484 Mich. 1 | Mich. | 2009
Lead Opinion
ON REHEARING
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.”
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 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 & 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
Pursuant to the consent judgment, USF&G paid Mr. Migdal the consented-to hourly wage.
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
The trial court granted USF&G’s motion for summary disposition, ruling that the MCCA must reimburse USF&G for its “ultimate loss,”
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 of $30 an hour for Allen’s care.
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 paid in excess of the statutory
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 “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)
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 US 137, 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.
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
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,
Section 3107 excludes from the definition of “allowable expenses” within PIP “coverage” 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
“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,”
The meaning of “coverages” in MCL 500.3104 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
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
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 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 at 49, 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
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 ensuring 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 Legis
[establish 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.
Only then, not after the claimant and member insurer have reached a settlement, can the MCCA exer
[establish 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 of the member.
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
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 engage in slack negotiations. It bears mentioning here that there is no indication that the settlements in these cases were unreasonable when made.
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.
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 eco
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 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
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.
United States Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 482 Mich 414, 417; 759 NW2d 154 (2008).
United States Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 483 Mich 918 (2009).
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 who 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.”
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 hooks, paying the nurses, and shopping for necessary items for Daniel’s care.
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.
Mr. Migdal paid $32 an hour of this amount to the nurses (including benefits) and kept the rest as compensation for his work.
USP&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.
MCL 500.3104(2).
United States Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 274 Mich App 184, 192; 731 NW2d 481 (2007).
481 Mich 862 (2008).
United States Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 482 Mich 414, 417; 759 NW2d 154 (2008).
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 NW 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 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
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.
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) to (k).
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 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.]
Webster’s II New College Dictionary (1995).
Random House Webster’s College Dictionary (2001).
Black’s Law Dictionary (7th ed).
Black’s Law Dictionary (5th ed).
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 hable 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.
Section 3104 includes numerous other rules for the MCCA, such as membership requirements, liability, and creation of a “plan of operation.”
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.
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.
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*22 be another member) shall audit and inspect such member’s records and compile the required information and data. [Art X, § 10.02.]
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.
Dissenting Opinion
(dissenting). I respectfully dissent.
On December 29, 2008, this Court decided these cases.
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 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.
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.
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,
*29 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.8
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.”
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
Plaintiff United States Fidelity & 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.
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
Because the composition of this Court changed on January 1, 2009, USF&G and Hartford sought rehearing
TV. 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.
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.”
Referring to the consent judgment and settlement agreement at issue, the new majority contends that “ [tjhis contractual liability, or coverage, owed by each insurer is the total amount agreed to between the original contracting parties.”
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.
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 freeze
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 properly left for the people’s elected representatives in the Legislature’ ”
Second, the majority emphasizes that the MCCA may only adjust a member insurer’s “practices and procedures.”
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.”
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.[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 ensuring efficient and quick recovery for claimants in the no-fault system.”
The majority concedes that the MCCA has authority to “requir[e] submission of proposed settlement agree
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 the words of a statute a plain reading and enforc
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.”
Accordingly, I respectfully dissent.
[[Image here]]
United States Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 482 Mich 414; 759 NW2d 154 (2008) (hereinafter USF&G I).
I note that the majority in this case is the new philosophically aligned majority: Justices Weaver, Cavanagh, and Hathaway and Chief Justice Kelly.
See USF&G I, supra at 432 n 32.
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.
See Nichols, Shepard & Co v Marsh, 62 Mich 439, 440; 29 NW 37 (1886); Thompson v Jarvis, 40 Mich 526, 526 (1879).
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.
The new majority states that MCR 2.119(F)(3) “creates a ‘palpable error’ standard for rehearing cases.” Ante at 12 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.
51 Mich 11; 16 NW 185 (1883).
Id. at 21.
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 NW 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 NYS 16 (NY Comm Pl, 1888).
McCready v Hoffius, 459 Mich 1235, 1236 (1999) (KELLY, J., dissenting).
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 918 (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 of the video at <http://www.youtube.com/watch?v=_7woWJDklQg> (accessed June 3, 2009).
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 I 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 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 he Michigan policyholders, not USF&G, who will pay for the profits of Daniel’s father.
United States Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 274 Mich App 184, 192; 731 NW2d 481 (2007).
USF&G I, supra at 417.
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 plaintiffs’ motivation for seeking rehearing.
United States Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 483 Mich 918 (2009).
