Michigan Decisions

Michigan Decisions

August 2008
An IRO's Recommendation is Not Binding Upon the Commissioner When a patient is denied coverage under his health plan, he has the option of requesting an external review under the Patient's Right to Independent Review Act ("PRIRA"). MCL 550.1901 et seq. Under MCL 550.1911, the Commissioner of the Office of Financial and Insurance Regulation (the "Commissioner") has discretion to accept or reject a request for an external review. MCL 550.1911(3). If an accepted request involves purely contractual provisions, the Commissioner has discretion to conduct his own external review. MCL 550.1911(7). If, however, the request involves issues of medical necessity or clinical-review criteria, the Commissioner must assign an independent review organization ("IRO") to conduct the external review. MCL 550.1911(6). The IRO provides a written recommendation to the Commissioner on whether to uphold or reverse the adverse determination. Id. On April 23, 2008, the Michigan Supreme Court held that the Commissioner is not bound by an IRO's recommendations on issues of medical necessity and clinical-review criteria. Ross, 480 Mich at 177. This decision reversed the lower Court of Appeals which improperly held that that the IRO would be the final authority on issues of medical or clinical-review criteria, while the Commissioner would be the ultimate authority on purely contractual issues. The Michigan Supreme Court stated: [The Court of Appeals'] construction essentially created a judicially defined bifurcated system of review in which the IRO would be the final authority on issues of medical or clinical-review criteria, while the Commissioner would be the ultimate authority on purely contractual issues. Such a construction was not supported by the plain and unambiguous language of [PRIRA] itself. Given the all-encompassing, comprehensive scheme set forth in PRIRA, the absence of such a bifurcated review process in the statute convincingly demonstrates that the Legislature did not intend that the review authority be bifurcated. In fact,...the opposite intent is demonstrated by the frequent use of the term "recommendation," as well as by MCL 550.1911(16)(b), which provides that the Commissioner must give the principal reasons why he or she did not follow the IRO's recommendation. Ross, 480 Mich at 174. Accordingly, the Court held that "an IRO's recommendation concerning whether to uphold or reverse a health carrier's adverse determination is merely a recommendation and is not binding on the Commissioner." Id. at 177. Michigan's Constitution Prohibits Public Employers From Providing Health Insurance Benefits to Same-Sex Domestic Partners The Michigan Supreme Court has held that the 2004 marriage amendment, Const. 1963, art. 1, § 25, which states that "the union of one man and one woman in marriage shall be the only agreement recognized as a marriage or similar union for any purpose," prohibits public employers from providing health-insurance benefits to their employees' qualified, same-sex domestic partners. Several public employers, including state universities and various city and county governments, had policies or agreements in effect that extended health-insurance benefits to their employees' qualified, same-sex domestic partners. The Court stated that the "pertinent question...is whether the public employers are recognizing a domestic partnership as a union similar to marriage," Nat'l Pride at Work, Inc, 481 Mich at 533. When two people enter a domestic relationship, they join or associate together for a common purpose, and, under the domestic partnership policies at issue here, legal consequences arise from that relationship in the form of health-insurance benefits. Therefore, a domestic partnership is most certainly a union." Id. at 534. Continuing, the Court noted that the public employers are in fact attaching a legal consequence to the relationship and, as a result, the employer is "clearly 'recognizing' that relationship." Id. at 537. The Court therefore concluded that health-insurance benefits do in fact constitute a benefit of marriage, and that public employers impermissibly recognize an agreement when they provide health-insurance benefits to domestic partners on the basis of a domestic partnership. Id. at 538-39. No-Fault Insurers' Liability Depends Upon Language of Health Insurers' Plan On March 20, 2008, the Michigan Court of Appeals held that an auto-insurers' liability for treatment resulting from an accident depends upon the interpretation of the injured individual's health insurance plan. The injured individual, Justin Rooney, had both medical coverage and no-fault coverage. The no-fault policy provided for coordinated benefits between it and the medical insurer. Specifically, pursuant to the coordination of the coverages, the no-fault insurer was a secondary insurer and was not required to pay services covered by the primary insurer. The court recognized that "[i]n general, when an insured chooses to coordinate benefits, the health insurer is primarily liable and the no-fault insurer is secondary." Institute for Inner Res, 2008 WL 747139 at *1. After an accident, Rooney had a "neuron-biofeedback" medical treatment performed; his health insurer only covered the treatment if it was performed by an MD or a DO - neither of which performed the treatment in this case. As a result, the invoices were submitted to the no-fault insurer. The no-fault insurer denied payment because Rooney failed to obtain the benefits available through his health insurer by complying with his health insurer's requirements for payment for the treatment. However, neither party could conclusively establish whether the primary insurer covered a neuron-biofeedback medical treatment. As a result, the case was remanded to determine the extent of the health insurer's provided coverage. Determining such coverage, according to the court, determines whether or not the no-fault insurer will be liable. Self-Funded ERISA Medical Health Plans Trump Michigan Law The federal court for the Eastern District of Michigan recently ruled that a self-funded ERISA medical health plan trumps Michigan law when determining which insurer is liable for payments when each insurer's policy contains a competing coordination of benefits clause. Typically in Michigan, a no-fault insurer is secondarily liable for insurance when there is another form of health or accident coverage and both insurers look to escape liability through competing coordination of benefits clauses. Mack, 537 F Supp 2d at 927; MCL 550.3109a. However, a court must consider whether the health insurance coverage is governed by ERISA and, in turn, whether Michigan no-fault law is preempted under ERISA. Id. at 928. Specifically, "'self-funded ERISA plans are exempt from state regulation insofar as that regulation relate[s] to the plans.'" Id. at 928 (quoting FMC Corp v Holliday, 498 US 52, 61 (1990)). In Mack, the plaintiff suffered an injury resulting from an automobile accident, and filed a claim with both her employer's medical insurer and with her auto insurer. Both insurers denied coverage each asserting that the other was liable because each policy contained a coordination of benefits clause. However, the plaintiff's employer's medical insurance plan was self-funded and, thus, exempt from state regulation. As a result, Michigan's general rule that a no-fault insurer is secondarily liable for insurance when there is another form of health or accident coverage did not apply. The Court concluded that "[a]lthough Michigan law usually subordinates no-fault coverage to ERISA plans, the exception to that rule occurs when the ERISA plan is self-insured as it is in this instance" and, thus, the employer's medical plan's coordination of benefits clause clearly subordinated its coverage to the coverage of the no-fault insurer. Id. at 929.
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