Andary v. USAA Cas. Ins. Co.
| Docket Number | SC 164772 |
| Decision Date | 31 July 2023 |
| Parties | MICHAEL T. ANDARY, M.D., Conservator and Guardian of ELLEN M. ANDARY, a legally incapacitated person, RONALD KRUEGER, Guardian of PHILIP KRUEGER, a legally incapacitated person, and MORIAH, INC., doing business as EISENHOWER CENTER, Plaintiffs-Appellees, v. USAA CASUALTY INSURANCE COMPANY and CITIZENS INSURANCE COMPANY OF AMERICA, Defendants-Appellants. |
| Court | Michigan Supreme Court |
Argued March 2, 2023
Chief Justice: Elizabeth T. Clement Justices: Brian K. Zahra David F. Viviano Richard H. Bernstein Megan K. Cavanagh Elizabeth M. Welch Kyra H. Bolden.
Michael T. Andary, conservator and guardian of Ellen M. Andary Ronald Krueger, guardian of Philip Krueger; and Moriah, Inc. doing business as Eisenhower Center, brought an action in the Ingham Circuit Court against USAA Casualty Insurance Company and Citizens Insurance Company of America, seeking a declaratory judgment that the Legislature's 2019 amendments of the no-fault act, MCL 500.3101 et seq., that placed new limitations on in-home family-provided attendant care in MCL 500.3157(10) and the non-Medicare fee schedule of MCL 500.3157(7) could not be applied to limit or change plaintiffs' rights to benefits under the insurance policies defendants had issued to them before the 2019 amendments. Ellen M. Andary and Phillip Krueger, who suffered traumatic injuries in automobile accidents before 2019, had been provided uncapped lifetime medical care covered by personal protection insurance (PIP) benefits under insurance policies and the no-fault act in effect at the time of their injuries. In 2019, the Legislature significantly overhauled the no-fault act pursuant to 2019 PA 21 and 2019 PA 22, resulting in large reductions in reimbursable family-provided attendant care hours and reimbursement rates for services that are not covered by Medicare for people who had suffered traumatic injuries because of automobile accidents. Plaintiffs argued that the 2019 amendments of MCL 500.3157 should not impact services and care that were already being provided and that had been reimbursable before the amendments. Specifically plaintiffs alleged that the retroactive application of the 2019 amendments to them was improper and would also violate their constitutional rights under the Contracts Clause of Const 1963, art 1, § 10 and their due-process and equal-protection rights. Finally, plaintiffs all challenged the prospective application of the 2019 amendments on behalf of future motor vehicle accident victims and medical providers. Defendants moved to dismiss the case, and the trial court, Wanda M. Stokes, J., granted defendants' motion. Plaintiffs appealed, and the Court of Appeals Shapiro and Patel, JJ. (Markey, P.J., dissenting), affirmed in part, reversed in part, and remanded the case to the circuit court. Mich.App. (2022) (Docket No. 356487). Defendants sought leave to appeal in the Supreme Court, and the Supreme Court granted the application. 510 Mich. 944 (2022).
In an opinion by Justice Welch, joined by Chief Justice Clement and Justices Bernstein, Cavanagh, and Bolden, the Supreme Court held:
The 2019 no-fault amendments of MCL 500.3157 that are at issue do not impact services and care that were already being provided to Andary and Krueger and that had been reimbursable prior to the amendments. Andary's and Krueger's rights to the PIP benefits at issue in this case were both contractual and statutory in nature, and the 2019 no-fault amendments did not retroactively modify their vested contractual rights. Plaintiffs' constitutional challenges to prospective application of the amended statutes were dismissed.
1. Prior to 2019, there was no statutory cap on the number of reimbursable hours of prescribed attendant care that could be provided to a covered individual by family members (as opposed to a commercial provider), nor were there limits on reimbursement rates for medical providers beyond a requirement that the cost for the service be reasonable and necessary. In 2019, the Legislature significantly amended MCL 500.3157; the amendments resulted in large reductions in family-provided attendant care hours and reimbursement rates for services that are not covered by Medicare for people who had suffered traumatic injuries because of automobile accidents. This case concerned whether these new limitations applied to individuals who were covered by a PIP policy and suffered injuries before the effective date of the 2019 no-fault amendments.
