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Court of Appeals Reaffirms Enlightenment Values In Landmark No-Fault Decision

On Behalf of | May 4, 2021 | Firm News

Just before Labor Day weekend Court of Appeals Judge Jane Markey issued a landmark authored published unanimous decision of the Michigan Court of Appeals interpreting the Michigan No-Fault Act. The opinion provides a welcome road map for a path through troubled times. It reaffirms the fundamental principles of our constitutional system of government. These are based on the twin pillars of Enlightenment thought and a constitutional system of mixed government and common law. This constitutional system evolved in England in an unwritten form and was later reinvented in America in written constitutions, the first of their kind in world history.

Judge Markey interpreted and applied the text of the statute according to its plain meaning, paying due respect to stare decisis but calling out obiter dicta for what it is and refusing to allow obiter dicta to divert her from the authority of the text itself.

The case is Spectrum Health Hosps. v. Farm Bureau Gen. Ins. Co. of Mich., No. 351018 (Mich. Ct. App. Jan. 28, 2021).

The issue involved what evidence is relevant to whether a health care provider’s gross charge was in excess of a reasonable charge within the meanings of sections 3107(1) (a) and 3157 of the no-fault act. Although the case arises under 1972 PA 294, it retains its importance for the interpretation of 2019 PA 21 for two reasons.

First and most simply, the identical language interpreted in the opinion remains in the new statute as the default and umbrella condition.

Second and on a deeper level, the opinion points the way to the future and the application of the reform statute.

Farm Bureau argued that health care finance data in the public domain and in common use in the industry relative to what the provider is actually paid in the health services market for the same treatment, and the cost to the provider of providing the treatment, were relevant to the issue of the reasonableness of gross charge. Spectrum denied that the data was relevant citing Mercy Mt Clemens Corp v Auto Club Ins Ass’n, 219 Mich App 46, 54-55; 555 NW2d 871 (1996):

Defendant sought to obtain information regarding payments accepted by plaintiffs from third-party payers such as Medicare, Medicaid, worker’s compensation, Blue Cross, HMOs, and PPOs in order to prove that plaintiffs’ customary charges for medical services were in fact significantly lower than the amounts they charged defendant. Reimbursement from Medicare, Medicaid, and worker’s compensation insurance is set by statutory and regulatory limitations. Reimbursement from Blue Cross, HMOs, and PPOs is set by contracts between those entities and health-care providers. Under Munson, Hofmann, Hicks, and Johnson, such information is not admissible to prove the customary charge that defendant must pay under § 3157. As stated in Hofmann, supra, p 109, “a trial court would not be justified in using amounts that are subject to third-party contractual or statutory limitations as a benchmark for determining the extent of a health-care provider’s customary charge.” In light of this precedent, we conclude that the circuit court did not err in finding that the information sought on discovery was not relevant to whether the amounts charged by plaintiffs met the requirements of §§ 3107 and 3157 of the no-fault act and that it was not reasonably calculated to lead to the discovery of admissible evidence. The circuit court did not abuse its discretion by granting plaintiff’s requested protective order.

Judge Markey wrote and the Court of Appeals ruled:

Very much like Munson, the decision in Mercy Mt Clemens mentioned reasonable charges and acknowledged that charges must be reasonable. Id. at 52. But, like Munson, the analysis then focused solely on the question of customary charges and whether third-party payments were relevant to determining a customary charge in cases not involving insurance. Id. at 52-55. Missing from Mercy Mt Clemens was a recognition that customary charges are not necessarily reasonable and that an insurer need not automatically pay a customary charge. Rather than assume Mercy Mt Clemens answered the reasonableness question presented in the instant case, we construe that decision as simply having resolved the customariness issue that it actually addressed and decided. And any incidental reference to “reasonable” in Mercy Mt Clemens was nothing more than dictum. See Aaron, 409 Mich at 722. Consequently, like the other cases cited by Spectrum, Mercy Mt Clemens does not provide the answer to the question in this case. [Spectrum Health Hosps. v. Farm Bureau Gen. Ins. Co. of Mich., No. 351018 (Mich. Ct. App. Jan. 28, 2021)2020 Mich. App. LEXIS 5804, at *47-48 (Ct App, Sep. 3, 2020)]

