Supreme Court Vacates Grant Order and Leaves Intact Court of Appeals Ruling on “Primary Purpose” / “Incidental Nature” Test Applied by Court of Appeals to Determine Priority of Insurers in a Motor Veh


MCL 500.3114(2) of Michigan’s No-Fault Automobile Insurance Act establishes a priority of insurers of motor vehicles for certain types of vehicles. The first sentence provides, simply, as follows: ”A person suffering accidental bodily injury while an operator or a passenger of a motor vehicle operated in the business of transporting passengers shall receive the personal protection insurance benefits to which the person is entitled from the insurer of the motor vehicle.”

I have written extensively on this issue in trial courts and appellate courts. For years, the Court of Appeals has applied a “primary purpose / incidental nature” test to determine whether, in a given circumstance, the insurer of the vehicle or the insurer of the occupants should be “primary” or take “priority” for responsibility to pay benefits.

The Court of Appeals in the instant case applied the test, and ruled, correctly, in my judgment, that the vehicle’s insurer was not liable as primary insurer for injuries suffered by its occupants. The Court of Appeals opinion is: Farmers Ins. Co. v. Michigan Ins. Co. (COA Opinion, Docket No. 298984). The Court of Appeals ruled that the occupants’ insurers were liable.

The Supreme Court granted the application for leave to appeal to consider whether use of the “incidental nature / primary purpose” test should continue.

However, the Court recently vacated its grant order, leaving intact the Court of Appeals ruling, and, unfortunately, its continued reliance on the “primary purpose / incidental nature” test to determine priority of insurers under these circumstances. The Supreme Court’s order is here: Farmers Ins. Co. v. Michigan Ins. Co. (Supreme Court Post-Grant Denial Order).

Not that I disagree with the Court of Appeals opinion in this case. I think it reaches the right result. But, I feel the tergiversations that courts go through in applying this “primary use / incidental nature” test is unnecessary. The plain language of the statute, including the several excepted types of vehicles enumerated later in the section is all that is necessary to take a common-sense, plain language approach to determine whether a vehicle is, or is not, used as “a motor vehicle operated in the business of transporting passengers”. The “test” creates a circumstance in which the facts of the given case dictate the outcome of the applied law, rather than, as it should be in my judgment, the applied law dictating the outcome of the case.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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