Ross v. Blue Care Network of Michigan

Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:

Opinion Clifford W. Taylor Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman

FILED APRIL 23, 2008

DESIREE E. ROSS, Personal Representative
of the Estate of DOUGLAS G. ROSS,

Petitioner-Appellee,

v No. 131711

BLUE CARE NETWORK OF MICHIGAN,

Respondent-Appellant.

BEFORE THE ENTIRE BENCH

TAYLOR, C. J.

At issue in this action brought pursuant to the Patient’s Right to

Independent Review Act (PRIRA), MCL 550.1901 et seq., is whether the

Commissioner of the Office of Financial and Insurance Services (OFIS)1 is bound

by the recommendations of an independent review organization (IRO) on issues of

medical necessity and clinical review. We conclude that the act provides that the

commissioner is not bound by such recommendations. Accordingly, we reverse

1
OFIS is now the Office of Financial and Insurance Regulation, effective
April 6, 2008. Executive Order No. 2008-2.
the judgment of the Court of Appeals and the order of the trial court that held to

the contrary and remand this matter to the trial court for further proceedings

consistent with this opinion.

I. FACTUAL BACKGROUND AND PROCEDURAL POSTURE

Douglas Ross was covered under the health maintenance organization

(HMO) health plan of respondent Blue Care Network of Michigan (BCN). The

certificate of coverage excluded out-of-network services that were not

preauthorized.2 However, it did provide coverage for medically necessary services

without prior authorization in cases of immediate and unforeseen medical

emergency, but only until such time as it became medically feasible to transfer the

person covered under the health plan to an in-network provider.3

2
Section 2.01 of the certificate provided:
The Health Plan is not an insurance company but a health
maintenance organization which operates on a direct service basis.
Health, medical, hospital, and other services obtained by a Member
outside of the Health Plan and not pre-authorized by a Plan
Physician are not a covered benefit under this Certificate and cannot
be reimbursed to the Member or paid for by the Health Plan.
3
Section 1.05 of the certificate provided:
A. . . . Coverage is provided for medically necessary
emergency services when they are needed immediately because of
an accidental injury or sudden illness, and the time required to
contact your Primary Care Physician could result in permanent
damage to your health. All benefits under this Certificate must be
provided or authorized by your Primary Care Physician or BCN,
except in the case of an immediate and unforeseen medical
emergency.

***
(continued…)

2

 In March 2002, Ross contracted an acute form of multiple myeloma. Ross

was referred to the University of Michigan Medical Center, an in-network

provider, which in a May 28, 2002, letter recommended to Dr. Stephen Goldfarb,

one of Ross’s oncologists, that Ross receive a stem-cell transplant and advised that

it had given Ross information on bone-marrow transplants and instructed Ross to

discuss this option with Dr. Goldfarb. According to Desiree Ross (petitioner),

who is Ross’s wife and the personal representative of his estate, Ross’s condition

began to spiral out of control toward the end of June 2002, Ross’s oncologist told

him that he was no longer eligible for treatment at the University of Michigan

Medical Center because the cancer had spread to his soft tissue, and Ross was

consigned to palliative treatment. She also claimed that Dr. Ronald Lutsic, a

radiation oncologist, told her in June 2002 that Ross’s prognosis was dismal and

that if he were Ross, he would go to the Myeloma Institute in Little Rock,

(…continued)
2. Medical Emergency means a sudden and immediate
medical condition which could be expected to result in permanent
damage to your health if not treated immediately.

***

C. All follow-up care to initial emergency treatment . . . is
covered only when provided or approved by BCN or by your
Primary Care Physician.

D. If a Member is hospitalized for emergency care in a non-
affiliated hospital or outside of the BCN service area, BCN may
require that the Member be transferred to an affiliated hospital or
(continued…)

3

Arkansas (the facility), one of two facilities in the world that treated multiple

myeloma.

Petitioner called Ross’s primary care physician (PCP), Dr. Michael

Silverstone, to ask for a referral to the facility, which was not a BCN in-network

provider. BCN advised that it needed to review the facility’s treatment plan and

that it would take 10 to 14 days to review the request. The facility said that it

could not provide a treatment plan without first evaluating Ross.

On July 2, 2002, Ross went to Arkansas and began an evaluation at the

facility without BCN’s approval. On July 8, 2002, Dr. Frits van Rhee, the

evaluating doctor, admitted Ross to the hospital, noting that without aggressive

intervention, Ross had only about seven days to live. Ross was hospitalized from

July 8, 2002, to July 23, 2002. The July 23, 2002, discharge summary indicated

that Ross was “stable for discharge and outpatient followup . . . .” In the

meantime, Ross had received notices from BCN on July 9, July 15, and July 16

denying coverage for treatment at the facility because either the services were

available in-network or there was no referral from his PCP, and advising Ross to

contact his PCP for a referral to an in-network provider.

Although petitioner claimed that BCN never informed her of any in-

network providers that could treat Ross’s condition, she did not indicate that she

(…continued)
other facility within the service area as soon as medically feasible.
[Emphasis added.]

4

had contacted Ross’s PCP as advised by BCN for such a referral, and she did not

present any evidence that the University of Michigan Medical Center was unable

to administer the same treatment Ross received at the facility. Ross continued

with both outpatient and inpatient treatment at the facility without BCN’s

authorization until March 2003. He died on April 6, 2003. BCN refused to cover

any evaluation or treatment at the facility.

On December 18, 2002, pursuant to BCN’s internal procedures, petitioner

initiated a “step one” appeal of the denial of coverage for Ross’s treatment at the

facility that had begun on June 30, 2002. BCN denied the appeal on January 9,

2003, because (1) the PCP had not referred Ross, (2) BCN had not authorized the

services and there was no indication that the services were not available in-

network, and (3) BCN considered the facility’s services to be experimental. On

February 6, 2003, petitioner filed a “step two” internal appeal, which BCN denied.

On April 28, 2003, petitioner appealed to OFIS under PRIRA. The commissioner

accepted the request and assigned the case to an IRO.

The IRO’s initial report, dated May 16, 2003, indicated that “this must be

considered an emergency evaluation and admission in the mind of a prudent

patient,” that attempts were made to use in-network providers, that Ross was not

offered a reasonable alternative plan of care that would address his condition, and

that the treatment he received at the facility should not have been considered

experimental. After receiving the initial report, the commissioner repeatedly

sought to compel the IRO to apply the contractual and statutory standards rather

5

than the IRO-imposed prudent-patient standard for evaluating an emergency,4

4
We quote here one of the questions in the commissioner’s October 2004
request for clarification of the IRO’s recommendation and the IRO’s November
2004 response to that question as just one example of how the commissioner
repeatedly sought to compel the IRO to apply the statutory standards and how the
IRO unwarrantedly declined to do so:
[Q.] Michigan law requires coverage for emergency treatment
up to the point of stabilization. At what point after Mr. Ross’
admission on July 8, 2002 was he stabilized. Dr. VanRhee, the
admitting and treating physician stated Mr. Ross began DT PACE
chemotherapy on July 10, 2002 and within 7 days Myeloma was
back under control. Can it be assumed that Mr. Ross was stable by
July 18, 2002?

[A.] The patient subsequently developed severe and life-
threatening complications of his disease process, requiring
admission to the University of Arkansas Medical Center July 8,
2002.

