Title: ARTHUR JARRAD V INTEGON NATL INS CO
Citation: N/A
Docket Number: 126176
State: Michigan
Issuer: Michigan Supreme Court
Date: May 3, 2005

_______________________________ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michigan Supreme Court 
Lansing, Michigan 
Chief Justice:  
Justices: 
Clifford W. Taylor  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Opinion 
Maura D. Corrigan 
Robert P. Young, Jr. 
Stephen J. Markman 
FILED MAY 3, 2005 
ARTHUR T. JARRAD, 
Plaintiff-Appellee, 
v 
No. 126176 
INTEGON NATIONAL INSURANCE 
COMPANY, 
Defendant-Appellant. 
BEFORE THE ENTIRE BENCH 
CORRIGAN, J.   
In this no-fault coordination-of-benefits case, the 
trial court and the Court of Appeals ruled that an 
employer’s self-funded long-term disability plan may not be 
coordinated with no-fault wage loss benefits. We hold that 
a self-funded long-term disability plan constitutes “other 
health 
and 
accident 
coverage” 
that 
is 
subject 
to 
coordination under MCL 500.3109a. We therefore reverse the 
judgment of the Court of Appeals, and remand the matter to 
the trial court for entry of an order granting summary 
disposition for defendant. 
 
 
                                                 
 
 
I. UNDERLYING FACTS AND PROCEDURAL HISTORY 
Plaintiff 
sustained 
injuries 
in 
an 
automobile 
accident. 
At the time of the accident, he was employed by 
the Michigan Department of Corrections. Under a collective 
bargaining agreement, the state provided a long-term 
disability (LTD) plan that covered plaintiff. An insurance 
company 
administered 
the 
plan 
and 
processed 
benefit 
payments, but the plan was self-funded by deductions from 
employees’ paychecks and employer contributions. 
Following the accident, plaintiff began receiving 
monthly payments of $2,220.04 under the LTD plan. 
Under 
the coordination-of-benefits clause in plaintiff’s no-fault 
policy, defendant, plaintiff’s no-fault insurer, deducted 
the LTD benefits from its no-fault wage loss payments, for 
a net amount of $1,467.76 a month for three years following 
the accident.1  Plaintiff filed this action to challenge the 
coordination of benefits. 
The parties filed cross-motions 
for summary disposition. 
The trial court granted summary 
disposition for plaintiff. 
The 
Court 
of 
Appeals 
affirmed 
in 
a 
two-to-one 
decision.2
 The majority noted that MCL 500.3109a permits 
coordination of no-fault benefits with “other health and 
1 Under MCL 500.3107(1)(b), no-fault wage loss benefits
are payable for up to three years after the accident. 
2 Unpublished opinion per curiam, issued January 27,
2004 (Docket No. 245068). 
2 
 
 
 
accident coverage . . . .” 
The majority explained that in 
LeBlanc v State Farm Mut Automobile Ins Co, 410 Mich 173, 
204; 301 NW2d 775 (1981), this Court had construed the word 
“coverage” as “a word of precise meaning in the insurance 
industry, [that] refers to protection afforded by an 
insurance policy, or the sum of the risks assumed by a 
policy of insurance.” 
While this definition has expanded 
under Court of Appeals case law to include medical benefits 
received from health plans typically provided by insurers, 
the majority opined that no such expansion of the term 
“coverage” has occurred regarding work-loss benefit plans. 
Moreover, the majority construed Spencer v Hartford 
Accident & Indemnity Co, 179 Mich App 389; 445 NW2d 520 
(1989), to preclude coordination where an employee receives 
“wage loss benefits from his employer through a formal wage 
continuation plan pursuant to a collective bargaining 
agreement.” 
The majority distinguished Rettig v Hastings 
Mut Ins Co, 196 Mich App 329; 492 NW2d 526 (1992), because 
in that case LTD benefits were provided under an insurance 
policy, rather than directly by the employer under a 
collective bargaining agreement. 
Judge Zahra, the dissenting Court of Appeals judge in 
this case, opined that the self-funded LTD plan constituted 
“other health and accident coverage” that is subject to 
coordination under MCL 500.3109a. 
Unlike Spencer, where 
3  
 
 
the employer paid wage continuation benefits directly to 
the employee, the instant case involves an insurance-type 
benefit paid by a third party from accumulated payroll 
contributions. 
The dissent would have followed Rettig, in 
which 
the 
Court 
of 
Appeals 
held 
that 
LTD 
benefits 
“constitute 
protection 
typically 
provided 
by 
health 
insurance 
plans, 
which 
include 
payments 
for 
medical 
expenses resulting from an accident as well as wage-loss 
replacement benefits.” 
Rettig, supra at 333 (emphasis 
added). 
Judge Zahra also opined that the self-funded nature of 
the plan was not dispositive, because in drafting § 3109a, 
the Legislature used the broad term “coverage” rather than 
“insurance.” 
Moreover, case law reflects that the phrase 
“other health and accident coverage” includes coverage 
typically provided by an insurance company, regardless of 
whether it is actually provided by an insurance company in 
a particular case. 
For example, Michigan courts have held 
that 
“other 
health 
and 
accident 
coverage” 
includes: 
military medical benefits paid by the federal government, 
Tatum v Gov’t Employees Ins Co, 431 Mich 663; 431 NW2d 391 
(1988); Medicare benefits, LeBlanc, supra; medical benefits 
provided under a union plan, Lewis v Transamerica Ins Corp 
of America, 160 Mich App 413; 408 NW2d 458 (1987); services 
offered by health maintenance organizations, United States 
4  
 
 
 
 
 
                                                 
 
