ARTHUR JARRAD V INTEGON NATL INS CO
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Michigan Supreme Court
Lansing, Michigan
Chief Justice:
Opinion
Justices:
Clifford W. Taylor
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman
FILED MAY 3, 2005
ARTHUR T. JARRAD,
Plaintiff-Appellee,
v
No. 126176
INTEGON NATIONAL INSURANCE
COMPANY,
Defendant-Appellant.
_______________________________
BEFORE THE ENTIRE BENCH
CORRIGAN, J.
In
trial
this
court
no-fault
coordination-of-benefits
and
Court
the
of
Appeals
ruled
case,
that
the
an
employer’s self-funded long-term disability plan may not be
coordinated with no-fault wage loss benefits.
We hold that
a self-funded long-term disability plan constitutes “other
health
and
accident
coverage”
coordination under MCL 500.3109a.
that
is
subject
to
We therefore reverse the
judgment of the Court of Appeals, and remand the matter to
the trial court for entry of an order granting summary
disposition for defendant.
I. UNDERLYING FACTS AND PROCEDURAL HISTORY
Plaintiff
accident.
sustained
injuries
in
an
At the time of the accident, he was employed by
the Michigan Department of Corrections.
bargaining
agreement,
the
state
Under a collective
provided
a
disability (LTD) plan that covered plaintiff.
company
automobile
administered
the
plan
and
long-term
An insurance
processed
benefit
payments, but the plan was self-funded by deductions from
employees’ paychecks and employer contributions.
Following
the
accident,
plaintiff
began
receiving
monthly payments of $2,220.04 under the LTD plan.
Under
the coordination-of-benefits clause in plaintiff’s no-fault
policy, defendant, plaintiff’s no-fault insurer, deducted
the LTD benefits from its no-fault wage loss payments, for
a net amount of $1,467.76 a month for three years following
the accident.1
Plaintiff filed this action to challenge the
coordination of benefits.
The parties filed cross-motions
for summary disposition.
The trial court granted summary
disposition for plaintiff.
The
decision.2
Court
of
Appeals
affirmed
in
a
two-to-one
The majority noted that MCL 500.3109a permits
coordination of no-fault benefits with “other health and
1
Under MCL 500.3107(1)(b), no-fault wage loss benefits
are payable for up to three years after the accident.
2
Unpublished opinion per curiam, issued January 27,
2004 (Docket No. 245068).
2
accident coverage . . . .”
The majority explained that in
LeBlanc v State Farm Mut Automobile Ins Co, 410 Mich 173,
204; 301 NW2d 775 (1981), this Court had construed the word
“coverage” as “a word of precise meaning in the insurance
industry,
[that]
refers
to
protection
afforded
by
an
insurance policy, or the sum of the risks assumed by a
policy of insurance.”
While this definition has expanded
under Court of Appeals case law to include medical benefits
received from health plans typically provided by insurers,
the majority opined that no such expansion of the term
“coverage” has occurred regarding work-loss benefit plans.
Moreover, the majority construed
Spencer v Hartford
Accident & Indemnity Co, 179 Mich App 389; 445 NW2d 520
(1989), to preclude coordination where an employee receives
“wage loss benefits from his employer through a formal wage
continuation
plan
pursuant
to
a
collective
bargaining
agreement.”
The majority distinguished Rettig v Hastings
Mut Ins Co, 196 Mich App 329; 492 NW2d 526 (1992), because
in that case LTD benefits were provided under an insurance
policy,
rather
than
directly
by
the
employer
under
a
collective bargaining agreement.
Judge Zahra, the dissenting Court of Appeals judge in
this case, opined that the self-funded LTD plan constituted
“other health and accident coverage” that is subject to
coordination under MCL 500.3109a.
3
Unlike Spencer, where
the employer paid wage continuation benefits directly to
the employee, the instant case involves an insurance-type
benefit
paid
by
contributions.
which
the
third
party
from
accumulated
payroll
The dissent would have followed Rettig, in
Court
“constitute
insurance
a
of
Appeals
protection
plans,
which
held
typically
include
that
LTD
provided
payments
benefits
by
for
health
medical
expenses resulting from an accident as well as wage-loss
replacement
benefits.”
Rettig,
supra
at
333
(emphasis
added).
Judge Zahra also opined that the self-funded nature of
the plan was not dispositive, because in drafting § 3109a,
the Legislature used the broad term “coverage” rather than
“insurance.”
“other
health
Moreover, case law reflects that the phrase
and
accident
coverage”
includes
coverage
typically provided by an insurance company, regardless of
whether it is actually provided by an insurance company in
a particular case.
that
“other
For example, Michigan courts have held
health
and
accident
coverage”
includes:
military medical benefits paid by the federal government,
Tatum v Gov’t Employees Ins Co, 431 Mich 663; 431 NW2d 391
(1988); Medicare benefits, LeBlanc, supra; medical benefits
provided under a union plan, Lewis v Transamerica Ins Corp
of America, 160 Mich App 413; 408 NW2d 458 (1987); services
offered by health maintenance organizations, United States
4
Fidelity & Guaranty Co v Group Health Plan of Southeast
Michigan,
131
Mich
App
268;
345
NW2d
683
(1983);
and
medical and disability benefits provided by the Army and
Veterans Administration, Bagley v State Farm Mut Automobile
Ins Co, 101 Mich App 733; 300 NW2d 322 (1980).
Defendant applied for leave to appeal in this Court.
We held oral argument on whether to grant the application
or
take
other
peremptory
action
permitted
by
MCR
7.302(G)(1).3
II. STANDARD OF REVIEW
We
review
de
novo
the
decision
whether
to
grant
summary disposition.
Maiden v Rozwood, 461 Mich 109, 120;
597 NW2d 817 (1999).
Moreover, the meaning of the phrase
“other health and accident coverage” in MCL 500.3109a is a
question of law that is also reviewed de novo.
