STATE OF MICHIGAN
IN THE COURT OF CLAIMS
Michigan Automobile Insurance Placement
Facility, in its capacity as the administrator of
the Michigan Assigned Claims Plan,
Civil Action No. tg Ottilc
Plaintiff,
VS.

E

Department of Insurance and Financial
Services and Anita G. Fox in her official
capacity as the Director of the Department of
Insurance and Financial Services,
Defendant.

Lori McAllister (P39501)
Erin A. Sedmak (P78282)
8 Attorneys for Plaintiff
Dykema Gossett PLLC
201 Townsend Street, Suite 900
Lansing, MI 48933
2 (517) 374-9150
There is no other pending or resolved
civil action arising out of the transaction
or occurrence alleged in the complaint.
VERIFIED COMPLAINT FOR INJUNCTIVE RELIEF AND DECLARATORY RULING
S

SUMMARY
Plaintiff, the Michigan Automobile Insurance Placement Facility ("MAIPF"), in its
capacity as the administrator of the Michigan Assigned Claims Plan ("MACP") requests that this
Court issue a temporary restraining order and, after a hearing, a preliminary injunction enjoining
Defendants, the Department of Insurance and Financial Services ("DIFS") and its Director, Anita
G. Fox ("Director"), from instituting any action to enforce their two pronouncements, purported
to be "orders", issued on September 20, 2019 and September 24, 2019 (the "Orders") against the

017318.000999 4844-8700-5609.4

 MAIPF or MACP. The purported "orders" are not properly promulgated rules nor orders issued
in any contested case in which the MAIPF or MACP was a party. Of particular concern, the
Director purports to order the MACP to act contrary to law by (1) refusing to process claims that
it receives as required by MCL 500.3172, and (2) prohibiting the MACP from complying with the
statutory cap on benefits that is applicable to claims against the MACP filed June 11, 2019 and
later. In so ruling, the Director vastly surpassed her regulatory authority and attempted to act in a
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quasi-legislative role that is prohibited by law.
If DIFS is not enjoined from enforcing its Orders, the MACP, and the MAIPF as the
administrator of the MACP, will suffer irreparable harm as they will be exposed to litigation from
claimants entitled to benefits and insurers to which the claims are returned. The MACP will also
suffer financial losses that will not be recoverable. As demonstrated in the attached Motion and
8
Brief, the MAIPF has a substantial likelihood of success on the merits, the MAIPF and the MACP
will be irreparably harmed if enforcement of the Orders is not enjoined, DIFS and its Director face
no potential harm from an injunction enjoining enforcement of the Orders, and it is in the interest
of the public to stay the Orders.
In support of its Complaint, the MAIPF states as follows:
PARTIES AND JURISDICTION
1.

The MAIPF is a statutorily created organization, see MCL 500.3301 et seq,

primarily responsible for ensuring that automobile insurance coverage is available to any person
that is otherwise unable to procure that insurance through ordinary methods. The MAIPF is
directed by its Board of Governors ("Board"), as provided in MCL 500.3330. The Michigan
Legislature also tasked the MAIPF with adopting and implementing an Assigned Claims Plan (the
MACP). See MCL 500.3171-500.3178. The MAIPF and the MACP are funded by statutorily

2

 required assessments under the No-Fault Act which, in turn, are passed on to the driving public.
The MAIPF's principal office is located at 17456 N Laurel Park Dr # 130E, Livonia, MI 48152.
2.

The MACP, formerly known as the Assigned Claims Facility ("ACF"), was

established by the Legislature in 1973 to provide assistance to people injured in an accident
involving a motor vehicle when there was no automobile insurance available. MCL 500.3171.
The Secretary of State managed the program until December 17, 2012, when the MAIPF was given
the task of operating the MACP. The MACP, as a last resort, is responsible for personal injury
protection ("PIP") benefits to those no-fault claimants who are injured in an automobile accident

5
when there is no insurance company responsible for the payment of no-fault benefits under the

0,
statutory scheme established by Michigan's No-Fault Act. The MACP's principal office is located
at 17456 N Laurel Park Dr # 130E, Livonia, MI 48152.
3.

2

Defendant DIPS is a State of Michigan agency created by Executive Order 2013-

1.I DIFS is an executive agency charged with the responsibility and authority to administer and
implement, inter alia, the Michigan Insurance Code of 1956, MCL 500.100 et seq. DIFS's

6

principal office is located at 530 W Allegan St #7, Lansing, MI 48933.
4.

4

Anita G. Fox is the Director of DIFS.

She was appointed Director of the

Department of Insurance and Financial Services (DIFS) by Michigan Governor Gretchen Whitmer
effective January 14, 2019, and is named in her representative capacity only.
5.

This Court has subject-matter jurisdiction over this Complaint pursuant to MCL

600.6419 and has the authority to grant injunctive relief pursuant to MCR 3.310. Because the

I DIFS is the successor to the Office of Financial and Insurance Regulation, which was
preceded by the Office of Financial and Insurance Services, which was synthesized from the
Insurance Bureau Financial Institutions Bureau and the securities functions of the former
Corporation, Securities, and Land Development Bureau.

3

 Director has purported to exercise a quasi-legislative function with her Orders, an appeal under the
Administrative Procedures Act is not appropriate, and this Court has exclusive jurisdiction.
Furthermore, any remand or referral of this matter to DIFS would be futile given that DIFS and
the Director have plainly expressed their view of the law in the Orders.
FACTUAL BACKGROUND
6.
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On June 11, 2019, Public Acts 21 and 22 were signed into law by Governor

Gretchen Whitmer. These Public Acts amended Michigan's No-Fault Act, MCL 500.3100 et seq.
and other related statutes. As part of the amendments to the Act, the following language was added
to MCL 500.3172:

2

The Michigan automobile insurance placement facility and the
insurer to whom a claim is assigned by the Michigan automobile
insurance placement facility are only required to provide
personal protection insurance benefits under section 3107(1)(a)
up to whichever of the following is applicable:
(a) Unless subdivision (b) applies, the limit provided in section
3107c(1)(b).
(b) If the person is entitled to claim benefits under the assigned
claims plan under section 3107d(6)(c) or 3109a(2)(d)(ii),
$2,000,000.00.

rci

MCL 500.3172(7). Public Acts 21 and 22 were given immediate effect, except as specifically
8 provided by the Legislature within certain statutory provisions.
7.

The limit referred to in MCL 500.3172(7)(a) is $250,000.

See MCL

500.3107c(1)(b).
8.

The limit referred to in MCL 500.3172(7)(b) is $2,000,000 and applies where a

person is entitled to benefits under the assigned claims plan under MCL 500.3107d(6)(c) or MCL
500.3109a(2)(d)(ii). However, both MCL 500.3107d(6)(e) and MCL 500.3109a(2)(d)(ii) will not
become effective until July 1, 2020, pursuant to the plain language of those provisions.

4

 9.

Therefore, until July 2, 2020, the $250,000 limit under MCL 500.3172(7)(a)

governs the payment of PIP benefits by the MACP for purposes of MCL 500.3172(7).
10.

In addition to placing a limit or cap of $250,000 on claims submitted to the MACP,

the Legislature also amended the statutory priority of claims when an accident involves an
occupant/passenger or someone not in a vehicle such as a pedestrian. In particular, prior to the
Amendments, Section 3114 of the No-Fault Act required an occupant in a vehicle who was injured
in an automobile accident, and not otherwise insured, to seek benefits first from the owner of the
vehicle, and second from the operator of the vehicle. The same priority scheme governed a
situation where a pedestrian was the injured person pursuant to MCL 500.3115. Under the
Amendments, a person who suffers accidental bodily injury arising from a motor vehicle accident
while an occupant of a motor vehicle who is not covered under their own PIP policy shall now
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claim PIP benefits from the MACP. MCL 500.3114(4). A person who suffers accidental bodily
injury while not an occupant of a motor vehicle (such as a pedestrian) who is not covered under
the own PIP policy shall now claim PIP benefits from the MACP. MCL 500.3115(1).
11.

Following the Amendments, the MACP has received two types of claims. The first

type are claims made directly to the MACP when there is no insurance available for the accident,
which is the traditional type of claim made to the MACP. The second type of claims results from
the changed priority scheme enacted by the Legislature which makes the MACP responsible for
claims by occupants and pedestrians who are not covered under their own PIP policy. Both types
of claims are subject to the cap of $250,000, rather than unlimited benefits. MCL 500.3172(7)(a).
12.

Once the MACP receives a claim, it is required to make an initial determination of

whether the claim is an "eligible" claim because there is no other applicable insurance. If the
MACP determines that the claim is eligible for assignment, it assigns the claim to a servicing

5

 insurance company for handling. The servicing insurer or the MACP can request reasonable proof
of loss from the claimant, including an examination under oath if appropriate. See generally, MCL
500.3173a.
13.

The MACP began receiving claims pursuant to the Amendments the day after they

became effective on June 11 2019. Numerous insurers referred claims to the MACP because of
the change in the priority scheme enacted by the Legislature. Because it is necessary to confirm
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that the referring insurer's policy does not provide coverage independent of the statutory change,
a number of referrals were made to outside counsel to evaluate the referring insurers' policies to
determine if there was coverage, which would make the claim ineligible for MACP coverage.

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14.

Three months after the entire system shifted as a result of the Amendments

becoming effective, DIPS for the first time questioned whether the Amendments were effective
upon enactment. The MAIPF provided its legal analysis demonstrating that the Amendments
became effective upon enactment, requiring it to consider claims being presented by the referring
rt

insurers, among other things.
15.

On September 20, 2019, the Director issued what DIFS described as an "order" (the

"September 20 Order") (Exhibit A) and posted it on the DIFS website in the same place it places
its orders in contested cases. The September 20 Order, however, was not derived from any
"contested case."2 Nor was it a promulgated rule under the Administrative Procedures Act
("APA"), and DIFS has not contended that it is a rule. None of the procedures to promulgate a

2 "`Contested case' means a proceeding, including rate-making, price-fixing, and licensing,
in which a determination of the legal rights, duties, or privileges of a named party is required by
law to be made by an agency after an opportunity for an evidentiary hearing. When a hearing is
held before an agency and an appeal from its decision is taken to another agency, the hearing and
the appeal are considered a continuous proceeding as though before a single agency." MCL
24.203.

6

 rule under the APA were followed with respect to the September 20 Order. Instead, the September
20 Order seeks to enforce the pronouncement made across the insurance industry, as if it is
generally applicable to all regulated parties and the MACP, and as if it has the force of law. It
does not.
16.

The September 20 Order requires insurers to resubmit forms and rates to DIFS for

approval before the insurers could refer claims to the MACP as a result of the priority change in
2

MCL 500.3114(4) and 500.3115(1). There is no such requirement in either statute.
17.

With respect to the MACP, the Director ordered that:
The Assigned Claims Plan shall not provide coverage for claims that
have been tendered to it under forms that purport to incorporate
amendments made by PA 21 and PA 22 that affect the scope of
coverage required to be provided under an insurance policy unless
those forms have been approved by the Director.

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Ex. A, ¶4.
18.

Nothing in the statute authorizes the MACP to refuse to provide coverage based on

whether DIFS believes it is appropriate to do so. Instead, the MACP' s responsibilities are spelled
out in the statute. The statute does not contain a provision authorizing the MACP to deny coverage
on the basis set forth in the DIFS Order, and the Director cites no such basis in her Order. Thus,
direct the MACP to not provide coverage as required under the
8 the September 20 Order seeks to
No-Fault Act and, therefore, violate its statutory duties under MCL 500.3171 — 500.3179.
19.

On September 24, 2019, the Director posted a second purported "order" on the

DIFS website in the section where orders from contested cases are found (the "September 24
Order") (together with the September 20 Order, the "Orders"). But, again, the September 24 Order
was not derived from any contested case. While the September 24 Order is aimed at the MAIPF,
no underlying hearing was held, MAIPF had no notice of any proceeding purporting to adjudicate
its rights, MAIPF did not participate in any proceedings, and MAIPF was not provided the
7

 opportunity to present evidence.

It is not a promulgated rule under the APA, nor has DIFS

contended that it is a rule. None of the procedures to promulgate a rule under the APA were
followed with respect to the September 24 Order. Again, DIFS seeks to enforce the pronouncement
contained in the September 24 Order against MAIPF, as if it has the force of law. It does not.
20.

The September 24 Order purported to "notify" the MAIPF that "any attempt to rely

on the amendments made by PA 21 and PA 22 to cap benefits at $250,000 prior to July 2, 2020, is
prohibited" based on the Director's alleged interpretation of MCL 500.3172(7). (Exhibit B). The
September 24 Order included an erroneous legal analysis to reach its conclusions that
implementing the $250,000 cap on MACP benefits prior to July 2, 2020 would conflict with the
purpose of the Insurance Code to protect policyholders, creditors and the public; is not supported
by principles of statutory interpretation; and frustrates the intent of other statutory amendments
contained in the Insurance Code.
21.

The September 24 Order pronounces that "MAIPF shall not impose a $250,000 cap

on MACP benefits under Section 3107c(1)(b) of the Code, pursuant to Section 3172(7)(a), prior
to July 2, 2020." (Id.) This instruction to disregard and not enforce the statute, which makes the
cap applicable immediately, is a violation of law.
22.

The source of the September 24 Order became immediately apparent. On the same

day, a news article was published regarding the September 24 Order, reporting that the Director
issued the September 24 Order at the request of Governor Gretchen Whitmer who "used her
executive authority to amend the enforcement of the no-fault insurance reform legislation she
signed in June." (Exhibit C) (emphasis added). According to the article, Governor Whitmer
"promised to use her powers to return complete coverage to auto accident survivors" and
"promised to make the change while in a closed-door meeting with advocates opposing the law."

8

 Id. (emphasis added). The article further provided that "[a]ccording to John Cornack, president of
the Eisenhower Center which provides care for those who suffer brain injuries", "the governor's
actions were to 'help soften the outcome of the new law' and postpone its provisions." Id.
(emphasis added). Mr. Cornack was an attendee at the meeting with the Governor. No Executive
Order was ever issued.
23.

Neither DIFS nor the Director are empowered to postpone the implementation of

0- part of the Amendments for political reasons. While the Director is a member of the Executive
Branch, there is nothing in the Michigan Constitution or Michigan law that permits the Governor

p to legislate from her office by ordering the Director of DIFS to issue orders changing the effective
date of the Amendments.
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24.

DIFS contends it has the power to issue the September 24 Order under MCL

8 500.205, MCL 500.3171, and its general power to execute the laws in the insurance code under
MCL 500.200. But nothing in those statutes allows DIFS to usurp the power of the Legislature to
Cj

amend statutory law or the power of the judiciary to invalidate laws passed by the Legislature.
DIFS's authority to issue orders using its reasonable discretion must be within the authority
° delegated to it by the Legislature. Detroit Pub Sch v Conn, 308 Mich App 234, 242; 863 NW2d
§ 373 (2014) (citations and quotations omitted) ("Administrative agencies have no common-law
powers. But the Legislature may confer on an administrative agency the power to enact rules
regarding details, to conduct hearings to find facts, and to exercise some discretion in
administering a statute."). The Legislature has not, and cannot, delegate the power to legislate to
DIFS, and has not given DIFS the authority to determine which claims are or are not covered by
the MACP, or when a statute becomes effective. See Taylor v Smithkline Beecham Corp, 468

9

 Mich 1, 8; 658 NW2d 127 (2003) (while the Legislature may obtain assistance from the judicial
and executive branches, it may not delegate the power to legislate to either).
25.

DIFS's orders direct the MACP to violate the law because the purported Orders

preclude the MACP from providing coverage for claims that it may determine are valid, and
imposes restrictions not in the statute before coverage may be afforded by the MACP. The
practical effect of the September 20 Order is that the MACP either returns claims from the
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servicing insurance carriers to whom they are assigned to the insurers from which they originated
or risk administrative attempts to enforce the Order. Moreover, the Order does not allow the
MAIPF or MACP to process the claims according to the No-Fault Act's requirements in MCL
500.3172 and 500.3173a, which require the MACP to timely and promptly send claims that it
receives for a determination as to whether coverage exists on the claim and, if so, to process the
claims accordingly.
26.

Forcing the MAIPF and MACP to violate the law is an irreparable injury that

exposes them to litigation from both the insurers to whom the MACP returns the files and from
the underlying claimants who do not have their claims timely processed.
27.

Enforcement of the prohibition against implementing the $250,000 cap also

irreparably harms the MACP as it will be required to pay amounts in excess of the $250,000 cap
until such time as the litigation resolves or face enforcement action from DIFS. Some of the claims
submitted to the MACP are catastrophic claims where the MACP expects that the cap will be
exceeded. Once the MACP pays the patients and providers on those claims, there is no effective
way for it to recoup the funds paid out. Even if the MAIPF is able to obtain partial repayment
from some hospitals, it is doubtful that any of the individuals will be able to repay the sums. Given
that the Director of DIFS is ordering the MACP to pay unlimited benefits, the amounts paid could

10

 greatly exceed the cap and will be forever unrecoverable. These costs are ultimately passed on to
auto insurance companies by way of assessments, who in turn pass the costs on to the driving
public.
28.

Neither the Governor, DIFS, a state agency, nor the Director have the authority to

postpone the effectiveness of the statutory cap, to pronounce the unambiguous plain language of a
statute to be ineffective, or to effectively amend a statute. Moreover, neither the Governor, DIFS,
nor the Director have the authority to demand that MAIPF or MACP violate the law by refusing
to perform their statutory obligations.
COUNT I—DECLARATORY RELIEF
29.

The MAIPF hereby realleges and incorporates the foregoing paragraphs as though

fully set forth herein.
a.

30.

DIFS issued two purported Orders that do not have the force of law because they

are not derived from any law or authority granted to DIFS. The Orders seek to amend legislation
passed by delaying the caps on benefits provisions from coming into effect immediately. DIFS
does not have the authority to override choices made by the Legislature. An administrative agency,
such as DIFS, "cannot exercise legislative power by creating law or changing the laws enacted by
the Legislature." SBC Mich v PSC (In re Complaint of Rovas), 482 Mich 90, 98; 754 NW2d 259
(2008). Therefore, by attempting to rewrite the amendments to the No-Fault Act, the Director is
usurping the Legislature's power in violation of section 2 of article 3 of the Michigan Constitution
of 1963. Const 1963, art 3, § 2. In short, DIFS exceeded its authority when it issued the purported
Orders for at least the following reasons:
a.

The Director's purported Orders violate the Michigan Constitution's separation of
powers principles. While an administrative agency has "quasi-legislative" powers,

11

 such powers are limited to rule making. In re Complaint of Rovas, 482 Mich at 98.
An administrative agency, such as DIFS, "cannot exercise legislative power by
creating law or changing the laws enacted by the Legislature." Id. Thus, DIFS
cannot promulgate any rule that conflicts with a statute because only the Legislature
may make law. See id. By attempting to rewrite the amendments to the No-Fault
Act, the Director is usurping the Legislature's power in violation of section 2 of
article 3 of the Michigan Constitution of 1963. Const 1963, art 3, § 2.
b.

Because the Director's Orders are not the result of contested cases, they are not
derived from administrative agencies' "quasi-judicial" power. "Administrative
agencies exercise what have been described as 'quasi-judicial' powers. However,
such power is limited and is not an exercise of constitutional 'judicial power.' The
primary 'judicial' function exercised by administrative agencies is confined to
conducting contested cases." In re Complaint of Rovas, 482 Mich at 98-99. Thus,
DIFS has no authority to issue a rule of law by issuing a purported judicial opinion.
DIFS's power to adjudicate cases is limited to a fact-finding exercise in contested
cases. Id at 98.

c.

The Orders do not have the force of law because agencies do not have the power to
unilaterally issue pronouncements that have the force of law. Ass 'n of Bus.
Advocating Tariff Equity v. Mich. Pub. Serv. Comm'n (In re Reliability Elec. Utils.
for 2017-2021), 325 Mich App 207, 232-233, 926 NW2d 584 (2018) (quoting
Faircloth v Family Independence Agency, 232 Mich App 391, 403-404; 591 NW2d
314 (1999) ("An agency should resort to formal APA rulemaking when establishing
policies that 'do not merely interpret or explain the statute or [rules from which the

12

 agency derives its authority,' but rather 'establish the substantive standards
implementing the program.'"). "An agency . , may not avoid the requirements for
promulgating rules by issuing its directives under different labels." Id. at 233. See
also, Detroit Edison Co v Dep't of Treasury, 498 Mich 28, 45; 869 NW2d 810
(2015) (finding that, for an agency regulation of general applicability to have the
force of law, it must fall under the definition of a properly promulgated rule).
d.

Even where an administrative agency interprets a statute, its interpretation cannot
conflict with the plain meaning of the statute. In re Complaint of Rovas, 482 Mich
at 108. To the extent that the DIPS Orders are based on its interpretation of the
Insurance Code, they are invalid, as they demand that the MACP violate the NoFault Act's plain language.

e.