Fidelity & Guaranty Co v Group Health Plan of Southeast 
Michigan, 131 Mich App 268; 345 NW2d 683 (1983); and 
medical and disability benefits provided by the Army and 
Veterans Administration, Bagley v State Farm Mut Automobile 
Ins Co, 101 Mich App 733; 300 NW2d 322 (1980). 
Defendant applied for leave to appeal in this Court. 
We held oral argument on whether to grant the application 
or 
take 
other 
peremptory 
action 
permitted 
by 
MCR 
7.302(G)(1).3 
II. STANDARD OF REVIEW 
We review de novo the decision whether to grant 
summary disposition. 
Maiden v Rozwood, 461 Mich 109, 120; 
597 NW2d 817 (1999). 
Moreover, the meaning of the phrase 
“other health and accident coverage” in MCL 500.3109a is a 
question of law that is also reviewed de novo. 
Jenkins v 
Patel, 471 Mich 158, 162; 684 NW2d 346 (2004). 
III. DISCUSSION 
A. Legal Background 
MCL 500.3109a states: 
An insurer providing personal protection 
insurance benefits shall offer, at appropriately
reduced premium rates, deductibles and exclusions
reasonably related to other health and accident
coverage on the insured. 
The deductibles and 
exclusions required to be offered by this section
shall be subject to prior approval by the 
commissioner and shall apply only to benefits
payable to the person named in the policy, the 
3 471 Mich 914 (2004). 
5 
 
 
 
 
 
 
 
 
 
                                                 
spouse of the insured and any relative of either
domiciled in the same household. 
In Nyquist v Aetna Ins Co, 84 Mich App 589; 269 NW2d 
687 (1978), the plaintiffs argued that Blue Cross-Blue 
Shield benefits were not insurance4 and therefore could not 
be coordinated with no-fault benefits. 
The Court of 
Appeals concluded that coordination was permitted, noting 
“that § 3109a uses the word ‘coverage’ rather than 
‘insurance’; the use of the broader term militates against 
plaintiffs’ restrictive reading of the section at issue.” 
Nyquist, 
supra 
at 
592. 
Moreover, 
the 
plaintiffs’ 
restrictive reading would subvert the statutory purpose of 
eliminating duplicative coverage. 
An employee’s use of accumulated sick leave, however, 
is not subject to coordination. 
In Orr v DAIIE, 90 Mich 
App 687; 282 NW2d 177 (1979), the Court of Appeals noted 
that the word “coverage” means protection by an insurance 
policy, and that the Legislature thus intended to limit 
coordination to health and accident insurance coverage. 
Sick leave does not fall within this definition. 
The 
plaintiff’s sick bank could fluctuate depending on usage. 
Thus, “[a]ny rate reduction granted based upon this 
fluctuating 
benefit 
could 
not 
be 
actuarially 
sound. 
However, a rate based upon another policy of insurance with 
4 See Michigan Hosp Service v Sharpe, 339 Mich 357; 63
NW2d 638 (1954). 
6 
 
 
 
 
fixed limits of liability would enable the insurance 
company to offer appropriately reduced premium rates.” Id. 
at 690-691. 
In LeBlanc, supra, this Court held that Medicare 
benefits were “health and accident coverage” subject to 
coordination. 
This 
Court 
stated 
that 
because 
the 
Legislature did not modify the statutory phrase “other 
health and accident coverage” with the word “private,” the 
Legislature “intended to give unrestrained application of § 
3109a to health and accident coverage from whatever 
source.” 
LeBlanc, supra at 202 (emphasis added). 
“Thus, 
both private and non-private plans were within the scope of 
the bill.” Id. at 203. 
The LeBlanc Court also stated: “‘Coverage,’ a word of 
precise meaning in the insurance industry, refers to 
protection afforded by an insurance policy, or the sum of 
the risks assumed by a policy of insurance.” 
Id. at 204. 
This Court concluded that Medicare constituted “other 
health and accident coverage” because the Court perceived 
“no just reason to differentiate Medicare from other, more 
traditional, forms of health and accident coverage which 
irrefutably are within the scope of § 3109a. Just like any 
so-called private insurer, Medicare compensates providers 
of medical and hospital services on behalf of participants 
who require health care.” Id. at 205. This Court found it 
7  
 
 
  
                                                 
 
“inconsequential” that, in other contexts, “Medicare has 
been deemed not to be insurance in the usual sense of the 
term: the same has been said of Blue Cross and Blue Shield 
plans which, according to Nyquist, fall within § 3109a.”5 
Id. 
In United States Fidelity, supra, the Court of Appeals 
held 
that 
services 
offered 
by 
a 
health 
maintenance 
organization (HMO) were health and accident coverage for 
purposes of § 3109a. 
The Court of Appeals acknowledged 
that HMOs “have a unique character. 
Rather than providing 
health insurance and paying for the bills after the insured 
has been treated by a doctor, an HMO is a prepaid plan 
where the participant pays before hand for the services 
themselves. . . . Under traditional definitions, a health 
maintenance organization does not sell insurance.” 
United 
States Fidelity, supra at 272 (emphasis added). 
5 Although the LeBlanc Court concluded that Medicare 
was “other health and accident coverage,” no coordination
was allowed in that case because the insured did not elect 
a coordinated policy. 
This Court’s holding avoided the
mandatory 
coordination 
provision 
in 
MCL 
500.3109(1)
(“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.”) by ruling that the
permissive 
coordination 
provision 
in 
MCL 
500.3109a 
controlled instead. This aspect of the analysis in LeBlanc 
is not implicated here because it is undisputed that 
plaintiff chose a coordinated policy. 
We also note that 
Congress has subsequently amended federal law to make 
Medicare benefits secondary to no-fault insurance. 
See 42 
USC 1395y(b). 
8 
 
 
 