Jenkins v
Patel, 471 Mich 158, 162; 684 NW2d 346 (2004).
III. DISCUSSION
A. Legal Background
MCL 500.3109a states:
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.
The deductibles and
exclusions required to be offered by this section
shall be subject to prior approval by the
commissioner and shall apply only to benefits
payable to the person named in the policy, the
3
471 Mich 914 (2004).
5
spouse of the insured and any relative of either
domiciled in the same household.
In Nyquist v Aetna Ins Co, 84 Mich App 589; 269 NW2d
687
(1978),
the
plaintiffs
argued
that
Blue
Cross-Blue
Shield benefits were not insurance4 and therefore could not
be
coordinated
with
no-fault
benefits.
The
Court
of
Appeals concluded that coordination was permitted, noting
“that
§
3109a
uses
the
word
‘coverage’
rather
than
‘insurance’; the use of the broader term militates against
plaintiffs’ restrictive reading of the section at issue.”
Nyquist,
supra
at
592.
Moreover,
the
plaintiffs’
restrictive reading would subvert the statutory purpose of
eliminating duplicative coverage.
An employee’s use of accumulated sick leave, however,
is not subject to coordination.
In Orr v DAIIE, 90 Mich
App 687; 282 NW2d 177 (1979), the Court of Appeals noted
that the word “coverage” means protection by an insurance
policy, and that the Legislature thus intended to limit
coordination
Sick
leave
to
does
health
not
and
fall
accident
within
insurance
this
coverage.
definition.
The
plaintiff’s sick bank could fluctuate depending on usage.
Thus,
“[a]ny
fluctuating
rate
benefit
reduction
could
granted
not
be
based
upon
actuarially
this
sound.
However, a rate based upon another policy of insurance with
4
See Michigan Hosp Service v Sharpe, 339 Mich 357; 63
NW2d 638 (1954).
6
fixed
limits
of
liability
would
enable
the
insurance
company to offer appropriately reduced premium rates.”
Id.
at 690-691.
In
LeBlanc,
benefits
were
supra,
“health
coordination.
not
and
This
Legislature
did
this
Court
accident
Court
modify
held
coverage”
stated
the
that
that
Medicare
subject
because
statutory
phrase
to
the
“other
health and accident coverage” with the word “private,” the
Legislature “intended to give unrestrained application of §
3109a
to
source.”
health
and
accident
coverage
from
whatever
LeBlanc, supra at 202 (emphasis added).
“Thus,
both private and non-private plans were within the scope of
the bill.”
Id. at 203.
The LeBlanc Court also stated: “‘Coverage,’ a word of
precise
meaning
in
the
insurance
industry,
refers
to
protection afforded by an insurance policy, or the sum of
the risks assumed by a policy of insurance.”
This
Court
concluded
that
Medicare
Id. at 204.
constituted
“other
health and accident coverage” because the Court perceived
“no just reason to differentiate Medicare from other, more
traditional, forms of health and accident coverage which
irrefutably are within the scope of § 3109a.
Just like any
so-called private insurer, Medicare compensates providers
of medical and hospital services on behalf of participants
who require health care.”
Id. at 205.
7
This Court found it
“inconsequential” that, in other contexts, “Medicare has
been deemed not to be insurance in the usual sense of the
term: the same has been said of Blue Cross and Blue Shield
plans which, according to Nyquist, fall within § 3109a.”5
Id.
In United States Fidelity, supra, the Court of Appeals
held
that
services
offered
by
a
health
maintenance
organization (HMO) were health and accident coverage for
purposes of § 3109a.
The Court of Appeals acknowledged
that HMOs “have a unique character.
Rather than providing
health insurance and paying for the bills after the insured
has been treated by a doctor, an HMO is a prepaid plan
where the participant pays before hand for the services
themselves. . . . Under traditional definitions, a health
maintenance organization does not sell insurance.”
United
States Fidelity, supra at 272 (emphasis added).
5
Although the LeBlanc Court concluded that Medicare
was “other health and accident coverage,” no coordination
was allowed in that case because the insured did not elect
a coordinated policy.
This Court’s holding avoided the
mandatory
coordination
provision
in
MCL
500.3109(1)
(“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.”) by ruling that the
permissive
coordination
provision
in
MCL
500.3109a
controlled instead. This aspect of the analysis in LeBlanc
is not implicated here because it is undisputed that
plaintiff chose a coordinated policy.
We also note that
Congress has subsequently amended federal law to make
Medicare benefits secondary to no-fault insurance. See 42
USC 1395y(b).
8
But MCL 500.3109a; MSA 24.13109(1) does not
refer to “insurance” but to “health and accident
coverage".
Not only have medical and disability
benefits
from
the
Army
and
the
Veterans
Administration been included within this statute,
Bagley v State Farm Mut Automobile Ins Co, 101
Mich App 733; 300 NW2d 322 (1980), but Medicare
payments have also been included.
[LeBlanc,
supra.]
The term used, “coverage", is a broad
term.
[Nyquist, supra.]
Accordingly, we hold
that the services offered by defendant are
“health and accident coverage” as defined by MCL
500.3109a; MSA 24.13109(1). [Id. at 272-273.]
In
Lewis,
supra, the Court of Appeals held that a
union plan that pays medical expenses constitutes “other
health and accident coverage” under § 3109a.
The Court of
Appeals noted that the intent of this provision “was to
reduce
insurance
double recovery.”
costs
by
obviating
the
Lewis, supra at 418.
potential
for
“To accomplish
this end, the Legislature purposely used the broad term
‘coverage’ rather than ‘insurance’ in describing health and
accident benefits available to the insured independent of
the no-fault contract.”
