the commissioner might have believed one and not the other, he does not say so. In any event, all the commissioner had to do to know the answer to this minor point and more particularly evaluate the merits of the BCBSM estimate as a whole was to have the basis of the estimates produced by BCBSM, and, for purposes of review, spread on the record.

 "Three, that an appeals process consistent with that offered other BCBSM providers be available to SNF providers to address significant and uncontrollable events which might necessitate relief from or adjustment to the ceiling, recognizing that certain facilities might provide a more intensive, but appropriate, level of care than other facilities.”