 
But MCL 500.3109a; MSA 24.13109(1) does not
refer to “insurance” but to “health and accident 
coverage". 
Not only have medical and disability
benefits 
from 
the 
Army 
and 
the 
Veterans 
Administration been included within this statute,
Bagley v State Farm Mut Automobile Ins Co, 101
Mich App 733; 300 NW2d 322 (1980), but Medicare
payments have also been included. 
[LeBlanc, 
supra.] 
The term used, “coverage", is a broad
term. 
[Nyquist, supra.] 
Accordingly, we hold
that the services offered by defendant are 
“health and accident coverage” as defined by MCL
500.3109a; MSA 24.13109(1). [Id. at 272-273.] 
In Lewis, supra, the Court of Appeals held that a 
union plan that pays medical expenses constitutes “other 
health and accident coverage” under § 3109a. 
The Court of 
Appeals noted that the intent of this provision “was to 
reduce insurance costs by obviating the potential for 
double recovery.” 
Lewis, supra at 418. 
“To accomplish 
this end, the Legislature purposely used the broad term 
‘coverage’ rather than ‘insurance’ in describing health and 
accident benefits available to the insured independent of 
the no-fault contract.” Id. 
In Tatum, supra, the Air Force paid the insured’s 
medical expenses pursuant to a federal statute. This Court 
held that those benefits constituted “other health and 
accident coverage” under § 3109a. 
Reviewing the holdings 
in LeBlanc and Nyquist, the Tatum Court reasoned: 
Military medical coverage is similar to both
Blue Cross-Blue Shield and Medicare in the sense 
that, in various forms, each is comprehensive
coverage 
of 
eligible 
individuals 
for 
their 
medical and hospitalization costs. Further, Blue
Cross-Blue Shield coverage, when provided through
9 
 
 
 
 
 
 
one’s employer, can parallel that which is 
provided to active military personnel by the 
federal government under [the federal statute].
We can perceive no rational basis for concluding
that military medical benefits, which essentially
serve the same purpose as Blue Cross-Blue Shield
and Medicare benefits, are not “health and 
accident coverage” within the meaning of § 3109a.
[Tatum, supra at 670.] 
In Spencer, supra, the Court of Appeals held that wage 
continuation benefits paid directly by an employer pursuant 
to a collective bargaining agreement did not constitute 
“health and accident coverage” under § 3109a. The Court of 
Appeals opined that the Uniform Motor Vehicle Accident 
Reparations Act (UMVARA), a model act on which our no-fault 
law is based, contained a broader coordination-of-benefits 
provision, and that the model provision would have included 
wage continuation benefits pursuant to a union agreement. 
But because our no-fault law was drafted more narrowly, the 
Court of Appeals believed that the Legislature did not 
intend to allow coordination in this situation. 
In Rettig, supra, the Court of Appeals held that LTD 
benefits paid by an insurance company could be coordinated 
under § 3109a. 
The panel stated that the phrase “other 
health and accident coverage” “has generally been limited 
to benefits typically associated with health insurance 
plans.” 
Rettig, supra at 333. 
The LTD benefits at issue 
constituted 
such 
“coverage” 
“because 
they 
constitute 
protection typically provided by health insurance plans, 
10  
 
 
 
 
 
 
which include payments for medical expenses resulting from 
an accident as well as wage-loss replacement benefits. 
LeBlanc, supra, p 204.” 
Rettig, supra at 333. 
The panel 
distinguished Spencer on the ground that the LTD benefits 
in Rettig were paid by an insurance company under an 
insurance policy, rather than a collective bargaining 
agreement. 
B. Analysis 
While the case law is rather muddled regarding the 
precise meaning of the phrase “other health and accident 
coverage,” we agree with the Court of Appeals dissent in 
this case that the term does not require that a risk 
actually be insured under a commercial insurance policy. 
As noted in Nyquist, in drafting § 3109a, the Legislature 
used the broader term “coverage” rather than “insurance.” 
The LeBlanc Court stated that the term “coverage” refers to 
protection afforded by an insurance policy or the sum of 
risks assumed by an insurance policy. 
The Court concluded 
that Medicare is sufficiently similar to an insurance 
policy to constitute “health and accident coverage.” 
Similarly, military benefits and HMO benefits have been 
treated as sufficiently akin to insurance to constitute 
health and accident coverage. 
Tatum, supra; United States 
Fidelity, supra. 
11  
 
 
 
Therefore, as the Court of Appeals dissent observed, 
the central question under our case law is not whether an 
insurance company actually provided the coverage, but 
rather whether the coverage is typically provided by an 
insurance company. 
That approach is consistent with the 
statutory text, which refers merely to “coverage” and 
contains no language limiting its application to commercial 
insurance policies. 
Here, there is no question that LTD benefits are 
typically provided by insurance companies. 
Indeed, the 
Court of Appeals held in Rettig that LTD benefits fall 
within the statutory term. The fact that the coverage here 
was funded by employer and payroll contributions, rather 
than by a separate insurance company, does not alter the 
fact that this type of coverage is typically provided by 
insurance companies. We thus perceive no basis to preclude 
coordination with a self-funded plan. 
Moreover, the view that a self-funded long-term 
disability plan is not “other health and accident coverage” 
disregards case law allowing coordination with self-funded 
medical plans under § 3109a. 
See, e.g., Lewis, supra; 
Michigan Millers Mut Ins Co v West Michigan Health Care 
Network, 174 Mich App 196; 435 NW2d 423 (1988); Auto-Owners 
Ins Co v Lacks Industries, 156 Mich App 837; 402 NW2d 102 
(1987). 
We discern no principled reason why self-funded 
12  
 
 
long-term disability plans should be treated differently 
from self-funded medical plans, in light of the holding in 
Rettig that LTD plans are “other health and accident 
coverage.” 
Additionally, the courts in Rettig, Lewis, Michigan 
Millers 
Mut, 
and 
Lacks 
Industries 
manifested 
an 
understanding that causing not only third-party funded LTD 
and medical plans, but also self-funded ones, to qualify as 
“other health and accident coverage” is consistent with the 
Legislature’s overarching commitment in the no-fault act, 
and its later amendments, to facilitating reasonable 
economies in the payments of benefits, thus causing the 
costs 
of 
this 
mandatory 
auto 
insurance 
to 
be 
more 
affordable. 
See State Farm Fire & Cas Co v Old Republic 
Ins Co, 466 Mich 142, 151; 644 NW2d 715 (2002); Cruz v 
State Farm Mut Automobile Ins Co, 466 Mich 588, 597 n 13; 
648 NW2d 591 (2002); O’Donnell v State Farm Mut Automobile 
Ins Co, 404 Mich 524; 273 NW2d 829 (1979). 
Also, the Court of Appeals has treated self-insurance 
as a form of insurance in other contexts. 
For example, in 
Allstate Ins Co v Elassal, 203 Mich App 548; 512 NW2d 856 
(1994), 
the 
Court 
of 
Appeals 
recognized 
that 
self­
insurance, as certified by the Secretary of State, is the 
functional equivalent of a commercial no-fault insurance 
policy. 
While the Court relied in part on provisions of 
13  
 
