Michigan Supreme Court to Consider Blue Cross Blue Shield of Michigan’s Authority to Use Capital Funds to Purchase Private Insurance Companies

The Michigan Supreme Court granted the Attorney General’s Application for Leave to Appeal in Michigan Attorney General v. Blue Cross Blue Shield of Michigan to consider two issues: Whether BCBSM could use its own funds to subsidize the Accident Fund, a corporation formed by BCBSM as a “wholly-owned, for-profit stock insurance subsidiary” and whether BCBSM ran afoul of its legislative authority when the Accident Fund thereafter purchased three private, for-profit insurance companies.

Also at issue in the Court of Appeals was whether the insurance commissioner’s interpretation of the statute in favor of BCBSM was entitled to deference.  The Court of Appeals opinion engages in a lengthy discussion of the doctrine of primary jurisdiction, which, in some cases, divests a court of subject-matter jurisdiction over certain aspects of issues that should properly be decided by the administrative agency with the expertise to address them.  The opinion cites and quotes from Travelers Ins v. Detroit Edison, a Michigan Supreme Court opinion that I worked on when I was a clerk at the Supreme Court for Justice Markman.

While the Court of Appeals concluded that the trial court improperly referred to the insurance commissioner to decide the issue, the Court of Appeals nonetheless concludes that BCBSM did not improperly transfer funds to the Accident Fund and therefore the Accident Fund did not run afoul of statutory authority in purchasing the private insurance companies.  A partial concurrence and dissent by Judge Bandstra disagreed with the majority and opined that the $125 million capital contribution to the Accident Fund ran afoul of the statutory authority and that there was no need to remand to the trial court for it to reconsider the issue.  This case will likely have significant implications for BCBSM and will perhaps shed some light on the insurance commissioner’s authority to regulate it.

Here is the Court of Appeals Opinion:  AG v BCBSM (Court of Appeals Opinion) and the Supreme Court’s Grant Order:  AG v BCBSM (Grant Order).

About cjtucker06

Owner of law firm since July 2014; Handles all types of appellate matters and assists other lawyers with complex litigation and insurance coverage issues; Admitted to the Supreme Court of the United States, the Sixth Circuit Court of Appeals and the State Bar of Michigan; Expertise in prosecuting and defending appeals with several significant successes in the Sixth Circuit Court of Appeals, the Michigan Supreme Court and the Michigan Court of Appeals; Author of briefs amicus curiae in the Michigan Supreme Court for the Michigan Defense Trial Counsel and the Insurance Institute of Michigan; Represents Insurance Companies, Major International Business, Governmental Entities, Law Enforcement Officers and County Sheriffs. Board of Directors, Michigan Defense Trial Counsel Amicus Committee Co-Chair, Michigan Defense Trial Counsel Military - Retired Major in the Judge Advocate General (JAG) Corps of the United States Army, Brigade Judge Advocate and Staff JAG officer for the Maneuver Training Center, Camp Grayling, Michigan; Recipient of the Army's Meritorious Service Medal (the highest medal of honor available to Soldiers serving in non-combat roles); 2012 Graduate of the Judge Advocate Officer Advanced Course, at The Judge Advocate Legal Center and School, Charlottesville, Virginia. United States Navy Reserves, Combat Warfare Qualification, January 1989 to July 2003 Former law clerk to Justice Stephen J. Markman, Michigan Supreme Court, Research Attorney, Michigan Court of Appeals. Insurance Coverage Associate Plunkett Cooney; Environmental Law Attorney at Squire Sanders, now Squire Patton Boggs; Master's Degree in Environmental Law; Environmental Law Scholar, ALI/ABA Washington, D.C., Juris Doctorate, Vermont Law School, Environmental Editor, Vermont Law Review; Treasurer and Finalist, Moot Court Advisory Board.
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