DIPS has no authority to alter the claims that the MACP must accept for
assignment. DIPS only has the narrow authority granted to it under MCL 500.3171
to appoint four of eleven governors to the MAIPF' s Board, to approve the assigned
claims plan, which occurred long ago, and make a report to the senate a year after
the plan is approved, which also already occurred. The MACP is not a regulated
entity like an insurance company or insurance producer. It only applies if there is
no insurance policy at issue. The Legislature has made the decision as to what
claims the MACP must accept and the limits on benefits the MACP must pay—
DIPS does not have the authority to alter those decisions. Thus, DIFS has no
authority to make the proclamations in its Orders.

13

 f.

DIFS has no authority to ban conduct that is in conformity with the Insurance Code.
Any such attempt would exceed the power delegated to DIPS by the Legislature.
See Ins Institute v Commissioner, 486 Mich 370, 407; 785 NW2d 67 (2010).

31.

DIFS does not have the authority to issue rulings of general applicability without

promulgating a rule under the APA.

Because the Director's purported Orders were not

promulgated rules, they do not have the force of law and, thus, are not enforceable. Detroit Edison,
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498 Mich at 45.

Moreover, no contested case existed in which the MAIPF participated to

adjudicate its rights.
32.

DIPS may not instruct the MACP as to which claims it will or will not cover, nor

does it have the power to override the Legislature's determination that a statute is given immediate
0 effect.
33.

The MAIPF therefore seeks, in addition to an injunction staying the enforcement

of the Orders, a Declaratory Ruling that the Orders are void and unenforceable as to the MAIPF
a
n and MACP.
COUNT II — INJUNCTIVE RELIEF
34.

The MAIPF hereby realleges and incorporates the foregoing paragraphs as though

fully set forth herein.
35.

As explained above, DIFS and its Director seek to demand that the MAIPF and

MACP violate the law and contend that DIFS and its Director have the authority to enforce the
Orders against the MAIPF and MACP.
36.

DIFS and its Director should be enjoined from seeking to enforce the Orders for

the following reasons:

14

 a.

The Director's purported Orders violate the Michigan Constitution's separation of
powers principles. While an administrative agency has "quasi-legislative" powers,
such powers are limited to rule making. In re Complaint of Rovas, 482 Mich at 98.
An administrative agency, such as DIFS, "cannot exercise legislative power by
creating law or changing the laws enacted by the Legislature." Id. Thus, DIFS
cannot promulgate any rule that conflicts with a statute because only the Legislature

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may make law. See id. By attempting to rewrite the Amendments, the Director is
usurping the Legislature's power in violation of section 2 of article 3 of the
Michigan Constitution of 1963. Const 1963, art 3, § 2.

f.
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b.

Because the Director's Orders are not the result of contested cases, they are not
derived from administrative agencies' "quasi-judicial" power.

DIFS has no

a
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authority to issue a rule of law by issuing a purported judicial opinion. DIFS's
power to adjudicate cases is limited to fact-finding in contested cases. Id. at 98.
c.

The Orders do not have the force of law because agencies do not have the power to
unilaterally issue pronouncements that have the force of law. In re Reliability Elec.
Utils. for 2017-2021, 325 Mich App at 232-233 (quoting Faircloth, 232 Mich App
at 403-404)("An agency should resort to formal APA rulemaking when establishing
policies that 'do not merely interpret or explain the statute or [rules from which the
agency derives its authority,' but rather 'establish the substantive standards
implementing the program."). "An agency . . . may riot avoid the requirements for
promulgating rules by issuing its directives under different labels." Id. at 233. See
also, Detroit Edison Co, 498 Mich at 45 (finding that, for an agency regulation of

15

 general applicability to have the force of law, it must fall under the definition of a
properly promulgated rule).
d.

Even where an administrative agency interprets a statute, its interpretation cannot
conflict with the plain meaning of the statute. In re Complaint of Rovas, 482 Mich
at 108. To the extent that DIFS Orders are based on its interpretation of the
Amendments, they are invalid, as they seek to demand that the MACP violate the
Amendments' plain language.

e.

DIFS has no authority to alter the claims that the MACP must accept for
assignment. The Legislature has made the decision as to what claims the MACP
must accept and the limits on benefits the MACP must pay—DIFS does not have
the authority to alter those decisions. Thus, DIFS has no authority to make the
proclamations in its Orders.

f.

DIFS has no authority to ban conduct that is in conformity with the Insurance Code.
Any such attempt would exceed the power delegated to DIFS by the Legislature.
See Ins Institute v Commissioner, 486 Mich at 407.

37.

As established in the accompanying Motion for Preliminary Injunction and Brief,

with these arguments the MAIPF has a likelihood of success on the merits.
38.

The MAIPF and MACP will suffer irreparable harm if DIFS's purported Orders are

not restrained and DIFS is allowed to take enforcement action, requiring the MACP to violate the
law, resulting in exposure to litigation from claimants, whose benefits are delayed, and insurers,
to whom claims are returned, in addition to incurring financial losses that are not recoverable.
Alternatively, if the MAIPF and MACP violate the Orders, they will become the target of
enforcement and disciplinary action by DIFS and its Director.

16

 39.

DIFS will not be harmed by a temporary restraining order because it has no

authority to amend legislation, or to order the MAIPF or MACP to violate the Amendments. DIFS
cannot be harmed by the non-enforcement of its invalid and unauthorized Orders.
40.

It is in the public interest to stay the Orders because numerous claimants will be

delayed receiving benefits, which undermines the very purposes of the No-Fault Act to provide
fast payment for economic losses, specifically, medical bills, wage loss, and replacement services
g

without the need to initiate a tort suit. Shavers v Attorney General, 402 Mich 554, 622; 267 NW2d
72 (1978). Moreover, an injunction merely preserves the enforcement of the No-Fault Act, as
written and prevents an unconstitutional usurping of Legislative power by DIFS.

2
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41.

The weighing of the interests between the parties favors the MACP because it is in

the public interest for an administrative agency to comply with the plain language of the statutory
amendments put in place by Michigan's Legislature, and passed by more than a two-thirds vote.
RELIEF SOUGHT
WHEREFORE, the MAIPF, on behalf of the MACP, requests this Court ENJOIN DIFS
and its Director from enforcing their purported Orders of September 20, 2019 and September 24,
2019 and declare that:
(i) DIFS's purported Orders of September 20, 2019 and September 24, 2019 are not
enforceable because DIFS, as an administrative agency, and its Director do not have the authority
to issue orders of general applicability that have the force of law, the violation of which may result
in enforcement action. Any rules of general applicability must be promulgated under the APA and
are limited to falling within the scope of authority delegated to DIFS by the Legislature.
(ii) DIFS does not have the authority to amend or alter Michigan law, and any attempt to
do so, is a violation of separation of power principles under Michigan's Constitution.

17

 (iii) The purported Orders of September 20, 2019 and September 24, 2019 demand that the
MAIPF and MACP violate the plain language of the No-Fault Act. DIFS does not have the
authority to impose its Orders on the MAIPF or MACP and, as a result, the purported Orders of
September 20, 2019 and September 24, 2019 are unenforceable.
(iv) The cap set forth in MCL 500.3172(7) became effective on June 11, 2019.
Respectfully submitted,
DYKEMA GOSSETT PLLC

Date: October 14, 2019

By:

18

agL-M -1
Lori McAllister (P39501)
Erin A. Sedmak (P78282)
Attorneys for Plaintiffs
Dykema Gossett PLLC
201 Townsend Street, Suite 900
Lansing, MI 48933
(517) 374-9100

 VERIFICATION
I hereby verify that the factual contents of this Complaint For Injunctive Relief And
Declaratory Ruling are based on my knowledge and investigation, and are true to the best of my
knowledge.

Dated: October 14, 2019
Kimb rly Bezy

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19

 Tab?x

 

STATE OF MICHIGAN
DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES
Before the Director of the Department of Insurance and Financial Services
In the matter of:
Requirement to File Forms and Rates Prior to
Implementing Public Acts 21 and 22

Order No. 19-048-M

Issued and entered
this 9e-day of September 2019
By Anita G. Fox
Director
BACKGROUND

I.

Public Acts 21 and 22 of 2019 (PA 21 and PA 22) were enacted into law on June 11, 2019. Several
provisions of the Insurance Code (Code) that were amended by PA 21 and PA 22 (amended provisions)
were effective June 11, 2019; other provisions are not effective until July 2, 2020. It has come to the
Directors attention that a limited number of automobile insurers have attempted to apply the amended
provisions to claims made under existing, in-force policies without first submitting revised forms and rates
for the Director's review and approval. Regardless of their effective date, amended provisions that affect
the scope of coverage required to be provided under automobile policies may not be implemented until
automobile insurers have submitted revised forms and rates for the Director's review and approval. Such
amended provisions include, but are not limited to, Sections 3009, 3111, 3113, 3114, and 3115, MCL
500.3009, 500.3111, 500.3113, 500.3114, and 500.3115.
This order notifies automobile insurers that any attempt to implement the amended provisions that affect
the scope of coverage required to be provided under an insurance policy without submitting revised policy
forms and rates to DIPS for review and approval would violate Sections 2106, 2108, and 2236 of the Code,
MCL 500.2106, 500.2108, and 500.2236.
II.

ANALYSIS

Pursuant to Sections 2106, 2108, and 2236 of the Code, MCL 500.2106, 500.2108, and 500.2236, forms
and rates are subject to the Director's review and disapproval. These sections of the Code were unchanged
by PA 21 or PA 22 and remain the requisite procedure prior to a company's form or rate use. Section
2106(3)1 provides that an insurer "may use rates for automobile insurance as soon as those rates are
filed," which requires that the rates are filed with the Director.2 Section 2108(6) provides: "An insurer shall
not make, issue, or renew a contract or policy except in accordance with filings that are in effect for the
I This section was amended by PA 21 and PA 22, but the amendments are not effective until July 2, 2020.
2 Rate filings must comply with all applicable sections of the Code, Including but not limited to Sections 2109 and 2110, MCL
500.2109 and 500.2110.

 Order No. 19-048-M
Page 2 of 4

insurer under this chapter." Section 2236(1) provides that "an insurer shall not deliver or issue for delivery
in this state a basic insurance policy form ... unless a copy of the form is filed with the department and
approved by the director as conforming with the requirements of this act and not inconsistent with the law."
Section 2236(5) of the Code establishes the Director's broad authority to disapprove, withdraw approval, or
prohibit the issuance of all types of insurance policy forms, and permits the Director to "... prohibit the
issuance, advertising, or delivery of a form to any person in this state if the form violates this act, contains
inconsistent, ambiguous, or misleading clauses, or contains exceptions and conditions that unreasonably or
deceptively affect the risk purported to be assumed in the general coverage of the policy." Insurers that
implement the amended provisions that affect the scope of coverage required to be provided under
automobile insurance policies without first revising their forms or rates are in violation of Sections 2106,
2108, and 2236 of the Code, MCL 500.2106, 500.2108 and 500.2236.
In addition, any attempt by automobile insurers to rely on a "conformity to law clause" 3 within their policies
as a way to adopt the amended provisions without substantively revised forms would constitute a violation
of Section 2236(5) of the Code as reliance upon an insurance policy provision that "unreasonably and
deceptively affects) the risk purported to be assumed in the general coverage of the policy."
Finally, the Code prohibits automobile insurers from reducing the coverage available under a policy without
first providing notice to policyholders. Under Section 2104(5) of the Code, MCL 500.2104(5), the offering of
coverage with less favorable terms or conditions than those previously provided is considered to be a
"termination" unless the reduction in coverage was requested by the policyholder or if the terms and
conditions of the coverage previously provided were no longer available from the insurer anywhere in
Michigan. Further, when an insurer fails to provide notice to a policyholder of a reduction in coverage, the
insurer is bound to the original coverage when the reduction was not brought to the insured's attention.
See, e.g., Casey v Auto-Owners Ins Co, 273 Mich App 388 (2006).

II.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The Director FINDS and CONCLUDES that:

1.

Several provisions of the Code that were amended by PA 21 and PA 22 affect the scope of
coverage required to be provided under automobile insurance policies.

2.

PA 21 and PA 22 did not amend Sections 2106, 2108, and 2236 of the Code, MCL
500.2106, 500.2108, and 500.2236, which subject insurance policy forms and rates, and
any revisions thereto, to DIFS' review and approval.

3.

Implementation of statutory amendments that affect the scope of coverage required to be
provided under an insurance policy without first revising insurance policy forms and rates
to account for coverage reductions and then submitting such forms and rates to DIFS for

This includes any clause that purports to 'conform' a policy to a change in law without providing notice to policyholders, and
can take the form of a 'conformity to state law" clause or a policy provision that generically states that coverage is to be afforded
"pursuant to Michigan law" or similarly broad language.

3

 Order No, 19-048-M
Page 3 of 4

review and approval would violate Sections 2106, 2108, and 2236 of the Code, MCL
500.2106, 500.2108, and 500.2236.
4.

Implementation of statutory amendments that affect the scope of coverage required to be
provided under an insurance policy through reliance on a "conformity to law clause " would
violate Section 2236(5) of the Code, MCL 500.2236(5), as reliance upon an insurance
policy provision that "unreasonably and deceptively affects] the risk purported to be
assumed in the general coverage of the policy."

5.

Failure by an automobile insurer to provide written notice to policyholders regarding
reductions to coverage provided under an insurance policy is contrary to Section 2104(5)
of the Code, MCL 500.2104(5), and Michigan case law.
III.

ORDER

Therefore, it is ORDERED that:
1.

No automobile insurer shall incorporate amendments made by PA 21 and PA 22 that affect
the scope of coverage required to be provided under an insurance policy into a policy form
without first submitting its revised forms and rates for the Director's review and approval.

2.

An automobile insurer shall not rely on conformity to law clauses" or other similar
provisions in its policy forms as a method of incorporating the statutory amendments that
affect the scope of coverage required to be provided under an insurance policy under PA
21 and PA 22.

3.

Any automobile insurer that wishes to revise its policy forms must submit revised forms
and rate revisions to the Director for approval. The Director will disapprove any form or rate
filings that incorporate statutory amendments prior to their effective date.

4.

Any automobile insurer that has processed claims in accordance with the statutory
amendments that affect the scope of coverage required to be provided under an insurance
policy without first submitting revised forms and rates for the DIFS' review and approval
shall immediately re-process those claims in accordance with the terms and conditions of
the existing policy form.

5.

The Assigned Claims Plan shall not provide coverage for claims that have been tendered
to it under forms that purport to incorporate amendments made by PA 21 and PA 22 that
affect the scope of coverage required to be provided under an insurance policy unless
those forms have been approved by the Director.

6.

Failure to comply with the form and rate filing and approval requirements of the Code
and/or failing to comply with this Order will result in disapproval or withdrawal of approval
of the form or rate and may subject the insurer to appropriate administrative action.

 Order No. 19-048-M
Page 4 of 4
The Director specifically retains jurisdiction of the matters contained herein and the authority to issue such
further orders and take such further actions as she shall deem just, necessary and appropriate.

/ ,-74,/-A/• Anita G. F x
Director

  

STATE OF MICHIGAN
DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES
Before the Director of the Department of Insurance and Financial Services

In the matter of:
Effective Date of the Cap on PIP Benefits
Provided Under the Michigan Assigned Claims Plan

Order No. 19-049-M

Issued and entered
this 2-/"day of September 2019
by Anita G. Fox
Director
BACKGROUND
Public Acts 21 and 22 of 2019 were enacted into law on June 11, 2019. Several provisions of the
Insurance Code (Code) that were amended by PA 21 and PA 22 were effective June 11, 2019; other
provisions are not effective until July 2, 2020.
It has come to the Director's attention that the Michigan Automobile Insurance Placement Facility
(MAIPF), which administers the Michigan Assigned Claims Plan (MACP), may attempt to impose a
$250,000 cap on benefits under Section 3107c(1)(b) of the Code, pursuant to Section 3172(7)(a), prior
to July 2, 2020.
The authority for this order is derived from the following:
•

the authority conferred upon the Department of Insurance and Financial Services
(DIFS) pursuant to Section 200 of the Code, MCL 500.200, and its obligation to execute
the laws of this state in relation to insurance;

•

the Director's authority to issue orders in the reasonable exercise of discretion pursuant
to Section 205 of the Code, MCL 500.205, with the intent to adhere to the Code's longstanding legislative purpose to protect policyholders, creditors and the public; and

•

the Director's supervisory authority over the MAIPF and MACP as set forth in Sections
3171(3) and 3171(4) of the Code, MCL 500.3171(3); MCL 500.3171(4).

Pursuant to the above authority, this order notifies the MAIPF that any attempt to rely on the
amendments made by PA 21 and PA 22 to cap benefits at $250,000 prior to July 2, 2020, is prohibited.

 Order No. 2019-049-M
Page 2 of 3
II.

ANALYSIS

Pursuant to Section 3172(7)(a) of the Code, "the [MACP] and the insurer to whom a claim is assigned
by the [MACP] are only required to provide personal protection insurance benefits under section
3107(1)(a) up to ... [$250,000]." See MCL 500.3172(7)(a); MCL 500.3107c(1)(b). An exception exists to
the imposition of the $250,000 cap if the injured person claims benefits through the MACP when,
pursuant to Section 3107 or 3019a(2), the person is injured during the 30-day window in which the
person had a lapse in qualified health insurance or other health and accident coverages. In that case,
the capped amount totals $2,000,000. See MCL 500.3172(7)(b).
Adherence to sound principles of statutory construction against rendering any part of a statute
surplusage or nugatory requires that the effective date of the entirety of Section 3172(7) is July 2, 2020.
See Badeen v PAR, Inc, 496 Mich 75, 81; 853 NW2d 303 (2014) ("When reviewing a statute, courts
should avoid a construction that would render any part of the statute surplusage or nugatory.").
The Code "was enacted for the benefit of the public and the insurance laws should be liberally
construed in favor of policy holders, creditors and the public." See Murphy v Seed-Roberts Agency, Inc.,
79 Mich App 1, 9 (1977) (citing Dearborn National Ins Co v Comm'r of Insurance, 329 Mich 107, 118
(1950); Comm'r of Insurance v American Life Ins Co, 290 Mich 33, 43-44 (1939)). See also King v State,
488 Mich 208, 218 (2010) ("The extensive regulation of the insurance industry provided for in [the
Insurance Code] indicates a legislative purpose to protect policyholders.") (citing In re Certified
Question, 413 Mich 22, 38 (1982)).
Per the plain language of Section 3172(7)(b), subdivision (7)(b) applies if a person is entitled to claim
benefits "under the [MACP] under section 3107d(6)(c) or 3109a(2)(d)(ii) ..." Because the effective date
of Sections 3107d and 3109a(2) is expressly July 2, 2020, there is no person who can claim benefits
from the MACP under those sections until July 2, 2020, which would render Section 3172(7)(b)
meaningless unless its effective date is also July 2, 2020. Subdivisions 7(a) and 7(b) of Section 3172
are interdependent: 7(a) explicitly references 7(b). To avoid a meaningless interpretation of Section
3172(7)(b), the entirety of Section 3172(7) must take effect on July 2, 2020, precluding the MACP from
imposing a $250,000 cap on benefits until that date. This interpretation allows Section 3172(7) to
function in a coherent manner and is consistent with the fundamental principles of statutory construction
noted above.
The interpretation of Section 3172(7) as having an effective date of July 2, 2020, is further supported by
reference to other amendments made by PA 21 and PA 22. In this regard, Section 3009 of the Code,
MCL 500.3009, sets forth various liability coverage limits with an effective date of July 2, 2020. If the
Director interpreted Section 3172(7) as having an effective date prior to July 2, 2020, pedestrians and
uninsured occupants who claim benefits from the MACP subject to the $250,000 cap, and whose
expenses exceed that amount, will be able to sue an at-fault driver for the remainder. However, the
defendant driver would be limited to the pre-amendment residual liability protections, and any amount of
liability over those amounts could subject the defendant to significant financial harm. This potentially
catastrophic exposure to residual liability—which was not contemplated by the policyholder at the time
of entry into the existing insurance contract—contravenes the Code's long-standing legislative purpose
of policyholder protection.

 Order No. 2019-049-M
Page 3 of 3
II.

FINDINGS OF FACT

The Director FINDS that:
1.

Public Acts 21 and 22 of 2019 were enacted into law on June 11, 2019. Several
provisions of the Insurance Code (Code) that were amended by PA 21 and PA 22 were
effective June 11, 2019; other provisions are not effective until July 2, 2020.

2.

It has come to the Director's attention that the Michigan Automobile Insurance
Placement Facility (MAIPF), which administers the Michigan Assigned Claims Plan
(MACP), may attempt to impose a $250,000 cap on benefits under prior to July 2, 2020.

3.

The Code was enacted for the benefit of the public, and the Director must interpret it in
favor of policyholders and the public.
II.

