Opinion ID: 1713371
Heading Depth: 1
Heading Rank: 3

Heading: priority of payment

Text: The no-fault act begins with § 3101(1), which for the convenience of the reader is quoted again as follows: The owner or registrant of a motor vehicle required to be registered in this state shall maintain security for payment of benefits under personal protection insurance, property protection insurance, and residual liability insurance. Security shall be in effect continuously during the period of registration of the motor vehicle. The no-fault act then specifies the order in which various potentially liable insurers will be required to cover a claim for benefits. The relevant sections are set forth below to clarify the legislative plan: (1) Except as provided in subsections (2), (3), and (5), a personal protection insurance policy described in section 3101(1) applies to accidental bodily injury to the person named in the policy, the person's spouse, and a relative of either domiciled in the same household, if the injury arises from a motor vehicle accident. ... (2) [Addresses motor vehicles transporting passengers; not relevant here.] (3) An employee, his or her spouse, or a relative of either domiciled in the same household, who suffers accidental bodily injury while an occupant of a motor vehicle owned or registered by the employer, shall receive personal protection insurance benefits to which the employee is entitled from the insurer of the furnished vehicle. (4) Except as provided in subsections (1) to (3), a person suffering accidental bodily injury arising from a motor vehicle accident while an occupant of a motor vehicle shall claim personal protection insurance benefits from insurers in the following order of priority: (a) The insurer of the owner or registrant of the vehicle occupied. (b) The insurer of the operator of the vehicle occupied. (5) [Addresses motorcycle operators or passengers; not relevant here.] [MCL 500.3114; MSA 24.13114.] Sections 3101(1) and 3114(1) set forth the general rule of priority: A no-fault insurance policy, which owners of vehicles required to be registered in the state must maintain as security, covers all injuries arising from the use of motor vehicles suffered by persons named in the policy. In other words, the general rule is that one looks to a person's own insurer for no-fault benefits unless one of the statutory exceptions, subsections 2, 3, and 5, applies. [3] Thus, under subsection 1, Parks would have to look to his personal insurer, DAIIE, for coverage of his benefits unless one of the statutory exceptions applies. The only rule of exception that may be applicable to the facts of this case is subsection 3, which deals with employees injured while occupying motor vehicles furnished by their employer. The DAIIE contends that because Parks suffered bodily injury while an occupant of a motor vehicle owned or registered by Roadway, Parks should look to Roadway as the insurer of the furnished vehicle for benefits. Roadway does not deny that it is the owner and insurer of the vehicle furnished to Parks, but responds that it does not come within the priority provision subsection 3 because the vehicle in which Parks was injured was not required to be registered under the no-fault act. The problem before us is one of examining the mandatory security provisions and the priority provisions, both of which are central to the purposes of the act. While the act's priority section does not directly address the situation in which security is not required, an analysis of the general provisions of the act and the Legislature's intention reveals who is liable for Parks' no-fault benefits. Case law confirms our construction of the priority provisions of the no-fault act. This Court has recently held that when an employee is injured by occupying a vehicle not required to be registered in this state, the employee's personal insurer should be looked to for coverage. Lee v DAIIE, 412 Mich 505; 315 NW2d 413 (1982). In Lee, an employee of the United States Postal Service injured his back unloading mail from a government-owned mail truck. Because government-owned vehicles are not subject to registration requirements, MCL 257.216(f); MSA 9.1916(f), the vehicle was not subject to the mandatory security requirements of § 3101(1) of the no-fault act, and hence was uninsured. The Court of Appeals held that the employee's personal insurer could not be held liable for benefits, reasoning that the Legislature did not intend to compensate persons injured in uninsured vehicles. We disagreed, finding that the broad language of § 3105(1), providing that benefits must be paid for accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle required a personal automobile insurer to pay benefits under circumstances in which the vehicle involved was not registered or insured. Id., p 512. We reasoned that this reading of the no-fault act furthered the Legislature's purposes: [T]he Legislature, in its broader purpose, intended