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A Better Partnership
July 22, 2009

MSC Opinion: U.S. Fidelity Ins. & Guaranty Co. v. Michigan Catastrophic Claims Ass’n (on rehearing)

On July 21, 2009, the Michigan Supreme Court issued its latest opinion in U.S. Fidelity Ins. & Guaranty Co. v. Michigan Catastrophic Claims Ass'n, Nos. 133466, 133468. This opinion explicitly reverses the Court's earlier ruling on these same cases, published on December 29, 2008. Our blog post discussing that initial opinion can be found here. Several weeks after the initial opinion, and after Justice Hathaway replaced Chief Justice Taylor on the Court, the Michigan Supreme Court granted rehearing in the case, but declined to require any additional briefing or argument on the case. Our post on that decision can be found here. In December 2008, the Court concluded where the No Fault Act requires the Michigan Catastrophic Claims Association ("MCCA") to indemnify member insurers “for 100% of the amount of ultimate loss sustained under personal protection insurance coverages in excess of [$250,000].” MCL 500.3104(2), and where the member insurer’s policy to claimants only covers “reasonable charges,” then MCCA has the authority to refuse to indemnify member insurers unreasonable charges paid to claimants. In this latest opinion, the Court reached the opposite conclusion and found that the MCCA does not have the authority to refuse to indemnify member insurers for unreasonable charges. As with December 2008 opinion, this was a 4-3 decision.

In our post on the initial December 2008 opinion, we suggested, "[t]his decision was one of two 4-3 decisions issued in the waning days of 2008 in which the out-going Chief Justice was in the majority. Given the incoming justice’s self-stated jurisprudential differences with her predecessor, it may well be that this victory for the MCCA will be short-lived." This has turned out to be accurate. Although the facts and legal arguments have remained the same between December 2008 and July 2009, the result in the case has changed. In his dissent, Justice Young argues that the December 2008 ruling should not have been disturbed because no party had presented a material issue of fact or law that was not previously considered. The majority disagreed, arguing that if the majority of a newly composed court believes that a challenged opinion was incorrect, then those justices have the authority to grant rehearing.

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