Ingham County Circuit Court: Docket No. 80-24529-CK
Chief Judge Michael G. Harrison
Official Reporter Citation: Not Applicable; Link to Opinion
Work Loss Benefits: Calculation of Benefits [§3107(1)(b)]
Work Loss Benefits: Relevance of Wage Continuation Benefits [§3107(1)(b)]
Uniform Motor Vehicle Accident Reparations Act (UMVARA)
In this written Opinion involving a case of first impression, Ingham County Chief Circuit Judge Michael G. Harrison held that "wage continuation" benefits paid to plaintiff by his employer may not be subtracted from work loss benefits paid to plaintiff under an uncoordinated no-fault automobile insurance policy.
The plaintiff in this case was a salaried employee of General Motors. As a result of being injured in an automobile accident, he was unable to work for 18 months. During a portion of his disability period, he received about 75 percent of his full salary in the form of certain disability insurance benefits available to him through his employment. General Motors paid the remaining 25 percent of his salary under a "wage continuation" plan. The plaintiff had a full, uncoordinated no-fault wage loss policy with defendant.
Defendant argued that it was entitled to deduct the 25 percent wage continuation benefits from its obligation to pay plaintiff no-fault wage loss benefits. The defendant argued that to the extent plaintiff received wage continuation benefits, he had not sustained the required "loss of income" thereby triggering a work loss benefit to that extent under §3107(b) of the Act.
Judge Harrison rejected defendant's contentions. In acknowledging that there were no cases on point and that the statute did not specifically address the issue, Judge Harrison referred to the Uniform Motor Vehicle Accident Reparations Act (UMVARA). In several cases, the Michigan appellate courts have relied on UMVARA in construing the Michigan No-Fault Act. The Commissioner's comment to §l(a)(5Xii) specifically addresses this issue and states in pertinent part:
“... An employed person who loses time from work he would have performed had he not been injured has suffered work loss, even if his employer continues his wages under a formal wage continuation plan or as a gratuity. Employer payments in this situation are collateral source payments rather than wages since they are not payments for work done during the time the employee was absent. Nor would the wage continuation payments be subtracted in the calculation of net loss."
Thus, according to UMVARA, wage continuation benefits are not to be deducted from a no-fault insurer's obligation to pay no-fault work loss benefits. Accordingly, partial summary judgment was entered in favor of plaintiff to the extent of the wage continuation benefits withheld by defendant.