to provide benefits whenever, as a general proposition, an insured is injured in a motor vehicle accident, whether or not a registered or covered motor vehicle is involved; and in its narrower purpose intended that an injured person's personal insurer stand primarily liable for such benefits whether or not its policy covers the motor vehicle involved and even if the involved vehicle is covered by a policy issued by another no-fault insurer. [ Id., p 515. Emphasis added.] The emphasized portion of the quotation makes clear that our decision was based on the legislative decision to impose primary responsibility upon the employee's personal insurer. The decision did not turn on the absence of coverage for the employer's vehicle. This distinction is critical in this case, because, while Roadway's trailer is not required to be registered, Roadway is self-insured, and therefore trailer No. 95836 cannot be considered uninsured in the same sense as the postal vehicle in Lee. Two Court of Appeals opinions support our analysis in Lee. In Covington v Interstate System, 88 Mich App 492; 277 NW2d 4 (1979), the Court of Appeals also held that an employee could not recover personal protection benefits from his employer's insurer when the employer's vehicle was not required to be registered in this state. The facts in Covington are nearly identical to those in this case. An employee was driving his employer's vehicle, which was registered and licensed in another state. The employer was self-insured, and refused to provide benefits on the ground that the truck being driven by the employee was not a vehicle subject to the requirements of the no-fault act. Id., p 493. The Court of Appeals agreed with the employer, reasoning that the express language of § 3101(1) subjected only vehicles required to be registered in this state to the requirements of the act. Id., pp 493-494. While Covington was decided before Lee, another decision released following Lee furthers this analysis of the act. In Citizens Ins Co v Roadway Express, Inc, 135 Mich App 465; 354 NW2d 385 (1984), lv den 421 Mich 857 (1985), the Court of Appeals again held that an employee's personal automobile insurer rather than the self-insured employer was liable for no-fault benefits. The facts in Citizens are remarkably similar to those in the case at bar: Roadway's employee was injured in a trailer that was licensed in another state and had not been in this state long enough to require insurance coverage under § 3102(1). The primary issue in the case was whether the trailer was a motor vehicle separate from the tractor. After finding that the trailer was a separate motor vehicle, the Court concluded that the trailer was uninsured for purposes of the no-fault act and held the employee's personal automobile insurer liable for benefits. Id., pp 469, 471. From a clear reading of the no-fault act and the reasoning of the cited case law, we find the following: First, the plain language of § 3101(1) subjects only those vehicles required to be registered in this state to the mandatory security requirements. The fact that a vehicle is actually covered by an insurance policy, or that the owner of the vehicle is self-insured, does not alter whether the vehicle itself need or need not conform to the requirements of the act. Second, the policy of the Legislature was to provide a method whereby persons injured in automobile accidents would be readily provided relief from the results of their injury. Third, the primary method of accomplishing this result, from the general rule in § 3114(1), is that one looks to one's own insurer for no-fault benefits unless one of the statutory exceptions applies. Fourth, the exception of an employee injured in an employer's vehicle contained in subsection 3 of § 3114 applies only in the case in which the insured vehicle is required to be registered in this state. Fifth, because the vehicle was not registered in this state and thus the exception of subsection 3 does not apply, we look to the general intention of the Legislature in § 3114(1) to provide compensation for liability through the injured person's personal insurer. The no-fault act was intended to minimize uncertainties and to provide a relatively simple means of compensating those injured in automobile accidents. Holding the employee's personal insurer liable for benefits when the employer's vehicle is not required to be registered best effects this goal. [4] In conclusion, we hold that when an employee is injured in an employer's out-of-state vehicle, which is not required to be registered in this state under the motor vehicle registration act and the pertinent multistate agreement, and when the vehicle is not subject to the security provisions of the no-fault act because it has not been operated in this state for more than thirty days within the calendar year, the employee's personal automobile insurer, in this case the DAIIE, is liable for no-fault benefits under §§ 3105 and 3114(1).