Crowley v. Detroit Automobile Inter-Insurance Exchange

Levin, J.

The question presented is whether . medical care provided a member of the armed forces pursuant to 10 USC 1071 et seq. is a benefit provided under the laws of the federal government required to be subtracted from medical no-fault benefits otherwise payable where neither the injured person, his spouse, nor a relative domiciled in the same household owns an automobile insured under the no-fault act. We hold that amounts paid by the United States government for medical care furnished a member of the armed forces are benefits required to be provided under the laws of the federal government required to be subtracted from medical no-fault benefits otherwise payable where neither the injured person, his spouse, nor a relative domiciled in the same household owns an automobile insured under the no-fault act, and affirm the decision of the Court of Appeals.

i

Chad Crowley, while in the service of the United States Navy, was seriously injured when an automobile, in which Crowley was riding as a passenger and which was owned and operated by Richard Belloni, struck a tree in Detroit. Medical care was provided and paid by the United States government pursuant to 10 USC 1071 et seq.

The circuit court ruled that the defendant, Detroit Automobile Inter-Insurance Exchange, the no-fault insurer of Belloni’s automobile, was obligated to pay the reasonable charges¹ incurred for providing Crowley’s medical care in the amount of $145,149.50, plus accrued interest without deduction for the value of the medical care provided by the United States government.

The Court of Appeals held, relying on earlier decisions of that Court,² that military medical benefits are benefits provided by the federal government within the meaning of § 3109(1)³ of the no-fault act.⁴ The Court reviewed this Court’s decision in LeBlanc v State Farm Mutual Automobile Ins Co, 410 Mich 173; 301 NW2d 775 (1981), where this Court held that benefits paid under the Medicare program are "other health and accident coverage” within the meaning of § 3109a of the no-fault act (requiring a no-fault insurer to offer coordinated health care benefits at reduced premiums), and that where a no-fault policy is issued to the injured person without coordinated benefits he may recover for the reasonable charges incurred for his medical care without reduction pursuant to § 3109(1) for Medicare benefits paid in respect to the automobile accident that gave rise to the claim for no-fault medical benefits.

The Court of Appeals said that it had concluded it should not extend LeBlanc to military medical benefits because this Court in LeBlanc had specifically limited its holding to Medicare and had stated that this Court would not "express an opinion with regard to the inclusion of other possible forms of health and accident coverage within the purview of § 3109a.”⁵ The Court of Appeals added that it found the Medicare and military medical care programs distinguishable, and concluded that the circuit court had erred "in awarding duplicate benefits,”⁶ stating that the test for determining whether the benefits were within § 3109(1) was stated by this Court in Jarosz v DAIIE, 418 Mich 565, 577; 345 NW2d 563 (1984), that "military benefits serve the same purpose as no-fault benefits,” and that "[b]oth benefits would be for plaintiffs medical care from the same injury for the exact same procedures, tests, care and doctors.”⁷

ii

Section 3109(1) of the no-fault act 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 Court has held that workers’ compensation benefits,⁸ social security survivors’ benefits,⁹ and social security disability benefits¹⁰ are required to be subtracted from no-fault benefits otherwise payable because they were benefits provided or required to be provided under the laws of this state or the federal government. In Jarosz, this Court held that social security retirement (old age) benefits were not required to be subtracted pursuant to § 3109(1) because they do not serve the same purpose as no-fault work loss benefits and are not provided or required to be provided as a result of injuries received in a motor vehicle accident giving rise to a claim for work loss benefits. In so holding, this Court said:

We conclude that the correct test is: state or federal benefits "provided or required to be provided” must be deducted from no-fault benefits under § 3109(1) if they:_

1) Serve the same purpose as the no-fault benefits, and

2) Are provided or are required to be provided as a result of the same accident. [Jarosz, supra, p 577.]

We agree with the Court of Appeals that medical benefits provided by the United States government to a member of the armed forces pursuant to 10 USC 1071 et seq. in respect to injuries suffered in an automobile accident in Michigan serve the same purpose as no-fault medical benefits, and that such benefits are provided as a result of the same accident.

Crowley asserts that military medical coverage does not serve the same purpose as no-fault benefits because military medical coverage is not limited to automobile accidents, includes family members of a member of the armed forces, is provided as a fringe benefit contingent upon the employment relationship, and is designed to improve employee morale. Recognizing these possible distinctions, we are persuaded that a purpose of both the military medical care program and of no-fault medical benefits is to provide for the medical care of a member of the armed forces, as well, indeed, as of other persons, who might be injured in an automobile accident that occurs in this state, and for that reason both programs "[s]erve the same purpose.” Similarly, while Crowley would have been entitled to military medical care benefits without regard to whether his injury was the result of an automobile accident in this state, the military medical benefits provided to him were in fact required to be provided "as a result of the same accident” that gave rise to his claim for no-fault medical benefits.

Nor do we find merit in Crowley’s claim that the Equal Protection Clauses of the state and federal constitutions are violated by the classification providing for the subtraction of military medical benefits from no-fault medical benefits otherwise payable. There is a reasonable relationship between the classification, requiring the subtraction of benefits otherwise required to be provided by state or federal law, and the objective of providing benefits at a reasonable cost to those who are not otherwise provided for by such state or federal programs. In providing medical benefits Under the no-fault act only to those who do not otherwise have mandatory medical benefits under some other state or federal program, the Legislature does not deprive those who already have benefits under another state or federal program of equal protection. It provides rather the protection of govern-mentally mandated medical benefits to those not already covered in that regard by a mandatory state or federal program.

m

Crowley claims that military medical benefits are "other health and accident coverage” within the meaning of § 3109a of the no-fault act, and relies on the following statement in LeBlanc as indicating that this Court’s holding in that case— despite its statement that it expresses no opinion regarding the inclusion of other possible forms of health and accident coverage within the purview of § 3109a — was not limited to Medicare and included all governmental health and accident coverage "from whatever source”:

The legislative history of § 3109a suggests that the Legislature, in leaving the phrase "other health and accident coverage” unmodified by the word private, intended to give unrestrained application of § 3109a to health and accident coverage from whatever source. [LeBlanc, supra, p 202.]

