Porter v. Michigan Mutual Liability Co. , 80 Mich. App. 145 ( 1977 )

T. M. Burns, J.

This action involves provisions of the no-fault automobile insurance act. MCLA 500.3101, et seq.; MSA 24.13101, et seq.

On September 12, 1974, plaintiff was operating a motorcycle in the city of Flint when he was struck by an automobile owned and operated by defendant Runyon. Runyon’s automobile was covered by no-fault and liability insurance policies issued by defendant Aetna Life & Casualty Company. Plaintiff lived with his father and was covered for injuries received while motorcycling under no-fault policies issued by defendant Michigan Mutual Liability Company.

Plaintiff brought this suit claiming that he suffered serious personal injuries requiring extensive hospitalization and medical treatment, and loss of income as a result of this accident.

Count I of the complaint sought recovery of personal injury protection (PIP) benefits from Michigan Mutual. Michigan Mutual claimed a deductible of $5,000 as provided in the policies it had issued plaintiff’s father. Plaintiff asserted that a deductible in excess of $300 was in violation of the statute and that the legislative grant of authority to the Insurance Commissioner to approve deductibles above that figure¹ was an unlawful delegation of legislative authority and therefore void. Plaintiff alleged in the alternative that to the extent he was not entitled to the first $5,000 of PIP benefits from Michigan Mutual, he was entitled to those benefits from Aetna Life & Casualty under the non-occupant provision of the no-fault act. MCLA 500.3115(1); MSA 24.13115(1).

In Count II plaintiff sought common law damages against Runyon based on negligence. In Count III plaintiff sought a declaration that the no-fault provision providing for repayment of no-fault benefits out of such a recovery² was violative of the equal protection and due process clauses of the Michigan and U. S. Constitutions.

On motion for summary judgment brought by Michigan Mutual, the trial court ruled that since motorcycles were excluded from the no-fault act, plaintiff could not claim no-fault benefits from either insurer. Consequently, the court granted summary judgment against the plaintiff on Count I, the claim for no-fault benefits, and permitted plaintiff to amend Count II to claim additional special damages of $5,000. The trial court further ruled that the repayment rule of § 3116 was unconstitutional. After entry of the order, plaintiff entered into a stipulation of dismissal with full prejudice with Aetna Life & Casualty and Runyon. All claims against these defendants were released in consideration of a $12,000 payment. Plaintiff appeals the trial court order as it relates to his claim against Michigan Mutual.

I

Motorcyclists are not "excluded from no-fault”. Motorcycle owners are not required to maintain personal injury protection insurance. See § 3101(1), (2).³

Motorcycles are not included in the definition of motor vehicles in the act. § 3101(2). Under § 3115(1),⁴ a person injured in an automobile accident while other than an occupant of a motor vehicle must claim PIP benefits, as between insurers of the automobile owner and operator, first from the insurer of the owner. Since a motorcyclist is, under the act, not an occupant of a motor vehicle, the motorcyclist injured in an automobile accident may recover from insurers of the owner, and then operator, of the automobile. However, this priority section is not controlling in this case.

Section 3115(1) is qualified by § 3114(1).⁵ Section 3114(1) indicates that when PIP benefits are payable to an insured under his own policy, his insurer must pay all of these benefits even though the insured is also covered under another policy. Michigan Mutual, the company which issued the policy under which plaintiff was insured, is therefore liable to plaintiff for PIP benefits. Even though injured on a motorcycle, plaintiff may recover PIP benefits from his own insurer. Plaintiff elected to pay for this nonrequired coverage and may enforce the contract subject to the requirements of the act.

II

The more bothersome issue in this appeal concerns the validity of the $5,000 deductible in the Michigan Mutual policy.

Subsection 3109(3)⁶ of the no-fault act provides that PIP insurers may offer deductibles not in excess of $300 per accident, that this deductible may apply to any of the PIP benefits for a named insured, and that any other deductible provisions require the approval of the Insurance Commissioner. The parties to this appeal assume this language gave the commissioner authority to approve deductible provisions in greater dollar amounts. Although the wording of the statute certainly does not compel that interpretation, it could apply equally to the second sentence of the subsection, and we assume only for decision of this issue that such a construction is proper.

On October 1, 1973, the Insurance Commissioner approved a PIP endorsement providing for a $5,-000 deductible for injuries sustained while occupying a two-wheel motor vehicle. This endorsement was contained in the Michigan Mutual policies held by the plaintiff’s father.

