Opinion ID: 848761
Heading Depth: 1
Heading Rank: 5

Heading: slb ≤ sm

Text: M.C.L. § 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 N.W.2d 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 M.C.L. § 500.3109 setoff provision applied. We agree with defendant. M.C.L. § 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. M.C.L. § 500.3108 governs that determination and specifically provides what benefit amount is payable (AP). Once that amount, i.e., the level of benefits otherwise payable, is calculated under M.C.L. § 500.3108, the setoff provision of M.C.L. § 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 N.W.2d 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 M.C.L. § 500.3108. This conclusion is consistent with the statutory language of M.C.L. § 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 M.C.L. § 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, 300 N.W.2d 895; O'Donnell v. State Farm Mut. Automobile Ins. Co., 404 Mich. 524, 538, 539, 273 N.W.2d 829 (1979). According to the plain language of M.C.L. § 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 M.C.L. § 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
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 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 Inasmuch as the Court of Appeals did not follow these steps, the panel erred.