Ante at 14. Justice Weaver asserts that “the terms ‘benefits’ and ‘coverages’ are related because of their close proximity in the statute... .” Ante at 15. I am unfamiliar with this tenet of statutoiy 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.
Ante at 15.
Ante at 15, quoting LeBlanc v State Farm Mut Auto Ins Co, 410 Mich 173, 204; 301 NW2d 775 (1981), for the proposition that “ ‘Moverage’, 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.” The new majority also cites the following consistent definitions: (1) the “[ejxtent 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 16, quoting Webster’s II New College Dictionary (1995); Random House Webster’s College Dictionary (2001); Black’s Law Dictionary (7th ed); and Black’s Law Dictionary (5th ed). See USF&G I, supra at 431 n 31.
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).
Ante at 6; see also ante at 25.
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).]
Ante at 16 (emphasis added).
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”).
Ante at 17 n 19.
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.
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”).
The MCCA provided a useful hypothetical conversation between a future plaintiffs no-fault attorney and an insurer:
[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?
*37 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.
See Executive Directive No. 2009-1.
See Louis Aguilar, Michigan’s jobless rate 14.1%, highest since ’83, Detroit News, June 18, 2009; Heather Lockwood, State jobless rate of 14.1% is highest — since July ’83, Lansing State Journal, June 18, 2009, available at <http://www.lansingstatejournal.com/atricle/20090618/ NEWS01/906180327> (accessed June 28, 2009).
USF&G I, supra at 432 n 32, quoting Devillers v Auto Club Ins Ass ’n, 473 Mich 562, 589; 702 NW2d 539 (2005).
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.”).
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.
Ante at 21-22. See MCL 500.3104(7)(g), which provides that the MCCA shall
[ejstablish 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.
Ante at 22 n 24.
USF&G I, supra at 430 n 30.
Id. at 432 n 32.
Ante at 19.
Ante at 19.
Ante at 22. 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
[ejstablish 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.]
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 24. The Legislature, unlike this Court, has the means to obtain the answers to those questions.
Ante at 23.
Dissenting Opinion
(dissenting). I concur fully with the discussion in part IV of Justice Young’s dissenting opinion and therefore also dissent.
United States Fidelity & Guaranty Company v Michigan Catastrophic Claims Association, No. 133466, and Hartford Insurance Company of the Midwest v Michigan Catastrophic Claims Association, No. 133468.
On order of the Court, the motion for recusal is considered, and it is denied.
On March 27, 2009, this Court issued an order granting rehearing in this matter.
I have also had an opportunity to review Caperton v A T Massey Coal Co, Inc, 556 US _; 129 S Ct 2252; 173 L Ed 2d 1208 (2009), and the briefs filed by the parties regarding this new decision. In reviewing whether there was a due process violation in the refusal of Justice Benjamin
We conclude that there is a serious risk of actual bias— based on objective and reasonable perceptions — when a person with a personal stake in a particular case had a significant and disproportionate influence in placing the judge on the*46 case by raising funds or directing the judge’s election campaign when the case was pending or imminent....
Our decision today addresses an extraordinary situation where the Constitution requires recusal. Massey and its amici predict that various adverse consequences will follow from recognizing a constitutional violation here — ranging from a flood of recusal motions to unnecessary interference with judicial elections. We disagree. The facts now before us are extreme by any measure. The parties point to no other instance involving judicial campaign contributions that presents a potential for bias comparable to the circumstances in this case. [Id., slip op at 14, 16-17 (emphasis added).]
Given this test, I find no arguable due process violation in the cases before me. There is nothing alleged by the MCCA that would cause any reasonable person to believe that there is a significant and disproportionate influence being asserted upon me under any objective analysis.
Despite the theories proffered by the MCCA, my husband has no connection to or financial interest in this matter. He is not an attorney for or employee of any party, nor is he a litigant in either of these cases. He has no relationship with either the attorneys or the litigants in these cases. The MCCA asserts that, because my spouse has handled cases in the field of no-fault insurance law, I must recuse myself. However, this assertion suggests a basis for recusal that is so attenuated from the facts of these cases that it strains reasoned logic.