CONCLUSIONS OF LAW

The Director CONCLUDES:
1.

Implementation of the $250,000 cap on MACP benefits under Section 3107c(1)(b) of
the Code, pursuant to Section 3172(7), prior to July 2, 2020, would conflict with the
longstanding legislative purpose of the Code to protect policyholders, creditors and the
public.

2.

Implementation of the $250,000 cap on MACP benefits under Section 3107c(1)(b) of
the Code, pursuant to Section 3172(7), prior to July 2, 2020, ignores sound principles of
statutory construction.

3.

Implementation of the $250,000 cap on MACP benefits under Section 3107c(1)(b) of
the Code, pursuant to Section 3172(7), prior to July 2, 2020, frustrates the intent of
other statutory amendments, including the residual liability protections contained in
Section 3009 of the Code, MCL 500.3009.
III.

ORDER

Therefore, it is ORDERED that the MAIPF shall not impose a $250,000 cap on MACP benefits under
Section 3107c(1)(b) of the Code, pursuant to Section 3172(7)(a), prior to July 2, 2020.
The Director specifically retains jurisdiction of the matters contained herein and the authority to issue
such further orders as she shall deem just, necessary and appropriate.

Anita G. F
Director

  Tab 

Page 1 of 1

BREAKING: Gov. Whitmer Retreats From No-Fault Changes

Shadrach Strehie w

Sep 24

BREAKING: Gov. Whitmer Retreats
From No-Fault Changes
Michigan Department of Insurance and Financial
Services Issues Order Halting Enforcement

STATE Of AMMAN
DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES
Before the Director of the Department of Insurance and Financial Services,

In the mailer of:
Effective Date (Atha Cap on PIP Benefits
Provided Under the Michigan Assigned Claims Plan

Order No.1944944

Issued and entered
this 24* day of September 2019
by Anita G. Fox
Cando(

LANSING (Great Lakes News) - Gov. Gretchen Whitmer used her executive authority to
amend the enforcement of the no-fault insurance reform legislation she signed in June.
Director of the Michigan Department of Insurance and Financial Services Anita G. Fox
issued a Director's Order postponing the $250,000 cap on personal injury protection
established by the legislation per the governor's request.
Whitmer promised to make the change while in a closed-door meeting with advocates
opposing the law. According to John Cornack, president of the Eisenhower Center which
provides care for those who suffer brain injuries, Whitmer promised to use her powers to
return complete coverage to auto accident survivors. Whitmer was reportedly moved by
stories of life-altering injuries going untreated since she signed the law.
Cornack said the governor's actions were to "help soften the outcome of the new law" and
postpone its provisions. Previously, the law phased out no-fault coverage in preparation for
its full effects in July, 2020. CPAN (Coalition Protecting Auto No-Fault) reportedly "thanked
her for her actions."
"This is a very good sign that the governor cares about the damage that's been done by
this bill to so many," said John Gwynne Prosser II, President of the Neurotrauma
Association. "It's a good first step."
The law's full effects, including the $250,000 cap on personal injury protection, will be
implemented on July 1, 2020. Activists will march in Lansing on Wednesday protesting the
law and urging its reexamination before the July start date.

https://social-blog.wix.com/post/breaking-gov-whitmer-retreats-from-no-fault-ehanges?e...

10/14/2019

  

DYKEMA GOSSETT PLLC - Capitol View, 201 Townsend Street, Suite 900, Lansing, Michigan 48933

 

STATE OF MICHIGAN
IN THE COURT OF CLAIMS

Michigan Automobile Insurance Placement
Facility, in its capacity as the administrator of
the Michigan Assigned Claims Plan,
Civil Action No. 19-50(3ng 

Plaintiff, ML)

VS.

Department of Insurance and Financial
Services and Anita G. Fox in her official
capacity as the Director of the Department of 
Insurance and Financial Services, 3 

Defendant. 

 

Lori McAllister (P3 9501) 
Erin A. Sedmak (P78282) i
Attorneys for Plaintiff 
Dykema Gossett PLLC I L:
201 Townsend Street, Suite 900 1 53"
Lansing, MI 48933

(517) 374-9100

 

10/14/19 MOTION FOR ENTRY OF A TEMPORARY RESTRAINING

ORDER AND PRELIMINARY INJUNCTION

 

Plaintiff, the Michigan Automobile Insurance Placement Facility, in its capacity as the
administrator of the Michigan Assigned Claims Plan (?Plaintiff?), moves this Court for a
temporary restraining order and preliminary injunction, pursuant to MCR 3.310, enjoining
Defendants, the Department of Insurance and Financial Services and its Director, Anita G. Fox
(?Defendants?), from enforcing two pronouncements, purported to be orders, issued on September

20, 2019 (order and September 24, 2019 (order (the Defendants

 

1 While this motion uses the term ?Orders? to refer to the documents issued by DIFS, as
explained herein, these two documents are not directives within authority and, as such, are

not ?orders? resulting from a contested case.

 

 

DYKEMA PLLC Capitol View, 201 Townsend Street, Suite 900, Lansing, Michigan 48933

 

exceeded their authority in issuing these purported Orders, which do not have the force of law, are
unenforceable, and are attempts to usurp the power of the Legislature in Violation of section 2 of
article 3 of Michigan?s Constitution. The Orders direct Plaintiff to Violate Michigan law, thereby
exposing Plaintiff to immediate irreparable harm if a temporary restraining order is not issued.
WHEREFORE, for the reasons as more fully set forth in the accompanying Brief, the
Michigan Automobile Insurance Placement Facility, on behalf of the Michigan Assigned Claims
Plan, respectfully requests that this Court GRANT Plaintiff?s motion, ISSUE a temporary
restraining order enjoining the enforcement of the Orders, and ISSUE an Order to Show Cause
why the Court should not preliminarily enjoin Defendants, and award such additional relief as may
be appropriate. A cepy of this Motion is being served on Defendants with the Complaint.
Respectfully submitted,

DYKEMA GOSSETT PLLC

Date: October 14, 2019 By: Wg?g??M

L'Bri (P39501)

Erin A. Sedmak (P78282)
Attorneys for Plaintiff

Dykema Gossett PLLC

201 Townsend Street, Suite 900
Lansing, MI 48933

(517) 374-9100

 

 

48933

 

DYKEMA GOSSETT PLLC - Capitol View, 20] Townsend Street, Suite 900. Lansing, 

 

STATE OF MICHIGAN
IN THE COURT OF CLAIMS

Michigan Automobile Insurance Placement
Facility, in its capacity as the administrator of
the Michigan Assigned Claims Plan,
Civil Action No. -MM

Plaintiff, if} 

VS.

Department of Insurance and Financial
Services and Anita G. Fox in her of?cial
capacity as the Director of the Department of
Insurance and Financial Services,



Defendant.

 

Lori McAllister (P39501)

Erin A. Sedmak (P78282)
Attorneys for Plaintiff

Dykema Gossett PLLC

201 Townsend Street, Suite 900
Lansing, MI 48933

(517) 374-9100

 

10/14/19 BRIEF IN SUPPORT OF MOTION FOR ENTRY OF A
TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION

 

 

DYKEMA GOSSETT PLLC - Capitoi View, 20! Townsend Street, Suite 900, Lansing, Michigan 48933

 

INTRODUCTION

Plaintiff, the Michigan Automobile Insurance Placement Facility in its
capacity as the administrator of the Michigan Assigned Claims Plan requests that the
Court issue a temporary restraining order and, after a hearing, a preliminary injunction enjoining
Defendants, the Department of Insurance and Financial Services and its Director, Anita
G. Fox (?Director?), from instituting any action to enforce their two purported orders, issued on
September 20, 2019 (order and September 24, 2019 (order (the ??Orders?).
The purported ?Orders? are not properly promulgated rules nor orders issued in any contested case
in which the MAIPF was a party. Of particular concern, the Director purports to order the MACP
to act contrary to law by (1) refusing to process claims that it receives as required by MCL

500.3172, and (2) prohibiting the MACP from complying with the statutory cap on bene?ts that is

applicable to claims against the MACP which became effective on June 11, 2019. In so ruling,

the Director vastly surpassed her regulatory authority and attempted to act in a quasi?legislative
role that is prohibited by law.

An injunction is necessary here to preserve the status quo. The MAIPF has a strong
likelihood of success on the merits because the Orders were not issued under any authority granted
to they are an attempt to unconstitutionally usurp the power of the Legislature; and they
demand that the MAIPF cause the MACP to violate the No?Fault Act. If DIFS is not enjoined
from enforcing its Orders, the MAIPF will suffer irreparable harm as it will be exposed to litigation
from claimants entitled to bene?ts and insurers for claims resulting from the priority change made
by the Legislature as part of the No?Fault Amendments. The MACP will also suffer ?nancial
losses that will not be recoverable if it is not permitted to enforce the statutory cap on bene?ts

enacted in MCL DIFS will not be prejudiced in any way by the injunction.

 

 

DYKEMA PLLC Capitol View, 201 Townsend Street. Suite 900, Lansing, Michigan 48933

 

Moreover, an injunction is in the best interest of the public, as the practical effects of the Orders
are ultimately harmful to the driving public who end up funding the MACP through their insurance
premiums. The Veri?ed Complaint is attached as Exhibit 1.

BACKGROUND

On June 1 l, 2019, Public Acts 21 and 22 became effective, amending Michigan?s No-Fault
Act, MCL 500.3100 et seq. (the ??Amendments?) and related statutes, and were given immediate
effect, except as speci?cally provided by the Legislature within certain statutory provisions. The
Amendments added subsection (7) to MCL 500.3172, which imposes limits on bene?ts paid on
claims assigned to the MACP to $250,000, under MCL unless a claimant is entitled
to benefits under In addition to placing a cap on claims submitted to the MACP, the
Legislature also amended the statutory priority of claims when an accident involves an occupant
(passenger) or non?occupant (pedestrian). Prior to the amendments, MCL 500.3114 and 500.3115
required occupants and non?occupants injured in an automobile accident, to seek benefits ?rst from
the owner of the vehicle, and second from the operator of the vehicle. Now, under the
Amendments, an occupant or non?occupant who is not covered under their own PIP policy, shall
claim PIP bene?ts from the MACP. MCL MCL 

The MACP began receiving claims pursuant to the Amendments the day after they became
effective on June 11, 2019. The MACP receives two type of claims. The first type are claims
made directly to the MACP when there is no insurance available for the accident, which is the

traditional type of claim made to the MACP. The second type of claims results from the changed

 

2 The limit referred to in MCL is $2,000,000 and applies where a person is
entitled to benefits under the assigned claims plan under MCL or MCL
However, there will be no claimants under those provisions until after July
1, 2020, pursuant to the plain language of those provisions.

 

 

DYKEMA GOSSETT PLLC - Capitol View, 201 Townsend Street, Suite 900, Lansing, Michigan 48933

 

priority scheme enacted by the Legislature which makes the MACP responsible for claims by
occupants and pedestrians who are not covered under their own PIP policy. Both types of claims
are subject to the cap of $250,000, rather than unlimited bene?ts. MCL 

Once the MACP receives a claim, it is required to make an initial determination of whether
the claim is an ?eligible? claim because there is no other applicable insurance. If the MACP
determines that the claim is eligible for assignment, it assigns the claim to a servicing insurance
company for handling. The servicing insurer or the MACP can request reasonable proof of loss
from the claimant, including an examination under oath if appropriate. See generally, MCL
500.3 1 73 a. Numerous insurers referred claims to the MACP because of the change in the priority
scheme enacted by the Legislature. Because it is necessary to con?rm that the referring insurer?s
policy does not provide coverage independent of the statutory change, a number of referrals were
made to outside counsel to evaluate the referring insurers? policies to determine if there is coverage
and the claim is therefore ineligible for the MACP. 

Three months after the entire system shifted as a result of the effectiveness of the
Amendments on June 11, 2109, DIFS for the first time questioned whether the Amendments were
effective upon enactment. The MAIPF provided its legal analysis to DIFS, demonstrating that the
Amendments became effective upon enactment, requiring the MACP to consider claims being
presented by the referring insurers, among other things. Shortly thereafter, on September 20, 2019,
the Director issued what DIFS described as an ?order? (the ?September 20 Order?) (Exhibit 1A)

and posted it on the DIFS website in the same place it places its orders in ?contested cases.?3 The

 

3 ??Contested case? means a proceeding, including rate-making, price-fixing, and licensing,
in which a determination of the legal rights, duties, or privileges of a named party is required by
law to be made by an agency after an opportunity for an evidentiary hearing. When a hearing is
held before an agency and an appeal from its decision is taken to another agency, the hearing and
the appeal are considered a continuous proceeding as though before a single agency.? MCL
24.203. There was no such case here, as the MAIPF never received notice of any proceeding

4

 

 

DYKEMA PLLC - Capitol View, 201 Townsend Street, Suite 900, Lansing, Michigan 48933

 

September 20 Order, however, was not derived from any contested case and is not a promulgated
rule under the Administrative Procedures Act None of the procedures to promulgate a
rule under the APA were followed with respect to the September 20 Order. Instead, the September
20 Order seeks to enforce the pronouncement across the insurance industry, as if it is generally
applicable to all regulated parties and the MACP and as if it has the force of law. (161.). The
September 20 Order requires insurers to resubmit forms and rates to DIFS for approval before the
insurers can refer claims to the MACP as a result of the priority change in MCL 500.3114(4) and
There is no such requirement in either statute. 
The September 20 Order speci?cally references the MACP and states as follows:

The Assigned Claims Plan shall not provide coverage for claims

that have been tendered to it under forms that purport to

incorporate amendments made by PA 21 and PA 22 that affect

the scope of coverage required to be provided under an insurance
policy unless those forms have been approved by the Director.

Nothing in the statute authorizes the MACP to refuse to provide coverage based on whether
DIFS believes it is appropriate to do so. Instead, the responsibilities are spelled out in
the statute. The statute does not contain a provision authorizing the MACP to deny coverage on
the basis set forth in the DIFS Order, and the Director cites no such basis in her Order. Thus, the
September 20 Order seeks to direct the MACP to not provide coverage as required under the No?
Fault Act and, therefore, violate its statutory duties under MCL 500.3171 500.3179.

On September 24, 2019, the Director posted a second purported ?order? on the DIF 
website in the section where orders from contested cases are found (the ?September 24 Order?).

But, again, the September 24 Order was not derived from any contested case. It is not a

 

seeking to adjudicate their rights or duties, there was no hearing, the MAIPF did not participate in
any proceeding and were not given the opportunity to present evidence.

 

 

DYKEMA PLLC Capitol View, 201 Townsend Street, Suite 900, Lansing, Michigan 48933

 

promulgated rule under the APA, nor has DIFS contended that it is a rule. While the September
24 Order is aimed speci?cally at the MAIPF, no underlying contested case existed that would give
rise to the order. MAIPF was not on notice of any proceeding purporting to adjudicate its rights
and obligations; there was no hearing; MAIPF did not participate in any proceedings; and MAIPF
was not provided the opportunity to present evidence. Nonetheless, DIFS seeks to enforce the
pronouncement contained in the September 24 Order against MAIPF as if it has the force of law.

The September 24 Order purported to ?notify? the MAIPF that ?any attempt to rely on the
amendments made cap bene?ts at $250,000 prior to July 2, 2020, is
prohibited? and pronounces that shall not impose a $250,000 cap on MACP bene?ts
under Section 3107c(1)(b) of the Code, pursuant to Section 3172(7)(a), prior to July 2, 2020.?
(Exhibit 18). Ironically, own website concedes that the Section 3172 was given immediate
effect, but then attempts to postpone the effectiveness of only subsection (7) to July 1, 2020. This
instruction to disregard and not enforce the statute is a violation of law.

The genesis of the September 24 Order became immediately apparent. The same day, a
news article was published regarding the Director?s September 24 Order, stating it. was the result
of Governor Whitmer requesting an ?order? delaying the effect of the statutory caps. (Exhibit 1C).
The article reports that Governor Whitmer ?used her executive authority to amend the enforcement
of the no?fault insurance reform legislation she signed in June.? Id. (emphasis added). According
to the article, Governor Whitmer ?promised to use her powers to return complete coverage to auto
accident survivors? and ?promised to make the change while in a closed?door meeting with
advocates opposing the law.? Id (emphasis added). The article further provided that ?[a]ccording
to John Cornack, president of the Eisenhower Center which provides care for those who suffer

brain injuries?, ?the governor?s actions were to ?help soften the outcome of the new law? and

 

 

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postpone its provisions.? Id. (emphasis added). Mr. Cornack was an attendee at the meeting with

the Governor.
ARGUMENT
I. A Temporary Restraining Order Should Be Issued.

Under the Michigan Court Rules, a temporary restraining order may be granted to preserve
the status quo pending the hearing on Plaintiff?s motion for preliminary injunction. MCR 3.310.

Here, the MAIPF ?led a Veri?ed Complaint, demonstrating that if an injunction is not
immediately issued, MAIPF will be ordered to Violate the law and, as a result, will be subject to
litigation by claimants and insurers. (Exhibit 1). Moreover, as explained in the Veri?ed
Complaint, the Director has been made aware that any attempt to preclude the MACP from
providing bene?ts in accordance with the cap set forth in MCL will cause
irreparable harm. Because the requirements of MCR 3.310 have been met, a temporary restraining
order preserving the status quo until a hearing can be held on this matter should be granted.

11. A Preliminary Iniunction Is Appropriate To Preserve The Status Quo During the
Pendency Of This Litigation.

The Court should enjoin DIFS and its Director from enforcing the purported Orders while
the Court considers whether DIFS and its Director exceeded their authority in issuing unilateral
statements that attempt to interpret the meaning and applicability of MCL 500.3172(7) and direct
the MAIPF to require the MACP to act contrary to the plain language of the relevant statute.

A temporary restraining order or preliminary injunction are ?mechanisrn[s] to maintain the
status quo.? Int?l Union, United Auto Aerospace Agric Implement Workers, Local Union 6000
State, 21 1 Mich App 20, 26; 535 210 (1995). Under the traditional standard for injunctive
relief, the following factors are considered: (1) the likelihood that the party seeking the injunction

will prevail on the merits; (2) the danger that the party seeking the injunction would suffer

 

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irreparable injury if the injunction is not issued; (3) the risk that the party seeking the injunction
would be harmed more by the absence of an injunction than the opposing party would be by the
granting of the relief; and (4) the harm to the public interest if the injunction is issued. Freuhauf
Trailer Corp Hagelihorn, 208 Mich App 447, 449; 528 778 (1995).

A. The MAIPF Is Likely To Succeed On The Merits Of This Case.

The purported Orders issued by DIFS and its Director are contrary to law. The Orders seek
to amend the No?Fault Act and interpret the Amendments in a manner that con?icts with its plain
language. Thus, the Orders violate the Separation of Powers Clause in Michigan?s Constitution,
as they are attempts to usurp the powers of the Legislative and Judicial branches of government.

1. The Purported Orders Are Not Authorized By Any Authority Granted To
DIFS. 

DIFS is an administrative agency, and, as such, may only act within the power delegated
to it by the Legislature. Detroit Pub Conn, 308-Mich App 234, 242; 863 373 (2014)
(citations and quotations omitted) (?Administrative agencies have no common?law powers. But
the Legislature may confer on an administrative agency the power to enact rules regarding details,
to conduct hearings to ?nd facts, and to exercise some discretion in administering a statute?). In
short, there are three ways in which an agency may act?under express statutory authority, under
its quasi?j udicial authority (if so granted), and under its quasi-legislative authority (if so granted).4
As explained herein, the Orders simply do not fall into any such categories. See SBC Mich PSC
(In re Complaint ofRovaS), 482 Mich 90; 754 259 (2008).

First, there is no provision of the Insurance Code that grants DIFS the authority to issue

of any notice or hearing process??that contort the plain language of the No?

 

4 Administrative agencies may also issue interpretative statements, but here, DIFS has
taken the position that the ?Orders? are binding. Interpretative statements are clearly not binding
and unenforceable. Danse Corp City of Madison His, 466 Mich 175, 181; 644 721 (2002).

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Fault Act and then direct speci?c parties (here, the MAIPF and the MACP) to prohibit those parties
from following the plain language of the relevant statute. The Director cites to no such authority
because no such authority exists. For the September 20 Order, the Director cited to no authority
for the basis of its ?order? directing the MACP not to provide coverage as required under the No?
Fault Act. No such authority exists. The Director attempted to cite to such authority in the
September 24 Order, but the cited provisions (MCL 500.200, 500.205, and 500.317l(3) and 
simply do not grant such authority to the Director.

