Michigan Supreme Court; Docket No. 90904; Published
Opinion by Justice Levin; 4-3 (with Justices Boyle, Riley, and Brickley Dissenting)
Official Michigan Reporter Citation: 444 Mich 281; Link to Opinion 
STATUTORY INDEXING:
Standards for Deductibility of State and Federal Governmental Benefits [§3109(1)]
Social Security Disability 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 decision by Justice Levin (Justices Boyle, Riley and Brickley concurring in part and dissenting in part), the Supreme Court held that Social Security disability benefits should be subtracted from work loss benefits otherwise due under the no-fault insurance policy as governmental benefits setoffs within the meaning of §3109(1). Such Social Security benefits are not "other health and accident coverage" within the meaning of §3109a, and therefore, reversed the Court of Appeals' decision.
Plaintiff was insured under a no-fault policy issued by Citizens Insurance Company, which provided for coordination of no-fault medical expense benefits with other health coverage, but which did not provide for coordination of no-fault work loss benefits with other accident coverage.
Plaintiff was seriously injured and Citizens paid work loss benefits minus Social Security disability benefits received by the plaintiff. Plaintiff brought suit claiming that because the insured did not elect to coordinate work loss benefits with other accident coverage, Citizens should not have reduced the work loss benefits by Social Security disability benefits paid by the federal government The trial court held in favor of plaintiff, and the Court of Appeals felt reluctantly constrained to follow the Supreme Court decision in Tatum v Governmental Employees Insurance Company, 431 Mich 663 (1988) and therefore affirmed the trial court. In Tatum, the Supreme Court had ruled that medical benefits paid by the federal government to or for a member of the armed forces for injuries suffered in an automobile accident could not be subtracted by an insurer from no-fault medical expense benefits where the insured had not elected to coordinate no-fault medical expense benefits with "other health coverage" under §3109a. Citizens, on appeal, asked the Supreme Court to overrule Tatum and its predecessor, LeBlanc v State Farm Mutual Auto Insurance Company, a case which held mat a no-fault insurer could not subtract Medicare benefits from no-fault medical expense benefits where the insured had not elected to coordinate medical expenses with other health coverage.
The Supreme Court noted that Congress has since eliminated the operative effect of LeBlanc by enacting that Medicare is secondary to automobile insurance where coverage under such insurance is available. Although the Supreme Court agreed with Citizens that it may well have erred in LeBlanc in equating benefits provided under a policy of insurance written by a private insurer such as Blue Cross-Blue Shield of Michigan with benefits provided under a mandatory federal entitlement program (Medicare), it does not follow that Tatum should now be overruled. In Tatum, the Supreme Court held that the benefits provided under military medical coverage are "similar" to those provided by a policy issued by Blue Cross-Blue Shield, and that Blue Cross-Blue Shield coverage "when provided through one's employer, can parallel that which is provided to active military personnel by the federal government."
The Supreme Court found no need to reconsider Tatum, however, since. Social Security disability benefits are not medical benefits and do not serve the same purpose as Blue Cross-Blue Shield and Medicare benefits. Further, the insured here was not an employee of the federal government.
The Supreme Court held that Social Security disability benefits are benefits provided under federal law, within the meaning of §3109(1) and are not "other health and accident coverage" within the meaning of §3109a.
The Supreme Court reasoned that Social Security disability benefits are provided as part of a mandatory comprehensive social welfare entitlement program generally providing benefits to all persons who have been wage earners, largely paid for by taxes levied on all wage earners. The term "other accident coverage" does not include benefits payable under such a mandatory social welfare program. Therefore, although plaintiff purchased a non-coordinated work loss policy, and paid a somewhat higher premium, Social Security disability benefits, because they are benefits "provided or required to be provided under the laws" of the federal government, are required to be subtracted from wage loss otherwise payable under the no-fault policy.
In a lengthy opinion by Justice Boyle concurring in part and dissenting in part, Justices Boyle, Riley and Brickley expressed the view that the majority opinion failed to provide a basis for distinguishing between benefits "provided or required to be provided" pursuant to state or federal law and "other health and accident coverage." They noted that the majority did not adequately define the difference between benefits required by law, therefore subject to automatic setoff under §3109(1), and other health and accident coverage to be coordinated pursuant to §3109a. Justice Boyle notes that in both the Profit and Owens decisions, the majority looks first to the insurance policies to determine whether they were coordinated, instead of examining the benefits under the governmental benefits subtraction provisions of §3109(1) to determine whether they were provided pursuant to the law of the state or federal government. Contrary to the rationale advanced by the majority, separate purposes are served by §3109(1) and §3109a. Justice Boyle argues that the Supreme Court erred when it held that the Legislature intended to include benefits required to be provided by law under the umbrella of other health and accident coverage, and that error, compounded by the majority in Profit, further undermines the purpose of §3109(1)'s cost containment. Under §3109(1), the court must first determine whether other benefits available to the insured were provided or required to be provided pursuant to state or federal law. If state or federal law mandates provision, the benefits must be deducted from no-fault benefits under §3109(1) if they meet the test established in Jaroszv DAIIE, 418 Mich 565 (1984). Since federal law mandates that Social Security disability benefits must be provided, and since those benefits serve the same purpose and are required to be provided as a result of the same accident, they are properly deducted as a governmental benefits subtraction under §3109(1). It is because the benefit is provided pursuant to federal law and meets the Jarosz test that it should be subtracted, not because Social Security is a "mandatory entitlement program paid for by taxes levied on all wage earners."
In Owens, Justice Boyle would hold that if treatment was directly available at a VA facility, Auto Club may subtract the value of that treatment from the medical benefits it would otherwise be liable to pay to Owens, not because the medical care was "health care coverage" as the majority decided in that case, but because it is a benefit provided pursuant to federal law and meets the Jarosz test. Further, with regard to whether medical care was available through a VA facility, at a minimum, Justice Boyle would hold that the insured must ask the government to exercise its discretion and provide the benefit. If the governmental agency decides not to allow for the private medical care that was at issue in Owens, then the benefit is not required to be provided within the meaning of §3109(1) and the no-fault insurer's liability may not be reduced.
Justice Boyle would also hold that the Veterans Administration disability benefits paid to plaintiff Owens should also be subtracted from work loss benefits that Auto Club would otherwise be required to pay. Veterans Administration disability benefits are provided pursuant to federal law and are therefore governmental benefits under §3109(1).
Finally, with regard to the Tousignant decision, Justice Boyle objects to the reference in the majority opinion of that decision to the notion that the insured must make "reasonable efforts to obtain" payment or treatment from the health care provider before seeking payment from the no-fault insurer. References to the "reasonable efforts" of the insured to obtain payment are irrelevant and will only increase uncertainty and add to litigation. Under the clear language of the policy, Allstate is not liable for medical expense benefits that should have been paid for or provided by another source. The policy does not require that the insured make reasonable efforts to obtain the benefit from the other source. Allstate's liability for medical expense benefits is premised on their unavailability from other sources. If medical expense benefits were available to the insured under any other health care plan, Allstate need not pay for them.