Blue Care Network’s policy on Emergency Care Section 1.04
D. [sic] states, “If a Member is hospitalized for emergency care in a
nonaffiliated hospital or outside of the BCN service area, BCN may
require that the member be transferred to an affiliated hospital or
other facility within the services area as soon as medically
feasible.[”] It is the opinion of this reviewer that it was not
medically feasible or appropriate to transfer the enrollee to another
facility, which was not involved with the patient’s course of
treatment. It would have been inappropriate to attempt to transfer
the patient across the country for treatment at a network facility at
any time during his July 8 - July 23, 2002 inpatient admission
episode.

He required treatment for his condition at a center that was
familiar with his condition under the supervision of his treating
physician.

This reviewer does not have adequate clinical information
about the August 1 - August 2, 2002 inpatient admission; therefore,
no decision can be rendered regarding this episode.

(continued…)

6

sending the IRO three requests for clarification whether the June 30, 2002,

outpatient consultation, the July 8, 2002, to July 23, 2002, inpatient admission, the

August 1, 2002, to August 2, 2002, inpatient admission, and the September 9,

2002, to November 17, 2002, follow-up testing constituted emergency care, which

would be covered under the certificate of coverage, as well as under MCL

(…continued)
The follow-up testing was to evaluate the health of the patient
and the effectiveness of the treatment given to this patient. This
reviewer does not have the specifics as to the care provided, but it
would be inappropriate to “transfer” this responsibility to another
facility, which was not involved with this patient’s course of
treatment. It is the opinion of this reviewer that it is inappropriate to
unbundle the care provided to this patient for his refractory myeloma
and that it is appropriate to look at the global care provided for this
illness. Given the sense of emergency and life-threatening nature of
the patient’s condition without effective therapy, the care, provided
at the University of Arkansas Medical Center, was appropriate
treatment.

When viewing the question and the answer in its entirety, it is clear that the
IRO’s statement that “it was not medically feasible or appropriate to transfer
[Ross] to another facility” referred to the July 8, 2002, to July 23, 2002,
admission, while the remainder of the IRO’s answer addressed the subsequent
periods of treatment. The IRO did not indicate with respect to these subsequent
periods that transfer would have been medically infeasible; rather, the IRO
indicated only that it would have been inappropriate to transfer Ross to another
facility. Justice Kelly argues, post at 13 n 23: “Given that the IRO is made up of
doctors, not lawyers, it is not surprising that [the IRO] did not use the legalistic
language that the majority is looking for.” In response, we note that the term
“medically feasible” used in the certificate of coverage was not defined in such a
manner that a doctor, who has extensive education, would be unable to understand
or apply the term. Moreover, the IRO demonstrated in its November 2004
response that the IRO’s physician reviewer was perfectly capable of using the term
“medically feasible” and applying, even citing, the language in BCN’s certificate
when the reviewer deemed it appropriate to do so.

7

500.3406k,5 and whether Ross became stabilized at any point so as to make it

medically feasible to transfer him to an in-network facility.

The IRO responded that Ross was admitted to the facility on an emergency

basis and that it was not appropriate to transfer him to an in-network facility for

treatment or follow-up because the in-network facility was not involved in Ross’s

treatment. In the IRO’s last two responses, it stated that it was not medically

feasible to transfer Ross from July 8, 2002, to July 23, 2002, and that it was

5
MCL 500.3406k of the Insurance Code provides that an HMO must, if it
provides a certificate of medical coverage, cover emergency medical services until
the insured is stabilized and defines “stabilization”:

(1) . . . [A] health maintenance organization contract shall
provide coverage for medically necessary services provided to an
insured for the sudden onset of a medical condition that manifests
itself by signs and symptoms of sufficient severity . . . such that the
absence of immediate medical attention could reasonably be
expected to result in serious jeopardy to the individual’s health . . . ,
serious impairment to bodily functions, or serious dysfunction of any
bodily organ or part. An insurer shall not require a physician to
transfer a patient before the physician determines that the patient has
reached the point of stabilization. An insurer shall not deny payment
for emergency health services up to the point of stabilization
provided to an insured under this subsection because of either of the
following:

(a) The final diagnosis.

(b) Prior authorization was not given by the insurer before
emergency health services were provided.

(2) As used in this section, “stabilization” means the point at
which no material deterioration of a condition is likely, within
reasonable medical probability, to result from or occur during
transfer of the patient.

8

inappropriate to unbundle the remaining care provided. The only time the IRO

stated that it was not medically feasible to transfer Ross was in response to the

commissioner’s question regarding the July 8, 2002, to July 23, 2002, admission.

The IRO recommended on three separate occasions that BCN’s denial of

petitioner’s claim be overturned.

The commissioner found that only the inpatient admission to the facility

from July 8, 2002, to July 23, 2002, was a medical emergency under the definition

of “emergency care” in BCN’s health plan. She upheld the denial regarding the

remainder of the services on the grounds that (1) out-of-network services were not

covered; (2) BCN did not approve the out-of-network services; (3) there was no

evidence that treatment was unavailable within the network, given that Ross’s PCP

had referred him to the University of Michigan Medical Center, a

multidisciplinary cancer treatment center; and (4) other than the July 8, 2002, to

July 23, 2002, hospitalization, the care was not emergency care under the policy or

Michigan law.

Petitioner appealed the commissioner’s decision in the circuit court,

arguing alternatively (1) that it was not medically feasible to transfer Ross to an

in-network facility because of the emergency nature of his condition; (2) that Ross

had a referral from his PCP, so the services did not need to constitute emergency

medical care; and (3) that the services were not available in-network. Focusing on

the argument that the services were emergency services, the circuit court reversed

the part of the commissioner’s decision that upheld BCN’s denial of coverage,

9

reasoning that the commissioner’s conclusion—that some but not all of the

facility’s services were emergency services—was unauthorized by law.

The Court of Appeals granted BCN’s application for leave to appeal and

affirmed with respect to the services provided through November 17, 2002. Ross

v Blue Care Network of Michigan, 271 Mich App 358; 722 NW2d 223 (2006). It

reasoned that the commissioner had failed to comply with the requirements of

PRIRA and exceeded her authority when she discounted the IRO’s medical

recommendations and replaced them with her own independent determinations.

Id. at 371. The panel concluded that the statement in English v Blue Cross Blue

Shield of Michigan, 263 Mich App 449, 464; 688 NW2d 523 (2004)—that an

IRO’s recommendation was not binding on the commissioner—was merely

dictum because the English panel was never actually presented with the question

whether an IRO’s recommendation is binding on the commissioner. Ross, supra

at 373-375.

Alternatively, the Court concluded that even if the statement in English

were binding on the Court, the English panel had recognized that the

commissioner’s independent review of the IRO’s recommendation under MCL

550.1911(15) was limited to confirming that the recommendation did not

contradict the health-plan provisions. Ross, supra at 375. However, the Ross

panel agreed with BCN that the circuit court erroneously required it to pay for

evaluation and treatment after November 17, 2002, because the commissioner had

not considered the care Ross received after that date. Id. at 380-381.

10

 BCN applied for leave to appeal in this Court. We ordered oral argument

on the application and specifically directed the parties to address whether the

Court of Appeals paid sufficient attention to the provisions of PRIRA that require

an IRO to provide a “recommendation” to the commissioner, and whether the

Court of Appeals properly characterized as dictum the statement in English that

indicated that the IRO’s recommendation was not binding on the commissioner.

477 Mich 960 (2006). The commissioner has filed an amicus curiae brief in

support of BCN’s application.

