*1
Mich 524
404
AUTOMOBILE
FARM MUTUAL
v STATE
O’DONNELL
COMPANY
INSURANCE
13).
(Calendar
3,
Argued
No.
March
No. 58833.
Decided
Docket
Rehearing
4,
Mich 1103.
January
denied 406
1979.
injuries
accident while
Gary
in an automobile
died
O’Donnell
policy
defend-
issued
by a no-fault insurance
he was covered
Company. His
Insurance
Automobile
Farm Mutual
ant State
brought
O’Donnell,
wife,
their children
Heather E.
of insurance
alleging
of the contract
complaint
breach
law,
constitutionality
no-fault insurance
challenging
paid
294,
provides
of benefits
for reduction
which
1972 PA
(Social
government benefits
policy by
the amount
under the
case)
plain-
by the
received
in this
survivors’
J.,
Court,
Campbell,
Ross W.
Circuit
Washtenaw
tiffs. The
Ap-
summary judgment
The Court
granted
for defendant.
P.J.,
Burns,
(Bashara,
dis-
peals,
T. M.
JJ.
J. Brennan and
V.
equal
ground
violates
senting),
that the statute
on the
reversed
Michigan Con-
guarantees
States and
protection
of the United
purchase pri-
persons
who cannot afford
because
stitutions
required
coverage
no-fault auto-
addition
vate insurance
Headnotes
for Points in
References
2d,
10, 19-21,
6,
Topic
No-Fault Insurance
[1,
Service Am Jur
23]New
[2,
[4,
[5,
[7]
[9,
[11,
[18]
[15]
[16,
[14,
[24]
[25]
New
What
New
3]
8]
New
13]
17]
21,
New
12]
applicable to the states.
mobile insurance less in will receive benefits than who (Docket 25429). purchase do additional insurance No. Defend- appeals. ant Held: Legislature’s judgment recipients *2 differently recipients benefits should be treated from of the government supported by is benefits a rational basis and should promotes rationally therefore be sustained. This distinction the legitimate legislative objectives enabling persons of with eco- wages exceeding permit- nomic needs or the maximum benefits supplemen- ted under the no-fault insurance to law obtain the coverage they placing tal need and of the burden of such extra coverage directly persons, spreading on those instead of it throughout requires the ranks of no-fault insureds. The statute Security a set-off of the Federal Social survivors’ benefits re- plaintiffs arbitrary ceived the but that set-off is not because paid the benefits are as a result of the same accident and duplicate varying degrees the no-fault benefits otherwise persons government due. All who receive redundant survivors’ arising way benefits from one accident are treated in the same guaranteed and all are a maximum survivors’ loss benefit of $1,000 per years. provision, month for three The set-off there- fore, does not violate the Dtie Process Clause of the state or expresses opinion Federal Constitutions. The Court no on cases involving possible government a set-off of other benefits. proper approach 1. The for a court when confronted with an process challenge or due to socioeconomic legislation such as the no-fault insurance act is to restrict its inquiry any to whether state of facts either known or which reasonably support could be assumed affords for it. Where the legislative judgment supported facts, although is the such may "debatable”, legislative judgment facts be must be accepted. 2. legislation pursu- The test to determine whether enacted police power comports process ant to the with due is whether legislation permissible bears a reasonable relation to a legislative objective. The test to determine whether a statute pursuant police power comports equal enacted to the with protection is, essentially, equal the same. Under traditional protection analysis, legislative a classification must be sus- tained, rationally if the classification itself is related to a legitimate governmental recognizes pre- interest. This test principle separation powers, serves the constitutional of system which forms the fundamental framework of our government. purpose judiciary Its is to make certain that the judgment does not substitute its Mich long Legislature’s to best So what is or what is wisest. as the judgment supported by basis, is a rational reasonable choices made and distinctions drawn are constitutional. In short, superlegislature judge the Court does not sit as a desirability policy wisdom or determinations. The Court sits determine whether there is a rational basis for the is, Legislature’s judgment. judgment If there then that must be sustained. history provision 3. The of the set-off of the no-fault insur- Legislature’s require ance act indicates that the was intent duplicated set-off of those benefits that the no-fault payable thereby because of the accident and reduce or Security contain the cost of basic insurance. The Social survi- plaintiffs duplicated vors’ benefits the received this case they survivors’ benefits received from the decedent’s no-fault policy. paid The Federal Social benefits were as a result of the decedent’s fatal automobile accident and substantially purpose served same as the no-fault insurance benefits. provision arbitrary 4. The set-off it does have a promotes legislative objectives rational basis. It the valid *3 insuring payment up $1,000 per for economic to loss for month years attempting three and of to reduce or contain the of cost by eliminating no-fault duplica- insurance some the benefit chosen, tion that would otherwise occur. The means a set-off of duplicative government benefits, rationally is related to that companies end. It reduces the amount that the insurance must out, pay making possible it for them to reduce the amount that they charge, only must it and does so in those situations where Thus, bar, the benefits are redundant. as in the case at all $1,000 eligible up per beneficiaries are for to month for three years compensate of survivors’ benefits to for their loss. Social interrupted. Having survivors’ benefits are never a basis, provision rational the set-off of the no-fault act insurance does not violate the Due Process Clause of the state or Federal Constitutions. Legislature 5. The mere fact the that to a has chosen draw government distinction recipients private between benefit recipients provision benefit does not mean the that set-off Equal no-fault insurance act violates the Protection Clause.
