Challenge to the legality of certain financial conduct by defendant-BCBSM under the Nonprofit Health Care Corporation Reform Act (MCL 550.1101 et seq.); Jurisdiction; Rooyaker & Sitz, PLLC v. Plante & Moran, PLLC; Docket No. 290167 - Whether BCBSM violated § 1207 of the Act when its subsidiary the Accident Fund Insurance Company of America purchased three for-profit insurance companies; MCL 550.1207(1)(o); Summary disposition under MCR 2.116(C)(8); Smith v. Stolberg; Statutory interpretation; Neal v. Wilkes; Turner v. Auto Club Ins. Ass'n; Nastal v. Henderson & Assoc. Investigations, Inc.; Herman v. Berrien County; Sun Valley Foods Co. v. Ward; People v. Williams; Woodard v. Custer; Whether Michigan's courts defer to Michigan's administrative agency decisions as to the interpretation of Michigan statutes; The doctrine of "primary jurisdiction"; Psychosocial Serv. Assoc., PC v. State Farm Mut. Auto. Ins. Co.; Travelers Ins. Co. v. Detroit Edison Co.; Rinaldo's Constr. Corp. v. Michigan Bell Tel. Co.; In re Complaint of Rovas Against SBC MI; Office of Financial & Insurance Regulation (OFIR)

In Docket No. 290167, the court held that the trial court correctly determined that § 1207 of the Act did not preclude defendant-BCBSM's subsidiary, the Accident Fund, from acquiring the three for-profit insurance companies at issue where that section was inapplicable to the Accident Fund's acquisition, ownership, and operation of the three insurance companies. Thus, the court affirmed the trial court's grant of summary disposition on Count I. However, the court further held that the trial court erred by deferring to an administrative agency's interpretation of the Act, reversed the trial court's dismissal of Count II, and remanded to the trial court for a de novo hearing to determine whether BCBSM's $125 million contribution to the Accident Fund violated the Act. At issue were a series of financial transactions by the Accident Fund to acquire three foreign insurance companies (UWI, CWI, and Third Coast), and a $125 million contribution to the Accident Fund by BCBSM. Plaintiff claimed contrary to the trial court's conclusion, MCL 550.1207(1)(o) prohibited the Accident Fund's acquisition of UWI, CWI, and Third Coast. The court disagreed. MCL 550.1207(1)(o) has no direct application to the Accident Fund's business activities. It applied here only if it prevented BCBSM from activity undertaken by its wholly-owned subsidiary. "However, nothing in MCL 550.1207(1)(o) expressly prohibits any particular activity undertaken by a health care corporation's subsidiary." The restrictions in MCL 550.1207(1)(o) plainly apply only to "a health care corporation." They do not mention or refer to such a corporation's affiliates or subsidiaries. Plaintiff argued that the prohibition against the Accident Fund's acquisition of UWI, CWI, and Third Coast arose from the statute's prohibition against BCBSM "otherwise" acquiring, owning, or holding voting shares or voting securities or interests issued by a domestic, foreign, or alien insurer. Plaintiff argued that the acquisition of UWI, CWI, and Third Coast by the Accident Fund constituted BCBSM "otherwise" acquiring those insurers within the meaning of MCL 550.1207(1)(o). Plaintiff pointed to language in MCL 550.1207(1)(o)(iii) and (iv), prohibiting a health care corporation from direct or indirect control of certain types of insurers, as supporting this assertion. However, the court found "dispositive the fact that there is simply nothing in the plain language of the statute to support a conclusion that MCL 550.1207(1)(o) prohibits activities undertaken by the Accident Fund." All of MCL 550.1207(1)(o) applies only to "health care corporations," and it permits BCBSM to acquire certain types of foreign insurers under certain circumstances. MCL 550.1207(1)(o) only applies when BCBSM undertakes a financial transaction meeting certain criteria. However, the transactions about which plaintiff complained were not undertaken by BCBSM - they were undertaken by the Accident Fund, to which the restrictions of MCL 550.1207(1)(o) did not apply. However, the court agreed with plaintiff that the trial court erred in dismissing Count II and by referring the count to the OFIR Commissioner for a determination of whether BCBSM violated the Act. While the doctrine of primary jurisdiction allowed the trial court to refer the count to the Commissioner for an "advisory opinion," the trial court erred by not retaining jurisdiction of the count and by failing to make a de novo determination of the statutory interpretation issue.