II. STANDARD OF REVIEW

The interpretation of statutes presents an issue of law, which is reviewed de

novo. Lapeer Co Clerk v Lapeer Circuit Judges, 465 Mich 559, 566; 640 NW2d

567 (2002). Decisions of an administrative agency or officer, in cases in which no

hearing is required, are reviewed to determine whether the decisions are

authorized by law. Const 1963, art 6, § 28.

III. ANALYSIS

PRIRA is a relatively recent addition to our state’s laws. Enacted in 2000

as part of the Legislature’s across-the-board attempt to regulate HMOs and other

insurance providers consistently,6 PRIRA was intended to standardize the external

6
PRIRA was introduced as HB 5576, enacted as 2000 PA 251, and
amended by 2000 PA 398. HB 5576 was considered in conjunction with HB
5573, HB 5574, and HB 5575. At the same time that the House bills were being
considered, SB 1211 and SB 1209 were also being considered. 2000 PA 252 (SB
1209) repealed part 210 of the Public Health Code (MCL 333.21001 through
(continued…)

11

review process designed to resolve disputes over covered benefits, establish IRO

qualifications, and provide for penalties in cases of wrongful denial of benefits.

Under PRIRA, the external review process of adverse determinations made

by health carriers is governed by MCL 550.1911, which provides:

(1) Not later than 60 days after the date of receipt of a notice
of an adverse determination . . . , a covered person . . . may file a
request for an external review with the commissioner. . . .

(2) Not later than 5 business days after the date of receipt of a
request for an external review, the commissioner shall complete a
preliminary review of the request to determine all of the following:

(a) Whether the individual is or was a covered person in the
health benefit plan . . . .

(b) Whether the health care service . . . reasonably appears to
be a covered service under the covered person’s health benefit plan.

(c) Whether the covered person has exhausted the health
carrier’s internal grievance process . . . .

(d) The covered person has provided all the information and
forms required . . . .

(e) Whether the health care service . . . appears to involve
issues of medical necessity or clinical review criteria.

(…continued)
333.21098), which had previously regulated HMOs; brought HMOs under the
authority of the OFIS commissioner by adding chapter 35, entitled “Health
Maintenance Organizations” to the Insurance Code; and amended MCL 500.2213
to provide that HMOs must establish an internal review procedure and that
insurers must notify insureds of the right to independent review under PRIRA.
2000 PA 253 (SB 1211) amended MCL 333.20106, MCL 333.20124, MCL
333.20161, and MCL 333.22205 of the Public Health Code to make technical
changes regarding HMOs in light of the transfer of the regulatory framework
pertaining to HMOs from the Public Health Code to the Insurance Code. 2000 PA
250 (HB 5573) amended MCL 550.1404 of the Nonprofit Health Care Corporation
Reform Act to provide for independent external review under PRIRA.

12

 (3) Upon completion of the preliminary review under
subsection (2), the commissioner immediately shall provide a written
notice . . . as to whether the request is complete and whether it has
been accepted for external review.

(4) If a request is accepted for external review, the
commissioner shall do both of the following:

(a) Include in the written notice under subsection (3) a
statement that the covered person . . . may submit to the
commissioner . . . additional information and supporting
documentation that the reviewing entity shall consider when
conducting the external review.

(b) Immediately notify the health carrier in writing of the
acceptance of the request for external review.

(5) If a request is not accepted for external review because the
request is not complete, the commissioner shall inform the covered
person . . . what information or materials are needed to make the
request complete. If a request is not accepted for external review, the
commissioner shall provide written notice . . . to the covered person .
. . and the health carrier of the reasons for its nonacceptance.

(6) If a request is accepted for external review and appears to
involve issues of medical necessity or clinical review criteria, the
commissioner shall assign an independent review organization . . . .
The assigned independent review organization shall be approved . . .
to conduct external reviews and shall provide a written
recommendation to the commissioner on whether to uphold or
reverse the adverse determination . . . .

(7) If a request is accepted for external review, does not
appear to involve issues of medical necessity or clinical review
criteria, and appears to only involve purely contractual provisions of
a health benefit plan, such as covered benefits or accuracy of coding,
the commissioner may keep the request and conduct his or her own
external review or may assign an independent review organization as
provided in subsection (6) . . . . Except as otherwise provided in
subsection (16), if the commissioner keeps a request, he or she shall
review the request and issue a decision . . . within the same time
limits and subject to all other requirements of this act for requests
assigned to an independent review organization. If at any time
during the commissioner’s review of a request it is determined that a

13

request does appear to involve issues of medical necessity or clinical
review criteria, the commissioner shall immediately assign the
request to an independent review organization . . . .

(8) In reaching a recommendation, the reviewing entity is not
bound by any decisions or conclusions reached during the health
carrier’s utilization review process or the health carrier’s internal
grievance process.

(9) Not later than 7 business days after the date of the notice
under subsection (4)(b), the health carrier . . . shall provide . . . the
documents and any information considered in making the adverse
determination . . . .

(10) Upon . . . notice from the assigned independent review
organization that the health carrier . . . has failed to provide the
documents and information within 7 business days, the
commissioner may terminate the external review and make a
decision to reverse the adverse determination . . . .

(11) The reviewing entity shall review all of the information
and documents received under subsection (9) and any other
information submitted . . . .

***

(13) In addition to the documents and information provided
under subsection (9), the reviewing entity . . . shall consider the
following in reaching a recommendation:

(a) The covered person’s pertinent medical records.

(b) The attending health care professional’s recommendation.

(c) Consulting reports from appropriate health care
professionals and other documents submitted by the health carrier,
the covered person, the covered person’s authorized representative,
or the covered person’s treating provider.

(d) The terms of coverage under the covered person’s health
benefit plan with the health carrier.

(e) The most appropriate practice guidelines, which may
include generally accepted practice guidelines, evidence-based
practice guidelines, or any other practice guidelines developed by

14

the federal government or national or professional medical societies,
boards, and associations.

(f) Any applicable clinical review criteria developed and used
by the health carrier or its designee utilization review organization.

(14) The assigned independent review organization shall
provide its recommendation to the commissioner not later than 14
days after the assignment by the commissioner of the request for an
external review. The independent review organization shall include
in its recommendation all of the following:

(a) A general description of the reason for the request for
external review.

(b) The date the independent review organization received the
assignment from the commissioner to conduct the external review.

(c) The date the external review was conducted.

(d) The date of its recommendation.

(e) The principal reason or reasons for its recommendation.

(f) The rationale for its recommendation.

(g) References to the evidence or documentation, including
the practice guidelines, considered in reaching its recommendation.

(15) Upon receipt of the assigned independent review
organization’s recommendation under subsection (14), the
commissioner immediately shall review the recommendation to
ensure that it is not contrary to the terms of coverage under the
covered person’s health benefit plan with the health carrier.

(16) The commissioner shall provide written notice . . . to the
covered person . . . and the health carrier of the decision to uphold or
reverse the adverse determination . . . not later than 7 business days
after the date of receipt of the selected independent review
organization’s recommendation. . . . The commissioner shall include
in a notice under this subsection all of the following:

(a) The principal . . . reasons for the decision . . . .

15

 (b) If appropriate, the principal . . . reasons why the
commissioner did not follow the assigned independent review
organization’s recommendation. [Emphasis added.]

