Michigan Court of Appeals; Docket No. 72708; Published
Judges Allen, Wahls, and Warshawsky; Unanimous
Official Michigan Reporter Citation: 139 Mich App 327; Link to Opinion 
STATUTORY INDEXING:
Standards for Deductibility of State and Federal Governmental Benefits [§3109(1)]
State Workers Compensation Benefits [§3109(1)]
TOPICAL INDEXING:
Workers Disability Compensation Act (MCL 418.1, et seq.)
CASE SUMMARY:
In this unanimous Opinion by Judge Warshawsky, the Court of Appeals held that a no-fault carrier may not, under the government benefits setoff provisions of §3109(1), deduct from no-fault wage loss benefits otherwise due, an amount equal to the money received by plaintiff pursuant to a workers' compensation redemption agreement which specifically allocated die redemption money to past, present and future medical expenses. The redemption agreement in this case occurred approximately eight months after plaintiff’s accident and was in the total amount of $12,500. The redemption agreement specifically allocated $12,000 of the award to past, present and future medical expenses and $500 to wage loss. The defendant PIP carrier argued that it was entitled to offset the entire $12,500 redemption award against its obligation to pay no-fault wage loss benefits to plaintiff. The Court of Appeals disagreed and affirmed the trial court's denial of a setoff.
In reaching its conclusion, the Court took issue with the analysis set forth in Thacker v DAIIE (item number 511) and Moore v Travelers Insurance Company (item number 465). The Court noted that the Thacker decision was primarily based upon the Court of Appeals decision in Perez v State Farm (item number 395) which was subsequently reversed by the Supreme Court in item number 701. According to the Supreme Court's opinion in Perez, the "required to be provided" language of §3109(1) means that an injured person is obligated to use reasonable efforts to obtain payments that are available from a workers' compensation insurer. With regard to the plaintiff’s exercise of reasonable efforts, the Court stated, "plaintiff in the instant case did use reasonable efforts to obtain workers' compensation benefits by asserting a claim which resulted in a redemption agreement the redemption procedure is authorized and governed by statute, and a redemption must be approved by the hearing referee before it becomes effective. There are many reasons why an employee may enter into a redemption agreement. One reason is to affect a compromise where liability under the WDCA is disputed. The fact that the workers' compensation claim resulted in a redemption and lump sum payment does not in any way suggest that plaintiff failed to use reasonable efforts to obtain benefits."
The Court also disagreed with the Thacker analysis on policy grounds. The Court stated that requiring the circuit court to look beyond the "four corners" of the redemption agreement to determine the amount of periodic payments to which a plaintiff would otherwise have been entitled under the Workers' Comp Act would impermissibly invade the exclusive jurisdiction of the Workers' Comp Bureau over matters relating to the Act.
The Court did not totally foreclose circuit court review of the redemption allocation, however. In footnote number 4, the Court stated, "where there is evidence of bad faith, we believe the circuit court may look behind the redemption agreement and determine the proper allocation for purposes of the setoff provision." However, absent such bad faith, the circuit court may not look behind the allocation made in the redemption agreement.
