Michigan Court of Appeals; Docket No. 87376; Published
Judges Wahls, R.B. Burns, and Warshawsky; Unanimous; Opinion by Judge R. B. Burns
Official Michigan Reporter Citation: 156 Mich App 519; 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:
This unanimous Opinion by Judge R. B. Burns involves a question of first impression regarding the setoff of federal workers' compensation insurance benefits against Michigan no-fault wage loss benefits and the subsequent liability of plaintiff to reimburse the federal government out of a non-economic loss tort recovery. The plaintiff was an employee of the federal government. He recovered federal workers' compensation insurance benefits under the Federal Employees Compensation Act (FECA). Defendant DAIIE was plaintiff’s no-fault insurer. Defendant deducted the federal workers' compensation benefits from plaintiff’s no-fault wage loss benefits under §3109(1) of the No-Fault Act. Plaintiff subsequently filed a third-party negligence action against the tortfeasor who caused his injury and recovered damages for non-economic loss in that lawsuit. The federal government then demanded reimbursement of the federal workers' compensation benefits pursuant to 5 USC, §8132 which mandates reimbursement of federal workers' compensation benefits from any tort recovery, regardless of the nature of the damages recovered. After reimbursing the federal government, plaintiff made a claim against defendant for payment of the amount reimbursed to the federal government, alleging that those reimbursed sums constituted an "allowable expense" under §3107(a) of the No-Fault Statute.
In affirming the trial court's summary judgment in favor of defendant, the Court of Appeals first noted that FECA benefits are to be set off against Michigan no-fault benefits where both benefits arise from the same accident. This is mandated by §3109(1). The court then held that the sum reimbursed by plaintiff from his tort recovery to the federal government under 5 USC, §8132 is not recoverable by plaintiff against the no-fault carrier as an allowable expense under §3107(a). The Court of Appeals recognized that its holding in this case imposes a "harsher" result on federal employees who are injured in automobile accidents than in the case with non-federal employees. However, this is an inequity which can only be corrected by legislation, which the court urged Congress or the Michigan Legislature to enact. The court stated:
"We recognize that the result in the present case is harsher than in a comparable case in which the injured party was subject to the state workers' compensation system. In Great American v Queen, the Supreme Court held that a workers' compensation carrier could seek reimbursement from an injured party from a tort recovery to the extent that the workers' compensation benefits do not substitute for no-fault benefits. However, to the extent that workers' compensation benefits substitute for no-fault benefits, the workers' compensation carrier may not be reimbursed out of the tort recovery. Thus, while under the Michigan system, a workers' compensation carrier is not reimbursed for that portion of the compensation benefits which were set off against no-fault benefits, the same is not true under the federal system. Rather, FECA permits the Department of Labor to obtain reimbursement of compensation benefits paid for economic damages out of an insured party's tort recovery for non-economic damages. However, this does not change the fact that the FECA benefits must be set off against the PIP benefits and it does not change the fact that the subsequent reimbursement is not an allowable expense under §3107 of the No-Fault Act. We recognize that these conflicting provisions of federal and state law might serve to work an injustice for those federal employees injured in the course of their employment in automobile accidents. It would appear that this is one of the few situations, or perhaps the only situation, in which an injured party is left, because of statutory provisions, less than fully compensated for his injuries. However, this presents an injustice which can only be redressed in Congress or the Michigan Legislature. While we would urge these bodies to act to correct this problem, until such time as they do, we can only enforce the statutes as they are drafted."
