Opinion ID: 794595
Heading Depth: 3
Heading Rank: 2

Heading: Sibley v. Detroit Automobile Inter-Insurance Exchange

Text: 21 In Sibley, the Michigan Supreme Court interpreted the [b]enefits provided language contained in MCL § 3109. The court expressly held that federal worker's compensation benefits that an insured receives but is later required to repay from the proceeds of a tort recovery for pain and suffering are not [b]enefits provided, and thus that a no-fault insurer could not deduct such benefits from its own coverage. The insured in Sibley was a U.S. postal worker. Sibley, 427 N.W.2d at 529. Because he was injured on the job, he received worker's compensation payments through the Federal Employees' Compensation Act (FECA), 5 U.S.C. § 8101 et. seq. Id. The insured's no-fault insurance company subtracted the worker's compensation payments from its coverage based on MCL § 3109, a provision of the MNFIA that allowed no-fault insurers to deduct amounts provided or required to be provided to the insured under federal or state law. Thereafter, the insured successfully instituted a civil tort action and obtained monetary compensation for pain and suffering. Id. at 529-30. Pursuant to FECA, the insured was required to reimburse the federal government from the insured's recently recovered damages for pain and suffering for the medical expenses and lost income the federal government had previously paid to the insured. Id. The insured then sued his no-fault insurer for the amount he was required to reimburse the government. Id. 22 The Michigan Supreme Court held in favor of the insured. Id. at 531. The court reasoned that requiring the insured to repay the federal government from the insured's tort damages would mean that the insured was covering his own medical expenses and lost wages despite the existence of a valid insurance policy. Id. The court rejected the insurance company's argument that the insured was receiving a windfall or duplicative payments. Id. The court reasoned that the pain and suffering damages were distinct from medical expenses and lost wages, and that Michigan law entitled the insured to all three types of damages. Id. Moreover, the court noted that Michigan law prohibits no-fault insurers from receiving reimbursement from tort recoveries. Id. at 530-31. If the no-fault insurer were not required to reimburse the federal government, and plaintiff was required to pay out of his tort damages, the MNFIA's prohibition on reimbursing no-fault insurers from tort damages would be circumvented. Id. The Court further implied in its brief discussion of preemption that a Michigan entity that attempted to require reimbursement from tort proceeds, in contrast to the federal government, would be unable to do so. Id. 23 The instant case is materially indistinguishable from Sibley. In this case, the insured received payment to cover medical expenses, that pursuant to federal law, she is required to repay from the proceeds of her tort recovery for pain and suffering damages. Because federal law preempts state law, Michigan cannot stop GEHA from requiring reimbursement. Consequently, here, as in Sibley, the insured is being forced to pay her own medical expenses out of her tort damages for pain and suffering. This contravenes the expressed intent of the Michigan legislature as embodied in MNFIA, which requires all car owners to maintain insurance coverage for medical expenses and prohibits no-fault insurers from seeking reimbursement from tort settlements. Mich. Comp. Laws §§ 3101, 3116. Furthermore, the Michigan legislature mandated coordinated benefits plans to avoid duplicative coverage, not to deny insured persons coverage altogether. See Smith, 514 N.W.2d at 154. Here the coverage is not duplicative because Plaintiff's tort damages are for pain and suffering and State Farm is covering Plaintiff's medical expenses. Thus, the fact that the State Farm Policy is coordinated with GEHA's policy is irrelevant. The insured maintains an insurance policy for medical expenses and should not be required to pay her medical expenses without help from her insurance carrier. 24