Michigan Supreme Court; Docket Nos. 94544 and 94546; Published
Opinion by Justice Levin; 4-3 (with Justices Boyle, Riley, and Brickley Dissenting)
Official Michigan Reporter Citation: 444 Mich 314; Link to Opinion 
STATUTORY INDEXING:
Standards for Deductibility of State and Federal Governmental Benefits [§3109(1)]
Social Security Disability Benefits [§3109(1)]
Veterans / Military Benefits [§3109(1)]
Coordination with Other Health and Accident Medical Insurance [§3109a]
TOPICAL INDEXING:
Social Security Disability and Death Benefits
CASE SUMMARY:
In this 4-3 Opinion by Justice Levin (Justices Boyle, Riley and Brickley dissenting), the Supreme Court interpreted the coordination of benefits provisions of §3109a to mean that where the injured person is covered by a policy of no-fault automobile insurance that is coordinated pursuant to §3109a with other health coverage provided by United States military forces or the Veterans Administration, the no-fault insurer is not subject to liability for a medical expense that the military forces or the Veterans Administration is required, under the other health coverage, to pay for or provide.
Plaintiff Owens was injured in an automobile accident in 1982. The Coast Guard paid the expense of providing health care to Owens until he was officially discharged from the Coast Guard in June 1984. This litigation concerned whether Auto Club, Owens' no-fault insurer, is subject to liability for medical expense incurred by Owens after he was discharged from the Coast Guard. Both the Veterans Administration and Auto Club refused to pay in-patient medical expense incurred at Herrick Hospital after Owens' discharge from the Coast Guard, and also refused to pay out-patient medical expense incurred at Saline Community Hospital incurred after Owens' was discharged from Herrick.
Owens was injured while on authorized leave from the Coast Guard. The health coverage with which his no-fault policy was coordinated was provided pursuant to federal law by the United States Coast Guard and the Veterans Administration in consequence of his employment. Owens was in a coma for a nuniber of weeks. In July 1983, Owens' parents authorized his transfer to the Herrick Memorial Hospital for rehabilitation. The Coast Guard paid the medical expense at Herrick until Owens was discharged from the Coast Guard in June, 1984. Thereafter, Owens incurred additional expenses at Herrick from June 1984 through June 198S. The Veterans Administration and Auto Club each refused to pay for the continued care at Herrick. Additionally, after Owens was discharged from Herrick Hospital in June 198S, he returned to his parents' home and received out-patient care at Saline Community Hospital, incurring an additional $70,000 in expenses. Neither the Veterans Administration nor Auto Club would pay these expenses. The trial court entered summary disposition in favor of Owens regarding the medical expense incurred at both Herrick and Saline. The Court of Appeals affirmed in part, but reversed with respect to the decision regarding Herrick Hospital on the basis that there was a question of fact whether all of the in-patient care at Herrick was necessary.
On appeal, Owens contended that coordination of benefits under §3109a does not require that a no-fault insured seek all medical care from the health insurer. The Supreme Court, however, held that, for the reasons stated in its decision in Tousignant (see Item No. 1630, above), the legislative purpose that led to the enactment of §3109a requires that an insured, who chooses to coordinate no-fault coverage with health care coverage provided by the military forces or the Veterans Administration, obtain payment and services from such a health care provider to the extent of the available health coverage. Owens, when he chose to coordinate, agreed to avail himself of health care coverage provided by the military forces or the Veterans Administration.
Although Auto Club contended that the health coverage provided by the military services were governmental benefits under §3109(1), the Supreme Court held that it need not consider these arguments concerning the applicability of §3109(1) because of its holding that Owens was coordinated pursuant to §3109a and had agreed to avail himself of "health coverage" provided by the military forces.
The Supreme Court next addressed the issue of whether or not Owens had satisfied his burden of showing that he had sought to obtain appropriate services from the coverage provided by the Veterans Administration as to the Herrick Hospital expenses. The facts demonstrated that Owens had been transferred from the Veterans Administration facility in Ann Arbor to Herrick on the recommendation of a Veterans Administration neurologist The opinion of this neurologist showed that the services rendered by Herrick were allowable expenses and were reasonably necessary within the meaning of §3107(l)(a). It was also shown that efforts were made to obtain such services from the Veterans Administration. However, neither Owens nor Herrick established that he needed to stay at Herrick for two years. Therefore, there was a genuine issue of material fact whether it was reasonably necessary for Owens to remain at Herrick for the entire two year period. Additionally, the Supreme Court held that Owens had failed to discharge his obligation to establish that he sought to obtain the out-patient services provided at Saline Hospital from the Veterans Administration. Therefore, summary disposition should not have been entered in favor of Owens respecting the services provided at both Herrick and Saline.
The Supreme Court also addressed an issue concerning entitlement to wage loss benefits where Owens also received Social Security disability benefits. Auto Club contended that it was entitled to a setoff under the governmental benefits setoff provisions contained in §3109(1) from no-fault work loss benefits otherwise due Owens to the extent that Owens receive Social Security and Veterans Administration disability benefits. The Supreme Court held that, in keeping with its decision in Profit v Citizens Insurance Company (see Item No. 1632, below), Social Security disability benefits are governmental benefits under §3109(1), rather than "other health and accident coverage" within the meaning of §3109a. Auto Club is therefore entitled to setoff Social Security disability benefits against no-fault wage loss benefits. Since the amount of the Social Security benefits exceeded the amount of work loss benefits otherwise due Owens, the Supreme Court did not reach the question whether Auto Club would also have been entitled to setoff any veterans disability benefits received by Owens.
Since there were substantial issues of law and fact, the Supreme Court held that summary disposition was not appropriate, and therefore, neither attorney fees nor interest should have been awarded. The case was remanded to the circuit court for further proceedings consistent with its opinion.
Justice Boyle dissented for the reasons set forth in her dissent in Profit v Citizens Insurance Company (see, Item No. 1632, below).
