LeBlanc v. State Farm Mutual Automobile Insurance

1981] 173 LeBlanc v State Farm Ins LeBLANC v STATE FARM MUTUAL AUTOMOBILE INSURANCE

COMPANY (Calendar Argued 10). 9, Docket January No. 62439. 1980 No. De- 3, February Rehearing cided 1981. denied 411 Mich 1119. LeBlanc, Joseph years qualified who was over 65 old and for benefits, brought against an State action Farm Mu- payment Company personal tual Automobile Insurance for protection policy. insurance benefits under a no-fault insurance payments plaintiff The defendant had reduced insurance paid the amount of Medicare benefits the Social hospital Security injuries Act and services for medical for the plaintiff when suffered he was struck an automobile. The plaintiff elected to his had not coordinate no-fault insurance Houghton coverage. with his Medicare Circuit Court, Condon, J., Stephen granted summary judgment J. plaintiff, holding that the was not defendant entitled to mandatory set-off Medicare benefits under the no-fault insur- Gillis, Appeals, P.J., ance act. The Court of J. H. and R. M. (D. Maher, Holbrook, J., dissenting), per J. E. reversed in a [1, [3, [4, 8, [6] [9, [13] [14, ^{[18] [17] [15] [21] [22] [19]} Validity Validity 73 Am Jur 8, 7, 7 Am Jur 2d 16] 2, 73 Am 7 Am Jur 2d 7 Am Jur 2d 7 Am Jur 2d 42 ALR3d 229. 42 ALR3d 229. 7 Am Jur 2d 7 Am Jur 2d §§ 7 Am Jur 10-12] 5, 11, 12, 7 Am Jur 2d 291, 292, 7 Am Jur 2d 11] and construction of "no-fault” automobile insurance 7 Am Jur 2d Jur 7 Am Jur 2d 2d, 2d construction 2d, References 368. (Rev), Statutes (Rev), (Rev), (Rev), (Rev), (Rev), (Rev), 23-25] Statutes (Rev), (Rev), Automobile Automobile Automobile Automobile Automobile Automobile Automobile Insurance (Rev), 7 Am Jur 2d (Rev), §§ Automobile Insurance 292. Automobile for Points in Headnotes of "no-fault” automobile insurance 145, Automobile Insurance Automobile Insurance 150. et Insurance Insurance Insurance §§ Insurance Insurance Insurance § 34.. seq. Insurance (Rev), §§ §§ §§ §§ Automobile Insurance 3, 367. 22, 23, 34, 126. 368. et 23. §§ 340 et §§ seq., 2-4, 368. 34, 292, 368. seq. 34. plans. plans. 368. 410 Mich payments opinion holding that the Medicare were curiam law and the defendant under Federal (Docket was, therefore, mandatory set-off No. 78- entitled to the 261). Coleman, opinion by appeals. Justice In an Chief Plaintiff Moody, Williams, Fitzgerald, joined by Su- Justices preme Court held: coverage”, phrase statutory and accident The "other health to allow to the no-fault statute used in the section added i.e., benefits, and the election of deductibles coordination of reasonably accident to other health and exclusions related rate, paid premium coverage benefits includes at a reduced Thus, program. benefits are not the Medicare Medicare provided subject mandatory under Federal set-off as benefits to law. requires a subtraction of bene- 1. The no-fault insurance act provided required provided under state or Federal or to be fits (which security social survivors’ have been held to include laws benefits) compensation no-fault and workers’ benefits permits payable. personal injury The act otherwise also benefits benefits, i.e., set-off of "other health and coordination optional coverage”, option of the insured. The accident at the mandatory provision, set-off of the benefits set-off like the law, duplicative provided recovery by and to to eliminate serves addition, costs. In it allows insured contain or reduce insurance coverage special persons own to their insurance to their tailor needs, to the individual rather than reduces insurance costs spreading saving among no-fault insurance consumers. the all coverage” phrase and accident used in 2. The "other health coverage clearly means the coordination-of-benefits section benefits, not, personal protection other than no-fault as the required argues, other than benefits to be defendant including by To limit coordina- law Medicare benefits. private incompatible tion of to benefits is with and benefits reading a common-sense of the text of the unwarranted legislative history provision suggests that statute. The of the modify phrase Legislature, by the "other the its failure "private”, coverage” in- health and accident with the word permit optional of such benefits tended to coordination analysis from whatever source. The of the House Insurance plans private non-private Committee indicated that both Further, scope provision. the Insurance were within the of the coordination-of- the Governor when the Commissioner advised recipients provision being that Medicare was enacted personal injury protection at reduced must be offered proposed presumed It is that the rates under the amendment. LeBlanc v State Farm Ins Legislature considered the Insurance Commissioner’s advice enacting provision, gives weight and the Court some interpretation given charged to a statute official with its enforcement. Legislature deliberately 3. The used different in de- words scribing subject mandatory items to set-off set-off and permissive provisions. mandatory coordination-of-benefits provision permissive provision is addressed to coverage. “coverage” precise meaning The word has a in insur- protection policy, ance: it refers afforded an insurance sum of the risks assumed. The use the word was not inadvertent, provide unique and evinces an intent to treatment insurance, opposed perhaps to health and accident to other equally duplicative benefits. Medicare is “other health and coverage” permissive qualifying accident set-off. There is no just reason to differentiate Medicare from "other coverage” scope optional health and accident within the provision, compensates providers set-off because also hospital participants of medical on services behalf who require inconsequential care. It that in health other contexts Medicare has been deemed not to be insurance in the usual has sense the term: same been said of Blue Cross and Construing plans. optional provision Blue Shield set-off comports pur- include Medicare benefits and the with fosters poses i.e., duplicative provision, recovery of the to eliminate partici- to contain If and reduce insurance costs. Medicare pants choose their to coordinate Medicare benefits with their insurance, they of no-fault obtain a direct no-fault reduction premiums recovery. forego and the double optional provision recognizes per- 4. The set-off that certain require coverage. sons additional and accident health Medicare exclusively elderly persons, applies to who often an have ex- care, panded convincing including a need for health reason for optional provision. plaintiff within it the set-off Since the case elect this did not to coordinate his Medicare benefits with benefits, payments by his no-fault on his made behalf the program may by be set the Medicare off defendant. permis- question 5. The Court did not the reach whether the provision constitutional, express sive set-off nor is did it an opinion on other of the inclusion of forms health and accident optional provision. insurance within the Reversed. Levin, joined Kavanagh, dissenting by part, Justice Justice payment wrote that the decision that of no-fault benefits that duplicate question benefits must be made the answers Mich 173 implement Legislature’s the efforts to in a manner that to fails by of insurance to consumers eliminat- reduce the cost no-fault ing duplication. provides benefits no-fault act that no-fault 1. The insurance payable reduced otherwise to be benefits are payments provided under state or Federal law. Medicare Act, Security the Federal Social and thus are to be subtracted payable. goal the from no-fault otherwise The basic benefits mandatory provision set-off to of no-fault is reduce the cost by eliminating requirement pay the to benefits which insurance government; duplicate already the received from the benefits reducing Legislature anticipated the benefits that had insurers, premiums paid by it would reduce the to be no-fault insurers to collect. no-fault had years two no-fault act 2. An amendment enacted after the step the cost of insurance a carries the effort to reduce no-fault requires policies It no-fault insurers to offer whose further. coverage is coordinated with the insured’s other coverage, premiums to with the reduce commensurate words, coverage. coverage thereby no-fault can reduced In other already insured is covered under be reduced extent the required policy, so is not to double-insure. another the insured Thus, provisions attempt the first both coordinate option mandatorily the Both and the second at of the insured. purpose, have the to reduce the cost of no-fault sections same obligation by removing pay benefits which the duplicate merely for received the same loss from benefits source. another Despite approach purpose similarity of the two 3. sections, provision that the the Court concludes for coordina- provi- by implication partially repealed of benefits has tion mandatory for a set-off benefits. The Court sion that because Medicare is insurance whose reasons option of the coordination insured, at the subject mandatory its cannot be coordi- benefits required by provision. why nation the set-off It is not known optional. Legislature made coordination other insurance However, part doing purpose so conclusion repeal by implication mandatory coordination of was duplicative governmental required provi- the set-off purpose sion is construction that stands basic provision helping coordination on its head. to further Instead of duplication, provision thereby the coordination works eliminate duplication to allow heretofore eliminated under the set-off provision. necessary provisions as 4. It is not to construe the two LeBlanc v State Farm Ins exclusive; mutually given operative both can be full effect. payments, governmental Medicare aas benefit under the man- datory provision, set-off are to be subtracted from no-fault insurers, payable. benefits otherwise no-fault And under the optional offer, provision, appropriately coordination must at premiums, reasonably reduced deductibles and exclusions re- coverage. provi- lated to the insured’s the Since two inconsistent, necessarily giving sions are not since full purpose eliminating dupli- effect to each their furthers basic of cation, the sections should be so construed. This construction Insurance, with coincides the of Commissioner of whose agency act, responsibility administering has the of the by upon passage revealed the of bulletin issued the coordina- provisions explained procedures tion in which the commissioner complying amendment. the may inequitable 5. It be considered to allow a in- no-fault collecting premiums surer the windfall of cover to losses actually Courts, by however, will be reimbursed Medicare. must construing resist statutes such broad remedial intent as the solely equitable no-fault reach an act to result the at case equity may expense society- hand. Individual be at whole, equity Legisla- wide of the act as a as conceived may Although ture. Such be the result here. con- Court’s insurers, struction disallows a windfall to no-fault the overall cost of no-fault insurance will rise because no-fault benefits payable provision mandatory bewill reduced under the set-off governmental only by those benefits which cannot be character- resulting "coverage” optional ized as under the coordina- provision. tion accept required offerings 6. The failure insureds to coverage, premium, reduced at a reduced to reflect losses that Medicare, will likely be reimbursed is more the result agent explain failure of the insurance to offer such coordi- nation than the result of an to informed choice double-insure. people willing pay Few for redundant of medi- expenses. requirement cal If more needed to enforce coverage, Legislature offer coordinated or the Commissioner Moreover, may provide of Insurance it. the construction while windfall, provides the Court removes the no-fault insurer’s it encouragement no actual for a no-fault insurer offer coordi- coverage. long premiums being yield nated As as the collected profit beyond paid what must be out expected insurers can be full continue to sell the regardless paid duplicate of the fact that the benefits those out of Medicare. drawing 7. A B While a distinction between Part and Part 410 Mich mandatory participation in Part A is Medicare because benefits voluntary might participation the set-off and B make in Part is statute, provision it a different it would also make a better of the set- within the literal terms statute. Part B benefits come provision a under Federal law. Absent off as benefits departure purpose justifying judicial showing legislative of a primary language meaning, the literal and from the literal purpose provision, for no-fault cost reduction of the set-off insurance, should be enforced. agreed dissenting, Ryan, with Justice Levin’s also Justice provisions analysis no-fault insurance act but of the of the program disagreed analysis it Medicare because with his of the programs comprised by the two fails to discriminate between precludes Ryan believed to be thus what Justice Medicare and the correct result in this case. Security program the Federal Social 1. Medicare is a within expenses designed system to finance certain medical which is older; parts. persons years it consists of two are 65 old and who A) (Part paid Hospitalization as a result of manda- benefits are persons aged self-employment tory payroll 65 and or taxes to benefits, Security Social and over meet the conditions for who objectives to further the social welfare are disbursements made government. Supplementary medical benefits of the Federal B) (Part voluntary plan open paid is as a result of a which are aliens), (except any person years or more nonresident old pri- important respects with has attributes associated and Participation entirely in Part B is vate medical insurance. voluntary generated, part, by premiums and benefits are Therefore, paid by participants. Part B has a contractual present aspect not in Part A. The salient attributes of social insurance, funding mandatory participation in and of a welfare government program de- which is administered society, signed mitigate disparities of the economic A, present private insurance in Part whereas attributes of B, present imparting preponder- contracts are in Part to it a private ately character. reading of the no- 2. The result that ensues from a literal act, require admittedly, all a set-off of fault insurance would settled, how- Part A and Part B. It is well ever, meaning to the literal that the Court is not confined countervailing legislative statutory language a in the face of mandatory provision history indicates set-off intent. The require Legislature’s of those intent was to set-off that the payable duplicate the no-fault benefits thereby reduce or contain the cost of the accident and because State v Farm LeBlanc Ins specific basic insurance. mechanism for the reduction of provision the cost basic insurance is the no-fault act requires charge appropriately the no-fault insurer to premium rates and reduced serves to coordinate no-fault insur- coverage, ance with other health and accident whether that governmental non-governmental, encourage However, overlapping coverage. elimination of the coordination provision proscribe overlap does not between no-fault and insurance, private permits persons medical needs exceeding provided by the benefits obtain they require. the extra proscribe overlap 3. The no-fault act does between no-fault "government Legislature apparent benefits”. It is that the overlapping intended to eliminate benefits to the extent that programs involuntarily participate the insured must in the creating overlap. the In of the case no-fault insurance and Security, mandatory government programs, Social both the object overlapping has no but insured choice to be the of coverage. pay, And since the insured must in one form or another, coverage, insured, duplicative for the the the government programs, pay confluence of unrelated is forced to require. for more insurance than That circumstances is the provision bane the set-off is to intended redress. One should be allowed, required, duplicative coverage. but not to obtain benefits, they 4. BPart Medicare to the extent that the product contributions, voluntary of not entail harm do the provision avoid, mandatory and, the set-off was enacted to therefore, subject mandatory should be the It to set-off. is note, however, important to that Part B derive from benefits voluntary involuntary both It follows that contributions. part only voluntary the of benefits attributable the monthly premiums justifiably escape the of subscribers can the mandatory Any windfall set-off. less set-off result in a for would program. the subscribers to Part B Because it is the Medicare part unclear this case under which and to extent the what paid, Medicare benefits were should be remanded to case question. the trial court to decide (1978) App 555; Mich 274 NW2d 69 reversed. Opinion of the Court — — 1. Insurance Benefits No-Fault Insurance Coordination of — Medicare. coverage” provision phrase The "other health and in the accident personal optional protection reduction insurance paid under the no-fault insurance act includes benefits Mich Act; thus, Security Medi- program of the Social personal protec- may with no-fault care benefits be coordinated (42 seq.; option USC 1395 et at of the insured tion benefits 500.3109a; 24.13109[1]). MSA MCL op — — 2. Benefits. Insurance Coordination Insurance No-Fault requires act a subtraction no-fault required provided or under state benefits laws, security benefits and as social survivors’ Federal such personal protection compensation insur- from workers’ payable; permits the act also a set-off otherwise ance benefits option coverage” accident at the “other health and 24.13109, (MCL500.3109,500.3109a; 24.13109[1]). MSA insured — — 3. of Benefits. Insurance Coordination Insurance No-Fault Construing provisions insurance act the set-off only permit optional "other where the coordination of coverage” provided under is not a health and accident benefit incompatible with and unwarranted state or Federal laws provi- reading of the coordination-of-benefits common-sense legislative sion; legislative history suggests that failure coverage” by phrase modify "other health and accident permit optional "private” set-off the word was intended (MCL source health and whatever accident 500.3109a; 24.13109[1]). MSA — — — 4. Statutes Administra- Insurance No-Fault Insurance tive Construction. Legislature, enacting presumed to It is an amendment that the act, of the Insur- the no-fault insurance considered the advice proposed of about the effect the amend- ance Commissioner ment, weight interpretation given give some to and courts to the no-fault insurance act the Insurance Commissioner (MCL charged is because he the one with its enforcement seq.; seq.). et MSA 24.13101 et 500.3101 — — 5. Insurance of Benefits No-Fault Insurance Coordination — Words and Phrases. mandatory provision act is The of the no-fault insurance set-off sense, government benefits; general clearly in a addressed to welfare, things promote person’s benefits are those which profit, advantage more or and term is from the distinct coverage” specific is term health and accident which "other permitting optional provision of such coordination used in 24.13109, (MCL 500.3109, 500.3109a; coverage MSA insurance 24.13109[1]). v LeBlanc State Farm Ins "Coverage” — — 6. Insurance Words and Phrases.

