Court Opinion

ID: 4228184
Source: CourtListenerOpinion
Date Created: 2017-12-13 10:09:22.250478+00
Date Added: 2024-06-11T07:47:56.068702
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

WILLIAM JOSEPH BATTS,                                              FOR PUBLICATION
                                                                   December 12, 2017
               Plaintiff-Appellee,                                 9:05 a.m.

v                                                                  No. 335656
                                                                   Wayne Circuit Court
TITAN INSURANCE COMPANY,                                           LC No. 14-013559-NF

               Defendant-Appellant.

Before: JANSEN, P.J., and CAVANAGH and CAMERON, JJ.

CAVANAGH, J.

       Defendant appeals as of right from a stipulated judgment entered following the trial
court’s order denying defendant’s motion for summary disposition in this no-fault insurance
dispute. We affirm and remand for entry of an order granting summary disposition in plaintiff’s
favor.

        Plaintiff, a military veteran, was riding a motor scooter and was injured when he struck a
vehicle that failed to stop at an intersection stop sign. The vehicle could not be identified.
Plaintiff received various medical treatments through the Veteran Administration (VA) for his
injuries, but also received medical care from non-VA medical providers, including Serenity
Personal Care, an assisted-living facility. Plaintiff did not have a policy of no-fault insurance
available to him in his household. Therefore, plaintiff filed a claim for no-fault personal injury
protection (PIP) benefits through the assigned claims plan, which assigned the claim to
defendant. Defendant refused to pay any of the requested PIP benefits on the ground that
plaintiff was entitled to health care benefits through the VA, and thus, the VA was the primary
insurer responsible for plaintiff’s medical care and expenses.

        Plaintiff then filed his complaint seeking payment of PIP benefits from defendant.
Plaintiff alleged that defendant had refused to pay any PIP benefits, including medical, attendant
care, replacement service, and transportation benefits.

        Defendant filed a motion for summary disposition under MCR 2.116(C)(10), arguing that
as a military veteran plaintiff had health “insurance” coverage through the VA which, like an
HMO, required plaintiff to receive medical treatment within the VA system. Consequently,
under the coordination of benefits provision of MCL 500.3109a, defendant was not liable for the
cost of any medical treatment received by plaintiff outside of the VA system. Similarly, because
benefits through the assigned claims carrier are coordinated under MCL 500.3172(2) and
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plaintiff had health care coverage through the VA, defendant was not liable for any of plaintiff’s
medical expenses. Further, under the set-off provision of MCL 500.3109(1), defendant was
entitled to a set-off against federal benefits to which plaintiff was entitled. And, in this case, the
VA health system could provide the same treatments and services plaintiff received from non-
VA providers after his motor vehicle accident; thus, defendant was not liable for those expenses.
That is, although plaintiff’s case manager, Monica Gay, testified that a VA social worker
contacted her to locate 24-hour care for plaintiff following a surgical procedure, Gay did not seek
that care from a VA facility before having him placed at Serenity Personal Care. Further, a
social worker at the VA, Pamela Mackey, testified that although the VA does not provide 24-
hour care, a veteran can apply to a VA-run medical foster care program which requires a veteran
to privately pay to receive care by individuals who are reviewed by VA staff. Therefore,
defendant argued, plaintiff’s complaint seeking PIP benefits should be summarily dismissed.

        Plaintiff responded to defendant’s motion for summary disposition and requested
summary disposition in his favor under MCR 2.116(I)(2). First, plaintiff argued, the VA is not a
health insurance company; it is a medical provider of last resort for veterans unless they have a
service-connected injury. Federal law—specifically 38 USC § 1729—establishes that the VA is
not an “insurer” because it grants the federal government the right to be reimbursed for the cost
of medical care provided to veterans for non-service related injuries. More specifically, 38 USC
§ 1729 states that when a veteran receives medical care for non-service connected injuries
incurred in a motor vehicle accident, no law of any state and no contract provision shall prevent
recovery by the Unites States for the care or services furnished to the veteran. See also United
States v State Farm Ins Co, 599 F Supp 441 (ED Mich, 1984). Accordingly, this federal law
preempts the state law provisions that defendant is relying on and defendant’s argument is
without merit.

