We determine in this case whether the Michigan Catastrophic Claims Association (mcca) 1 is a state agency, and therefore subject to the Administrative Procedures Act. 2 We hold that it is not and reverse the decision of the Court of Appeals. 3
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PACTS
The Michigan automobile no-fault act was adopted by the Legislature in 1972, 4 MCL 500.3101 et seq.; MSA 24.13101 et seq. The act requires that insurers pay or reimburse their policyholders’ lifetime medical expenses. There is no dollar limit on an insurer’s liability for medical, hospital, and rehabilitation benefits under the statute; thus, where injuries are severe, the resulting claims may be extremely high. The cost of covering an insured’s catastrophic losses — amounts of more than $250,000 — could be overwhelming to an individual insurance company.
Following implementation of the no-fault act, more insurers and reinsurers became aware of the potential for enormous liabilities under the personal protection insurance coverage provisions. Consequently, the mcca was created in 1978 5 to serve as the means for reimbursing each member *341 insurer for all "ultimate loss sustained under personal protection insurance coverages in excess of $250,000.00 in each loss оccurrence.” MCL 500.3104(2); MSA 24.13104(2).
In this case, the mcca, an unincorporated, nonprofit association of private insurers, adopted a statutorily required "plan of operation,” promulgated by its board of directors. The plan includes a method to calculate premiums for catastrophic claim coverage and generate funds to pay for those claims. Pursuant to the plan, the mcca is authorized to make and collect premium assessments from member 6 insurers. MCL 500.3104(7)(d), (e); MSA 24.13104(7)(d), (e).
The mcca charged its members for two premium payments, the first being sent out in February 1979. League General Insurance Company, a no-fault insurer required to be a member of the mcca and, thus, subject to its premium assessments, did not pay the premium. Instead, League General brought an action in Ingham Circuit Court against the mcca, claiming that the premiums were arbitrary and unreasonable. The mcca, in turn, filed a counterclaim for the unpaid assessments.
Michigan Mutual Insurance Company brought a similar action in which it alleged that the mcca was a state agency subject to the apa, that the mcca had not complied with the rule-mаking requirements of the apa 7 in adopting its operating plan, and, accordingly, that its plan and its assess- *342 merits were invalid. The Commissioner of Insurance was joined as a party defendant, and the actions were joined for trial. 8
The trial court ruled that the mcca was a state agency, that its operating plan was a “rule” subject to the apa, and that it could not levy premiums against plaintiff until the plan had been properly promulgated pursuant to the apa. The trial court indicated, however, that the mcca could offset indemnification payments to nonpaying member insurers to the extent of their unpaid premium assessments if the mcca promptly promulgated its plan pursuant to apa standards. The mcca appealed. League General cross appealed. The Attorney General intervened.
The Court of Appeals affirmed the lower court’s decision regarding the mcca’s state agency
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status and that its plan of operation was null and void.
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The mcca appealed; this Court denied leave on July 11, 1988. On July 27, 1988, the Legislature passed
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ANALYSIS
Under the apa, MCL 24.203(2); MSA 3.560(103)(2), an "agency” is defined as "a state department, bureau, division, section, board, commission, trustee, authority or officer, created by the constitution, statute, or agency action.”
As we determined in
Hanselman v Wayne Co Concealed Weapon Licensing Bd,
In Hanselman, this Court had to determine *344 whether the Wayne County Concealed Weapon Licensing Board was an "аgency” within the meaning of the apa, so that it would be required to comply with apa provisions. There was no dispute that the licensing board was created by statute 13 and that it was not specifically exempted from the apa. 14 However, we had to ascertain whether the board was a state board in which case it would have been an agency under the apa and subject to those provisions.
The Court of Appeals in the instant case did not embark upon this two-pronged inquiry. It found that because the mcca statute creates a board of directors,
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and "boards” are specifically included within the apa’s definition of agency, "[t]hat alone leads to the conclusion that the cca’s board of directors, in effect the association itself, must abide by the apa.”
In Advisory Opinion, the Court had to ascertain whether the "state” housing developmеnt authority was an instrumentality of state government. We recognized:_
*345 We must . . . look behind the name to the thing named. We must examine its character, its relations, and its functions to determine, indeed, whether it is an agency or instrumentality of State government. [380 Mich 571 .]
As we stated in
Hanselman,
the
Advisory Opinion
was not exactly analogous to the facts in that case; however, the analysis was appropriate to determine whethеr the board is a state board.
We believe the Court of Appeals erred (a) in not engaging in the dual analysis required to determine whether the mcca’s board was a "state” board, and (b) in applying the Advisory Opinion test and concluding that the mcca was a state agency.