"Coverage”, precise meaning a word industry, in the insurance protection to policy,

refers afforded an insurance or the sum risks assumed. — — 7. Insurance No-Fault Insurance Coordination of Benefits "Coverage”. — "coverage” permissive The deliberate use of the word in the set- benefits) (coordination off amendment to the no-fault insur- act, ance when the rest of the no-fault act refers to clearly Legislature indicates that intended the deductions permitted and exclusions in the amendment to limited insured, upon health other and accident opposed "benefits”; duplicative to other the limitation of the "coverage” provide unique amendment to evinces an intent to (MCL 500.3109a; treatment to health and accident insurance 24.13109[1]). MSA — — 8. Insurance No-Fault Insurance Coordination of Benefits Coverage. — — Other Insurance just is no There reason differentiate Medicare from "other coverage” meaning health accident within the of the which, provision permits of the no-fault insurance act coordina- compen- tion such because Medicare also providers hospital sates of medical and services on behalf of participants care; require construing optional who health provision comports set-off include Medicare benefits purposes provision, duplicative fosters the to eliminate (42 recovery and to contain reduce insurance costs USC 1395 500.3109a; etseq.; 24.13109[lj). MCL MSA — — 9. Insurance No-Fault Insurance Coordination of Benefits Coverage — — Other Insurance Medicare. provision permits of the no-fault insurance act which coordi- personal protection nation benefits with other health and optional persons require accident because some coverage, e.g., Medicare, applies exclusively additional elderly persons expanded often who have an need health care; person age where an insured of 65 did not elect over to coordinate his Medicare benefits with his no-fault automobile insurance, payments made on behalf the Medicare his program may applicable not be subtracted his otherwise (42 personal seq.; protection USC 1395 et MCL 500.3109a; 24.13109[1]). MSA 410 Mich by

Dissenting Levin, J. op — — Coordination Benefits Insurance Insurance No-Fault 10. Coverage. — — Health and Accident Benefits Government provisions insurance act both of the no-fault two set-off The beneñts, mandatorily for beneñts attempt one coordinate option of government other at the and the from the received and accident cover- other health for the insured’s the insured reducing purpose age; provisions the cost have the both obligation pay removing no-fault merely duplicate received for the same beneñts beneñts which (MCL 500.3109, 500.3109a; MSA another source loss from 24.13109, 24.13109[1]). — — of Benefits Coordination Insurance No-Fault 11. Insurance Coverage. — — and Accident Health Benefits Government enacting no-fault insur- an amendment to the Legislature, in with the insured’s of beneñts allow coordination act to ance insured, option at the accident other health implication repeal by the manda- intended could not have government required duplicative tory beneñts coordination provision, construction of the because such a set-off another duplication of beneñts hereto- to allow would work amendment (MCL 500.3109, mandatory provision fore eliminated 24.13109, 24.13109[1]). 500.3109a;MSA — — Bene- Coordination No-Fault Insurance 12. Insurance fits. not so provisions insurance act are of the no-fault

The two set-off government particular mutually a form of exclusive that rather, section; may only one be within beneñts pursu- paid may beneñts required off still be to be set beneñts must the insurer for which and accident ant to health (MCL reñecting and exclusions premium deductibles rates offer 24.13109, 24.13109[1]). 500.3109a; 500.3109, MSA — — — No-Fault Insur- Construction Insurance Statutes 13. ance. construing remedial a statute of such a broad must resist Courts equitable solely an insurance act to reach intent as the no-fault may equity at hand because individual result in the case equity expense society-wide of the act as had at (MCL seq.; whole, Legislature 500.3101 et as conceived seq.). MSA 24.13101 et v State Farm LeBlanc Ins — — 14. Insurance No-Fault Insurance Coordination of Benefits — — Medicare Words and Phrases. * * * Medicare beneñts are "beneñts under the laws of * * * government” meaning the federal within the mandatory provision act; set-off of the no-fault Medicare is also coverage” meaning "other health and accident within the of provision requires offer, appro- no-fault insurers to at rates, priately premium reduced deductibles and exclusions to (42 coverage seq.; reñect an insured’s Medicare et USC 1395 500.3109, 24.13109, 500.3109a; 24.13109[1]). MCL MSA — — 15. No-Fault Insurance Coordination of Benefits Insurance Coverage. — Health and Accident Legislature provided option That the insureds with the of obtain- ing coverage support additional health and accident does not part Legislature’s purpose the conclusion that of was to duplicative coverage, option distinguished confer the as coverage supplements insurance; rather than primary, Legislature may choose which insurer would optional compromise, have made a coordination in effect leaving it to each insured to decide which insurer would be (MCL500.3109, 500.3109a; 24.13109, primary 24.13109[1]). MSA — — 16. Insurance Insurance No-Fault Coordination of Benefits — Medicare. hospitalization expenses Medicare and medical re- sulting supplement but, from an automobile accident does not rather, duplicates necessarily coverage; no-fault how- ever, Legislature, using permits language duplica- recovery, encourage duplicative coverages tive did not mean to for health care or amend the no-fault insurance act implication mandatory to eliminate the set-off of Medicare (42 seq.; 500.3109, 500.3109a; beneñts USC 1395 et MCL MSA 24.13109, 24.13109[1]). — — 17. Insurance No-Fault Insurance Coordination Benefits — Coverage — Government Benefits Health and Accident — Medicare. obligation The of an insurer under act the no-fault insurance offer deductibles and exclusions for other health and accident non-governmental insured is not limited to coverage; accident and health Medicare is health and accident coverage and thus deductibles and rate reductions must be (42 500.3109a; seq.; offered the insurer USC 1395 et MCL 24.13109[1]). MSA 410 Mich op — — Benefits Coordination 18. Insurance No-Fault Insurance — — Medicare. Government Benefits legislative history of the no-fault insurance act does show distinguish legislative purpose beneñts a according participation is to whether volun- for set-off available involuntary; supplementary tary beneñts under the medical B) (Part terms program within the literal come Medicare pro- act as beneñts provision of the no-fault set-off legislative law, showing of a and absent under Federal vided meaning, departure judicial from the literal purpose justifying provi- purpose primary language of the set-off the literal insurance, sion, be enforced should for no-fault cost reduction 24.13109). (42 500.3109; seq.; MSA 1395 et MCL USC — — Coordination Benefits No-Fault Insurance 19. Insurance — Coverage — — Equal Accident Health and Protection. amounting equal of to a denial is no differential treatment There mandatory by protection application of the set- of the the laws provision act to Medicare beneñts off of the no-fault insurance health and accident insureds as well as other because Medicare reñecting premium rates deductibles insureds must be offered coverage and therefore to Medicare and exclusions related all from coordination of insurance do derive the same beneñt (US Const, XIV; Am Const other health and accident insureds 500.3109, 500.3109a; 1, §2; seq.; MCL art 42 USC et 24.13109, 24.13109[1J). MSA Dissenting Ryan, J. 11-12, 15.

