LeBlanc v. State Farm Mut. Auto. Ins. Co.

• Citation: 410 Mich. 173,301 N.W.2d 775
• Decision Date: 03 February 1981
• Docket Number: Docket No. 62439,No. 10,10
• Parties: Joseph LeBLANC, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Appellee. Calendar
• Court: Supreme Court of Michigan

Page 775

301 N.W.2d 775

410 Mich. 173

Joseph LeBLANC, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Appellee.

Docket No. 62439.

Calendar No. 10.

Supreme Court of Michigan.

Argued Jan. 9, 1980.

Decided Feb. 3, 1981.

John M. McCarthy, McLean & McCarthy, Houghton, for plaintiff-appellant.

Weis & Cossi, P. C. by Timothy M. Dean, Ironwood, for defendant-appellee.

COLEMAN, Chief Justice.

Section 3109(1) ¹ of the Michigan no-fault insurance act ² requires a subtraction of benefits provided under the laws of state or federal government from the amount of personal protection insurance benefits payable under any no-fault insurance policy. A second provision of the no-fault act, § 3109a, ³ permits a coordination of no-fault personal protection benefits with "other health and accident coverage on the insured". The principal question presented in this case is whether Medicare payments, made on behalf of a qualifying participant to cover expenses incurred as a consequence of an accident for which no-fault benefits are also payable, must be set off in accordance with § 3109(1) as benefits provided under the laws of the federal government, or whether such payments may be set off under § 3109a as "other health and accident coverage on the insured". The Court of Appeals ruled in a 2-to-1 decision that § 3109(1) requires a set-off of Medicare payments against no-fault benefits otherwise due. ⁴ We reverse the decision of the Court of Appeals. The phrase "other health and accident coverage" contained in § 3109a contemplates benefits provided to qualified participants under the Medicare program; thus, Medicare benefits may be coordinated with no-fault personal protection insurance benefits at the option of the insured. In view of our holding on the principal question, we do not reach the constitutional issue framed in our order granting leave to appeal.

I

Plaintiff sustained multiple injuries in a pedestrian/automobile accident which occurred on June 2, 1976, and as a result, required extensive hospitalization and outpatient treatment. At the time of the accident, plaintiff was over the age of 65 and was eligible to receive Medicare benefits pursuant to certain sections of the Social Security Act ⁵ which provide payment for eligible medical expenses on behalf of qualified individuals. ⁶ Plaintiff additionally qualified for personal protection insurance benefits under the no-fault insurance policy issued him by defendant. The policy in question contained a provision mandating a subtraction of benefits payable by a state or federal government from no-fault benefits otherwise due. Defendant does not submit that plaintiff paid a reduced no-fault premium in recognition of his eligibility for Medicare benefits. ⁷

Medicare disbursed a total of $13,539.57 to various providers in payment of hospital and medical expenses incurred by plaintiff as a result of his accident. ⁸ Defendant paid no-fault benefits with respect to qualified items of hospital and medical care not covered by Medicare, but refused to compensate plaintiff for those expenses which were picked up by Medicare, claiming that Medicare benefits were required to be subtracted from no-fault benefits under § 3109(1) of the no-fault act.

On April 15, 1977, plaintiff brought an action in circuit court to recover from defendant no-fault benefits for Medicare-reimbursed hospital and medical expenses, and attorney's fees. ⁹ The circuit court denied the claim for attorney's fees, but awarded summary judgment in plaintiff's favor on the set-off issue, relying on O'Donnell v. State Farm Mutual Automobile Ins. Co., 70 Mich.App. 487, 245 N.W.2d 801 (1976). ¹⁰ Defendant appealed ¹¹ to the Court of Appeals, which reversed on the set-off issue in a 2-to-1 decision. ¹² Plaintiff appealed and we granted leave to appeal on the following issues: "(1) whether MCL 500.3109 and 500.3109a; MSA 24.13109 and 24.13109(1) can be construed to allow a no-fault insurer to set off for Medicare benefits; and (2) whether MCL 500.3109; MSA 24.13109 is constitutional if it is construed to allow a no-fault insurer to set off for Medicare benefits". ¹³

II

Before addressing the specific arguments advanced by the parties on appeal, we consider the pertinent statutory provisions, the intent of the Legislature underlying their enactment and interpretations given them by the courts of this state.

Section 3109(1) states:

"Benefits provided or required to be provided under the laws of any state or the federal government shall be subtracted from the personal protection insurance benefits otherwise payable for the injury." ¹⁴

This section has been the subject of extensive litigation; ¹⁵ almost invariably, ¹⁶ the governmental benefits at issue have been social security survivors' loss benefits and workers' compensation benefits.