The Court of Appeals found that the nature of the mcca and its relation to the state rendered it a state agency. The reasons were: (1) the mcca was created by statute, (2) the Commissioner of Insurance appoints the directors and serves as ex officio member of the board of directors, (3) the mcca levies mandatory assessments against its members, and (4) it has the power to adopt rules and hear complaints.
As we stated in
Hanselman, supra,
the fact that an entity is created by statute does not dispositively indicate "state” status.
Second, the Court of Appeals stated that the Commissioner of Insurance appoints the mcca’s directors and serves as ex officio member of the board of directors. The Court of Appeals appar *346 ently was focusing on MCL 500.3104(11); MSA 24.13104(H). 16
Despite the fact that the commissioner appoints the five directors to the mcca board, 17 the commissioner does not possess ostensible and pervasive control because of this appointment power. Although the commissioner serves as an ex officio board member, the commissioner has no voting power 18 and is not counted for purposes of determining whether a quorum is present.
Plaintiff, throughout thе proceedings below, also emphasized the commissioner’s involvement in adoption of the mcca plan. No later than sixty days after its initial meeting, the board is required to submit the proposed plan of operation to the commissioner for approval. If no plan is submitted within this sixty-day period, the commissioner must formulate and effectuate a plan añer cоnsulting with the board. MCL 500.3104(17); MSA 24.13104(17).
The board’s plan is presumed to meet statutory requirements if not disapproved by written order of the commissioner within thirty days of its submission. If disapproved, the commissioner must notify the board as to which aspects of the plan are deficient, after which time the board has thirty days to submit a revised plan. Failure to submit a *347 revised plan within this deadline will enable the commissioner to formulate and effectuate a plan. MCL 500.3104(18); MSA 24.13104(18).
The plan of operation and amendments to the plan are subject to majority approval of the board, must be ratified by a majority of the voting membership, and are subject to the commissioner’s approval. MCL 500.3104(19); MSA 24.13104(19).
Upon approval by the commissioner and ratification by the members of the plan submitted, or upon the promulgation of a plan by the commissioner, the insurer members become bound. MCL 500.3104(20); MSA 24.13104(20).
While wе recognize that this scheme entails involvement by the commissioner, it fails to rise to the level of dominant state control we deem requisite for state agency status.
Third, the Court of Appeals stated that the mcca "levies mandatory assessments against its members,”
Stating that both taxes and assessments are involuntary extractions of monies which truly private entities cannot impose, plaintiff assailed the mcca’s reliance on
Dukesherer Farms, Inc v Director of the Dep’t of Agriсulture (After Remand),
This Court affirmed the Court of Appeals ruling that the monies collected from the produсers were assessments, not taxes. Although, as plaintiff in the case at bar points out, the marketing act was subject to the apa,
"Taxes and assessments do have a number of elements in common. Both are exactions or involuntary contributions of money thе collection of which is sanctioned by law and enforceable by the courts. Here, however, the similarity ends.” Exactions which are imposed primarily for public rather than private purposes are taxes. Revenue from taxes, therefore, must inure to the benefit of all, as opposed to exactions from a few for benefits that will inure to the persons or group assessed.
The Act in question specifically states that funding is to come from an assessment collected from each producer of the commodity , who is directly affected by the marketing program. The Act further states that monies so collected are not state funds and are to be disbursed solely for necessary expenses incurred with respect to each separate marketing program. Thus, the Act itself is consistent with the imposition of an assessment rather than a tax; it is structured to apply to and for the benefit of producers of specific commodities. [405 Mich 15 -16. Citations omitted.]
Likewise, the assessments levied by the mcca are for a primarily private purpose — to protect
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and benefit no-fault insurers in Michigan, in particular, smallеr insurers, who may have difficulty absorbing a catastrophic claim by an insured. Of course, there are certain incidental benefits to the public because of this arrangement. However, as we noted in
Dukesherer Farms, Inc,
Accordingly, we find that the monies sought to be collected by the mcca arе assessments, and not taxes.
Fourth, the Court of Appeals noted that the mcca’s power to adopt rules and hear complaints is evidence of a state characteristic. However, we agree with defendants and hold that this characteristic is not determinative of state agency status. Private insurers are empowered to hear complaints as well. MCL 500.2113; MSA 24.12113.