See headnotes Security — — — Health and Medicare Insurance 20. Social Coverage. Accident insurance, mandatory of The attributes social welfare salient funding participation program in and of a which is adminis- designed mitigate government the and to the economic tered present hospitalization disparities society, bene- of a in the (Part A), private program whereas attributes ñts present supplementary in the medical beneñts insurance are (Part B), imparting preponderate^ private program to ait (42 seq.). USC 1395 character et — — Coordination Benefits 21. Insurance No-Fault Insurance — — Phrases. Medicare Words and require reading would A of the no-fault insurance act literal against personal injury protec- set-off of all Medicare beneñts LeBlanc v State Farm Ins beneñts; however, Supreme tion the Court is conñned the meaning language statutory literal face of a counter- vailing legislative intent, mandatory history and set- provision Legislature’s off indicates intent was to that require duplicate of those a set-off beneñts that payable the no-fault and beneñts because of the accident (42 thereby or reduce contain cost USC of basic insurance 24.13109). seq.; 500.3109; 1395 et MCL MSA — — 22. Insurance No-Fault Insurance Coordination of Benefits Coverage. — Health and Accident speciñc Legislature provided mechanism the for the reduc- provi- tion of the of basic cost motor vehicle insurance is that requires sion of the no-fault insurance act which the no-fault charge appropriately premium insurer reduced rates and serves coordinate no-fault insurance with other health and coverage, governmental accident that whether is non-governmental, encourage overlapping elimination however, coverage; provision pro- the coordination does not overlap private insurance, scribe between no-fault and medical permits persons exceeding needs beneñts coverage they require no-fault insurance to obtain the extra (MCL500.3109a; 24.13109[1]). MSA — — 23. Insurance No-Fault Insurance Coordination of Benefits — Benefits. Government proscribes overlap act The no-fault insurance between no-fault government beneñts; apparent Legislature it overlapping intended to eliminate beneñts extent involuntarily participate programs the insured must in the (MCL 24.13109). creating overlap 500.3109; MSA — — 24. Insurance No-Fault Insurance Coordination of Benefits — — Government Benefits Medicare. supplementary program Beneñts under the medical of Medicare (Part B), they product voluntary to the extent are the of contributions, mandatory do not entail the the harm that set- provision government off of the no-fault for insurance act avoid, and, therefore, beneñts was enacted to should not be (42 subject provision 1395j-1395w; to the set-off of USC 24.13109). 500.3109;MSA MCL — — 25. Insurance No-Fault Insurance Coordination of Benefits — —(cid:127) Government Benefits Medicare. Only part the volun- of Medicare beneñts attributable to the tary escape monthly premiums justiñably of the subscribers can 410 Mich 173 186 op the Court govern- mandatory of no-fault insurance act for set-off beneñts; in a windfall for any set-off would result less ment (42 500.3109; 1395j-1395w; USC MCL MSA those subscribers 24.13109). McCarthy plaintiff. & for McLean Dean), Cossi, Timothy P.C. M. (by &Weis defendant. 3109(1)1 Michigan C.J. Section of Coleman, 2 of requires act a subtraction

no-fault under the laws of state federal provided benefits of personal protec the amount any under payable tion insurance benefits of no- provision A second policy. 3109a,3 no- act, a coordination permits fault benefits with "other personal protection fault insured”. The health and on the accident in this case question presented principal a made on behalf of payments, whether Medicare participant expenses to cover incurred qualifying an for which no-fault consequence as a accident must be set off accor payable, benefits are also provided as benefits under dance with § such government, laws of the federal or whether may set off under 3109a "other payments on insured”. The health and accident Appeals ruled in a 2-to-l decision that Court of 3109(1) requires payments set-off Medicare re due.4 We against no-fault benefits otherwise Appeals. Court verse the decision coverage” con phrase "other health and accident contemplates tained 3109a pro- the Medicare qualified participants 1 (1). (1); MSA 24.13109 subd MCL 500.3109 subd seq. seq.; et MSA 24.13101 et 1972 PA MCL 500.3101 24.13109(1). 500.3109a; MCL MSA (1978). App 555; 274 NW2d 69 Mich LeBlanc State v Farm Ins 187 of Court thus, gram; may Medicare benefits coordinated with no-fault personal protection bene- the option fits at of the insured. In view of our on holding the principal question, we do not reach the constitutional issue in framed our order grant- ing to appeal. leave

I Plaintiff multiple sustained in a injuries pedes- trian/automobile accident which on occurred June 1976, result, required hospi- and as a extensive outpatient At talization and treatment. time of accident, plaintiff age was over the of 65 and eligible pursuant was to receive Medicare benefits to certain sections of the Social Act5 Security provide eligible for payment expen- medical qualified ses behalf on individuals.6 Plaintiff additionally qualified personal protection for insur- ance benefits under the no-fault policy him policy issued defendant. The in question a provision mandating contained a subtraction payable by a state or federal from no-fault benefits otherwise due. Defendant not a plaintiff paid does submit no- reduced fault premium recognition of his for eligibility Medicare benefits.7 $13,539.57

Medicare disbursed a total of vari- ous providers payment hospital medical

5 seq. 42 USC 401 et 642 USC 1395-1395rr. policy plaintiff by part issued defendant was made a appeal. request office, plaintiffs the record on At the of the clerk’s Court, copy policy counsel submitted a certified true along copy plaintiffs subsequent premium a for notice (the period applicable coverages latter item said to indicate also in occurred). period effect in which the These accident documents designate plaintiffs "P”, meaning expenses that allowable coordinated, payable primary, were on a rather than on a basis with respect plan. policy to benefits under another Mich Opinion of the Court his result of as a plaintiff incurred

expenses benefits with paid Defendant accident.8 medical hospital and qualified items respect to Medicare, but refused com- by care not covered which were expenses for those pensate plaintiff Medicare, that Medicare claiming picked up no- subtracted required benefits were 3109(1) act. of the no-fault under fault benefits in 1977, an action 15, brought plaintiff April On from defendant court to recover circuit and hospital for Medicare-reimbursed fees.9 The circuit attorney’s and expenses, medical fees, attorney’s for but the claim court denied plaintiff’s favor on judgment summary awarded issue, v State on O’Donnell relying the set-off Co, App Ins 70 Mich Mutual Automobile Farm 11 (1976).10 appealed 801 Defendant 487; 245 NW2d on the set- Appeals, which reversed to the Court appealed in a 2-to-l decision.12 Plaintiff off issue following appeal we leave to on granted and "(1) 500.3109a; MCL 500.3109 and issues: whether 24.13109(1) construed to 24.13109 and can be MSA for insurer to set off allow a no-fault (2) 500.3109; MCL MSA benefits; whether if to allow 24.13109 is constitutional it is construed benefits which B Medicare paid pursuant claimant (1979). was was January dispute. ney’s 555, 558; 9 8 10 11 the Court of The record does not disclose what MCL At the time Plaintiff pending paid pursuant fees in a no-fault action "for Mich 500.3148(1); in an action 274 NW2d 1980, participant. App 555; cross-appealed decision to Part Appeals, judgment counsel for overdue”. by this MSA 274 NW2d 69 A of Part which affirmed on that was entered in (1978). personal 24.13148(1) the circuit court’s denial plaintiff implied the Medicare Court. See B Medicare. Attorney’s (1978). or portion of these property provides advising 404 program, Mich circuit fees At oral for reasonable protection point. 524; plaintiff are no court, or what representing 273 NW2d 829 attorney’s argument expenses 87 Mich awas Part O’Donnell longer portion attor App fees was on LeBlanc v State Farm Ins Opinion op the Court a no-fault insurer off to set for Medicare bene- fits”.13

II addressing specific arguments Before ad- parties appeal, vanced on we consider the pertinent statutory provisions, the intent of the Legislature underlying enactment, their and inter- pretations given them the courts of this state.

Section states: provided required "Benefits to be any the laws of state or the federal shall be protection personal subtracted from the fits insurance bene- payable injury.”14 otherwise for the subject This section has been the of extensive litigation;15 invariably,16 governmental almost 13 (1979). 406 Mich 1009 14 24.13109(1). 500.3109(1); MCL MSA 15See, e.g; Wysocki v Detroit Automobile Inter-Insurance Ex change, App 565; (1977), 860; 77 Mich 258 561 NW2d rev’d 406 Mich (1979); Co, 275 NW2d 551 Pollock v Frankenmuth Mutual Ins 79 218; App (1977); Co, Mich 261 NW2d 554 Smart v Citizens Mutual Ins App 30; (1978); 83 Mich 268 NW2d 273 Hawkins v Auto-Owners Ins Co, 225; (1978), App 164; 83 Mich 268 NW2d 534 aff’d 408 Mich 289 (1980); Co, NW2d 708 Greene v State Farm Mutual Automobile Ins 83 App 505; (1978); Michigan Mich 268 NW2d 703 Mielke v Millers Co, (1978), App 721; Mutual Ins 82 Mich 267 NW2d 165 rev’d 406 858; (1979); Hawkeye-Security Mich 275 553 NW2d Ottenwess v Ins Co, 292; (1978), 164; App 84 Mich 269 NW2d 570 rev’d 408 Mich 289 (1980); America, App NW2d 708 Hubert v Ins Co of 88 Citizens Mich 710; Co, (1979); Lindsey Indemnity 279 NW2d 48 v & Hartford Accident 668; App (1979); 90 Mich 282 440 v NW2d Brumfield Detroit 1; Exchange, App Automobile Inter-Insurance 89 Mich 279 NW2d 293 (1979); (1979); Co, App 600; Wolford v 92 Travelers Ins Mich 285 NW2d 383 Co, 472; Casualty App v Neumann Transit 96 Mich 292 NW2d (1980); Co, 555 Mich O’Donnell v State Farm Mutual Ins 70 Automobile (1976), App 487; 524; 245 NW2d 801 rev’d 273 404 Mich NW2d (1979); Exchange, 829 404 Mich v Workman Detroit Automobile Inter-Insurance 477; (1979); 274 NW2d 373 Mathis v Interstate Motor (1980). 164; Freight System, 408 Mich 289 NW2d 708 16Exceptions include Detroit Workman v Automobile Inter-Insur 410 173 Mich

190 Opinion op Court survi- social security issue have been at bene- compensation workers’ loss benefits and vors’ fits. 3109(1), O'Don- leading concerning case

In § Co, 404 Automobile Ins v State Farm Mutual nell (1979), this sus- 829 Court 524; Mich 273 NW2d validity mandatory the constitutional tained set-off, security that survivors’ confirming social from 310817 required to be subtracted benefits are gov- We observed no-fault survivors’ benefits. of the same result ernment benefits are also pay- no-fault benefits accident for which able, as no-fault purpose serve the same which however, benefits, 3109(1); scope within the O'Don- our decision emphatically stated we possible other nell "does purport encompass O’Donnell, supra, 538. benefits”. Freight Motor System, Mathis v Interstate In (1980),18 164; we extended Mich 289 NW2d O’Donnell compensation to workers’ holding our benefits, to be constitutionally we found 3109(1). set-off of mandatory subject application The Court considered benefits, Medicaid atypical to somewhat Automobile Inter-Insurance v Detroit in Workman (1979). Exchange, 477; 404 Mich NW2d However, Workman was ascertained that since we receiving Medicaid disqualified statutorily no-fault bene- eligibility of her benefits because issue, or otherwise to fits, we to decide the declined "opinion respect propriety an express (Medicaid (1979) 477; Exchange, 404 ance 274 NW2d 373 bene Mich Co, 472; Casualty fits), App v 292 and Neumann Transit 96 Mich i.e., (1980) (supplementary insurance Part medical NW2d Medicare). B of 500.3108; MCL MSA 24.13108. Co, Hawkeye-Security Ins v Hawkins v Auto-Owners Co and In re Certiñed Ottenwess Transport (Joseph Indemnity Questions v Ins Co) were decided with Mathis. LeBlanc v State Farm Ins Opinion of the Court gratia a redundant, accident-related, of set-off of ex governmental coverage”, Workman, transfer su- pra, 486. 3109(1) legislative history § of was ade-

quately supra, O’Donnell, detailed in 544-545:19 3109(1) history

"The Legisla- indicates that require govern- ture’s intent was to ment set-off of a those duplicated benefits that pay- no-fault benefits thereby able because the accident and reduce or contain cost of basic insurance.

