Title: WENDY WOOD V AUTO-OWNERS INSUR CO
Citation: N/A
Docket Number: 121970
State: Michigan
Issuer: Michigan Supreme Court
Date: September 9, 2003

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Michigan Supreme Court
Lansing, Michigan 48909 
Chief Justice 
Justices 
Maura D. Corrigan 
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Clifford W. Taylor 
Robert P. Young, Jr. 
Opinion 
Stephen J. Markman 
FILED SEPTEMBER 9, 2003  
WENDY WOOD, Personal Representative of the 
ESTATE OF MARVIN JAMES WOOD, JR., 
Deceased,  
Plaintiff-Appellee,  
v 
No. 121970  
AUTO-OWNERS INSURANCE COMPANY,  
Defendant-Appellant.  
PER CURIAM  
Defendant seeks leave to appeal the judgment of the Court  
of Appeals reversing the trial court’s grant of summary  
disposition for defendant.  We reverse the Court of Appeals  
decision concerning replacement services benefits under MCL  
500.3108 and remand the case to the Washtenaw Circuit Court  
for further proceedings consistent with this opinion. In all  
other respects, we affirm.1  
1 In particular, we affirm the judgment of the Court of 
Appeals concerning funeral benefits under MCL 500.3107.  
  
  
  
  
I. INTRODUCTION  
Plaintiff’s decedent, Marvin James Wood, Jr., was killed  
in an automobile accident during the course of his employment.  
Defendant Auto-Owners Insurance Company is first in the order  
of priority for payment of no-fault benefits.  The issue  
presented is how to properly calculate Auto-Owners’ liability  
for payment of replacement services benefits under MCL  
500.3108, in light of the statutory maximum benefit contained  
in MCL 500.3108 and the setoff provision in MCL 500.3109.  
II. STANDARD OF REVIEW  
The issue presented concerns the interpretation of, and  
the relationship between, two statutes.  Accordingly, the  
issue is one of statutory interpretation, which we review de  
novo as a question of law.  Lesner v Liquid Disposal, Inc, 466  
Mich 95, 99; 643 NW2d 553 (2002).  
III. DISCUSSION  
A. CALCULATION  
MCL 500.3108 provides:  
(1) Except as provided in subsection (2), 
personal protection insurance benefits are payable 
for a survivor’s loss which consists of a loss, 
after the date on which the deceased died, of 
contributions of tangible things of economic value, 
not including services, that dependents of the 
deceased at the time of the deceased’s death would  
have received for support during their dependency 
from the deceased if the deceased had not suffered  
the accidental bodily injury causing death and 
expenses, not exceeding $20.00 per day, reasonably 
incurred 
by 
these 
dependents 
during 
their  
dependency and after the date on which the deceased 
died in obtaining ordinary and necessary services 
in lieu of those that the deceased would have  
2  
 
 
performed for their benefit if the deceased had not 
suffered the injury causing death. 
Except as 
provided in section (2) the benefits payable for a 
survivor’s loss in connection with the death of a  
person in a single 30-day period shall not exceed 
$1,000.00 for accidents occurring before October 1, 
1978, and shall not exceed $ 1,475.00 for accidents 
occurring on or after October 1, 1978, and is not 
payable beyond the first three years after the date 
of the accident.  
(2) The maximum payable shall be adjusted 
annually to reflect changes in the cost of living 
under rules prescribed by the commissioner.  A  
change in the maximum shall apply only to benefits 
arising out of accidents occurring subsequent to 
the date of change in the maximum.  The maximum  
shall apply to the aggregate benefits for all 
survivors payable under this section on account of 
the death of any one person.  
From the plain, unambiguous language of subsection  
3108(1), a survivor’s loss benefit (SLB) is comprised of two  
elements: (1) economic loss (EL), which is the loss of  
contributions of tangible things of economic value, not  
including services, and (2) replacement services costs (RS),  
which are the expenses, not exceeding $20 a day, reasonably  
incurred 
in 
replacing ordinary and necessary services.  Miller  
v State Farm Mut Automobile Ins Co, 410 Mich 538, 554; 302  
NW2d 537 (1981).  Under subsection 3108(1), the survivor’s  
loss benefit (SLB) cannot exceed the statutory maximum (SM).  
Schaible v Michigan Mut Ins Co, 116 Mich App 116, 120-121; 321  
NW2d 860 (1982). In equational presentation,  
SLB = EL + RS  
SLB # SM 
3  
 
MCL 500.3109(1) provides:  
Benefits provided or required to be provided 
under the laws of any state or the federal  
government shall be subtracted from the personal 
protection insurance benefits otherwise payable for  
the injury. [Emphasis added.]  
Because 
neither 
worker’s 
compensation 
survivor’s 
benefits  
nor Social Security survivor’s benefits include, or are  
required to include, replacement services costs (RS),  
subsection 3109(1) setoff benefits (SO) pertain only to  
economic-loss benefits (EL).  Cole v Detroit Auto Inter-Ins  
Exch, 137 Mich App 603, 613; 357 NW2d 898 (1984).  
The particular question presented by this case pertains  
to the interrelation of the survivor’s loss benefit,  the  
statutory maximum amount, and the setoff benefit amount. The  
Court of Appeals held that the setoff benefit amount is to be  
subtracted before the calculation of the survivor’s  loss  
benefit and before the comparison to the statutory maximum  
ceiling.  In contrast, defendant argues that the first step is  
to determine the survivor’s loss benefit and then compare it  
to the statutory maximum ceiling.  Only then, according to the  
defendant, is the MCL 500.3109 setoff provision applied. We  
agree with defendant.  
MCL 500.3109 provides that setoff benefits “shall be  
subtracted from the personal protection insurance benefits  
otherwise payable for the injury.”  By this language, it is  
clear that one first determines what personal protection  
insurance benefits are payable.  MCL 500.3108 governs that  
4  
 