The principles of separation of powers and due process of law forbid the delegation of legislative powers to an administrative agency unless those powers are accompanied by appropriate standards limiting their use. See Department of Natural Resources v Seaman, 396 Mich 299, 308-309; 240 NW2d 206 (1976), and cases cited therein. In considering whether a statute has provided sufficient standards, three principles are to be followed:

1. The act in question must be read as a whole;

2. The standard should be as reasonably precise as the subject matter requires or permits;

3. If possible, the statute must be construed in such a way as to render it valid, not invalid, as conferring administrative, not legislative power and as vesting discretionary, not arbitrary, authority. Seaman, supra, at 309.

The no-fault act, as it applies to the deductible in this case, contains no provision defining or limiting the power delegated the Insurance Commissioner in § 3109(3). See footnote 6. There is no indication of the goal sought to be achieved by the delegation of such power. The commissioner is not told what he can do, how he can do it or why he can do it. Looking to the Insurance Code as a whole, we still find no guidelines for the establishment or approval of deductible provisions.

Little can be said on what the subject matter requires or permits in the way of standards. There are no standards.

The no-fault act is remedial social legislation of complex proportions. Such legislation cannot be expected to be without flaws. It deals with a subject matter involving a high degree of regulation— insurance — which of necessity calls for the exercise of discretion and administrative authority. In such a case it may be more significant to seek standards created by the administrative agency itself to guide its decision making.

However the problem is viewed, though, we are faced with a situation in which a purely arbitrary decision was made by an administrative agency of the state — in the exercise of unlimited, undirected authority — which had the effect of creating an exception to a legislative prohibition (no deductible to exceed $300). Being action taken under a grant of legislative authority without proper standards for the exercise of that authority, the action was invalid. Michigan Mutual may claim no more than the statutory limit of a deductible of $300.

The order of summary judgment for Michigan Mutual against plaintiff on Count I is reversed. This cause is remanded for a determination of the amounts of PIP benefits which plaintiff is entitled to and has not yet received.

No costs.

A. E. Keyes, J., concurred.

1 MCLA 500.3109(3); MSA 24.13109(3).

2 MCLA 500.3116; MSA 24.13116.

3 "Sec. 3101. (1) The owner or registrant of a motor vehicle required to be registered in this state shall maintain security for payment of benefits under personal protection insurance, property protection insurance and residual liability insurance. Security shall be in effect continuously during the period of registration of the motor vehicle.

"(2) 'Motor vehicle’ as used in this chapter, except for section 3103, means a vehicle, including a trailer, operated or designed for operation upon a public highway by power other than muscular power which has more than 2 wheels.” MCLA 500.3101; MSA 24.13101.

4 "Sec. 3115. (1) Except as provided in subsection (1) of section 3114, a person suffering accidental bodily injury while not an occupant of a motor vehicle shall claim personal protection insurance benefits from insurers in the following order of priority:

"(a) Insurers of owners or registrants of motor vehicles involved in the accident.

"(b) Insurers of operators of motor vehicles involved in the accident.” MCLA 500.3115(1); MSA 24.13115(1).

5 "Sec. 3114. (1) Except as provided in subsections (2) and (3), a personal protection insurance policy applies to accidental bodily injury to the person named in the policy, his spouse, and a relative of either domiciled in the same household. When personal protection insurance benefits are payable to or for the benefit of an injured person under his own policy and would also be payable under the policy of his spouse, relative, or relative’s spouse, the injured person’s insurer shall pay all of the benefits and shall not be entitled to recoupment from the other insurer.” MCLA 500.3114(1); MSA 24.13114(1).

6 "(3) An insurer providing personal protection insurance benefits may offer, at appropriately reduced premium rates, a deductible of a specified dollar amount which does not exceed $300 per accident. This deductible may be applicable to all or any specified types of personal protection insurance benefits but shall apply only to benefits payable to the person named in the policy, his spouse and any relative of either domiciled in the same household. Any other deductible provisions require the prior approval of the commissioner.” MCLA 500.3109(3); MSA 24.13109(3).

Effective June 3, 1974, the Legislature amended the no-fault act by adding § 3109a. That section provides:

"An insurer providing personal protection insurance benefits shall offer, at appropriately reduced premium rates, deductibles and exclusions reasonably related to other health and accident coverage on the insured. The deductibles and exclusions required to be offered by this section shall be subject to prior approval by the commissioner and shall apply only to benefits payable to the person named in the policy, the spouse of the insured and any relative of either domiciled in the same household.” MCLA 500.3109a; MSA 24.13109(1).

The Insurance Commissioner interpreted § 3109a as forbidding the inclusion of large deductible motorcycle coverage in policies issued after the effective date of the new statute. See, Section 7 of Bulletin ED Section 1 (4-74), Michigan Department of Commerce. No deductible was to exceed $300 in new or renewal policies processed after that date.

The policy in question here was issued before that date and had not been processed for renewal. The added section and the commissioner’s interpretation of it are not directly involved in this appeal.