To summarize, under MCL 550.1911, the commissioner has discretion to

accept or reject a request for an external review, MCL 550.1911(3). If a request is

accepted, the covered person is permitted to submit “additional information and

supporting documentation,” MCL 550.1911(4)(a), and the health carrier is

required to submit “the documents and any information considered in making the

adverse determination,” MCL 550.1911(9).

If an accepted request “involve[s] purely contractual provisions,” the

commissioner has discretion to conduct his or her own external review, MCL

550.1911(7). If, however, an accepted request “involve[s] issues of medical

necessity or clinical review criteria,” 7 the commissioner must assign an IRO to

conduct the external review, MCL 550.1911(6). IROs conduct their external

reviews through clinical peer reviewers, who must be physicians or meet the

requirements found in MCL 550.1919(2)8 for health care professionals. In

7
“Clinical review criteria” is defined as “the written screening procedures,
decision abstracts, clinical protocols, and practice guidelines used by a health
carrier to determine the necessity and appropriateness of health care services.”
MCL 550.1903(f).
8
MCL 550.1919(2) provides in relevant part:
A clinical peer reviewer . . . shall be a physician or other
appropriate health care professional who meets all of the following
minimum qualifications:

(continued…)

16

reaching a recommendation, the IRO is not bound by any prior decision or

conclusion, MCL 550.1911(8). After reviewing all information, the IRO makes a

recommendation concerning whether the commissioner should uphold or reverse

the health carrier’s decision, MCL 550.1911(6). This recommendation must be

provided within 14 days of receiving the assignment, MCL 550.1911(14).

The commissioner, who is not required to have any medical knowledge,

then reviews the recommendation to ensure that it is not contrary to the terms of

coverage under the covered person’s health benefit plan with the health carrier,

MCL 550.1911(15). The commissioner has seven days to decide whether to

uphold or reverse the health carrier’s decision, MCL 550.1911(16). The

commissioner must provide the reasons for his or her decision, including the

reasons why he or she decided not to follow the IRO’s recommendation, MCL

(…continued)
(a) Is an expert in the treatment of the covered person’s
medical condition that is the subject of the external review.

(b) Is knowledgeable about the recommended health care . . .
treatment because he or she devoted in the immediately preceding
year a majority of his or her time in an active clinical practice within
the medical specialty most relevant to the subject of the review.

(c) Holds a nonrestricted license . . . and, for physicians, a
current certification by a recognized American medical specialty
board in the . . . areas appropriate to . . . the external review.

(d) Has no history of disciplinary actions . . . that raise a
substantial question as to the clinical peer reviewer’s physical,
mental, or professional competence or moral character.

17

550.1911(16)(b). Finally, a party aggrieved by the commissioner’s decision may

seek judicial review, MCL 550.1915(1).9

As can be seen from this statutory scheme, it is hard to imagine a more

comprehensive review process. And this comprehensive scheme in MCL

550.1911 refers 13 times to an IRO’s recommendation.10

In its opinion, the Court of Appeals neither defined the term

“recommendation” nor considered the significance of its use by the Legislature.

“Recommendation” is defined as “the act of recommending.” Random House

Webster’s College Dictionary (2005). “Recommending” is the gerund form of

“recommend,” which is defined as “to urge or suggest as appropriate . . . .” Id.

“Suggest” is defined as “to mention, introduce, or propose (an idea, plan, person,

etc.) for consideration, possible action, or some purpose or use.” Id. Clearly, to

make a “recommendation” means to suggest or propose something;

“recommendation” is not a word that connotes mandatory compliance. Nowhere

9
MCL 550.1915(1) provides in relevant part: “An external review decision
and an expedited external review decision are the final administrative remedies
available under this act. A person aggrieved by [such a] decision may seek judicial
review . . . .”
10
In response to Justice Kelly’s analysis using the doctrine of expressio
unius est exclusio alterius, we point out that MCL 550.1911(16) expressly gives
the commissioner authority to uphold or reverse an insurer’s adverse
determination. Nowhere in the statute is there a similar provision that grants an
IRO comparable authority. Thus, Justice Kelly’s application of the doctrine of
expressio unius est exclusio alterius is unpersuasive because it leads to an
interpretation that is contrary to the unambiguous language of the statute. See
Luttrell v Dep’t of Corrections, 421 Mich 93, 107; 365 NW2d 74 (1984).

18

in the statute does it say that the IRO’s recommendation is binding in any way, so

there is nothing that would require us to impute a meaning other than the plain

meaning of the term “recommendation.” Moreover, the nature of the term

“recommendation” as connoting a suggestion is reinforced by MCL

550.1911(16)(b), which expressly allows the commissioner to decline to follow

the IRO’s recommendation as long as the commissioner explains his or her

reasons for doing so.11

11
According to Justice Kelly, the commissioner acted in an arbitrary and
capricious manner when she rejected the IRO’s conclusions about medical
necessity. In reaching this conclusion, Justice Kelly claims: “The IRO determined
that (1) the initial treatment was a medical emergency, (2) it was not appropriate to
transfer Ross to an in-network facility, and (3) Ross was not stabilized before
November 17, 2002.” Post at 12. We disagree that the IRO concluded that Ross
was not stabilized. The term “stabilization,” as defined by MCL 500.3406k(2)
means “the point at which no material deterioration of a condition is likely, within
reasonable medical probability, to result from or occur during transfer of the
patient.” (Emphasis added.) On July 23, 2002, Ross was discharged from the
facility, and the discharge summary indicated Ross was “stable for discharge.” It
is axiomatic that if a patient is stable for discharge, the patient may be transferred
without the likelihood of a material deterioration in the patient’s condition
resulting from or occurring during transfer. We emphasize that the only period for
which the IRO specifically indicated that it was not medically feasible to transfer
Ross was from July 8, 2002, to July 23, 2002, even when specifically asked at
what point Ross was stabilized for transfer. With respect to the subsequent
periods, the IRO merely characterized the possibility of a transfer as improper.
The IRO’s rationale for finding that transfer was improper was not because Ross’s
medical condition would likely have deteriorated during transfer (the standard
required under MCL 500.3406k), but because it would have been inappropriate to
“unbundle” the remaining care. Thus, Justice Kelly’s characterization of the
IRO’s finding—that Ross was not stabilized before November 17—is faulty.
Nevertheless, had the IRO found on these facts that Ross was not stabilized before
November 17, i.e., that his condition was likely to deteriorate if he was transferred,
such a finding would itself have been arbitrary and capricious, and, if the
commissioner had blindly accepted such a finding, the commissioner’s actions
(continued…)

19

 In the only Michigan case before this one to address PRIRA, English, the

Court of Appeals likewise noted that an IRO’s recommendation was not binding

on the commissioner. English, supra at 464. In English, the commissioner

partially reversed Blue Cross’s denial of coverage for various blood tests because

she found, consistently with the IRO’s recommendation, that the tests were

medically necessary. Id. at 453. In response to Blue Cross’s argument that it was

denied due process because it did not know the identity, and could not challenge

the recommendation, of the IRO, the Court of Appeals distinguished the authority

cited by Blue Cross because in those cases, which held that due process had been

denied, the evidence was unknown to the parties, while in English, the IRO’s

recommendation was not evidence, but was merely a tool to aid the commissioner,

and the recommendation was not binding on the commissioner. Id. at 464.