 
 
  
 
 
the no-fault act, MCL 500.3101 et seq., and the financial 
responsibility act, MCL 257.501 et seq., it also discussed 
the “common understanding of insurance”: 
The term insurance can be defined . . . as a 
contract between two parties for indemnification.
Black’s Law Dictionary (4th ed), p 943. However,
definitions of insurance also include: “coverage
by contract whereby one party undertakes to 
indemnify or guarantee another against loss by a
specified 
contingency 
or 
peril,” 
Webster’s 
Seventh New Collegiate Dictionary (1970), p 439
(definition 2b), see also Random House Webster’s 
College Dictionary (1991), p 699 (definition 2);
“the 
sum 
for 
which 
something 
is 
insured,”
Webster’s 
Seventh 
New 
Collegiate 
Dictionary, 
supra, p 439 (definition 2c); and “any means of
guaranteeing against loss or harm,” Random House 
Webster’s, supra, p 699 (definition 6). 
In this 
case, Enterprise was certified as self-insured,
meaning, 
for 
purposes 
of 
the 
no-fault 
and 
financial 
responsibility 
acts, 
that 
it 
had 
indemnified itself to satisfy judgments against
it. [Elassal, supra at 555.] 
We do not suggest that the holding in Elassal is 
directly relevant, because we are concerned here not with a 
self-insured no-fault plan, but rather with a self-funded 
LTD plan that a no-fault insurer seeks to coordinate with 
its no-fault policy. 
We simply observe that the reasoning 
in Elassal suggests that even if § 3109a referred to 
“insurance” and not (as it does) to “coverage,” a strong 
argument would still exist that a self-funded LTD plan 
constitutes “insurance” under the common understanding of 
that term. 
Further, we reject the Court of Appeals majority’s 
view—derived from the holding in Spencer—that the existence 
14 
 
 
 
 
 
 
of a collective bargaining agreement somehow negates the 
existence of “other health and accident coverage.” 
The 
text of § 3109a refers to health and accident coverage—the 
central question is whether other coverage exists, not how 
it came to exist. 
It is simply not relevant under the 
statutory text whether the coverage arose from a collective 
bargaining agreement. 
Next, we address the Spencer Court’s reliance on 
language in the UMVARA, the model act on which our no-fault 
act was based. 
The Spencer Court observed that the UMVARA 
contained the following provision: 
"(b) [B]asic reparation insurers may offer
the following additional exclusions . . . 
* * * 
"(2) [Exclusions], in calculation of net 
loss, of any of those amounts and kinds of loss
otherwise compensated by benefits or advantages a
person receives or is unconditionally entitled to
receive from any other specified source, if the
other source has been approved specifically or as
to type of source by the [commissioner] of 
insurance by rule or order adopted upon a 
determination by the [commissioner] (i) that the
other source or type of source is reliable and
that approval of it is consonant with the 
purposes of this Act, and (ii) if the other
source is a contract of insurance, that it 
provides 
benefits 
for 
accidental 
injuries
generally and in amounts as [sic] least as great
for other injuries as for injuries resulting from
motor vehicle accidents.” 
[Spencer, supra at 
399, quoting 14 ULA Civil Procedural and Remedial
Laws, UMVARA, § 14(b)(2), pp 82-83.] 
The Spencer Court also extracted an official comment 
to the model provision: “'The cost reductions may be 
15 
 
 
 
 
 
significant, however, in the case of an insurer offering to 
sell basic reparation policies to the employees of a large 
employer, who have defined, generous wage-continuation and 
accident and health benefits under a common employer­
furnished or trade union plan.'” 
Spencer, supra at 399­
400, quoting official comments to § 14(b)(2), supra, p 85. 
The Spencer Court then reasoned that “it is clear from 
the comments that, under the UMVARA, wage continuation 
benefits pursuant to a union agreement were intended to be 
coordinated with no-fault benefits otherwise payable.” 
Spencer, supra at 400. 
The Court then asserted that 
because the Legislature did not adopt “the broader language 
of the uniform act,” it “did not intend for no-fault 
benefits to be coordinated with a broad array of other 
benefits which may perhaps be equally duplicative.” Id. 
We emphasize that a court’s fundamental interpretive 
obligation is to discern the legislative intent that may 
reasonably be inferred from the words expressed in the 
statute. 
Koontz v Ameritech Services, Inc, 466 Mich 304, 
312; 645 NW2d 34 (2002). 
Where the Legislature has 
unambiguously conveyed its intent in a statute, judicial 
construction is not permitted. 
Because the proper role of 
the judiciary is to interpret, not write, the law, courts 
lack authority to venture beyond the unambiguous statutory 
text. Id. 
16  
 
 
 
 
 
 
The Spencer Court relied on the proposition that where 
the Legislature does not adopt a model provision, it 
presumably rejected the proposed language. 
Spencer, supra 
at 399, citing Michigan Mut Ins Co v Carson City Texaco, 
Inc, 421 Mich 144; 365 NW2d 89 (1984). 
The Spencer Court 
failed, however, to adequately explain why this principle 
supported its holding. 
The Legislature’s deviation from the language in a 
model act does not grant a court license to simply assert, 
without any reasoning, that (1) the statute is narrower 
than the model provision, and (2) the statute must 
therefore produce a different outcome than the model 
provision would generate. 
Such conclusions do not follow 
ineluctably from the Legislature’s rejection of particular 
language in a model provision. 
It is, of course, possible that the Legislature 
rejected a model provision because it did not wish to enact 
the provision into law. 
Other inferences may arise, 
however. 
For example, our Legislature might simply have 
found a better way than the drafters of the model provision 
to express the same proposition. 
Perhaps our Legislature 
used a synonym or more succinct language to state whatever 
the drafters of the model provision had attempted to say. 
Or the Legislature might have concluded that another 
statutory 
provision 
in 
Michigan 
rendered 
the 
model 
17  
 
