Some Question Michigan Judge’s Refusal to Recuse in Insurance Case

July 29, 2009

A Michigan Supreme Court justice’s decision not to recuse herself from a case that pertains to her husband’s profession contradicts the spirit of a recent U.S. Supreme Court ruling on when judges should step aside because of possible conflicts of interest, critics say.

Three Republican justices on the Michigan Supreme Court have criticized their new Democratic colleague, Justice Diane Hathaway, for ruling in a case that dealt with the insurance industry, as her husband is an auto insurance attorney.

Hathaway cast the deciding vote in a 4-3 ruling last week that forced the Michigan Catastrophic Claims Association to fully reimburse insurers for a brain-damaged man’s round-the-clock home nursing care.

The association said the $55 hourly rate was too high and that requiring it to pay additional costs would let insurers and injured motorists quickly settle claims for any amount, pushing those costs onto the association and the Michigan motorists who pay for catastrophic care through an annual surcharge on their insurance bills.

The Michigan court ruled 4-3 in the association’s favor in December, before Hathaway took the spot previously held by Republican Cliff Taylor, who lost to Hathaway in November.

When the case was reviewed again, the claims association argued Hathaway should not rule on it because her husband could benefit financially. But Hathaway denied having any conflict of interest, saying the association’s stance “strains reasoned logic.”

She argued justices should not have to step aside themselves just because their spouse practices in an area of law affected by a case. Justices would not recuse themselves from a medical malpractice lawsuit because their spouse was a doctor or a school dispute because their spouse was a teacher, she said.

Democratic justices Michael Cavanagh and Marilyn Kelly and GOP Justice Elizabeth Weaver sided with Hathaway.

But Republican justices Maura Corrigan, Stephen Markman and Robert Young Jr. said Hathaway should have waited until the state Supreme Court was able to fully dissect and react to the U.S. Supreme Court’s conflict of interest ruling. That ruling does not directly address situations where a judge’s family members might be affected by a case.

In that June decision, the court ruled that a West Virginia judge who remained involved in a lawsuit filed against the company of his biggest campaign donor deprived the other side of the right to a fair hearing.

Young argued Hathaway’s refusal to remove herself flew in the face of the position she campaigned on last fall.

During those months, Hathaway railed against insurance companies and called Taylor a “walking conflict of interest” because his wife was former Republican Gov. John Engler’s chief legal counsel, and Taylor – an Engler appointee – ruled on laws enacted by Engler.

“Justice Hathaway’s refusal to live up to her own expressed standard of conduct is worthy of note in its own right: The people of this state deserve to know whether candidates promise one thing when running for office but deliver another when elected,” wrote Young, who is up for re-election in 2010.

Hathaway wrote she would not respond to her colleagues’ “inappropriate and unnecessary” comments. “This court should discontinue devoting the state’s limited resources to unproductive colloquy,” she said.

The Michigan high court has a 172-year-old tradition of letting justices decide for themselves whether they have a conflict of interest, the same process used by the U.S. Supreme Court and other state high courts. The state justices have no power to punish a fellow justice who does not step aside voluntarily.

The dispute over the insurance case was not the first time Michigan justices have feuded over disqualification issues, but the federal ruling has raised the stakes and more questions – especially to what extent, if any, campaign contributions affect whether a justice should step aside.

The justices plan to consider formal rules on disqualification procedures later this year. Friday is the deadline for public comment on the proposed standards.

The recusal order: 3466-72109Order.pdf

The insurance case: F&G-Opinion.pdf

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