The recognition and calling out of obiter dicta is a big deal. At the end of the day, Spectrum’s argument in support of the evidentiary ruling of the trial court was that obiter dicta from the court of appeals are superior in authority to the text of the statute. Hence, Spectrum could at one and the same time concede that the ratio decidendi of the decision in Hofmann v Auto Club Ins Ass’n, 211 Mich App 55; 535 NW2d 529 (1995) had nothing to do with the reasonable charge issue, yet pluck out of the opinion the sentence “ACIA’s reliance on the amount that was ‘paid’ by BCBSM, as opposed to the amount that Plaintiffs ‘charged,’ is unwarranted,” and argue as if this sentence itself were contained in the statute.  Indeed, according to Spectrum’s argument, remarks in an opinion of an appellate court are binding on lower courts and subsequent panels of the same court under the rule of stare decisis, to the extent that trial courts and later appellate courts are bound to follow, not the text of the statute, but the text of the obiter dicta.

At the end of the day Spectrum’s conception of obiter dicta and stare decisis violates separation of powers under Michigan Constitution, art. 3, §2. It is axiomatic under separation of powers that in the case of applying a statute, the statutory language must be enforced according to its plain meaning, and cannot be judicially revised or amended. An exception to the rule is where by the ratio decidendi of a prior decision of a higher court or a precedentially binding decision of a Michigan appellate court of the same level, the judicial branch has fixed the interpretation of the statute by stare decisis. Under the common law rule the ratio decidendi of a prior decision was binding on subsequent courts but obiter dicta were not. The common law in this and other respect was incorporated into the Michigan Constitution of 1850.

According stare decisis effect to obiter dicta, thereby elevating obiter dicta in authority over the text of the statute itself, is an infraction of separation of powers by the judicial branch into the constitutional sphere of the legislature.

“Judgments ought to be ever conformable to the letter of the law. Were they to be the private opinion of the judge, people would then live in society without exactly knowing the nature of their obligations.” Such were the values expressed by the great Enlightenment legal philosopher Montesquieu. In modern times the basis of the English and American systems of law in Enlightenment thought has been challenged by the legal skepticism school of legal philosophy, which encourages judges to pay less attention to the values of separation of powers, judicial self-restraint, and a government of laws and not men and more attention to judicial prerogative.

Philosophers may argue whether the Enlightenment thinkers or the legal skeptics are right about the reality of values. The fact remains that the constitutional systems of the United States and the State of Michigan are based on Enlightenment values. The great mass of citizens who are governed under those systems accept those values. Those who accept office under those systems take an oath to uphold the same values.

We would be closing our eyes to reality if we did not recognize in our society that old paradigms are being tested and new paradigms are being born. The American legal system with an honorable record behind it has a crucial and necessary role to play in this process. But its greatest contribution will come from adhering to its foundational values in Enlightenment thought and common law practice.

Jack Hoffman leads the no-fault practice group at Kuiper Kraemer PC. His practice focuses on provider charging issues under the Michigan no-fault act. He can be reached at [email protected].

Devillers v Auto Club, 473 Mich 562, 582; 702 NW2d 539, 554 (2005).

This point is covered in MCR 7.215(J)(1) & (2). “(J) Resolution of Conflicts in Court of Appeals Decisions.

(1) Precedential Effect of Published Decisions. A panel of the Court of Appeals must follow the rule of law established by a prior published decision of the Court of Appeals issued on or after November 1, 1990, that has not been reversed or modified by the Supreme Court, or by a special panel of the Court of Appeals as provided in this rule.

(2) Conflicting Opinion. A panel that follows a prior published decision only because it is required to do so by sub rule (1) must so indicate in the text of its opinion, citing this rule and explaining its disagreement with the prior decision. The panel’s opinion must be published in the official reports of opinions of the Court of Appeals.”

Michigan is a stare decisis jurisdiction in which the ratio decidendi sets a precedent for the future. Morse Chain Co v Formsprag Co, 380 Mich 475, 483; 157 NW2d 244 (1968).

“It is a well-settled rule that any statements and comments in an opinion concerning some rule of law or debated legal proposition  not necessarily involved nor essential to determination of the case in hand are, however illuminating, but obiter dicta and lack the force of an adjudication.” Case, supra, 220 Mich at 382-83. “Obiter dicta does not create a binding rule of law.” Luster, supra, 239 Mich App at 730 n 5.

Michigan Constitution of 1850, Schedule, Sec. 1 “The common law and the statute laws now in force, not repugnant to this constitution, shall remain in force until they expire by their own limitations or are altered or repealed by the legislature.” See also Const. 1963, art. III, § 7, “The common law and the statute laws now in force, not repugnant to this constitution, shall remain in force until they expire by their own limitations, or are changed, amended or repealed.”