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 
STATUTORY INDEXING:
Standards for Deductibility of State and Federal Governmental Benefits [§3109(1)]
State Workers Compensation Benefits [§3109(1)]
Social Security Disability Benefits [§3109(1)]
TOPICAL INDEXING:
Workers Disability Compensation Act (MCL 418.1, et seq.)
CASE SUMMARY:
In this unanimous published Opinion by Judge Jansen, the Court of Appeals held that deduction of both federal social security survivor's benefits and worker's compensation benefits from otherwise payable no-fault benefits for plaintiffs decedent's wage loss/survivor's loss benefits, were proper, but that the trial court's computation of the set off 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.
Plaintiff’s husband was killed in an automobile accident while traveling home from work. Plaintiff sought survivor's loss benefits based upon her husband's wages at the time of the accident which consisted of an average 30 day wage of $2,071.25. Eighty-five percent of decedent's average wage was $1,760.56. Auto Owners paid these benefits for two years, after subtracting social security survivor's loss benefits being received by plaintiff in the amount of $1,232 per month. Auto Owners also deducted the annual cost of living increase in social security benefits received by plaintiff.
Plaintiff also filed a claim for worker's compensation death benefits and ultimately redeemed that claim for $50,000. As part of the redemption, the worker's compensation carrier waived its right of reimbursement from plaintiffs tort claim against the owner and driver of the other vehicle involved in the accident.
Following the redemption, Auto Owners then discontinued paying any continuing survivor's loss benefits. Action was commenced to enforce payment of the survivor's loss benefits, and additionally, plaintiff claimed that deductions for periodic raises in social security benefits was in violation of §3108 of the no-fault act.
Defendant Auto Owners filed a counterclaim alleging that it had overpaid benefits, in that it was entitled to a deduction of both social security benefits and worker's compensation benefits plaintiff was entitled to, retroactive to the date of the accident. The trial court agreed that an overpayment had occurred and entered an order requiring plaintiff to pay Auto Owners the sum of $20,597 in overpaid benefits.
On appeal, the Court of Appeals upheld the grant of summary disposition in favor of Auto Owners. Under the no-fault act, a decedent survivor is entitled to recover 85% of the decedent's average earnings for three years from the date of the accident, pursuant to §3108(1). However, Auto Owners was statutorily entitled to set off certain governmental benefits, including plaintiffs social security survivor's benefit and the worker's compensation benefits under §3109(1).
However, the Court of Appeals held that the trial court incorrectly calculated the reimbursement obligation. The trial court's computations failed to account for the fact that the workers' compensation carrier waived participation in the third-party tort recovery under MCLA 418.827 of the Workers' Disability Compensation Act in exchange for the redemption. Under Sibley v DAIIE, 431 Mich 164; 427 NW2d 528 (1988)(Item No. 1146), the Supreme Court held that the "trade-off" in such situations where the workers' compensation carrier waives its lien rights against the third-party tort recovery must be recognized. In Sibley, supra, the Supreme Court stated that if the reduction in the automobile insurer's responsibility is from a source that gains reimbursement from the injured person's tort recovery, the amount so gained shall not be deemed to be benefits provided within the meaning of §3109(1), relieving the primarily liable automobile insurer of its primary responsibility to pay full benefits without reduction by reason of any tort recovery. Therefore, the Court of Appeals held that Sibley required that any of the workers' compensation carrier's share of a third-party tort recovery must be subtracted from the statutory benefit rate. Based on its recalculation of the reimbursement obligation, the Court of Appeals held that the correct amount for reimbursement was $17,168.