This is not to say that parties should be impeded from bringing such motions. However, not every hypothetical theory proffered by a litigant must be accepted as accurate or controlling. The issue to be decided is one of due process. Any alleged due process claim must be evaluated
In conclusion, I have no personal bias or prejudice for or against any party in this matter. Moreover, neither I nor any member of my immediate family has any real or arguable financial interest in this case. The allegations made by the MCCA are not a basis for recusal because there is no appearance of impropriety and no due process violation. Accordingly, there is no reason to recuse myself.
United States Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 483 Mich 918 (2009).
The motion and related documents, including all the briefs of the parties and the amici curiae, may be viewed at chttp: //courts.michigan.gov/supremecourt/Clerk/10-08/133466-133468/133466133468-Index.htm>.
Justice Benjamin sits on the West Virginia Supreme Court of Appeals and had received in excess of $3 million in financial support to his campaign from the individual who was chairman, chief executive officer, and president of the defendant in the case before him.
Currently, there are no rules governing the recusal of justices. On March 18, 2009, a majority of this Court voted to publish for comment various proposals for rules that would govern the recusal of justices. 483 Mich 1205 (2009). Until such time as comprehensive rules governing the recusal of justices in Michigan are adopted, I will follow this Court’s current practice whereby the justice from whom recusal is sought decides the motion for recusal. Michigan’s current recusal practice is the same as that of the United States Supreme Court, and there is no indication in Caperton that this practice violates due process.
While I do not acquiesce to the statements of Justices Corrigan, Markman, and Young, I will not participate in this Court’s practice of engaging in responses to comments of others that are inappropriate and unnecessary. This Court should discontinue devoting the state’s limited resources to unproductive colloquy
Dissenting Opinion
I agree with Justice Hathaway’s denial of the recusal motion because due process is not violated in this case.
In March of this year, after former Chief Justice TAYLOR’s removal from this Court as a result of his overwhelming defeat in the 2008 election, the “remaining three” (Justices CORRIGAN, YOUNG, and MARKMAN) voted against publishing proposed rules for disqualification. Fortunately, a majority voted in March to publish, for public comment until August 1, 2009,
I also note that the United States Supreme Court’s Caperton
See, e.g., the statements or opinions by WEAVER, J., in In re JK, 468 Mich 202, 219 (2003); Gilbert v DaimlerChrysler Corp, 469 Mich 883 (2003); Advocacy Org for Patients & Providers v Auto Club Ins Ass’n, 472 Mich 91, 96 (2005); McDowell v Detroit, 474 Mich 999, 1000 (2006); Stamplis v St John Health Sys, 474 Mich 1017 (2006); Heikkila v North Star Trucking, Inc, 474 Mich 1080, 1081 (2006); Lewis v St John Hosp, 474 Mich 1089 (2006); Adair v Michigan, 474 Mich 1027, 1044 (2006); Grievance Administrator v Fieger, 476 Mich 231, 328 (2006); Grievance Administrator v Fieger, 477 Mich 1228, 1231 (2006); People v Parsons, 728 NW2d 62 (2007); Ruiz v Clara’s Parlor, Inc, 477 Mich 1044 (2007); Neal v Dep’t of Corrections, 477 Mich 1049 (2007); State Automobile Mut Ins Co v Fieger, 477 Mich 1068, 1070 (2007); Ansari v Gold, 477 Mich 1076, 1077 (2007); Short v Antonini, 729 NW2d 218, 219 (2007); Flemister v Traveling Med Services, PC, 729 NW2d 222, 223 (2007); McDowell v Detroit, 477 Mich 1079, 1084 (2007); Johnson v Henry Ford Hosp, 477 Mich 1098, 1099 (2007); Tate v City of Dearborn, 477 Mich 1101, 1102 (2007); Dep’t of Labor & Economic Growth v Jordan, 480 Mich 869 (2007); Cooper v Auto Club Ins Ass’n, 739 NW2d 631 (2007); and Citizens Protecting Michigan’s Constitution v Secretary of State, 482 Mich 960 (2008).
Also see my personally funded website, www.justiceweaver.com.
These three proposals are the same proposals that the “majority of four” refused to publish in 2006.
Justices Corrigan and Young and former Chief Justice Taylor filed an amicus curiae brief in the Caperton case in opposition to the plaintiff Caperton’s ultimately successful appeal.
Beyond due process issues involving campaign contributions, I further note that this Court does not have rules ensuring due process by requiring disclosure by justices of their former representation as attorneys of parties appearing before the Court, regardless of how far in the past the representation may have been.
