WENDY WOOD V AUTO-OWNERS INSUR CO
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Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
C h i e f J u s ti c e
Maura D. Corrigan
J u s t ic e s
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
Opinion
____________________________________________________________________________________________________________________________
FILED SEPTEMBER 9, 2003
WENDY WOOD, Personal Representative of the
ESTATE OF MARVIN JAMES WOOD, JR.,
Deceased,
Plaintiff-Appellee,
v
No. 121970
AUTO-OWNERS INSURANCE COMPANY,
Defendant-Appellant.
________________________________
PER CURIAM
Defendant seeks leave to appeal the judgment of the Court
of Appeals reversing the trial court’s grant of summary
disposition for defendant.
We reverse the Court of Appeals
decision concerning replacement services benefits under MCL
500.3108 and remand the case to the Washtenaw Circuit Court
for further proceedings consistent with this opinion.
In all
other respects, we affirm.1
1
In particular, we affirm the judgment of the Court of
Appeals concerning funeral benefits under MCL 500.3107.
I. INTRODUCTION
Plaintiff’s decedent, Marvin James Wood, Jr., was killed
in an automobile accident during the course of his employment.
Defendant Auto-Owners Insurance Company is first in the order
of priority for payment of no-fault benefits.
The issue
presented is how to properly calculate Auto-Owners’ liability
for
payment
of
replacement
services
benefits
under
MCL
500.3108, in light of the statutory maximum benefit contained
in MCL 500.3108 and the setoff provision in MCL 500.3109.
II. STANDARD
OF
REVIEW
The issue presented concerns the interpretation of, and
the relationship between, two statutes.
Accordingly, the
issue is one of statutory interpretation, which we review de
novo as a question of law.
Lesner v Liquid Disposal, Inc, 466
Mich 95, 99; 643 NW2d 553 (2002).
III. DISCUSSION
A. CALCULATION
MCL 500.3108 provides:
(1) Except as provided in subsection (2),
personal protection insurance benefits are payable
for a survivor’s loss which consists of a loss,
after the date on which the deceased died, of
contributions of tangible things of economic value,
not including services, that dependents of the
deceased at the time of the deceased’s death would
have received for support during their dependency
from the deceased if the deceased had not suffered
the accidental bodily injury causing death and
expenses, not exceeding $20.00 per day, reasonably
incurred
by
these
dependents
during
their
dependency and after the date on which the deceased
died in obtaining ordinary and necessary services
in lieu of those that the deceased would have
2
performed for their benefit if the deceased had not
suffered the injury causing death.
Except as
provided in section (2) the benefits payable for a
survivor’s loss in connection with the death of a
person in a single 30-day period shall not exceed
$1,000.00 for accidents occurring before October 1,
1978, and shall not exceed $ 1,475.00 for accidents
occurring on or after October 1, 1978, and is not
payable beyond the first three years after the date
of the accident.
(2) The maximum payable shall be adjusted
annually to reflect changes in the cost of living
under rules prescribed by the commissioner.
A
change in the maximum shall apply only to benefits
arising out of accidents occurring subsequent to
the date of change in the maximum.
The maximum
shall apply to the aggregate benefits for all
survivors payable under this section on account of
the death of any one person.
From
the
plain,
unambiguous
language
of
subsection
3108(1), a survivor’s loss benefit (SLB) is comprised of two
elements:
(1)
contributions
economic
of
loss
tangible
(EL),
things
which
of
is
economic
the
loss
value,
of
not
including services, and (2) replacement services costs (RS),
which are the expenses, not exceeding $20 a day, reasonably
incurred in replacing ordinary and necessary services. Miller
v State Farm Mut Automobile Ins Co, 410 Mich 538, 554; 302
NW2d 537 (1981).
Under subsection 3108(1), the survivor’s
loss benefit (SLB) cannot exceed the statutory maximum (SM).
Schaible v Michigan Mut Ins Co, 116 Mich App 116, 120-121; 321
NW2d 860 (1982).
In equational presentation,
SLB = EL + RS
SLB # SM
3
MCL 500.3109(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. [Emphasis added.]
Because neither worker’s compensation survivor’s benefits
nor
Social
required
subsection
Security
to
survivor’s
include,
3109(1)
benefits
replacement
setoff
benefits
economic-loss benefits (EL).
include,
services
(SO)
or
costs
pertain
are
(RS),
only
to
Cole v Detroit Auto Inter-Ins
Exch, 137 Mich App 603, 613; 357 NW2d 898 (1984).
The particular question presented by this case pertains
to the interrelation of the survivor’s loss benefit,
the
statutory maximum amount, and the setoff benefit amount.
