Harris v. Auto Club Ins. Ass'n

• Decision Date: 29 July 2013
• Docket Number: Docket No. 144579.,Calendar No. 7.
• Citation: 494 Mich. 462,835 N.W.2d 356
• Parties: HARRIS v. AUTO CLUB INSURANCE ASSOCIATION.
• Court: Michigan Supreme Court

494 Mich. 462

835 N.W.2d 356

HARRIS

v.AUTO CLUB INSURANCE ASSOCIATION.

Docket No. 144579.

Calendar No. 7.

Supreme Court of Michigan.

Argued March 6, 2013.

Decided July 29, 2013.

Anselmi & Mierzejewski, P.C., Bloomfield Hills (by Kurt A. Anselmi), for Brent Harris.

Hom, Killeen, Siefer, Arene & Hoehn (by Elaine I. Harding) and John A. Lydick, for Auto Club Insurance Association.

Bodman PLC (by James J. Walsh, Ann Arbor, Jonathon A. Young, and Thomas J. Rheaume, Jr., Detroit) and Robert A. Phillips, Detroit, for Blue Cross Blue Shield of Michigan.

Opinion

PER CURIAM.

The significant question in this case is whether a person claiming personal protection insurance (PIP) benefits under MCL 500.3114(5)(a) for injuries arising from a motor vehicle accident may also recover an award for those same injuries under a health insurance policy that contains a provision titled, “Care and Services That Are Not Payable,” which provides, “[w]e do not pay for the following care and services: Those for which you legally do not have to pay or for which you would not have been charged if you did not have coverage under this certificate.” The Court of Appeals majority in this case held that because plaintiff Brent Harris, for purposes of the no-fault act, incurred expenses on receiving treatment, ¹ he could seek a duplicate award from his health insurer, third-party defendant Blue Cross Blue Shield of Michigan (BCBSM), because these were services for which Harris legally had to pay.² We conclude that, regardless of when Harris incurred expensesarising from the motor vehicle accident, he simply did not legally have to pay these expenses. When Harris sought treatment for his injuries under MCL 500.3114(5)(a), the legally assigned insurer, defendant Auto Club Insurance Association (ACIA), became liable for all of Harris's PIP expenses. Because BCBSM's policy plainly provides that BCBSM is not liable for expenses that Harris does not legally have to pay, Harris cannot collect expenses from both ACIA and BCBSM. Accordingly, we reverse in part the December 27, 2011 judgment of the Court of Appeals and reinstate the judgment of the Oakland Circuit Court.

I. FACTS AND PROCEEDINGS

On July 11, 2008, Harris was injured when he was struck by a motor vehicle while operating a motorcycle. Harris had a health insurance policy, referred to as a Professional Services Group Benefit Certificate (the policy or the certificate), with BCBSM. The owner of the motor vehicle that struck Harris was insured under a no-fault insurance policy issued by ACIA. Under the no-fault act, MCL 500.3101 et seq., the statutory definition of motor vehicle expressly “does not include a motorcycle.” ³ However, MCL 500.3114 provides in relevant part:

(5) A person suffering accidental bodily injury arising from a motor vehicle accident which shows evidence of the involvement of a motor vehicle while an operator or passenger of a motorcycle shall claim personal protection insurance benefits from insurers in the following order of priority:

(a) The insurer of the owner or registrant of the motor vehicle involved in the accident.

Accordingly, if Harris claimed PIP benefits, ACIA would be responsible for paying those benefits, despite the fact Harris did not purchase a no-fault insurance policy from ACIA.

Following his accident, Harris sought insurance coverage for his medical bills from both ACIA and BCBSM. Harris expected BCBSM to pay the bills submitted by his medical care providers and expected ACIA to send a check directly to him in the same amount as the BCBSM payments. BCBSM initially paid $19,801.75 in benefits, but then retracted those payments and denied coverage, relying on provisions in its policy that stated BCBSM would not pay for medical care and services for which benefits are paid by another plan. In light of BCBSM's denial of coverage, ACIA paid all Harris's medical bills, including those bill payments retracted by BCBSM. ACIA has paid in excess of $85,000.

Harris then filed this lawsuit naming ACIA as the only defendant. Harris alleged that ACIA was required to pay him directly the same amounts paid by BCBSM to any healthcare provider for medical expenses arising from the motor vehicle accident. ACIA subsequently filed a third-party complaint against BCBSM. Harris then filed an amended complaint naming BCBSM as a defendant.

