Great American Ins. Co. v. Queen
| Decision Date | 23 December 1980 |
| Docket Number | No. 6,Docket No. 62185,6 |
| Citation | 300 N.W.2d 895,410 Mich. 73 |
| Parties | GREAT AMERICAN INSURANCE COMPANY, Plaintiff-Appellant, v. Peter QUEEN, Patricia Elaine Moore, a/k/a Patricia Elaine Gardener, and Michael Irwin Hughes, Defendants-Appellees. Calendar |
| Court | Michigan Supreme Court |
Johnson, Campbell & Moesta, P. C. by Reginald S. Johnson, Detroit, for plaintiff-appellant.
Freedman, Krochmal & Colman by Gary A. Krochmal, Southfield, for defendant-appellee Queen.
Conklin, Maloney & Loesch, Thomas L. Conklin, Southfield, for defendant-appellee Moore/Gardener; Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen, John P. Jacobs, Detroit, of counsel.
Davidson, Gotshall, Kohl, Secrest, Wardle, Lynch & Clark by Randall D. Bryant, Farmington Hills, for defendant-appellee Hughes.
The issue is whether an employer's or insurer's right under the workers' compensation act to be reimbursed out of any tort recovery by an employee from a third party in respect to the same injury which gave rise to the obligation to pay workers' compensation benefits is modified by the provisions of the no-fault motor vehicle liability act.
We conclude that since the insurer in the instant case seeks reimbursement for payments which substituted for no-fault benefits otherwise payable, there is no right to reimbursement.
We do not agree with Justice Williams' conclusion that there is "a clear and irreconcilable repugnance" between the no-fault act and the workers' compensation act and "both acts cannot be given simultaneous effect" and that therefore the no-fault act operates to repeal the reimbursement provisions of the workers' compensation act in all cases involving motor vehicle accidents. It is possible to give both acts simultaneous literal effect. The workers' compensation carrier could be permitted reimbursement from "any tort recovery," whether for economic or non-economic loss, although the employee's right to proceed in tort is limited by the no-fault act. 1
Nevertheless, we think it appropriate to inquire whether consideration of the legislative policies and judgments embodied in the provisions of both acts indicates a legislative intent that a workers' compensation carrier's reimbursement rights be modified in cases where the no-fault act is also operative.
When an employee is injured in a motor vehicle accident in the course of his employment, his entitlement to compensation for his injuries, from all sources, is governed by the workers' compensation act and the no-fault act. His rights and entitlements under each act are affected by his being injured under circumstances which make him subject to the provisions of the other.
Under the workers' compensation act the employee is entitled to statutory compensation and may also seek to enforce the legal liability of a third party. 2 But, by operation of the no-fault act, that legal liability is limited.
Under the no-fault act he is entitled to no-fault benefits. 3 But, once the liability of the no-fault insurer is determined, that liability is reduced by the amount of workers' compensation benefits paid or payable because of the injury. 4
If the legislative decision, set forth in the no-[410 Mich. 87] fault act, that no-fault insurers are entitled to reimbursement from third-party tort recoveries only to the extent recovery represents compensation for elements of loss compensated by no-fault benefits is not extended to workers' compensation benefits which substitute for no-fault benefits, the third-party tort recovery of a person injured in a motor vehicle accident in the course of his employment would be reduced by no-fault benefits paid by the workers' compensation carrier, while the third-party tort recovery of a person not injured in the course of his employment would not be reduced.
We are persuaded that had the Legislature considered the acts' application to the case at bar 5 a motor vehicle accident occurring in the course of employment it would have explicitly provided that when a workers' compensation carrier provides benefits which would be payable by the no-fault insurer had the accident not occurred in the scope of employment but are instead payable by the workers' compensation carrier because of the no-fault act's mandatory set-off provision, its reimbursement rights are coextensive with those of the no-fault insurer whose liability it replaces and are thus limited to cases where there is tort recovery for basic economic loss. 6
That conclusion does not, however, compel total nullification of the workers' compensation carrier's reimbursement rights in cases involving motor vehicle accidents. When the carrier pays benefits which do not substitute for no-fault benefits, because they exceed no-fault benefits in amount or duration, it should be treated like all other workers' compensation carriers and be entitled to reimbursement out of any third-party recovery.