determination 
and 
specifically 
provides 
what 
benefit 
amount 
is  
“payable” (AP).  Once that amount, i.e., the level of benefits  
otherwise payable, is calculated under MCL 500.3108, the  
setoff provision of MCL 500.3109 is applied and “[b]enefits  
provided . . . under the laws,” i.e., the setoff benefit  
amount (SO), is subtracted from the “benefits otherwise  
payable.”  
Under the statutory scheme, to the extent that a setoff  
occurs, the setoff benefit amount (SO) substitutes for and  
becomes all or part of the economic loss benefit (EL) payment.  
Great American Ins Co v Queen, 410 Mich 73, 85, 87, 96, 97;  
300 NW2d 895 (1980).  In the present case, this means that the  
benefits 
provided 
by 
Social 
Security 
and 
worker’s 
compensation  
governmental programs are deducted from the amount payable by  
the no-fault insurer as calculated under MCL 500.3108. This  
conclusion is consistent with the statutory language of MCL  
500.3109, which provides that setoff benefits are to be  
“subtracted from the personal protection insurance benefits  
otherwise payable.”  
The Court of Appeals erred in applying the setoff  
provision before completing the MCL 500.3108 analysis.  The  
full economic loss benefit should have been credited and  
included 
in 
the 
survivor’s loss benefit calculation before the  
comparison to the statutory maximum benefit. Great American,  
supra at 96; O’Donnell v State Farm Mut Automobile Ins Co, 404  
5  
 
 
  
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
  
Mich 524, 538, 539; 273 NW2d 829 (1979).  According to the  
plain language of MCL 500.3109, both these steps are to occur  
before consideration of the setoff benefit.  
To restate, the proper steps in the process are as 
follows: (1) calculate SLB 
(EL 
+ 
RS 
= 
SLB); (2) compare SLB to 
SM (SLB # SM) to determine the amount payable under MCL 
500.3108 (AP); and (3) determine the no-fault insurer’s 
payment liability (NFIL) in light of the setoff benefit amount 
(SO).  Because the setoff benefit (SO) serves to reimburse 
economic loss (EL), the total setoff cannot exceed economic 
loss.  Thus: If EL 
$ SO, then NFIL = AP - SO; if EL < SO, then 
NFIL = AP - EL. 
B. APPLICATION  
In the present case, economic loss benefits (EL) based on  
Wood’s salary and taxes were calculated to be $3,643.10.2  
Replacement service benefits (RS), at a rate of $20 a day,  
amount to $600.  The applicable statutory maximum benefit  
under the annual adjustment permitted by subsection 3108(2)  
(SM) is $3,688.  
Concerning the setoff benefit amount, plaintiff receives  
$2,513.14 in worker’s compensation benefits and $2,199 in  
Social 
Security 
benefits. 
These 
benefits 
represent  
compensation for economic loss only, not for replacement  
services.
 In sum, the total benefit amount that can be  
2 All calculations are for a thirty-day period.  
6  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
applied as setoff under § 3109 (SO) is $4,712.14.  
Accordingly, we first calculate the survivor’s loss  
benefit (SLB) by adding the economic loss benefit (EL) and the  
replacement services costs (RS):  
SLB = EL + RS  
SLB = $3,643.10 + $600  
SLB = $4,243.10  
Second, we compare the survivor’s loss benefit (SLB) to  
the statutory maximum benefit (SM) in order to determine the  
amount payable (AP):  
(The lesser of SLB and SM) = AP  
(The lesser of $4,243.10 and $3,688) = AP  
$3,688 = AP  
Third, we determine the no-fault insurer’s payment  
liability (NFIL), considering the setoff benefit amount (SO):  
If EL $ SO, then NFIL = AP - SO 
If EL < SO, then NFIL = AP - EL  
Here, SO = $4712.14 and EL = $3,643.10  
Therefore, EL < SO, and  
NFIL = AP - EL  
NFIL = $3,688 - $3,643.10  
NFIL = $44.90  
Inasmuch as the Court of Appeals did not follow these  
steps, the panel erred.  
CONCLUSION  
For these reasons, we reverse the judgment of the Court  
7  
of Appeals concerning replacement services benefits. In all  
other respects we affirm.  The case is remanded to the  
Washtenaw Circuit Court for further proceedings consistent  
with this opinion.  
Maura D. Corrigan 
Elizabeth A. Weaver  
Clifford W. Taylor 
Robert P. Young, Jr. 
Stephen J. Markman  
CAVANAGH and KELLY, JJ.  
We would grant leave to appeal.  
Michael F. Cavanagh 
Marilyn Kelly  
8