Thompson v. Detroit Auto. Inter-Insurance Exchange
| Citation | 418 Mich. 610,344 N.W.2d 764 |
| Decision Date | 12 March 1984 |
| Docket Number | No. 2,INTER-INSURANCE,Docket No. 67794,2 |
| Parties | Francis THOMPSON and Sarah Thompson, Plaintiffs-Appellees, v. DETROIT AUTOMOBILEEXCHANGE, a Michigan corporation, Defendant- Appellant. Calendar |
| Court | Supreme Court of Michigan |
William E. Rheaume, Abood, Abood & Rheaume, P.C., Lansing, for plaintiffs-appellees.
Gromek, Bendure & Thomas by John A. Lydick, Detroit, for defendant-appellant.
LEVIN, Justice (for reversal).
The question presented is whether social security disability benefits that would not be paid to the dependents of a person injured in an automobile accident but for income lost as a result of the accident are required by § 3109(1) of the no-fault automobile liability act to be coordinated with work-loss benefits payable under the no-fault act. We would hold that coordination is required, and that social security disability payments to dependents are required to be subtracted from work-loss benefits.
The purpose of social security disability payments is income replacement. Such payments to dependents are calculated on the basis of the injured worker's prior earnings history, and have the same income-replacement effect as do the work-loss benefits provided by the no-fault act. Consistent with the legislative purpose of reducing the cost of providing no-fault benefits by subtracting other governmentally mandated payments, § 3109(1) requires the subtraction of social security disability payments to dependents from the work-loss benefits otherwise payable for the injury under the no-fault act although they are paid directly to the dependent spouse and children. 1
On July 13, 1978, Francis Thompson was injured in an automobile accident. Detroit Automobile Inter-Insurance Exchange is the no-fault insurer obligated to pay him work-loss benefits. Francis Thompson also receives social security disability benefits pursuant to 42 U.S.C. § 423. Thompson's wife Sarah and their two dependent children also receive social security benefits as a result of the disability Thompson suffered in the automobile accident.
Upon learning of the Thompsons' receipt of social security disability payments, DAIIE reduced the monthly amount payable to Thompson by the aggregate amount of social security disability payments made to the Thompson family. Francis Thompson did not challenge DAIIE's reduction for the social security payments made to him, but the Thompsons filed this action seeking a declaratory judgment that DAIIE may not reduce no-fault work-loss payments by the amount of social security disability payments provided to Sarah Thompson and the two Thompson children.
The circuit court granted the Thompsons' motion for summary judgment, and the Court of Appeals affirmed. We would reverse. 2
Section 3109(1) of the no-fault act provides:
"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 payments otherwise payable for the injury." 3
The subtraction from no-fault work-loss benefits of social security disability benefits paid directly to Francis Thompson, the disabled worker, is not contested. All appear to agree that social security disability benefits, when paid to the injured worker, like the survivors' benefits required to be subtracted in O'Donnell v. State Farm Mutual Automobile Ins. Co., 404 Mich. 524, 273 N.W.2d 829 (1979), app. dis. 444 U.S. 803, 100 S.Ct. 22, 62 L.Ed.2d 16 (1979), and the workers' compensation benefits required to be subtracted in Mathis v. Interstate Motor Freight System, 408 Mich. 164, 289 N.W.2d 708 (1980), are "benefits" within the meaning of § 3109(1). The issue presented is whether social security disability benefits, when paid to the dependents of the injured worker, are "benefits" within the meaning of § 3109(1).
Social security disability benefits to dependents are paid directly to the injured worker's spouse and children. 4 Under the Social Security Act, a child only receives disability payments if he is dependent on the injured worker; 5 any money the child receives in the form of social security payments is money he need no longer obtain from the disabled worker on whom he is dependent. Similarly, disability benefits are payable to a spouse 6 only when Congress deems it to be difficult for the spouse to work either because the spouse is 62 years old or has a child in care; 7 any money received in the form of social security disability payments is money that need no longer be obtained from the disabled worker. 8
Before an automobile accident, then, the dependent child and the spouse who cannot work receive direct support from the worker. 9 The Congress has decided that social security disability benefits should be paid to disabled workers, including those disabled in automobile accidents. Rather than make all the disability payments to the worker and have family members continue to receive all their support from the worker, the Congress has chosen instead to pay a portion of the total benefits in respect to the disability to the disabled worker and the remainder directly to the spouse and the child. Although the Congress has chosen to change the name on the check, disability payments to dependents replace the income that would have inured to the spouse and the child had the worker to whom they look for support not been injured.