 
 
provision unnecessary. 
Thus, the mere fact that a statute 
is written differently from a model act does not always 
compel the conclusion that our statute is written more 
narrowly. 
But even if a statute is written more narrowly than a 
model provision, a court’s analysis does not end there. 
Even a statute that is written narrowly could apply to the 
particular case before the court. 
A statutory provision 
that provides for coordination, but in fewer circumstances 
than a model provision, will still allow coordination in 
some circumstances. 
Otherwise, the statutory provision 
would never allow coordination and would be essentially 
nugatory. 
Courts must give effect to every word, phrase, 
and clause in a statute, and must avoid an interpretation 
that would render any part of the statute surplusage or 
nugatory. Koontz, supra at 312. 
Thus, even if the Spencer Court had supported its 
assertion that § 3109a is written more narrowly than the 
model provision, the question would remain whether the 
statute allowed coordination in the circumstances at issue 
in that case. 
Merely asserting, as the Court did in 
Spencer, that a statute is narrow does not, by itself, 
resolve whether the statute applies to a given case. 
A court may not simply announce that the text of a 
statute differs from the language in a model act (or, as in 
18  
 
 
Spencer, a comment to the model act) as an excuse to avoid 
the court’s duty to interpret the statutory text adopted by 
the Legislature. 
The Spencer Court did not analyze the 
language of § 3109a. 
The Court failed to explain why the 
benefits at issue did not fall within the plain meaning of 
the term “other health and accident coverage.” 
The Court 
also did not explain how the statutory phrase is not only 
narrower than the model language, but too narrow to allow 
coordination in that case. 
Here, it is simply unnecessary to decide whether the 
model provision is broader than the statute. 
We conclude 
that § 3109a allows coordination in this case, regardless 
of whether it is broader or narrower than the model 
provision. 
As discussed, we agree with the Court of 
Appeals dissent that the statutory phrase, “other health 
and accident coverage,” plainly includes defendant’s self­
funded long-term disability plan. 
We discern no textual 
basis to limit the phrase “other health and accident 
coverage” to commercial insurance policies. 
Section 3109a 
contains no such limitation, and we believe the phrase 
“other health and accident coverage” includes self-funded 
plans. 
Therefore, 
regardless 
of 
how 
broadly 
the 
model 
provision might reach, the text of § 3109a plainly allows 
coordination of no-fault benefits with a self-funded long­
19  
 
 
                                                 
 
 
term disability plan.6
 We overrule Spencer to the extent 
that it is inconsistent with this opinion. 
IV. CONCLUSION 
We conclude that the phrase “other health and accident 
coverage” in § 3109a includes a self-funded long-term 
disability 
plan, 
and 
that 
defendant 
may 
therefore 
coordinate its no-fault wage loss payments with plaintiff’s 
LTD benefits. We thus reverse the judgment of the Court of 
Appeals and remand the matter to the trial court for entry 
of an order granting summary disposition for defendant. 
Maura D. Corrigan
Clifford W. Taylor
Elizabeth A. Weaver 
Robert P. Young, Jr.
Stephen J. Markman 
6 Our dissenting colleague analyzes the model provision
that the Legislature did not adopt. 
We again emphasize
that a court’s fundamental interpretive obligation is to
discern the legislative intent that may reasonably be 
inferred from the words expressed in the statute. 
Koontz, 
supra, p 312. 
Where the Legislature has unambiguously
conveyed its intent in the statutory text, judicial
construction is not permitted. 
Id. 
We have examined the 
statutory text and concluded that the phrase used by our
Legislature, “other health and accident coverage,” is 
sufficiently broad to include a self-funded LTD plan.
Because we are satisfied that the words adopted by our
Legislature 
are 
sufficiently 
clear 
to 
resolve 
this 
question, we simply have no occasion to resort to the
method of judicial construction utilized by the Spencer
Court and advocated by the dissent in this case.
20 
 
 
 
 
 
 
 
 
 
 
_______________________________ 
 
 
 
 
 
 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
ARTHUR T. JARRAD, 
Plaintiff-Appellee, 
No. 126176 
INTEGON NATIONAL INSURANCE COMPANY, 
Defendant-Appellant. 
CAVANAGH, J. (dissenting). 
In this no-fault case, I would conclude that the long­
term disability (LTD) plan covering plaintiff does not 
constitute “other health and accident coverage” subject to 
coordination under MCL 500.3109a. 
I am not convinced that 
the dichotomy set forth by Spencer v Hartford Accident & 
Indemnity Co, 179 Mich App 389; 445 NW2d 520 (1989), and 
Rettig v Hastings Mut Ins Co, 196 Mich App 329; 492 NW2d 
526 (1992), is inconsistent with the Legislature’s intent. 
Moreover, 
I 
would 
not 
decide 
this 
jurisprudentially 
significant issue without the benefit of full briefing and 
oral argument. Accordingly, I must respectfully dissent. 
I. FACTUAL BACKGROUND 
Plaintiff worked for the Michigan Department of 
Corrections. 
Under his collective bargaining agreement, 
plaintiff was allowed to participate in the LTD plan. 
The 
LTD plan was administered by a private insurance company; 
 
 
 
 
 
 
 
 
 
