Attorney General v. Blue Cross & Blue Shield of Michigan

• Decision Date: 08 June 1988
• Docket Number: Docket No. 96778
• Citation: 424 N.W.2d 54,168 Mich.App. 372
• Court: Court of Appeal of Michigan — District of US
• Parties: ATTORNEY GENERAL, Plaintiff-Cross-Defendant, Appellee, v. BLUE CROSS & BLUE SHIELD OF MICHIGAN, a Michigan nonprofit corporation, Defendant-Cross-Plaintiff, Appellant, and General Motors Corporation, Amicus Curiae.

Page 54

424 N.W.2d 54

168 Mich.App. 372

ATTORNEY GENERAL, Plaintiff-Cross-Defendant, Appellee, v. BLUE CROSS & BLUE SHIELD OF MICHIGAN, a Michigan nonprofit corporation, Defendant-Cross-Plaintiff, Appellant and General Motors Corporation, Amicus Curiae.

Docket No. 96778.

Court of Appeals of Michigan.

Submitted Jan. 14, 1988.

Decided May 2, 1988.

Released for Publication June 8, 1988.

Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., and Richard L. Hammer, Jr., Asst. Atty. Gen., for Attorney General.

Hammond, Ziegelman, Roach & Sotiroff, P.C. by Thomas A. Roach and Amy L. Glenn, Detroit, for Blue Cross & Blue Shield of Michigan.

Bodman, Longley & Dahling by Theodore Souris, Kim Michael Lavalle, and Jeanne Van Egmond, Detroit, amicus curiae, for General Motors Corp.

Before J.H. GILLIS, P.J., and WEAVER and ALLEN, ^* JJ.

PER CURIAM.

Plaintiff filed a complaint for escheat and declaratory judgment concerning uncashed benefit checks issued by defendant to its suppliers, providers, and subscribers. Defendant filed a counterclaim, alleging that funds previously paid under the escheat statute, M.C.L. Sec. 567.11 et seq.; M.S.A. Sec. 26.1053(1) et seq., were not subject to escheat. The parties agreed to dismiss the counterclaim and, then, defendant filed an action in the Court of Claims. Apparently, the Court of Claims remanded the case to the circuit court to be tried with plaintiff's claim. Plaintiff filed a motion for summary disposition on its complaint pursuant to MCR 2.116(C)(9) and (10) and on defendant's counterclaim pursuant to MCR 2.116(C)(7), (8), and (9). The trial court granted plaintiff's motion. Defendant appeals as of right. We affirm.

Plaintiff, on behalf of the state, sought to escheat funds represented by unnegotiated medical benefit checks issued by defendant to its subscribers, providers, and suppliers under prepaid medical and hospital benefit contracts. When a claimant incurs medical costs covered by defendant's contract, the subscriber, provider, or supplier submits a claim for reimbursement to defendant. Pursuant to its contract, defendant determines what the reasonable and customary charge for such service would be in the claimant's area and issues a check in that amount. Thus, the amount of the check may or may not equal the amount charged for the service. Plaintiff alleges that defendant's contracts provide that, if the amount of the check is not challenged for two years, the claimant may not challenge it. Furthermore, plaintiff contends that although defendant's checks expire after six months, defendant will reissue a new check upon the claimant's proof of entitlement.

Because the dormancy period in the escheat code is seven years, plaintiff sought to escheat funds represented by unnegotiated checks issued from 1976 until 1978 and, therefore, required to be reported by defendant to the state from 1984 to 1986 M.C.L. Secs. 567.11, 567.15(f), 567.16 and 567.17a; M.S.A. Secs. 26.1053(1), 26.1053(5)(f), 26.1053(6) and 26.1053(7a). In its counterclaim defendant sought to recoup funds already escheated to the state and represented by checks issued from 1972 to 1975 and reportable from 1980 to 1983.

M.C.L. Sec. 567.15(b); M.S.A. Sec. 26.1053(5)(b) provides in part:

" 'Property' means personal property, of every kind or description, tangible or intangible, in the possession or under the control of a holder, as hereinafter defined, and includes, but not by way of limitation:

"(i) Money.

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"(iv) Credits, including wages and other allowances for services earned or accrued on or after January 1, 1958, and funds due and payable on checks certified in this state or on written instruments issued in this state on which a banking or financial institution or any other holder is liable, including but not limited to certificates of deposit, drafts, cashier checks, money orders, and travelers checks; also proceeds or property interests represented by unredeemed gift certificates.

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"(viii) Amounts due and payable pursuant to the terms of any policy of insurance....

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"(xiii) All other liquidated choses-in-action of whatsoever kind or character.