The Court of Appeals in the instant case declared that this statement in

English did not bind the Court because whether an IRO’s recommendation was

binding on the commissioner was not at issue in English given that the

commissioner agreed with the IRO’s recommendation. Ross, supra at 374. In

reaching this conclusion, the Court of Appeals failed to recognize or address the

significance of the reason the English panel made the statement in the first place,

which was to distinguish the cases cited by Blue Cross in support of its argument

(…continued)

would likewise have been arbitrary and capricious. However, according to Justice

Kelly’s reasoning, this is exactly what the commissioner would be required to do.

20

on denial of due process, an issue that most certainly was before the Court. The

English panel held in part that PRIRA did not violate the parties’ due process

rights because the IRO’s recommendation is not binding on the commissioner.

Thus, its conclusion that an IRO’s recommendation is not binding on the

commissioner is clearly not dictum. Instead, it was one of the reasons that the

panel held that PRIRA did not violate the parties’ due process rights. When

necessary to determine an issue in a case, a statement of law cannot be dictum.

Wold Architects & Engineers v Strat, 474 Mich 223, 232 n 3; 713 NW2d 750

(2006).

In sum, by failing to recognize the significance of the use of the term

“recommendation” and declining to follow English, the Court of Appeals applied a

flawed construction of the statute to conclude that

while the Legislature intended that the OFIS Commissioner would
review the IRO’s recommendation for consistency and compliance
with the health plan itself, the Legislature did not intend that the
OFIS Commissioner would review or reevaluate the IRO reviewer’s
specific medical or clinical findings. Instead, the language of
PRIRA indicates that the Legislature intended the OFIS
Commissioner to defer to the IRO’s recommendation on medical
issues that do not implicate the language of the health plan itself.
[Ross, supra at 377-378.]

This construction essentially created a judicially defined bifurcated system

of review in which the IRO would be the final authority on issues of medical or

clinical-review criteria, while the commissioner would be the ultimate authority on

purely contractual issues. Such a construction was not supported by the plain and

unambiguous language of the act itself. Given the all-encompassing,

21

comprehensive scheme set forth in PRIRA, the absence of such a bifurcated

review process in the statute convincingly demonstrates that the Legislature did

not intend that the review authority be bifurcated. In fact, as previously noted, the

opposite intent is demonstrated by the frequent use of the term “recommendation,”

as well as by MCL 550.1911(16)(b), which provides that the commissioner must

give the principal reasons why he or she did not follow the IRO’s

recommendation.

Furthermore, the Legislature has contemplated in MCL 550.1911(7) that

there may be situations involving purely contractual issues over which the

commissioner has sole authority. Similarly, the Legislature has treated medical

issues as implicating contractual matters also and has not established that the

commissioner’s authority is different. That is, the commissioner has identical

authority over both contractual and medical issues. The Court of Appeals failed to

recognize this and erred in concluding that “medical issues” were to be treated

differently. The act provides for no such bifurcation. Rather, when the

Legislature charged the commissioner with ensuring that the IRO’s

recommendation was consistent with the terms of coverage, it necessarily

authorized the commissioner to review issues of medical necessity pertaining to

those terms of coverage.

In any event, the commissioner’s determination was consistent with the

IRO’s recommendation to the extent that the recommendation did not contradict

22

the policy provisions or MCL 500.3406k.12 The only period for which the IRO

stated that it was not medically feasible—the standard required in the policy—to

12
Justice Kelly asserts that the only reasonable way to read the IRO’s
response to the commissioner’s last request for clarification is that the IRO
concluded that “Ross was necessarily not ‘stabiliz[ed]’ for transfer as that term is
defined by MCL 500.3406k(2).” Post at 12 n 23. From this response, Justice
Kelly claims that the IRO concluded that Ross was not stabilized before
November 17, 2002. Again, this requires us to include the relevant question from
the commissioner’s January 26, 2005, clarification request and the IRO’s March 9,
2005, response to that question in their entirety:
[Q.] The Michigan statute governing emergency health
services, MCL 500.3406k, requires coverage for “medically
necessary services” to the insured “for the sudden onset of a medical
condition that manifests itself by signs and symptoms of sufficient
severity, including severe pain, such that the absence of immediate
medical attention could reasonably be expected to result in serious
jeopardy to the individual’s health . . . serious impairment to bodily
functions, or serious dysfunction of any bodily organ or part.” The
statute further provides that “an insurer shall not require a physician
to transfer a patient before the physician determines that the patient
has reached the point of stabilization.” Stabilization is defined as
“the point at which no material deterioration of a condition is likely,
within reasonable medical probability, to result from or occur during
transfer of the patient”. Based on the available records, at which
point after [Ross] was hospitalized on July 8, 2002 would no
material deterioration of his condition likely result from or occur
during transfer of [Ross] to a network hospital? What medical
services were necessary to stabilize [Ross] under the statute’s
definition of stabilization?

[A.] This issue was addressed in a conference call on
Wednesday, February 9, 2005 by Dr. David Sand, Medical Director,
Permidion. [Ross] had methicillin-resistant Staphylococcus aureus
septicemia following his DT-PACE chemotherapy. The University
Hospital of Arkansas discharge summary dictated September 15,
2002 documents [Ross’s] clinical status from August 16, 2002
through September 9, 2002. [Ross] could not have been transferred
or released prior to his discharge date.

23

move Ross to an in-network facility was the period from July 8, 2002, to July 23,

2002, and it was for services provided during this period that the commissioner

reversed BCN’s denial of coverage.13 The IRO’s finding that it was

“inappropriate” to move Ross to another facility after July 23, 2002, was not based

on a standard set forth in either the policy or the statute. Those standards were

that it be medically feasible to move the patient or that the patient be stabilized

before being moved, respectively. Thus, the IRO’s error was one that involved

Notwithstanding the fact that the period of August 16, 2002, through
September 9, 2002, was not a period the IRO was ever asked to address, we
include this question and answer for two reasons. First, it is an excellent
illustration of the IRO’s unresponsive answers to the commissioner’s increasingly
more specific questions, which prompted the commissioner to seek clarification of
the IRO’s recommendation on three separate occasions. Second, it illustrates how
unreasonable it is to assert that the IRO concluded that Ross was not stabilized
before November 17, 2002, when the IRO’s answer, which relied on a September
15, 2002, discharge summary, is completely silent with respect to any time after
September 9, 2002. Although we agree with Justice Kelly that the IRO repeatedly
responded that BCN should be required to pay for the services, we disagree that
the only way to read the IRO’s reports is to conclude that the treatment at issue fell
within the terms of coverage. Rather, given that the IRO demonstrated it was
capable of understanding and applying the standards with respect to the July 8,
2002, to July 23, 2002, hospitalization, and that it repeatedly refused to apply the
standards with respect to the remaining periods of care, we think it clear that the
IRO thought BCN should pay for the services regardless of whether they fell
within the terms of coverage.
13
The Court of Appeals determination—that the IRO specifically
concluded it was not medically feasible to transfer Ross before November 17,
2002, Ross, supra at 379—was clearly in error because it contradicted the IRO’s
own statements as well as the facility’s July 23, 2002, discharge summary, which
indicated that Ross was “stable for discharge and outpatient followup . . . .”

24

contractual and statutory construction—error that the commissioner correctly

rectified.

IV. CONCLUSION

Under the PRIRA provisions for an independent external review of an

adverse determination regarding coverage, an IRO’s recommendation concerning

whether to uphold or reverse a health carrier’s adverse determination is merely a

recommendation and is not binding on the commissioner. We reverse the

judgments of the trial court and the Court of Appeals, which held otherwise, and

remand the case to the trial court for further proceedings.

