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Allstate Insurance Company v Sentry Insurance Company of Michigan; (COA-UNP, 2/22/1989; RB # 1222)


Michigan Court of Appeals; Docket No. 100484; Unpublished  
Judges Sullivan, Hood, and Bruff; Unanimous; Per Curiam  
Official Michigan 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)]

No-Fault Insurer Claims for Reimbursement
Private Contract (Meaning and Intent)
Workers Disability Compensation Act (MCL 418.1, et seq.)   

In this unanimous, published per curiam Opinion, the Court of Appeals reversed and remanded to the trial court a case in which plaintiff Allstate had claimed entitlement to a lien against any workers' compensation redemption made by defendant Sentry to the estate of the insured.

Following the fatal injury to the insured in an automobile accident while in the course of a work-related function, plaintiff Allstate commenced payment of survivors' loss benefits. The surviving widow also filed a petition for workers' disability compensation from defendant Sentry. Plaintiff Allstate became aware of the pendency of the workers' compensation claim and wrote a letter notifying defendant Sentry of Allstate's "lien" against any settlement of the workers' compensation claim. This letter claiming a lien was acknowledged, and in a responding letter, Sentry stated that it "will protect the lien you have against any settlement made under [the insured's] workers' compensation file."

Later, a redemption occurred in the amount of $60,000. Allstate was not notified of this redemption, and when it became aware of the redemption, it filed suit seeking reimbursement of survivors' loss benefits paid under the provisions of §3109. Neither party contested the entitlement of plaintiff to a "set off” pursuant to §3109. However, defendant Sentry contested the method by which Allstate sought to protect its right to setoff.

In reversing the trial court's holding that Allstate had properly created a lien by its correspondence to Sentry, the Court of Appeals held that §3109 does not specifically create a lien in favor of the no-fault carrier. Nothing in the language of §3109 evinces a legislative intent to create a lien in favor of the no-fault carrier.

The court held that the more logical and reasonable procedure for protecting the no-fault carrier's set off rights is for the no-fault carrier to ascertain whether a workers' compensation claim has been filed, and then to seek intervention in the workers' compensation proceeding in accordance with MCLA 418.847. This encourages swift payment of no-fault benefits and protects the no-fault carrier's financial interest in the workers' compensation award.

On a related claim that the correspondence between the parties created a contractual agreement to protect plaintiffs set off rights, the court remanded for further proceedings in order to resolve any factual disputes concerning the existence of such an agreement.

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