  
 
however, 
the 
plan 
was 
self-funded 
through 
payroll 
deductions 
and 
employer 
contributions. 
While 
still 
employed by the Department of Corrections, plaintiff was 
injured in an automobile accident. 
Plaintiff began 
receiving benefits under the LTD plan, and defendant, 
plaintiff’s no-fault insurer, coordinated the LTD benefits 
with the no-fault work-loss benefits. Defendant maintained 
that the setoff was permissible under MCL 500.3109a. 
Plaintiff filed this action to challenge the setoff, and 
the parties filed cross-motions for summary disposition. 
The trial court granted summary disposition in favor of 
plaintiff, and the Court of Appeals affirmed. 
II. LEGAL BACKGROUND 
A. MCL 500.3109a 
MCL 500.3109a provides: 
An insurer providing personal protection 
insurance benefits shall offer, at appropriately
reduced premium rates, deductibles and exclusions
reasonably related to other health and accident
coverage on the insured. The deductibles and 
exclusions required to be offered by this section
shall be subject to prior approval by the 
commissioner and shall apply only to benefits
payable to the person named in the policy, the
spouse of the insured and any relative of either
domiciled in the same household. 
B. Spencer v Hartford Accident & Indemnity Co 
In Spencer, supra, the plaintiff was injured during 
the course of his employment and was unable to return to 
work. 
After the accident, the plaintiff received worker’s 
2  
 
 
compensation benefits. 
Additionally, under the terms of a 
collective bargaining agreement between the plaintiff’s 
union 
and 
his 
employer, 
the 
plaintiff 
received 
the 
difference between his worker’s compensation benefits and 
his base rate of pay. 
The defendant insurance company 
denied liability for no-fault work-loss benefits, claiming, 
among other things, that the wage continuation benefits 
were subject to setoff pursuant to MCL 500.3109a. 
The Spencer panel noted that the “purpose of § 3109a 
is to reduce the cost of no-fault insurance by allowing 
insurers to offer policies that coordinate benefits with 
other 
similar 
coverages 
in 
return 
for 
charging 
a 
statutorily mandated reduced premium.” 
Spencer, supra at 
396. 
The Court of Appeals reasoned that § 3109a expressly 
limits setoff to health and accident coverage on the 
insured 
and, 
therefore, 
the 
issue 
was 
whether 
the 
additional wages the plaintiff received pursuant to a 
collective bargaining agreement constituted “other health 
and accident coverage” under § 3109a. The Court of Appeals 
held that the Legislature did not intend for § 3109a to 
apply to the type of benefits the plaintiff received. 
After detailing this Court’s decision in LeBlanc v 
State Farm Mut Automobile Ins Co, 410 Mich 173; 301 NW2d 
775 (1981), as well as its own decision in Orr v DAIIE, 90 
Mich App 687; 282 NW2d 177 (1979), the Court of Appeals 
3  
 
 
 
 
 
noted that the scope of coverages within the meaning of 
“other health and accident coverage” had been subsequently 
expanded. However, “the cases so doing have generally been 
limited 
to 
benefits 
corresponding 
to 
typical 
health 
insurance plans.” 
Spencer, supra at 398. 
In light of 
these decisions, and the absence of a clear construction of 
the phrase “other health and accident coverage,” the Court 
of Appeals observed: 
It 
is 
also 
helpful 
when 
construing
provisions of the Michigan no-fault insurance act
to look to the Uniform Motor Vehicle Accident 
Reparations Act (UMVARA). 
The UMVARA is one of 
the model acts which was utilized as source 
material in the drafting of the no-fault act.
Citizens Ins Co of America v Tuttle, 411 Mich
536; 309 NW2d 174 (1981). 
Thus, where a 
provision of the no-fault act is virtually
identical to a provision of the UMVARA, the 
UMVARA 
will 
be 
looked 
to 
for 
guidance 
in 
construing a provision of the no-fault act. 
See 
MacDonald v State Farm Mutual Ins Co, 419 Mich
146; 350 NW2d 233 (1984). 
However, where there
is an absence of a comparable provision in the
Michigan act, it is presumed the Legislature
considered but rejected the proposed language in
the uniform act. 
See Michigan Mutual Ins Co v
Carson City Texaco, Inc, 421 Mich 144; 365 NW2d
89 (1984). [Id. at 398-399.] 
The Spencer Court then examined the language and 
official comments of the counterpart of § 3109a in the 
model act, 14 ULA Civil Procedural and Remedial Laws, 
UMVARA, § 14(b)(2).  Notably, the Court of Appeals quoted 
the official comments to § 14(b)(2): 
“The cost reductions may be significant,
however, in the case of an insurer offering to
sell basic reparation policies to the employees 
4 
 
 
 
  
 
 
of a large employer, who have defined, generous
wage-continuation 
and 
accident 
and 
health 
benefits under a common employer-furnished or 
trade union plan.” [Spencer, supra at 399-400.] 
In light of the differences between Michigan’s no­
fault act and the model act, the Court of Appeals reasoned: 
Thus, it is clear from the comments that,
under the UMVARA, wage continuation benefits 
pursuant to a union agreement were intended to be
coordinated 
with 
no-fault 
benefits 
otherwise 
payable. 
Instead 
of 
adopting 
the 
broader 
language 
of 
the 
uniform 
act, 
however, 
the 
Michigan act was drafted much more narrowly, and
limited 
coordination 
to 
“other 
health 
and 
accident coverage.” 
It appears, therefore, that
in enacting the Michigan act the Legislature did
not 
intend 
for 
no-fault 
benefits 
to 
be 
coordinated with a broad array of other benefits
which may perhaps be equally duplicative. 
[Id. 
at 400.] 
Thus, the Court of Appeals in Spencer held that the 
plaintiff’s wage continuation benefits pursuant to a 
collective bargaining agreement did not constitute “other 
health and accident coverage” within the meaning of 
§ 3109a. 
C. Rettig v Hastings Mut Ins Co 
In Rettig, supra, the Court of Appeals was again 
called upon to interpret § 3109a. 
The plaintiff in Rettig 
was injured in an automobile accident. 
At the time of the 
accident, the plaintiff was insured by the defendant under 
a no-fault insurance policy that contained a coordinated-
benefits provision. 
The plaintiff also had an LTD plan 
issued by a different insurance company and made available 
5  
 
 
 
to the plaintiff by her employer. 
The LTD plan was paid 
for by the plaintiff through payroll deductions. 
Notably, 
the plaintiff was employed as a supervisor and was not 
covered under a collective bargaining agreement. The trial 
court held that the defendant was entitled to a setoff 
under § 3109a because the plaintiff’s LTD plan constituted 
“other health and accident coverage” under § 3109a, and the 
Court of Appeals affirmed. 
The Rettig Court, similar to the Spencer Court, 
observed that “[w]hile the scope of coverage included 
within the meaning of ‘other health and accident coverage’ 
. . . has expanded since LeBlanc, it has generally been 
limited to benefits typically associated with health 
insurance plans.” 
Rettig, supra at 333. 
Accordingly, the 
Court of Appeals concluded that the LTD benefits received 
by the plaintiff fell within the purview of § 3109a 
“because they constitute protection typically provided by 
health insurance plans, which include payments for medical 
expenses resulting from an accident as well as wage-loss 
replacement benefits.” Rettig, supra at 333. 
Importantly, the Court of Appeals reasoned that its 
holding did not conflict with Spencer. The panel in Rettig 
observed that the plaintiff in Spencer received wages 
directly from his employer pursuant to a collective 
bargaining agreement. The Court of Appeals further noted: 
6  
 
