Profit v. Citizens Insurance Co. of America

506 N.W.2d 514, 444 Mich. 281

• Court: Michigan Supreme Court
• Decided: September 29, 1993
• Docket: 90904, (Calendar No. 1)
• Status: Published

Opinions

Levin, J.

The no-fault automobile liability act provides, in § 3109(1) of the Insurance Code, that benefits provided by a state or the federal government "shall be subtracted” from no-fault benefits payable for medical expense and work loss.¹ The act also provides, in § 3109a, that a no-fault insurer shall offer, at appropriately reduced premium rates, deductibles and exclusions related to other "health and accident coverage” of the insured.²

A policy of no-fault insurance issued by Citizens Insurance Company of America to George Yancey, Jr., provided for coordination, at a reduced premium, of no-fault medical expense benefits with "other health coverage” of Yancey, but did not provide for coordination of no-fault work loss benefits with "other accident coverage” of Yancey.

Yancey was seriously injured in an automobile accident. Citizens paid work loss benefits less social security disability benefits. Gail Profit, Yan-cey’s guardian, commenced this action against Citizens claiming that, because Yancey did not elect to coordinate work loss benefits with other accident coverage, Citizens should not have reduced the work loss benefits by social security disability benefits paid by the federal government.

The question presented is whether social security disability benefits are to be subtracted by an automobile no-fault insurer from the amount otherwise payable for work loss where the policy of insurance specifically provides that the work loss benefit and other accident coverage are not coordinated, and thus the insured paid a higher premium than would have been payable had he been offered an opportunity and had elected to coordinate. We hold that social security disability benefits should be subtracted.

i

Profit contends, and the circuit judge and the Court of Appeals agreed, that work loss benefits should not be reduced by social security disability benefits. The Court of Appeals said that while it found Citizens’ "arguments to be strong and persuasive,” Citizens’ position was rejected in LeBlanc v State Farm Mutual Automobile Ins Co, 410 Mich 173; 301 NW2d 775 (1981), and Tatum v Government Employees Ins Co, 431 Mich 663; 431 NW2d 391 (1988). The Court of Appeals "reluctantly” followed Tatum.3

In LeBlanc, this Court held that a no-fault insurer could not subtract Medicare benefits from no-fault medical expense benefits where the insured had not elected to coordinate medical expense with "other health coverage.” In Tatum, this Court held that medical benefits paid by the federal government to or for a member of the armed forces for injuries suffered in an automobile accident could not be subtracted by an insurer from no-fault medical expense benefits where the insured had not elected to coordinate no-fault medical expense benefits with "other health coverage.”

ii

Citizens and amici curiae ask that LeBlanc and Tatum be overruled.

The Congress eliminated the operative effect of LeBlanc by enacting that Medicare is secondary to automobile insurance where coverage under such insurance is available.⁴ Tatum, nevertheless, relied on LeBlanc. In Tatum, like LeBlanc, the insured was not offered and did not elect to coordinate no-fault medical expense benefits with other health coverage. _

A

We agree with Citizens that this Court may very well have erred in LeBlanc5 in equating benefits provided under a policy of insurance written by a private insurer such as Blue Cross-Blue Shield of Michigan, the paradigm "other health coverage,” with benefits provided under a mandatory federal entitlement program (Medicare), generally providing benefits to all persons over sixty-five, largely paid for by taxes levied on all wage earners. It does not, however, follow that Tatum should now be overruled.

B

In Tatum, this Court observed that the benefits provided under military medical coverage are "similar” to those provided by a policy issued by bcbsm, and that bcbsm coverage "when provided through one’s employer, can parallel that which is provided to active military personnel by the federal government. . . .”⁶ (Emphasis added.) This Court continued:

We can perceive no rational basis for concluding that military medical benefits, which essentially serve the same purpose as Blue Cross-Blue Shield and Medicare benefits, are not "health and accident coverage” within the meaning of § 3109a.[⁷]

There is no need in the instant case to reconsider Tatum, nor would it be appropriate to do so:

• Social security disability benefits are not medical benefits and do not "serve the same purpose as Blue Cross-Blue Shield and Medicare benefits;”⁸

• Yancey was not an employee of the federal government;

• For reasons set forth in part in, social security disability benefits are benefits provided under federal law, within the meaning of § 3109(1), and are not "other health and accident coverage” within the meaning of § 3109a.

III

The record does not indicate that social security disability benefits are "similar”⁹ to those provided by policies of insurance issued by private insurers who provide accident coverage that is generally available to and purchased by employers for their employees or by the employees themselves.

In all events, social security disability benefits are provided as part of a mandatory, comprehensive social welfare entitlement program generally providing benefits to all persons who have been wage earners, and dependents of such persons, largely paid for by taxes levied on all wage earners. With few exceptions, no employer, no employee, can lawfully avoid paying social security taxes and participating in this social welfare program.

The term "other accident coverage,” like the term "other health coverage,” does not—now that LeBlanc has, to that extent, been disapproved— include benefits payable under such a program.¹⁰ Accordingly, although Yancey purchased a policy of no-fault insurance that was not coordinated for work loss benefits, and paid a somewhat higher premium than if the policy had been so coordinated, social security disability benefits, because they are "[bjenefits provided or required to be provided under the laws” of the federal government, "shall be subtracted” from work loss benefits otherwise payable for an automobile injury.

In so holding, we follow O’Donnell v State Farm Mutual Automobile Ins Co, 404 Mich 524; 273 NW2d 829 (1979), in which this Court held that social security survivors’ benefits are required to be subtracted,¹¹ Thompson v Detroit Automobile Inter-Insurance Exchange, 418 Mich 610; 344 NW2d 764 (1984), in which this Court held that social security disability benefits paid to dependents of an injured wage earner are required to be subtracted, and Mathis v Interstate Motor Freight System, 408 Mich 164; 289 NW2d 708 (1980), in which this Court held that workers’ compensation benefits are required to be subtracted from no-fault work loss benefits otherwise payable for an automobile injury.

Reversed.

Cavanagh, C.J., and Griffin and Mallett, JJ., concurred with Levin, J.

1 MCL 500.3109(1); MSA 24.13109(1) provides in part:

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.

Personal protection insurance benefits include benefits for medical expense and work loss (MCL 500.3107; MSA 24.13107).

2 MCL 500.3109a; MSA 24.13109(1) provides in part:

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.

3 187 Mich App 55, 61-62; 466 NW2d 354 (1991).

4 See Omnibus Budget Reconciliation Act of 1980, 42 USC 1395b. The 1980 legislation was not in issue in LeBlanc.

5 We do not, however, overrule LeBlanc. The rights of injured persons, and the obligations of insurers, that were not affected by the legislation referred to in the preceding footnote, are not affected by today’s decision.

6 Id., p 670.

7 Id.

⁸

⁹

10 But see n 5.

11 But see Jarosz v DAIIE, 418 Mich 565; 345 NW2d 563 (1984), in which this Court held that social security old-age benefits are not required to be subtracted.