Reversed and remanded to the trial court.

Clifford W. Taylor
Elizabeth A. Weaver
Maura D. Corrigan
Robert P. Young, Jr.
Stephen P. Markman

25

 STATE OF MICHIGAN

SUPREME COURT

DESIREE E. ROSS, personal representative
of the estate of DOUGLAS G. ROSS,

Petitioner-Appellee,

v No. 131711

BLUE CARE NETWORK OF MICHIGAN,

Respondent-Appellant.

KELLY, J. (dissenting).

The majority correctly frames the issue. It is “whether the Commissioner

of the Office of Financial and Insurance Services (OFIS) is bound by the

recommendations of an independent review organization (IRO) on issues of

medical necessity and clinical review.”1 But the majority errs by deciding that the

commissioner is never bound by such recommendations.

I conclude that the commissioner’s review is limited to ensuring that an

IRO’s recommendations are not contrary to the terms of coverage under the

covered person’s health-benefit plan.2 In this case, the IRO’s recommendation

that respondent Blue Care Network of Michigan be required to pay for services

1
Ante at 1.
2
MCL 550.1911(15).
provided before November 17, 2002, was consistent with the terms of coverage.

Therefore, I would affirm the well-reasoned decision of the Court of Appeals.

FACTS

Respondent insured petitioner’s decedent, Douglas Ross. In February

2002, Ross began experiencing back and leg pain. By April, he could no longer

walk or stand. He was diagnosed as suffering from numerous conditions, the most

serious being a severe form of multiple myeloma.3

Ross underwent a variety of treatments, including chemotherapy, to combat

the disease. In May 2002, he was advised to seek treatment from the Bone

Marrow Transplant Clinic at the University of Michigan (U of M). Unfortunately,

he was unable to begin treatment at the U of M immediately because his blood-

sugar level was elevated.

By early June, Ross’s multiple myeloma had become increasingly severe

and resulted in tumors in his leg, neck, and eye. Ross was advised by his treating

physicians that he had an extremely aggressive strain of the disease. Dr. Lutsic,

his radiation oncologist, characterized his condition as the most severe form of the

disease he had ever seen. As a result of his deterioration, Ross was told that he

was no longer a candidate for a bone-marrow transplant and that the U of M would

3
Multiple myeloma is a cancer of the plasma cell. See Multiple Myeloma
Research Foundation, About Myeloma
(last visited January 7,
2008).

2

no longer treat him. He was advised that the only remaining course of treatment

was medication to handle the pain as he died.

In a final effort to prolong Ross’s life, petitioner contacted the University of

Arkansas for Medical Sciences (UAMS), a leader in the treatment of myeloma.

Dr. Lutsic had told petitioner that he would pursue this option if he were in the

same position as Ross. UAMS advised petitioner that it had successfully treated

the condition that Ross had, but, if he were to have any chance of survival, he

would have to start treatment promptly. Ross immediately requested a referral to

UAMS, which was not an in-network provider. Respondent told Ross that it

needed time to review UAMS’s treatment plan before it took action. However,

UAMS stated that it could not provide a treatment plan without first evaluating

Ross.

On June 30, 2002, Ross traveled to UAMS for an evaluation. The doctors

at UAMS found Ross to be close to death and decided that, without aggressive

treatment, he would die very soon. On July 9, 2002, Dr. van Rhee of UAMS

provided respondent with an explanation of Ross’s condition and the proposed

treatment. Dr. van Rhee informed respondent that, without treatment, Ross had

only days to live. Ross’s certificate of coverage included medically necessary

services without prior authorization in cases of immediate and unforeseen medical

emergency. This coverage was available until it became medically feasible to

transfer the covered person to an in-network provider. Nonetheless, respondent

3

informed UAMS that it intended to deny coverage. And, ultimately, it did refuse

to pay for any services provided by UAMS.

The treatment administered at UAMS immediately showed marked success.

On July 23, 2002, Ross was discharged. Ross continued outpatient treatment with

UAMS, and he was also readmitted on numerous occasions. On December 23,

2002, Ross was admitted to UAMS for the last time. He remained an inpatient

until March 2003. He died on April 6, 2003, at 46 years of age.

In regards to Ross’s insurance claims, respondent categorized UAMS’s

services into four periods: (1) outpatient facility services commencing on June 30,

2002, (2) inpatient admission from July 8 through July 23, 2002, (3) inpatient

admission on August 1 and 2, 2002, and (4) follow-up testing from September 9 to

November 17, 2002. On December 18, 2002, Ross initiated an internal appeal

with respondent. When respondent denied the appeal, Ross took the second step

in the internal appeal process. Respondent upheld its denial. On April 28, 2003,

petitioner filed a request for external review with the Office of Financial and

Insurance Services (OFIS)4 under the Patient’s Right to Independent Review Act.5

The Commissioner of OFIS6 accepted the request and assigned the case to

Permidion, an independent review organization. The IRO submitted its initial

4
OFIS is now the Office of Financial and Insurance Regulation, effective
April 6, 2008. Executive Order No. 2008-2.
5
MCL 550.1901 et seq.
6
The commissioner in this case was Linda A. Watters.

4

decision on May 16, 2003. It concluded that Ross’s evaluation and admission to

UAMS was an emergency and that it would have been inappropriate for Ross to

have received care elsewhere. The IRO also concluded that the treatment

provided was not experimental or investigational.

The commissioner asked the IRO for clarification in July 2003. She asked

the IRO to consider four periods of care: (1) the June 30, 2002, outpatient

consultation, (2) the July 8 to July 23, 2002, inpatient admission, (3) the August 1

to August 2, 2002, inpatient admission, and (4) the September 9 to November 17,

2002, follow-up testing. The IRO recognized that the commissioner had

specifically asked it to review “whether each of the . . . four episodes meet[s] the

criteria for emergency care under the insured’s policy, and at what point, if any,

would the patient have been stabilized to make it ‘medically feasible’ to transfer

care to an in-network facility.”

The IRO determined that it did not have the information required to offer

an opinion about the August 1 and 2 treatment. But the IRO concluded that, with

respect to the other periods, the treatment was appropriate. The IRO concluded

that the initial consultation was emergency care and that it would have been

improper to have transferred Ross to another facility because the “patient required

ongoing treatment for a period of time under the supervision of his treating

physician and it would have been inappropriate for the patient to receive treatment

elsewhere.” Accordingly, the IRO recommended that respondent’s denial be

reversed.

5

 The commissioner requested even more review in October 2004. The

October 2004 request was almost identical to the July 2003 request, and the IRO

responded in kind. Specifically, the IRO reiterated its conclusion that the initial

treatment constituted emergency services due to lack of a reasonable alternative at

an in-network facility. It also again concluded that Ross “required ongoing

treatment for his condition at a center that was familiar with his condition under

the supervision of his treating physician.”

The commissioner made a final request for clarification in January 2005.

She asked the IRO to again consider whether Ross had been in an acute medical

state in June 2002 and to clarify when Ross had been stabilized for transfer. The

IRO responded by noting that Ross was one week away from death when he

arrived at UAMS. The IRO also attached its response to the October 2004 request

for review, in which it had concluded that it would have been inappropriate to

have transferred Ross to another facility. Ultimately, the IRO again recommended

that respondent’s denial of coverage be overturned for the periods at issue.

