Michigan Supreme Court; Docket No. 80207; Published
Opinion by Justice Cavanagh; Unanimous
Official Michigan Reporter Citation: 431 Mich 164; Link to Opinion 
STATUTORY INDEXING:
Standards for Deductibility of State and Federal Governmental Benefits [§3109(1)]
Federal Workers Compensation Benefits [§3109(1)]
TOPICAL INDEXING:
Federal Workers Compensation Benefits
CASE SUMMARY:
In this important case of first impression authored by Justice Michael F. Cavanagh, the Supreme Court unanimously reversed the Court of Appeals (Item No. 973) and trial court and disallowed a governmental benefits setoff from plaintiff’s personal protection insurance benefits. The Court held that because the plaintiff was required by law to refund federal workers' compensation benefits out of his non-economic tort recovery, the net effect was that these were not governmental benefits which were "provided or required to be provided" within the meaning of §3109(1). The Court held that where a governmental benefit provider is entitled to reimbursement from the injured person's tort recovery, the amount so retrieved should not be deemed "benefits provided" within the meaning of the automobile no-fault act, and the insurance company providing no-fault benefits is therefore not relieved of responsibility to pay full benefits without reduction. In construing the provisions of §3109(1), the Court held that it was persuaded that "when the auto no-fault act speaks of benefits 'provided,' it means benefits permanently provided." To the extent that benefits paid are retrieved by the alternative source provider out of the workers' tort recovery, they at that point cease to be "benefits provided" within the meaning of §3109(1) relieving the auto no-fault insurer of liability to the extent of "benefits provided" by alternative sources pursuant to state or federal law. Thus, in the case of Federal Employees Compensation Act (FECA) benefits, the Supreme Court has held that §3109(1) of the No-Fault Act does not apply. By its ruling, the Supreme Court has acted to eliminate the injustice created by federal law which permitted full reimbursement of workers' compensation benefits from the worker's tort recovery, which, coupled with a governmental benefit setoff under no-fault would in effect result in the worker paying for his own work loss/medical benefits.
The Court noted that, under the Doctrine of Federal Preemption, it could not bar the federal government from recovering benefits from the worker's tort recovery, as it did in the state law context [see, Great American Insurance v Queen, 410 Mich 73 (1980)]. However, the Court ruled that it could require the auto no-fault insured to repay benefits previously deducted under the governmental benefits setoff in order to effectuate the underlying policies of the No-Fault Act.