"The word 'property' does not include credits or deposits evidenced by cash balances on unclaimed or refused personal property, nor any property, except the items specified in subparagraphs (i) to (xii), the right to recover which in a proceeding brought by the owner would be barred by the provisions of any statute of limitations, state or federal." (Emphasis supplied.)

The trial court held that the funds represented by the unnegotiated checks were liquidated choses-in-action and, therefore, subject to escheat. M.C.L. Sec. 567.15(b)(xiii); M.S.A. Sec. 26.1053(5)(b)(xiii). The trial court implicitly rejected defendant's argument that the above-emphasized portion of M.C.L. Sec. 567.15(b); M.S.A. Sec. 26.1053(5)(b) would prevent escheat of liquidated choses-in-action in which a proceeding brought by the owner would be barred by the provisions of any statute of limitations. Moreover, the trial court implicitly rejected defendant's claim that the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Sec. 1001 et seq., preempted the application of the escheat code to the funds in issue.

While defendant does not dispute that the funds represented by the checks were choses-in-action, it claims that they were unliquidated because defendant and the claimants had not agreed on the amounts due. Apparently, defendant does not dispute that checks in which the amount due was equal to the amount requested were liquidated.

Liquidated is defined as:

"Ascertained; determined; fixed; settled; made clear or manifest. Cleared away; paid; discharged. Adjusted, certain, or settled.... Made certain or fixed by agreement of parties or by operation of law." Black's Law Dictionary (5th ed), at 838. (Citations omitted.)

Unliquidated is defined as:

"Not ascertained in amount; not determined; remaining unassessed or unsettled, as unliquidated damages...." Id. at 1378. (Citation omitted.)

In Revenue Cabinet v. Blue Cross & Blue Shield of Kentucky, Inc., 702 S.W.2d 433 (1986), the Supreme Court of Kentucky had to determine whether uncashed subscriber benefit checks were liquidated debts which should be treated as intangible property subject to escheat under the laws of that state. The defendant paid benefits in an amount stated in the policy or by referral to a schedule of usual, customary, and reasonable fees. The court found that the amounts represented by the checks were fixed and incontestable because the claimants' ability to challenge them had expired under time limitations contained in the policies and because they were recognized by the defendant as continuing obligations for which it would issue a new check to the subscriber regardless of how much time had passed. The Kentucky statute provided:

"[A]ll intangible property, ... that is held or owing in this state by any person and has remained unclaimed by the owner for more than seven (7) years after it became payable or distributable is presumed abandoned." Id. at 434.

The court noted that while the plaintiff contended that the obligation to pay the amounts of the checks was a liquidated debt, the defendant claimed that the amounts on the checks were offers of settlement. The court held that the definition of intangible property included a liquidated debt evidenced by a written instrument. The court then noted that the Kentucky statute was modeled after the Uniform Unclaimed Property Act and that that act provided that a draft issued by a property or casualty insurance company for property damage or personal injury was not subject to a presumption of abandonment if the offer was not accepted by the payee. The court opined that the converse of the check issued by a property or casualty insurer as an offer of settlement of a claim of an unliquidated amount is a check issued by a life insurance company, a health insurance company, or a disability insurance company in payment of a fixed or scheduled benefit, an obligation not subject to negotiation. Thus, the court held that the defendant's checks were not offers of settlement, but payments of fixed obligations. Id. at 435.

We agree with the reasoning of the Kentucky Supreme Court. In this case, the providers, subscribers, and suppliers contracted with defendant only for reimbursement for customary and reasonable charges for a particular service; therefore, the claimants had a reasonable expectation that they would be reimbursed only for that amount which might or might not be equal to the amount of their claims. As in Revenue Cabinet, supra, we believe that determining the reasonable and customary amount due, necessarily determined by reference to a schedule, is no different than a situation where the charged amount is specified in the contract. Hence, we agree with plaintiff that the sums represented by the checks were liquidated.

Defendant next claims that liquidated choses-in-action are not property subject to escheat where a proceeding by the owner to recover the same would be barred by the provisions of any statute of limitations, state or federal. M.C.L. Sec. 567.15(b); M.S.A. Sec. 26.1053(5)(b) describes thirteen categories of property. The thirteenth category is liquidated choses-in-action. M.C.L. Sec. 567.15(b); M.S.A. Sec. 26.1053(5)(b) then provides:

"The word 'property' does not include credits or deposits evidenced by cash balances on unclaimed or refused personal property, nor any property, except the items specified in subparagraphs (i) to (xii), the right to recover which in a proceeding brought by the owner would be barred by the provisions of any statute of limitations, state or federal."

Plaintiff claims that this portion of the statute was enacted in partial response to our Supreme Court's opinion in Evans Products Co. v. State Board of Escheats, 307 Mich. 506, 12 N.W.2d 448 (1943), and...