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STATE OF MICHIGAN
COURT OF APPEALS


AUTO OWNERS INSURANCE COMPANY, Plaintiff-Appellant, v AMOCO PRODUCTION COMPANY, Defendant-Appellee.

FOR PUBLICATION March 27, 2001 9:05 a.m. No. 223572 WCAC LC No. 95-000532 Updated Copy May 11, 2001

Before: Smolenski, P.J., and Jansen and Fitzgerald, JJ. JANSEN, J. Plaintiff appeals by leave granted from an order of the Worker's Compensation Appellate Commission (WCAC), which ruled that defendant's reimbursement liability to plaintiff for medical expenses paid by plaintiff for an employee of defendant is limited by the cost containment rules set forth in subsection 315(2) of the Worker's Disability Compensation Act (WDCA), MCL 418.315(2); MSA 17.237(315)(2). We affirm the WCAC's ruling, and remand for further findings. Leroy Smithingell, an employee of defendant, was injured in an accident involving his motor vehicle when he arrived for work on January 30, 1994. Smithingell parked his vehicle in defendant's parking garage. Smithingell left the vehicle's engine running while he removed some snow that the vehicle had dragged into the garage. He then returned to his vehicle, got out of the vehicle and left the door open, and walked to the rear of the vehicle to check its position. As he did so, the vehicle rolled into him and knocked him into an adjacent wall. Smithingell suffered

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injuries to his hand and back. Smithingell filed a claim with plaintiff, his no-fault automobile insurer, which paid his no-fault benefits, including wage-loss and medical expenses. On October 20, 1994, plaintiff filed a petition to determine rights, contending that Smithingell was injured during the course of his employment and that defendant was therefore liable for all benefits paid and any future benefits. Trial was held on April 19, 1995, before a magistrate. The parties stipulated that Smithingell's average weekly wage was $475 and that his period of disability was from January 30, 1994, to May 16, 1994. The magistrate mailed his opinion on May 30, 1995, and ruled that Smithingell's injury arose out of and in the course of his employment, that plaintiff was not entitled to recover from defendant no-fault wage-loss benefits paid to Smithingell,1 and that plaintiff was entitled to reimbursement from defendant for medical expenses paid, but that the reimbursement was subject to the cost containment rules. Plaintiff filed its claim for review on June 26, 1995. The issues were limited to whether plaintiff was entitled to recover no-fault wage-loss benefits and whether the medical expenses paid were subject to the cost containment rules. The WCAC issued its opinion and order on April 17, 1998, affirming the magistrate's decision. Plaintiff filed for leave to appeal to this Court, and in an unpublished order entered on November 6, 1998 (Docket No. 211679), the case was remanded to the WCAC for reconsideration. On remand, the WCAC, in an opinion dated February 22, 1999, again ruled that plaintiff was not entitled to recover no-fault wage-loss benefits and that plaintiff 's reimbursement for medical expenses paid was limited by the cost containment rules. Plaintiff again filed for leave to appeal to this Court, limiting the issue to whether the cost containment rules apply to reimbursement of medical expenses paid. -2This Court, in an

unpublished order entered on May 25, 1999 (Docket No. 218310), once again remanded the matter to the WCAC "for further consideration of whether the cost containment rules limit reimbursement under the circumstances of this case." In its opinion dated October 22, 1999, the WCAC again ruled that plaintiff 's reimbursement for medical expenses was limited by the cost containment rules. This Court in an unpublished order entered on April 7, 2000, subsequently granted plaintiff 's application for leave to appeal. The sole issue is whether plaintiff 's

reimbursement for medical expenses is limited by the cost containment rules set forth in the WDCA. The issue arises because plaintiff paid more in medical expenses than a worker's compensation carrier would have had to provide as a matter of law under the cost containment rules. The issue before us is purely one of law. This Court is empowered to review questions of law involved with any final order of the WCAC. MCL 418.861a(14); MSA 17.237(861a)(14). Further, the interpretation of statutes is a question of law. Hoste v Shanty Creek Management, Inc, 459 Mich 561, 569; 592 NW2d 360 (1999). Questions of law are reviewed de novo on appeal. Id. However, we will accord great weight to the administrative interpretation of the statute unless that interpretation is clearly wrong. Id. Subsection 315(1) of the WDCA requires employers to pay reasonable medical expenses of injured employees whose injuries are covered by the WDCA. Further, subsection 315(1) provides in relevant part: If the employer fails, neglects, or refuses to [pay reasonable medical expenses], the employee shall be reimbursed for the reasonable expense paid by the employee, or payment may be made in behalf of the employee to persons to whom the unpaid expenses may be owing, by order of the worker's compensation magistrate. [MCL 418.315(1); MSA 17.237(315)(1).] -3-

The purpose of this provision is clearly to protect employees who pay for medical expenses for which the employers are responsible to pay. In this case, however, as noted by the WCAC, Smithingell did not pay for his medical expenses; rather, plaintiff paid for the medical expenses. A legislative attempt has been made to control medical costs in worker's compensation cases. Subsection 315(2) of the WDCA, MCL 418.315(2); MSA 17.237(315)(2), requires the promulgation of administrative rules providing for maximum charges for medical procedures and treatment. These rules were promulgated in 1988. See 1988 AACS, Rule 418.101-418.2324. Relevant to this appeal is Rule 418.2102, which provides: Notwithstanding any other provision of these rules, if an employee has paid for a health care service and at a later date a carrier is determined to be responsible for the payment, then the employee shall be fully reimbursed by the carrier. Rule 418.2102 is consistent with the requirement in subsection 315(1) of the WDCA that an employee who pays the employee's own medical expenses is to be reimbursed if those expenses are the employer's responsibility under the WDCA. Consistent with the purpose of the statutory provision, the statute requires reimbursement in full. Rule 418.2102 also requires reimbursement in full by excluding the cost containment rules from employee reimbursement situations. Here, the WCAC described the purpose of Rule 418.2102 as a "special protection" for employees who have to pay their own medical expenses. Thus, the rule protects such employees from actual financial loss when the employer is responsible for payment under the WDCA. Noting that the rule is precisely focused on the employee, the WCAC did not construe the rule as protecting sophisticated insurers such as plaintiff. The WCAC's interpretation of subsection 315(1) and Rule 418.2102 is entirely in accord with the clear and unambiguous language set forth

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in those two provisions. Clearly, the statute and the administrative rule are designed to protect employees as set forth by their clear language. Plaintiff is not an employee and therefore is not protected by the language of subsection 315(1) of the WDCA such that plaintiff is entitled to full reimbursement for medical expenses paid. Only employees are so entitled. Further, we reject plaintiff 's argument that it should be subrogated to Smithingell's position. Plaintiff is subrogated only to the employee's rights, but if the employee does not pay for the medical services directly, then there is no right in the employee to full reimbursement for the insurer to assert by way of subrogation. See Auto Club Ins Ass'n v New York Life Ins Co, 440 Mich 126, 135-136; 485 NW2d 695 (1992) (the subrogee is equitably subrogated to the position of the insured and acquires only those rights held by the insured). Consequently, because Smithingell did not pay for his medical expenses and was not entitled to reimbursement under subsection 315(1), there is no right for plaintiff to assert. We also note that the result reached by the WCAC and this Court is consistent with the WDCA and the no-fault insurance act, MCL 500.3101 et seq.; MSA 24.13101 et seq. Plaintiff 's claim for reimbursement stems from

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