On March 30, 2005, nearly two years after petitioner requested external

review, the commissioner issued her decision. She disregarded the IRO’s

conclusions and found that only Ross’s July 8 through July 23, 2002, inpatient

admission was covered treatment. She decided that this treatment alone

constituted emergency care. Accordingly, the commissioner upheld respondent’s

denial of coverage with respect to the remainder of UAMS’s services.

6

 Petitioner filed an appeal in the Wayne Circuit Court. The circuit court

reversed the commissioner’s decision and ordered respondent to pay for all the

services rendered by UAMS. The circuit judge reasoned that, because the

commissioner had concluded that the July 8 to July 23 hospitalization constituted

emergency services, all the services that UAMS provided were emergency

services.

Respondent filed an application for leave to appeal in the Court of Appeals.

The Court granted leave to appeal and, in a published opinion, affirmed in part and

reversed in part the circuit court’s order.7 The Court of Appeals reversed the

decision requiring respondent to pay for services rendered after November 17,

2002, because the commissioner had not addressed these services.8 But the Court

affirmed with respect to services provided before November 17, 2002.9 It held

that the commissioner had erred by discounting the IRO’s medical

recommendations and replacing them with her own independent conclusions.10

THE PATIENT’S RIGHT TO INDEPENDENT REVIEW ACT

This case requires us to consider the final decision of an administrative

agency and the correct interpretation of a statute. Issues of statutory interpretation

7
Ross v Blue Care Network of Michigan, 271 Mich App 358; 722 NW2d
223 (2006).
8
Id. at 381.
9
Id. at 371.
10
Id.

7

are reviewed de novo.11 In cases where no hearing is required, final decisions of

administrative agencies are reviewed to determine whether the decision was

authorized by law.12 “[A]n agency’s decision that ‘is in violation of statute [or

constitution], in excess of the statutory authority or jurisdiction of the agency,

made upon unlawful procedures resulting in material prejudice, or is arbitrary and

capricious,’ is a decision that is not authorized by law.”13

We have been asked to interpret the Patient’s Right to Independent Review

Act. Under PRIRA, when an individual believes that a health-care coverage

determination is incorrect, he or she has the right to request an independent

review.14 When the commissioner accepts a request for external review and the

review involves questions of medical necessity or clinical review, the

commissioner is required to appoint an IRO to assess the services.15 The IRO is

directed to consider the relevant materials and recommend either upholding or

reversing the earlier determination.16 Upon receipt of the recommendation, the

commissioner is authorized to review the IRO’s recommendation “to ensure that it

11
Ostroth v Warren Regency, GP, LLC, 474 Mich 36, 40; 709 NW2d 589
(2006).
12
Const 1963, art 6, § 28.
13
Northwestern Nat’l Cas Co v Ins Comm’r, 231 Mich App 483, 488; 586
NW2d 563 (1998), quoting Brandon School Dist v Michigan Ed Special Services
Ass’n, 191 Mich App 257, 263; 477 NW2d 138 (1991).
14
MCL 550.1911(1).
15
MCL 550.1911(6).
16
MCL 550.1911(6), (11), and (13).

8

is not contrary to the terms of coverage under the covered person’s health benefit

plan with the health carrier.”17

Accordingly, under PRIRA, if a case accepted for external review involves

an issue of medical necessity, an IRO must be appointed to make a

recommendation. The commissioner, however, has the power to review the IRO’s

recommendation. But that power is not unlimited. The issue here is whether the

commissioner exceeds her power when she substitutes her opinion for the

conclusion of the IRO on issues that require the exercise of medical judgment.

For many years, this Court has recognized the maxim expressio unius est

exclusio alterius.18 This maxim says that the “express mention in a statute of one

thing implies the exclusion of other similar things.”19 So well established is this

maxim that it can be assumed that legislators are fully aware the courts will utilize

it when construing their words. Accordingly, by expressly giving the

commissioner the authority to review the recommendation to “ensure that it is not

contrary to the terms of coverage,” the Legislature implicitly barred the

commissioner from reviewing the recommendation for any other purpose. As

explained by the Court of Appeals:

17
MCL 550.1911(15).
18
E.g., Peter v Chicago & W M R Co, 121 Mich 324, 329; 80 NW 295
(1899).
19
Bradley v Saranac Community Schools Bd of Ed, 455 Mich 285, 298; 565
NW2d 650 (1997).

9

 [W]hile the Legislature intended that the OFIS Commissioner
would review the IRO’s recommendation for consistency and
compliance with the health plan itself, the Legislature did not intend
that the OFIS Commissioner would review or reevaluate the IRO
reviewer’s specific medical or clinical findings. Instead, the
language of PRIRA indicates that the Legislature intended the OFIS
Commissioner to defer to the IRO’s recommendation on medical
issues that do not implicate the language of the health plan itself.[20]

Thus, the commissioner is specifically authorized to review the IRO’s

recommendation to ensure that it is not contrary to the “terms of coverage.” In

this respect, the recommendation is not binding. But the commissioner is not

allowed to substitute her lay opinion for the medical conclusions of the IRO.21

20
Ross, 271 Mich App 377-378.
21
The majority argues that my analysis using expressio unius est exclusio
alterius leads to an interpretation that is contrary to the language of the statute.
The majority claims that I fail to recognize that the commissioner is given the
power to uphold or reverse an adverse determination whereas the IRO is not.
What the majority overlooks is that the commissioner’s power to review the IRO’s
recommendation is limited to “ensur[ing] that it is not contrary to the terms of
coverage . . . .” Thus, the commissioner is authorized to reject the IRO’s
recommendation only if it is contrary to the terms of coverage. It necessarily
follows that the commissioner must adopt the IRO’s recommendation when it is
not contrary to the terms of coverage. I recognize this point. The majority does
not. Hence, it is the majority’s interpretation that is contrary to the language of the
statute, not mine.
The interpretation of the statute advanced by the members of the majority is
another example of their belief that the answer to all questions of statutory
interpretation lies in a dictionary. As a result of this belief, they focus on the
dictionary definition of the word “recommendation” to resolve the case. But the
majority ignores the fact that the commissioner’s power of review is limited.
Regardless of how the majority defines the word “recommendation,” the
commissioner exceeds the scope of her power when she performs an act that she is
not empowered to do. As I have explained, PRIRA gives the commissioner the
power to review the recommendation solely to ensure that it is not contrary to the
terms of coverage.

10

Therefore, in order to determine whether the commissioner exceeded the scope of

her powers in this case, it is necessary to examine the “terms of coverage.”

Here, the IRO’s recommendation was consistent with the terms of

coverage. Ross’s health-benefit plan covered services in cases of immediate and

unforeseen medical emergency until such time as it was medically feasible to

transfer him to an in-network provider. The IRO concluded that Ross’s initial

treatment was a medical emergency. It also found that Ross “required ongoing

treatment for a period of time under the supervision of his treating physician and it

would have been inappropriate for [Ross] to receive treatment elsewhere.”

Also, as recognized by the Court of Appeals,

[respondent’s] schedule of benefits provides that respondent will
provide treatment for “medical emergenc[ies].” The schedule of
benefits also provides coverage for related medically necessary
services and related ancillary services. The IRO specifically
concluded that Ross’s initial evaluation from June 30, 2002, until
July 7, 2002, and his hospitalization of July 8 to 23, 2002, both
constituted emergency services.

