Due process; Hinky Dinky Supermarket, Inc v Department of Cmty Health; Procedural due process; Notice & an opportunity to be heard; Determining primary liability as to a no-fault claim; MCL 500.3109a; Auto Club Ins Ass’n v Frederick & Herrud, Inc; Substantive due process; AFT MI v Michigan

Holding that intervenor-appellant-insurer’s (Atlantic) due process rights were violated, the court vacated the trial court’s order granting plaintiff’s motion to strike Atlantic’s lien on his settlement proceeds. Plaintiff sued several insurers seeking benefits for injuries he sustained while driving his semitruck in the course of his employment. The trial court found defendant-Great American, with whom plaintiff had a “bobtail” policy, was first in priority. The parties reached a settlement under which Great American agreed to pay the overwhelming majority, and defendant-AIFE, plaintiff’s employer’s fleet insurer, agreed to pay a smaller portion. Plaintiff was enrolled in a group occupational accident insurance policy issued by Atlantic. The trial court, after previously denying Atlantic’s motion to intervene, granted plaintiff’s motion to strike Atlantic’s lien covering $50,000 in medical and wage-loss expenses it had already paid. The order stated that Atlantic was “primary for payment of health and accident benefits.” On appeal, the court agreed with Atlantic that it was deprived of procedural due process because it had no notice that its liability for paying plaintiff’s PIP benefits was at issue and no meaningful opportunity to be heard on this issue. “Atlantic had no reason to believe that the proceeding was actually one to determine whether it was liable to pay any or all of plaintiff’s PIP benefits.” In addition, “neither plaintiff nor the trial court did anything to notify Atlantic of the true nature of the postjudgment proceeding.” Further, without knowing that its liability to pay “benefits was at issue, Atlantic had no meaningful opportunity to contest its liability.” And because it was “denied the opportunity to participate in this case, it missed out on discovery. As a result, Atlantic had no access to the evidence against it—namely the entirety of Great American’s insurance policy.” Finally, even after the trial court declared Atlantic to be the primary insurer, it “still had no meaningful opportunity to be heard.” The court also agreed with Atlantic that the trial court violated its substantive due process rights when it arbitrarily disregarded the terms of its policy. “Without a valid legal basis for disregarding the terms of Atlantic’s insurance policy, the trial court here acted arbitrarily. And considering [it] imposed liability on a nonparty to this litigation, the trial court’s action shocks the conscience.” Vacated.