Michigan Court of Appeals; Docket No. 171044; Published
Judges MacKenzie, Jansen, and T.R. Thomas; Unanimous; Opinion by Judge Jansen
Official Michigan Reporter Citation: 223 Mich App 327; Link to Opinion
Standards for Deductibility of State and Federal Governmental Benefits [§3109(1)]
State Workers Compensation Benefits [§3109(1)]
Social Security Disability Benefits [§3109(1)]
Workers Comp Liens Regarding Auto Tort Claims [§3116]
Workers Disability Compensation Act (MCL 418.1, et seq.)
In this unanimous published Opinion by Judge Jansen on rehearing, the Court of Appeals reaffirmed its earlier ruling in McCain v Auto-Owners Insurance Company [Item No. 1903] in which it held that deduction of both federal social security survivors' benefits and state workers' compensation benefits from otherwise payable no-fault benefits for plaintiffs decedent's wage loss/survivors' loss benefits, was proper. The court also reaffirmed its earlier opinion that the trial court's computation of the appropriate governmental benefits set-off under §3109(1) was incorrect because it failed to account for the fact that the workers' compensation carrier had waived participation in the third-party tort recovery in exchange for a redemption agreement. The court granted rehearing, in part, because figures used in computations in its original opinion were incorrect.
Plaintiff’s husband was killed in an automobile accident while traveling home from work. Plaintiff sought survivors' loss benefits under a no-fault automobile insurance policy provided by Auto-Owners. Auto-Owners sought to deduct from its obligations the amount of a workers' compensation redemption of $50,000, together with certain social security benefits received by the decedent. Auto-Owners filed a counterclaim alleging that it had overpaid benefits and sought reimbursement for set-offs that should have been taken for social security benefits and workers' compensation benefits plaintiff had previously received. The trial court agreed and entered an order requiring repayment of the sum of $20,597 in overpaid benefits.
On rehearing, the Court of Appeals reaffirmed its earlier ruling that "both federal social security and state workers' compensation benefits may be offset against no-fault automobile insurance benefits." Root v Insurance Company of North America, 214 Mich App 106 (1995) [Item No. 1826].
The court also reaffirmed its earlier ruling that the trial court's computations were incorrect because they did not account for the fact that the workers' compensation carrier waived participation in plaintiff’s third-party tort recovery in exchange for a redemption agreement. Under Sibley v DAIIE, 431 Mich 164 (1988) [Item No. 1146], such a trade-off in such situations where there is a waiver of lien rights against a third-party recovery must be recognized in calculating the correct amount of the set-off.
On rehearing, the court acknowledged that its earlier calculations in its original opinion were incorrect, in that the amount of the three year total for the social security survivors' benefits set-off was not correct because it did not account for annual cost of living increases in the social security benefits received by plaintiff. The matter was remanded to the trial court for correct calculation based upon this information.
In addition, the Court of Appeals on rehearing determined that the amount of the no-fault benefits actually paid to plaintiff as stated in its earlier opinion was incorrect, because it should not have included funeral and burial expenses paid under § 107 in the amount of $1,500 because such expenses are not "allowable expenses" for personal protection insurance benefits.
On rehearing, the court concluded that the matter should be remanded to the trial court for further evidence regarding the correct computations of the appropriate set-off.