MCL 500.200 establishes DIFS as a department charged with the execution of the laws
related to insurance and surety business in the State. This provision grants no Special authority to
DIFS to issue the Orders. In fact, the Orders attempt not to eXecute the laws related to insurance
but rather to amend or alter such laws. MCL 500.205 states that, ?[o]rders, decisions, ?ndings,
rulings, determinations, opinions, actions, and inactions of the commissioner in this act shall be
made or reached in the reasonable exercise of discretion.? Again, this provision does not grant
DIFS any special authority?moreover, this provision specifically refers to orders ?in this act?,
meaning such orders as otherwise provided for in the Insurance Code. It is not an independent
source of authority for the Director. Finally, MCL 500.3171(3) and (4) also do not grant DIFS or
the Director authority to issue the Orders. Section 3171(3) provides that the Director may review
the assigned claims plan and may approve it. The plan takes effect on such approval. The Director
approved the plan years ago. That provision provides no authority to issue orders. The same is
true for Section 3171(4), which relates to approval of amendments to the plan?which is not at
issue here.

SeCond, the Orders also are not within the agency? quasi?judicial powers. ?Administrative

agencies exercise what have been described as ?quasi?judicial? powers in the sense that they may

 

 

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review contested cases and issue orders, but this power is not an exercise of constitutional ?judicial
power.m See AG Blue Cross Blue Shield, 291 Mich App 64, 90; 810 603 (2010). ?Since
the time of Marbury 12 Madison, interpreting the law has been one of the de?ning aspects of udicial
power. ?Although [courts] may not usurp the lawmaking function of the legislature, the proper
construction of a statute is a judicial function, and [courts] are required to discover the legislative
intent.? In re Complaint of Rovas, 482 Mich 90, 98; 754 259 (2008). Thus, while courts
have stated that administrative agencies have the power to interpret the statutes that they enforce,
those interpretations do not have the force of law like a court?s judicial opinion interpreting a
statute. Id. Moreover, pursuant to separation of powers principles, administrative agency?s
interpretation of a statute that it is obligated to execute is entitled to ?respectful consideration,? but
it ?cannot con?ict with the plain meaning of the statute.? Hegadorn Dep ?r of Human Servs Dir,
503 Mich 231, 244; 931 571 (2019) (citing In re Roms Complaint, 482 Mich at 108).
Agency interpretations do not have the force of law and, thus, are not enforceable. Danse Corp,
466 Mich at 181.

Instead, the cases that administrative agencies conduct under their ?quasi judicial? power
are essentially ?administrative fact?finding exercises.? Blue Cross Blue Shield, 291 Mich App at
90; see also In re Complaint of Rovas, 482 Mich at 101.(agencies? quasi?judicial function is to
serve as a fact ?nder in contested cases). ??Contested case? means a proceeding, including rate?
making, pricem?xing, and licensing, in which a determination of the legal rights, duties, or
privileges of a named party is required by law to be made by an agency after an opportunity for
an evidentiary hearing.? MCL 24.203 (emphasis added).

Here, it is indisputable that the Director?s Orders are not the result of a contested case

involving a named party and did not resolve any evidentiary record. While the Director claims

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she had the authority to issue the September 24 Order, as explained above, none of those statutes
give DIFS carte blanche authority to unilaterally issue binding judicial interpretations of law.
authority to act is entirely contained by the authority delegated by the Legislature. Detroit
Pub Sch, 308 Mich App at 242. It is axiomatic that the Legislature does not have the power
reserved to the Judicial branch to interpret statutes outside of any statutory authority related to an
agency?s interpretation. See In re Rovas Complaint, 482 Mich at 98-99.

Simply put, does not have the power to invalidate any statute or portion thereof
through a ?quasiujudicial? order and the Orders are not the result of any resolution in a contested
case. Thus, the Orders are not an exercise of the agency?s ?quasi?judicial? power. Any such
position taken by DIFS or its Director is plainly invalid under the Michigan Constitution?s
Separation of Powers Clause. Const 1963, art 3, 2.

Third, the Orders are also not Within quasi-legislative authority. DIFS ?has the
authority to ?promulgate rules and regulations? to ?effectuate the purposes? of the Insurance Code
and to ?execute and enforce? its provisions.? Ins Institute Commissioner, 486 Mich 370, 389;
785 67 (2010) (quoting MCL 500.210). But, this quasi?legislative authority is not
unfettered. These agencies cannot exercise legislative power by creating law or changing the
laws enacted by the Legislature. Blue Cross Blue Shield, 291 Mich App at 89. In other words,
rules promulgated by an agency cannot con?ict with any statute. ?An administrative rule is ?an
agency regulation, statement, standard, policy, ruling, or instruction of general applicability that

implements or applies law enforced or administered by the agency . . . Ass ?n of Bus Advocating

 

5 Here, the Director?s September 24 Order is not generally applicable and is directed only
at the MAIPF. While much of the September 20 Order is directed across the insurance industry
generally, it also provides a speci?c provision directed only at the MACP, ordering it not to provide
coverage, in contravention of the No?Fault Act. As discussed above, the Director has no authority
to unilaterally ?order? the MAIPF or MACP to act in contravention of the law.

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Tari??Eqi/iity Mich Pub Serv Comm ?n (In re Reliability Elec Ut?ilsfor 201 7-2021), 325 Mich App
207, 232; 926 584 (2018) (citing MCL 24.207).

While agency rules have the force of law, in order to promulgate a rule, APA procedures

must be followed. Detroit Edison Co Dep ?t of Treasury, 498 Mich 28, 45; 869 810 (2015)

(?nding that, for an agency regulation of general applicability to have the force of law, it must fall
under the de?nition of a properly promulgated rule). MCL 24.241(1) provides, in pertinent part:
?[B]efore the adoption of a rule, an agency, or the of?ce of regulatory reform, shall give notice of
a public hearing and offer a person an opportunity to present data, views, questions, and
arguments.? Mich Ass ?14 of Home Builders, 481 Mich at 499.

Here, the Orders are not the \result of any procedure under the APA, or otherwise,
promulgating a rule. Nor has DIF or its Director contended the Orders are a rule. Thus, the
Orders are not the proper exercise of ?quasinlegislative? power and, thus, do not have the
force of law.

With no basis for DIFS or the Director to issue these purportedly binding ?orders? against,
in part, speci?c entities directing those entities to violate the No?Fault Act, the Orders are
unsupported by the force of law.

2. The Orders Are Unconstitutional Attempts To Usurp The Power Of The
Legislature.

Beyond lacking the authority to unilaterally issue binding directives, even if DIFS had
some authority to issue such ?orders?, it certainly does not have the authority to use such ?orders?
to amend legislation with which it disagrees. DIFS does not have the authority to amend the No?
Fault Act and delay the effective date of the statutory caps put in place by the Legislature, which
took immediate effect on June 11, 2019. Michigan?s Constitution provides that: ?The powers of

government are divided into three branches: legislative, executive and judicial. No person

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exercising powers of one branch shall exercise powers properly belonging to another branch except
as expressly provided in this constitution.? Const 1963, art 3, 2. ??The legislative power of the
State of Michigan is vested in a senate and a house of representatives.? Simply put, legislative
power is the power to make laws.? In re Complaint ofRovas, 482 Mich at 98 (quoting Const 1963,
art 4, 1). It is undeniable that an administrative agency cannot override the Legislature?s clear
directives set forth in its statutory provisions. 1d. DIFS is charged only with administering and
enforcing the insurance Code and does not have the power to rewrite it, which is exactly what it
purports to do with its Orders.

The Legislature passed Public Acts 21 and 22 by a two?thirds majority vote, and when it
was signed into law by Governor Whitmer on June 11, 2019, they became immediately effective.
Const 1963, art 4, 27. The amendments to the No?Fault Act included MCL which
concerns claims handled by the MACP. It states as follows:

The Michigan automobile insurance placement facility and the
insurer to whom a claim is assigned by the Michigan automobile
insurance placement facility are only required to provide

personal protection insurance benefits under section 3107(1)(a)
up to whichever of the following is applicable:

Unless subdivision applies, the limit provided in section
3107c(1)(b).

If the person is entitled to claim benefits under the assigned

claims plan under section 3107d(6)(c) or 3109a(2)(d)(ii),

$2,000,000.00.
MCL Thus, under subsection unless subsection applies, the limit of $250,000
applies to claims assigned to the MACP.6 The limit referred to in MCL 5 is

$2,000,000 and applies where a person is entitled to bene?tsunder the assigned claims plan under

 

6 The limit referred to in MCL is $250,000. See MCL 

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MCL or MCL However, both MCL and
MCL do not become effective until July 2, 2020, pursuant to the plain language
of Lose provisions. 7 Therefore, until July 2, 2020, only the $250,000 limit under MCL I
applies for purposes of MCL 

However, according to September 24 Order, MCL also should not
be effective until July 2, 2020.7 This is in direct contravention to the plain language of MCL
?The principal goal of statutory interpretation is to give effect to the Legislature?s
intent, and the most reliable evidence of that intent is the plain language of the statute.? Hegadorn,
503 Mich at 245 (citing South Dearborn Environmental Improvement Ass Inc Dep ?t of
Environmental Quality, 502 Mich 349, 360?361; 917 603 (2018)). The Legislature can,
and did, expressly provide for delayed effective dates in certain provisions. See MCL 500.3106a
and 500.3107d. Thus, if the Legislature wanted MCL not to become effective until
July 2, 2020, it simply would have stated so. It is not within authority, or even the authority
of the Courts, to simply insert a provision into MCL on the assumption that the,

Legislature simply forgot to add it. See Hegadorn, 503 Mich at 261 (quoting Farrington Total

 

7 DIFS argues that a reading of the statute?s plain language renders MCL 500.3172(b)
meaningless unless subsection effective date is also July 2, 2020. The September 24 Order
argues that, while not stated as it is in other sections of the amended Act, subsection should not
be effective until July 2, 2020 because subsection is not implicated until July 2, 2020. This
reading of the statute is erroneous. First, the statute expressly envisioned this possibility: it
provides that subsection applies only if subsection does not, and then provides for a different
limit for when subsection will apply in the future. If interpretation were correct, the
the-language specifying which subsection applies based on the type of claim at issue would be
surplusage. Further, a reading of the statute as a whole yields no surplus language or
contradictions. Just because subsection is not implicated until July 2, 2020 does not make it
surplusage. The statute is unambiguous. See Lyng, 872 F2d 718, 723 (CA 6, 1989)
(Secretary of Agriculture was bound to honor statutorily?set effective dates, which were not
suiplus language inthe statute).

8 ?An administrative agency?s interpretation of a statute that it is obligated to execute is

entitled to ?respectful consideration,? but it ?cannot con?ict with the plain meaning of the statute.?
Hegaa?orn, 503 Mich at 244 (quoting In re Rovas Complaint, 482 Mich at 108).

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Petroleum, Inc, 442 Mich 201, 210; 501 76 (1993) (?Courts cannot assume that the
Legislature inadvertently omitted from one statute the language that it placed in another statute,
and then, on the basis of that assumption, apply what is not there?). To do so would be to legislate,
which is an unconstitutional usurping of legislative power.9

Neither the Governor nor has the power to retroactively amend legislation passed by
the Legislature and signed into law. The Constitution expressly sets forth the procedures for the
amendment of legislation. Const ?1963, art 4, 25. The exercise of the legislative power of
amendment by the executive violates the provisions of the Michigan Constitution that establish
the procedure for enacting and amending legislation, as well as the Separation of Powers Clause.

Neither DIFS nor its Director have the authority to ban conduct that is in conformity with
the plain language of the Insurance Code. Any such attempt exceeds the power delegated to DIFS
by the Legislature. See Ins Institute Commissioner, 486 Mich at 407. Simply put, by attempting
to rewrite the amendments to the No-Fault Act, the Director is usurping the Legislature?s power
in violation of section 2 of article 3 of the Michigan Constitution of 1963. The Orders are not valid
or enforceable.

3. The Orders Demand Plaintiff Violate the Law.

orders direct the MACP to violate the law in two separate ways. The ?rst Order
requires the MACP to ignore the change in the priority provisions enacted by the Legislature unless
an insurer has ?rst gone through additional hoops mandated by the Director. Yet the Legislature
mandated that the MACP provide No?Fault insurance bene?ts under speci?ed circumstances.

MCL 50031720); 500.3114; 500.3115. The MACP is tasked only with making the initial

 

9 As noted supra, the Governor instructed the Director to issue the second Order,
recognizing that it was a postponement not included in the Amendments, and without the use of
an Executive Order.

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determination of eligibility of a claim and may-only deny a claim if it is ?obviously ineligible.?
MCL 5 00.3 173 Eligibility is determined only by the conditions outlined in MCL 500.3172(1)
and any attempt to deny coverage for any other reason is outside the scope of power granted to the
MAIPF and MACP. Spectrum Health Hosps Mich Assigned Claims Plan, an unpublished
opinion of the Court of Appeals, issued Sept 24, 2019 (Docket No. 343563) (Exhibit 2). Thus,
Plaintiff has no authority to deny coverage on any other basis. Id. Even DIFS, on its own website,
concedes that MCL 500.3114?8 priority change is given immediate effect.10

The second Order demands the MAIPF ignore the $250,000 statutory cap on bene?ts on
claims under MCL As already discussed, this is in direct contravention of the law
and DIFS has no authority to make such a directive. Neither DIFS nor the MACP can postpone
the effective date of the cap.

In sum, the MAIPF and MACP have a strong likelihood of success on the merits because
and its Director?s actions are not grounded in any law or authority granted to them, their
purported Orders are an unconstitutional attempt at usurping the Legislature?s power, and

Defendants have no authority to demand the MAIPF and MACP violate the law.

B. Plaintiff Will Be Irreparably Harmed If Defendants Are Not Enjoined From
Enforcing The Purported Orders.

The Orders have placed the MAIPF and MACP in an untenable situation because the
Orders direct that the MAIPF require the MACP to violate the law and threaten enforcement action

if Plaintiff fails to comply with the Orders. This constitutes irreparable injury under the law. See

 

10 website states: 
13047 13049 34631 95382v??.00.html) 

 

1. Do the order of priority changes in Section 3114 have immediate effect?

Yes; however, must be submitted prior to changing claims practices. See DIFS Order 19?048-
Ni.

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Sherfel Gassman, 899 Supp 2d 676, 710 (SD Ohio, 2012) a??d 768 F3d 561 (CA 6, 2014)
(plaintiffs established irreparable harm where the continued enforcement of a state law by an
agency, requiring them to pay bene?ts, would place them in the untenable position of choosing to
either violate state or federal law).

If the MACE returns claims to the insurers who have shifted the claims based on the
statutory priority change, they risk lawsuits by those insurers. The Orders do not allow the MACP
to process the claims according to the No?Fault Act?s requirements in MCL 500.3172 and
500.3173a, which require the to timely and send claims that it receives for a
determination as to whether coverage exists on the claim and, if so, to process the claims
accordingly. The practical effect of the September 20 Order is that the MACP will move claims
from the servicing insurance carriers back to the insurance companies until the Director
decides it is appropriate for those insurers to send the claims to the MACP, notwithstanding that
the MACP has no statutory authority to do so.

Further, if the Director is not enjoined from enforcing its Orders, the MACP will be
required to pay amounts in excess of the $250,000 cap until such time as the litigation resolves or
face enforcement action from DIFS. Some of the claims submitted to the MACP are catastrophic
claims where the MACP expects that the cap will be exceeded. Once the MACP pays the patients
and providers on those claims, there is no effective way for it to recoup the-funds paid out. Even
if the MACP is able to obtain partial repayment from some hospitals, it is doubtful that any of the
individuals will be able to repay the sums to the MACP. This also constitutes irreparable harm.
Mich Consol Gas Co Mich Pub Serv Com, 389 Mich 624, 643; 209 210 (1973)

(unrecoverable ?nancial losses constitute irreparable harm).

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It is easy to issue an Order that is neither fish nor fowl and let others deal with the
consequences. In this case, those consequences expose the MAIPF to irreparable harm.

C. Neither DIFS Nor Its Director Can Be Harmed By An Injunction Preserving
the Status Quo.

This factor requires the Court to balance the harm that will flow to either party if this
motion is granted. This factor weighs strongly in favor of the MAIPF who will be irreparably
harmed. The Director and DIFS, however, would not all be harmed by an injunction because they
would suffer only the inability to amend provisions of the No?Fault Act with which they disagree.
This is not a harm?at most, it is an inconvenience, as if they wish to delay the statutory caps, they
must do so through lawful means (addressing the Legislature). Moreover, the Director and DIFS
cannot be harmed by an injunction staying enforcement of the Orders because they had no right to
issue them in the ?rst place and the contents of the Orders are unconstitutional. An injunction
staying enforcement merely preserves the status quo as of June 1 1, 2019, and requires application
of the No?Fault Act according to its terms as set forth by the Legislature. On balance, all of the
perceivable harm would be suffered by the MAIPF, not DIFS or its Director.

D. The Public Interest Weighs In Favor Of An Injunction.

Doubtless the DIFS and its Director will make much of this factor, claiming that it is crucial
to the public interest to prevent statutory caps from robbing claimants of bene?ts but, such an
argument is short-sighted. As an initial matter, it is DIFS and its Director that has ordered the
MACP not to provide bene?ts to certain claimants and the practical effect of its orders would
prevent numerous claimants from receiving bene?ts until certain forms were able to be approved
through agency procedures. (Exhibit 1A). Illegally delaying such bene?ts undermines the very

purposes of the No?Fault Act to provide fast payment for economic losses, speci?cally, medical

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bills, wage loss, and replacement services. Shavers Attorney General, 402 Mich 554, 622; 267
72 (1978).

Moreover, those claimants who would receive bene?ts to which they are not entitled
would, most likely to their great surprise, become liable for repayment once the Orders are declared
unconstitutional. Forcing the MACP to provide bene?ts, which are not in conformity with the
law, and subsequently seek repayment from claimants for the same, is not a scheme that is in the
interest of the claimants that DIFS and its Director seeks to protect. Moreover, because the MAIPF
is funded by assessments which are paid by the insurers authorized to transact business in
Michigan, who in turn pass them on to the driving public through increased premiums, the driving
public does not bene?t from the delayed implementation of the cap.

Finally, the power to legislate for the welfare of the peeple is a matter of public concern
and that power is assigned to the Legislature not IDIFS. Const 1963, art 4, 51. In this case, the
Legislature has declared it to be in the best interest of the public to impose statutory caps
immediately on claims submitted to the MACP, which was the Legislature?s decision to make.
MCL 50031720). Without an injunction staying enforcement of the Orders, Michigan?s
constitutional structure of government would be left disturbed, which is not in the public?s best
interest.

CONCLUSION

For the foregoing reasons, the Court should GRANT Plaintiff?s motion, ISSUE a
temporary restraining order enjoining the enforcement of the Orders, and issue an Order to Show
Cause why the Court should not preliminarily enjoin Defendants, and award such additional relief

as may be appropriate.

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Date: October 14, 2019

017318000999 48284927418893

Respectfully submitted,

DYKEMA .GOSSETT PLLC

c. 
By: 5/20? 
Lori McAlli?ter (P39501)
Erin A. Sedmak (P78282)
Attorneys for Plaintiff
Dykema Gossett PLLC
201 Townsend Street, Suite 900
Lansing, MI 48933
(517) 374?9100

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Tab 1

 

 

DYKEMA GOSSETT-A PROFESSIONAL LIMITED LIABILITY COWANY- CAPITOL VIEW 201 TOWNSEND STRET SUITE 900-LANSENG, MCMGAN 48933

STATE OF MICHIGAN
IN THE COURT OF CLAIMS

Michigan Automobile Insurance Placement
Facility, in its capacity as the administrator of
the Michigan Assigned Claims Plan, .
Civil Action No.
Plaintiff,

vs.

Department of Insurance and Financial
Services and Anita G. Fox in her of?cial
capacity as the Director of the Department of

Insurance and Financial Services,

Defendant.

 

Lori McAllister (P39501)
Erin A. Sedmak (P78282)
Attorneys for Plaintiff
Dykema Gossett P-LLC .
201 Townsend Street, Suite 900
Lansing, MI 48933
(517) 374-9150
There is no other pending or resolved

civil action arising out of the transaction
or occurrence alleged in the complaint.

VERIFIED COMPLAINT FOR INJUNCTIVE RELIEF AND DECLARATORY RULING

SUMMARY

Plaintiff, the Michigan Automobile Insurance Placement Facility in its
capacity as the administrator of. the Michigan Assigned Claims Plan requests that this
Court issue a temporary restraining order and, after a hearing, a preliminary injunction enjoining
Defendants, the Department of Insurance and Financial Services and its Director, Anita
G. Fox (?Director?), from instituting any action to enforce their two pronouncements, purported

to be ?orders?, issued on September 20, 2019 and September 24, 2019 (the ?Orders?) against the

017318000999 4844?8700-56094

 

 

DYKEMA PROFESSIONAL LIMITED LIABILITY COMPANY - CAPITOL VIEW 201 TOWNSEND STREET SUTTE MICHIGAN 48933

 

MAIPF or MACP. The purported ?orders? are not properly promulgated rules nor orders issued
in any contested case in which the or MACP was a party. Of particular concern, the
Director purports to order the MACP to act contrary to law by (1) refusing to process claims that
it receives as required by MCL 500.3172, and (2) prohibiting the MACP from complying with the
statutory cap on bene?ts that is applicable to claims against the MACP ?led June 11, 2019 and
later. In so ruling, the Director vastly surpassed her regulatory authority and attempted to act in a
quasi-legislative role that is prohibited by law.