        Second, plaintiff argued, the no-fault provisions and cases relied upon by defendant in
support of its legal position are inapposite. In this case, plaintiff did not choose to purchase a
coordinated automobile insurance policy that offered reduced health care benefits. Moreover,
again, the VA is not a health insurance company. That is why the VA actually sought payment
from defendant through its numerous billings for medical services provided to plaintiff as a
consequence of the motor vehicle accident. Further, defendant was sent a letter written by a staff
attorney at the VA General Counsel Office which set forth the legal authority, including 38 USC
§ 1729, supporting its efforts to seek reimbursement for medical services provided to plaintiff as
a result of the motor vehicle accident. In summary, plaintiff argued, he was wrongfully denied
PIP benefits and was entitled to summary disposition in his favor.

        Following oral arguments, the trial court denied defendant’s motion for summary
disposition. The trial court held that because the VA did not offer the services that plaintiff
needed, defendant was liable for those expenses incurred outside the VA. Subsequently, the trial
court granted defendant’s motion to stay proceedings pending this Court’s decision on
defendant’s application for leave to appeal. After this Court issued an order denying defendant’s
application, the parties agreed to a contingent award of damages pending appeal and the trial
court entered a stipulated judgment that closed the case. This appeal of right followed.

       Defendant argues that plaintiff had health insurance coverage through the VA and was
required under provisions of the no-fault act to seek and receive all medical treatment within the

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VA system. Therefore, defendant was not liable for any outstanding PIP benefits and the trial
court erred in denying its motion for summary disposition. We disagree.

       We review de novo a trial court’s decision to grant a motion for summary disposition.
Lakeview Commons v Empower Yourself, LLC, 290 Mich. App. 503, 506; 802 NW2d 712 (2010).
A motion brought under MCR 2.116(C)(10) tests the factual support of a plaintiff’s claim and
should be granted if, after consideration of the evidence submitted by the parties in the light most
favorable to the nonmoving party, no genuine issue regarding any material fact exists. Id.

        We also review de novo questions of statutory interpretation. Dextrom v Wexford Co,
287 Mich. App. 406, 416; 789 NW2d 211 (2010). It is well-established that the goal of statutory
interpretation is to give effect to the intent of the Legislature. Atchison v Atchison, 256 Mich
App 531, 535; 664 NW2d 249 (2003). “If the language of a statute is clear and unambiguous,
the statute must be enforced as written and no further judicial construction is permitted.”
Whitman v City of Burton, 493 Mich. 303, 311; 831 NW2d 223 (2013).

        Under the assigned claims statutory scheme, including MCL 500.3172(3)(b) and
500.3175(1), defendant was required to make prompt payment for plaintiff’s losses suffered as a
consequence of the motor vehicle accident in accordance with the no-fault act. Defendant has
asserted three untenable excuses for failing to do so. First, defendant claims that under the
coordination of benefits provision of MCL 500.3109a, it was not liable for medical expenses
incurred by plaintiff inside or outside of the VA system. MCL 500.3109a provides:
              An insurer providing personal protection insurance benefits under this
       chapter may offer, at appropriately reduced premium rates, deductibles and
       exclusions reasonably related to other health and accident coverage on the
       insured.

This provision plainly refers to “coordinated” no-fault policies, i.e., no-fault policies that are
purchased by the insured that coordinate their no-fault and health insurance coverage in
exchange for a reduced premium. St John Macomb-Oakland Hosp v State Farm Mut Auto Ins
Co, 318 Mich. App. 256, 263; 896 NW2d 85 (2016). “In that circumstance, the no-fault insurer is
not liable for medical expenses that the health insurer is required to pay for or provide.” Id.,
citing Tousignant v Allstate Ins Co, 444 Mich. 301, 303; 506 NW2d 844 (1993). Consequently,
the no-fault insurer is only liable for medical expenses incurred for care or services not available
from the insured’s health insurer—the primary insurer. Id. at 307; Sprague v Farmers Ins Exch,
251 Mich. App. 260, 270; 650 NW2d 374 (2002).