Dissenting Opinion
I would not resolve the recusal motion of defendant Michigan Catastrophic Claims Association (MCCA) at this time. Rather, I would order supplemental briefing of the application of Caperton v A T Massey Coal Co, Inc, 556 US _; 129 S Ct 2252; 173 L Ed 2d 1208 (2009) (Caperton), to these cases. Caperton addressed the disqualification of a judge when a party alleges that the judge’s interest in a case requires recusal under the Due Process Clause of the federal
The scope of Caperton and how courts will implement it present significant unanswered questions, particularly for our Court. Caperton held that a state supreme court justice was disqualified from hearing a case involving a corporate party whose chairman and CEO had expended $3 million to support the justice’s campaign, although the individual expended this money independently and through donations to an independent political group. Caperton, 129 S Ct at 2257. The Court concluded that the justice was disqualified although he professed that the funds were solicited and expended without his knowledge, direction, or control under state election laws very similar to our own. See Caperton v A T Massey Coal Co, Inc, 223 W Va 624, 703-705; 679 SE2d 223 (2008) (W Va Caperton.) (Benjamin, acting C.J., concurring). Indeed, Michigan allows independent political groups to expend unlimited money during elections, often without being required even to reveal their funding sources.*
For these reasons, in my view, deciding the MCCA’s recusal motion within days of Caperton is precipitous. Caperton was released on June 8, 2009. We have hardly had time to digest the opinion, much less its ramifications, particularly given that the opinion is positively Delphic in explaining the standards for courts attempting to implement it. Four justices of this Court now vote, without any explanation or the benefit of fact-finding, to support Justice HATHAWAY’s decision to participate in these cases. Thus, although we have had little time to study Caperton and do not have the benefit
THE MCCA’S MOTION FOR RECUSAL
The most relevant aspects of the MCCA’s motion follow. After this Court issued its March 2009 decision to grant reconsideration
In Caperton, the United States Supreme Court “underscore[d] the need for objective rules” and asserted that the Due Process Clause requires recusal motions to be decided “by objective standards that do not require proof of actual bias.” Caperton, 129 S Ct at 2263. In concluding that recently elected West Virginia Supreme Court of Appeals Justice Brent Benjamin was disqualified from hearing the underlying case as a result of substantial campaign expenditures by the chairman, CEO, and president of the respondent company, A. T. Massey Coal Co., Inc., the Court held that “[d]ue process requires an objective inquiry” to establish whether the circumstances “ ‘would offer a possible temptation to the average... judge to ... lead him not to hold the balance nice, clear and true.’ ” Id. at 2264, quoting Tumey v Ohio, 273 US 510, 532 (1927). Significantly, the Court thus considered the purported facts underlying the motion for recusal, see Caperton, 129 S Ct at 2264,
QUESTIONS RAISED BY CAPERTON
In light of the Caperton opinion, I do not think that we can resolve the MCCA’s recusal motion — which squarely raises due process concerns — without first addressing the following questions:
• Does this Court’s historical recusal practice— which permits each justice to decide motions for his or her recusal and which Justice HATHAWAY follows here— comport with the Caperton Court’s requirement for objective standards? Justice HATHAWAY states: “[N]either I nor any member of my immediate family has any
• Is it sufficient under Caperton that four justices of this Court have voted to support Justice HATHAWAY’s decision here? Although Caperton expressly failed to address a proper method for fact-finding, the Court reached its decision by carefully considering the facts surrounding Justice Benjamin’s election. Here the MCCA alleges that Justice HATHAWAY must recuse herself because her husband has more than a de minimis financial interest in the subject matter of these cases. The MCCA points to very recent payments it has just made to one of Mr. Kingsley’s clients. It also alleges that it has raised the amounts needed to pay expected claims and its reserves by $693.8 million in anticipation of this Court’s potential reversal on rehearing of its earlier ruling in these cases; it states that the rate hike will be necessary because, if we reverse, claimants such as Mr. Kingsley’s clients will receive substantially higher payments — which result in higher attorney contingency fees — because insurers will have no legal basis for resisting unreasonable settlement demands made by plaintiffs’ attorneys. Can we possibly decide whether these alleged facts establish that “ ‘the probability of actual bias on the part of [Justice HATHAWAY] is too high to be constitutionally tolerable’ ” without first engaging in some kind of independent inquiry to test the claim
I raise these concerns in part in light of the dissent filed by Chief Justice Roberts in Caperton. He asks, among
I would thus invite thorough supplemental briefing on these significant issues before disposing of the MCCA’s recusal motion. Because the majority has chosen to precipitously resolve this disqualification motion, I dissent.