If DIFS is not enjoined from enforcing its Orders, the MACP, and the MAIPF as the
administrator of the MACP, will suffer irreparable harm as they will be exposed to litigation from
claimants entitled to bene?ts and insurers to which the claims are returned. The MACP will also
suffer ?nancial losses that will not be recoverable. As demonstrated in the attached Motion and
Brief, the MAIPF has a substantial likelihood of success on the merits, the MAIPF and the MACP
will be irreparably harmed if enforcement of the Orders is not enjoined, DIFS and its Director face
no potential harm from an injunction enjoining enforcement of the Orders, and it is in the interest
of the public to stay the Orders.

In support of its Complaint, the MAIPF states as follows:

PARTIES AND JURISDICTION

1. The MAIPF is a statutorily created organization, see MCL 500.3301 et seq,
primarily responsible for ensuring that automobile insurance coverage is available to any person
that is otherwise unable to procure that insurance through ordinary methods. The MAIPF is
directed by its Board of Governors (?Board?), as provided in MCL 500.3330. The Michigan
Legislature also tasked the MAIPF with adopting and implementing an Assigned Claims Plan (the

MACP). See MCL The MAIPF and the MACP are funded by statutorily

 

 

 

DYKEMA GOSSETI-APROFESSIONAL LIABILITY COMPANY - CAPITOL VIEW 201 TOWNSEND STREET SUITE 900-LANSING. MICHIGAN 48933

required assessments under the No?Fault Act which, in turn, are passed on to the driving public.
The principal office is located at 17456 Laurel Park Dr 130E, Livonia, MI 48152.

2. The MACP, formerly known as the Assigned Claims Facility was
established by the Legislature in 1973 to provide assistance to people injured in an accident
involving a motor vehicle when there was no automobile insurance available. MCL 500.3171.
The Secretary of State managed the program until December 17, 2012, when the MAIPF was given
the task of operating the MACP. The MACP, as a last resort, is responsible for personal injury
protection bene?ts to those no-fault claimants who are injured in an automobile accident
when there is no insurance company responsible for the payment of no-fault bene?ts under the
statutory scheme established by Michigan?s Nanault Act. The principal of?ce is located
at 17456 Laurel Park Dr 130E, Livonia, Mi 48152.

3. Defendant DIFS is a State of Michigan agency created by Executive Order 2013?
1.1 DIFS is an executive agency charged with the responsibility and authority to administer and
implement, inter alia, the Michigan Insurance Code of 1956, MCL 500.100 et seq. 
principal of?ce is located at 530 Allegan St Lansing, MI 48933.

4. Anita G. Fox is the Director of DIFS. She was appointed Director of the
Department of Insurance and Financial Services (DIF S) by Michigan Governor Gretchen Whitmer
effective January 14, 2019, and is named in her representative capacity only.

5. This Court has subject-matter jurisdiction over this Complaint pursuant to MCL

600.6419 and has the authority to grant injunctive relief pursuant to MCR 3.310. Because the

 

1 DIFS is the successor to the Office of Financial and Insurance Regulation, which was
preceded by the Of?ce of Financial and Insurance Services, which was from the
Insurance Bureau Financial Institutions Bureau and the securities functions of the former
Corporation, Securities, and Land Development Bureau.

 

 

 

DYKEMA PROFESSIONAL LIMITED LIABILITY COMPANY - CAPITOL VIEW 201 TOWNSEND STREET SUITE 900-LANSING, MICHIGAN 48933

Director has purported to exercise a quasi-legislative function with her Orders, an appeal under the
Administrative Procedures Act is not appropriate, and this Court has exclusive jurisdiction.
Furthermore, any remand or referral of this matter to DIFS would be futile given that DIFS and
the Director have plainly expressed their view of the law in the Orders.
FACTUAL BACKGROUND
6. On June 11, 2019, Public Acts 21 and 22 were signed into law by Governor

Gretchen Whitmer. These Public Acts amended Michigan?s No-Fault Act, MCL 500.3100 et seq.
and other related statutes. As part of the amendments to the Act, the following language was added
to MCL 500.3172:

The Michigan automobile insurance placement facility and the

insurer to whom a claim is assigned by the Michigan automobile

insurance placement facility are only required to provide

personal protection insurance bene?ts under section 3107(1)(a)

up to whichever of the following is applicable:

Unless subdivision applies, the limit provided in section
3107c(1)(b).

If the person is entitled to claim bene?ts under the assigned

claims plan under section 3107d(6)(c) or 3109a(2)(d)(ii),
000, 000. 00.

MCL Public Acts 21 and 22 were given immediate effect, except as speci?cally
provided by the Legislature within certain statutory provisions.

7. The limit referred to in MCL is $250,000. See MCL


8. The limit referred to in MCL is $2,000,000 and applies where a
person is entitled to benefits under the assigned claims plan under MCL or MCL
However, both MCL and MCL will not

become effective until July 1, 2020, pursuant to the plain language of those provisions.

 

 

DYKEMA PROFESSIONAL LIMITED LIABILITY COMPANY - CAPITOL VIEW 201 TOWNSEND STREET SUITE 48933

 

9. Therefore, until July 2, 2020, the $250,000 limit under MCL 
governs the payment of PIP bene?ts by the MACP for purposes of MCL 

10. In addition to placing a limit or cap of $250,000 on claims submitted to the MACP,
the Legislature also amended the statutory priority of claims when an accident involves an
occupant/passenger or someone not in a vehicle such as a pedestrian. In particular, prior to the
Amendments, Section 31 14 of the No?Fault Act required an occupant in a vehicle who was injured
in an automobile accident, and not otherwise insured, to seek bene?ts ?rst from the owner of the
vehicle, and second from the operator of the vehicle. The same priority scheme governed a
situation Where a pedestrian was the injured person pursuant to MCL 500.3115. Under the
Amendments, a person who suffers accidental bodily injury arising from a motor vehicle accident
while an occupant of a motor vehicle who is not covered under their own PIP policy shall new
claim PIP bene?ts from the MACP. MCL A person who suffers accidental bodily
injury while not an occupant of a motor vehicle (such as a pedestrian) who is not covered under
the own PIP policy shall now claim PIP bene?ts from the MACP. MCL 

11. Following the Amendments, the MACP has received two types of claims. The ?rst
type are claims made directly to the MACP when there is no insurance available for the accident,
which is the traditional type of claim made to the MACP. The second type of claims results from
the changed priority scheme enacted by the Legislature which maltes the MACP responsible for
claims by occupants and pedestrians who are not covered under their own PIP policy. Both types
of claims are subject to the cap of $250,000, rather than unlimited bene?ts. MCL 

12. Once the MACP receives a claim, it is required to make an initial determination of
whether the claim is an ?eligible? claim because there is no other applicable insurance. If the

MACP determines that the claim is eligible for assignment, it assigns the claim to a servicing

 

 

DYKEMA GOSSETF-A PROFESSIONAL LIMITED COMPANY- CAPITOL VIEW 201 TOWNSEND STREET SUITE 900-LANSING, MICHIGAN 48933

 

insurance company for handling. The servicing insurer or the MACP can request reasonable proof
of loss from the claimant, including an examination under oath if appropriate. See generally, MCL
500.3 173 a.

13. The MACP began receiving claims pursuant to the Amendments the day after they
became effective on June 11, 2019. Numerous insurers referred claims to the MACP because of
the change in the priority scheme enacted by the Legislature. Because it is necessary to con?rm
that the referring insurer?s policy does not provide coverage independent of the statutory change,
a number of referrals were made to outside counsel to evaluate the referring insurers? policies to
determine if there was coverage, which would make the claim ineligible for MACP coverage.

14. Three months after the entire system shifted as a result of the Amendments
becoming effective, DIFS for the first time questioned whether the Amendments were effective
upon enactment. The MAIPF provided its legal analysis demonstrating that the Amendments
became effective upon enactment, requiring it to consider claims being presented by the referring
insurers, among other things.

15. On September 20, 2019, the Director issued what DIFS described as an ?order? (the
?September 20 Order?) (Exhibit A) and posted it on the DIF website in the same place it places
its orders in contested cases. The September 20 Order, however, was not derived from any
?contested case.?2 Nor was it a promulgated rule under the Administrative Procedures Act

and DIFS has not contended that it is a rule. None of the procedures to promulgate a

 

2 ??Contested case? means a proceeding, including rate-making, price?fixing, and licensing,
in which a determination of the legal rights, duties, or privileges of a named party is required by
law to be made by an agency after an opportunity for an evidentiary hearing. When a hearing is
held before an agency and an appeal from its decision, is taken to another agency, the hearing and
the appeal are considered a continuous proceeding as though before a single agency.? MCL
24.203.

 

 

 

DYKEMA PROFESSIONAL LIMITED LIABILITY COMPANY - CAPITOL VIEW 201 TOWNSEND STREET SUITE WO-LANSING, MICHIGAN 48933

rule under the APA were followed with respect to the September 20 Order. Instead, the September
20 Order seeks to enforce the pronouncement made across the insurance industry, as if it is
generally applicable to all regulated parties and the MACP, and as if it has the force of law. It
does not.

16. The September 20 Order requires insurers to resubmit forms and rates to DIFS for

approval before the insurers could refer claims to the MACP as a result of the priority change in

I MCL 500.31 14(4) and There is no such requirement in either statute.

17. With respect to the MACP, the Director ordered that:
The Assigned Claims Plan shall not provide coverage for claims that
have been tendered to it under forms that purport to incorporate
amendments made by PA 21 and PA 22 that affect the scope of

coverage required to be provided under an insurance policy unless
those forms have been approved by the Director.

Ex. A, 114.

18. Nothing in the statute authorizes the MACP to refuse to provide coverage based on
whether DIFS believes it is appropriate to do so. Instead, the responsibilities are spelled
out in the statute. The statute does not contain a provision authorizing the MACP to deny coverage
on the basis set forth in the DIFS Order, and the Director cites no such basis in her Order. Thus,
the September 20 Order seeks to direct the MACP to not provide coverage as required under the 
No-Fault Act and, therefore, violate its statutory duties under MCL 500.3171 500.3179.

19. On September 24, 2019, the Director posted a second purported ?order? on the
DIFS website in the section where orders from contested cases are found (the ?September 24
Order?) (together with the September 20 Order, the ?Orders?). But, again, the September 24 Order
was not derived from any contested case. While the September 24 Order is aimed at the MAIPF,
no underlying hearing was held, MAIPF had no notice of any proceeding purporting to adjudicate

its rights, MAIPF did not participate in any proceedings, and MAIPF was not provided the

 

 

 

DYKEMA GOSSETT-APROFESSIONAL LIMITED COMPANY - CAPITOL VIEW 201 TOWNSEND STREET SUITE 900-LANSING, MICHIGAN 48933

opportunity to present evidence. It is not a promulgated rule under the APA, nor has DIFS
contended that it is a rule. None of the procedures to promulgate a rule under the APA were
followed with respect to the September 24 Order. Again, DIFS seeks to enforce the pronouncement
contained in the September 24 Order against MAIPF, as if it has the force of law. It does not.

20. The September 24 Order purported to ?notify? the MAIPF that ?any attempt to rely
on the amendments made cap bene?ts at $250,000 prior to July 2, 2020, is
prohibited? based on the Director?s alleged interpretation of MCL (Exhibit B). The
September 24 Order included an erroneous legal analysis to reach its conclusions that
implementing the $250,000 cap on MACP bene?ts prior to July 2, 2020 would con?ict with the
purpose of the Insurance Code to protect policyholders, creditors and the public; is not supported
by principles of statutory interpretation; and frustrates the intent of other statutory amendments
contained in the Insurance Code.

21. The September 24 Order pronounces that shall not impose a $250,000 cap
on MACP bene?ts under Section 3107c(1)(b) of the Code, pursuant to Section 3172(7)(a), prior
to July 2, 2020.? (M) This instruction to disregard and not enforce the statute, which makes the
cap applicable immediately, is a violation of law.

22. The source of the September 24 Order became immediately apparent. On the same
day, a news article was published regarding the September 24 Order, reporting that the Director
issued the September 24 Order at the request of Governor Gretchen Whitmer who ?used her
executive authority to amend the enforcement of the no-fault insurance reform legislation she
signed in June.? (Exhibit C) (emphasis added). AccOrding to the article, Governor Whitmer
?promised to use her powers to return complete coverage to auto accident survivors? and

?promised to make the change while in a closed-door meeting with advocates opposing the law.?

 

 

 

DYKEMA GOSSETPA PROFESSIONAL LIABILITY COWANY- CAPITOL VIEW 201 TOWNSEND STREET SUITE 900-LANSING, MICHIGAN 48933

Id. (emphasis added). The article further provided that ?[a]ccording to John Cornack, president of
the Eisenhower Center which provides care for those who suffer brain injuries?, ?the governor?s
actions were to ?help soften the outcome of the new law? and postpone its provisions.? Id.
(emphasis added). Mr. Cornack was an attendee at the meeting with the Governor. No Executive
Order was ever issued.

23. Neither DIFS nor the Director are empowered to postpone the implementation of
part of the Amendments for political reasons. While the Director is a member of the Executive I
Branch, there is nothing in the Michigan Constitution or Michigan law that permits the Governor
to legislate from her of?ce by ordering the Director of DIFS to issue orders changing the effective
date of the Amendments.

24. DIFS contends it has the power to issue the September 24 Order under MCL
500.205, MCL 500.3171, and its general power to execute the laws in the insurance code under
MCL 500.200. But nothing in those statutes allows DIFS to usurp the power of the Legislature to
amend statutory law or the power of the judiciary to invalidate laws passed by the Legislature.
authority to issue orders using its reasonable discretion must be within the authority
delegated to it by the Legislature. Detroit Pub Conn, 308 Mich App 234, 242; 863 
373 (2014) (citations and quotations omitted) (?Administrative agencies have no common-law
powers. But the Legislature may confer on an administrative agency the power to enact rules
regarding details, to conduct hearings to ?nd facts, and to exercise some discretion in
administering a statute?). The Legislature has not, and cannot, delegate the power to legislate to
DIFS, and has not given DIFS the authority to determine which claims are or are not covered by

the MACP, or when a statute becomes effective. See Taylor Smithkline Beecham Corp, 468

 

 

 

DYKEMA GOSSETF-A PROFESSIONAL LIABILITY COMPANY - CAPITOL VDEW 201 TOWNSEND STREET SUITE 900-LANSWG, MICHIGAN 48933

Mich l, 8; 658 127 (2003) (while the Legislature may obtain assistance from the judicial
and executive branches, it may not delegate the power to legislate to either).

25. orders direct the MACP to Violate the law because the purported Orders
preclude the MACP from providing coverage for claims that it may determine are valid, and
imposes restrictions not in the statute before coverage may be afforded by the MACP. The
practical effect of the September 20 Order is that the MACP either returns claims from the
servicing insurance carriers to whom they are assigned to the insurers from which they originated
or risk administrative attempts to enforce the Order. Moreover, the Order does not allow the
MAIPF or MACP to process the claims according to the No-Fault Act?s requirements in MCL
500.3172 and 500.3173a, which require the MACP to timely and send claims that it
receives for a determination as to whether coverage exists on the claim and, if so, to process the
claims accordingly.

26. Forcing the MAIPF and MACP to violate the law is an irreparable injury that
exposes them to litigation from both the insurers to whom the MACP returns the ?les and from
the underlying claimants who do not have their claims timely processed.

27. Enforcement of the prohibition against implementing the $250,000 cap also
irreparably harms the MACP as it will be required to pay amounts in excess of the $250,000 cap
until such time as the litigation resolves or face enforcement action from DIFS. Some of the claims
submitted to the MACP are catastrophic claims where the MACP expects that the cap will be
exceeded. Once the MACP pays the patients and providers on those claims, there is no effective
way for it to recoup the funds paid out. Even if the MAIPF is able to obtain partial repayment
from some hospitals, it is doubtful that any of the individuals will be able to repay the sums. Given

that the Director of DIFS is ordering the MACP to pay unlimited bene?ts, the amounts paid could

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DYKEMA GOSSETT-A PROFESSIONAL LIMITED LIABILITY COMPANY - CAPITOL VIEW 201 TOWNSEND STREET SUITE 48933

greatly exceed the cap and will be forever unrecoverable. These costs are ultimately passed on to
auto insurance companies by way of assessments, who in turn pass the costs on to the driving
public.

28?. Neither the Governor, DIFS, a state agency, nor the Director have the authority to
postpone the effectiveness of the statutory cap, to pronounce the unambiguous plain language of a
statute to be ineffective, or to effectively amend a statute. Moreover, neither the Governor, DIFS,
nor the Director have the authority to demand that MAIPF or MACP violate the law by refusing
to perform their statutory obligations.

COUNT RELIEF

29. The MAIPF hereby realleges and incorporates the foregoing paragraphs as though
fully set forth herein.

. 30. DIF issued two purported Orders that do not. have the force of law because they
are not derived from any law or authority granted to The Orders seek to amend legislation
passed by delaying the caps on bene?ts provisions from coming into effect immediately. DIFS
does not have the authority to override choices made by the Legislature. An administrative agency,
such as DIFS, ?cannot exercise legislative power by creating law or changing the laws enacted by
the Legislature.? SBC Mich PSC (In re Complaint of Roms), 482 Mich 90, 98; 754 259
(2008). Therefore, by attempting to rewrite the amendments to the No-Fault Act, the Director is
usurping the Legislature?s power in violation of section 2 of article 3 of the Michigan Constitution
of '1963. Const 1963, art 3, 2. In short, DIFS exceeded its authority when it issued the purported
Orders for at least the following reasons:

a. The Director?s purported Orders violate the Michigan Constitution?s separation of

owers rinci les. While an administrativea enc has? uasi-le islative? owers


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such powers are limited to rule making. In re Complaint ofRovas, 482 Mich at 98.
An administrative agency, such as DIFS, ?cannot exercise legislative power by
creating law or changing the laws enacted by the Legislature.? Id. Thus, DIFS
cannot promulgate any rule that con?icts with a statute because only the Legislature
may make law. See id By attempting to rewrite the amendments to the No?Fault
Act, the Director is usurping the Legislature?s power in Violation of section 2 of
article 3 of the Michigan Constitution of 1963. Const 1963, art 3, 2.

Because the Director?s Orders are not the result of contested cases, they are not
derived from administrative agencies? ?quasi?judicial? power. ?Administrative
agencies exercise what have been described as ?quasi?judicial? powers. However,
such power is limited and is not an exercise of constitutional ?judicial power.? The
primary ?judicial? function exercised ?by administrative agencies is confined to
conducting contested cases.? In re Complaint afRovas, 482 Mich at 98?99. Thus,
has no authority to issue a rule of law by issuing a purported judicial opinion.
power to adjudicate cases is limited to a fact-?nding exercise in contested
cases. Id. at 98.

The Orders do not have the force of law because agencies do not have the power to
unilaterally issue pronouncements that have the force of law. Ass ?11 of Bus.
Advocating Tari?r Equity v. Mich. Pub. Serv. Comm ?n (In re Reliability Elec. Utils.
for 2017-2021), 325 Mich App 207, 232?233, 926 584 (2018) (quoting
Faircloth Family Independence Agency, 232 Mich App 391, 403-404; 591 
314 (1999) (?An agency should resort to formal APA rulemaking when establishing

policies that ?do not merely interpret or explain the statute or [rules from which the

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DYKEMA PROFESSEONAL LIMITED LIABILITY COMPANY - CAPITOL VIEW 201 TOWNSEND STREET SUITE 900-LANSING, MCI-EGAN 48933

agency derives its authority,? but rather ?establish the substantive standards
implementing the program?). ?An agency . .smay not avoid the requirements for
promulgating rules by issuing its directives under different labels.? Id. at 233. See
also, Detroit Edison Co Dep?t of Treasury, 498 Mich 28, 45; 869 810
(2015) (?nding that, for an agency regulation of general applicability to have the
force of law, it must fall under the de?nition of a properly promulgated rule). 
Even where an administrative agency interprets a statute, its interpretation cannot
con?ict with the plain meaning of the statute. In re Complaint of Rovas, 482 Mich
at 108. To the extent that the DIF Orders are based on its interpretation of the
Insurance Code, they are invalid, as they demand that the MACP Violate the No-
Fauit Act?s plain language.

