Michigan Court of Appeals; Docket No. 48912; Published
Judges MacKenzie, Bronson, and Allen; Unanimous
Official Michigan Reporter Citation: 106 Mich App 138; Link to Opinion 
STATUTORY INDEXING:
No Lien as to Noneconomic or Excess Economic Loss [§3116(4)]
Calculation of PIP Tort Lien [§3116(2) (4)]
General / Miscellaneous [§3116]
General / Miscellaneous [§3135]
TOPICAL INDEXING:
No-Fault Insurer Claims for Reimbursement
CASE SUMMARY:
In this unanimous Opinion by Judge MacKenzie, the Court of Appeals rendered a significant holding regarding the interpretation of a no-fault carrier's lien under §3116 of the No-Fault Act as it was originally written. This case arose out of an automobile train collision wherein the plaintiff sustained severe and permanent injuries. The plaintiff filed a tort action against the railroad and the road commission alleging a defect in the railroad crossing. The plaintiff had recovered substantial no-fault benefits from State Farm compensating her for various medical expenses and wage losses. The tort action was settled wherein the plaintiff was paid a substantial amount of money pursuant to a stipulation which was recited that the settlement proceeds were for noneconomic losses only and did not reimburse the plaintiff for hospital or medical expenses or for any of the benefits paid by the no-fault carrier. Furthermore, the plaintiff’s complaint had requested damages for economic loss only. Subsequent to the settlement, plaintiff’s no-fault insurance company, State Farm, brought an action against the original tort defendants under §3116(1) claiming that State Farm had a lien for all economic loss benefits that were paid to plaintiff and this lien should have been recognized and compensated in the tort settlement The trial court granted defendants' motions for accelerated and/or summary judgment, holding that the no-fault carrier did not have a viable lien because the amendment to §3116 effective October 16,1978 applied to this cause of action and under that amended version, this was not the kind of tort recovery which gave rise to reimbursement
On appeal, the Court of Appeals made the following rulings:
1. The amended version of §3116 did not apply retroactively. Because this accident occurred on April 10, 1975, the no-fault carrier's right to reimbursement is to be determined pursuant to §3116 as originally written.
2. The Court agreed with the plaintiff that §3135 of the No-Fault Act did not limit the tort liability of the Railroad Company and the Railroad Commission "since their liability is not caused by their ownership, maintenance or use of a motor vehicle." The Court agreed with the prior holding in Schwark v Lilly (item number 218) that the case against the Railroad Company and the Road Commission addresses "a type of tort liability outside the intended scope of the No-Fault Act Defendants' common law and statutory liability for economic and noneconomic damages was not affected by the No-Fault Act."
3. Even though the liability of the tort defendant was outside the intended scope of the No-Fault Act, the no-fault carrier was nevertheless entitled to be reimbursed out of any tort recovery realized by the plaintiff so as to avoid the possibility of double recovery. To this effect, the Court held, "To hold that §3116 has no applicability to a third party recovery where the third party liability arises outside the scope of the No-Fault Act would allow the possibility of double recovery to the motorist receiving injury through actions of a third party tort feasor whose liability does not arise out of the ownership, maintenance or use of a motor vehicle. The amendment of §3116 limits the applicability of the reimbursement provision. However, under Workman v DAIIE, plaintiff’s insured could have made a recovery of settlement which would have reimbursed the no-fault carrier as contemplated for benefits paid out for economic losses and made the insured whole as well, because there is no conflict between §3116 and §3135 as applied to the facts of this case. This reimbursement of the no-fault insurer and compensation of insured for the remaining damages would have been in keeping with the intention of the No-Fault Act to limit double recovery by the claimant and the resulting duplication of payments for the same loss by insurers."
4. Even though the no-fault carrier had a legal right to reimbursement out of the tort recovery, the plaintiff’s recovery in parties stipulated that the entire award was to compensate noneconomic damages The Court stated, "The settlement of lawsuits is desirable and to be encouraged, and we are reluctant to look behind the expressed intent of the parties." Even though the record reflected that the tort defendants had notice of State Farm's lien, the Court stated, "We conclude that the preferable result under these facts is to give literal effect to the terms of the settlement agreement, accepting the recitation of the parties to the federal court suit, that the payment of the defendants to plaintiff’s insured was made solely for noneconomic losses." Therefore, State Farm was not entitled to any reimbursement.