        In this case, however, plaintiff did not purchase either a no-fault policy or a coordinated
no-fault insurance policy; thus, MCL 500.3109a is not applicable. Accordingly, defendant’s
argument premised on the holdings in Tousignant and Owens v Auto Club Ins Ass’n, 444 Mich.
314; 506 NW2d 850 (1993), is without merit. Both of those decisions involved no-fault policies
that coordinated benefits as allowed by MCL 500.3109a. The former concerned health coverage
through an HMO. Tousignant, 444 Mich. at 310. The latter concerned health coverage though
the Coast Guard and the VA—for an active member/employee of the Coast Guard, not a veteran.
Owens, 444 Mich. at 318-319, 321-322. And in both cases, the insureds’ voluntary decisions to
purchase coordinated no-fault policies was critical to the Court’s holdings. Thus, here, to the
extent the trial court held that plaintiff’s claim for PIP benefits was subject to MCL 500.3109a—

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but that plaintiff was still entitled to recovery because the medical services he required were not
available from the VA—the trial court’s decision was erroneous. MCL 500.3109a is
inapplicable.

         The second reason provided by defendant for failing to promptly pay plaintiff’s PIP claim
is that, under MCL 500.3172(2), benefits through the assigned claims plan are coordinated with a
claimant’s benefits received from other sources, including health care benefits through the VA.
MCL 500.3172(2) provides:
               Except as otherwise provided in this subsection, personal protection
       insurance benefits, including benefits arising from accidents occurring before
       March 29, 1985, payable through the assigned claims plan shall be reduced to the
       extent that benefits covering the same loss are available from other sources,
       regardless of the nature or number of benefit sources available and regardless of
       the nature or form of the benefits, to a person claiming personal protection
       insurance benefits through the assigned claims plan. This subsection only applies
       if the personal protection insurance benefits are payable through the assigned
       claims plan because no personal protection insurance is applicable to the injury,
       no personal protection insurance applicable to the injury can be identified, or the
       only identifiable personal protection insurance applicable to the injury is, because
       of financial inability of 1 or more insurers to fulfill their obligations, inadequate to
       provide benefits up to the maximum prescribed. As used in this subsection,
       “sources” and “benefit sources” do not include the program for medical assistance
       for the medically indigent under the social welfare act, 1939 PA 280, MCL 400.1
       to 400.119b, or insurance under the health insurance for the aged act, title XVIII
       of the social security act, 42 USC 1395 to 1395kkk-1. [Emphasis added.]

Defendant claims that plaintiff’s eligibility to receive health care services through the VA
constituted a “benefit source” which relieved defendant of its obligation to pay for any medical
care or services required by plaintiff for his motor vehicle accident injuries. We do not agree.

       As plaintiff argued in the trial court, the VA has the same right to recover payment for
medical care and services provided to plaintiff as any private hospital or medical facility. That is
so because of a federal statute, 38 USC § 1729, which states:
        (a)(1) Subject to the provisions of this section, in any case in which a veteran is
       furnished care or services under this chapter for a non-service-connected
       disability described in paragraph (2) of this subsection, the United States has the
       right to recover or collect reasonable charges for such care or services (as
       determined by the Secretary) from a third party to the extent that the veteran (or
       the provider of the care or services) would be eligible to receive payment for such
       care or services from such third party if the care or services had not been
       furnished by a department or agency of the United States.

       (2) Paragraph (1) of this subsection applies to a non-service-connected disability--

                                                ***

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       (B) that is incurred as the result of a motor vehicle accident to which applies a
       State law that requires the owners or operators of motor vehicles registered in that
       State to have in force automobile accident reparations insurance;

                                              * * *

       (b)(1) As to the right provided in subsection (a) of this section, the United States
       shall be subrogated to any right or claim that the veteran . . . may have against a
       third party.

                                              * * *

       (f) No law of any State or of any political subdivision of a State, and no provision
       of any contract or other agreement, shall operate to prevent recovery or collection
       by the United States under this section . . . .

