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Vanover and Chilton Insurance Company v Commercial Carriers Inc; (USD-UNP, 8/5/1993; RB #1661)


United States District Court, Western District of Michigan; Docket No. 1:90-CV-252;  
Honorable Robert Holmes Bell; Unpublished
Official Federal Reporter Citation:  Not Applicable; Link to Opinion alt   

Standards for Deductibility of State and Federal Governmental Benefits [§3109(1)]  
State Workers Compensation Benefits [§3109(1)]  
Workers Comp Liens Regarding Auto Tort Claims [§3116]

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

In this 1993 decision by Judge Bell, the court on reconsideration of an earlier order, interpreted the provisions of the Michigan no-fault act, §3109(1) providing for subtraction of governmental benefits from PIP benefits, and held that where workers' compensation benefits substitute for no fault benefits, the workers' compensation carrier is not entitled to reimbursement for such payments out of plaintiff’s third-party recovery, even though Texas law (which provided for the workers' compensation benefits) would allow a full reimbursement. Reconsidering his earlier ruling, Judge Bell determined that the rule of comity should not be allowed to operate when it will contravene the rights of the citizen of the state where the action was brought. In this case, allowing a full reimbursement to the Texas workers' compensation carrier of all workers' compensation benefits paid, and allowing a lien against the third-party tort recovery, would effectively deny plaintiff recovery for his medical expense benefits and clearly is not in keeping with Michigan or Texas public policy. Therefore, the court determined that the Texas workers' compensation carrier should be entitled to a lien against an injured employee's third-party recovery only to the extent that the workers' compensation benefits exceed no-fault benefits.  

In this somewhat complicated case, plaintiff Vanover, a Texas resident, was injured in Michigan in the course of his employment for a Texas trucking corporation. Plaintiff received wage loss benefits under the Michigan no-fault act. However, plaintiff’s medical benefits and workers' compensation benefits were received through his Texas employer's workers' compensation policy written by Chilton Insurance Company. Plaintiff then filed an action against other parties seeking non-economic damages and excess economic losses beyond the first three year limits of the Michigan no-fault law. Chilton intervened in the case, seeking to impress a lien upon any recovery obtained from the responsible third parties. In an opinion dated July 25,1991, the court first determined that Chilton could impress its lien for the full amount of benefits paid.  

On reconsideration, the court determined that §3109(1) of the no-fault act providing for governmental benefits subtraction has been construed to mean that workers' compensation benefits substitute for no-fault benefits to the extent that the workers' compensation benefits duplicate no-fault benefits otherwise payable to the employee. Under Great American Insurance Company v Queen, 410 Mich 73 (1980), the workers' compensation carrier is not entitled to reimbursement for payments which substitute for no-fault benefits. 

Although under Texas law there is no similar limitation on a workers' compensation carrier's right to reimbursement for benefits paid out of the workers' compensation claimant's tort recovery against a third-party, the court on reconsideration held that Michigan courts would not treat a Texas workers' compensation carrier differently from a Michigan workers' compensation carrier, and that they would similarly limit the Texas workers' compensation carrier's right to reimbursement. Therefore, the court held that the Texas workers' compensation carrier is not entitled to full reimbursement, but rather is limited to the amounts which is in excess of no-fault benefits. The court distinguished the holding in Sibley v DAIIE, 431 Mich 164 (1988) because in Sibley, supra, the lien at issue arose under federal law not state law, and federal preemption therefore was not implicated in the instant case.

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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