The Michigan Campaign Finance Act, MCL 169.201 et seg., does not regulate certain expenditures, including those “for communication on a subject or issue if the communication does not support or oppose a ballot question or candidate by name or clear inference.” MCL 169.206(2)(b). See also Right to Life of Michigan, Inc v Miller, 23 F Supp 2d 766, 767 (WD Mich, 1998), quoting Buckley v Valeo, 424 US 1, 44 & n 52 (1976) (observing that Michigan is prohibited from
MCFN Citizen’s Guide, p 14; see also Michigan Campaign Finance Network, Anonymous donors dominated Supreme Court campaign, November 19, 2008 <htfp://www.mcfn.org/press.php?prId=77> (accessed June 18, 2009) (“More than 60 percent of spending for the Michigan Supreme Court campaign between incumbent Chief Justice Clifford Taylor and Judge Diane Marie Hathaway will not be disclosed in any campaign finance report because it paid for candidate-focused ‘issue’ advertising.”).
This occurs although Caperton has sparked much debate concerning its application. For example, Michigan Lawyers Weekly quoted former Michigan State Supreme Court Chief Justice Clifford Taylor as stating that Caperton “ ‘has to mean that the challenged justice can’t make the recusal decision alone.’ ” MSC recusal rule may not be constitutional, Michigan Lawyers Weekly, June 15, 2009, p 23. Chief Justice Kelly also asserted, in a recent press release, that Caperton “ ‘signals that we do need to have appropriate protections in place’ ” and “will assist the Michigan Supreme Court as it develops its own disqualification rules for justices.” Michigan Supreme Court, Office of Public Information, Caperton ruling by U.S. Supreme Court highlights importance of fair and impartial justice, says Michigan Supreme Court Chief Justice Marilyn Kelly, June 9, 2009 <http://courts.michigan.gov/supremecourt/Press/060909-CapertonDQ.pdf> (accessed June 18, 2009). Wayne County Assistant Prosecuting Attorney Timothy Baughman, on the other hand, “[rjespectfully” but “heartily” disagreed with former Chief Justice Taylor’s comments, asserting in a Michigan Lawyers Weekly Viewpoint comment:
Caperton is a case about standards and not about the identity of the decision-maker....
Nothing in Caperton requires that the decision on a recusal motion be reviewed by another justice or body of justices. For the Michigan Supreme Court [to continue] to follow the practice of the U.S. Supreme Court is perfectly permissible, so long as a system of “objective rules” exists. ['Caperton’ was about recusal standards, not decision maker, Michigan Lawyers Weekly, June 22, 2009, p 7.]
United States Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 483 Mich 918 (2009).
United States Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 482 Mich 414 (2008).
The MCCA has an unlimited statutory obligation to reimburse insurers for 100 percent of claims paid to insureds whose losses due to personal injury exceed certain statutory caps; the current cap is $460,000. MCL 500.3104(2)(i) and (7)(a). As is further explained by Justice YOUNG, post at 62, the MCCA asserts that reversal of this Court’s prior opinion on rehearing will require the MCCA to reimburse all benefits paid by insurers to their catastrophically injured insureds, without regard to the reasonableness of the insured’s underlying expenditures. Accordingly, the MCCA states that its insurer members will have little incentive to defend unreasonable claims by their insureds; no matter how unreasonable the expenditure — at issue in one of these cases, for example, are an insured’s expenditures of $54.84 an hour for attendant care services — if the insurer accepts its insured’s claim, the MCCA will be obligated to reimburse the insurer in full. The MCCA asserts: ‘With a guarantee of MCCA reimbursement, coupled with the lure of saving legal defense costs, members will have a strong motive to settle [personal protection insurance] claims early and with little or no resistance.” It concludes: “This directly benefits lawyers like Mr. Kingsley who represent plaintiffs in no-fault automobile insurance cases, and who typically receive their fees out of the proceeds of settlements.” To illustrate, the MCCA has provided a hypothetical conversation between a future plaintiff’s attorney and an insurer:
[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. [See 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?”
*54 Insurer: “Of course not.”