In
Tatum,
supra,
Id.
the
Air
Force
paid
the
medical expenses pursuant to a federal statute.
held
that
those
benefits
constituted
accident coverage” under § 3109a.
“other
insured’s
This Court
health
Reviewing the holdings
in LeBlanc and Nyquist, the Tatum Court reasoned:
Military medical coverage is similar to both
Blue Cross-Blue Shield and Medicare in the sense
that, in various forms, each is comprehensive
coverage
of
eligible
individuals
for
their
medical and hospitalization costs. Further, Blue
Cross-Blue Shield coverage, when provided through
9
and
one’s employer, can parallel that which is
provided to active military personnel by the
federal government under [the federal statute].
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.
[Tatum, supra at 670.]
In Spencer, supra, the Court of Appeals held that wage
continuation benefits paid directly by an employer pursuant
to
a
collective
bargaining
agreement
did
not
“health and accident coverage” under § 3109a.
Appeals
opined
that
the
Uniform
Motor
constitute
The Court of
Vehicle
Accident
Reparations Act (UMVARA), a model act on which our no-fault
law is based, contained a broader coordination-of-benefits
provision, and that the model provision would have included
wage continuation benefits pursuant to a union agreement.
But because our no-fault law was drafted more narrowly, the
Court
of
Appeals
believed
that
the
Legislature
did
not
intend to allow coordination in this situation.
In Rettig, supra, the Court of Appeals held that LTD
benefits paid by an insurance company could be coordinated
under § 3109a.
The panel stated that the phrase “other
health and accident coverage” “has generally been limited
to
benefits
plans.”
typically
associated
Rettig, supra at 333.
constituted
such
“coverage”
with
health
insurance
The LTD benefits at issue
“because
they
constitute
protection typically provided by health insurance plans,
10
which include payments for medical expenses resulting from
an
accident
as
well
as
wage-loss
LeBlanc, supra, p 204.”
replacement
Rettig, supra at 333.
benefits.
The panel
distinguished Spencer on the ground that the LTD benefits
in
Rettig
insurance
were
paid
policy,
by
an
rather
insurance
than
a
company
collective
under
an
bargaining
agreement.
B. Analysis
While the case law is rather muddled regarding the
precise meaning of the phrase “other health and accident
coverage,” we agree with the Court of Appeals dissent in
this
case
that
the
term
does
not
require
that
a
risk
actually be insured under a commercial insurance policy.
As noted in Nyquist, in drafting § 3109a, the Legislature
used the broader term “coverage” rather than “insurance.”
The LeBlanc Court stated that the term “coverage” refers to
protection afforded by an insurance policy or the sum of
risks assumed by an insurance policy.
that
Medicare
policy
to
Similarly,
treated
as
is
sufficiently
constitute
military
sufficiently
similar
“health
benefits
and
and
akin
health and accident coverage.
Fidelity, supra.
11
The Court concluded
to
HMO
to
an
accident
benefits
insurance
to
insurance
coverage.”
have
been
constitute
Tatum, supra; United States
Therefore, as the Court of Appeals dissent observed,
the central question under our case law is not whether an
insurance
company
actually
provided
the
coverage,
but
rather whether the coverage is typically provided by an
insurance company.
statutory
text,
That approach is consistent with the
which
refers
merely
to
“coverage”
and
contains no language limiting its application to commercial
insurance policies.
Here,
typically
there
is
provided
no
by
question
LTD
benefits
are
companies.
insurance
that
Indeed,
the
Court of Appeals held in
Rettig
that LTD benefits fall
within the statutory term.
The fact that the coverage here
was funded by employer and payroll contributions, rather
than by a separate insurance company, does not alter the
fact that this type of coverage is typically provided by
insurance companies.
We thus perceive no basis to preclude
coordination with a self-funded plan.
Moreover,
the
view
that
a
self-funded
long-term
disability plan is not “other health and accident coverage”
disregards case law allowing coordination with self-funded
medical plans under § 3109a.
See, e.g.,
Lewis,
supra;
Michigan Millers Mut Ins Co v West Michigan Health Care
Network, 174 Mich App 196; 435 NW2d 423 (1988); Auto-Owners
Ins Co v Lacks Industries, 156 Mich App 837; 402 NW2d 102
(1987).
We discern no principled reason why self-funded
12
long-term disability plans should be treated differently
from self-funded medical plans, in light of the holding in
Rettig
that
LTD
plans
are
“other
health
and
accident
coverage.”
Additionally, the courts in
Millers
Mut,
and
Lacks
Rettig, Lewis, Michigan
Industries
manifested
an
understanding that causing not only third-party funded LTD
and medical plans, but also self-funded ones, to qualify as
“other health and accident coverage” is consistent with the
Legislature’s overarching commitment in the no-fault act,
and
its
later
amendments,
to
facilitating
reasonable
economies in the payments of benefits, thus causing the
costs
of
this
affordable.
mandatory
auto
insurance
to
be
more
See State Farm Fire & Cas Co v Old Republic
Ins Co, 466 Mich 142, 151; 644 NW2d 715 (2002); Cruz v
State Farm Mut Automobile Ins Co, 466 Mich 588, 597 n 13;
648 NW2d 591 (2002); O’Donnell v State Farm Mut Automobile
Ins Co, 404 Mich 524; 273 NW2d 829 (1979).
Also, the Court of Appeals has treated self-insurance
as a form of insurance in other contexts.
For example, in
Allstate Ins Co v Elassal, 203 Mich App 548; 512 NW2d 856
(1994),
the
Court
of
Appeals
recognized
that
self-
insurance, as certified by the Secretary of State, is the
functional equivalent of a commercial no-fault insurance
policy.
While the Court relied in part on provisions of
13
the no-fault act, MCL 500.3101 et seq., and the financial
responsibility act, MCL 257.501 et seq., it also discussed
the “common understanding of insurance”:
The term insurance can be defined . . . as a
contract between two parties for indemnification.
