Case Title: Sibley v. DAIIE

Citation: 427 N.W.2d 528, 431 Mich. 164

Docket Number: 

State: michigan

Court: Michigan Supreme Court

Date: 1988-08-23T00:00:00Z

Document:
Decided August 23, 1988.
Brent S. Hunt for the plaintiff.
Brandt, Hanlon, Becker, Lanctot, McCutcheon, Martin & Schoolmaster (by Clair W. Hoehn) and *166 Gromek, Bendure & Thomas (by John A. Lydick, of counsel) for the defendant.
CAVANAGH, J.
Several times this Court has determined whether § 3109(1) of the no-fault insurance act[1] requires various state and federal government benefits to be subtracted from no-fault benefits. In this case we must determine whether § 3109(1) applies to the benefits plaintiff received but was later required to refund under the Federal Employees' Compensation Act (FECA), 5 USC 8101 et seq. We hold that because plaintiff was required by law to refund the benefits he had received, those benefits were not "provided or required to be provided" and therefore should not be subtracted from the personal protection insurance benefits otherwise available to plaintiff under the no-fault insurance act.
I
The facts in this case were submitted to the trial court by the parties in a stipulated "Statement of Facts," which is summarized in the Court of Appeals opinion:
The Court of Appeals affirmed, finding no reason to treat FECA benefits differently from state workers' compensation benefits and holding that plaintiff's FECA benefits had been properly set off against his no-fault benefits.
We granted plaintiff's application for leave to appeal. 428 Mich 910 (1987).
II
Section 3109(1) of the no-fault insurance act provides that certain benefits must be subtracted from personal protection insurance benefits available under the act:
The purpose of § 3109(1) is to reduce the basic cost of insurance by requiring a setoff of those government benefits that duplicate no-fault benefits[2] and coordinating those benefits a victim may receive. The focus of the analysis is whether the benefits are duplicative.[3] Thus, "not all `[b]enefits provided or required to be provided under the laws of any state or the federal government' must be subtracted from no-fault personal protection insurance benefits otherwise due."[4]
*169 This Court formulated a test to determine whether particular benefits must be set off from no-fault benefits in Jarosz v DAIIE, 418 Mich 565, 577; 345 NW2d 563 (1984):
Unfortunately, the Jarosz test did not really anticipate the question presented by these facts. We are confronted here with legislation conferring on the payer of workers' compensation benefits a right of complete recovery out of the worker's tort recovery  a situation not specifically dealt with or contemplated by our Legislature when it crafted our no-fault scheme.
The primary underlying theme of the automobile no-fault act is that the automobile insurer pays without any right of reimbursement out of any tort recovery. It is an important, but secondary, concept that where benefits are provided from other sources pursuant to state or federal law, the amount paid by the other source reduces the automobile insurer's responsibility. But to the extent that the reduction in the automobile insurer's responsibility is from a source that retrieves reimbursement from the injured person's tort recovery, the amount so retrieved should not be deemed "benefits provided" within the meaning of the automobile no-fault act relieving the primarily liable automobile insurer of its primary responsibility to pay full benefits without reduction by reason of any tort recovery. Were it to be otherwise, *170 the worker's tort recovery, contrary to the spirit of the automobile no-fault act, would be used, in effect, to reimburse the alternative source (the federal government) of the other "benefits provided" that substituted for automobile no-fault benefits.
Because the reimbursement here is provided for by federal law, which preempts state law, we cannot, as in Great American Ins v Queen, 410 Mich 73; 300 NW2d 895 (1980), bar the alternative source (the federal government) from recovering against and from the tort recovery what it paid the injured worker. In fairness, however, in order to prevent a worker injured in an automobile accident from, in effect, paying for his own work loss/medical benefits, we can require the automobile no-fault insurer to repay benefits to that extent, in order to effectuate the underlying policies of the automobile no-fault act.[5]
We are persuaded that when the automobile no-fault act speaks of benefits "provided," it means benefits permanently provided. To the extent that benefits paid are retrieved by the alternative source provider out of the worker's tort recovery, they at that point cease to be "benefits provided" within the meaning of § 3109(1) relieving the automobile no-fault insurer of liability to the extent of "benefits provided" by alternative sources pursuant to state or federal law.
Because plaintiff was ultimately required to refund the FECA benefits he had received, he was left without that compensation for his medical services and lost wages. Therefore, his only recourse for *171 economic damages was to seek payment from his no-fault carrier. Because, in fact, only single recovery was available to plaintiff, there was no duplicative recovery.[6]
We find that § 3109(1) of the no-fault act does not apply in this case. Therefore, the amount plaintiff initially received in FECA benefits should not be subtracted from the personal protection insurance benefits otherwise available to plaintiff under the no-fault insurance act. Plaintiff is entitled to personal protection benefits plus interest. We therefore reverse the decision of the Court of Appeals and remand this case to the circuit court for entry of an order consistent with this opinion.
RILEY, C.J., and LEVIN, BRICKLEY, BOYLE, ARCHER, and GRIFFIN, JJ, concurred with CAVANAGH, J.
[1]  MCL 500.3101 et seq.; MSA 24.13101 et seq.
[2]  See Tebo v Havlik, 418 Mich 350, 367; 343 NW2d 181 (1984); O'Donnell v State Farm Mutual Automobile Ins Co, 404 Mich 524, 544; 273 NW2d 829 (1979).
[3]  Jarosz v DAIIE, 418 Mich 565, 577; 345 NW2d 563 (1984).
[4]  Id., p 573.
[5]  It is most unlikely that the Legislature intended that all persons injured in automobile accidents would receive full work loss and medical benefits without any reduction of any tort recovery they might obtain, excepting only those relatively small number of persons injured in an automobile accident in their employment by the federal government.
[6]  See Perez v State Farm Mutual Automobile Ins Co, 418 Mich 634, 641; 344 NW2d 773 (1984).