MICHIGAN EDUCL. EMPLOYEES MUT. INS. CO. v. Morris

• Citation: 596 N.W.2d 142,460 Mich. 180
• Decision Date: 29 June 1999
• Docket Number: Docket No. Calendar,Docket No. 109351,Docket No. 108600,Docket No. 10.,Docket No. 9
• Parties: MICHIGAN EDUCATIONAL EMPLOYEES MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. Richard MORRIS, Conservator of the Estate of Celia Annette Wooten, Legally Incapacitated Person, Defendant-Appellant. Auto-owners Insurance Company, Plaintiff-Appellee, v. Betty Perry, formerly known as Betty Campbell, Defendant-Appellant.
• Court: Supreme Court of Michigan

596 N.W.2d 142

460 Mich. 180

MICHIGAN EDUCATIONAL EMPLOYEES MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. Richard MORRIS, Conservator of the Estate of Celia Annette Wooten, Legally Incapacitated Person, Defendant-Appellant.

Auto-owners Insurance Company, Plaintiff-Appellee, v. Betty Perry, formerly known as Betty Campbell, Defendant-Appellant.

Docket Nos. 108600, 109351, Calendar Nos. 9, 10.

Supreme Court of Michigan.

Argued November 10, 1998.

Decided June 29, 1999.

Jon J. Schrotenboer and Mark D. Goudy, Grand Rapids, for plaintiff-appellee Michigan Educational Employees Mutual Insurance Company.

Anselmi, Mierzejewski & Ledwidge, P.C. (by Joseph S. Mierzejewski), Bloomfield Hills, for plaintiff-appellee Auto-Owners Insurance Company.

Field & Field, P.C. (by Samuel T. Field), Kalamazoo, for defendant-appellant Richard Morris.

Michael J. Kelly, Flint, for defendant-appellant Perry.

Opinion

BRICKLEY, J.

We granted leave in these cases to determine whether this Court's decision in Profit v. Citizens Ins. Co. of America, 444 Mich. 281, 506 N.W.2d 514 (1993), is retroactively applicable, so that plaintiff insurance companies in the present cases can obtain reimbursement from the present defendants for the amount of no-fault personal protection insurance benefits that were overpaid because social security benefit payments were not offset. We answer this first question in the affirmative. Additionally, we consider whether plaintiff insurance companies have a common-law basis for reimbursement of the overpayments. While we conclude that such a right exists, it is an equitable right, and plaintiffs are only entitled to reimbursement if, in light of all the circumstances, reimbursement would be equitable to defendants. Finally, we consider whether the doctrine of laches bars plaintiff Michigan Mutual Insurance Company's (MEEMIC) attempt to recover reimbursement of the full amount of the overpayment. We conclude that the doctrine of laches is inapplicable under the circumstances of this case.

Before turning to a discussion of the issues, we will examine the facts and the procedural history of these cases.

I. Facts and Proceedings

A. Michigan Educational Employees Mutual Ins Co

On December 12, 1988, Celia Wooten was injured in a motor vehicle accident that left her totally disabled. Ms. Wooten is now under the conservatorship of Richard Morris, her brother and legal representative and the defendant in this action.

At the time of the accident, Ms. Wooten's automobile insurance provider was plaintiff Michigan Educational Employees Mutual Insurance Company. As Ms. Wooten's no-fault insurer, MEEMIC was responsible for paying Ms. Wooten's income replacement benefits for work she would have performed during the first three years after the accident. MCL 500.3107; MSA 24.13107.¹ MEEMIC immediately began paying work loss benefits in the amount of $2,670 a month, the maximum amount payable under the statute.

On June 20, 1990, the Social Security Administration approved Ms. Wooten's claim for social security disability benefits and provided that her benefits be retroactive to June, 1989. MEEMIC was informed of this award on August 16, 1990. MEEMIC continued to pay full work loss benefits without coordinating the social security award.

On January 22, 1991, the Court of Appeals, Profit v. Citizens Ins. Co. of America, 187 Mich.App. 55, 466 N.W.2d 354 (1991), held that social security benefits could not be subtracted from work loss benefits. MCL 500.3109(1); MSA 23.13109(1). Section 3109(1) provides as follows:

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.

Before the holding in Profit, this Court had twice held that social security benefits were to be offset against no-fault personal protection insurance benefits under § 3109(1). See O'Donnell v. State Farm Mut. Automobile Ins. Co., 404 Mich. 524, 273 N.W.2d 829 (1979) (social security benefits payable to a deceased worker's survivors are subject to offset), and Thompson v. Detroit Automobile Inter-Insurance Exchange, 418 Mich. 610, 344 N.W.2d 764 (1984) (social security disability benefits payable to dependents of injured person for income lost as the result of an automobile accident are subject to offset).