It is obvious that the Legislature intended the Commissioner of Insurance to be involved in the mcca. However, that participation is not so pervasive or controlling as to render the association a state agency. The provisions highlighted by plaintiff are but a few of those the Legislature enacted under the catastrophic claims act. As we stated in
Hanselman, supra,
In evaluating the characteristics of the board to determine whether it is a "state . . . board” or a non-state board, it is essential to avoid selective consideration of the board’s characteristics. While the . . . Court of Appeals [is] clearly corrеct in saying that the board possesses the characteristics enumerated in the Court’s holding, [it is] in error in not weighing the importance of these characteristics. Stated differently, "state” status in this case *350 is not dependent upon the presence of a particular characteristic or a select group of characteristics. Rather, "state” status is determined by a review of all relevant characteristics which, when considered together, indicate the overall character of the board. . . . When considered together, the board possesses considerably more non-state-like characteristics than state-like characteristics and its composite character is not that of a "state . . . board.” [Emphasis supplied.]
Accordingly, we find that the Court of Appeals selective focus on certain characteristics of the mcca impaired its analysis. Taken as a whole, the characteristics of the mcca lead us to recognize it as a private association.
As noted previously, the commissioner has no voting power on the board and is not statutorily empowered to remove board members. Furthermore, although the mcca’s plan of operation is subject to the сommissioner’s approval, MCL 500.3104(19); MSA 24.13104(19), this action is no different from the commissioner’s review of the rates and plans of private insurers, MCL 500.2107; MSA 24.12107, MCL 500.2408; MSA 24.12408, MCL 500.2108(1); MSA 24.12108(1).
Finally, we address the last prong of Advisory Opinion, supra, which instructs that the function of the entity is to be examined in determining its true status. The plaintiff maintains that the mcca serves a public function and therefore is a state agency. We disagree. As we have already recognized, the association’s fоrmation may have bestowed an incidental benefit upon the public by facilitating availability of automobile insurance. Nonetheless, its primary purpose was to protect smaller insurers from the potentially severe financial repercussions of the no-fault act. The mcca was enacted to create an association of insurance *351 cоmpanies that could more evenly bear the expense of a catastrophic claim, as opposed to an individual company. We believe that this attempt to attain a less burdensome structure for handling catastrophic no-fault claims was intended primarily for private, not public, benefit.
CONCLUSION
Because we determine today that the mcca is not а state agency but a private association, the mcca is not subject to the apa and need not have promulgated its plan of operation pursuant to those requirements. Therefore, all premiums assessed to mcca member insurers are valid. We remand this case to the Ingham Circuit Court for a determination of the proper fees and assessments due.
Notes
MCL 500.3104; MSA 24.13104.
MCL 24.201 et seq.; MSA 3.560(101) et seq.
League General Ins Co v Michigan Catastrophic Claims Ass’n,
MCL 500.3104(1); MSA 24.13104(1) provides:
Each insurer engaged in writing insurance coverages which provide the security required by section 3101(1) within this state, as a condition of its authority to transact insurance in this state, shall be a member of the association and shall be bound by the plan of operation of the association.
MCL 24.207; MSA 3.560(107).
Following trial, Michigan Mutual settled with the mcca.
"Agency” at the time this сase arose was defined by MCL 24.203(2); MSA 3.560(103)(2), as 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, and an agency having direct governing control over an institution of higher education, or the state civil service commission.”
This statute has since been amended to specifically exclude the mcca from the definition of agency.
The Court of Appeals also affirmed other rulings of the circuit court favorable to the mcca but not pertinent to the issue here.
Similarly, the Legislature amended the Insurance Code of 1956 in
*343 However, any consideration by this Court of the validity or retroactivity of these two amendments is unnecessary in light of our determination that, at its inception in 1978, the mcca was not a state agency.
MCL 24.203(2); MSA 3.560(103)(2), exempts certain agencies from the apa:
[It] does not include an agency in the legislative or judicial branch of state government, the governor, an agency having direct governing control over an institution of higher education, the state civil service commission ....
MCL 28.426(1); MSA 28.93(1).
We nеed not discuss whether an exemption under MCL 24.203; MSA 3.560(103) applies to the mcca, in light of our determination that the mcca is not a state agency. '
MCL 500.3104(9); MSA 24.13104(9).
In pertinent part, this provision states:
The board shall be initially composed of 5 members of the association appointed by the commissioner to serve as directors, and the commissioner or a designated representative . . . serving as an ex officio member of the board without vote. . . . The initial term of office of a director shall be 2 years. [Emphasis supplied.]
MCL 500.3104(11), (14); MSA 24.13104(11), (14); MCCA Plan of Operation, art VI, § 6.02.
MCL 500.3104(11), (13); MSA 24.13104(11), (13); MCCA Plan of Operation, art VI, § 6.04.