Black’s Law Dictionary (4th ed), p 943. However,
definitions of insurance also include: “coverage
by contract whereby one party undertakes to
indemnify or guarantee another against loss by a
specified
contingency
or
peril,”
Webster’s
Seventh New Collegiate Dictionary (1970), p 439
(definition 2b), see also Random House Webster’s
College Dictionary (1991), p 699 (definition 2);
“the sum for which something is insured,”
Webster’s Seventh New Collegiate Dictionary,
supra, p 439 (definition 2c); and “any means of
guaranteeing against loss or harm,” Random House
Webster’s, supra, p 699 (definition 6). In this
case, Enterprise was certified as self-insured,
meaning, for purposes of the no-fault and
financial
responsibility
acts,
that
it
had
indemnified itself to satisfy judgments against
it. [Elassal, supra at 555.]
We
do
not
suggest
that
the
holding
in
Elassal
is
directly relevant, because we are concerned here not with a
self-insured no-fault plan, but rather with a self-funded
LTD plan that a no-fault insurer seeks to coordinate with
its no-fault policy.
We simply observe that the reasoning
in
that
Elassal
suggests
even
if
§
3109a
referred
to
“insurance” and not (as it does) to “coverage,” a strong
argument
would
still
exist
that
a
self-funded
LTD
plan
constitutes “insurance” under the common understanding of
that term.
Further,
we
reject
the
Court
of
Appeals
majority’s
view—derived from the holding in Spencer—that the existence
14
of a collective bargaining agreement somehow negates the
existence of “other health and accident coverage.”
The
text of § 3109a refers to health and accident coverage—the
central question is whether other coverage exists, not how
it came to exist.
It is simply not relevant under the
statutory text whether the coverage arose from a collective
bargaining agreement.
Next,
we
address
the
Spencer
Court’s
reliance
on
language in the UMVARA, the model act on which our no-fault
act was based.
The Spencer Court observed that the UMVARA
contained the following provision:
"(b) [B]asic reparation insurers may offer
the following additional exclusions . . .
*
*
*
"(2) [Exclusions], in calculation of net
loss, of any of those amounts and kinds of loss
otherwise compensated by benefits or advantages a
person receives or is unconditionally entitled to
receive from any other specified source, if the
other source has been approved specifically or as
to type of source by the [commissioner] of
insurance by rule or order adopted upon a
determination by the [commissioner] (i) that the
other source or type of source is reliable and
that approval of it is consonant with the
purposes of this Act, and (ii) if the other
source is a contract of insurance, that it
provides
benefits
for
accidental
injuries
generally and in amounts as [sic] least as great
for other injuries as for injuries resulting from
motor vehicle accidents.”
[Spencer, supra at
399, quoting 14 ULA Civil Procedural and Remedial
Laws, UMVARA, § 14(b)(2), pp 82-83.]
The Spencer Court also extracted an official comment
to
the
model
provision:
“'The
15
cost
reductions
may
be
significant, however, in the case of an insurer offering to
sell basic reparation policies to the employees of a large
employer, who have defined, generous wage-continuation and
accident
and
health
benefits
under
furnished or trade union plan.'”
a
common
employer-
Spencer, supra at 399-
400, quoting official comments to § 14(b)(2), supra, p 85.
The Spencer Court then reasoned that “it is clear from
the
comments
that,
under
the
UMVARA,
wage
continuation
benefits pursuant to a union agreement were intended to be
coordinated
Spencer,
with
supra
no-fault
at
400.
benefits
The
Court
otherwise
then
payable.”
asserted
that
because the Legislature did not adopt “the broader language
of
the
uniform
act,”
it
“did
not
intend
for
no-fault
benefits to be coordinated with a broad array of other
benefits which may perhaps be equally duplicative.”
Id.
We emphasize that a court’s fundamental interpretive
obligation is to discern the legislative intent that may
reasonably
be
inferred
from
the
words
expressed
in
the
statute.
Koontz v Ameritech Services, Inc, 466 Mich 304,
312;
NW2d
645
34
(2002).
Where
the
Legislature
has
unambiguously conveyed its intent in a statute, judicial
construction is not permitted.
Because the proper role of
the judiciary is to interpret, not write, the law, courts
lack authority to venture beyond the unambiguous statutory
text.
Id.
16
The Spencer Court relied on the proposition that where
the
Legislature
does
not
adopt
a
model
presumably rejected the proposed language.
provision,
it
Spencer, supra
at 399, citing Michigan Mut Ins Co v Carson City Texaco,
Inc, 421 Mich 144; 365 NW2d 89 (1984).
The Spencer Court
failed, however, to adequately explain why this principle
supported its holding.
The
Legislature’s
deviation
from
the
language
in
a
model act does not grant a court license to simply assert,
without any reasoning, that (1) the statute is narrower
than
the
therefore
model
provision,
produce
a
and
different
provision would generate.
(2)
the
outcome
statute
than
the
must
model
Such conclusions do not follow
ineluctably from the Legislature’s rejection of particular
language in a model provision.
It
is,
of
course,
possible
that
the
Legislature
rejected a model provision because it did not wish to enact
the
provision
however.
into
law.
Other
inferences
may
arise,
For example, our Legislature might simply have
found a better way than the drafters of the model provision
to express the same proposition.
Perhaps our Legislature
used a synonym or more succinct language to state whatever
the drafters of the model provision had attempted to say.
Or
the
statutory
Legislature
provision
might
in
have
concluded
Michigan
17
rendered
that
the
another
model
provision unnecessary.
Thus, the mere fact that a statute
is written differently from a model act does not always
compel
the
conclusion
that
our
statute
is
written
more
narrowly.
But even if a statute is written more narrowly than a
model provision, a court’s analysis does not end there.
