Michigan Supreme Court; Docket No. 62439; Published
Opinion by Coleman; (With Justice Ryan Dissenting)
Official Michigan Reporter Citation: 410 Mich 173; Link to Opinion 
STATUTORY INDEXING:
Standards for Deductibility of State and Federal Governmental Benefits [§3109(1)]
Medicare Benefits [§3109(1)]
Coordination with Other Health and Accident Medical Insurance [§3109a]
TOPICAL INDEXING:
Medicare Benefits
CASE SUMMARY:
In this 4 to 3 Opinion, Chief Justice Mary Coleman writing for the majority held that federal Medicare payments, made on behalf of a qualifying participant to cover expenses incurred as a consequence of an automobile accident for which no-fault benefits are also payable, need not be setoff in accordance with §3109(1) of the No-Fault Act as benefits "provided under the laws of the federal government." Rather, such Medicare benefits may be setoff as a coordinated benefit under §3109a as "other health and accident coverage on the insured," if the insurer has opted to coordinate benefits under the no-fault policy. Accordingly, if coordination of benefits is not provided for in the no-fault policy, a person receiving Medicare payments as a result of an auto accident can duplicate recovery by also receiving no-fault benefits. To this effect, Chief Justice Coleman wrote:
"Medicare constitutes 'other health and accident coverage* within the meaning of §3109a of the No-Fault Act Thus, payments made to health care providers pursuant to the Medicare program for expenses arising out of the same accident for which no-fault benefits are also payable may be subtracted from payable no-fault benefits at the option of the insured. Since plaintiff in the instant case did not elect to coordinate his Medicare benefits with his no-fault befits, payments made on his behalf by the Medicare program may not be subtracted from the no-fault benefits due under the no-fault policy issued to him by defendant We do not reach the constitutional issue presented on appeal, nor do we express an opinion with regard to the inclusion of other possible forms of health and accident coverage within the purview of §3109a. The decision of the Court of Appeals is reversed."
Essentially, the majority's opinion was premised on the conclusion that the provisions of §3109(1) and §3109a, are mutually exclusive. The former applies to collateral governmental benefits and the latter speaks more specifically to other health and accident coverage. In distinguishing the two, the Court stated, "In a general sense, benefits are those things which promote an individual's welfare, advantage or profit... In contrast to §3109(1) is the latter enacted §3109a, which more specifically speaks to other health and accident coverage. 'Coverage,' a word of precise meaning is the insurance industry, refers to protection afforded by an insurance policy or the sum of the risks assumed by a policy of insurance." Therefore, while §3109(1) contemplates benefits derived only from collateral governmental sources, §3109a applies to "other health and accident coverage" obtained from any collateral source - private or governmental.
The Court then went on to characterize Medicare benefits. Justice Coleman stated, "Medicare is 'other health and accident coverage' qualifying for §3109a's permissive setoff. We perceive no just reason to differentiate Medicare from other, more traditional, form of health and accident coverage which irrefutably are within the scope of §3109a. Just like any so-called private insurer, Medicare compensates providers of medical and hospital services on behalf of participants who require health care. It is inconsequential that in other contexts Medicare has been deemed to be insurance in the usual sense of the term: the same has been said of Blue Cross Blue Shield plans which, according to Nyquist v Aetna, fall within §3109a."
Justice Levin, joined by Justice Kavanagh, concurred in the majority's conclusion that Medicare is "health and accident coverages within the meaning of §3109a, but did not agree with the majority that, as a result, Medicare benefits must be exempted from the mandatory setoff required by §3109(a). Justice Levin acknowledged that the majority's opinion would eliminate the inequitable windfall to no-fault insurers of collecting premiums to cover losses that would actually be reimbursed by Medicare. However, the Court's holding will increase the cost of insurance by permitting duplication of benefits. Justice Levin was also bothered by the distinction which the majority opinion established between "governmental benefits" and "other health and accident coverage." Justice Levin wrote:
"Further, the Court's construction establishes a distinction which I believe will prove untenable. By finding that §3109a and §3109(1) are mutually exclusive, the Court requires a determination whether any particular government benefit is to be considered 'coverage.' If the benefit results from 'coverage,' no setoff under §3109(1) is required; if it does not, setoff is required. What is 'coverage'? Could not workers' compensation, for example, be considered insurance coverage for work related injuries? Yet, in Mathis, we held that workers' compensation must be setoff under §3109(1). The Court departs from the intelligible governmental/nongovernmental distinction established by §3109(1) and previously maintained by this Court in favor of a distinction whose meaning is uncertain and for which the Act provides little guidance."
Justice Ryan dissented. He concurred with Justice Levin's "study of the relationship between §3109(1) and §3109a," however, he disagreed with Justice Levin's "monolithic treatment of Medicare; a treatment that fails to discriminate between the two programs Medicare comprises and, in my view, precludes a correct result in this case." Justice Ryan then went on to discuss the two subcategories of Medicare benefits Part A and Part B. Part A benefits are "involuntary" benefits in that they are payable to all persons who qualify. On the other hand, Part B benefits are the product of voluntary contributions. Justice Ryan would hold that "Part B Medicare benefits, to the extent they are the product of voluntary contributions, do not entail the harm §3109(1) was enacted to avoid, and therefore, should not be subject to the mandatory setoff of that provision." Because Part B benefits derive from both voluntary and involuntary contributions, only one half of the benefits provided under Part B could escape the mandatory setoff provisions. Because the record is unclear as to what benefits the plaintiff in the instant case was receiving, a remand to circuit court should have been ordered.
[Author's Comment: (revised by September 30,1983 Supplement): In order to understand the relationship between no-fault benefits and Medicare benefits, see insurance Bureau Bulletin 83-04 which is summarized in item number 674)]