MCR 2.003(B)(5) provides in part that a judge is disqualified from hearing a case if “the judge’s spouse ... has an economic interest in the subject matter in controversy... or has any other more than de minimis interest that could be substantially affected by the proceeding.” MCR 2.003(B)(6)(c) also provides that a judge is disqualified if the “judge or the judge’s spouse ... is known by the judge to have a more than de minimis interest that could be substantially affected by the proceeding!.]” Similarly, the United States Supreme Court requires recusal with regard to a justice’s spouse if “ ‘the amount of the relative’s compensation could be substantially affected by the outcome’____” See Adair v Michigan, 474 Mich 1027, 1031 (2006) (statement of Taylor, C.J., and Markman, J.), quoting the United States Supreme Court’s Statement of Recusal Policy, November 1, 1993.
No-fault automobile negligence cases remain a dominant factor in Michigan civil filings every year. Of the 46,216 new civil filings in Michigan circuit courts in 2008, 8,477 — or more than one-fifth of all civil cases — were automobile related. See 2008 Annual Report of the Michigan Supreme Court, p 30 <http://www.courts.michigan.gov/scao/resources/ publications/statistics/2008/2008execsum.pdf> (accessed June 18, 2009). Further, because many, if not most, no-fault claims settle out of court, the number of claims potentially affected by this Court’s ruling is much higher than the number of cases filed.
Somewhat confusingly, the Court considered the purported facts underlying the recusal motion, but also conceded that there was “no procedure for judicial factfinding....” Caperton, 129 S Ct at 2264.
As former Chief Justice Taylor suggested to Michigan Lawyers Weekly. “ ‘You can’t set up the kind of test the U.S. Supreme Court created in Caperton without giving parties the opportunity to have a hearing.... Where else or how else will they be able to adduce the facts needed to meet the new objective test?’ ” MSC recusal rule may not be constitutional, Michigan Lawyers Weekly, June 15, 2009, p 23.
Moreover, as Justice Young intimates, the narrow Caperton holding— that, under some circumstances, an elected judge is disqualified from hearing a case on the basis of contributions to his or her campaign — is also directly implicated in this case and will continue to be regularly implicated in cases before this Court given the current state of Michigan election law. As it bears on this case, at her January 8, 2009, investiture ceremony, Justice Hathaway attributed her election to various organizations that supported her campaign. Investiture Ceremony for the Honorable Diane M. Hathaway, 483 Mich cliii, clxviii (2009). Of particular note is her acknowledgment of the Michigan Association for Justice (MAJ); the MAJ has explicitly supported the defendants in these cases and filed an amicus curiae brief in support of the motion for rehearing. Organizations that supported Justice Hathaway’s campaign, including the AFL-CIO, whose president, Mark Gaffney, acted as master of ceremonies at the investiture proceeding, are also members of the Coalition Protecting Auto No-Fault, which filed an amicus curiae brief in these cases opposing Justice Hathaway’s recusal. Further, these cases involve insurance companies as parties. During her campaign, Justice Hathaway regularly spoke out against insurance companies and suggested that she would not “ ‘sid[e] with big insurance companies’ ” if she were elected to this Court. Hathaway sworn in as MSC’s 104th justice, Michigan Lawyers Weekly, January 12, 2009, p 2. Upon her investiture as a justice of this Court, she told the Detroit News: “ ‘For at least 10 years, the Michigan Supreme Court has been in favor of insurance companies.... [Now] I think we will see a lot more real justice out of this Supreme Court.’ ” Michigan Supreme Court to swear in newest justice, Detroit News, January 8, 2009. Under an objective Caperton inquiry, it seems inescapable that such comments must be analyzed to establish whether the circumstances “ ‘offer a possible temptation to the average... judge to ... lead him not to hold the balance nice, clear and true,’ ” Caperton, 129 S Ct at 2264, quoting Tumey, supra at 532, or suggest “a serious, objective risk of actual bias,” Caperton, 129 S Ct at 2265.
every judicial officer in this state is subject to having to decide the merits of a case that involves a party or attorney who contributed to or supported, or, conversely, opposed his or her campaign for office. This now includes those who contribute to or support so-called Independent Expenditure Groups who engage in political campaigns completely independent of candidates of office.