These provisions clearly allow the United States to recover the cost of providing medical care to
a veteran through the VA system for injuries sustained in a motor vehicle accident.

        The Supremacy Clause of the United States Constitution, US Const, art VI, cl 2, gives
Congress the authority to preempt state laws that interfere with, or are contrary to, federal law.
See Ter Beek v City of Wyoming, 495 Mich. 1, 10; 846 NW2d 531 (2014) (quotation marks and
citations omitted). “Under conflict preemption, a federal law preempts state law to the extent
that the state law directly conflicts with federal law or with the purposes and objectives of
Congress.” Packowski v United Food & Commercial Workers Local 951, 289 Mich. App. 132,
140; 796 NW2d 94 (2010). Thus, to the extent that MCL 500.3172(2), or any other no-fault
provision, is in conflict with the federal statute mandating reimbursement for medical care and
services provided to a veteran for nonservice-related injuries—like those resulting from a motor
vehicle accident—such state laws are preempted by 38 USC § 1729. And because the VA
system, like private hospitals and medical facilities, does not provide free medical services to
veterans for nonservice-related injuries, entitlement to seek medical services from the VA cannot
be deemed a “benefit source” that relieved defendant of its obligation to pay PIP benefits to
plaintiff. Accordingly, defendant’s argument regarding MCL 500.3172(2) is without merit.

        The third reason provided by defendant for failing to promptly pay plaintiff’s PIP claim is
that, under MCL 500.3109(1), defendant was entitled to a set-off against federal benefits to
which plaintiff was entitled, including health care benefits through the VA. MCL 500.3109(1)
states:
       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 under this chapter.

As our Supreme Court explained: “The history of § 3109(1) indicates that the Legislature’s intent
was to require a set-off of those government benefits that duplicated the no-fault benefits payable
because of the accident and thereby reduce or contain the cost of basic insurance.” O’Donnell v
State Farm Mut Auto Ins Co, 404 Mich. 524, 544; 273 NW2d 829 (1979). But plaintiff was not

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active in a military service when he was in the motor vehicle accident.1 As discussed above, 38
USC § 1729 negates any argument that the VA was liable, and primarily responsible, to provide
medical benefits to plaintiff for his nonservice-related motor vehicle accident injuries. In other
words, there was no duplication of governmental benefits related to plaintiff’s medical care. The
United States is entitled to reimbursement for all medical services provided to plaintiff for his
accident-related injuries; thus, defendant is not entitled to a set-off for the medical services
provided to plaintiff by the VA for his accident-related injuries. The health care benefits plaintiff
received from the VA were outside the scope of § 3109(1). Moreover, because defendant was
the primary insurer responsible for plaintiff’s medical expenses for injuries sustained in the
automobile accident, plaintiff was not required to solely seek medical care and services through
the VA system.
        In summary, defendant as the assigned claims insurer was required under the no-fault act
to promptly pay plaintiff’s PIP benefits and defendant’s reasons for refusing to pay any benefits
at all were unreasonable. Therefore, defendant’s motion for summary disposition premised on
those same reasons was properly denied, albeit for the wrong reason. And plaintiff’s request for
summary disposition in his favor under MCR 2.116(I)(2) should have been granted.
Accordingly, we affirm the trial court’s decision but remand for entry of an order granting
summary disposition in plaintiff’s favor. Because the parties’ stipulated award of damages is
“inclusive of no-fault penalty interest, no-fault attorney fees, and taxable costs,” we need not
remand for further proceedings in that regard.
       Affirmed, but remanded for entry of an order granting summary disposition in plaintiff’s
favor. We do not retain jurisdiction. Plaintiff is entitled to costs as the prevailing party. MCR
7.219(A).

                                                              /s/ Mark J. Cavanagh
                                                              /s/ Kathleen Jansen
                                                              /s/ Thomas C. Cameron

1
  Compare Morgan v Citizens Ins Co of America, 432 Mich. 640, 643-644; 442 NW2d 626
(1989), a case in which the plaintiff was injured in a motor vehicle accident while active in a
military service.

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