Michigan Court of Appeals; Docket No. 192146; Unpublished
Judges Young, Jr., Markman, and Smolenski; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Exception for Employer Provided Vehicles [§3114(3)]
Legislative Purpose and Intent
In this unanimous per curiam unpublished Opinion, the Court of Appeals held that language in a "labor broker" agreement in which the broker supplies drivers to a vehicle owner, was not the sole dispositive factor in determining whether the broker or the vehicle owner was the "employer" for purposes of the priority provisions of §3114(3) of the No-Fault Act, which would require that personal protection insurance benefits be paid by the insurer of a vehicle furnished to an employee who suffers accidental bodily injury while occupying a motor vehicle owned or registered by the employer.
The court held that the clear public policy behind the enactment of §3114(3) requiring insurance to be provided by the insurer of the vehicle which the employee was occupying at the time of the injury, would be frustrated by a labor-broker agreement which provides that the labor-broker is the "sole employer” of a vehicle driver rather than the vehicle owner who actually provides the vehicle to the driver. The court held that the policy objective is to allocate the risks of insuring commercial vehicles to commercial insurers who can better assess the risks in the commercial setting, rather than to personal insurers who cannot adequately predict the risks or burdens beyond the personal vehicles that they insure.
This case was a priority dispute between the injured employee's personal no-fault insurer. State Farm, and the insurer of the vehicle being driven at the time of the accident. Under §3114(3), an employee who suffers accidental bodily injury while an occupant of a motor vehicle owned or registered by the employer, shall receive personal protection insurance benefits from the insurer of the furnished vehicle.
The No-Fault Act does not define the terms "employee" and "employer" for purposes of §3114(3). Michigan courts have applied the "economic reality" test in a variety of contexts, including workers' disability compensation cases to determine whether an employment relationship existed. In Parham v Preferred Risk Mutual Insurance Company, 124 Mich App 618 (1983) (Item No. 636), the Court of Appeals stated a number of factors to be considered in applying the economic reality test in the context of §3114(3) of the No-Fault Act Those factors included: (1) control of the worker's duties, (2) payment of wages, (3) right to hire, fire and discipline, and (4) the performance of the duties as an integral part of the employer's business towards the accomplishment of a common goal. However, courts have held that no single factor is controlling, and other factors should be considered as each individual case requires.
In this case, the tractor-trailer driven by the injured person was owned by National Steel Corporation and insured by Hartford. Ashford, the injured party, was a driver supplied to National Steel pursuant to a “labor-broker agreement" between National and Preferred Personnel Services, Inc. Under that agreement, it was provided that Preferred was the "sole employer" of the drivers and would perform the duties of the "sole employer." State Farm was the insurer of Ashford's personal vehicles. State Farm, as insurer of the Ashford's personal vehicles, contended that the application of the economic reality test resulted in the conclusion that the injured party was the employee of both National Steel and Preferred, and therefore, pursuant to §3114(3), Hartford was first in priority to provide coverage, since it was the insurer of the furnished vehicle. Hartford, conversely, contended that under the labor-broker agreement, Preferred was responsible for determining and controlling the terms and conditions of employment, including wages, taxes, workers' compensation insurance, hiring, discipline and firing. Hartford argued that State Farm was therefore in first priority under §3114(1). The trial court agreed that because the injured party was the employee of Preferred, State Farm was the primary carrier for PIP benefits.
The Court of Appeals held that pursuant to Celina Mutual Insurance Company v Lake States Insurance Company, 452 Mich 84 (1996) (Item No. 1851), great weight should be placed on the "policy objective behind §3114(3), finding that the cases interpreting that section have given it broad reading designed to allocate the cost of injuries resulting from use of business vehicles to the business involved through the premiums it pays for insurance." Further, the court held that it did not accept the contract designation of Preferred as the "sole employer” as dispositive. This case was remanded to the trial court for the purpose of further evaluating the employment relationship between the injured employee and National Steel in light of the totality of the circumstances.