"In a letter to the Governor from the Commissioner analyzing of Insurance proposed series of no-fault bills 1971, introduced in none which contained a set-off provision, the Commissioner criticized the bills because they duplication tended to 'increase the overlap auto programs, between sick leave other insurance programs security’. Subsequent and social bills provisions. did contain set-off The final version of 3109(1) was similar suggested an amendment According Commissioner, Commissioner. purpose of the provide amendment was 'to a more complete and effective coordination benefits between Michigan auto insurance and the benefits the laws of all government’. the states and the federal opinion As noted case, Justice Williams in his in this the Commissioner’s comments 'make clear purpose statutory scheme was maintaining framed in terms reducing premium through costs all insureds dupli- the elimination of cative benefits recovery’.” provision

The second of the no-fault act relevant to our discussion herein is 3109a: providing "An personal protection insurer offer, benefits shall at appropriately premium reduced rates, reasonably deductibles and exclusions related to 19See, Gretzinger, v also: O’Donnell State Farm Mutual Insurance Attempt Michigan’s Act, A to Amend Co: Judicial No-Fault 1977 DCL Rev 191-195. 410 Mich 173 Opinion of the Court the insured. and accident on other health by this required to be offered and exclusions

deductibles the com- subject prior approval by shall be section missioner payable only to apply and shall spouse of the person policy, the in the the named any of either domiciled relative insured same household.”20 been 3109(1), 3109a has

In contrast with § § v Nyquist mentioned, much less construed. seldom Co, 589; 269 NW2d 687 Aetna Ins App 84 Mich (1979), 817; aff'd (1978), 404 Mich 280 NW2d nine named In Nyquist, merits our attention. to re against Aetna plaintiffs brought an action Aetna because cover no-fault benefits withheld paid had expenses been plaintiffs’ hospitalization Shield, plain and because Blue Cross-Blue in elect premiums paid tiffs had reduced principally Plaintiffs ing a coordination of benefits. not "in Blue Shield was asserted that Cross-Blue did not come within surance” and therefore re Appeals The Court purview of 3109a. sponded: for three argument is untenable reasons.

"[Plaintiffs’ "First, provision legislative history of this demon- Shield of Blue Cross-Blue strates that coordination injury protection was a personal benefits with primary * * *. concern 'coverage’ 3109a the word "We also note uses 'insurance’; term use of the broader rather than reading of the against plaintiffs’ restrictive militates section at issue. record part

"Secondly, documents that were Deputy Com- show that the Commissioner below position missioner of Insurance have taken Cross- plans such as Blue hospitalization medical and MCL 500.3109a; MSA 24.13109(1). LeBlanc v State Farm Ins op the Court fall give particular Blue Shield within 3109a. We weight interpretations charged of those with the implementation and enforcement of a statute. See Boyer-Campbell v Fry, Co 282; 271 Mich 260 NW 165 (1935). "Finally, plain purpose of 3109a was to reduce premiums by eliminating duplicate coverage. It is un- disputed personal injury overlap insurance benefits hospitalization Thus, with medical and benefits. plain- reading tiffs’ restrictive of 3109a would subvert the § Nyquist, supra, 591- purpose legislation.” clear 592. of Appeals,

The Court in a second case discuss- ing permissive the provision, set-off Orr v Detroit Automobile Inter-Insurance Exchange, 90 Mich 687; App (1979), 282 NW2d 177 held that sick leave accumulated an employee was health coverage accident set forth in 3109a.21 §

Although our primary focus in O’Donnell was 3109(l)’s upon the of constitutionality mandatory § set-off, we also concluded that 3109a is constitu- § tional, commenting: attempt "Section did not prob- to address the of overlapping private

lem dent was no-fault and health or acci- insurance benefits. Soon after the No-Fault Act passed Legislature, however, the attempt an was made provisions to fine-tune the set-off so that this kind duplication of persons could be permitting reduced while still exceeding

with needs provided by the benefits no-fault required. obtain the they extra * * Legislature enacted 3109a *. "Although Legislature did not choose to make 3109(l)’s this mandatory, set-off as it had with done set-off, benefit this justified by distinction is perceived necessity making possible persons it (On Remand), Michigan Liability See Porter v Mutual Co 97 Mich 281; (1980), App 293 NW2d 799 for additional mention of 3109a. Mich Court require they greater obtain needs to on the pay reduced rates by the approved through deductibles and exclusions through slip can still persons That Commissioner. some additional benefits 3109a and receive

the colander of § Mathe- mean the is unconstitutional. does not matical statute required. possible is nor precision neither objec- legislative promotes the valid 3109a "Section benefits; the means chosen reducing duplicative tive end; and the distinctions rationally to that related is This is a basis. statute supported by rational drawn also constitutional.” O’Donnell, supra, 550-551. in this case are two analysis to our Crucial the intent of the clarify tend to documents which 3109a. The first enacting Legislature Commis- the Governor letter addressed purpose explains of Insurance22 sioner argu- summarizes Bill 572423 and 1974 House bill: ments favor to to requires insurers offer automobile "The bill protection insurance benefits personal their insureds to other deductibles which relate exclusions and with coverage on the insured. Offer of health and accident such deductibles and virtually eliminate exclusions will overlap coverage an which occurs when the current personal protection bene- has the no-fault insured both which, coverage like health and accident fits and other the benefits, expen- personal medical protection covers auto accidents and other accidents. ses connected with drastically reduce the "The bill will eliminate or coverage expenses overlapping for medical incidence hence reduce the to automobile accidents and related cost of such insurance to the insured. persons by require covered "The bill will Demlow, 26, February Commis dated 1974 from Daniel J. Letter Insurance, to Milliken. Governor William G. sioner of present Subsequently MCL into 1974 PA enacted 24.13109(1). 500.3109a; MSA LeBlanc State v Farm Ins Opinion op the Court program given personal injury protection at Currently, benefits reduced rates. some automobile provide do not personal protection insurers rates to The due reduced persons program. covered under the Medicare only reduction persons available to all retired is their lower income not their Medicare if any.

"The bill would possible make it to eliminate the persons current situation which insured under acci- policies dent and health and loss of expense include medical wages may collect benefits from coverage personal such tion benefits. and from their protec- no-fault recovery contrary public

This double is policy in that it can is wasteful and result in an insured receiving recuperating more income when than when working. gives "The bill each consumer the chance to select

reject on existing deductibles based his non-automotive coverage. Currently, health and accident insurers writ- ing approximately do not allow the Michigan’s 90%

consumer make such a choice.”24 The second item an is of HB analysis prepared Committee,25 the House Insurance which largely echoes the arguments and purposes set forth in the Insurance Commissioner’s letter the Governor: Apparent

’’The Problem to Which the Bill Addresses Itself: "Since the compulsory advent of no-fault automobile October,

insurance last premiums auto insurance have not been Many gards persons reduced as some anticipated. had average

believe the driver overbuying in re- to accident and medical insurance since no- [sic] fault overlaps portions of the medical 24Letter from Insurance Commissioner Demlow to Governor Mil liken, supra, 1-2. 25Analysis prepared by Analysis of 1974 Bill House Committee, Representatives Section of the House Insurance con taining complete February material to 1974. 410 Mich 173 Court and health private accident coverage offered Blue and Blue group plans of Cross and the insurers Shield. Michigan persons residents should Some claim duplicate coverage and this required pay for offer deductions automobile insurers should pay for premiums to those who at exclusions similar Further, reduced plans. coverage and accident under other health duplicate this many contend elimination result a coverage insurers would Michigan drivers. savings substantial [sic]

"Argument For: Michigan for save millions dollars "The bill would opportunity to elimi- them an drivers and would offer nate their since coverage duplicate, overlapping insurance required to would be offer insurers automobile wrap-around policy- a of exclusions which deductibles coverage. insurers accident No-fault holder’s health and premiums, at deductions reduced would offer these the 5 to 6 million estimate State insurance officials annually. Michigan could save million $100 drivers "Argument For: flexibility in create more by

"Passage of the bill would coverage offering consumers an health and accident option majority the vast underwrit- Further, Michigan if operating do not offer. ers plans gain approval for their Blue Shield Cross/Blue modifications, seeking health proposed the consumer option yet another and accident will have The bill not make it manda- from which tory choose. does buyer for select these deductibles an opt overlapping many could and exclusions so coverage. still "Argument For: hospital costs could be skyrocketing "The and medical greater health and accident

contained to as the extent with like the primary policies, since these plans, have limits Blue Shield established Cross/Blue hospital expen- on their of doctor and reimbursement patient has A knows his or her physician ses. who 197 LeBlanc v State Farm Ins Opinion op the Court unlimited medical keep has incentive no the doctor bill at a minimum.”26 3109(1) summary, requires

In subtraction government benefits from no-fault benefits other- payable. provision wise exists to eliminate duplicative recovery and to contain insurance implemented costs. Reduction of insurance costs is spreading savings among under all no-fault consumers. This Court has far thus found security that social survivors’ benefits and work- compensation subject ers’ benefits are man- provision. datory set-off permits

Section 3109a a set-off of "other health coverage” option. and accident at the insured’s provision, 3109(1), This like serves to eliminate duplicative recovery and to contain or reduce in- additionally, costs; surance it allows individuals to spe- tailor their insurance to their own implemented cial Cost needs. reduction is § 3109a on an individual basis rather than in blanket fashion. Blue Cross-Blue Shield has been deemed one form of "other health and accident coverage” qualifying permissive coordination of benefits under 3109a.

Ill " variously Medicare has been defined as 'social legislation passed by Congress welfare to aid general health and welfare of 65 those over years age’ Michigan ”, Imvris v Millers Mutual App Co, 406, Ins 39 410; Mich 198 NW2d 36 (1972),27 federally and as "a funded and adminis- 26 Analysis, supra, House Insurance Committee 1. 27 Witherspoon Co, But see v St Paul Fire & Marine 86 2d Ins Wash (1976): 641, 646; 302, 548 306 P2d "Neither Part A nor Part B ” plan.’ Medicare constitute a 'welfare Mich 173 Court program XVIII of the Social Title created

tered Security outpatient hospital providing Act persons”, elderly American Supp Weinberger, F v Medical Ass’n 1975). (ND of Medicare enactment28 Ill, The 1965 Security the fed Act "established into the Social largest health insurer as the eral Ass’n, su Medical American the United States”. pra, 518. part program, two-part each dis- is

Medicare a coverage, financing regard benefits, tinct with Medicare, known A Part of and administration.29 incorporated coverage” "hospital into the is as the existing designed security structure,30 is and social inpatient payment of for in services to assist nursing hospital care, care and certain skilled eligible for Part A To be home health care.31 aged older, 65 must or an individual security cash social and must meet conditions for aged persons 65 or automati- Most older benefits.32 coverage qualify cally A A benefits. Part for Part through wholly universal and manda- financed is employees, employers, tory and contributions from monthly self-employed people, no and thus entails qualifying participant.33 premium a on behalf of age requirements who who meet the and Persons ings Medicare Handbook ment of HEW Services.) and the ^[28] 29 Added Witherspoon, supra, Institution, has Hospitals Health, been July 30, 1965, redesignated 1967), —Issues Education (1974), pp 644, 79 Stat and 19-20, & 44-45. citing Prospects (Washington, Welfare, 291, Department (Note H. 42 USC 1395 et referring Somers Pub No SSA that effective & A. of Health and the reader to Somers, seq. DC: The Brook- 74-10050, May Medicare 4, 1980, Human Depart- Your 30Witherspoon, supra, 644. 31 Welfare, Health, 1395d; Department & Education Pub 42 of USC 1979), 79-10043, (May, Explanation 4-6. A Brief of Medicare