Further, as recognized by the OFIS Commissioner in her final
opinion and order, Michigan law requires a health maintenance
organization certificate, which otherwise provides coverage for
emergency health services, to

“provide coverage for medically necessary services provided to an
insured for the sudden onset of a medical condition that manifests
itself by signs and symptoms of sufficient severity, including severe
pain, such that the absence of immediate medical attention could
reasonably be expected to result in serious jeopardy to the
individual’s health[,] . . . serious impairment to bodily functions, or
serious dysfunction of any bodily organ or part. An insurer shall not
require a physician to transfer a patient before the physician
determines that the patient has reached the point of stabilization. An
insurer shall not deny payment for emergency health services up to

11

 the point of stabilization provided to an insured under this subsection
because of either of the following:

“(a) The final diagnosis.

“(b) Prior authorization was not given by the insurer before
emergency health services were provided. [MCL 500.3406k(1).]”

MCL 500.3406k(1) goes on to define “stabilization” as “the point at
which no material deterioration of a condition is likely, within
reasonable medical probability, to result from or occur during
transfer of the patient.” The IRO reviewer in this case specifically
concluded that it would not have been medically feasible to transfer
Ross at any time before November 17, 2002, because his condition
had not been sufficiently stabilized and because his follow-up
treatments at the Arkansas facilities were medically necessary.[22]

In summary, the plan covered medical emergencies up to the point where it

was medically feasible to transfer the patient to an in-network facility. Michigan

law also requires coverage for emergency health services until stabilization. The

IRO determined that (1) the initial treatment was a medical emergency, (2) it was

not appropriate to transfer Ross to an in-network facility, and (3) Ross was not

stabilized before November 17, 2002.23 Therefore, the IRO’s recommendation

22
Ross, 271 Mich App 378-379 (citations omitted).
23
The majority claims that the IRO never concluded that Ross was not
“stabiliz[ed]” as defined by MCL 500.3406k(2). I disagree. In her final request
for clarification, the commissioner specifically asked the IRO to consider whether
Ross was stabilized as provided in MCL 500.3406k(2). In light of the
commissioner’s specific request, there is only one reasonable way to read the
IRO’s conclusion that respondent should be required to pay for the services: Ross
was necessarily not “stabiliz[ed]” for transfer as that term is defined by MCL
500.3406k(2).
It seems to me that the majority’s problem with the IRO’s recommendation
can be boiled down to two points. The first lies in the language that the IRO used
in its reports. The majority goes so far as accusing the IRO of responding to the
(continued…)

12

that respondent be ordered to pay for the services was consistent with the terms of

coverage.24 For this reason, the commissioner’s decision to ignore the IRO’s

recommendation was not authorized by law.

Aside from this inconsistency with the statutory language, an additional

reason exists for not allowing the commissioner to substitute her opinion for the

conclusions of the IRO on issues requiring medical judgment. The commissioner

(…continued)
commissioner’s requests with “unresponsive answers.” Ante at 24 n 12. Given
that the IRO is made up of doctors, not lawyers, it is not surprising that it did not
use the legalistic language that the majority is looking for. But we have a duty to
look beyond the language that is used to understand what the IRO was really
saying. The commissioner repeatedly cited the relevant standards and asked the
IRO to reevaluate its conclusion that respondent be required to pay for the
services. Repeatedly, the IRO concluded that respondent should be required to
pay for the services at issue. The commissioner made repeated requests citing the
relevant standards and the IRO repeatedly replied that respondent should be
required to pay for the services. Everything considered, the only way to read the
IRO’s reports is to find that the IRO concluded that the treatment at issue fell
within the terms of coverage.
The second point is that the majority apparently believes that the IRO
decided that it was going to recommend that respondent be required to “pay for the
services regardless of whether they fell within the terms of coverage.” Ante at 24
n 12. I find nothing to indicate bias on the part of the IRO. Accordingly, I find it
inappropriate for the majority to make this assumption. This faulty assumption
lies at the heart of the majority’s decision.
24
An example of a recommendation that would be contrary to the terms of
coverage would be an IRO’s determination that mental-health services were
medically necessary when the plan excluded coverage for mental-health services.
In such a situation, the commissioner could reject the recommendation because the
plan did not cover mental-health services.

13

is not a physician.25 Her expertise is banking. By contrast, for an IRO to be

approved, the IRO and its physicians must meet certain standards designed to

ensure quality and credentials.26 The commissioner is not a doctor, whereas the

IRO is made up of very well-qualified doctors. I do not see how the

commissioner’s decision to reject the IRO’s medical conclusions in favor of her

own uneducated opinion is anything other than arbitrary and capricious. And a

decision that is arbitrary and capricious is not authorized by law.27

In this case, the IRO’s physician, who is board-certified in internal

medicine, medical oncology, and hematology, concluded that Ross’s initial

evaluation constituted emergency services. The physician also concluded that it

was not appropriate to transfer Ross to another facility before November 17, 2002.

And Ross’s condition had not stabilized to the point where he could have been

transferred to an in-network facility. Ross’s health plan covered medical

emergencies until it was medically feasible to transfer him to an in-network

provider. Michigan law also provides that “[a]n insurer shall not deny payment

for emergency health services up to the point of stabilization . . . .”28 It follows

25
MCL 500.202 sets forth the qualifications of the commissioner. Notably
absent is any requirement that the commissioner have any medical degree or
license.
26
MCL 550.1919.
27
Northwestern Nat’l Cas, 231 Mich App at 488.
28
MCL 500.3406k(1).

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that respondent was required to pay for the services provided through November

17, 2002.29

Yet the commissioner found that only the July 8 to July 23, 2002, services

were covered. In so doing, she necessarily rejected the medical findings of the

IRO in favor of her own uneducated opinion. Not only was there no medical

evidence supporting her decision, she is completely unqualified to offer a medical

opinion. There could be no clearer example of an arbitrary and capricious

decision.30

CONCLUSION

As the Court of Appeals recognized, the commissioner exceeds the scope of

her power when she substitutes her opinion for the conclusion of an IRO on issues

29
The majority claims that “the commissioner’s determination was
consistent with the IRO’s recommendation to the extent that the recommendation
did not contradict the policy provisions or MCL 500.3406k.” Ante at 22-23. As I
have explained, this simply is not true.
30
The majority takes the position that a conclusion that Ross was not
stabilized for transfer is arbitrary and capricious, given that UAMS discharged
Ross on July 23, 2002. But the fact that Ross was discharged does not mean that it
would have been appropriate to have transferred him to another facility. In fact, in
its discharge summary UAMS specifically indicated that Ross required “outpatient
followup.” The IRO’s physician, who is a medical expert, reviewed the relevant
materials and reached the medical conclusion that it would have been
inappropriate to have transferred Ross to another facility. As the IRO uses
physicians medically trained to reach such conclusions, the majority’s suggestion
that the IRO’s conclusion was arbitrary and capricious is preposterous.
In addition, there is no evidence that the services Ross required were
offered by an in-network provider. Without proof that an in-network provider
offered the requisite services, it is impossible to conclude that transfer would have
been appropriate.

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that require the exercise of medical judgment. This result is not only mandated by

the statutory language, it is also necessary to avoid allowing the commissioner, a

banker, to make medical decisions. Accordingly, I dissent. I would affirm the

judgment of the Court of Appeals.

Marilyn Kelly

Cavanagh, J. I would deny leave to appeal.

Michael F. Cavanagh

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