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Westchester Fire Insurance Co v Safeco Insurance Co; (COA-PUB, 2/22/1994; RB #1802)


Michigan Court of Appeals; Docket No. 145989; Published 
Judges Gribbs, Shepherd, and P. E. Deegan; Unanimous; Opinion by Judge Shepherd  
Official Michigan Reporter Citation:  203 Mich App 663; Link to Opinion alt   

Standards for Deductibility of State and Federal Governmental Benefits [§3109(1)]   
State Workers Compensation Benefits [§3109(1)]   
Applicability of Limitations Period to Claims by Insurers Against Other Insurers [§3145]

Workers Disability Compensation Act (MCL 418.1, et seq.)    

In this unanimous published Opinion by Judge Shepherd, the Court of Appeals upheld summary disposition in favor of the no-fault insurer in a dispute with a workers' compensation insurer regarding reimbursement of benefits paid by the no-fault insurer which should have been paid by the workers' compensation insurer because the injuries arose out of a motor vehicle accident that occurred during the course of employment. The no-fault issue in this case concerned application of the statute of limitations provisions of §3145 to such an action for reimbursement by a no-fault carrier against a workers' compensation carrier.

Frederick Paper, an employee of University Cellar, Inc., was injured in a motor vehicle accident while in a company car on route to a trade show. Westchester Fire Insurance Company was the workers' compensation insurer for University Cellar. Safeco Insurance Company was the no-fault insurer for University Cellar's company car. Westchester paid wage loss and medical benefits to Paper on his assertion that he was injured in the course of employment. However, Westchester later discontinued coverage to Paper and disputed Paper's entitlement to benefits. An action was commenced in the Bureau of Workers' Disability Compensation, and while that action was still pending, a declaratory judgment action was commenced in the circuit court by Westchester against Safeco. Safeco, in turn, filed a counterclaim in the circuit court seeking reimbursement for wage loss and medical expenses that it had paid to Paper in excess of its obligations under the no-fault insurance policy. An opinion was issued by the Workers' Compensation Magistrate, concluding that Paper's injuries were incurred in the course of employment and determining that Paper was entitled to weekly disability benefits and medical expenses under the Workers' Compensation Act. However, the magistrate's decision made no mention of the respective rights of Westchester and Safeco. Subsequently, in the circuit court action, cross-motions for summary disposition were filed. Thereafter, Westchester sent a check to Safeco for $62,172 purporting to fulfill its obligation to Safeco for reimbursement. This check was never cashed, and was ultimately returned to Westchester at the hearing on the parties' motions for summary disposition. The trial court then entered summary disposition in favor of Safeco on its claim for reimbursement in the amount of $57,000 for wage loss and $19,258 in interest.  

On appeal, Westchester argued that the one year statute of limitations and one year back rule contained in §3145 barred Safeco's claim for anything other than those benefits that were within the one year time period. In rejecting this argument, the Court of Appeals relied upon the Supreme Court decision in Auto Club Insurance Ass'n vNew York Life Insurance Co, 440 Mich 126 (1992). In that case, the Supreme Court held that the one year limitation and recovery period of §3145 is not applicable to a no-fault insurer seeking reimbursement for expenses paid in excess of its policy obligation. Under Auto Club v New York Life, supra, the no-fault insurer is entitled to bring a common law contract action for reimbursement, as subrogee, under the traditional six year period of limitation for contract actions. The distinction is that the insurer is not seeking personal protection insurance benefits under the no-fault act, but rather is attempting to obtain reimbursement for what it ultimately was not obligated to pay under the no-fault act.  

The Court of Appeals also rejected plainitff s argument that the circuit court lacked jurisdiction to adjudicate the counterclaim by Safeco for reimbursement. Westchester claimed that this matter was already pending and had already been decided by the Workers' Compensation Bureau. In rejecting this argument, the Court of Appeals held that while it is the rule that the Bureau has exclusive jurisdiction to decide whether injuries suffered by an employee were in the course of employment, the courts retain jurisdiction to determine more "fundamental" issues and to adjudicate claims not based upon the employer-employee relationship.  

In this case, the circuit court action was not based on the employer-employee relationship. Paper's rights to workers' compensation had already been determined by the Bureau. However, the Bureau's decision lacked a determination of their respective rights and obligations between the workers' compensation insurer and the no-fault insurer. Therefore, the Court of Appeals held that the circuit court had concurrent jurisdiction to decide the claims between these two insurers.  

Finally, the Court of Appeals rejected plaintiffs argument that the tender of a check for $62,172 satisfied its obligation to Safeco and tolled the further accumulation of interest on the amount tendered. The Court of Appeals held that the check did not satisfy plaintiffs obligation to defendant and did not stop the accrual of interest. 

[Editor's Note: The above case was inadvertently omitted from prior summaries.]  

Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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