• Regulatory Considerations. Several government offices monitor the activities of MESSA, mostly within the Michigan Departments of Commerce and Labor. Since MESSA's primary business function is third party administration of insurance, it must report to the Insurance Bureau of the Michigan Department of Commerce. The Insurance Bureau licenses MESSA and its managers, ensures compliance with the law, examines the financial solvency of the corporation, certifies MESSA insurance plans, and handles all complaints against MESSA. In addition, MESSA is subject to the regulations of the insurance industry contained within the Michigan Insurance Code. In the past, MESSA's attorneys have contended that MESSA's business activities do not constitute transactions of insurance for the regulatory purposes of the Code.¹³ Rather, they have contended that MESSA is regulated by the Third Party Administrator Act of 1984, which provides the specifications and guidelines for administering insurance plans which have been underwritten by a separate commercial carrier. Yet according to Jean Carlson, director of the Insurance Bureau's Office of Policy, MESSA must comply with the Insurance Code, because it functions as an insurance agent and because the Third Party Administrator Act is a "supplement" to the Code.

• Judicial Considerations. Several court cases involving the MEA have secured MESSA's hegemony in the market for administration of insurance benefits to public school employees. The two most important cases were both decided by the Michigan Court of Appeals during the 1980s. In the 1981 case of Houghton Lake Education Association v. Houghton Lake Board of Education, the Court ruled that a school district cannot unilaterally choose the most cost-effective insurance administrator once the contents of an insurance plan have been negotiated.¹⁴ The Court stated that the choice of an administrator for the plan is not a managerial decision reserved by the school district, but a bargaining issue which must be resolved through negotiations with the labor union and identified in the labor contract. In its 1986 decision in MEA/NEA v. St. Charles Community Schools, the Court ruled that insurance benefits are a mandatory topic of all contract negotiations involving school districts and the teachers' union.¹⁵ The bargainers do not have to settle on the issue, but a discussion of insurance benefits must be incorporated into the overall collective bargaining process if a negotiating party raises the issue. As a result of both cases, school districts have been put at a disadvantage, because they can neither avoid the issue of insurance nor decide who the plan administrator will be without the consent of MESSA's parent corporation-the MEA. Not all MEA local affiliates bargain for MESSA coverage with the same intensity and not all school districts bow to the union's pressure, so some school districts have avoided MESSA, despite the fact that two court decisions now stand which have cleared the way for MESSA to dominate its market.

As of late, no final court decision has adversely impacted MESSA's ability to conduct business; however, a case is now pending before the Michigan Court of Appeals which could prevent MESSA from making unilateral changes in its insurance plans during the course of a contract period.¹⁶ This particular case, IEA/MEA and MESSA v. St. Clair Intermediate School District, is discussed later in this report.