Even a statute that is written narrowly could apply to the
particular case before the court.
A statutory provision
that provides for coordination, but in fewer circumstances
than a model provision, will still allow coordination in
some
would
circumstances.
never
nugatory.
allow
Otherwise,
coordination
the
and
statutory
would
be
provision
essentially
Courts must give effect to every word, phrase,
and clause in a statute, and must avoid an interpretation
that would render any part of the statute surplusage or
nugatory. Koontz, supra at 312.
Thus,
even
if
the
Spencer
Court
had
supported
its
assertion that § 3109a is written more narrowly than the
model
provision,
the
question
would
remain
whether
the
statute allowed coordination in the circumstances at issue
in
that
case.
Merely
asserting,
as
the
Court
did
in
Spencer, that a statute is narrow does not, by itself,
resolve whether the statute applies to a given case.
A court may not simply announce that the text of a
statute differs from the language in a model act (or, as in
18
Spencer, a comment to the model act) as an excuse to avoid
the court’s duty to interpret the statutory text adopted by
the Legislature.
The Spencer Court did not analyze the
language of § 3109a.
The Court failed to explain why the
benefits at issue did not fall within the plain meaning of
the term “other health and accident coverage.”
The Court
also did not explain how the statutory phrase is not only
narrower than the model language, but too narrow to allow
coordination in that case.
Here, it is simply unnecessary to decide whether the
model provision is broader than the statute.
We conclude
that § 3109a allows coordination in this case, regardless
of
whether
it
provision.
is
As
broader
or
narrower
discussed,
we
agree
than
with
the
the
model
Court
of
Appeals dissent that the statutory phrase, “other health
and accident coverage,” plainly includes defendant’s selffunded long-term disability plan.
basis
to
limit
the
phrase
We discern no textual
“other
health
coverage” to commercial insurance policies.
contains
no
such
limitation,
and
we
and
accident
Section 3109a
believe
the
phrase
“other health and accident coverage” includes self-funded
plans.
Therefore,
regardless
of
how
broadly
the
model
provision might reach, the text of § 3109a plainly allows
coordination of no-fault benefits with a self-funded long19
term disability plan.6
We overrule Spencer to the extent
that it is inconsistent with this opinion.
IV. CONCLUSION
We conclude that the phrase “other health and accident
coverage”
disability
in
§
plan,
3109a
and
includes
that
a
self-funded
defendant
may
long-term
therefore
coordinate its no-fault wage loss payments with plaintiff’s
LTD benefits.
We thus reverse the judgment of the Court of
Appeals and remand the matter to the trial court for entry
of an order granting summary disposition for defendant.
Maura D. Corrigan
Clifford W. Taylor
Elizabeth A. Weaver
Robert P. Young, Jr.
Stephen J. Markman
6
Our dissenting colleague analyzes the model provision
that the Legislature did not adopt.
We again emphasize
that a court’s fundamental interpretive obligation is to
discern the legislative intent that may reasonably be
inferred from the words expressed in the statute. Koontz,
supra, p 312.
Where the Legislature has unambiguously
conveyed its intent in the statutory text, judicial
construction is not permitted.
Id.
We have examined the
statutory text and concluded that the phrase used by our
Legislature, “other health and accident coverage,” is
sufficiently broad to include a self-funded LTD plan.
Because we are satisfied that the words adopted by our
Legislature
are
sufficiently
clear
to
resolve
this
question, we simply have no occasion to resort to the
method of judicial construction utilized by the Spencer
Court and advocated by the dissent in this case.
20
S T A T E
O F
M I C H I G A N
SUPREME COURT
ARTHUR T. JARRAD,
Plaintiff-Appellee,
v
No. 126176
INTEGON NATIONAL INSURANCE COMPANY,
Defendant-Appellant.
_______________________________
CAVANAGH, J. (dissenting).
In this no-fault case, I would conclude that the longterm
disability
(LTD)
plan
covering
plaintiff
does
not
constitute “other health and accident coverage” subject to
coordination under MCL 500.3109a.
I am not convinced that
the dichotomy set forth by Spencer v Hartford Accident &
Indemnity Co, 179 Mich App 389; 445 NW2d 520 (1989), and
Rettig v Hastings Mut Ins Co, 196 Mich App 329; 492 NW2d
526 (1992), is inconsistent with the Legislature’s intent.
Moreover,
I
would
not
decide
this
jurisprudentially
significant issue without the benefit of full briefing and
oral argument.
Accordingly, I must respectfully dissent.
I. FACTUAL BACKGROUND
Plaintiff
Corrections.
worked
for
the
Michigan
Department
of
Under his collective bargaining agreement,
plaintiff was allowed to participate in the LTD plan.
The
LTD plan was administered by a private insurance company;
however,
the
deductions
plan
and
was
employer
self-funded
through
contributions.
While
payroll
still
employed by the Department of Corrections, plaintiff was
injured
in
receiving
an
automobile
benefits
under
accident.
the
LTD
Plaintiff
plan,
and
began
defendant,
plaintiff’s no-fault insurer, coordinated the LTD benefits
with the no-fault work-loss benefits.
that
the
setoff
was
permissible
Defendant maintained
under
MCL
500.3109a.
Plaintiff filed this action to challenge the setoff, and
the parties filed cross-motions for summary disposition.
The trial court granted summary disposition in favor of
plaintiff, and the Court of Appeals affirmed.
II. LEGAL BACKGROUND
A. MCL 500.3109a
MCL 500.3109a provides:
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. The deductibles and
exclusions required to be offered by this section
shall be subject to prior approval by the
commissioner and shall apply only to benefits
payable to the person named in the policy, the
spouse of the insured and any relative of either
domiciled in the same household.