Social security disability payments to dependents are calculated on the basis of the disabled worker's past earnings record, 10 and the maximum amount of payments that the family may receive is also based on the earnings history of the disabled worker. 11 If these payments were to have some purpose other than replacing the injured worker's lost income, that purpose would not be served by tying disability payments to dependents to the past earnings record of the disabled worker.
At the time this Court decided Mathis v. Interstate Motor Freight System, supra, the workers' compensation act provided that payments made to the injured worker were to vary with the number of dependents. 12 Augmented workers' compensation payments provided to the worker because of his dependents were required to be subtracted under the rule stated in Mathis. Similarly, social security disability payments provided directly to the dependents themselves should be subtracted. The name on the check should not be determinative. "To refuse the setoff directed by the [no-fault act] would result in the injured claimant receiving more as lost earnings than the actual wages lost, a gift not intended by the Legislature when it enacted no-fault legislation". Karmilowicz v. Allstate Ins. Co., 77 A.D.2d 131, 135, 432 N.Y.S.2d 698 (1980), app. dis. 54 N.Y.2d 753 (1981). 13
The dissenting opinion acknowledges that social security disability payments, like no-fault work-loss benefits, provide "income insurance protection". 14 14 The opinion argues, however, that the social security disability program is also, "to a certain extent, a social welfare program designed to provide at least subsistence payments to disabled workers as well as to their dependents". 15
The United States Supreme Court has said that in providing for the payment of social security benefits to dependents the Congress "intended to provide persons dependent on the wage earner with protection against the economic hardship occasioned by loss of the wage earner's support". Califano v. Jobst, 434 U.S. 47, 50, 98 S.Ct. 95, 97, 54 L.Ed.2d 228 (1977). 16 The dissenting opinion does not explain what purpose social security disability payments to dependents serve other than replacing the lost wages of the disabled person, 17 or why subsistence payments to the worker's dependents should not be subtracted when subsistence payments to the disabled worker himself are required by § 3109(1) to be subtracted from work-loss benefits. It does not appear that social security disability payments to dependents serve any purpose other than replacing the lost wages of the disabled worker.
This Court has held, despite the "social welfare" component that inheres in social security survivors' payments, 18 that survivors' payments are required by § 3109(1) to be subtracted from no-fault work-loss benefits. O'Donnell v. State Farm Mutual Automobile Ins. Co., supra. The failure to require a setoff of social security disability payments to dependents would yield the anomalous result that the payments to dependents are not subtracted as long as the injured worker is alive and disabled, but are subtracted under the rule of O'Donnell, supra, when the injured worker dies from his injuries.
The dissenting opinion asserts that this result is not anomalous because "[a]t the time of the injured worker's death, a different type of benefit is payable, and it is not inconsistent to subject the benefit to a different treatment". 19 Yet it is but a truism that a different type of payment is made when the worker is disabled than when the worker dies; in the former case the social security program pays disability benefits, while in the latter the social security program pays survivors' benefits. This does not explain why the different labels attached to the social security payments--substantially identical in amount whether the payment is for disability or death 20--should make a difference. No evidence has been offered and there is no reason to believe that the Congress provided more than income replacement to the dependents of a disabled worker while providing only income replacement to the dependents of a deceased worker.
The social welfare program argument ignores that the no-fault act also embodies a social welfare program. Although the no-fault system is administered through insurance companies, premiums paid by the owners of motor vehicles to no-fault automobile insurers are governmentally mandated exactions that socialize the cost of providing work-loss...
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