2. PIP benefits provided under a no-fault policy of insurance have both statutory and contractual characteristics. While neither Andary nor Krueger were named insureds on the insurance policies that provided them coverage, it was undisputed that they were covered individuals according to both the terms of the policies and the no-fault act, and thus they were entitled to benefits pursuant to the policies. Although the Court had previously declared that an injured employee's right to benefits and an employer's obligation to pay for an employee's medical expenses under the Worker's Disability Compensation Act (the WDCA), MCL 418.101 et seq., are purely statutory in origin and cannot be "vested rights" for purposes of a constitutional Contracts Clause, Due Process Clause, or Takings Clause analysis, the no-fault act differs from the WDCA in that the WDCA is wholly a creature of statute that must be enforced through an administrative commission. Unlike the no-fault automobile insurance system, the WDCA expressly places on the employer a statutory obligation to provide or facilitate the provision of reasonable medical services to an employee who is injured in the course of employment. An employee's purely statutory right to workers' compensation benefits has nothing to do with whether an employer has purchased a private policy of insurance to cover the business's potential liability. Although the no-fault act mandates that certain minimum benefits be provided in private insurance policies, that does not mean that benefits available under a contractual policy of no-fault automobile insurance are purely statutory, as an injured employee's workers' compensation benefits are. Accordingly, PIP benefits under a no-fault insurance policy remain binding post-injury as to the individuals covered by the policy unless clearly and retroactively invalidated by the Legislature.
3. It has long been the rule in Michigan that for insurance purposes the rights and obligations of the parties vest at the time of the accident. For purposes of a no-fault policy of insurance, this means that neither the insured nor the insurer can unilaterally change the terms of a policy after a covered accident occurs. The scope of PIP benefits under an insurance policy vests at the time of injury. Andary's and Krueger's rights to PIP benefits under the applicable no-fault insurance policies vested, at the latest, when their injuries occurred and they first became eligible for PIP benefits. That was also when the insurers' legal obligation to pay PIP benefits for all reasonable and necessary medical expenses at the statutorily mandated minimum level, as incorporated into the insurance contract, was triggered. While Andary and Krueger could not seek reimbursement for specific medical expenses until the expenses were actually incurred under MCL 500.3110(4), their rights under the insurance policies for reimbursement of all reasonable and necessary medical expenses at a particular (uncapped) level vested at the time of the automobile accidents causing their injuries-the events that triggered the coverage provided by the insurance policies.
4. In determining whether a law has retroactive effect, four principles are considered. First, a court considers whether there is specific language providing for retroactive application. Second, in some situations, a statute is not regarded as operating retroactively merely because it relates to an antecedent event. Third, retroactive laws impair vested rights acquired under existing laws or create new obligations or duties with respect to transactions or considerations already past. Finally, a remedial or procedural act not affecting vested rights may be given retroactive effect where the injury or claim is antecedent to the enactment of the statute. In this case, under the first factor, the amendments that 2019 PA 21 made to MCL 500.3157(7) and (10) appeared prospective on their face, but these provisions did not explicitly address to whom they apply. There was nothing in the clear language of MCL 500.3157, 2019 PA 21, that suggested an intent to modify the contractual rights of an injured individual who has uncapped PIP benefits and family-provided attendant care that vested prior to the enactment of the amendments. Under MCL 500.2111f(8), any savings from the class of individuals injured before July 1, 2021, who have no vested right to benefits at the pre-amendment level must be passed on in filings after July 1, 2020. However, MCL 500.2111f(8) does not reflect a clear expression of legislative intent that MCL 500.3157(7) and (10) apply retroactively to insureds who were injured while covered by an insurance policy providing them a contractual right to provider reimbursement at the pre-amendment levels. Under the second factor, MCL 500.3157(7) and (10) do not directly relate to antecedent events because, on their face, they apply to all services and care rendered after the listed effective dates. Accordingly while application of the amended statutes to individuals like Andary and Krueger indirectly relates to antecedent car crashes and injuries, which triggered their rights to PIP benefits, this was not enough on its own to render the statute retroactive as to required benefits. But this consideration...
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