Opinion
Docket No. 51436.
Decided June 16, 1981. Leave to appeal applied for.
Abood Abood, P.C. (by William E. Rheaume), for plaintiffs.
Reid, Reid MacKay, P.C. (by Fred C. Newman), for defendant.
Before: BASHARA, P.J., and T.M. BURNS and BEASLEY, JJ.
Defendant, Detroit Automobile Inter-Insurance Exchange, appeals a partial summary judgment granted to plaintiffs in their action to recover no-fault insurance benefits.
Plaintiff Francis Thompson became disabled as a result of injuries that he sustained in an automobile accident. Defendant, plaintiffs' no-fault insurer, commenced payment of work-loss benefits to Francis Thompson. However, the benefits were reduced by the amount of social security disability benefits received by each plaintiff and their children.
Plaintiffs filed a two-count complaint seeking a declaratory judgment that defendant may deduct only the social security disability payments paid to Francis Thompson and not those paid to plaintiff Sarah Thompson and their children. The second count of the complaint seeks exemplary damages on the ground that defendant wilfully and wantonly breached its policy, causing plaintiffs severe emotional distress.
According to plaintiffs' brief, another suit is pending in the circuit court in which defendant is contesting whether or not wage-loss benefits are owing in any amount. This opinion does not address that issue as it was not raised below. We assume herein, as did the trial court for purposes of declaratory judgment, that defendant is liable under the terms of the insurance policy to plaintiffs for payment of no-fault benefits.
Plaintiffs filed a motion for summary judgment pursuant to GCR 1963, 117.2(2) as to the first count. The trial court granted partial summary judgment to plaintiffs, holding that defendant may not reduce the wage-loss benefits by the amount of social security benefits received by plaintiff Sarah Thompson and the children.
On appeal, defendant alleges that the trial court erred in failing to construe the policy and the nofault act as requiring setoff of social security benefits.
MCL 500.3109(1); MSA 24.13109(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."
The policy includes a comparable provision.
In O'Donnell v State Farm Mutual Automobile Ins Co, 404 Mich. 524; 273 N.W.2d 829 (1979), app dis 444 U.S. 803 (1980), the Court construed § 3109(1) as requiring setoff of social security survivors' benefits received by the plaintiff from survivors' benefits due under the no-fault act, MCL 500.3108; MSA 24.13108. In reaching its decision, the Court reviewed the legislative history of § 3109(1) and concluded,
"[T]he 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." Id., 544.
In Mathis v Interstate Motor Freight System, 408 Mich. 164, 187; 289 N.W.2d 708 (1980), the holding of O'Donnell was extended to require setoff of workers' compensation benefits paid as the result of the same accident to the extent that they duplicate the no-fault benefits owing.
Justice MOODY'S concurring opinion in Mathis noted that,
"[S]ignificant questions were left unanswered in O'Donnell. * * * Indeed, issues regarding which governmental benefits may be deducted from no-fault benefits still remain largely unaddressed." Id., 189-190.
We agree with Justice MOODY'S observation that O'Donnell and Mathis do not hold that all government benefits must be set off against no-fault benefits under § 3109(1). Rather, where the government benefits duplicate the no-fault benefits, § 3109(1) is invoked.
Recently, in LeBlanc v State Farm Mutual Automobile Ins Co, 410 Mich. 173; 301 N.W.2d 775 (1981), the Supreme Court concluded that Medicare benefits are not subject to the mandatory setoff of § 3109(1). Instead, the Court found applicable § 3109a, which allows coordination of other health and accident coverage by payment of a reduced premium to the insurer. Since the plaintiff in LeBlanc did not pay a reduced premium, he was entitled to recovery of both Medicare and no-fault benefits. Although LeBlanc was primarily concerned with interpretation of § 3109a, the opinion is germane to the controversy at bar. It again stated that the purpose of § 3109(1) is prevention of duplicative recovery. Id., 197.
Consequently, the issue before us requires review of the no-fault and social security benefits in order to determine whether they provide duplicate coverage.
No-fault work-loss benefits are calculated pursuant to § 3107(b). The benefits roughly correspond to the adjusted gross wages of the insured prior to an accident, subject to a statutorily imposed maximum. The number of dependents which the insured must support is not a factor in determining the amount of work-loss benefits owing.
Similarly, social security disability benefits paid to a wage earner are established by utilizing a formula involving his past wages. The number of dependents and their needs are not considered in establishing the wage earner's disability benefits according to the evidence submitted in the trial court. Thus, work-loss benefits for loss of wages under the no-fault scheme is duplicative of social security disability benefits requiring setoff under § 3109(1).
However, review of the no-fault act reveals that there is no benefit corresponding to a wife's or child's insurance benefit under the Social Security Act, 42 U.S.C. § 402. According to plaintiffs' expert witness, those benefits are also calculated on the basis of the wage earner's history of earnings. However, the benefits are for the support of the individual children and wife involved and remain payable even where the wife divorces the wage earner and obtains custody of the children.
Consequently, we conclude that the purpose for providing work-loss no-fault benefits to the insured is not the same as that for paying wife and child social security disability benefits. There being no duplication of benefits, the mandatory setoff provision is inapplicable.
Affirmed; no costs, a public question being involved.