B. Spencer v Hartford Accident & Indemnity Co
In Spencer, supra, the plaintiff was injured during
the course of his employment and was unable to return to
work.
After the accident, the plaintiff received worker’s
2
compensation benefits.
collective
union
and
Additionally, under the terms of a
bargaining
his
agreement
employer,
the
between
the
plaintiff
plaintiff’s
received
the
difference between his worker’s compensation benefits and
his base rate of pay.
The defendant insurance company
denied liability for no-fault work-loss benefits, claiming,
among
other
things,
that
the
wage
continuation
benefits
were subject to setoff pursuant to MCL 500.3109a.
The Spencer panel noted that the “purpose of § 3109a
is to reduce the cost of no-fault insurance by allowing
insurers to offer policies that coordinate benefits with
other
similar
coverages
in
return
statutorily mandated reduced premium.”
396.
for
charging
a
Spencer, supra at
The Court of Appeals reasoned that § 3109a expressly
limits
insured
setoff
and,
additional
to
health
therefore,
wages
the
and
the
plaintiff
accident
issue
coverage
was
received
on
whether
pursuant
the
the
to
a
collective bargaining agreement constituted “other health
and accident coverage” under § 3109a.
The Court of Appeals
held that the Legislature did not intend for § 3109a to
apply to the type of benefits the plaintiff received.
After
detailing
this
Court’s
decision
in
LeBlanc
v
State Farm Mut Automobile Ins Co, 410 Mich 173; 301 NW2d
775 (1981), as well as its own decision in Orr v DAIIE, 90
Mich App 687; 282 NW2d 177 (1979), the Court of Appeals
3
noted that the scope of coverages within the meaning of
“other health and accident coverage” had been subsequently
expanded.
limited
However, “the cases so doing have generally been
to
benefits
insurance plans.”
corresponding
to
typical
Spencer, supra at 398.
health
In light of
these decisions, and the absence of a clear construction of
the phrase “other health and accident coverage,” the Court
of Appeals observed:
It
is
also
helpful
when
construing
provisions of the Michigan no-fault insurance act
to look to the Uniform Motor Vehicle Accident
Reparations Act (UMVARA).
The UMVARA is one of
the model acts which was utilized as source
material in the drafting of the no-fault act.
Citizens Ins Co of America v Tuttle, 411 Mich
536; 309 NW2d 174 (1981).
Thus, where a
provision of the no-fault act is virtually
identical to a provision of the UMVARA, the
UMVARA will be looked to for guidance in
construing a provision of the no-fault act. See
MacDonald v State Farm Mutual Ins Co, 419 Mich
146; 350 NW2d 233 (1984).
However, where there
is an absence of a comparable provision in the
Michigan act, it is presumed the Legislature
considered but rejected the proposed language in
the uniform act.
See Michigan Mutual Ins Co v
Carson City Texaco, Inc, 421 Mich 144; 365 NW2d
89 (1984). [Id. at 398-399.]
The
Spencer
Court
then
examined
the
language
and
official comments of the counterpart of § 3109a in the
model
act,
14
ULA
UMVARA, § 14(b)(2).
Civil
Procedural
and
Remedial
Laws,
Notably, the Court of Appeals quoted
the official comments to § 14(b)(2):
“The cost reductions may be significant,
however, in the case of an insurer offering to
sell basic reparation policies to the employees
4
of a large employer, who have defined, generous
wage-continuation
and
accident
and
health
benefits under a common employer-furnished or
trade union plan.” [Spencer, supra at 399-400.]
In
light
of
the
differences
between
Michigan’s
no-
fault act and the model act, the Court of Appeals reasoned:
Thus, it is clear from the comments that,
under the UMVARA, wage continuation benefits
pursuant to a union agreement were intended to be
coordinated with no-fault benefits otherwise
payable.
Instead of adopting the broader
language of the uniform act, however, the
Michigan act was drafted much more narrowly, and
limited
coordination
to
“other
health
and
accident coverage.”
It appears, therefore, that
in enacting the Michigan act the Legislature did
not
intend
for
no-fault
benefits
to
be
coordinated with a broad array of other benefits
which may perhaps be equally duplicative.
[Id.
at 400.]
Thus, the Court of Appeals in Spencer held that the
plaintiff’s
wage
continuation
benefits
pursuant
to
a
collective bargaining agreement did not constitute “other
health
and
accident
coverage”
within
the
meaning
of
§ 3109a.
C. Rettig v Hastings Mut Ins Co
In
Rettig,
supra,
the
Court
called upon to interpret § 3109a.
of
Appeals
was
again
The plaintiff in Rettig
was injured in an automobile accident.
At the time of the
accident, the plaintiff was insured by the defendant under
a no-fault insurance policy that contained a coordinatedbenefits provision.
The plaintiff also had an LTD plan
issued by a different insurance company and made available
5
to the plaintiff by her employer.
The LTD plan was paid
for by the plaintiff through payroll deductions.
Notably,
the plaintiff was employed as a supervisor and was not
covered under a collective bargaining agreement.
The trial
court held that the defendant was entitled to a setoff
under § 3109a because the plaintiff’s LTD plan constituted
“other health and accident coverage” under § 3109a, and the
Court of Appeals affirmed.
The
observed
Rettig
that
Court,
“[w]hile
similar
the
to
scope
the
of
Spencer
coverage
Court,
included
within the meaning of ‘other health and accident coverage’
. . . has expanded since LeBlanc, it has generally been
limited
to
benefits
insurance plans.”
typically
associated
Rettig, supra at 333.
with
health
Accordingly, the
Court of Appeals concluded that the LTD benefits received
by
the
plaintiff
fell
within
the
purview
of
§
3109a
“because they constitute protection typically provided by
health insurance plans, which include payments for medical
expenses resulting from an accident as well as wage-loss
replacement benefits.”
Rettig, supra at 333.