If the Appellees’ argument became the law, every judicial officer in this state would he disqualified from any and every case in which an independent nonparty organization over which the judicial officer had no control received contributions from individuals or groups which included a person or entity affiliated with a party or an attorney in the case, when the independent nonparty organization used its contributions to wage a campaign against the judicial officer’s electoral opponent. Conversely, such a standard would likely require a judge also to recuse himself or herself when an independent expenditure group operated against the judge or supported the judge’s opponent. Our judicial system would break down under such a standard for disqualification. [W Va Caperton, supra at 699, 703-704.]
Clearly, without the benefit of further study and a process for objective fact-finding, this Court is ill-equipped to properly resolve the complex questions presented by Caperton.
The summary nature of the majority’s treatment of this disqualification motion indeed may lead the MCCA to test its due process claim in federal court under 42 USC 1983 rather than in this Court. This is yet another reason why we should allow the parties to brief the Caperton due process question.
See Caperton, 129 S Ct at 2274 (Scalia, J., dissenting).
Dissenting Opinion
Consistent with the Court’s 170-year-old disqualification practice, I do not participate in the determination whether Justice HATHAWAY should disqualify herself. I join in Justice CORRIGAN’S dissenting statement concerning the Caperton*
However, given Justice HATHAWAY’s stated position on disqualification matters, I also write to raise questions about the casual way she has chosen to decide this motion and how her response may bear on the extra-constitutional disqualification proposals currently under consideration by this Court.
Defendant Michigan Catastrophic Claims Association (MCCA) has asserted that Justice HATHAWAY’s husband is a no-fault plaintiffs’ attorney who stands to profit in his no-fault practice if Justice HATHAWAY participates in these cases to overturn a decision made by this Court just months ago. The thrust of this claim is that a reversal of our earlier opinion will remove the legal basis, and thus the incentive, for insurance companies to resist unreasonable no-fault settlements demanded by claimants and their attorneys. Consequently, because insurance companies will be free to pass on these unreasonable settlements to the MCCA (which will eventually be paid for by the public, who must buy no-fault insurance), no-fault practitioners will increase their contingency fee yields by obtaining higher settlements than warranted.
Despite this, and without bothering to explain why, Justice HATHAWAY simply denies that she should be disqualified, adding that there is no appearance of impropriety in her participation. Justice HATHAWAY does not even deign to deny that her husband is a no-fault plaintiffs’ practitioner or to assert that his practice will not benefit from her participation in a decision to overturn this Court’s prior decision.
Justice HATHAWAY’s refusal to live up to her own expressed standard of conduct is worthy of note in its own right: The people of this state deserve to know whether candidates promise one thing when running for office but deliver another when elected. But the far more important issue is the horror that would be visited on this Court if Justice HATHAWAY’s preferred “appearance of impropriety” disqualification standard were actually adopted.
HOW MAY A JUSTICE REBUT AN “APPEARANCE OF IMPROPRIETY”?
Justice HATHAWAY has provided no information in response to defendant’s allegations of her family’s fi
WHAT SUFFICES TO ESTABLISH AN “APPEARANCE OF IMPROPRIETY”?
According to Justice HATHAWAY, allegations of a spouse’s “economic interest in the subject matter in controversy” or “more than de minimis interest that could be substantially affected by the proceeding”— grounds requiring recusal under MCR 2.003(B)(5) and (6)(c) — are so irrelevant as to not even merit a discussion in her statement. If these allegations of increased
WHO WILL DETERMINE WHETHER THERE IS AN “APPEARANCE OF IMPROPRIETY”?
For the first time to my knowledge, members of the Court have participated in the merits of a disqualification decision on a motion addressed to another justice. Although Justices CAVANAGH and WEAVER and Chief Justice KELLY have joined and endorsed Justice HATHAWAY’s decision, they have done so solely on the basis of Justice HATHAWAY’s statement without any additional inquiry into the merits of her participation or the allegations raised. In this, their participation is merely a rote ratification of Justice HATHAWAY’s cursory denial of the motion to disqualify.
The new majority’s approval of and participation in the merits of the determination whether Justice HATHAWAY should be disqualified, while an alteration of our traditions, is consistent with several of the Court’s pending disqualification proposals that require full Court participation or that of the Chief Justice.7
HOW WOULD SUCH A PROCEDURE BETTER SERVE THE PEOPLE OF THIS STATE THAN THE NEARLY 200-YEAR-OLD CURRENT DISQUALIFICATION PRACTICE?
These are but a few of the questions raised by Justice HATHAWAY’S disposition of the pending motion to disqualify her. Given Justice HATHAWAY’S campaign promises and our colleagues’ published statements on disqualification over the years, not only the parties, but the public deserve more.