The
Court of Appeals held that the setoff benefit amount is to be
subtracted before the calculation of the survivor’s
loss
benefit and before the comparison to the statutory maximum
ceiling. In contrast, defendant argues that the first step is
to determine the survivor’s loss benefit and then compare it
to the statutory maximum ceiling. Only then, according to the
defendant, is the MCL 500.3109 setoff provision applied.
We
agree with defendant.
MCL 500.3109 provides that setoff benefits “shall be
subtracted from the personal protection insurance benefits
otherwise payable for the injury.”
By this language, it is
clear that one first determines what personal protection
insurance benefits are payable.
4
MCL 500.3108 governs that
determination and specifically provides what benefit amount is
“payable” (AP). Once that amount, i.e., the level of benefits
otherwise payable, is calculated under MCL 500.3108, the
setoff provision of MCL 500.3109 is applied and “[b]enefits
provided . . . under the laws,” i.e., the setoff benefit
amount
(SO),
is
subtracted
from
the
“benefits
otherwise
payable.”
Under the statutory scheme, to the extent that a setoff
occurs, the setoff benefit amount (SO) substitutes for and
becomes all or part of the economic loss benefit (EL) payment.
Great American Ins Co v Queen, 410 Mich 73, 85, 87, 96, 97;
300 NW2d 895 (1980).
In the present case, this means that the
benefits provided by Social Security and worker’s compensation
governmental programs are deducted from the amount payable by
the no-fault insurer as calculated under MCL 500.3108.
This
conclusion is consistent with the statutory language of MCL
500.3109, which provides that setoff benefits are to be
“subtracted from the personal protection insurance benefits
otherwise payable.”
The
Court
of
Appeals
erred
in
applying
the
setoff
provision before completing the MCL 500.3108 analysis.
The
full economic loss benefit should have been credited and
included in the survivor’s loss benefit calculation before the
comparison to the statutory maximum benefit. Great American,
supra at 96; O’Donnell v State Farm Mut Automobile Ins Co, 404
5
Mich 524, 538, 539; 273 NW2d 829 (1979).
According to the
plain language of MCL 500.3109, both these steps are to occur
before consideration of the setoff benefit.
To restate, the proper steps in the process are as
follows: (1) calculate SLB (EL + RS = SLB); (2) compare SLB to
SM (SLB # SM) to determine the amount payable under MCL
500.3108
(AP);
and
(3)
determine
the
no-fault
insurer’s
payment liability (NFIL) in light of the setoff benefit amount
(SO).
Because the setoff benefit (SO) serves to reimburse
economic loss (EL), the total setoff cannot exceed economic
Thus: If EL $ SO, then NFIL = AP - SO; if EL < SO, then
loss.
NFIL = AP - EL.
B. APPLICATION
In the present case, economic loss benefits (EL) based on
Wood’s salary and taxes were calculated to be $3,643.10.2
Replacement service benefits (RS), at a rate of $20 a day,
amount to $600.
The applicable statutory maximum benefit
under the annual adjustment permitted by subsection 3108(2)
(SM) is $3,688.
Concerning the setoff benefit amount, plaintiff receives
$2,513.14 in worker’s compensation benefits and $2,199 in
Social
Security
benefits.
These
benefits
represent
compensation for economic loss only, not for replacement
services.
2
In sum, the total benefit amount that can be
All calculations are for a thirty-day period.
6
applied as setoff under § 3109 (SO) is $4,712.14.
Accordingly,
we
first
calculate
the
survivor’s
loss
benefit (SLB) by adding the economic loss benefit (EL) and the
replacement services costs (RS):
SLB = EL + RS
SLB = $3,643.10 + $600
SLB = $4,243.10
Second, we compare the survivor’s loss benefit (SLB) to
the statutory maximum benefit (SM) in order to determine the
amount payable (AP):
(The lesser of SLB and SM) = AP
(The lesser of $4,243.10 and $3,688) = AP
$3,688 = AP
Third,
we
determine
the
no-fault
insurer’s
payment
liability (NFIL), considering the setoff benefit amount (SO):
If EL $ SO, then NFIL = AP - SO
If EL < SO, then NFIL = AP - EL
Here, SO = $4712.14 and EL = $3,643.10
Therefore, EL < SO, and
NFIL = AP - EL
NFIL = $3,688 - $3,643.10
NFIL = $44.90
Inasmuch as the Court of Appeals did not follow these
steps, the panel erred.
CONCLUSION
For these reasons, we reverse the judgment of the Court
7
of Appeals concerning replacement services benefits.
other respects we affirm.
In all
The case is remanded to the
Washtenaw Circuit Court for further proceedings consistent
with this opinion.
Maura D. Corrigan
Elizabeth A. Weaver
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
CAVANAGH and KELLY, JJ.
We would grant leave to appeal.
Michael F. Cavanagh
Marilyn Kelly
8
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