Importantly, the Court of Appeals reasoned that its
holding did not conflict with Spencer.
observed
that
directly
from
the
his
bargaining agreement.
plaintiff
employer
in
The panel in Rettig
Spencer
pursuant
to
received
a
wages
collective
The Court of Appeals further noted:
6
There, this Court observed that under the
Uniform Motor Vehicle Accident Reparations Act,
wage continuation benefits pursuant to a union
agreement were intended to be coordinated with
no-fault benefits, but that the Michigan version
of the uniform act contained more restrictive
language and limited coordination of benefits to
insurance coverage.
In contrast to Spencer, the
long-term disability benefits in this case were
provided to plaintiff by Reliance Standard Life
Insurance
Company
pursuant
to
an
insurance
policy, not a collective bargaining agreement.”
[Id.]
III. THE COURT
OF
APPEALS DECISION
IN
THIS CASE
Here, the Court of Appeals, in an unpublished two-toone
decision,
Spencer
than
concluded
Rettig.”
that
this
case
Unpublished
“is
opinion
issued January 27, 2004 (Docket No. 245068).
reasoned
that,
like
the
plaintiff
in
more
per
like
curiam,
The majority
Spencer,
this
“plaintiff received wage loss benefits from his employer
through
a
formal
collective
wage
bargaining
continuation
plan
agreement.
pursuant
to
Consistent
a
with
established precedent, we agree with the trial court and
conclude
‘other
that
those
health
wage
and
continuation
accident
benefits
coverage’
are
within
not
the
contemplation of MCL 500.3109a.”
Judge Zahra dissented, concluding that defendant was
entitled to a setoff for the LTD wage-loss benefits because
this case was more like Rettig than like Spencer.
the
benefits
benefits
in
in
this
Spencer,
case
Judge
were
7
not
Unlike
Zahra
opined,
the
LTD
paid
directly
by
the
employer;
rather,
the
plan
was
accumulated payroll deductions.
self-funded
through
Accordingly, the Court of
Appeals dissent found Rettig controlling because the LTD
benefits
plaintiff
received
constituted
protection
typically provided by health insurance plans.
Moreover,
Judge Zahra reasoned that the notion that plaintiff’s LTD
benefits were not actually provided by an insurance company
was not dispositive.
IV. DISCUSSION
I
agree
sufficiently
with
the
“muddled”
majority
regarding
that
the
the
case
“other health and accident coverage.”
is
meaning
precise
law
of
Moreover, I agree
with the majority that the great weight of the case law
suggests that the key question for § 3109a purposes is
whether the coverage is typically provided by an insurance
company.
to
I disagree, however, with the majority’s decision
peremptorily
overrule
Spencer,
supra.
Moreover,
I
disagree with the majority’s decision to decide this case
without the benefit of full oral argument and briefing.
In light of Spencer’s thoughtful analysis, I do not
believe that the legislative distinction noted by the Court
of Appeals is accidental.
Even if the term “coverage” is
interpreted broadly, there is a difference between a selffunded,
noninsurance
LTD
plan
pursuant
to
a
collective
bargaining agreement and a so-called typical insurance plan
8
for purposes of the no-fault act.
Moreover, I am persuaded
by Spencer’s rationale that the Legislature intended this
difference to be dispositive when it refused to incorporate
the
broader
UMVARA
provision
into
our
no-fault
act.
Accordingly, if a person falls in the Spencer box, such as
this plaintiff, then setoff is not permitted under § 3109a.
However, if a person falls within the
setoff is permitted.
Rettig
box, then
As noted by the trial court, this
dichotomy is not as arbitrary as it appears.1
Thus, because
I am not convinced that Spencer was wrongly decided, and
because plaintiff falls within the Spencer box, I would
affirm the Court of Appeals decision.
The majority concludes that
decided
because
“[i]t
is
simply
1
Spencer
not
In
granting
plaintiff’s
disposition, the trial court stated:
was erroneously
relevant
motion
for
under
summary
I am persuaded that at this time case law
does clearly hold that the legislature intended
section 3109a only to apply to wage continuation
benefits which are funded by insurance as opposed
to wage continuation benefits which are selffunded. That is not as arbitrary as it at first
may sound, because I agree with the Defendant
that there’s a clear legislative policy behind
the statute, and that to trade—or mandate, I
should say, the trading of a class of lower
premium insurance policies in return for the
acceptance by the consumer of coordination of
benefits, not in this fact situation we’re not
talking about a consumer buying an insurance
policy.
We’re talking about a consumer being
part of a bargaining unit which collectively
bargained a self-funded, non-insurance funded
wage continuation benefit.
9
the
statutory text whether the coverage arose from a collective
bargaining agreement.”
of
§
3109a
refers
Ante at p 15.
to
health
and
Rather, “[t]he text
accident
coverage–the
central question is whether other coverage exists, not how
it
came
to
exist.”
Id.
(emphasis
in
original).
The
majority then criticizes the Spencer Court for examining
the language of the model act on which our no-fault act was
based and for venturing beyond the text of the statute.
Stated
differently,
the
majority
criticizes
the
Spencer
Court for evaluating the “muddled” case law construing the
text of the statute, for examining the model act on which
our
no-fault
act
was
based,
and
for
not
ignoring
the
elephant standing in the corner once the panel reasonably
concluded that there is a glaring difference between the
two acts.
This Court, however, has previously acknowledged that
it is entirely appropriate, if not prudent, to examine a
model act on which a Michigan statutory scheme was based
when attempting to discern the Legislature’s intent.
See,
e.g., Donajkowski v Alpena Power Co, 460 Mich 243, 256 n
14; 596 NW2d 574 (1999) (“The fact that our Legislature did
not include this restriction in adopting its version of the
model
contribution
effort
to
Here,
the
give
act
meaning
UMVARA
is
to
“clearly
significant
the
was
10
any
good-faith
Legislature’s
intent.”).