DIFS has no authority to alter the claims that the MACP must accept for
assignment. DIFS only has the narrow authority granted to it under MCL 500.3171
to appoint four of eleven governors to the Board, to approve the assigned
claims plan, which occurred long ago, and make a report to the senate a year after
the plan is approved, which also already occurred. The MACP is not a regulated
entity like an insurance company or insurance producer. It only applies if there is
no insurance policy at issue. The Legislature has made the decision as to what
claims the must accept and the limits on bene?ts the MACP must pay??
DIFS does not have the authority to alter those decisions. Thus, DIF has no

authority to make the proclamations in its Orders.

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DYKEMA GOSSETT-A PROFESSIONAL LIMITED LIABILITY CAPITOL VIEW 201 TOWNSEND STREET SUITE WO-LANSDIG, MICHIGAN 48933

f. DIFS has no authority to ban conduct that is in conformity with the Insurance Code.
Any such attempt would exceed the power delegated to DIFS by the Legislature.
See Ins Institute Commissioner, 486 Mich 370, 407; 785 67 (2010).

31. DIFS does not have the authority to issue rulings of general applicability without
promulgating a rule under the APA. Because the Director?s purported Orders were not
promulgated rules, they do not have the force of law and, thus, are not enforceable. Detroit Edison,
498 Mich at 45. Moreover, no contested case existed in which the MAIPF participated to
adjudicate its rights.

32. DIFS may not instruct the MACP as to which claims it will or will not cover, nor
does it have the power to override the Legislature?s determination that a statute is given immediate
effect.

33. The MAIPF therefore seeks, in addition to an injunction staying the enforcement
of the Orders, a Declaratory Ruling that the Orders are void and unenforceable as to the MAIPF
and MACP.

COUNT II INJUNCTIVE RELIEF

34. The MAIPF hereby realleges and incorporates the foregoing paragraphs as though
fully set forth herein.

35. . As explained above, DIFS and its Director seek to demand that the and
MACP violate the law and contend that DIFS and its Director have the authority to enforce the
Orders against the MAIPF and MACP.

36. DIFS and its Director should be enjoined from seeking to enforce the Orders for

the following reasons:

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DYKEMA GOSSETT-A PROFESSIONAL LIMITED LIABILITY COMPANY - CAPITOL VIEW 201 TOWNSEND STREET SUITE 900-LANSING, MICHIGAN 48933

The Director?s purported Orders violate the Michigan Constitution?s separation of
powers principles. While an administrative agency has ?quasi-legislative? powers,
such powers are limited to rule making. In re Complaint of Rovas, 482 Mich at 98.
An administrative agency, such as DIFS, ?cannot exercise legislative power by
creating law or changing the laws enacted by the Legislature.? Id Thus, DIFS
cannot promulgate any rule that con?icts with a statute because only the Legislature
may make law. See id. By attempting-to rewrite the Amendments, the Director is
usurping the Legislature?s power in violation of section 2 of article 3 of the
Michigan Constitution of 1963. Const 1963, art 3, 2.

Because the Director?s Orders are not the result of contested cases, they are not
derived from administrative agencies? ?quasi-j udicial? power. DIFS has no
authority to issue a rule of law by issuing a purported judicial opinion. 
power to adjudicate cases is limited to fact-finding in contested cases. Id. at 98.
The Orders do not have the force of law because agencies do not have the power to
unilaterally issue pronouncements that have the force of law. In re Reliability Elec.
Utils. for 2017?2021, 325 Mich App at 232-233 (quoting Faircloth, 232 Mich App
at agency should resort to formal APA rulemaking when establishing
policies that ?do not merely interpret or explain the statute or [rules from which the
agency derives its authority,? but rather ?establish the substantive standards
implementing the pro ?An agency . . . may not avoid the requirements for
promulgating rules by issuing its directives under different labels.? 1d. at 233. See

also, Detroit Edison Co, 498 Mich at 45 (?nding that, for an agency regulation of

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DYKEMA LIMITED LIABEIJTY COWANY- CAPITOL VIEW 201 TOWNSEND STREET SUITE MICHIGAN 48933

37.

general applicability to have the force of law, it must fall under the de?nition of a
properly promulgated rule).

Even where an administrative agency interprets a statute, its interpretation cannot
con?ict with the plain meaning of the statute. In re Complaint of Rovas, 482 Mich
at 108. To the extent that DIFS Orders are based on its interpretation of the
Amendments, they are invalid, as they seek to demand that the MACP violate the
Amendments? plain language.

DIFS has no authority to alter the claims that the MACP must accept for
assignment. The Legislature has made the decision as to what claims the MACP
must accept and the limits on bene?ts the MACP must does not have
the authority to alter those decisions. 'Thus, DIFS has no authority to make the
proclamations in its Orders.

DIFS has no authority to ban conduct that is in conformity with the Insurance Code.
Any such attempt would exceed the power delegated to DIFS by the Legislature.
See Ins Institute Commissioner, 486 Mich at 407.

As established in the accompanying Motion for Preliminary Injunction and Brief,

with these arguments the MAIPF has a likelihood of success on the merits.

38.

The MAIPF and MACP will suffer irreparable harm if purported Orders are

not restrained and DIFS is allowed to take enforcement action, requiring the MACP to violate the

law, resulting in exposure to litigation from claimants, whose benefits are delayed, and insurers,

to whom claims are returned, in addition to incurring ?nancial losses that are not recoverable.

Alternatively, if the MAIPF and MACP violate the Orders, they will become the target of

enforcement and disciplinary action by DIFS and its Director.

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DYKEMA GOSSETT-A PROFESSIONAL LRVEITED LIABEJTY COMPANY- CAPITOL WEW 201 TOWNSEND STREET SUITE MCI-EGAN 48933

39. DIFS will not be harmed by a temporary restraining order because it has no
authority to amend legislation, or to order the MAIPF or MACP to violate the Amendments. DIFS
cannot be harmed by the non-enforcement of its invalid and unauthorized Orders.

40. It is in the public interest to stay the Orders because numerous claimants will be
delayed receiving bene?ts, which undermines the very purposes of the No-Fault Act to provide
fast payment for economic losses, speci?cally, medical bills, wage loss, and replacement services
without the need to initiate a tort suit. Shavers Attorney General, 402 Mich 554, 622; 267 
72 (1978). Moreover, an injunction merely preserves the enforcement of the No-Fault Act, as
written and prevents an unconstitutional usurping of Legislative power by DIFS.

41. The weighing of the interests between the parties favors the MACP because it is in
the public interest for an administrative agency to with the plain language of the statutory
amendments put in place by Michigan?s Legislature, and passed by more than a two?thirds vote.

RELIEF SOUGHT

WHEREFORE, the MAIPF, on behalf of the MACP, requests this Court ENJOIN DIFS
and its Director from enforcing their purported Orders of September 20, 2019 and September 24,
2019 and declare that:

purported Orders of September 20, 2019 and September 24, 2019 are not
enforceable because DIFS, as an administrative agency, and its Director do not have the authority
to issue orders of general applicability that have the force of law, the violation of which may result
in enforcement action. Any rules of general applicability must be promulgated under the APA and
are limited to falling within the scope of authority delegated to DIFS by the Legislature.

(ii) DIF does not have the authority to amend or alter Michigan law, and any attempt to

do so, is a violation of separation of power principles under Michigan?s Constitution.

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PROFESSIONAL LIMITED LIABILITY COMPANY CAPITOL VIEW 201 TOWNSEND STREET SUITE (JOB-LANSING, 48933

The purported Orders of September 20, 2019 and September 24, 2019 demand that the
MAIPF and MACP Violate the plain language of the No?Fault Act. DIFS does not have the
authority to impose its Orders on the MAIPF or MACP and, as a result, the purported Orders of
September 20, 2019 and September 24, 2019 are unenforceable.

(iv) The cap set forth in MCL 500.3172(7) became effective on June 11, 2019.

Respectfully submitted,

DYKEMA GOSSETT PLLC

. 
Date: October 14, 2019 By: WW

iori McAllister (P39501)

Erin A. Sedmak (P78282)
Attorneys for Plaintiffs
Dykema Gossett PLLC

201 Townsend Street, Suite 900
Lansing, MI 48933

(517) 374-9100

18

 

 

knowledge.

 

Dated: October 14, 2019

DYKEMA PROFESSIONAL LIMJTED LIABILITY CAPITOL VIEW 201 TOWNSEND STREET W-LANSNG. MICHIGAN 48933

 

VERIFICATION

I hereby verify that the factual contents of this Complaint For Injunctive Relief And

Declaratory Ruling are based on my knowledge and investigation, and are true to the best of my

MM

Kir'nberly Bezy I

19

00

 

Tab A .

STATE OF MICHIGAN
DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES

Before the Director of the Department of Insurance and Financial Services

In the matter of:

Requirement to File Forms and Rates Prior to Order No. 19-048-M

Implementing Public Acts 21 and 22
I

Issued and entered
this Malay of September 2019
By Anita G. Fox
Director

I. BACKGROUND

Public Acts 21 and 22 of 2019 (PA 21 and PA 22) were enacted into law on June 11, 2019. Several
provisions of the Insurance Code (Code) that were amended by PA 21 and PA 22 (amended provisions)
were effective June 1 1, 2019; other provisions are not effective until July 2, 2020. It has come to the
Director?s attention that a limited number of automobile insurers have attempted to apply the amended
provisions to claims made under existing, in?force policies without first submitting revised forms and rates
for the Director's review and approval. Regardless of their effective date, amended provisions that affect
the scope of coverage required to be provided under automobile policies may not be implemented until
automobile insurers have submitted revised forms and rates for the Director's review and approval. Such
amended provisions include, but are not limited to, Sections 3009, 3111, 3113, 3114, and 3115, MCL
500.3009, 500.3111, 500.3113, 500.3114, and 500.3115.

This order noti?es automobile insurers that any attempt to implement the amended provisions that affect
the scope of coverage required to be provided under an insurance policy without submitting revised policy
forms and rates to DIFS for review and approval would violate Sections 2106, 2108, and 2236 of the Code,
MCL 500.2106, 500.2108, and 500.2236.

M. ANALYSIS

Pursuant to Sections 2106, 2108, and 2236 of the Code, MCL 500.2106, 500.2108, and 500.2236, forms
and rates are subject to the Director?s review and disapproval. These sections of the Code were unchanged
by PA 21 or PA 22 and remain the requisite procedure prior to a company's form or rate use. Section
2106(3)1 provides that an insurer ?may use rates for automobile insurance as soon as those rates are
filed,? which requires that the rates are filed with the Director.2 Section 2108(6) provides: ?An insurer shall 
not make, issue, or renew a contract or policy except in accordance with filings that are in effect for the

 

1 This section was amended by PA 21 and PA 22, but the amendments are not effective unlit July 2, 2020.
2 Rate ?lings must comply with ail applicable sections of the Code, Including but not limited to Sections 2109 and 2110, MCL

500.2109 and 500.2110.

 

Order No. 
Page 2 of 4

insurer under this chapter.? Section 2236(1) provides that ?an insurer shall not deliver or issue for delivery
in this state a basic insurance policy form unless a copy of the form is filed with the department and
approved by the director as conforming with the requirements of this act and not inconsistent with the law."
Section 2236(5) of the Code establishes the Director's broad authority to disapprove, withdraw approval, or
prohibit the issuance of all types of insurance policy forms. and permits the Director to prohibit the
issuance, advertising, or delivery of a form to any person in this state if the form viciates this act, contains
inconsistent, ambiguous, or misleading clauses, or contains exceptions and conditions that unreasonabiy or
deceptiveiy affect the risk purported to be assumed in the general coverage of the policy." Insurers that
impiement the amended provisions that affect the scope of coverage required to be provided under
automobile insurance poiicies without first revising their forms or rates are in violation of Sections 2106,
2108, and 2236 of the Code, MCL 500.2106, 500.2108 and 500.2236.

in addition, any attempt by automobile insurers to rely on a "conformity to law clause? 3 within their policies
as a way to adopt the amended provisions without substantively revised forms would constitute a violation
of Section 2236(5) of the Code as reliance upon an insurance policy provision that "unreasonably and
deceptively affectis] the risk purported to be assumed in the general coverage of the policy."

Finaliy, the Code prohibits automobile insurers from reducing the coverage available under a policy without
first providing notice to policyholders. Under Section 2104(5) of the Code, MCL the offering of
coverage with less favorable terms or conditions than those previously provided is considered to be a
?termination" uniess the reduction in coverage was requested by the policyholder or if the terms and
conditions of the coverage previously provided were no longer available from the insurer anywhere in
Michigan. Further, when an insurer fails to provide notice to a policyholder of a reduction in coverage, the
insurer is bound to the original coverage when the reduction was not brought to the insured's attention.
See, Casey Auto-Owners ins Co, 273 Mich App 388 (2006).

ll. FINDINGS OF FACT AND CONCLUSIONS OFLAW

The Director FINDS and CONCLUDES that:

1. Several provisions of the Code that were amended by PA 21 and PA 22 affect the scope of
coverage required to be provided under automobile insurance policiesdid not amend Sections 2106, 2108, and 2236 of the Code, MCL
500.2106, 500.2108, and 500.2236, which subject insurance policy forms and rates, and
any revisions thereto, to review and approval.

3. implementation of statutory amendments that affect the scope of coverage required to be
provided under an insurance policy without first revising insurance policy terms and rates
to account for coverage reductions and then submitting such forms and rates to DIFS for

 

3 This includes any clause that purports to ?conform? a policy to a change in law without providing notice to policyholders, and
can take the form of a ?conformity to state law" clause or a policy provision that generically states that coverage is to be afforded
"pursuant to Michigan law? or similarly broad language.

 

Order No. 

Page 3 of 4

review and approval would violate Sections 2106, 2108, and 2236 of the Code, MCL
500.2106, 500.2108, and 500.2236.

Implementation of statutory amendments that affect the scope of coverage required to be
provided under an insurance policy through reliance on a ?conformity to law clause would
violate Section 2236(5) of the Code, MCL as reliance upon an insurance
policy provision that ?unreasonably and deceptively affectis] the risk purported to be
assumed in the general coverage of the policy."

Failure by an automobile insurer to provide written notice to policyholders regarding
reductions to coverage provided under an insurance policy is contrary to Section 2104(5)
of the Code, MCL 500.2104i5), and Michigan case law.

ill. ORDER

Therefore, it is ORDERED that:

1.

No automobile insurer shall incorporate amendments made by PA 21 and PA 22 that affect
the scope of coverage required to be provided under an insurance policy into a policy form
without first submitting its revised forms and rates for the Directors review and approval.

An automobile insurer shall not rely on ?conformity to law clauses" or other similar
provisions in its policy forms as a method of incorporating the statutory amendments that
affect the scope of coverage required to be provided under an insurance policy under PA
21 and PA 22.

Any automobile insurer that wishes to revise its policy forms must submit revised forms
and rate revisions to the Director for approval. The Director will disapprove any form or rate
?lings that incorporate statutory amendments prior to their effective date.

Any automobile insurer that has processed claims in accordance with the statutory
amendments that affect the scope of coverage required to be provided under an insurance
policy without first submitting revised forms and rates for the review and approval
shall immediately re-process those claims in accordance with the terms and conditions of
the existing policy form.

The Assigned Claims Plan shall not provide coverage for claims that have been tendered
to it under forms that purport to incorporate amendments made by PA 21 and PA 22 that
affect the scope of coverage required to be provided under an insurance policy unless
those forms have been approved by the Director.

Failure to comply with the form and rate filing and approval requirements of the Code
andlor failing to comply with this Order will result in disapproval or withdrawal of approval
of the form or rate and may subject the insurer to appropriate administrative action.

 

Order No. 
Page 4 0f 4

The Director speci?cally retains jurisdiction of the matters contained herein and the authority to issue such
further orders and take such further actions as she shall deem just, necessary and appropriate.



Anita G. Fox
Director

 

 

STATE OF MICHIGAN
DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES

Before the Director of the Department of Insurance and Financial Services

In the matter of:

Effective Date of the Cap on PIP Benefits
Provided Under the Michigan Assigned Claims Plan Order 
I

 

Issued and entered
this day of September 2019
by Anita G. Fox
Director

I. BACKGROUND

Public Acts 21 and 22 of 2019 were enacted into law on June 11, 2019. Several provisions of the
Insurance Code (Code) that were amended by PA 21 and PA 22 were effective June 11, 2019; other
provisions are not effective until July 2, 2020.

It has come to the Director?s attention that the Michigan Automobile Insurance Placement Facility
(MAIPF), which administers the Michigan Assigned Claims Plan (MACP), may attempt to impose a
$250,000 cap on bene?ts under Section 3107c(1)(b) of the Code, pursuant to Section 3172(7)(a), prior
to July 2, 2020.

The authority for this order is derived from the following:

. the authority conferred upon the Department of lnsUrance and Financial Services
pursuant to Section 200 of the Code, MCL 500.200, and its obligation to execute
the laws of this state in relation to insurance;

. the Director?s authority to issue orders in the reasonable exercise of discretion pursuant
to Section 205 of the Code, MCL 500.205, with the intent to adhere to the Code?s long-
standing legislative purpose to protect policyholders, creditors and the public; and

. the Director?s supervisory authority over the MAIPF- and MACP as set forth in Sections
3171(3) and 3171(4) of the Code, MCL MCL 

Pursuant to the above authority, this order noti?es the that any attempt to rely on the
amendments made cap benefits at $250,000 prior to July 2, 2020, is prohibited.

Order No. 
Page 2 of 3

ll. ANALYSIS

Pursuant to Section 3172(7)(a) of the Code, ?the and the insurer to whom a claim is assigned
by the are only required to provide personal protection insurance benefits under section
3107(1)(exception exists to
the imposition of the $250,000 cap if the injured person claims bene?ts through the MACP when,
pursuant to Section 3107 or 3019a(2), the person is injured during the?30-day window in which the
person had a lapse in qualified health insurance or other health and accident coverages. In that case.
the capped amount totals $2,000,000. See MCL 

Adherence to sound principles of statutory construction against rendering any part of a statute
surplusage or nugatory requires that the effective date of the entirety of Section 3172(7) is July 2, 2020.
See Badeen PAR, Inc, 496 Mich 75, 81; 853 303 (2014) (?When reviewing a statute, courts
should avoid a construction that would render any part of the statute surplusage or 

The Code ?was enacted for the benefit of the public and the insurance laws should be liberally
construed in favor of policy holders, creditors and the public." See Murphy Seed~Roberts Agency, Inc,
79 Mich App 1, 9 (1977) (citing Dearborn National Ins Co Comm?r of Insurance, 329 Mich 107, 118
(1950); Comm?r of Insurance American Life Ins Co, 290 Mich 33, 43-44 (1939)). See also King State,
488 Mich 208, 218 (2010) (?The extensive regulation of the insurance industry provided for in [the
Insurance Code] indicates a legislative purpose to protect policyholdersf'.) (citing In re Certified
Question, 413 Mich 22, 38 (1982)).

Per the plain language of Section 3172(7)(b), subdivision applies if a person is entitled to claim
bene?ts ?under the under section 3107d(6)(c) or 3109a(2)(d)(ii) Because the effective date 
of Sections 3107d and 3109a(2) is expressiy July 2, 2020, there is no person who can claim benefits
from the MACP under those sections until July 2, 2020, which would render Section 3172(7)(b)
meaningless unless its effective date is also July 2, 2020. Subdivisions 7(a) and 7(b) of Section 3172
are interdependent: 7(a) explicitly references To avoid a meaningless interpretation of Section
3172(7)(b), the entirety of Section 3172(7) must take effect on July 2, 2020, precluding the MACP from
imposing a $250,000 cap on bene?ts until that date. This interpretation allows Section 3172(7) to
function in a coherent manner and is consistent with the fundamental principles of statutory construction
noted above.

The interpretation of Section 3172(7) as having an effective date of July 2, 2020, is further supported by
reference to other amendments made this regard, Section 3009 of the Code,
MCL 500.3009, sets forth various liability coverage iimits with an effective date of July 2, 2020. If the
Director interpreted Section 3172(7) as having an effective date prior to July 2, 2020, pedestrians and
uninsured occupants who claim bene?ts from the MACP subject to the $250,000 cap, and whose
expenses exceed that amount, will be able to sue an at?fault driver for the remainder. However, the
defendant driver would be limited to the pre-amendment residual liability protections, and any amount of
liability over these amounts could subject the defendant to significant ?nancial harm. This potentiaily
catastrophic exposure to residual liability?which was not contemplated by the policyholder at the time
of entry into the existing insurance contract??acontravenes the Code's long-standing legislative purpose
of policyholder protection.

Order No. 

Page 3 of 3

il. FINDINGS OF FACT

The Director FINDS that:

1.

Public Acts 21 and 22 of 2019 were enacted into law on June 11, 2019. Several
provisions of the Insurance Code (Code) that were amended by PA 21 and PA 22 were
effective June 11, 2019; other provisions are not effective until July 2, 2020.

it has come to the Director?s attention that the Michigan Automobile Insurance
Placement Facility (MAIPF), which administers the Michigan Assigned Claims Plan
(MACP), may attempt to impose a $250,000 cap on bene?ts under prior to July 2, 2020.

