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Perez v State Farm Mutual Automobile Insurance Company; (MSC-PUB, 3/12/1984; RB #701)

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Michigan Supreme Court; Docket No. 67122; Published  
Opinion by Judge Levin; 5-2  
Official Michigan Reporter Citation: 418 Mich 634; Link to Opinion alt   


STATUTORY INDEXING:  
Standards for Deductibility of State and Federal Governmental Benefits [§3109(1)]  
State Workers Compensation Benefits [§3109(1)]

TOPICAL INDEXING:
Uniform Motor Vehicle Accident Reparations Act (UMVARA)
Workers Disability Compensation Act (MCL 418.1, et seq.)   


CASE SUMMARY:  
In this 5-2 opinion by Justice Levin, the Supreme Court reversed the Court of Appeals in item number 395 and held that workers' compensation benefits required to be paid to a worker injured in a motor vehicle accident but which will not be paid because the employer did not have workers' compensation coverage, are not required to be subtracted from no-fault work loss benefits under the governmental benefits setoff provisions of §3109(1). The Court noted that the primary reason for the setoff provisions is to avoid duplicative recovery with respect to certain economic loss benefits. Amounts payable as workers' compensation benefits that will not be paid because an employer failed to obtain workers' compensation insurance cannot duplicate no-fault work loss benefits and are thus not required to be subtracted from no-fault benefits.

With regard to the meaning of the phrase "provided or required to be provided" in §3109(1), the Court made the following important observation about an injured person's duty to pursue available government benefits. The Court stated:

"The 'required to be provided' clause of §3109(1) means that the injured person is obligated to use reasonable efforts to obtain payments that are available from a workers' compensation insurer. If workers' compensation payments are available to him, he does not have the choice of seeking workers' compensation or no-fault benefits; the no-fault insurer is entitled to subtract the available workers' compensation payments even if they are not in fact paid because of the failure of the injured person to use reasonable efforts to obtain them."

As further support for its conclusion, the Court stated that §3109(1) is based upon and similar to the government benefits setoff provisions of the Uniform Motor Vehicle Accident Reparations Act (UMVARA) and the Motor Vehicle Basic Protection Insurance Act (MVBPIA). Both model acts provide for setoffs of benefits a person "receives or is entitled to receive." This is "functionally equivalent' to the Michigan statutory language.

On reaching its conclusion, the majority specifically expressed their agreement with the result reached by the Court of Appeals in Davis v Auto-Owners (item number 524) on this identical issue.

Justices Ryan and Brickley dissented advocating strict adherence to the statutory setoff language.

[Author's Comment: This decision leaves unanswered the question of the extent of a setoff in those situations where the worker redeems his claim for workers' compensation benefits and takes less by way of the redemption than would be available if comp benefits were fully paid. Perhaps this issue will turn on the "reasonableness" of the redemption. If the worker had a very weak case for workers' compensation, then perhaps it could be argued that the worker has a "duty to pursue" the redemption as opposed to risking everything by proceeding to a contested comp hearing. These types of cases present difficult problems regarding the extent of the workers' comp setoff and appear to be beyond the scope of this opinion. It should also be pointed out that this is the most recent in a long line of appellate cases referring to UMVARA for assistance in statutory interpretation. For more on redemption see item number 726]


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 SinasDramis.com.

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