Michigan Supreme Court; Docket No. 96795; Published
Opinion by Justice Cavanagh; 5-2 (with Justices Levin and Mallet Dissenting)
Official Michigan Reporter Citation: 446 Mich 460; Link to Opinion 
STATUTORY INDEXING:
Work Loss Benefits: Nature of the Benefit [§3107(1)(b)]
Work Loss Benefits: Calculation of Benefits [§3107(1)(b)]
Standards for Deductibility of State and Federal Governmental Benefits [§3109(1)]
Social Security Disability Benefits [§3109(1)]
TOPICAL INDEXING:
Social Security Disability and Death Benefits
CASE SUMMARY:
In this 5-2 Opinion by Chief Justice Cavanagh, the Michigan Supreme Court rendered two rulings regarding plaintiff’s claim for wage loss benefits. First, the court held that a person who, prior to the accident, was employed on a full-time basis but who was only employed on a part-time basis as of the date of the accident, must receive work loss benefits under §3107(1)(b), not under the temporarily unemployed provisions of §3107a. Second, the court held that the entire amount of an award of social security disability benefits is to be deducted from work loss benefits, even that portion of the social security award which is paid directly to plaintiff’s attorney as a statutory attorney fee.
With regard to the wage loss issue, the court noted that three months before plaintiffs accident, plaintiff was fired from a full-time job that he had held for approximately two months. As of the date of the accident, plaintiff was working two part-time jobs and also receiving unemployment compensation because the amount of his earnings from his part-time employment was not enough to disqualify him from receipt of unemployment benefits. In concluding that plaintiff was not entitled to draw wage loss benefits as a temporarily unemployed person under §3107a based upon the last month of full-time employment, the Supreme Court referred to its earlier opinion in MacDonald v State Farm Mutual Insurance Co (Item No. 754) which affirms the proposition "that §3107a applies when a claimant suffers an unavailability of work at the time of the accident." In light of the fact that plaintiff was working two part-time jobs, it is impossible to conclude that plaintiff was "unemployed" within the meaning of §3107a. The court noted that the word "unemployed" as used in that section is not defined and therefore, reference to the dictionary is proper. Common dictionary definition defines "unemployed" as "out of work; jobless." Thus, those individuals who are employed, even on a temporary part-time basis, are not "unemployed." The court expressed this notion in the following language:
"Had the Legislature intended 'unemployed' to mean 'all people working less than full-time,' it would have so stated. Section 3107a simply does not apply to plaintiff because hewas not 'out of work' or jobless.' It is clear that the Legislature intended §3107a to apply only to those individuals confronted with a temporary and complete unavailability of work."
The court also held that plaintiff’s receipt of unemployment compensation is not dispositive of whether he is considered "unemployed" for purposes of §3107a. In this regard, the court noted:
"The receipt of unemployment compensation says little about whether a person is completely unemployed because, as in this case, one may be partially employed and still receive compensation. The conclusion of complete unemployment does not therefore invariably follow from one's eligibility for unemployment compensation. Furthermore, the receipt of unemployment compensation does not establish the permanency of that unemployment Accordingly, the receipt of some unemployment compensation, as the plaintiff was receiving here, does not definitively answer the question whether a person is 'temporarily unemployed' as that term is used in §3107."
In holding that plaintiff’s wage loss claim must be processed under §3107(l)(b), the court made it clear that plaintiffs benefits are not necessarily limited to the part-time wages he was earning at the time of the accident if plaintiff can show that he would have taken a higher paying job had he not been injured. In this regard, the court noted:
"Work loss benefits are not necessarily restricted to a claimant's wage at the time of the accident Thus, even if a claimant is working a lower paying part-time job at the time of the accident, that claimant is not precluded from proving that he would have taken a higher paying full-time job had he not been injured in a car accident In all cases, claimants are left to their proofs."
With regard to the second issue dealing with the setoff of social security benefits, the court rejected plaintiff’s argument that the portion of the social security award designated as an attorney fee is immune from the setoff. The court noted that under the "American rule" regarding recovery of attorney fees, each side pays their own attorney fees. The court rejected plaintiffs argument that the long recognized "common fund" doctrine applied in this case because the no-fault insurer did not benefit from plaintiffs receipt of social security benefits in that those benefits would have been setoff against wage loss benefits under the language of §3109(1) which requires the setoff of governmental benefits "provided or required to be provided." Therefore, plaintiff’s no-fault insurer would have been able to claim a setoff regardless of whether plaintiff had pursued the social security benefits in question.
Justice Levin dissented regarding the setoff of social security benefits, and was joined by Justice Mallet. Justice Levin would hold that §3109(1), which authorizes the subtraction of governmental benefits provided or required to be provided "means the amount actually provided and received by the no-fault insured net of the reasonable cost of recovery." Justice Levin based his analysis on the Supreme Court's earlier decision in Perez v State Farm Mutual Automobile Insurance Co (Item No. 701).
