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Court addresses interplay of No Fault insurer's obligations and school district's legal duties

Under Michigan law, public school districts owe a duty to provide certain services to children who have special needs.  These services are usually defined through the IEP [individual education program] process:  the IEP is a detailed, comprehensive examination of the child's needs and it involves the child's parents, teacher(s), medical records and school system specialists.  An IEP conference is held annually and the child's educational needs are compiled in a detailed report.  In some cases, the "needs" identified in the IEP also fall within the obligations of a no fault insurer required to provide for the educational and rehabilitational needs of a child injured in a motor vehicle collision. 

When needs identified to the insurer by the no fault injury victim's medical treaters are identical to the needs (and school system duties) included in an IEP, the insurer is allowed to deduct the cost of these [governmental benefit] services from its no fault obligations (to avoid redundancy and duplication of services or payment).  Using this statutory right of set-off, Progressive Michigan Insurance Company attempted to force the Calhoun Intermediate School District to pay it back for certain attendant care and transportation expenses it had incurred on behalf of a no fault accident child victim.

This week the Court of Appeals rejected Progressive's claim.  It noted that while Progressive does have standing to seek reimbursement in an appropriate case, it cannot use the litigation discovery process in an attempt tore-define which services should be included in an IEP:  the latter administrative process is a comprehensive system defined by law.  The Court held that Progressive cannot argue that the IEP should be amended or modified to include duties the school experts and parents have not considered.  In terms of a governmental "set-off," Progressive is bound by the conclusions reached through the statutorily-defined IEP framework and does not have standing to challenge those conclusions through litigation discovery.

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