Caperton v A T Massey Coal Co, Inc, 556 US _; 129 S Ct 2252; 173 L Ed 2d 1208 (2009).
See, e.g., Adair v Michigan, 474 Mich 1027, 1038-1039 (2006) (statement of Taylor, C.J., and Markman, J.); Grievance Administrator v Fieger, 476 Mich 231, 266-281 (2006) (opinion by Taylor, C.J., and Corrigan, Young, and Markman, JJ.); Scalise v Boy Scouts of America, 473 Mich 853 (2005); In re JK, 468 Mich 202, 219 (2003) (statement by Weaver, J.); Gilbert v DaimlerChrysler Corp, 469 Mich 883 (2003), reconsideration denied 469 Mich 889 (2003). Justice Weaver has also provided her own personalized history of this debate in her statement endorsing Justice Hathaway’s continued participation in these cases.
The following was part of Justice Hathaway’s campaign: “Our Supreme Court is not being fair and impartial. ... They are not recusing themselves and that is the problem; we need judges who are going to be
The MCCA is a nonprofit association created by the Legislature to ensure that there are sufficient resources to fund benefits under our no-fault law for the catastrophically injured. See MCL 500.3104. Under our prior decision, the MCCA has authority to reject unreasonable claims when a member insurer’s policy only provides coverage for “reasonable charges.” United States Fidelity Ins & Guaranty Co v Michigan Catastrophic Claims Ass’n, 482 Mich 414, 417 (2008). The MCCA contends
During her campaign, Justice Hathaway affirmatively supported other financial disclosures: “I believe that there should be disclosure of all election campaign spending.” Michigan Campaign Finance Network, Questionnaire for 2008 Michigan Supreme Court Candidates, p 1 <http://www.mcfn.org/pdfs/reports/SCquestionnaire.pdf> (accessed June 16, 2009). Indeed, several member organizations of the Coalition Protecting Auto No-Fault, which has filed an amicus curiae brief in these cases supporting Justice Hathaway’s continued participation, supported Justice Hathaway’s campaign. The Michigan Trial Lawyers Association and the United Automobile Workers each gave $34,000 to Justice Hathaway’s campaign, the maximum allowed by law. During her campaign, Justice Hathaway stated that “a judge should consider!] disqualifying herself in any instance where a party has made a substantial campaign contribution.” Id. In Justice Hathaway’s calculus of disqualification ethics, do such contributions not raise “even the mere appearance of impropriety”? Id. at 2.
And why, having promised a "higher standard of conduct” if elected, is it defensible for Justice Hathaway to shelter under the Court’s historical disqualification practice that she disparaged on the campaign trail?
Moreover, do the fact that the motion for rehearing in these cases was prompted solely because of Justice Hathaway’s replacement of Chief Justice TAYLOR and the fact that utterly no new substantive or legal arguments were raised in the motion, as generally required by MCR 2.119(F)(3), give rise to an appearance of impropriety with respect to her participation? See, e.g., Peoples v Evening News Ass’n, 51 Mich 11, 21 (1883), in which this Court opined 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.”
It is unclear why Justice Hathaway and the new majority chose to adopt some aspects of the new proposals while claiming to adhere to our current disqualification practice. As stated, Justices CAVANAGH and Weaver and Chief Justice Kelly have never, to my knowledge, publicly endorsed the decision of another justice targeted with a disqualification
Dissenting Opinion
Defendant has moved for Justice HATHAWAY’s disqualification, arguing that “her spouse has an interest that could be substantially affected by the outcome of the proceedings.” Justice HATHAWAY now denies this motion, concluding that she has “no personal bias or prejudice,” that there is “no appearance of impropriety,” and that there is “nothing alleged . . . that would cause any reasonable person to believe that there is a significant and disproportionate influence being asserted upon me,” with little to no explanation. This decision must be viewed against a backdrop in which Justice HATHAWAY has been free in her criticism of other justices for their disqualification decisions. (For example, assert
<http://www.youtube.com/watch?v=_7woWJI)klQg> (accessed June 18, 2009); Interview with Lansing State Journal, October 17, 2008; and League of Woman Voters of Michigan Voter Guide 2008 <http://www.lwvmi.org/documents/LWV08SupremeCourt.pdf> (accessed June 18, 2009), respectively.