 
 
 
 
 
There, this Court observed that under the
Uniform Motor Vehicle Accident Reparations Act,
wage continuation benefits pursuant to a union
agreement were intended to be coordinated with
no-fault benefits, but that the Michigan version
of the uniform act contained more restrictive 
language and limited coordination of benefits to
insurance coverage. 
In contrast to Spencer, the
long-term disability benefits in this case were
provided to plaintiff by Reliance Standard Life
Insurance 
Company 
pursuant 
to 
an 
insurance 
policy, not a collective bargaining agreement.”
[Id.] 
III. THE COURT OF APPEALS DECISION IN THIS CASE 
Here, the Court of Appeals, in an unpublished two-to­
one decision, concluded that this case “is more like 
Spencer than Rettig.” 
Unpublished opinion per curiam, 
issued January 27, 2004 (Docket No. 245068). 
The majority 
reasoned 
that, 
like 
the 
plaintiff 
in 
Spencer, 
this 
“plaintiff received wage loss benefits from his employer 
through a formal wage continuation plan pursuant to a 
collective 
bargaining 
agreement. 
Consistent 
with 
established precedent, we agree with the trial court and 
conclude that those wage continuation benefits are not 
‘other 
health 
and 
accident 
coverage’ 
within 
the 
contemplation of MCL 500.3109a.” 
Judge Zahra dissented, concluding that defendant was 
entitled to a setoff for the LTD wage-loss benefits because 
this case was more like Rettig than like Spencer. 
Unlike 
the benefits in Spencer, Judge Zahra opined, the LTD 
benefits in this case were not paid directly by the 
7  
 
 
 
 
employer; 
rather, 
the 
plan 
was 
self-funded 
through 
accumulated payroll deductions. 
Accordingly, the Court of 
Appeals dissent found Rettig controlling because the LTD 
benefits 
plaintiff 
received 
constituted 
protection 
typically provided by health insurance plans.  Moreover, 
Judge Zahra reasoned that the notion that plaintiff’s LTD 
benefits were not actually provided by an insurance company 
was not dispositive. 
IV. DISCUSSION 
I agree with the majority that the case law is 
sufficiently “muddled” regarding the precise meaning of 
“other health and accident coverage.” 
Moreover, I agree 
with the majority that the great weight of the case law 
suggests that the key question for § 3109a purposes is 
whether the coverage is typically provided by an insurance 
company. I disagree, however, with the majority’s decision 
to peremptorily overrule 
Spencer, 
supra. Moreover, I 
disagree with the majority’s decision to decide this case 
without the benefit of full oral argument and briefing. 
In light of Spencer’s thoughtful analysis, I do not 
believe that the legislative distinction noted by the Court 
of Appeals is accidental. 
Even if the term “coverage” is 
interpreted broadly, there is a difference between a self­
funded, noninsurance LTD plan pursuant to a collective 
bargaining agreement and a so-called typical insurance plan 
8  
 
 
 
 
                                                 
 
for purposes of the no-fault act. Moreover, I am persuaded 
by Spencer’s rationale that the Legislature intended this 
difference to be dispositive when it refused to incorporate 
the broader UMVARA provision into our no-fault act. 
Accordingly, if a person falls in the Spencer box, such as 
this plaintiff, then setoff is not permitted under § 3109a. 
However, if a person falls within the Rettig box, then 
setoff is permitted. 
As noted by the trial court, this 
dichotomy is not as arbitrary as it appears.1  Thus, because 
I am not convinced that Spencer was wrongly decided, and 
because plaintiff falls within the Spencer box, I would 
affirm the Court of Appeals decision. 
The majority concludes that Spencer was erroneously 
decided because “[i]t is simply not relevant under the 
1 
In 
granting 
plaintiff’s 
motion 
for 
summary
disposition, the trial court stated: 
I am persuaded that at this time case law
does clearly hold that the legislature intended
section 3109a only to apply to wage continuation
benefits which are funded by insurance as opposed
to wage continuation benefits which are self­
funded. 
That is not as arbitrary as it at first
may sound, because I agree with the Defendant
that there’s a clear legislative policy behind
the statute, and that to trade—or mandate, I
should say, the trading of a class of lower
premium insurance policies in return for the 
acceptance by the consumer of coordination of
benefits, not in this fact situation we’re not
talking about a consumer buying an insurance 
policy. 
We’re talking about a consumer being
part of a bargaining unit which collectively
bargained a self-funded, non-insurance funded 
wage continuation benefit. 
9 
 
 
 
 
 
 
statutory text whether the coverage arose from a collective 
bargaining agreement.” 
Ante at p 15. 
Rather, “[t]he text 
of § 3109a refers to health and accident coverage–the 
central question is whether other coverage exists, not how 
it came to exist.” 
Id. (emphasis in original). 
The 
majority then criticizes the Spencer Court for examining 
the language of the model act on which our no-fault act was 
based and for venturing beyond the text of the statute. 
Stated differently, the majority criticizes the Spencer 
Court for evaluating the “muddled” case law construing the 
text of the statute, for examining the model act on which 
our no-fault act was based, and for not ignoring the 
elephant standing in the corner once the panel reasonably 
concluded that there is a glaring difference between the 
two acts. 
This Court, however, has previously acknowledged that 
it is entirely appropriate, if not prudent, to examine a 
model act on which a Michigan statutory scheme was based 
when attempting to discern the Legislature’s intent. 
See, 
e.g., Donajkowski v Alpena Power Co, 460 Mich 243, 256 n 
14; 596 NW2d 574 (1999) (“The fact that our Legislature did 
not include this restriction in adopting its version of the 
model contribution act is significant to any good-faith 
effort to give meaning to the Legislature’s intent.”). 
Here, the UMVARA “clearly was ‘one of the model acts 
10  
 