On June 12, 1991, MEEMIC wrote to Ms. Wooten's conservator informing him that MEEMIC intended to offset Ms. Wooten's social security benefits and demanding reimbursement of the amount of social security benefits that had already been received. Ms. Wooten's counsel, relying on the Court of Appeals decision in Profit, responded with a refusal to reimburse MEEMIC and demanded that MEEMIC continue to pay the work loss benefits in full. MEEMIC complied with the demand and paid the remainder of the work loss benefits without setoff.

On September 29, 1993, this Court reversed Profit and announced that a no-fault insurer is entitled to deduct social security disability benefits from work loss benefits. 444 Mich. 281, 506 N.W.2d 514. On October 19, 1993, MEEMIC wrote to Ms. Wooten's attorney, demanding reimbursement for the amount of the social security disability benefits. Ms. Wooten did not make the reimbursement, and MEEMIC brought this action.

The trial court concluded that a six-year period of limitation was applicable, and, thus, the claim was not barred. The court then granted MEEMIC's motion for summary disposition on the basis of an unjust enrichment or restitution theory. The court found that Profit mandated that MEEMIC be reimbursed the amount Ms. Wooten was overpaid as a result of receiving social security benefits. The court, however, limited the amount of the reimbursement to the amount of overpayment Ms. Wooten received in the third and final year in which work loss benefits were paid by MEEMIC. The court based this limitation on the doctrine of laches as set for in MCL 600.5815; MSA 27A.5815.²

Both parties appealed the trial court's decision. The Court of Appeals affirmed the trial court's finding of liability, but reversed with respect to the one-year limitation on the reimbursement. The Court of Appeals remanded to the trial court and ordered that the judgment be modified to reflect MEEMIC's right to full reimbursement of the social security disability benefit setoff amount.

On appeal to this Court, Ms. Wooten argues, through her conservator, that the Court of Appeals erred in granting unlimited retroactive application to Profit, 444 Mich. 281, 506 N.W.2d 514. Ms. Wooten also argues that under Adams v. Auto Club Ins. Ass'n, 154 Mich.App. 186, 397 N.W.2d 262 (1986), plaintiff MEEMIC has failed to demonstrate that it made the payments under a "mistake of fact," which is a necessary element in a common-law case where an insurer attempts to obtain a judgment against an insured and the insured detrimentally relied on the amount of the work loss benefits paid being correct. Finally, Ms. Wooten argues that the Court Appeals erred in not considering the doctrine of laches in granting MEEMIC the right to full reimbursement of the social security disability benefits.

B. Auto-Owners Insurance Co v. Perry

Michael Campbell died on October 3, 1991, as a result of injuries suffered in an automobile accident. Decedent's ex-wife, Betty Perry, filed a claim with Auto-Owners Insurance Company for survivors' loss benefits for her's and Mr. Campbell's three children. Mr. Campbell's survivors were also paid social security survivors' loss benefits. Pursuant to M.C.L. § 500.3108; MSA 24.13108,³ Auto-Owners paid the survivors' loss benefits to Mr. Campbell's surviving children. After Auto-Owners had begun making payments, it informed the claimants that setoff adjustments might be necessary, considering the receipt of duplicate payments of survivors' loss benefits from the Social Security Administration.⁴

This Court released Profit on September 29, 1993. The opinion reversed the Court of Appeals decision that had prompted Auto-Owners to refrain from setting off the social security benefits. We held that social security survivors' benefits are to be subtracted from no-fault benefits payable for an automobile injury. Auto-Owners requested that Ms. Perry reimburse it for the overpayment, and, when Ms. Perry failed to reimburse, Auto-Owners filed the present lawsuit.

Auto-Owners subsequently moved for summary disposition. When the trial court denied the motion, Auto-Owners appealed. The Court of Appeals reversed the judgment of the trial court and held that Auto-Owners was entitled to set off the amount of social security survivor payments from the amount Auto-Owners had paid defendant in survivors' loss benefits. It also held that Auto-Owners was entitled to full reimbursement of the amount that was overpaid to the survivors.⁵

Defendant, Ms. Perry, argues that this Court's decision in Profit announced a new rule or decided an issue of first impression and, therefore, should not be applied retroactively. Additionally, Ms. Perry argues that Auto-Owners brought its complaint under the sole theory of mistake and that both the trial court and the Court of Appeals found that Auto-Owners had not met its burden of proof under a theory of mistake. Therefore, Ms. Perry contends that the Court of Appeals erroneously granted Auto-Owners relief.

We combine these cases to determine if our decision in Profit should be applied retroactively so that plaintiff insurance companies in the present cases can obtain reimbursement for the amounts they overpaid in no-fault personal protection insurance benefits because they did not subtract social security benefit payments from the amount paid in no-fault personal protection insurance benefits.

II. Retroactive Application of Profit

In these companion cases, both defendants argue that this Court's decision in Profit should be applied prospectively rather than retroactively. "[T]he...