In the leading case concerning § 3109(1), O'Donnell v. State Farm Mutual Automobile Ins. Co., 404 Mich. 524, 273 N.W.2d 829 (1979), this Court sustained the constitutional validity of the mandatory set-off, confirming that social security survivors' benefits are required to be subtracted from § 3108 ¹⁷ no-fault survivors' benefits. We observed that government benefits provided as a result of the same accident for which no-fault benefits are also payable, and which serve the same purpose as no-fault benefits, are within the scope of § 3109(1); however, we emphatically stated that our decision in O'Donnell "does not purport to encompass other possible government benefits". O'Donnell, supra, 404 Mich. 538, 273 N.W.2d 829.

In Mathis v. Interstate Motor Freight System, 408 Mich. 164, 289 N.W.2d 708 (1980), ¹⁸ we extended our holding in O'Donnell to workers' compensation benefits, which we found to be constitutionally subject to the mandatory set-off of § 3109(1).

The Court considered the application of § 3109(1) to somewhat atypical benefits, Medicaid benefits, in Workman v. Detroit Automobile Inter-Insurance Exchange, 404 Mich. 477, 274 N.W.2d 373 (1979). However, since we ascertained that Workman was statutorily disqualified from receiving Medicaid benefits because of her eligibility for no-fault benefits, we declined to decide the issue, or otherwise to express an "opinion with respect to the propriety of a set-off of redundant, accident-related, ex gratia governmental transfer coverage," Workman, supra, 486, 274 N.W.2d 373.

The legislative history of § 3109(1) was adequately detailed in O'Donnell, supra, 404 Mich. 544-545, 273 N.W.2d 829: ¹⁹

"The history of § 3109(1) indicates that the Legislature's intent was to require a set-off of those government benefits that duplicated the no-fault benefits payable because of the accident and thereby reduce or contain the cost of basic insurance.

"In a letter to the Governor from the Commissioner of Insurance analyzing a series of proposed no-fault bills introduced in 1971, none of which contained a set-off provision, the Commissioner criticized the bills because they tended to 'increase the duplication and overlap between auto insurance and other insurance programs, sick leave programs and social security'. Subsequent bills did contain set-off provisions. The final version of § 3109(1) was similar to an amendment suggested by the Commissioner. According to the Commissioner, the purpose of the amendment was 'to provide a more complete and effective coordination of benefits between Michigan auto insurance and the benefits provided by the laws of all the states and the federal government'. As noted by Justice Williams in his opinion in this case, the Commissioner's comments 'make clear that the purpose of the § 3109(1) statutory scheme was framed in terms of maintaining or reducing premium costs for all insureds through the elimination of duplicative benefits recovery'."

The second provision of the no-fault act relevant to our discussion herein is § 3109a:

"An insurer providing personal protection insurance benefits shall offer, at appropriately reduced premium rates, deductibles and exclusions reasonably related to other health and accident coverage on the insured. The deductibles and exclusions required to be offered by this section shall be subject to prior approval by the commissioner and shall apply only to benefits payable to the person named in the policy, the spouse of the insured and any relative of either domiciled in the same household." ²⁰

In contrast with § 3109(1), § 3109a has been seldom mentioned, much less construed. Nyquist v. Aetna Ins. Co., 84 Mich.App. 589, 269 N.W.2d 687 (1978), aff'd. 404 Mich. 817, 280 N.W.2d 792 (1979), merits our attention. In Nyquist, nine named plaintiffs brought an action against Aetna to recover no-fault benefits withheld by Aetna because plaintiffs' hospitalization expenses had been paid for by Blue Cross-Blue Shield, and because plaintiffs had paid reduced no-fault premiums in electing a coordination of benefits. Plaintiffs principally asserted that Blue Cross-Blue Shield was not "insurance" and therefore did not come within the purview of § 3109a. The Court of Appeals responded:

"(P)laintiffs' argument is untenable for three reasons.

"First, the legislative history of this provision demonstrates that coordination of Blue Cross-Blue Shield benefits with personal injury insurance protection was a primary concern * * *.

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"We also note that § 3109a uses the word 'coverage' rather than 'insurance'; the use of the broader term militates against plaintiffs' restrictive reading of the section at issue.

"Secondly, documents that were part of the record below show that the Commissioner and Deputy Commissioner of Insurance have taken the position that medical and hospitalization plans such as Blue Cross- Blue Shield fall within § 3109a. We give particular weight to the interpretations of those charged with the implementation and enforcement of a statute. See Boyer-Campbell Co. v. Fry, 271 Mich. 282, 260 N.W. 165...