Schigur v. West Bend Mutual Insurance ( 1978 )

Per Curiam.

Plaintiff, while a pedestrian, was struck by an unidentified hit and run driver on May 18, 1975. He was unsuccessful in an attempt to recover damages for pain and suffering from the Motor Vehicle Accident Claims Fund, MCLA 257.1101 et seq.; MSA 9.2801 et seq. Schigur v Secretary of State, 73 Mich App 239; 251 NW2d 567 (1977). The present action is against defendant, insurer of plaintiff’s Volkswagen, for recovery under uninsured motorist coverage.¹

The "Family Combination Automobile Policy” plaintiff purchased from defendant included, for a $2 annual premium, $20,000-$40,000 uninsured motorist coverage. Section II of the policy stated:

"In consideration of the insurance afforded under Section 1 of this endorsement [no-fault personal protection coverage] and the adjustment of applicable rates, any amount payable under the Protection Against Uninsured Motorists Coverage shall be reduced by the amount of any personal protection benefits paid or payable under this or any other automobile insurance policy because of bodily injury to an eligible injured person.”

Plaintiff sought arbitration of defendant’s liability under the uninsured motorist coverage of the policy. The arbitrator found plaintiff entitled to $20,000, specifying also that the award did not include medical payments and wage loss. The court below rejected defendant’s claim that any amounts paid as personal protection benefits under the policy could be offset against the arbitrator’s award. Somehow, the court thought that to allow the insurer to offset benefits paid for economic losses against an award for noneconomic losses would violate both due process and equal protection. Defendant appeals the judgment below.

We have recently considered, in American Fidelity Fire Insurance Co v Williams, 80 Mich App 125; 263 NW2d 311 (1977), the question presented by this appeal. We held that, as authorized by the policy, an insurer could offset against its liability under uninsured motorist coverage any personal protection benefits it paid. None of plaintiff’s arguments convince us to decide the present case differently.

As did the insured in Williams, plaintiff points to Michigan Mutual Liability Co v Karsten, 13 Mich App 46; 163 NW2d 670 (1968), and Michigan Mutual Liability Co v Mesner, 2 Mich App 350; 139 NW2d 913 (1966), as support for his argument against offset. His argument based upon the two cases is no more persuasive than the one rejected in Williams.

Plaintiff also argues that Murray v Ferris, 74 Mich App 91; 253 NW2d 365 (1977), supports the trial court’s decision. Murray found that MCLA 500.3116; MSA 24.13116 clearly required that an insured who receives personal protection benefits must repay his insurer from any tort recovery he realizes. Murray then held that this statute violated both due process and equal protection.

Provisions of an insurance policy that are not statutorily required do not implicate constitutional guarantees of due process and equal protection. Nevertheless, the similarity between the insurance provision involved here and MCLA 500.3116; MSA 24.13116 indicates that Murray may support plaintiffs position. Both the offset provision in the policy and MCLA 500.3116; MSA 24.13116 must be read with MCLA 500.3135; MSA 24.13135 in mind. MCLA 500.3135; MSA 24.13135 severely restricts the ability of a person, injured in a motor vehicle mishap, to maintain an action in tort. Only if there has been death, serious impairment of body function or permanent serious disfigurement does a person remain subject to tort liability for noneconomic loss caused by his ownership, maintenance or use of a motor vehicle. MCLA 500.3135(1); MSA 24.13135(1). Whether or not the person causing the accident is insured, the threshold for liability for noneconomic loss must be met.² While an insured motorist is only liable for negligently caused economic loss that is in excess of personal protection benefits payable, MCLA 500.3135(2)(c); MSA 24.13135(2)(c), an uninsured motorist is given no immunity from tort liability for economic loss.³ Of course, the ability of a person injured in another jurisdiction to invoke the laws of that jurisdiction have not been affected.

When a tort recovery is made, under these restrictions upon liability, MCLA 500.3116; MSA 24.13116 gives an insurer who has paid personal protection benefits a right to reimbursement from the recovery. As Murray observed, an insurer who has paid an insured only for economic losses may, under this section, be reimbursed from the insured tort recovery for noneconomic losses.

In Pelkey v Elsea Realty & Investment Co, 394 Mich 485; 232 NW2d 154 (1975), the Supreme Court found nothing objectionable with a workmen’s compensation carrier’s ability to offset an injured employee’s recovery for pain and suffering against the carrier’s liability for medical treatment. The employee had argued that permitting the carrier to credit a pain and suffering recovery from a third-party tortfeasor against the amount of compensation owed violated equal protection and due process. The Court quickly rejected this argument.

Although Murray attempted to distinguish Pelkey, the distinction offered was not a substantial one. In view of Pelkey, the holding in Murray is questionable. Certainly, the questionable constitutional analysis of MCLA 500.3116; MSA 24.13116 in Murray is no reason to disregard the plain language of contractual provision now before this Court. To the contrary, the policy provision is not inconsistent with the approach chosen by the Legislature for compensation of automobile accident victims.

Reversed and remanded.

1 The statement in Schigur v Secretary of State, supra, that no one in plaintiffs household owned a car, and therefore there was no "no-fault” coverage for plaintiffs injuries, is incorrect.

2 This view has not had complete acceptance. The statute has been read to offer no escape from liability for uninsured motorists. In McKendrick v Petrucci, 71 Mich App 200; 247 NW2d 349 (1976), this Court rejected an equal protection challenge premised upon the absence of a threshold for liability for noneconomic loss caused by an uninsured motorist. McKendrick pointed out that "a reasonable construction of the entire section [MCLA 500.3135; MSA 24.13135] is that in every instance liability for noneconomic loss is limited by the threshold stated in paragraph (1), and that paragraph (2) only concerns the limitation of liability applicable when there is no-fault coverage”. 71 Mich App at 204. This construction appears preferable in view of the language and structure of the section.

McKendrick is limited solely to the issue of meeting the threshold when the loss for which the uninsured motorist is liable is noneconomic. It was not intended to suggest nor do we now state that uninsured motorists cannot be held liable for economic loss. Furthermore, liability for such economic loss is not limited by any threshold question.

3 An insured is therefore able to recover, under his uninsured motorist coverage, both economic and noneconomic losses. The fact that the arbitrator here limited the award, at plaintiffs ingenious request, to only noneconomic loss cannot serve to negate the policy provision for offset. An automobile owner is not required to agree to a policy provision offsetting personal protection benefits against an award under uninsured motorist coverage. Without such a provision, nothing would seem to be able to prevent an insured from recovering his economic losses under both personal protection coverage and uninsured motorist coverage. Of course, nothing precludes a person from negotiating with an insurance company for uninsured motorist coverage with policy limits higher than those in plaintiffs policy.