The plaintiff, Sophie Nash, was severely injured in an automobile colli *570 sion on January 15, 1977. The defendant, Detroit Automobile Inter-Insurance Exchange, provided insurance benefits to the plaintiff, pursuant to her automobile no-fault insurance policy. The defendant deducted Medicare payments that the plaintiff received from the amount of coverage that it provided.
On August 29, 1977, the plaintiff initiated suit to recover the $57,253.19 deducted from the plaintiff’s insurance benefits. This suit was held in abeyance while the Supreme Court of Michigan decided the same issue in another case. On February 3, 1981, the Supreme Court ruled in
LeBlanc v State Farm Mutual Automobile Ins Co,
On June 30, 1981, the defendant paid the plaintiff the $57,253.19 that it had previously withheld. A dispute arose between the parties regarding whether the plaintiff was entitled to collect on the withheld payments both interest pursuant to the provisions of the automobile no-fault insurance act, MCL 500.3142; MSA 24.13142, and judgment interest, pursuant to MCL 600.6013; MSA 27A.6013. The plaintiff filed a motion for summary judgment, which was granted, awarding the plaintiff both types of interest. Defendant appeals by right.
First, we must determine if the defendant incurred a 12% interest penalty when it withheld a portion of PIP benefits from the plaintiff in excess of 30 days in contravention of MCL 500.3142; MSA 24.13142. The defendant asserts that interest should only be charged as a penalty for wilful procrastination and that, accordingly, interest *571 should not be assessed when the carrier erroneously misinterpreted a statute in good faith. Conversely, the plaintiff claims that the 12% interest charge should be levied whenever the insurer has failed to pay benefits on time, regardless of the reason. The plaintiffs argument is based on the theory that the carrier assumes the risk of being assessed interest if its rejection of a claim proves to be wrongful. This dispute is an issue of first impression in this jurisdiction.
We begin our task of construing the statute by examining its text. MCL 500.3142; MSA 24.13142 states:
"(1) Personal protection insurance benefits are payable as loss accrues.
"(2) Personal protection insurance benefits are overdue if not paid within 30 days after an insurer receives reasonable proof of the fact and of the amount of loss sustained. If reasonable proof is not supplied as to the entire claim, the amount supported by reasonable proof is overdue if not paid within 30 days after the proof is received by the insurer. Any part of the remainder of the claim that is later supported by reasonable proof is overdue if not paid within 30 days after the proof is received by the insurer. For the purpose of calculating the extent to which benefits are overdue, payment shall be treated as made on the date a draft or other valid instrument was placed in the United States mail in a properly addressed, postpaid envelope, or, if not so posted, on the date of delivery.
"(3) An overdue payment bears simple interest at the rate of 12% per annum.”
The rules of statutory construction require us to determine and enforce the intent of the Legislature. The spirit and purpose of the statute should prevail over its strict letter.
Richards v American Fellowship Mutual Ins Co,
Section 3142(2) provides that personal protection insurance benefits are overdue if not paid within 30 days after the insurer receives reasonable proof of the fact of injury and of the amount of loss sustained. Payments are' not overdue if they are not supported by reasonable proof. The facts in the current case establish that the plaintiff provided reasonable and verifiable proof in support of her claim for compensation.
The defendant did not challenge the reasonableness of the plaintiff’s claim or the accuracy of the proof. Instead, the defendant asserted that it was
legally
entitled to subtract Medicare benefits from its coverage. Since this position proved to be unjustified, the benefits were overdue. Interest is owing because the defendant’s defense is not recognized by § 3142(2). The plaintiff’s right to interest is not dependent upon the presence or absence of the insurer’s good faith in rejecting a claim. A carrier rejects a claim at its own risk. It will owe interest if its interpretation of the statute proves to be erroneous.
Carrillo v State Farm Mutual Automobile Ins Co,
96 Nev 793;
Finally, the defendant claims that the trial court erred in awarding the 6% judgment interest, MCL 600.6013; MSA 27A.6013, in addition to the 12% penalty interest pursuant to MCL 500.3142; MSA 24.13142. This dispute was resolved by the following passage from our decision in
Wood v Detroit Automobile Inter-Ins Exchange,
"The purpose of the six percent interest statute is to compensate the prevailing party for the expenses incurred in bringing an action and for the delay in receiving money damages. Schwartz v Piper Aircraft Corp,90 Mich App 324 , 326;282 NW2d 306 (1979); Waldrop v Rodery,34 Mich App 1 , 4;190 NW2d 691 (1979). The 12 percent interest provision is intended to penalize the recalcitrant insurer rather than compensate the claimant. See O J Enterprises, Inc v Ins Co of North America,96 Mich App 271 ;292 NW2d 207 (1980) (similar purpose intended under the Insurance Code, MCL 500.2006; MSA 24.12006). We do not consider these statutes to be mutually exclusive. Therefore, the trial court correctly ordered both the six percent and the 12 percent interest.”
Recently, the Supreme Court affirmed this holding in
Wood v Detroit Automobile Inter-Ins Exchange,
Accordingly, we conclude that the trial court properly awarded the plaintiff both the 12% no-fault interest and the 6% judgment interest.
Affirmed. Costs to plaintiff.