 
 
 
utilized as source material in the drafting of the no-fault 
act . . . .’” Marquis v Hartford Accident & Indemnity 
(After Remand), 444 Mich 638, 652 n 17; 513 NW2d 799 
(1994), quoting Tuttle, supra at 546. 
And § 3109a was 
plainly based on § 14(b)(2) of the UMVARA. 
See Spencer, 
supra. 
Moreover, this Court has held that “where the 
statutory language differs from the UMVARA model, courts 
can presume that the Legislature considered the model act 
and rejected it.” Marquis, supra at 652 n 17. Thus, in my 
view, the Spencer panel properly consulted the model act’s 
language and official comments when making its decision. 
See, e.g., Ouellette v Kenealy, 424 Mich 83, 86-87; 378 
NW2d 470 (1985). 
Even though the majority claims that the UMVARA should 
not have been examined, the majority nonetheless travels 
beyond the text of the statute in an attempt to explain 
away the Legislature’s deviation from the language in the 
model act and, at the same time, further undermine the 
Spencer Court’s ultimate conclusion. 
For example, the 
majority posits that the Legislature may not have included 
the language from § 14(b)(2) of the model act because “our 
Legislature might simply have found a better way than the 
drafters of the model provision to express the same 
protection.” 
Ante at 17. 
The majority further surmises, 
“[p]erhaps our Legislature used a synonym or more succinct 
11  
 
 
 
 
 
language to state whatever the drafters of the model 
provision had attempted to say.” 
Id. 
Without citing any 
particular provision, the majority also hypothesizes that 
“the 
Legislature 
might 
have 
concluded 
that 
another 
statutory 
provision 
in 
Michigan 
rendered 
the 
model 
provision unnecessary.” 
Id. 
The majority poses these 
questions in an effort to discount the Spencer Court’s 
conclusion that § 3109a is more narrow than the model act. 
In my view, however, the majority’s attempts only 
solidify the conclusion reached in Spencer. 
Again, this 
Court has held that “where the statutory language differs 
from the UMVARA model, courts can presume that the 
Legislature considered the model act and rejected it.” 
Marquis, supra at 652 n 17. 
Accordingly, Spencer’s 
position that the Legislature rejected the applicable 
portion of the UMVARA in favor of a more narrow provision 
is more defensible than the majority’s translucent attempts 
to explain away the deviation and further muddy the waters. 
I believe that the Spencer Court adequately explained that 
because the Legislature rejected one portion of § 14 of the 
UMVARA, the Michigan statute is “narrower” (i.e., it does 
not contain the rejected portion of § 14). 
Moreover, I 
believe that under these circumstances—where § 14 of the 
UMVARA differs from § 3109a, and a self-funded noninsurance 
LTD plan under a collective bargaining agreement is 
12  
 
 
 
 
implicated—the 
Michigan 
statute 
produces 
a 
different 
result. 
Further, the majority explains that “even if a statute 
is written more narrowly than a model provision, a court’s 
analysis does not end there” because even the narrow 
statute could apply to the facts of a given case. 
Ante at 
18 (emphasis in original). 
Thus, even if Spencer were 
supportable, the majority claims that a court cannot merely 
assert that the statute is narrow and conclude that it does 
not apply. 
The majority simply dismisses the Spencer 
Court’s analysis as incomplete. 
In 
my 
view, 
Spencer’s 
rationale 
is 
plainly 
supportable. 
The primary goal of statutory interpretation 
is to discern the Legislature’s intent. 
To this end, the 
Court of Appeals examined the relevant statutory language 
and the “muddled” case law that construed this language, 
consulted the source of the statutory provision, found a 
difference 
between 
the 
model 
act 
and 
the 
statutory 
provision, and reasonably concluded that the Legislature 
rejected this portion of the model act and intended that 
wage 
continuation 
benefits 
pursuant 
to 
a 
collective 
bargaining agreement should not constitute “other health 
and accident coverage” within the meaning of § 3109a. I do 
not 
believe 
that 
Spencer’s 
approach 
was 
incomplete. 
Indeed, I believe the approach was prudent and supported by 
13  
 
 
 
 
 
I 
our case law. 
When compared with the majority’s approach, 
prefer Spencer’s approach under these circumstances 
because it best effectuates, rather than ignores, the 
Legislature’s apparent intent. 
Finally, I would be remiss if I did not point out that 
neither the parties nor the lower courts in this case 
questioned the validity of Spencer’s rationale. 
Rather, 
defendant and the Court of Appeals dissent simply argued 
that this case was more like Rettig than Spencer. 
Because 
the majority has seen fit to take aim at Spencer, the 
parties 
never 
specifically 
briefed 
this 
issue, 
and, 
arguably, this result was not clearly foreshadowed, I would 
have preferred to grant leave to appeal to have the benefit 
of full briefing and oral argument on this particular 
issue. 
As shown by the majority and dissenting opinions, 
the ongoing validity of Spencer is a jurisprudentially 
significant issue that could have wide implications. Thus, 
even though I believe at this point that Spencer was 
properly decided, I would prefer to grant leave and 
actually hear what the parties have to say on this 
particular issue. 
V. CONCLUSION 
I would conclude that Spencer was correctly decided 
and, therefore, would hold that the LTD plan covering this 
plaintiff 
is 
not 
subject 
to 
setoff 
under 
§ 
3109a. 
14  
 
 
 
 
 
 
 
 
Accordingly, I would affirm the decision of the Court of 
Appeals. 
However, 
because 
Spencer’s 
viability 
is 
jurisprudentially significant and the parties did not 
specifically brief this issue, I would prefer to grant 
leave to appeal to have the benefit of full briefing and 
oral argument on whether Spencer was properly decided. 
Thus, I must respectfully dissent. 
Michael F. Cavanagh
Marilyn Kelly 
15