The Code was enacted for the benefit of the public, and the Director must interpret it in
favor of policyholders and the public.

It. CONCLUSIONS OF LAW

The Director CONCLUDES:

1.

Implementation of the $250,000 cap on MACP benefits under Section 3107c(1)(b) of
the Code, pursuant to Section 3172(7), prior to July 2, 2020, would con?ict with the
longstanding legislative purpose of the Code to protect policyholders, creditors and the
public.

Implementation of the $250,000 cap on MACP bene?ts under Section 3107c(1)(b) of
the Code, pursuant to Section 3172(7), prior to July 2, 2020, ignores sound principles of
statutory construction.

Implementation of the $250,000 cap on MACP bene?ts under Section 3107c(1)(b) of
the Code, pursuant to Section 3172(7), prior to July 2, 2020, frustrates the intent of
other statutory amendments, inctuding the residual liability protections contained in
Section 3009 of the Code, MCL 500.3009.

ill. ORDER

Therefore, it is ORDERED that the shall not impose a $250,000 cap on MACP bene?ts under
Section 3107c(1)(b) of the Code, pursuant to Section 3172(7)(a), prior to July 2, 2020.

The Director specifically retains jurisdiction of the matters contained herein and the authority to issue
such further orders as she shalt deem just, necessary and appropriate.

(2,42%

Anita G. 56x 
Director

- Tab 

BREAKING: Gov. Whitmer Retreats From No?Fault Changes Page 1 of 1

Shadrach Strehle Sep 24

BREAKING: Gov. Whitmer Retreats
From No-Fault Changes

Michigan Department of Insurance and Financial
Services Issues Order Halting Enforcement

STATE OF 
DEPARTMENT OF AND FINANCIAL SERVICES

 
    

Before the Dimelor of the Department of Insurance and Financial Services

tn the matter of:

Effective Date ofthe on PIP Benefits
vidcd Under the Michigan Assigned China Plan Order Ho. 19-0434:


 

Issued and 
this 20 day of Septumbcr 2MB
by Anita a. Fox
Director

LANSING (Great Lakes News) - Gov. Gretchen Whitmer used her executive authority to
amend the enforcement of the no-fault insurance reform legislation she signed in June.
Director of the Michigan Department of Insurance and Financial Services Anita G. Fox
issued a Director's Order postponing the $250,000 cap on personal injury protection
established by the legislation per the governor?s request.

Whitmer promised to make the change while in a closed-door meeting with advocates
opposing the law. According to John Cornack. president of the Eisenhower Center which
provides care for those who suffer brain injuries, Whitmer promised to use her powers to
return complete coverage to auto accident survivors. Whitmer was reportedly moved by
stories of life-aitering injuries going untreated since she signed the law.

Cornack said the governor's actions were to ?help soften the outcome of the new law" and
postpone its provisions. Previously, the law phased out no-fault coverage in preparation for
its full effects in July, 2020. CPAN (Coalition Protecting Auto No-Fauit) reportedly "thanked
her for her actions.?

?This is a very good sign that the governor cares about the damage that's been done by
this bill to so many,? said John Prosser ll. President of the Neurotrauma
Association. ?it's a good first step."

The law's full effects. including the $250,000 cap on personal injury protection. will be

implemented on July 1, 2020. Activists will march in Lansing on Wednesday protesting the
iaw and urging its reexamination before the July start date.

10/ 14/20 1 9

Tab2

0 Neutral

As of: October 14, 2019 1:02 PM 

Spectrum Health. Hows. v. .rl/Iiclz. Assigned Claims Plan

Court of Appeals of Michigan

September 24, 2019, Decided

No. 343563

Reporter
2019 Mich. App. LEXIS 5749 2019 WL 4648448

SPECTRUM HEALTH HOSPITALS, Plaintiff-Appellant, 
MICHIGAN ASSIGNED CLAIMS PLAN, MICHIGAN
AUTOMOBILE INSURANCE PLACEMENT FACILITY,
and JOHN DOE INSURANCE COMPANY, Defendants-
Appellees.

Notice: THIS OPINION IS UNCORRECTED AND
SUBJECT TO REVISION BEFORE PUBLICATION IN

- THE MICHIGAN COURT OF APPEALS REPORTS.

Prior History: Kent Circuit Court. LC No. 17007964?
NF.

Spectrum Health Hosps. v. illicit, Assumed Claims Plan, 2019
.r?la?iclz. App. LEXIS 3865 (Midi. Cr. Arm. July 15, 2W9)

Core Terms

 

insurer, bene?ts, no-fault, claimant, assign, notice, ineligible,
notify, eligibility, summary disposition, coverage, motor
vehicle accident, injured person, motor vehicle, time of an
accident, investigator, driver, automobile insurance,
signature, preparer

Case Summary

 

Overview

HOLDINGS: [1]?The health care provider gave the Michigan
Assigned Claims Plan (MACP)/Michigan Automobile
Insurance Placement Facility (MAIPF) the notice required
under ill/{CL 500.3174 as it ?led the application for assignment
within one year as required by 500.3145; [2]?By
indicating that it was "unknown? to the provider whether the
passenger, her resident relatives, the driver, or the involved
vehicle possessed a no?fault policy, the
communicated that applicable personal injury protection (PIP)

provider

bene?ts could not be identi?ed, and the was
then required by 500.3174 to assign the claim;
[3]?The did not assign the claim and
did not notify the provider of its denial; [4]-The claim could
not be deemed obviously ineligible and the 
was duty-bound to assign it to an insurer.

Outcome
Judgment reversed and remanded.

 

LexisNexis? Headnotes

Civil Procedure Appeals Standards of Review De
Novo Review

Civil Procedure Appeals Summary Judgment
Review Standards of Review

Civil Procedure Summary Judgment Entitlement
as Matter of Law Genuine Disputes

twin-i] Standards of Review, De Novo Review

The appellate court reviews de novo a circuit court's
resolution of a summary disposition motion. A motion under
MGR. tests the factual support of a plaintiff?s
claim. Summary disposition is appropriate under subsection
if there is no genuine issue regarding any material fact
and the moving party is entitled to judgment as a matter of
law. In reviewing such motions, the appellate court considers
the pleadings, admissions, af?davits, and other relevant
documentary evidence of record in the light most favorable to
the nonmoving party to determine whether any genuine issue
of material fact exists to warrant a trial. A genuine issue of
material fact exists when the record, giving the bene?t of
reasonable doubt to the opposing party, leaves open an issue
upon which reasonable minds might differ.

Lori McAliister

2019 Mich. App.

Civil Procedure Appeals Standards of Review De
Novo Review

Governments Legislation Interpretation
Standards of Review, De Novo Review

The appellate court also reviews de novo underlying issues of
statutory interpretation. The primary goal of statutory
interpretation is to discern the intent of the Legislature. The
best indicator of the Legislature's intent is a plain reading of
the statutory language. If the statutory language is
unambiguous, the appellate court presumes that the
Legislature intended the meaning that it clearly expressed,
and further construction is neither required nor permitted.

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

Insurance Law Motor Vehicle
Insurance Coverage No Fault Coverage 

Personal Injury Protection, Medical Bene?ts

In 1973, the Legislature enacted the no~fault insurance act,
MCL 500.3!01 at sea, to provide victims of motor vehicle
accidents assured, adequate, and prompt reparation for certain
economic losses. It established the no?fault scheme, in part, to
rectify problems with the tort-based compensation scheme,
which frequently denied bene?ts to a high percentage of
motor vehicle accident victims.

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

Personal Injury Protection, Medical Bene?ts

To achieve its goals, the Legislature required the owner or
registrant of a motor vehicle required to be registered in this
state in relevant part to purchase personal injury protection
(PIP) insurance to cover injuries to persons caused by motor
vehicles, MCL 2. The Legislature provided that the
policies required under MCL must cover more
than just the named insured; policies must also cover injuries
incurred in motor vehicle accidents by the named individual's
spouse and any relative domiciled in the same household,
MC): 500.3114 .1 When an injured person is not covered by
his or her own insurance policy or a policy owned by a

 

Page 2 of 10
LEXIS 5749, *1

relative, the Legislature provided that the insurers of the
various vehicles involved or occupied during the accident, or
the insurers of persons operating such vehicles, must cover
the loss, 5003115.

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

Personal Injury Protection, Medical Bene?ts

Even where there does not appear to? be any applicable
personal injury protection (PIP) coverage, the Legislature
provided that an injured person could obtain PIP bene?ts
through the Michigan Assigned Claims Plan (MACP), ELL
?120.31 72?] 2. All self-insurers or insurers writing insurance as
provided by the no?fault insurance act are required to
participate in the MACP, with the associated costs being
allocated fairly among insurers and self-insurers, 
50031719). In this way, the Legislature ensured that every
person injured in a motor vehicle accident would have access
to PIP benefits unless one of the limited exclusions in the no-
fault act apply, and the losses suffered by uninsured persons
injured in motor vehicle accidents could be indirectly passed
on to the owners and registrants of motor vehicles through
insurance premiums.

Business Corporate
Compliance Regulators State Insurance
Commissioners Departments Rules Regulations

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

State Insurance Commissioners Departments,
Rules Regulations

The Legislature initially required the Secretary of State to
organize and maintain the Michigan Assigned Claims Pian
(MACP)/Michigan Automobile Insurance Placement Facility
(MAIPF). It ?irther authorized the Secretary of State to
promulgate rules to implement the facility and plan, 11g,
500.3171. In 2012, the Legislature shifted the obligation to
adopt and maintain the MACP from the Secretary of State to
the MAIPF, 500.31%. The Legislature originally
created the MAIPF to provide no-fault insurance to any
person who was unable to obtain insurance through ordinary
means, .ilrr?CL 5 00. 330! . The MAIPF is not a state agency; it is
a nonpro?t organization of insurer members, 
Therefore, it is not subject to the rules
governing state agencies, such?as the Freedom of Information

Lori McAllister

2019 Mich. App.

Act, 500.13?4g42. The insurers tasked with covering
losses under the MACP indirectly controlled the
administration of the MACP through their control of the
MAIPF, 500.331 0.

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

Personal Injury Protection, Medical Bene?ts

Although the Legislature authorized the Michigan
Automobile Insurance Placement Facility (MAIPF) to
establish its own Michigan Assigned Claims Plan (MACP),
MCL 500..i171{22, the Legislature did not authorize the
MAIPF to establish eligibility criteria. Rather, MCI
500.31 72(] 2 provided the eligibility criteria for the MACP: A
person entitled to claim because of accidental bodily injury
arising out of the ownership, operation, maintenance, or use
of a motor vehicle as a motor vehicle in this state may obtain
personal injury protection (PIP) bene?ts through the MACP if
no PIP is applicable to the injury, no PIP applicable to the
injury can be identi?ed, the PIP applicable to the injury
cannot be ascertained because of a dispute between 2 or more
automobile insurers concerning their obligation to provide
coverage or the equitable distribution of the loss, or the only
identi?able PIP applicable to the injury is, because of
?nancial inability. of 1 or more insurers to ?il?ll their
obligations, inadequate to provide bene?ts up to the
maximum prescribed, MCL 500.3172 1 .

    

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

Personal Injury Protection, Medical Bene?ts

The phrase a "person entitled to claim" refers to a person who
is entitled to claim personal injury protection (PIP) bene?ts
under the no?fault act. And such a person may claim against
the Michigan Assigned Claims Plan (MACP) when any of the
four following conditions are true: (1) no PIP is applicable to
the injury, (2) no PIP applicable to the injury can be
identi?ed, (3) the applicable insurance cannot be ascertained
due to a dispute among insurers, or (4) the only applicable
insurance is inadequate due to ?nancial inability. The
Legislature also disquali?ed some persons from coverage
under the MACP.

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

Page 3 of 10
LEXIS 5749, *1

Personal Injury Protection, Medical Bene?ts

In addition to establishing eligibility criteria and disqualifying
factors, the Legislature provided a framework for the
processing, timing, and review of claims under the Michigan
Assigned Claims Plan (MACP). The Legislature stated that a
person who claims personal injury protection (PIP) bene?ts
through the MACP must notify the Michigan Automobile
Insurance Placement Facility (MAIPF) of his or her claim
within the time limit for ?ling a PIP claim with an insurer: A
person claiming through the MACP shall notify the MAIPF of
his or her claim within the time that would have been allowed
for ?ling an action for PIP bene?ts if identifiable coverage
applicable to the claim had been in effect, :l'fCL 500.3174.
Once the person noti?es the MAIPF of his or her claim, it
must assign the claim in accordance with the plan
and notify the claimant of the identity and address of the
insurer to which the claim is assigned. Before assigning the
claim to a member insurer, however, the MAIPF must make
an initial determination of a claimant's eligibility for bene?ts
under the MACP and shall deny an obviously ineligible claim,
500317351 '1 . The MAIPF must notify the claimant of
the reasons for denial in writing.

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

HNI Personal Injury Protection, Medical Bene?ts

iir'CL 500.31 72(12 provides that a claim is eligible for
assignment when no personal injury protection applicable to
the injury can be identi?ed.

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

Personal Injury Protection, Medical Benefits

Nothing in the no-fault act requires a claimant to ?le a claim
with the Michigan Assigned Claims Plan (MACP)/Michign
Automobile Insurance Placement Facility (MAIPF) on a form
application or through communication signed by the claimant.
These requirements come entirely from the ?Michigan
Assigned Claims Plan" adopted, implemented and maintained
by the MAIPF. Michigan Assigned Claims Plan, 1. Section
of the Plan provides, A claim for personal injury
protection bene?ts under the MACP must be made on an
application prescribed by the MAIPF. The MAIPF requires
that the application be complete and signed by the claimant.
The application also must be accompanied by reasonable

Lori McAHister

2019 Mich. App.

proof of loss, and documentation supporting that due
diligence was exercised to establish the claimant is entitled to
claim bene?ts through the MACP, Michigan Assigned Claims
Plan, 

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

 

Personal Injury Protection, Medical Bene?ts

Mandating strict adherence to the minutiae of these notice
provisions would be inconsistent with Michigan law. Even
with the notice provisions enacted by the Legislature in the
no?fault act, substantial compliance that ful?lls the purpose of
the statute is suf?cient to preserve a claim. The purpose of
notice under ila?CL' 500.3145U 2 is simply to convey the name
and address of the claimant and the name of the person
injured and the time, place and nature of the injury. Given this
purpose, the Supreme Court found adequate notice where the
injured person never noti?ed his insurer of the accident, but
the healthcare provider submitted its bills for reimbursement
directly to the insurer. The notice provided under UCI
500.3145( 2 need not even be in writing.

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

Personal Injury Protection, Medical Bene?ts

Ultimately, the Michigan Assigned Claims Plan
(MACP)/Michign Automobile Insurance Placement Facility
(MAIPF) has only those rulemaking powers conveyed to it by
the Legislature. The powers must derive
from MCL 500.317! to 500.3179. The Legislature
authorized the board of governors to adopt an
MACP, 500317113). However, the authority to adopt a
plan does not grant the authority to establish rules governing
the processing, timing, and review of claims under the
those requirements are enumerated by statute. While
the Legislature subsequently enacted MCI, 500.3173a, giving
the Secretary of State and then the MAIPF the limited
authority to deny claims that are obviously ineligible, the
Legislature did not substantively alter the remainder of the
no-fault act to expand the authority. Notice is
reasonable proof of the fact and of the amount of loss

sustained, rl/[CL 5 00.31 42/2 2.

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

Page 4 of 10
*1

4 Personal Injury Protection, Medical Bene?ts

An insurer cannot vitiate its statutory duty to pay bene?ts in a
timely fashion through a contractually agreed upon condition
precedent; rather, once it receives reasonable proof of the fact
and amount of loss sustained, the insurer must comply with its
statutory duty to pay. Similarly, once the Michigan
Automobile Insurance Placement Facility receives reasonable
proof of the fact and amount of loss sustained by a claimant
eligible to claim bene?ts as stated in MCI. 500.3172 '1
must assign the claim in accordance with the plan,
74.

   

Business Corporate
Compliance Regulators State Insurance
Commissioners Departments Rules Regulations

Insurance Law No Fault C0verage Personal
Injury Protection Medical Bene?ts

State Insurance Commissioners 
Departments, Rules Regulations

Plan (MACP)/Michign Automobile Insurance Placement
Facility (MAIPF) authority to impose ?ling requirements
beyond those provided in the statutes. rlr?CL 5 00.31 75 includes
a list of elements that the MAIPF was required to incorporate
into the MACP when power transferred to the MAIPF from
the Secretary of State. The statutory provisions address the
transfer of claims already assigned or ?led under the
Secretary of State?s plan to the plan and the
allocation of costs during the crossover period. The purpose
of the statute was to set the start date for ?ling claims with the
new MACP, not to confer additional rulemaking authority.
The fact that no court was asked to invalidate the old
administrative rule requiring a signed application is not
dispositive and does not establish that the Secretary of State
had the statutory authority to promulgate the rule and deny
claims for noncompliance.

Insurance Law No Fault Coverage Personal
Injury Protection Medical Bene?ts

HNI Personal Injury Protection, Medical Bene?ts

The Michigan Assigned Claims Plan (MACH/Michigan
Automobile Insurance Placement Facility (MAIPF) is tasked
only with making the initial determination of eligibility of a
claim and may only deny a claim if it is obviously ineligible,

Lori McAlliste'r

2019 Mich. App.

     

.l/ftjil. 50031730 .I Eligibility is determined by the
conditions outlined in .sl'leff. 500.3172 7 not by the form in
which the notice is given. The could request
that the claimant amend the notice to comply with its form
application to make its tasks more manageable, but it could
not declare the claim to he obviously ineligible based on a
minor nonconformity.

   

Counsel: For SPECTRUM HEALTH HOSPITALS, Plaintiff-
Appellant: JOSEPH J. GAVIN.

For MICHIGAN ASSIGNED CLAIMS PLAN, MICHIGAN
AUTOMOBILE INSURANCE PLACEMENT FACILITY,
JOHN DOE INSURANCE COMPANY, Defendants-
Appellees: ROBERT D. STEFFES.

Judges: Before: SWARTZLE, P.J., and GLEICHER and M.
J. KELLY, JJ.

()piniorl

 

PER CURIAM.

The Michigan Assigned Claims Plan (MACP)/Michigan
Automobile Insurance Placement Facility (MAIPF) rejected
Spectrum Health Hospital's claim for assignment because the
injured party did not sign the assignment application. The
purpose of the MACP is to ensure prompt coverage for
persons injured in motor vehicle accidents when coverage
cannot be found or is unavailable. To achieve that end, the
has extremely limited authority to deny
claims for assignmentu?it may only deny an "obviously
ineligible" claim. The absence of a signature does not meet
that threshold. We reverse the award of summary disposition
in the favor and remand for entry of
summary disposition in favor of Spectrum.

LBACKGROUND

Robin Benoit was seriously injured on August 30, 2016, while
a passenger in a vehicle involved in a single-car motor vehicle
accident. Spectrum Health provided more than $129,000
in services to Benoit from August 30 through September 19,
2016. Benoit was not covered by any no-fault insurance
policy. Upon Benoit?s admission, Spectrum secured a "verbal
consent" witnessed by two staff members for a general
assignment of rights; however, Benoit was "unable to sign."
The hospital did not secure a more speci?c assignment to
apply to the Michigan Assigned Claims Plan
(MACP)/Michigan Automobile Insurance Placement Facility
(MAIPF) on Benoit?s behalf. Spectrum allegedly misplaced
the general assignment, then searched high and low for
Benoit, but to no avail.

Page 5 of 10
LEXIS 5749, *1

On August 10, 2017, almost a year after the accident,
Spectrum filed an "application for personal injury protection
bene?ts" with the Spectrum's agent
signed as the "preparer" and the signature line for the "injured
Person or Representative" was left blank. Spectrum directed
the to the police report, which indicated that
the driver of the vehicle did not have no-fault insurance. The
preparer answered "unknown" to several application
questions, including the names of persons with whom Benoit
lived-at the time of the accident and any vehicles owned by
Benoit at that time. The preparer also answered
"unknown" to the questions: "At the time of the accident, did
you have any auto insurance? If yes, list Name of Automobile
Insurance Company Policy Number," and "Are you ?ling
this claim because there is a dispute between two or more
insurance companies for your coverage?" The
application did include the address and phone number
provided by Benoit in the hospital and her Medicaid policy
number, as well as the vehicle operator's driver's license
number. The preparer did not know if there was "automobile
insurance in effect for this vehicle on the date of the accident"
or whether "the driver [had] automobile insurance in effect on
the date of the accident."

Spectrum provided the a "list of steps taken to
find Auto Insurance" along with the application. It described
Spectrum's attempts to contact Benoit by phone and mail, and
to uncover additional contact information for its patient by
searching various databases.

