Michigan Court of Appeals; Docket No. 78-4196; Published
Judges Bashara, Brennan, and Daner; Unanimous
Official Michigan Reporter Citation: 96 Mich App 472; Link to Opinion 
STATUTORY INDEXING:
Standards for Deductibility of State and Federal Governmental Benefits [§3109(1)]
Medicare Benefits [§3109(1)]
TOPICAL INDEXING:
Medicare Benefits
CASE SUMMARY:
In a significant decision regarding §3109(1) of the no-fault statute, the Court of Appeals unanimously held that "to the extent that a governmental benefit accrues from the voluntary payment of premiums, the mandatory setoff of no-fault insurance benefits based on such a government benefit violates the constitutional guarantee of equal protection." Thus, if a governmental benefit (such a type B Medicare benefits in this case) are attributable to the voluntary payment of premiums by the recipient, then the portion of that benefit which is attributable to the voluntary payment of private premiums cannot be offset as a governmental benefit under §3109(1) of the Act However, the statutory setoff is valid for that part of the benefit which is funded by the government. Thus in the case of type B Medicare benefits, the court found that the amount of the premiums paid by the enrollees is calculated to pay for one half of the costs of the program. Thus, the setoff required by §3109(1) would apply only to one half of the type B benefits received by the plaintiff.
The Court based its decision on the rationale of the Supreme Court in the case of O'Donnell v State Farm (item number 142). The Court of Appeals felt that the rationale of O'Donnell was to permit a discrimination between private purchased benefits and ex gratia governmental benefits, but not to condone any discrimination between private purchased benefits and government purchased benefits.
The Court of Appeals could have avoided the constitutional issue in this case by simply holding that type B Medicare benefits were not "benefits provided or required to be provided by the laws of any state or federal government" However, the Court specifically refused to so hold. On the contrary, the majority stated, "The benefits provided by the supplementary medical insurance are provided by operation of federal law [42 USC 1395j - 1395w] and are, therefore, within the language of the statutory setoff."