No SSA 1395c; supra, Witherspoon, 645. 42 USC Medicare, supra, HEW, Explanation 13. of Brief A State Farm LeBlanc v Ins of Court B, in enrolled Part who but have worked long enough other satisfy conditions for A, in participation Part may purchase Part A paying a monthly premium which is said to represent hospital cost protection.34 paid Amounts as employee self- employment taxes Internal Revenue insurance, do not qualify paid Code as amounts for and are not deductible medical expenses.35 B in Part

Participation pro- the Medicare gram, coverage” termed "medical the "phy- coverage” sician is voluntary, open and is to any older,36 aged 65 or except individual nonresident In contrast Part A coverage, aliens.37 some must individuals for Part B apply to be Moreover, it.38 eligible for in delay applying for Part B a coverage results increase 10% premium amount monthly year each B, Once enrolled in Part an delay.39 individual may cease participation by filing either a written no- Health, According Department Welfare, & Education Pub 05-10050, (1980), 45, No SSA Your Medicare Handbook basic "[t]he hospital premium through $69 month June 1980. It 1, period starting July will $77 increase to a month for the 12-month premium represents present hospital 1980. This cost of Medicare protection”. insurance 35Witherspoon, supra, 645; 66-216, Rev Rul 1966-2 Cum Bull 100. However, voluntary payments by participant made a for Medicare A coverage qualify paid as amounts for medical IRC 79-175, 213. Rev Rul 1979-1 Cum Bull 117. 36HEW, Explanation Medicare, 8; supra, 1395j; A Brief 42 USC 1395o; Witherspoon, supra, 42 USC 645. 37 Diaz, (1976). 67; 1883; v 426 Mathews US 96 S Ct 2d 478 48 L Ed 38 person receiving security A social or railroad retirement benefits automatically is enrolled in Part B Medicare same at the time he benefits, eligible or she becomes for Part A or unless he she indicates participation that ment does participate live in Puerto in Part B is desired. Part B not Automatic enroll eligible for not occur individuals who are 65 but are A, permanent failure, kidney in Part or who have or who HEW, foreign Explanation or Rico countries. A Brief Medicare, supra, 8-9; 1395p. 42 USC 39 1395r; HEW, (1980),supra, 42 USC Your Medicare Handbook 45. 410 173 Mich 200 Opinion op the Court pay premium.40 by failing Former tice, or only permitted participants re-enroll B Part premium.41 higher B of Medi once, at a Part charges pays a in excess of of reasonable care moderate deductible patient 80% physicians’ services, out hospital visits, services, out home health therapy speech pathology patient physical chiropractic services, services, some ambulance physician-prescribed services, health and and other Financing B is of Part accom medical services.42 premiums plished through monthly an exaction and, uniform at a of a amount from enrollees43 matching minimum, from the fed contributions general appropriations paid Premiums, fund.44 eral payment automatic deduc either direct security participant’s social benefit tion check, only if has there been can be increased general security in social cash benefits increase premium during previous year.45 any Because percentage cannot exceed the increase increase share assumed federal cash enlarged.46 pre government necessarily is Part B paid qualify for insurance cov as amounts miums ering medical care under Internal Revenue expenses.47 Code, and are deductible as medical Correlatively, B are in the Part benefits received 40 (1980), HEW, 1395q; supra, 42 Your 46. USC Medicare Handbook 41 (1980), 1395p; HEW, supra, 42 Your 46. USC Medicare Handbook 42 Medicare, HEW, supra, Explanation A Brief 9-11. 43 (1980), 44, HEW, According supra, Your Medicare Handbook premium through $8.70 medical a month basic "[t]he 30, 1980. It increase to a month for the 12-month $9.60 June will period starting July 1980”. supra, Witherspoon, 645-646. Medicare, HEW, Explanation of 13. A Brief 1, 1980, starting July year will "For the federal premium pay cost of medical insurance.” more than two-thirds HEW, (1980), supra, 44. Your Handbook 100; 213(a); 66-216, Rul 1966-2 Bull Wither See IRC Rev Cum spoon, supra, 646. LeBlanc v State Farm 201 Ins Opinion of the Court proceeds, nature of medical and are gross excluded from income under federal income provisions.48 tax

IV We first address defendant’s contention that the phrase coverage” "other health and accident con- "coverage tained in 3109a refers to other than provided required or to be under the any government”,49 laws of or i.e., state the federal governmental other than the benefits of 3109(1) posits, which, defendant include Medicare reasons, benefits. For several we believe that such incompatible a construction is with and unwar- reading ranted a common-sense of the text of § 3109a. Section 3109a makes no internal refer- express 3109(1); implied, ence, an thus interpretation dependent upon language set forth 3109(1) pointless. §in Furthermore, the fact that coverage” immediately "other health and accident "personal protection follows a reference to insur- compels ance benefits” a conclusion that "other coverage” clearly health and accident means cov- erage personal protection other than payable any policy.

V Defendant asserts that Medicare benefits are unquestionably purview within the §of they provided pursuant because law, to federal by agencies govern- are administered of the federal 48 104(a); 70-341, (revoked See IRC Rev Rul 1970-2 Cum Bull 31 79-173, part by Rev Rul 1979-1 Cum Bull to the extent that it had determining support ruled that basic benefits were includable in purposes pertinent of IRC 151 and 152—the revocation is not §§ here); supra, Witherspoon, our discussion 646. Appeal, Defendant’s Brief on 4. Mich Opinion op the Court schemes. federal tax by are funded

ment, and not for qualify do Accordingly, payments are not they because permissive set-off 3109a’s § in this Court benefits, as characterized private plain the that Defendant believes O’Donnell. 3109(1), the intent of coupled with meaning of § set-off enacting mandatory in Legislature that Medicare conclusion necessitate provision, purposes for benefits benefits are 3109(1). § it plausible, but certainly is analysis

Defendant’s eminently persuasive. is not upon govern- predicated holding is Our urged by dichotomy mental/private benefits resolu- simple such a enticing However defendant. not the that it is be, are convinced we might tion con- benefits are as Medicare one insofar correct 3109(1) contem- that indisputable It § cerned. govern- a collateral derived plates benefits indisputable that source; equally it is not mental accident health and to "other applies only 3109a § private from a collateral coverage” obtained limited. While face, 3109a is not so source. On its pri- between that the distinction acknowledge we sur- repeatedly governmental and vate O’Donnell, in throughout faced our discussion relating 3109a as that we there characterized that our concerns say suffice it to private from those different radically in O’Donnell were here, confined confronting precisely and that we us to its facts. O’Donnell suggests 3109a legislative history

The "other leaving phrase Legislature, coverage” unmodified health and accident appli- give unrestrained intended to private, word accident to health and cation of 3109a HB 5724 analysis from whatever source. State Farm LeBlanc v Ins Opinion of the Court prepared the House Insurance Committee indi cates that would duplicate bill eliminate cover-' age by making private accident and health insur ance, as well group plans as the of Blue Cross and Shield, Blue primary sources of reimbursement accident-related medical and hospital expenses. Thus, private non-private50 both plans were Further, scope within the bill. his letter regarding Governor HB the Insurance Commissioner his expressed view that Medicare recipients must personal injury be offered no-fault rates under protection benefits at reduced the bill. presume Legislature upon We reflected position the Insurance Commissioner’s in enacting 3109a, give weight and we some interpre given by tation a statute the official charged with Magreta Co, v Ambassador Steel enforcement. its (1968). 513, 519; 380 Mich 158 NW2d 473 participants That in the program qual- ify permissive coordination of benefits under 3109a, rather than for mandatory coordination of 3109(1), benefits under is forcefully demonstrated Legislature’s deliberate use of distinct words to describe the items subject to set-off in the provisions. 3109(1), two Section enacted as a por- original act, tion of the no-fault ad- clearly beneñts. In a general dressed to sense, benefits are those things promote an indi- 50 Shield, provided auspices Blue Cross and Blue under the of state law, seq., seq.; seq., MCL 550.301 et 550.501 et MSA 24.591 et 24.621 seq., technically private et is not a form of health and accident "non-profit, tax-exempt insurance. BC/BS has been described as a incorporated spe pursuant 'charitable and benevolent institution’ enabling legislation 1939, Michigan Legislature cial for the protection enacted purpose providing a mechanism for broad health care people Michigan.” of the State of Blue Cross & Blue Michigan Comm’r, 399, 415-416; Shield of v Insurance 403 Mich 270 (1978). interesting NW2d 845 It is to note that Blue Shield of Michi gan presently Michigan handles medical insurance claims for Medi participants. HEW, (1980), supra, care Your Medicare 54. Handbook 410 173 Mich 204 Opinion of the Court Salisbury welfare, See advantage profit. vidual’s (CA 1967); States, 2, 700, 706 377 F2d United v No Logan rel Aracoma-Chief ex v Hardesty State of the United 4523, Foreign Veterans of Wars 921, States, Inc, 645, 924- 650; 129 SE2d 147 W Va (1963). is the later- In contrast to § 3109a, speaks to specifically which more enacted § coverage. "Coverage”, a other and accident health industry, in the insurance meaning word of precise pol by an protection refers to afforded policy assumed sum of the risks icy, or the Paperboard v Cornell D'Angelo See insurance. 846, Co, 46, 51; 207 NW2d Products 59 Wis 2d Co, Falls Ins 2d (1973); Freimuth v Glens Wash (1957). 468, discussing In 621, 625; 314 P2d consti program leave employee’s whether an sick coverage” accident tuted "other health and Orr, supra, 3109a, Appeals Court commented: 'coverage’ in use of the word "The noninadvertent act, the no- when the rest of

this section of the benefits, clearly indicates that act fault refers 3109a, deductibles and exclu- Legislature intended § sions, to health and accident to be limited coverage upon the insured.” Appeals the Court in the belief of

joinWe to "coverage” choice of the word Legislature’s the "noninad- the of 3109a was perimeters delineate § Legisla- We are also of the view that vertent”. 3109a, narrowly of which is ture’s enactment expressly is not "coverage” limited to which "coverage”, forms of such private confined treatment provide unique an intent evinces insurance, to other opposed and accident health "benefits”. perhaps equally duplicative Farm v State Ins LeBlanc of Court and accident cover- is "other health Medicare set-off. We permissive 3109a’s qualifying age” Medicare reason to differentiate just no perceive traditional, of health and other, forms more are within irrefutably accident private so-called any 3109a. Just like scope of § of medi- insurer, providers compensates Medicare participants of hospital cal and services on behalf inconsequential It health care.51 require who has been deemed in other contexts52 of the term: in the usual sense not to Blue Cross and Blue said of has been the same Nyquist, which, according fall plans Shield Michi- & Blue Shield of 3109a. Blue Cross within § Comm’r, 399; 270 v Insurance 403 Mich NW2d gan (1978). Medicare ben- construing 3109a to embrace By to traditional forms of health and B Medicare is also akin Part relationship sort of arises insurance because a contractual accident premium-paying partici provider payment and the between Although might See, Witherspoon, supra. pants. generally, it be said departs A Medicare from usual modes of insurance that Part paid by participant, premiums directly we do because are not application of 3109a on the basis of exclude Part A of Medicare from no a form of this Part A of Medicare is rendered less distinction. financing coverage” by peculiar "health and accident reason of its structure. (Medicare "individual, 52Imvris, group supra or is not blanket accident, disability hospitalization insurance” within the exclusion expenses); ary policy providing payment of a for medical clause (Medicare Witherspoon, supra deductible amount of is not within the personal catastrophe liability policy; a terms of an exclusion for through nor does it come within charges paid by or for or reimbursable unit); governmental Wojtkowski Accident & v Hartford (1976) (Part Co, Indemnity App 497; A of 27 Ariz 556 P2d expenses policy’s Medicare is not included within a paid by set-off for medical insurance, individual, group Part B of blanket or accident but clause). group exclusionary Medicare constitutes See, App, partment insurance within (Mo Co, Casualty Surety 497 SW2d 809 also: Jones v Aetna & 1973). explanatory the De brochures issued Note that Health, typi regarding Medicare Education & Welfare See, cally e.g., A B as "insurance”. refer to both Part and Part of Medicare HEW, Medicare, Explanation supra. A Brief 410 Mich 173 Opinion op the Court efits,53 legislative intent we do no violence to the indeed, underlying provision; interpreta- our tion comports purposes with and fosters 3109(1), 3109a. 3109a exists to eliminate Like § § § in- duplicative and to contain or reduce recovery worthy goals promoted by surance costs. These are 3109a, since, Medi- including Medicare within § opt to coordinate their Medicare participants care benefits, their no-fault obtain a they benefits with forego of no-fault premiums direct reduction However, also recognizes dual 3109a recovery. § persons possess unique requirements that certain health and accident which necessitate additional optional hence facet of 3109a’s coverage; ap- Medicare’s exclusive coordination of benefits. population,54 which fre- plication elderly care, has an need for health quently expanded it provides convincing including reason for within 3109a.