Allowing reimbursement for such benefits would work no discrimination against motor vehicle accident victims who happen to be injured in the course or scope of employment because reimbursement is permitted only for benefits which other motor vehicle accident victims do not receive.
Queen was injured in a motor vehicle accident in the course of his employment on January 12, 1976. Great American Insurance Company paid him $4,567 in workers' compensation benefits. Queen claimed benefits from his employer's no-fault insurer. The no-fault insurer subtracted the amounts paid under the workers' compensation act from the benefits otherwise owing under the no-fault act.
Queen then sought to recover from the tortfeasors as permitted by § 3135 of the no-fault act. His claim was settled for $18,500. This sum was paid without notice to Great American.
Great American then brought this cause against Queen and the third-party tortfeasors claiming a lien on the settlement proceeds pursuant to § 827 of the workers' compensation act. The trial judge granted summary judgment in favor of the defendants. The Court of Appeals affirmed per curiam. 7
An employee's common-law right to proceed in tort against persons other than his employer or co-workers was not altered by the workers' compensation act. An employee may sue such persons for all losses normally recoverable in tort. If he is awarded damages, the employer or workers' compensation carrier is entitled to reimbursement for benefits paid and to a credit against future payments, without regard to whether the recovery is for the same elements of loss compensated by the benefits paid under the statute.
The employee is thus permitted to rest content with a workers' compensation award or to pursue his tort remedy and reimburse the employer or insurer for any amounts received under the workers' compensation act. Because he need not repay more than he recovered in tort, the employee in effect recovers under the more generous of the two systems tort or workers' compensation but not both. This was our holding in Pelkey v. Elsea Realty & Investment Co. 8
The workers' compensation carrier argues that this case is governed by our decision in Pelkey. The circumstances which supported our rationale in Pelkey, however, and which exist in all workers' compensation reimbursement cases except those involving motor vehicle accidents occurring after the passage of no-fault, do not obtain here. In Pelkey, damages recoverable in tort included compensation for all losses required to be compensated by the workers' compensation carrier.
Pelkey was involved in a motor vehicle accident in the course of her employment with Elsea Realty. She sustained a compensable disability and received $3,364.60 in workers' compensation. Pelkey, her husband, and the workers' compensation carrier jointly settled their claim against the third-party tortfeasor for $10,000. $3,000 was allocated to Pelkey's husband for loss of consortium; $3,364.60 was allocated to the workers' compensation carrier as reimbursement and.$3,635.40 was allocated to Pelkey for pain and suffering.
After settlement, Pelkey developed psychiatric complications requiring treatment and petitioned for compensation. The WCAB ruled the treatment related to the earlier injury and awarded compensation but determined that the insurer was entitled to a credit equal to Pelkey's tort recovery less the costs of securing that recovery. Pelkey argued that tort recoveries for pain and suffering were not intended to be subject to an insurer's lien based on compensation for economic loss.
We concluded that:
"(W)hen the Legislature stated that damages recovered by an employee from a third-party tortfeasor for 'personal injuries or death only' could be reached by an insurer, the Legislature meant to include damages resulting from pain and suffering."
We noted that prior to 1952 an injured employee was required to choose between the common-law tort remedy against third parties and the workers' compensation remedy provided by statute and concluded that "(t)he right to reimbursement is justified by the abrogation of the election of remedies requirement."
The workers' compensation act provides a right to no-fault wage benefits, medical care and scheduled benefits for specific losses. Where the person whose negligence caused the compensable disability is neither an employer nor a co-worker, the injured employee is also permitted to sue in tort. In such an action the employee is entitled to recover all damages normally recoverable in tort wage loss, medical expenses, and pain and suffering. The third party's liability is not reduced by amounts recovered under the workers' compensation system.
In most cases, the amounts repaid to the insurer will represent payments from the third party for elements of damage already compensated by the insurer medical expenses, wage loss, and pain and suffering in the case of an employee receiving scheduled benefits for a specific loss. In such cases the...
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