Michigan Supreme Court; Docket #126176; Published
Opinion by Justice Corrigan; 5-2 (Justices Cavanagh and Kelly dissenting)
Official Michigan Reporter Citation: 472 Mich. App. 207, Link to Opinion 
STATUTORY INDEXING:
Coordination with Other Health and Accident Disability Insurance [3109a]
TOPICAL INDEXING:
Not applicable
CASE SUMMARY:
In this 5-2 opinion by Justice Corrigan, the Michigan Supreme Court held that a self-funded long-term disability plan is “other health and accident coverage” subject to coordination under MCL 500.3109a. In this case, plaintiff was injured in an automobile accident. At the time of the accident, plaintiff worked for the Michigan Department of Corrections and was covered by a long-term disability (LTD) benefit plan under a collective bargaining agreement. The LTD plan was administered by an insurance company but was self-funded by deductions from employees’ paychecks and employer contributions. Plaintiff received monthly payments of $2,220.04 under the plan. Under the coordination of benefits clause in plaintiff’s no-fault policy, the insurer deducted the LTD benefits from its wage-loss payments, for a net amount of $1,467.76 a month. In determining that the LTD benefits were subject to coordination, the Supreme Court held “that the phrase ‘other health and accident coverage’ in § 3109a includes a self-funded long-term disability plan. . . .” In so holding, the Supreme Court noted that this issue has been addressed in Spencer v Hartford Accident & Indemnity Company, [Item No. 1286] and Rettig v Hastings Mutual Insurance Company [Item No. 1577]. In Spencer, the Court of Appeals held that there is no coordination where an employer pays wage loss benefits to an injured employee through a wage continuation plan under a collective bargaining agreement. However, the Court of Appeals held in Rettig, that long term disability benefits paid by an insurance company were subject to coordination because those benefits are the type of protection normally provided by health insurance plans. The Supreme Court specifically overruled Spencer, and held that when determining whether a payment is pursuant to “other health and accident coverage,” it is irrelevant whether the other coverage is paid under a commercial insurance policy. In this regard, the Court stated:
“Therefore, . . . the central question under our case law is not whether an insurance company actually provided the coverage, but rather whether the coverage is typically provided by an insurance company. That approach is consistent with the statutory text, which refers merely to ‘coverage’ and contains no language limiting its application to commercial insurance policies. Here, there is no question that LTD benefits are typically provided by insurance companies. Indeed, the Court of Appeals held in Rettig that LTD benefits fall within the statutory term. The fact that the coverage here was funded by employer and payroll contributions, rather than by a separate insurance company, does not alter the fact that this type of coverage is typically provided by insurance companies. We thus perceive no basis to preclude coordination with a self-funded plan.”
Justices Cavanagh and Kelly dissented and stated that:
“[E]ven if the term ‘coverage’ is interpreted broadly, there is a difference between a self-funded, noninsurance LTD plan pursuant to a collective bargaining agreement and a so-called typical insurance plan for purposes of the no-fault act.”