VI Medicare constitutes "other health and accident meaning of 3109a of the no- coverage” within Thus, fault act. made to health care payments providers pursuant program to the Medicare for expenses arising out of the same accident payable may also no-fault benefits at subtracted payable option of the insured. Since plaintiff the instant case did not elect to coordinate his Medicare bene- fits with on his no-fault made payments receipts Our characterization of Medicare as "benefits” does receipts contradict our determination such do not constitute 3109(1). "benefits”, governmental employed term is as that 1968, By approximately elderly persons 18.6 million were covered by Medicare; elderly by both Parts A and B of the number of grown Witherspoon, participants approximately had 23 million. supra, 653. LeBlanc v State Farm Ins Dissenting Levin, J. program may his behalf the Medicare not be subtracted from the no-fault benefits due under policy the no-fault issued him defendant. We presented do not appeal, reach constitutional issue on express regard opinion nor do we an with possible to the inclusion of other forms of health purview and accident within the § 3109a. Appeals

The decision of the Court of is reversed. Williams, Moody, Fitzgerald, Jr., and Blair JJ., C.J. Coleman, concurred with (concurring part; dissenting part).

Levin, J. question whether, in this case is when an overlapping insured has Medicare and no-fault liability coverage, automobile insurance the no- pay duplicate fault insurer must benefits that paid by benefits Medicare. The Court’s decision duplicative payments be must made answers question implement the ain manner that fails to Legislature’s the efforts to reduce the costs of no- Michigan by fault insurance to consumers elimi- nating duplication. 3109(1)

Section of the no-fault automobile liabil- provides ity act1 that no-fault benefits otherwise payable by provided to are be reduced under state or federal law. Medicare benefits are Security Act, under the federal Social contrary thus, Court, and decision to be subtracted no-fault benefits otherwise 3109(1) payable. goal The basic is to reduce the by eliminating cost of no-fault insurance the re- quirement pay duplicate benefits which benefits Legisla- already government; received from the anticipated reducing ture the benefits that (1). (1); MCL 500.3109 subd MSA 24.13109 subd Mich 173 Opinion by Dissenting Levin, J. insurers, it re- would paid be no-fault had to had to collect. no-fault insurers premiums duce two 3109a, years amendment enacted Section an act,2 step effort a carries this after the no-fault poli- to offer no-fault insurers requires further. It in- coverage is with the coordinated cies whose coverage, reduce other sured’s reduced cover- premiums commensurate thereby can words, age. In other already insured to the extent reduced is not the insured policy, so covered under another required to double-insure. 3109(1) to coor-

Thus, attempt and 3109a both §§ 3109a mandatorily dinate Both sections have insured. option at the cost of no-fault purpose, reduce same pay bene- removing obligation duplicate benefits received merely fits which source. loss from another same purpose, and similarity approach Despite to indicate that 3109a was would which seem § policy expand to continue and intended 3109(1) it, preempt the Court rather than to § by implication partially that 3109a has concludes § 3109(1). that because The Court reasons repealed § coverage whose coordination Medicare is insurance option is at 3109a, sub- benefits cannot be insured under its § mandatory required coordination ject 3109(1). § Legislature made do not know why

We optional. under 3109a Unlike coordination § part of however, that persuaded I am not majority, implica- doing repeal by for so was to purpose duplicative tion the coordination mandatory 3109(1). Such governmental required benefits § MCL 500.3109a; MSA 24.13109(1). LeBlanc v State Farm Ins Dissenting Levin, J. a construction purpose stands basic of 3109a on head. helping its Instead of to further eliminate 3109a thereby works to allow dupli- duplication, 3109(1). cation heretofore eliminated under § It is not necessary construe 3109a and §§ exclusive; as mutually given both can be full operative effect. Medicare gov- payments, as a 3109(1), ernmental benefit under are to be sub- tracted from no-fault benefits otherwise payable. insurers, 3109a, And no-fault offer, must at premiums, reduced appropriately deductibles and reasonably exclusions related to the insured’s coverage.3 provisions

Since the two are not necessarily inconsistent, giving and since full effect to each purpose of eliminating furthers their basic duplica- tion, the sections should be so construed. This construction coincides with that of the Commis- Insurance, sioner whose agency respon- has the (95th Cong, a Such construction is not novel. See HR 13048 2d 1978) Sess, June "Standards No-Fault Motor Vehicle Accidents Act”, provides: Benefits Duplication. "Sec. 109. Avoidance of "(a) (1) approved plan establish, In An State shall General. — implement, provision fairly equita- the commissioner shall bly— "(A) any duplication eliminates unintended in the benefits other- respect any respect wise available with to a victim or survivor with any injury; and "(B) passes savings on the cost which result from that elimination persons to all who would otherwise entitled to receive those duplicative benefits, savings defray or utilizes the the cost of other benefits. "(c) Reduction for Benefits Received From Governments. —An approved plan (less provide reasonably State shall all costs) pursuant incurred collection an individual receives to entitlement, receive, respect or injury, is entitled to with to an from— "(1) security (except social benefits under of title XIX the Social * * * Security [Medicaid]); Act benefits, calculating "shall be subtracted in basic no-fault unless the authorizing providing law or secondary for those benefits makes them duplicative to of basic no-fault benefits.” 410 Mich Dissenting by Levin, J. the act, administering by the as revealed of

sibility in which upon passage issued 3109a § bulletin comply- for procedures explained commissioner the 3109a. ing allow a no- inequitable

It to may be considered collecting premiums the fault insurer windfall be actually by that will reimbursed to cover losses Courts, however, construing must resist Medicare. intent as the no- remedial broad statutes such the equitable result to reach an solely fault act be at equity may Individual case at hand. of the as a act society-wide equity expense Such Legislature. may whole, conceived as the Court’s construc- Although here. result be the insurers, no-fault a windfall tion disallows will rise because cost of no-fault overall under will be reduced payable no-fault benefits governmental by those only resulting cannot be characterized 3109a. "coverage” under § accept required failure insureds pre- a reduced coverage, of reduced at offerings will be reimbursed mium, to reflect losses that Medicare, failure of likely is more the result such agent explain offer and than of an informed choice coordination the result willing to for pay people to double-insure. Few expenses. redundant of medical require- 3109a’s If more needed to enforce Legislature coverage, ment to offer coordinated it. provide of Insurance may or the Commissioner Moreover, the Court the construction while windfall, provides it removes no-fault insurer’s a no-fault insurer encouragement actual no long 3109a. As offer coordinated being profit premiums yield collected as the paid must out in what beyond LeBlanc State 211 v Farm Ins Dissenting Opinion Levin, J. insurers expected can be to continue to sell full coverage regardless of the fact the bene- fits out paid duplicate those of Medicare.

I 3109(1) Section was part originally- of the act as enacted. Section 3109a was added two later. years amendments, construing "regard When must be was, had for the law as it for the effect and it, purpose of the amendments changing and all provisions given must be effect and reconciled with if possible. each other Amendments and dominate law, modify the former in case of conflict”.4

A Thus the first step in the analysis omitted —one in the opinion the Court —is to determine whether Medicare a government was benefit re- 3109(1) quiring setoff under before the addition 3109a. Section is based on two model acts— UMVARA5 and MVBPIA6 —both of which require the setoff of Medicare benefits. requires

MVBPIA the setoff all re- ceived from sources other than no-fault and protection” "added in determining net loss. protection” "Added "insurance, defined insured, optional providing benefits beyond 4 Johnson, People 623-624; (1935); v 270 Mich 259 NW 343 1A Sands, Construction, 22.35, Statutory p Sutherland’s 197. 5 Reparations ULA, Uniform Motor Vehicle Accident Act. See Acts, seq. pp Civil drafted Procedural Remedial 41 et UMVARA was the National Conference on Uniform State Laws under Department Transportation. contract with the United States Act, Motor Basic Vehicle Protection Insurance see & Keeton O’Connell, Blueprint for the Basic Protection Traffic Victim: A 1965). Reforming (Little, Co, Automobile Insurance & Brown 410 Mich Dissenting Levin, J. * * * con- on terms [no-fault]

basic * * * provisions [the consistent ditions plan]”. makes particular all MVBPIA thus pri- regardless source, of their collateral mary loss not cov- unless the benefit reimburses no-fault insurance. ered only requires "social the setoff of UMVARA any compensation, security, state- workmen’s disability nonoccupational required temporary in- UMVARA, the Thus, source under surance”. distinguish which benefits to was used benefit off. were to be set distinguishing Michigan by act, benefits

required source, to is similar their to be set off particularized provide a Rather than UMVARA. generalizes, speak- Michigan however, act list, ing provided required of benefits or federal law. under state compensation to be a found workers’ This Court Michigan the intendment benefit within language general Mo- in Mathis v Interstate act’s Freight System.7 Farm v State In O’Donnell tor Co,8 the same we reached Mutual Automobile Ins Social benefits under as to survivors’ conclusion Security. Security com- benefit.9 The is a Social

Medicare mentary that even it clear to UMVARA makes language, was Medicare under its more restrictive " 'Social intended to be set off: within the benefits Security’ the federal includes all benefits including Security Act, and dis- Social ability benefits.”10_ 7 164; Freight System, 408 Mich 289 Mathis v Interstate Motor (1980).

NW2d 708 8 Co, 404 Mich 524; Automobile Ins O’Donnell v State Farm Mutual (1979). 273 NW2d 829 seq. 42 USC 401 et 11(a), ULA, pp Comment 78-79. UMVARA LeBlanc v State Farm Ins Dissenting Levin, J. suppose Michigan There is no reason to that the Legislature, enacting provi- a collateral benefits primarily UMVARA, sion modeled on intended general language its more to exclude Medicare required anything, Legisla- from the setoff. If require array ture intended to setoff a broader specified of benefits than those in UMVARA. I would consider it therefore clear that Medicare 3109(1) required by § off, are to be set changed by unless was the later addition §of 3109a.