Section 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.

Section 3109a was not enacted as part of the original no-fault act in 1972,¹¹ and was added in 1974.¹² Thus, as originally enacted, military medical benefits would have been required, for the reasons stated in part ii, to be subtracted pursuant to § 3109(1). The question then is whether the amendment of the act that added § 3109a requires a different result.

We have concluded that there is no need to decide in the instant case whether military medical benefits are "other health and accident coverage” within the meaning of § 3109a because § 3109a applies only to benefits payable to the person named in a no-fault policy, his spouse, and any relative of either domiciled in the same household.

In LeBlanc, a no-fault policy had been issued by State Farm Mutual Automobile Insurance Company to Joseph LeBlanc, who had not elected to coordinate his no-fault insurance coverage with his Medicare coverage. In holding that LeBlanc could recover no-fault medical benefits in addition to Medicare paid in respect to injuries suffered in the accident that gave rise to the claim for no-fault medical benefits, this Court said:

Section 3109a permits a set-off of "other health and accident coverage” at the insured’s option. This provision, like § 3109(1), serves to eliminate duplicative recovery and to contain or reduce insurance costs; additionally, it allows individuals to tailor their insurance coverage to their own special needs. Cost reduction is implemented under § 3109a on an individual basis rather than in blanket fashion. [LeBlanc, supra, p 197.]

The foregoing rationale and § 3109a, by its terms, apply only in a situation where there is an insurer providing personal protection insurance benefits, who then must offer, at appropriately reduced premium rates, deductions and exclusions reasonably related to other health and accident coverage on the insured.

Where the insured accepts the offer and coordinates benefits, the coordination applies only to the insured, his spouse, and any relative of either domiciled in the same household. Although an insured’s decision to coordinate medical benefits affects only his own rights and those of his spouse or any relative of either domiciled in the same household claiming benefits pursuant to priority § 3114(1),¹³ and not the entitlement of persons claiming no-fault benefits under other subsections of § 3114¹⁴ or priority § 3115,¹⁵ § 3109a does not enlarge the entitlement of a person in respect to whom an insurer is not required to "offer, at appropriately reduced premium rates, deductibles and exclusions reasonably related to other health and accident coverage on the insured.” It was beyond the purpose of the Legislature, in adding § 3109a, to reduce the operative effect of § 3109(1) respecting a person who does not own an automobile and who cannot claim no-fault benefits under the no-fault policy of a spouse or relative with whom he is domiciled in the same household who elected not to coordinate.¹⁶

To be sure, the second clause of the second sentence of § 3109a, stating that the deductions and exclusions "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,” is designed to preclude a reduction of the benefits otherwise payable to a person entitled to benefits under § 3114 or § 3115, other than the insured, his spouse, and any relative of either domiciled in the same household. That language, however, does not mean that a person to whom benefits are payable under § 3114 (other than § 3114[1]) or § 3115, is entitled to the benefit of any modification of § 3109(1) resulting from the enactment of § 3109a without regard to whether he, his spouse, or any relative of either domiciled in the same household is a person to whom an insured must offer, at appropriately reduced rates, deductions and exclusions reasonably related to other health and accident coverage on the insured.

Since Crowley is not a person in respect to whom a no-fault insurer was required to make such an offer — he did not own an automobile, he was single, and he was not domiciled in the household of a person to whom such an offer was required to be made — we conclude that even if military medical benefits "are other health and accident coverage” within the meaning of § 3109a, he is not within the intendment of § 3109a, and the military medical benefits paid to him are required to be subtracted under § 3109(1).

We affirm the decision of the Court of Appeals.

Riley, C.J., and Brickley, Boyle, and Griffin, JJ., concurred with Levin, J.

1 MCL 500.3107; MSA 24.13107.

2 Bagley v State Farm Mutual Automobile Ins Co, 101 Mich App 733; 300 NW2d 322 (1980); Dengler v State Farm Mutual Automobile Ins Co, 135 Mich App 645, 650; 354 NW2d 294 (1984).

3 MCL 500.3109(1); MSA 24.13109(1).

4 Crowley v DAIIE, 144 Mich App 394, 396; 375 NW2d 754 (1985).

5 LeBlanc v State Farm Mutual Automobile Ins Co, 410 Mich 173, 207; 301 NW2d 775 (1981).

6 Crowley, supra, p 398.

7 Id.

8 Mathis v Interstate Motor Freight System, 408 Mich 164, 187; 289 NW2d 708 (1980).

9 O’Donnell v State Farm Mutual Automobile Ins Co, 404 Mich 524, 546; 273 NW2d 829 (1979), app dis 444 US 803 (1979).

10 Thompson v DAIIE, 418 Mich 610; 344 NW2d 764 (1984).

11 1972 PA 294.

12 1974 PA 72.

13 MCL 500.3114(1); MSA 24.13114(1).

14 MCL 500.3114; MSA 24.13114.

15 MCL 500.3115; MSA 24.13115.

16 The parties stipulated that Chad Crowley did not reside with his parents on the date of the accident and had no intention to reside in their home in the future.