BCBSM and Harris filed motions for summary disposition. ACIA opposed the motions. The circuit court determined that because ACIA's policy was uncoordinated,⁴ACIA was the primary insurer. The court also opined that the BCBSM certificate coordinated benefits with the no-fault policy. The court emphasized that the BCBSM certificate included a “Coordination of Benefits” provision. The court additionally relied on the “Physician and Other Professional Provider Services That Are Not Payable” and “Care and Services That Are Not Payable” provisions in concluding that BCBSM does not pay for care and services for which the insured legally does not have to pay or for which the insured would not have been charged if the insured did not have coverage. The court held that ACIA was primarily responsible for the payment of Harris's medical expenses. Accordingly, the court denied Harris's motion for summary disposition, but granted BCBSM's motion, resulting in the dismissal of all the claims asserted against BCBSM by Harris and ACIA. The court also granted summary disposition in favor of ACIA against Harris.

Harris appealed, challenging only the circuit court's order dismissing his claims against BCBSM. ACIA did not appeal the circuit court's order dismissing its third-party claims against BCBSM. A split panel of the Court of Appeals reversed the circuit court's order to the extent that it granted summary disposition to BCBSM.⁵ The majority characterized the dispute as “whether the BCBSM certificate coordinates with the no-fault policy.” ⁶ The majority rejected BCBSM's reliance on several provisions in the certificate that the circuit court relied on to preclude coverage.⁷

The majority expressly addressed the provision of the BCBSM certificate titled, “Care and Services That Are Not Payable,” ⁸ which as previously stated, provides: “We do not pay for the following care and services: Those for which you legally do not have to pay or for which you would not have been charged if you did not have coverage under this certificate.” Rather than applying the language of this provision, however, the majority looked to the Court of Appeals' decisions in Shanafelt v. Allstate Ins. Co. and Bombalski v. Auto Club Ins. Ass'n.⁹ In those cases, the panels “examined the meaning of the term ‘incurred’ in MCL 500.3107(1) and considered the no-fault insurer's contention that the plaintiff did not ‘incur[ ]’ expenses that were paid by the health insurer.” ¹⁰ As noted by the majority, Shanafelt explained that “[t]he primary definition of the word ‘incur’ is ‘to become liable for.’ ” ¹¹ In applying this definition, Shanafelt reasoned that

[o]bviously, [the] plaintiff became liable for her medical expenses when she accepted medical treatment. The fact that plaintiff had contracted with a health insurance company to compensate her for her medical expenses, or to pay directly the health care provider on her behalf, does not alter the fact that she was obligated to pay those expenses.¹²

Relying on this reasoning, the majority concluded that Harris had incurred expenses when he sought treatment for his injuries that arose from the motor vehicle accident, and that once he became liable for those expenses, BCBSM was in turn liable to cover those expenses.¹³ The majority concluded in part that the circuit court “erred in determining that the BCBSM certificate coordinated with the no-fault policy.” ¹⁴

The majority also addressed BCBSM's contention that Shanafelt and Bombalski were inapposite because they addressed the no-fault act while the instant case turns on the language of BCBSM's certificate.¹⁵ The majority rejected this claim because the term “incurred” is synonymous with the phrase, “legally obligated to pay.” ¹⁶ The majority opined that the rationale of Shanafelt and Bombalski was nonetheless applicable. ¹⁷ That is, “that a party receiving services has a legal obligation to pay for them when rendered and incurs the expense even if the expense is paid by an insurer, is applicable here, although the phrase and context are different.” ¹⁸

Judge Murray partially dissented.¹⁹ Judge Murray found controlling the provision in the certificate, titled “Care and Services That Are Not Payable.” Judge Murray noted that this provision was stated in the present tense, and that “whether we look to the factual situation at the time the complaint was filed or when plaintiff submitted his demand upon BCBSM, we know that plaintiff did not legally have to pay anything.” ²⁰

We granted BCBSM's application for leave to appeal, instructing that “[t]he parties shall include among the issues to be briefed whether [Harris] is entitled to a double recovery from both [ACIA] and [BCBSM] of medical expenses arising from a motorcycle accident involving a motor vehicle.” ²¹

II. STANDARD OF REVIEW

This Court reviews a circuit court's decision on a motion for summary judgment de novo.²² We also review de novo the proper interpretation of a contract.²³

III. ANALYSIS

In Smith v. Physicians Health Plan, Inc,²⁴ this Court acknowledged that an insured who had elected an uncoordinated no-fault policy may, under certain circumstances, be able to obtain a double recovery from both the no-fault insurer and the health insurer for medical expenses arising from the same accident. “It is when both the no-fault automobile insurance and the health insurance are uncoordinated policies that multiple recovery is possible for the insured.” ²⁵ Thus, for example, in Shanafelt,²⁶ the Court of Appeals permitted an insured who had an uncoordinated no-fault policy, and was allegedly injured in a motor vehicle accident, to...