B I concur in the Court’s conclusion that Medicare coverage” is "health accident within the meaning 3109a, §of and hence that no-fault insur- required appropriately offer, ers at reduced premium rates, deductibles and exclusions re- coverage. flect an insured’s Medicare I do not agree, simply however, that because Medicare is coverage meaning 3109a, within § of its bene- necessarily excepted fits must from the manda- 3109(1). tory required.by § setoff give provisions We should full effect to both part necessarily § unless some of incon- § sistent with 3109a. The two sections are not mutually exclusive. Governmental benefits re- quired 3109(1) may to § be set off under still be paid pursuant benefits to health and accident cov- erage must, for which the § 3109a, insurer under premium reflecting offer rates deductibles and ex- clusions. purposes §

The 3109a to facilitate the coverage coordination of no-fault with other cover- age require savings insured, on the and to that passed derived be on to the insured in the form of 410 Mich Levin, J. Dissenting Opinion problem premiums. addressed The lower policies and health and accident 3109a was coverage policies for no-fault auto both wage Duplica- expenses loss. the same and medical being premiums to insure collected were tive against duplicative risk, the same being paid elements to reimburse same were promote the 3109a added to loss. Section was duplication. of such elimination duplication way would to eliminate One coverage man- make coordination of have been to datory have No-fault insurers could 3109a. coverage, premi- required limit their been already ums, covered the insured’s to losses not general insurance, or vice health and accident Legislature, however, to make chose The versa. requiring only optional, that no-fault coordination coverage and exclu- with deductibles offer insurers coverage. reflect other sions opinion concludes that coordi- of the Court mandatory not made 3109a was nation under provide Legislature insureds wished because the obtaining option additional with coverage. thing recognize that not

It is one mandatory making coordination under 3109a purchase It insurance. allow the additional will is Legis- quite part of the another to conclude option dupli- purpose to confer the lature’s was coverage, distinguished cative that e.g., supplements insurance, income protection maximum.11 in excess of the no-fault hospitalization and medical expenses resulting not from an auto accident does supplement necessarily duplicates no- but rather coverage, opinion Court does fault expressly recognize. 500.3108; 500.3107(b); 24.13107(b); MSA 24.13108. MCL MCL MSA LeBlanc v State Farm Ins Dissenting Opinion Levin, J. if Even not making coordination under 3109a § mandatory reflects a legislative purpose to allow the purchase insurance, of additional assuring that this purpose was permit intended the purchase duplicative of rather than supplemental coverage, it requires still another jump to conclude legislative this purpose extends to giving the option of choosing duplication the very 3109(1) bars. expressly §

Such a conclusion reverses of purpose basic 3109a. Rather facilitating coordination, than § thereby 3109a duplication, facilitates not only § duplication very but sort barred under 3109(1). I am reluctant particularly legisla- to extend the tive purpose identified so far majority as to work an as amendment of part be- alternative, cause there is an equally plausible, explanation of coordination why under 3109a was not made mandatory. To have made coordination mandatory would have required de- ciding which insurer would be no- primary —the fault general insurer or the health insurer. Only the primary insurer would premium receive the dollars insureds. Rather than choose which insurer would be primary, Legislature may optional have made coordination compromise, aas in effect it to leaving each insured to decide which insurer would be primary.

We are not privy give and take of the legislative process during which it was decided to make coordination 3109a mandatory, nor do we know much about the insur- ance business or complexities, imag- real ined, which were presented Legislature it attempted to reconcile reducing objective cost consumers 410 Mich 173 by Levin, J. Dissenting and auto insurers of both care health

the desires for, provide, premiums to receive and insurers however, I coverage. majority, Unlike the primary using in persuaded Legislature, the that am recovery, duplicative language permits in the coverages duplicative encourage meant to area, pur- that such specifically care and health of implication by to amendment pose extends an 3109(1) of Me- setoff mandatory the eliminate dicare benefits.

C that the insurer’s majority agree I 3109a to offer deductibles obligation under § other health and accident exclusions for limited non-governmental of the insured is not coverage. Medicare is health accident and health coverage and thus deductibles and accident offered the insurer. by must be rate reductions required paid to be as benefits law, are within nevertheless under state or federal 3109(1). scope by the swayed has been Perhaps majority auto the benefit of allowing an insurer inequity it must out under against pay the setoff insurer did not reduce when that auto be charged savings it to reflect premium sure, reading that setoff. To be realized for a as results a windfall independent sections its cover- insurer that has not coordinated Medicare, light since age under 3109a premiums to insure insurer will have collected reimbursed against actually loss will Medicare. must, however, care special

Courts exercise or hardship when individual claims of considering a statute with such injustice caused allegedly LeBlanc v State Farm Ins Dissenting Opinion by Levin, J. purposes broad remedial no-fault act. Such society-wide programs necessarily almost work oc- injustice provide casional. system in order a fairer majority. naturally Courts tend to equities they on focus them; the case before ability, expertise authority have limited to as- system sess either the fairness of the entire or the system any effect on that individual decision. by attempting Yet to reach a fair result in the may unwittingly it, case before a court sacrifice program some measure of the fairness of the as a whole. may

Such is the case It here. be unfair that the plaintiff deprives statute the of some measure of purchased. he It essential, benefits however, viability program to the of the no-fault that costs of no-fault insurance be restrained. This primary purpose reduction of costs is the of both and 3109a. opinion noted, moreover, It should that the of admittedly removing Court, while the no-fault provides windfall, insurer’s no more actual encour- agement coverage to insurers coordinate my § 3109a than does construction. Insurers make premiums money by collecting produce will that they pay. revenue in excess of the benefits must opinion requires While the pay of the Court insurers to coverage they all benefits under for which premiums, change have collected it not does profitability providing coverage. of that Given con- profitability, expected tinued insurers can be to coverage, regardless continue to sell full of the fact they pay duplicate that the benefits will benefits received under Medicare. Legislature’s objective reducing

The basic through coordinating coverage cost of insurance may effectively by recognizing be more achieved Mich Levin, J. Dissenting Opinion responsibility Insurance Bureau has that to offer requirement for enforcement § 3109a’s compa- coverage. Requiring coordinated because simply to pay duplicative nies out benefits will premiums have been collected duplicative for the insured. reduce the cost Medicare any failure to coordinate suspect I that past have been due to either may in the reaching as not 3109a the misconstruction or, of insurance the failure likely, more health cover- general as to other agents inquire to have and offer may age policyholders I there coverage. doubt coordinated explain accept would not who many policyholders are Few want redundant people if offered. coordination or, put differently, it expense coverage medical one, despite for it. what willing pay No states, reim- duplicative Court needs opinion of the expenses. of medical bursement in effect decides that of the Court opinion as to other insurance inquire when such failure occurs, duplicative recover- there will be require duplicative payment such ies. I would not to the Insurance Bureau and would look needed to enforce if more is Legislature of no-fault insur- requirement agents the act’s sale, actually explain point ers offer and at the available, than have coordinated merely rather in- an premiums reduced reflect policies with coverage. sured’s Medicare

D I cor- of 3109a believe The construction which Bu- is in with that of the Insurance rect accord reau, agency charged administering its 3109a and act. Between the enactment of § is- date, of Insurance the Commissioner effective State LeBlanc v Farm Ins 1981] Dissenting Opinion by Levin, J. 74-2,

sued Bulletin AD providing guidelines to be in implementing followed the new law: guidelines "Attached are filing be followed when benefits your company’s coordination of program. "Basically, requires the act PA that automo- [1974 bile insurers must offer excess no-fault benefits allow who individuals have health coverage duplicates coverage under no-fault to duplication. eliminate the applies "The act personal to commercial and automo- insurance, bile but to the extent commercial rates have already been reduced to take account of workmen’s compensation benefits or statutorily required other ben- * * * efits, no further reductions required. would be Note that fined statutory coordination with programs is de- your statute. For information Medicare is a ” primary program. (Emphasis health changed.)12 Two may inferences be drawn from Bulletin AD 74-2. The Medicare, first is that like workers’ compensation, is considered agency be a statutory program whose coordination is defined 3109(1). i.e., statute, The second is that since necessarily primary, deduc- exclusions, tions and with appropriately reduced premiums, must be offered by the no-fault insurer 3109a.

This is the construction of the two sections that I adopt. would I agree with the Commissioner Insurance 3109a not provide does authority to ignore the character of Medicare as a statuto- rily required benefit.

Insurers who fail to offer premium reduced rates on based "other coverage” accident and health (issued Department ED-1), April Insurance Bulletin AD 74-2 15, 1974. 410 Mich 173 by Levin, J. Dissenting Opinion provi- setoff mandatory falls within the also

which 3109(1) pro- to compliance subject are sions Insurance. ceedings the Commissioner E between the Court drawn The distinction All insur- is not sound. "coverage” "benefits” and contin- particular a "coverage” against ance is occurs, insurer is contingency If that gency. 3109(1) re- Section pay "benefits”. obligated to motor paid "benefits” quires the coordination occurs. after an accident victims vehicle accident offered and "coverages” speaks 3109a Section subject It is the the event. before premiums paid Legislature’s dictated provisions the two not a words; choice does evidence choice of paid pursuant intent to remove legislative and accident health governmental to all other applicable mandatory setoff from the or federal state kinds of benefits law.

Further, establishes the Court’s construction untenable. prove I believe will distinction 3109(1) mutually finding that 3109a and By exclusive, a determination requires the Court is to benefit be whether anyy'particular results If the "coverage”. benefit considered if required; is "coverage”, no setoff under § not, required. it setoff does is compen- "coverage”? Could workers’ What insurance cover- sation, considered example, Mathis, Yet, su- age injuries? for work-related must be compensation we held that workers’ pra, 3109(1). departs from the The Court set off under § dis- governmental/non-governmental intelligible 3109(1) and previously tinction established of a distinction in favor by this Court maintained State LeBlanc v Farm Ins Dissenting Opinion by Levin, J. meaning whose is uncertain and for which the act provides guidance. little

II Ryan Justice states that Part B Medicare bene- (covering expenses) fits medical should be treated 3109(1) differently § under than Part A Medicare (covering hospital expenses). benefits In contrast qualified persons A, with Part under which all participation benefits, receive tary, in Part B is volun- by premiums paid by with half the met cost voluntary participants and the other half governmental appropriations. Ryan Justice ar- gues, hybrid therefore, B that Part has a charac- supported by ter: so much of Part B benefits as are premiums private have the character of requiring 3109(1); not setoff under supported by so much of Part B benefits as are government appropriations have the character of provided required provided ”[b]enefits or to be * * * government”, under the laws of requiring the federal 3109(1). setoff 3109(1) might While a such distinction make a statute, better it would also make it a different statute. We must take the statute as it is. B Part Medicare benefits come within the literal terms 3109(1) as benefits under federal law. required showing legislative Setoff is absent a of a purpose justifying judicial departure from this meaning. showing literal made here. Such a has not been My colleague’s gov- construction would limit the thereby setoff, ernmental benefits available for increasing the costs of no-fault insurance. a Absent persuasive showing legislative that such was the purpose, language I would enforce the literal 3109(1), primary purpose §of cost reduction. 410 Mich Dissenting Opinion Levin, J. legisla- history legislative show a The does governmental distinguish purpose benefits tive voluntary according participation is to whether showing, beyond involuntary. it is Without such governmental authority ben- our to so differentiate efits. supra, O’Donnell, the distinction forth As set provided under law §in between legislative of a was the result

and other benefits compromise. Legislature to reduce wished requiring setoff of no-fault cost still while collateral sources benefits received protection needing allowing persons income supplemen- to obtain máximums of no-fault excess history support legislative would This tal benefits. excepting from benefits certain sup- only requirement if those benefits were setoff plemental provide designed benefits and were to no-fault protection where a no- income additional persons ceiling would leave some benefit fault underinsured. provide bene- medical B benefits

Part Medicare protection. Further, no-fault medi- fits, not income pro- no-fault income benefits, contrast cal subject any benefits, benefit are not tection ceiling, come within thus cannot be said to supplemen- allowing private legislative purpose of Finally, reim- reim- Part B Medicare tation. expenses as are the same medical burse therefore and are no-fault bursed supplemental. duplicative rather than fact Ill 3109(1) argument uncon- insured’s applied Medicare benefits assumes stitutional they that section if such benefits are within recipients, who § 3109a. Medicare cannot be within 223 LeBlanc v State Farm Ins Dissenting Levin, J. premiums paid have for such as well as coverage, for no-fault would bear the entire cost the coordination of Medicare benefits with no-fault benefits in the form of a setoff but would receive a portion corresponding only benefit in the form savings insurance pur- chasing public large. at Other health and accident insureds would receive the full benefit of coordina- through tion no-fault premium reductions based on deductibles reasonably related to their health coverage. and accident other health and

