Wolford v. Travelers Ins. Co.

• Decision Date: 01 October 1979
• Docket Number: Docket No. 30819
• Parties: Donald O. WOLFORD, Plaintiff-Appellee, v. TRAVELERS INSURANCE COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 383

285 N.W.2d 383

92 Mich.App. 600

Donald O. WOLFORD, Plaintiff-Appellee, v. TRAVELERS INSURANCE COMPANY, Defendant-Appellant.

Docket No. 30819.

Court of Appeals of Michigan.

Oct. 1, 1979.

Released for Publication Nov. 29, 1979.

Fisher, Troff & Fisher by Creighton F. Klute, St. Joseph, for defendant-appellant.

Harry J. Creager, St. Joseph, for plaintiff-appellee.

Before WALSH, P. J., and KELLY and OPPLIGER, ^* JJ.

OPPLIGER, Judge.

This appeal involves the statutory set-off for governmental benefits against personal protection insurance benefits under the no-fault act. M.C.L. § 500.3109(1); M.S.A. § 24.13109(1).

FACTS

Plaintiff-appellee filed a complaint for declaratory judgment alleging that he was injured in the course of the operation of a vehicle owned by his employer. Defendant-appellant was the no-fault auto insurance carrier for the vehicle. Plaintiff alleged that defendant acknowledged liability for personal protection insurance benefits, but in the computation of such benefits subtracted those amounts received by plaintiff in the form of social security disability benefits and workers' disability compensation benefits. Plaintiff sought a ruling that the statutory set-off provision of the no-fault act is unconstitutional as it denies plaintiff equal protection of the laws.

Plaintiff moved for and was granted summary judgment primarily on the strength of this Court's decision in O'Donnell v. State Farm Mutual Automobile Ins. Co., 70 Mich.App. 487, 245 N.W.2d 801 (1976). This Court extended the time for defendant's appeal until after the Michigan Supreme Court's decision in O'Donnell v. State Farm Mutual Automobile Ins. Co., 404 Mich. 524, 273 N.W.2d 829 (1979). Of course, the Supreme Court's reversal in O'Donnell bears great weight in determining the outcome of this case.

ISSUE

At issue is that portion of the Michigan No-Fault Insurance Act, M.C.L. § 500.3101 Et seq.; M.S.A. § 24.13101 Et seq., providing for the reduction of the otherwise payable no-fault insurance benefits by the amount of benefits payable to a beneficiary by the state or Federal government. M.C.L. § 500.3109(1); M.S.A. § 24.13109(1) 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 benefits otherwise payable for the injury."

This provision was attacked in the O'Donnell case on the grounds that it impermissibly provided unequal treatment between an insured receiving private benefits and another insured receiving government benefits. Section 3109(1) provides for a set-off of government benefits but not of private benefits such as private health or accident insurance benefits.

O'Donnell upheld the constitutionality of section 3109(1), finding that the Legislature's judgment in differentiating between public and private benefits is supported by a rational basis. Specifically, the Court found:

"This distinction rationally promotes the legitimate legislative objectives of enabling persons with economic needs and/or wages exceeding the maximum benefits permitted under the No-Fault Act to obtain the supplemental coverage they need and of placing the burden of such extra coverage directly on the shoulders of those persons, instead of spreading it throughout the ranks of no-fault insureds." 404 Mich. at 537-538, 273 N.W.2d at 832.

Further, the Court in O'Donnell was asked to determine whether social security survivor's benefits were of a type required to be set-off under section 3109(1). O'Donnell held that a set-off was required. Specifically limiting the holding to the facts of that case, the Court said:

"We conclude that § 3109(1) does require a set-off of these government benefits but is not arbitrary because the benefits are paid as a result of the same accident and duplicate in varying degrees the no-fault benefits otherwise due. All persons who receive redundant government survivors' benefits arising from one accident are treated the same and all are guaranteed a maximum survivor's loss benefit of $1000 per month for three years. It therefore does not violate the Due Process Clause of the state or Federal constitutions." 404 Mich. at 538, 273 N.W.2d at 832.

We now...