FAITH-BASED HEALTH CARE SHARING MINISTRIES ARE NOT SUBJECT TO MICHIGAN INSURANCE LAW AND CANNOT BE MADE TO PAY PRIMARY TO COORDINATED NO-FAULT COVERAGE

Robert L. Goldenbogen

Meemic Insurance Company v. Christian Care Ministry, Inc., ___ Mich App ___; No. 356739, 2022 WL 2080242 (June 9, 2022), a decision designated for publication, is one of the few cases that limits the reach of the mandatory rule of priority that arises when an insured elects coordinated no-fault benefits under MCL 500.3109a. Michigan insurance law typically allows a broad array of “other health and accident benefits” to pay primary when coordinated with no-fault coverage. The Meemic decision holds that a faith-based “health care sharing ministry” is not subject to that rule and cannot be made to pay primary, both because of the nature of the benefits it provides, and because the Michigan legislature expressly provided health care sharing ministries immunity from Michigan insurance law.

When Josephus Vanderlinden secured his no-fault insurance through Meemic, he presumably represented that he had “other health and accident coverage” that would pay primary to his no-fault insurance in the event of a motor vehicle accident. Consequently, he qualified for a coordination of benefits endorsement making his no-fault insurance excess to such other coverage. He paid a reduced premium for that coordinated coverage based on the understanding that Meemic would not be called upon to pay primary coverage. Mr. Vanderlinden’s “other coverage” was the Medi-Share program, administered by Christian Care Ministry (CCM). However, when Mr. Vanderlinden suffered injuries in a motor vehicle accident, CCM refused to pay his more than $680,000 in medical bills and Meemic, having paid those bills, sued CCM for reimbursement. The Kent County Circuit Court granted CCM summary disposition. Meemic appealed and the Court of Appeals affirmed.

In Federal Kemper v Health Ins. Administration, Inc., 424 Mich 537 (1986), the Michigan Supreme Court held that other health and accident benefits must pay primary to a coordinated no-fault policy regardless of the coordination provision in the other coverage.[1]  The Federal Kemper rule enforces the intent underlying MCL 500.3109a and imposes priority on “other health and accident coverage” when the insured elects coordinated no-fault coverage. The rule has been given broad application to various sources of coverage – insurance and non-insurance, alike – that pay what is “typically provided by an insurance company.” Jarrad v Integon Nat’l Ins Co, 472 Mich 207, 217 (2005). In all such cases, the courts have concluded that the “other coverage” is sufficiently like insurance so as to provide some guaranty of coverage that will pay in the event of a loss.

However, the rule is not applicable to a “Health Care Sharing Ministry” by operation of the Health Care Sharing Ministries Freedom to Share Act, MCL §550.1861 et seq., a “safe harbor” statute that insulates qualified programs from state insurance law. That Act identifies what qualifies as a “Health Care Sharing Ministry” at MCL 550.1863 as a “program established by an eligible entity for the sharing of finances and health care in compliance with this act.” An “eligible entity” is defined as a “faith-based, nonprofit entity that maintains tax-exempt status.” The act goes on to indicate at MCL 550.1865 that a ministry established under the act:

Is not engaged in the business of insurance in this state and the entity and ministry is not subject to the insurance laws of this state.

Mr. Vanderlinden’s Medi-Share plan qualified as a non-profit, faith-based entity that benefits from the protections afforded under the Health Care Sharing Ministries Act. It was, therefore, not subject to the rules of Michigan insurance law, including the Federal Kemper rule. The Meemic decision appears to be the first time a Michigan appellate court has examined the Health Care Sharing Ministries Act and the Court applied the statute, without comment or criticism.

Significantly, the Court noted how a Health Care Sharing Ministry does not pay what is typically provided by an insurance company. In those cases that have expanded the category of “other health and accident coverages” subject to the Federal Kemper rule, the coverages so included provide the insured a guarantee of payment like that provided through a traditional insurance policy. Although Medi-Share – and other medical sharing plans like it – generally provide payment of medical claims, there is no guarantee of payment and no means to compel the provision of coverage. Under a Health Care Sharing Ministry, coverage depends solely on the generosity of others because the program provides assistance to the participants on a purely voluntary basis, a fact that the Medical Sharing Ministries Act requires the plan to expressly disclose to the participant.[2] In fact, the Act requires that participants in such programs remain personally responsible for payment of medical bills incurred in meeting his or her medical needs.

The Court also addressed – without resolving – the fact that Mr. Vanderlinden’s “contractual promise of coordination of coverage made to Plaintiff Meemic was just illusory, and the reduced premium he paid for no-fault coverage afforded him an indefensible windfall.” The Court believed that “CCM cannot be blamed for that result” but left unanswered the question of whether Mr. Vanderlinden could. Whether a no-fault insurer can sue to reform its no-fault policy to a full coverage policy – and collect the full premium – when an insured’s choice of coordinated coverage proves to have been based on an “illusory promise” remains to be resolved in another case.

EDITOR’S NOTE: A motion for reconsideration has been filed in the Court of Appeals. GLM will continue following this case to its conclusion.

[1] The decision in Federal Kemper was overruled to the extent it would impose priority on a self-funded health plan established under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., that makes its coverage secondary. However, it remains the rule of law in Michigan in all other situations. Auto Club Ins. Ass’n v. Frederick & Herrud, Inc., 443 Mich. 358, 389 (1993).

[2] Other states have addressed health care sharing programs with mixed results. For example, a California appellate court determined that a health care sharing ministry in that state did not qualify as “insurance” for purposes of enforcing a divorce decree requiring a parent to provide “insurance” coverage for his children. (See In re Marriage of Cantrell, No. C084426, 2018 WL 3524652 (Cal. Ct. App. July 23, 2018)). By contrast, the Kentucky Supreme Court concluded that the Medi-Share plan operated by CCM in that state did qualify as insurance coverage under that state’s insurance laws and did not qualify for protection under Kentucky’s statute shielding such programs from insurance regulation because benefits were paid from pooled contributions rather than shared directly by participants. (See In Commonwealth of Kentucky v. Reinhold, 325 S.W.3d 272 (Ky. 2010)).