Medicare insureds as well as must, however, accident insureds be offered pre- reflecting mium rates deductibles and exclusions coverage. related to Medicare Since Medicare in- sureds derive the same benefit from coordination insureds, all as do other health and accident there is no differential treatment amounting to denial equal protection.13 Co, 472; Casualty App v In Neumann Transit Mich NW2d (1980), Appeals Court held that the distinction in § voluntarily purchased private between tarily insurance benefits and volun- purchased governmental rationally insurance benefits was not legitimate governmental purpose, related to a and therefore violated equal protection. here, argument While LeBlanc has made this the issue should be addressed. disagree Appeals I with the Court of conclusion in Neumann. The Legislature rationally governmental could decided have that most financed, programs part, by public benefit are in whole or in monies designed, part, purposes in whole or in to achieve social (here insurance) beyond simply providing a a fee. service Distin- guishing governmental programs private programs such does analysis Equal not violate the "rational relation” under the Protec- equal standards, protection tion Clause. Under that least strict of Legislature portion precisely except not need fine tune its distinction governmental programs degree any if indeed benefit funded public public policy, any with monies or infused with such programs exist. Further, Legislature rationally distinguish gov- could between agencies payors private companies ernmental payors. certainty, not be influenced and insurance as only solvency governmental payor Not is the a virtual may presumed governmental payor but it that the will profit-maintenance any considerations in deter- mining participant particular a a whether is entitled to benefit or amount of benefits. 173 410 Mich

224 Dissenting Opinion Ryan, J. the Court of affirm decision I would Appeals. Levin,

Kavanagh, J., J. concurred with (dissenting). with Ryan, my I am in accord J. relationship between study Brother Levin’s act1 of our no-fault and 3109a §§ I do not that follow therefrom. and the conclusions however, monolithic treatment agree, with his fails to discriminate Medicare; a treatment comprises programs Medicare between the two view, correct result this and, in a precludes my case. sub- 15-year-old program is a federal

Medicare security of the social sumed within the structure medical finance certain designed and system2 65 old and persons years expenses incurred A Parts and parts, It of two discrete over. consists demonstrated, charac- disparate B.3 As will be respect parts, especially ter of the compels they capitalized, manner for each. disparate legal consequences "Hospital Insurance Benefits Part A4 is entitled incorporated It "is within Aged for and Disabled”. Contributions existing security patterns. social * * * [Eligibility mandatory. are universal and [is] for 65 and over who meet right persons only bene- required security conditions cash social fits”.5_ 1 (1) (1); and MCL MCL 500.3109 subd 24.13109 subd MSA 24.13109(1). 500.3109a; MSA seq. 42 USC et comprising program two Medicare a dual structure ''[T]he benefits, coverage, separate programs, financ distinct as Somers, ing, Hospitals and the A. and administration”. H. Somers & Brookings Prospects (Washington In DC: —Issues

stitution, 1967), p 19. 442 USC 1395c-1395i-2. Somers, Hospitals H. & A. Medicare and Somers —Issues v State Farm LeBlanc Ins 225 Dissenting Opinion Ryan, J. the Washington Supreme As Court observed in Witherspoon Co, v St Paul Fire & Marine Ins 86 (1976): 641, 645; Wash 2d 548 P2d 305 (hospitalization) "Part A by- are not obtained voluntarily beneficiaries who enter into a contract with government. the federal Part A as paid benefits are a result of mandatory payroll self-employment or taxes persons those 65 and over who for meet conditions added.) Security (Emphasis Social benefits.” Accordingly, it been A6 has declared that Part benefits "are in the nature of disbursements made in furtherance of the social welfare objectives government”. 70-341, the Federal Rev Rul 1970-2 " Cum Bull 31. This amounts 'social welfare Michigan Imvris v Mutual ”. Millers legislation’ (1972). Co, Ins 406, 410; 39 Mich 198 36 App NW2d term Part A suggests, compre As that hends forced participation. B,7

In stark contrast to Part A stands Part entitled, Insur- "Supplementary is Medical Aged perti- ance Benefits for and Disabled”. The nent statute states: _ (1967), Prospects pp 19-20. "provides against protection hospital Part A basic the costs of and posthospital related services”. USC 1395c.This includes: beds) (2-4 meals, semiprivate special including "A room and all

diets; nursing services; "Routine "Special units, coronary care such as intensive unit and care care unit; "Drugs hospital inpatient; you furnished while are an "Operating rooms; recovery and physical therapy, occupational such "Rehabilitation services therapy, speech pathology; treatment; "X-ray radiology diagnosis other services for hospital Dep’t your "Lab tests included in bill.” United States Health, Welfare, Education & Pub No. SSA 78-10039. 1395j-1395w. 7 42USC 410 Mich Dissenting Ryan, J. voluntary insurance hereby established "There in accor- provide insurance benefíts medical program aged and part this provisions dance disabled such to enroll individuals who elect by payments premium ñnanced program, to be appro- from funds together with contributions enrollees 1395j 42 USC priated by Federal Government.” added).8 (emphasis And, explained, as further plan, is B, medical benefits supplementary

"Part 65 or over person aged open any voluntary and aliens) secu- irrespective of social (except nonresident current basis. paid on a rity Premiums are status. plans made the two are payments under Benefit (called 'carri- 'intermediaries’ different administrative B).” Somers, Medicare A. H. Somers & ers’ under Part (Washington, Prospects Hospitals and the —Issues 1967), Institution, pp 19-20. Brookings DC: The that Part foregoing, apparent, light It is has attributes respects in important B Medicare Partici insurance. medical private associated with gener are voluntary and benefits pation entirely ated, partici premiums paid in part, by made agree I the observation pants. with B that "Part Washington Supreme Court of [has] in Part A”. Wither aspect present 'contract’ Co, 86 Wash 2d & Marine Ins v St Paul Fire spoon Bankers 646; 305. Black v American 548 P2d See 1972) ("The (Tex, Co, 478 439 Ins SW2d many is similar program insurance programs hospital respects services, outpatient surgical covers doctors’ medical and "[Part B] services, speech pathology outpatient physical therapy hospital services, independent equipment, labo services from durable medical services, care, ratories, and a number home health ambulance Health, supplies.” Dep’t of United States other health services and Education Welfare, & No. SSA 76-10037. Pub LeBlanc v State Farm Ins Dissenting Opinion by Ryan, J. private companies”); by many sold Neu- App Casualty Co, 472; mann v Transit 96 Mich (1980). NW2d sum, In the salient of "social welfare” attributes mandatory participation in and fund- insurance — ing program of a administered de- signed mitigate disparities the economic of a society present A, in Part whereas attributes —are present private insurance contracts are in Part imparting private preponderately B, to it a charac- question ter. The now is whether this distinction is any legal significance respect appli- 3109(1) §§of and 3109a of the no-fault act9 cation to Medicare. "[b]enefits mandates set-off of all

Section provided required to be under the laws government”. any or the federal Justice state A all Medicare Part and believes Levin admittedly, This, B, is must be set off. the Part reading of that ensues from a literal result settled, however, It that we are not statute. is well meaning statutory to the literal lan- confined countervailing legislative guage in the face of a intent.10 aspect recently

An of that intent was discerned in v State Farm Mutual Automobile Ins O’Donnell (1979): Co, 524, 544; 404 Mich 273 NW2d 829 benefits shall the laws of ibles and exclusions coverage on the insured.” MCL purpose legislative from the statute should vation, "Sec. 3109a. An "Sec. 3109. injury.” "[T]he 387 Mich personal protection intent. If there is a proper MCL any offer, prevail (1) court state or the federal 495, 499; 500.3109 Benefits construction of insurer at reasonably over its strict letter.” Aikens v appropriately interpreting 198 NW2d 304 subd MSA provided providing personal protection insurance benefits 500.3109a; conflict, (1); related to other any a statute reduced required statute is 24.13109 (1972). (Citations MSA spirit premium is to 24.13109(1). otherwise to be health and accident shall be subtracted and subd for the court. The give Dep’t Conser- provided purpose of the (1). rates, effect to the payable omitted.) deduct- 410 Mich Dissenting Opinion Ryan, J. 3109(1) Legisla- history of indicates "The § govern- require a set-off of those ture’s intent was pay- duplicated the no-fault benefits ment benefits that able because of the accident contain the cost of basic insurance.” added). thereby reduce or (emphasis

Id. And, demonstrates, as Justice correctly Levin specific mechanism for the reduction of the cost 3109a, requires is the no- basic insurance reduced charge "appropriately fault insurer However, 3109a serves premium although rates”. no-fault insurance with "other to coordinate insured”, health and accident on the governmental or non- whether governmental, encouraging with a view to elimina- it overlapping coverage, proscribe tion of does not in- overlap private between no-fault and medical O’Donnell, 3109a per- surance. As we found "persons exceeding mits with needs the benefits no-fault to obtain the extra [require]”. 404 Mich 550. coverage they On hand, proscribe overlap other does be- "government tween no-fault benefits”. The arises, question disparate is the treat- what end ment of "government benefits”? apparent Legislature

It is that our intended to overlapping eliminate to the extent participate pro- insured must in the involuntarily Thus, grams creating overlap. in the case of insurance and social both manda- security, tory government programs, the insured has no overlapping coverage. choice but to be the object And since the insured must in one form or pay, another, she, duplicative coverage, by for the he or government programs, the confluence of unrelated is forced to pay more insurance than circum- view, This, require. my quite clearly stances is 3109(1) the bane intended is redress. One State LeBlanc v Farm Ins 229 Dissenting by Ryan, J. but not required, allowed, should be to obtain duplicative coverage. B

Part Medicare to the extent they are product contributions, of voluntary do not entail the harm avoid, was enacted to and, therefore, should not be subject to the manda- tory set-off of that provision.11 note,

It important however, that Part B benefits derive from both and involun- voluntary contributions. tary supplementary governmental insurance benefit "[T]he program premium is funded both payments [Part B]

by the appropriated enrollees and funds by the Federal government. 1395j. 42 USC The amount premi- of the paid by ums the enrollees is calculated pay for one 1395r(b)(2).” program. half of the costs of the 42 USC Co, Casualty Neumann v Transit App Mich 479. It follows that only one-half of the pro- B, vided under Part the half attributable premiums voluntary monthly subscribers,12 can justifiably escape purview of the manda- 3109(1). tory set-off of Any less set-off would result in a windfall for those subscribers.

This result is in accord with that reached our Neumann v Transit Casualty Court of Appeals Co, (1980). App 472; Mich 292 NW2d 555 here, result however, is the product of statutory construction, not, in Neumann, the mandate of the Equal Protection Clause.13 I do Accordingly, not reach the question constitutional answered the Neumann panel.

Because it is unclear under part and to foregoing implies, agree As the I that Part A Justice Levin benefits must be set off from no-fault benefits. time, monthly premium At this is $9.60. 13Nevertheless, noteworthy predicate equal it is the panel’s for the protection analysis was the Neumann distinction between "purchased governmental efits”, gratia governmental benefits” and "ex ben- "significant”. App which was found to be 96 Mich 478. The 410 Mich Dissenting Ryan, J. what extent the instant Medicare benefits were paid,14 I would remand to the trial court for a question entry determination of that and an judgment opinion. consistent with this former, panel, furthermore, Part B were at issue in that case. The Neumann concluding was correct in that distinction followed from the rationale utilized in O’Donnell v State Farm Co, (1979). 524; Mutual Automobile Ins 404 Mich 273 NW2d 829 14See Chief Justice Coleman’s fn 8.

Case Details

Case Name: LeBlanc v. State Farm Mutual Automobile Insurance

Court Name: Michigan Supreme Court

Date Published: Feb 3, 1981

Citation: 301 N.W.2d 775

Docket Number: 62439, (Calendar No. 10)

Court Abbreviation: Mich.