‘one
to
of
the
model
acts
utilized as source material in the drafting of the no-fault
act
.
(After
.
.
.’”
Remand),
Marquis
444
v
Mich
Hartford
638,
Accident
652
n
(1994), quoting Tuttle, supra at 546.
17;
513
Indemnity
NW2d
799
And § 3109a was
plainly based on § 14(b)(2) of the UMVARA.
supra.
&
See Spencer,
Moreover, this Court has held that “where the
statutory language differs from the UMVARA model, courts
can presume that the Legislature considered the model act
and rejected it.”
Marquis, supra at 652 n 17.
Thus, in my
view, the Spencer panel properly consulted the model act’s
language and official comments when making its decision.
See, e.g., Ouellette v Kenealy, 424 Mich 83, 86-87; 378
NW2d 470 (1985).
Even though the majority claims that the UMVARA should
not have been examined, the majority nonetheless travels
beyond the text of the statute in an attempt to explain
away the Legislature’s deviation from the language in the
model act and, at the same time, further undermine the
Spencer
Court’s
ultimate
conclusion.
For
example,
the
majority posits that the Legislature may not have included
the language from § 14(b)(2) of the model act because “our
Legislature might simply have found a better way than the
drafters
of
protection.”
the
model
Ante at 17.
provision
to
express
the
same
The majority further surmises,
“[p]erhaps our Legislature used a synonym or more succinct
11
language
to
state
whatever
the
drafters
provision had attempted to say.”
Id.
of
the
model
Without citing any
particular provision, the majority also hypothesizes that
“the
Legislature
statutory
might
provision
in
provision
unnecessary.”
questions
in
an
have
Michigan
Id.
effort
concluded
to
that
another
rendered
model
majority
The
the
poses
these
discount
the
Spencer
Court’s
conclusion that § 3109a is more narrow than the model act.
In
my
view,
however,
the
majority’s
attempts
solidify the conclusion reached in Spencer.
only
Again, this
Court has held that “where the statutory language differs
from
the
UMVARA
Legislature
model,
considered
Marquis,
supra
at
position
that
the
652
courts
the
n
can
presume
model
act
and
17.
Accordingly,
Legislature
rejected
that
rejected
the
the
it.”
Spencer’s
applicable
portion of the UMVARA in favor of a more narrow provision
is more defensible than the majority’s translucent attempts
to explain away the deviation and further muddy the waters.
I believe that the Spencer Court adequately explained that
because the Legislature rejected one portion of § 14 of the
UMVARA, the Michigan statute is “narrower” (i.e., it does
not contain the rejected portion of § 14).
Moreover, I
believe that under these circumstances—where § 14 of the
UMVARA differs from § 3109a, and a self-funded noninsurance
LTD
plan
under
a
collective
12
bargaining
agreement
is
implicated—the
Michigan
statute
produces
a
different
result.
Further, the majority explains that “even if a statute
is written more narrowly than a model provision, a court’s
analysis
does
not
end
there”
because
even
the
statute could apply to the facts of a given case.
18 (emphasis in original).
Thus, even if
narrow
Ante at
Spencer
were
supportable, the majority claims that a court cannot merely
assert that the statute is narrow and conclude that it does
not
apply.
The
majority
simply
dismisses
the
Spencer
is
plainly
Court’s analysis as incomplete.
In
my
view,
supportable.
Spencer’s
rationale
The primary goal of statutory interpretation
is to discern the Legislature’s intent.
To this end, the
Court of Appeals examined the relevant statutory language
and the “muddled” case law that construed this language,
consulted the source of the statutory provision, found a
difference
between
the
model
act
and
the
statutory
provision, and reasonably concluded that the Legislature
rejected this portion of the model act and intended that
wage
continuation
benefits
pursuant
to
a
collective
bargaining agreement should not constitute “other health
and accident coverage” within the meaning of § 3109a.
not
believe
that
Spencer’s
approach
was
I do
incomplete.
Indeed, I believe the approach was prudent and supported by
13
our case law.
I
prefer
because
When compared with the majority’s approach,
Spencer’s
it
best
approach
under
effectuates,
these
rather
than
circumstances
ignores,
the
Legislature’s apparent intent.
Finally, I would be remiss if I did not point out that
neither
the
parties
nor
the
lower
courts
in
this
questioned the validity of Spencer’s rationale.
case
Rather,
defendant and the Court of Appeals dissent simply argued
that this case was more like Rettig than Spencer.
the
majority
parties
has
never
seen
fit
to
specifically
take
aim
briefed
at
this
Because
Spencer,
issue,
the
and,
arguably, this result was not clearly foreshadowed, I would
have preferred to grant leave to appeal to have the benefit
of
full
issue.
the
briefing
and
oral
argument
on
this
particular
As shown by the majority and dissenting opinions,
ongoing
validity
of
Spencer
is
a
jurisprudentially
significant issue that could have wide implications.
even
though
I
believe
properly
decided,
actually
hear
what
I
at
would
the
this
point
prefer
parties
to
have
that
Spencer
was
leave
and
on
this
grant
to
Thus,
say
particular issue.
V. CONCLUSION
I would conclude that Spencer was correctly decided
and, therefore, would hold that the LTD plan covering this
plaintiff
is
not
subject
to
14
setoff
under
§
3109a.
Accordingly, I would affirm the decision of the Court of
Appeals.
However,
jurisprudentially
specifically
brief
because
significant
this
Spencer’s
and
issue,
I
viability
the
parties
would
prefer
did
to
is
not
grant
leave to appeal to have the benefit of full briefing and
oral
argument
on
whether
Spencer
was
properly
Thus, I must respectfully dissent.
Michael F. Cavanagh
Marilyn Kelly
15
decided.
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