On August 14, 2017, the sent Spectrum a
generic form letter denying the application, stating:

We have received the application for bene?ts through the
which you submitted on 08/10/2017. After
careful review it has been determined that your
application is ineligible for assignment under Michigan
No Fault Act. If you have any questions regarding this
determination please contact a representative for the
operated by the 

Spectrum then hired a private investigator to continue the
search for Benoit. The investigator learned that the address
and phone number given by Benoit at the hospital actually
belonged to a personal friend who refused to speak to the
investigator. The investigator uncovered another address for
Benoit, which was a vacant lot. Benoit's former landlord had
no forwarding information. On August 25, 2017, at 2:25 
the investigator sent Benoit a private message on Facebook
and she telephoned him ?ve minutes later. Benoit indicated
that at the time of the accident, her ex-boyfriend was driving
his personal vehicle, which he had neither registered nor
insured. Benoit continued that she did not own a vehicle,

Lori McAlliste'r

2019 Mich. App.

have no-fault insurance, or live with anyone who carried no-
fault insurance at the time of the accident.

On August 28, 2017, Benoit met with the investigator in
person and signed an "assignment of rights, bene?ts and
causes of action" to permit Spectrum to seek PIP
bene?ts on her behalf. Spectrum forwarded the assignment to
the by fax on August 30, 2017, the ?nal day
to timely ?le a claim. The cover sheet informed the
that Spectrum had provided medical treatment
to Benoit following her motor vehicle accident and that
Spectrum had ?led an application for assignment on August
10. Spectrum requested, "Please assign the claim, and notify
us as to the assigned carrier."

The immediately noti?ed Spectrum that it
was "unable to process the claim you have submitted on
behalf of" Benoit and that it "require[d] additional
information in order to move forward with [its] initial
eligibility determination." The stated that the
matter had been referred to its "legal counsel for further
handling which may include, but is not limited to,
examinations under oath of the appropriate individuals."

That same day, Spectrum ?led suit for mandamus and
declaratory relief, asserting that the had a
clear legal and ministerial duty to assign the claim to a no?
fault insurer under rltl'CL 500.3174, which, at the time of
Spectrum's application and suit, provided:

A person claiming through the shall notify the
of his or her claim within the time that
would have been allowed for ?ling an action for 
bene?ts if identi?able coverage applicable to the claim
had been in effect. The shall assign
the claim in accordance with the plan and notify the
claimant of the identity and address of the insurer to
which the claim is assigned. . . . 500.3.174, as
- amended by 2012 PA 204 (emphasis 

   

The bucked discovery attempts, contending
that Spectrum?s application for assignment was facially
de?cient as Spectrum made inadequate efforts before ?ling to
determine whether Benoit had available insurance coverage. It
announced its intent to ?le a motion for summary disposition
"to draw a line in the sand to prevent these efforts at obtaining
assignment with little more than the most bare of
information.? A subsequent summary disposition motion
added that Spectrum did not have an independent right to
assert a claim in its own name after (fl?ovenam Cir. Inc: 
State Farm Mm Auto ins Co. 500 Mich 191?; 895 Alli/?24 490

 

1The statute was amended by 2019 PA 21, effective June 11, 2019.

Page 6 of 10
LEXIS 5749, *4

(20.2 71.2 The further contended that the
application was invalid because although Spectrum signed it
as the preparer, no one signed as the claimant or claimant's
representative as required by the plan's internal operating
procedures. Speci?cally, Michigan Assigned Claims
Plan, provides that claim for 
bene?ts under the Plan must be made on an application
prescribed by the and that the application "must be
complete and signed by the claimant," by "a person
suffering accidental bodily injury arising out of the
ownership, operation, maintenance or use of a motor vehicle
as a motor vehicle in this state."

Spectrum replied that it was entitled to summary disposition
because the was only authorized to reject an
application if from the outset the claim was obviously
ineligible under the no-fault act. The standard did not require
the applicant to conclusively prove that no insurance was
available, only that it made a good-faith effort to determine
whether insurance was available. With its response, Spectrum
included an af?davit from Benoit, avowing that she was
merely a passenger in the vehicle involved in the accident and
had no ownership or control over it. the best of [her]
knowledge, neither the vehicle's driver nor the vehicle itself
was covered by a no-fault policy at the time of the accident,"
Benoit asserted. Benoit continued that she did not have a no-
fault policy or reside with relatives maintaining policies
at that time.

At the hearing on the counter motions for summary
disposition, the agreed that it now had
suf?cient information that Benoit did not have insurance
available to her at the time of the accident. However, it
continued to insist that the application was invalid at its
inception based on the absence of Benoit?s signature as
claimant.

The circuit court agreed with the and
summarily dismissed Spectrum's action. The court
acknowledged that Spectrum secured an assignment from
Benoit alter it ?led its application. However, the court
reasoned, the focus was on the application and whether it was

 

2The Michigan Legislature "overruled" Covenant by amending art;
500.3112 to give healthcare providers the right to ?le a direct claim
or cause of action against an insurer for reimbursement for services
provided to an injured person. See 2019 PA 21, effective June 11,
2019. As such, the argument in this regard is no
longer valid.

 

3The "Michigan Assigned Claims Plan" is available at


Final.pdf> (accessed September 17, 2019).

Lori McAlIister

2019 Mich. App.

valid when originally ?led. The plan rules required that the
application be signed by the claimant or her representative
and Spectrum did not Sign in that capacity. And Spectrum did
not ?le a new or amended application after locating Benoit.
The court concluded, "I'm constrained to agree that while it's
a technical point, the law is full of technicalities, and in this
case, the statute requires a person entitled to claim because of
accidental bodily injury to file the request for the to
assign a carrier, and that person did not do so." The 

application was therefore fatally "defective," the court ruled.

The circuit court denied Spectrum's subsequent motion for
reconsideration. Spectrum now appeals.

II. STANDARD OF REVIEW

We review de move a circuit court's resolution of a
summary disposition motion. Zalrcr Miofkct, 300 Mich App.
132, .139; 832 266 (2013). A motion under 
"tests the factual support of a plaintiffs claim."
Walsh 1? Taylor, 263 Eiffel; Am) 618. 621; 689 Nit/251 506
(20043. Summary disposition is appropriate under subsection
(C311 02 "if there is no genuine issue regarding any material
fact and the moving party is entitled to judgment as a matter
of law." West Gen i?ti?otors Corp, 469 Mic/'7 177, [83; 665
NiiQd 468 (20032. In reviewing such motions, we "consider[]
the pleadings, admissions, af?davits, and other relevant
documentary evidence of record in the light most favorable to
the nonmoving party to determine whether any genuine issue
of material fact exists to warrant a trial." Whisk .263 Mich
genuine issue of material fact exists when the
record, giving the bene?t of reasonable doubt to the opposing
party, leaves open an issue upon which reasonable minds
might differ." West, 46M'ich at 183.

 

Lag-?33] We also review de novo underlying issues of
statutory interpretation. Joseph 1; Auto Club Ass-h, 491
Mich 200. 205,- 815 412 (20.12). The primary goal of
statutory interpretation is to discern the intent of the
Legislature. Id. The best indicator of the Legislature's intent is
a plain reading of the statutory language. Id. at .205w
"If the statutory language is unambiguous, we presume
that the Legislature intended the meaning that it clearly
expressed, and further construction is neither required nor
permitted." Id. at 206'.

 

GUIDING LEGAL PRINCIPLES

In 1973, the Legisiature enacted the no?fault
insurance act, .il/[CL 500.310] of sari, "to provide victims of
motor vehicle accidents assured, adequate, and prompt
reparation for certain economic losses." Shavers .xltz?omev
General. 402 Eli/fie}: 554. 578?579; 267 Nii?2d 73 It
established the no-fault scheme, in part, to rectify problems

Page 7 of 10
LEXIS 5749, *8

with the tort-based compensation scheme, which frequently
"denied bene?ts to a high percentage of motor vehicle

To achieve its goals, the Legislature required the
"owner or registrant of a motor vehicle required to be
registered in this state" in relevant part to purchase PIP
insurance to cover injuries to persons caused by motor
vehicles. .ilafgjl. 500.310] 11. The Legislature provided that the
policies required under MCI. 500.3101 i; must cover more
than just the named insured; policies must also cover injuries
incurred in motor vehicle accidents by the named individual's
spouse and any relative domiciled in the same household.
500.3114 1' . When an injured person is not covered by
his or her own insurance policy or a policy owned by a
relative, the Legislature provided that the insurers of
the various vehicles involved or occupied during the accident,
or the insurers of persons operating such vehicles, must cover
the loss. See MCI. 5 00. 31? I 500.3115. 
Even where there does not appear to be any applicable PIP
coverage, the Legislature provided that an injured person
could obtain PIP bene?ts through the MACP. See Mg;
500.31 72{1). All seif-?insurers or insurers writing insurance as
provided by the no-fault insurance act are required to
participate in the MACP, with the associated costs being
"ailocated fairly among insurers and self?insurers." Mg;
500.31?1f22. In this way, the Legislature ensured that every
person injured in a motor vehicle accident would have access
to PIP bene?ts unless one of the limited exclusions in the no?
fault act apply, and the losses suffered by uninsured persons
injured in motor vehicle accidents could be indirectly passed
on to the owners and registrants of motor vehicles through
insurance premiums.

 

 

The Legislature initially required the Secretary of
State to "organize and maintain" the See
1972 PA 345. It further authorized the Secretary of State to
"promulgate rules to implement the facility and plan." 
500.317], as enacted by 1972 PA 345. In 2012, the
Legislature shifted the obligation to adopt and maintain
the MACP from the Secretary of State to the MAIPF. MILL
500.3] 2, as amended 2012 PA 204. The Legislature
originally created the MAIPF to provide no?fault insurance to
any person who was unable to obtain insurance through
ordinary means. See Wtj300i301 The MAIPF is not a
state agency; it is a "nonprofit organization of insurer
members." MCI. 500.134 6 Therefore, it is not subject to
the rules governing state agencies, such as the freedom of
[Hfi?lf?mt?lfitm Act. MCL 500.1344). After the passage of 2012
PA 204, the insurers tasked with covering losses under the
MACP indirectly controlled the administration of the MACP
through their control of the MAIPF. Mt'iL 500.3310
(establishing a board of governors to govern the MAIPF and

 

Lori McAllister

2019 Mich. App

providing that seven of the li governors were to be elected as
provided in the plan of operation and four were to be selected
by the insurance commissioner).

Mfg] Although the Legislature authorized the MAIPF to
establish its own MACP, 50031711921, the Legislature
did not authorize the MAIPF to establish eligibility criteria.
Rather, 500.3172 provided the eligibility criteria for
the MACP:

 

A person entitled to claim because of accidental bodily
injury arising out of the ownership, operation,
maintenance, or use of a motor vehicle [*13l as a motor
vehicle in this state may obtain bene?ts through
the if no is applicable to the injury, no
applicable to the injury can be identi?ed, the 
applicable to the injury cannot be ascertained because of
a dispute between 2 or more automobile insurers
concerning their obligation to provide coverage or the
equitable distribution of the loss, or the only identi?able
applicable to the injury is, because of ?nancial
inability of 1 or more insurers to ful?ll their obligations,
inadequate to provide benefits up to the maximum
prescribed. . . . [ll/[CL 500. 3172(1], as amended 2012 PA
204.]

The phrase a "person entitled to claim" refers to a
person who is entitled to claim PIP bene?ts under the no?fault
act. Allstate Ins Co State Farm Mitt Auto Ins Co, 32} Mini?
A Dr) 5413, 558-559; 90.9 W251 495 (2017). And such a person
may claim against the MACP when any of the four following
conditions are true: no is applicable to the injury,
(2) no applicable to the injury can be identi?ed, (3) the
applicable insurance cannot be ascertained due to a dispute
amoug insurers, or (4) the only applicable insurance is
inadequate due to ?nancial inability." WA {more Mam Ham 
Alfie}: Assigned Claims Plan, 321? Mich App 15.9, 170; 909
Nil/?25? 38 20.17 . The Legislature also disquali?ed some
persons from coverage under the MACP. See MCL 500.3} 73
(stating that a person who falls within a limitation or

 

disquali?ed from receiving bene?ts under the MACP as
well).

In addition to establishing eligibility criteria and
disqualifying factors, the Legislature provided a framework
for the processing, timing, and review of claims under the
MACP. The Legislature stated that a person who claims PIP
bene?ts through the MACP must notify the MAIPF of his or
her claim within the time limit for ?ling a PIP claim with an
insurer: person claiming through the shall notify
the of his or her claim within the time that would
have been allowed for ?ling an action for bene?ts if

Page 8 of 10

. LEXIS 5749, *12

identi?able coverage applicable to the claim had been in
effect." Hg]: 500.3! 74, as amended by 2012 PA 204. Once
the person noti?es the MAIPF of his or her claim, it must
assign the claim in accordance with the plan and
notify the claimant of the identity and address of the insurer to
which the claim is assigned." Id. Before assigning the claim to
a member insurer, however, the MAIPF must "make an initial
determination of a claimant's eligibility for bene?ts under the
MACP and shall deny an obviously ineligible claim.? 
500.31 7364-1 2, as enacted by 2012 PA 204.4 The MAIPF must
notify the claimant of the reasons for denial 
in writing. Id.

IV. NOTICE

Spectrum gave the the notice required under
MCI 500.3174. Spectrum ?led the application for assignment
within one year as required by 500.3145. The claim
described in the August 10, 2017 application was not
"obviously ineligible" for assignment as contemplated in
MCI, rlefCL provides
that a claim is eligible for assignment when "no 
applicable to the injury can be identi?ed." By indicating that
it was "unknown" to Spectrum whether Benoit, her resident
relatives, the driver, or the involved vehicle possessed a no-
fault policy, Spectrum communicated that applicable PIP
bene?ts could not be identi?ed. The was then
required by MCL 500.3174 to assign the claim.

 

The did not assign the claim.
Indeed, it did not even comply with 500,317.30 1" 
notifying Spectrum of its denial. The form letter did not cite
the reasons for rejection.

 

By the August 30, 2017 deadline for providing notice of its
claim, Spectrum de?nitively learned that the claim was
eligible for assignment under the ?rst condition of ill?CL
500.3] 72(12: there was "no . . . applicable to the injury."
Spectrum had located Benoit and con?rmed that no no-fault
insurance policy covered her injury. Benoit did not
own a car or possess insurance, she was not domiciled with
insured relatives, and her ex-boyfriend, the driver, had neither
registered nor insured his vehicle. Spectrum then forwarded
Benoit's assignment of rights to the 

Spectrum noti?ed the of the grounds
supporting eligibility and the right to assignment by also
?ling suit on August 30. This Court implicitly held in
Mendelson Orthopedics PC v. Everest Nat?l Ins. C0., Mich

 

4 The passage of 2019 PA 21, effective June 11, 2019, added several
requirements to 500317351, which are not applicable to this
2017 case.

Lori McAliister

2019 Mich. App

App (Docket No. 341013, 2019), 2019 
Am). 2603 at that a claimant can provide timely
notice as required by rl/fCL 500.3174 and 1&1; 
by ?ling a lawsuit. Spectrum's August 30, 2017 complaint
listed the amount of the claim, described that Benoit did not
maintain a nonfault insurance policy and was not domiciled
with an insured relative, and indicated that the sole involved
vehicle was not insured. Even if the earlier notice failed, upon
receiving notice of the lawsuit, Spectrum's claim could not be
deemed "obviously ineligible" and the was
duty-bound to assign it to an insurer.

V. SIGNATURE REQUIREMENT

 

that
for

The continues to argue, however,
Spectrum's application was "obviously ineligibie"
assignment because its rules mandated that Benoit or her
representative sign the application. The 
contends that the claim remained "obviously ineligible"
because Spectrum never submitted an amended application
with a signature for the claimant or her representative.

We start by noting that?MFF] nothing in the no~fault act
requires a claimant to ?le a claim with the on
a form application or through communication signed by the
claimant. These requirements come entirely from the
"Michigan Assigned Claims Plan" "adopt[ed}, implement[ed]
and maintain[ed]" by the MAIPF. Michigan Assigned Claims
Plan, 1. Section of the Plan provides, claim for
bene?ts under the must be made on an
application prescribed by the The MAIPF requires
that the application "be complete and signed by the claimant."
Michigan Assigned Claims Plan, The
application also "must be accompanied by reasonable proof of
loss, and documentation supporting that due diligence was
exercised to establish the claimant is entitled to claim bene?ts
through the Michigan Assigned Claims Plan, 


Mandating strict adherence to the minutiae of these
notice provisions would be inconsistent with Michigan law.
Even with the notice provisions enacted by our Legislature in
the no-fault act, substantial compliance that fui?lls the 
purpose of the statute is suf?cient to preserve a claim.
Zurich Am. Ins. 500 5412011. 44. 52; 893
N. W251 322 (20172. The purpose of notice under MEL
5003145112 is simply to convey "the name and address of the
claimant and . . . the name of the person injured and the time,
place and nature of the injury." Perkovic, 500 til/[felt at 53?.
Given this purpose, the Supreme Court found adequate notice
where the injured person never noti?ed his insurer of the
accident, but the healthcare provider submitted its bills for
reimbursement directly to the insurer. M. a! 4.7148. The notice
provided under 500.3145 I need not even be in Writing.

 

Page 9 of 10

. LEXIS 5749, *16

Linden Citizens Ins Co of'zlmerz'ca. 308 ri?e/7 Am) 89. .95;
862 ,Ni?iQd 438 2014 .

     

Ultimately, the has only those
ruiemaking powers conveyed to it by the Legislature. See
Consumers .vaer Co 12 Public: Scerv Comm. 460 Mich 148,
155?156; 596 Nit/M 126 (.1999). The 
powers must derive from 500.317] to MCI. 500.3179.
The Legislature authorized the board of governors
to adopt an MACP. MCL 500.3] 7! 3 However, the authority
to adopt a plan does not grant the authority to establish rules
governing the processing, timing, and review of claims under
the those requirements are enumerated by statute.
Jackson Secretary of-S?Zate, 1?05 ,l?ld?r'ch App 132, 
3?06 Nlii?Za? 422 (1981). While the Legislature subsequently
enacted Mtf'fL 500.31.73a, giving the Secretary of State and
then the MAIPF the limited authority to deny claims that are
"obviously ineligible," the Legislature did not substantively
alter the remainder of the no-fault act to expand the
authority. Under the act, notice is "reasonable proof
of the fact and of the amount of loss sustained." MEL
500.3142(22. As our Supreme Court has stated in an
anaiogous context, an insurer cannot vitiate its
statutory duty to pay bene?ts in a timely fashion through a
contractually agreed upon condition precedent; rather, once it
receives reasonable proof of the fact and amount of loss
sustained, the insurer must comply with its statutory duty to
pay. See Cm: State Farm Mu: Auto Ins Co, 466 l?kffc/t 588.
600; 648 59.] (2002). Similarly, once the MAIPF
receives reasonable proof of the fact and amount of loss
sustained by a claimant eligible to claim bene?ts as stated in
.MCL it must assign the claim in
accordance with the plan." MCL 500.3] 74.

 

 

Contrary to the contention, Milt] MQL
500.3175 did not grant it authority to impose filing
requirements beyond those provided in the statutes. Mg;
500.3175 includes a list of elements that the MAIPF was
required to incorporate into the MACP when power
transferred to the MAIPF from the Secretary of State. The
statutory provisions address the transfer of claims already
assigned or ?led under the Secretary of State's plan to the
MAIPF's plan and the allocation of costs during the crossover
period. The purpose of the statute was to set the start
date for ?ling claims with the new MACP, not to confer
additional rulemaking authority. The existence of similar
?ling requirements in the administrative rules promulgated by
the Secretary of State under the former MACP also does not
control the outcome here. The fact that no court was asked to
invalidate the old administrative rule requiring a signed
application is not dispositive and does not establish that the
Secretary of State had the statutory authority to promulgate
the rule and deny claims for noncompliance.

Lori McAIlister

2019 Mich. App. LEXIS 5749, *20

The is tasked only with making the
initial determination of eligibility of a claim and may only
deny a claim if it is "obviously ineligibic.? 
Eligibility is determined by the conditions
outlined in 500. 3172(12, not by the form in which the
notice is given. The could request that the
claimant amend the notice to comply with its form application
to make its tasks more manageable, but it could not declare
the claim to be obviously ineligible based on a minor
nonconformity. As Spectrum's claim was not "obviously
ineligible," the was required to assign it to a
member insurer.

As the has conceded that the documentation
presented by Spectrum during this suit supports
assignment of the claim to a member insurer, there is no
ground to remand this matter for further consideration.
Accordingiy, we reverse the award of summary disposition in
the favor and remand for entry of summary
disposition in favor of Spectrum. We do not retain
jurisdiction.

Brock A. Swartzle
Elizabeth L. Gleicher

Michael J. Keliy

Page 10 of 10

 

End of Document

Lori McAllister