First-party compul- no-fault automobile insurance made was Therefore, sory. important premiums it was that the to be charged Otherwise, possible. poor be maintained as low as the disadvantaged people might and the to obtain the be able necessary Legislature compromise guar- insurance. The chose a State Farm Ins 1) $1,000 per up antee of to month survivors’ loss benefits to 2) provide adequate compensation people, a for most set-off of duplicative against government benefits no-fault benefits other- needing possible persons it wise due to make for all no-fault 3) cost, requirement it insurance to obtain at less no set-off private to for health or accident insurance benefits enable $1,000 persons per pay to the with need in excess of month premiums voluntary .coverage. This full for extension of promotes legislative objectives. It at- solution several valid tempts every- no-fault for to reduce the cost of basic insurance possible persons and to to one make it for most obtain most coverage they the need. necessary agree 6. It is not that the Court with the wisdom of judgmеnts by Legislature uphold made the in order to necessary supposed the act. is it section of Nor that benefi- Legislature cial effects envisioned be verified at this precisely regulation time. It is because in the economic field long-term developments often deals with that the Court treats great Legislature legislation deference. In time such with originally may associated with the decide benefits although statutory set-off scheme have not materialized or that they they are not worth the social and have materialized economic costs. The rational basis for the distinctions drawn recipients of between the recipients primarily the desire and the benefits — possible persons requirements exceeding make it for with benefits assured the no-fault insurance act to obtain the coverage they burdening other no-fault extra need without purchasers requires holding a the set-off is — Equal constitutional under the Protection Clause. permits voluntary 7. The amendment which a set-off overlapping private health or accident insurance benefits against opposed 1974 PA no-fault insurance benefits in set-off, mandatory justified by goal making possible it persons greater coverage they require with needs obtain through pay on de- reduced rates the no-fault insurance approved by Commis- ductibles and exclusions the Insurance persons sioner. The fact receive additional that some can still *4 benefits does not mean the statute is unconstitutional. Mathe- precision possible required. matical is neither nor The amend- promotes legislative objective reducing dupli- ment the valid that, benefits; rationally cative the means chosen are related to end; supported by and the distinctions drawn are a rational basis. This amendment is also constitutional. Legislature statutorily 8. In this has declared that case policy certain set-offs to public state now favors of this authority recovery. has no to invalidate Court insurance The long supported legislative it some so is decision occasion, its limited no within Court has rational basis. The Constitution, legiti- to consider whether function under the Legislature might have been better served purposes of the mate insurance, recipients private by applying the same set-off to Legisla- apprehensions judge of the for itself whether the toor legiti- goals sought justified the facts. If the ture were mate, rationally adopted to is related and the classification Legislature goals, is the action of the achievement of those then arbitrary the Due Prоcess Clause. as to violate not so Reversed. Williams, Fitzgerald Moody, would with Justices Justice Appeals judgment reasons: Court of for these of the
affirm duplicative and the maintenance benefits The elimination permissible subjects premium of the costs are or reduction of However, statutory legislative judgment. classifica- neither the by the to the means selected tions drawn nor provision judgment of the no-fault insur- its in the effectuate per- government which benefits from ance act subtracts injury payable protection for the rea- benefits otherwise sonal purposes legitimate governmental sonably of the relate to the scheme, face, plain- provision. its denies the This on Therefore, process equal protection of the laws. tiffs due provision implements the statu- the insurance contract which public policy. tory decla- as offensive to This scheme is invalid justice, given unconstitutionality, in the interest of ration of only a limited retroactive effect. correctly plaintiffs that the have not 1. The trial court ruled policy alleged the insurance a breach of contract because provided paid the extent of for a reduction of benefits received. benefits apply proscriptions 2. The Fourteenth Amendment merely conduct. the actions of the state and not legislation applies which Fourteenth to all state Amendment undisputed equal protection. impairs process or It is denies due provision policy which that the basis of the in the insurance reduces the no-fault is the enactment consequently plan. no-fault This action and is state failing the trial court erred in to consider the constitutional questions raised. plaintiffs injury has been 3. The have a claim for which Therefore, pursuant this is a case of to the no-fault act. reduced *5 Farm v State Ins standing they pray declara- controversy, for actual and have tory relief. process equal protection tests 4. due and The "traditional” challenges applicable statu- to constitutional the various are essentially tory tests of the no-fault act. These are schemes a bears must determine first whether the statute the court permissible legislative objective, and relation to a reasonable the under the means chosen or classifications second whether legitimate rationally governmental a the related to statute are Legislature may of take a class interest. The not natural two, arbitrarily persons, split enact different it in and then However, a there is for of thе classes. when rules the treatment of or between the situation circumstances natural difference classes, Legislature enjoys range of discre- wide the two the selecting, classifying. distinguishing, It is suificient in and tion palpably arbitrary. practical if a is and classification plaintiffs of rebut- 5. The in this must bear the burden case constitutionality. ting The presumption of the the statute’s expressed preference previously its for a record based Court has statutory considering findings the on fact when an attack on of However, plaintiffs may act. schemes the no-fault insurance legal arguments constitutionality purely if the attack its legislative arbitrary judgment to render is so and irrational as legislation face. the unconstitutional on its purpose enacting provision the 6. The set-off injury question duplicate the same is to eliminate benefits for Considering premiums. the or to no-fault reduce insurance act, provide comprehensive legislative objective of the entire assured, adequate, and victims of motor vehicle accidents losses, prompt reparation or for and to reduce certain economic insureds, purposes rising premiums by contain borne all permissible legislative statutory this an exercise judgment police power rationally How- based. under the ever, provi- the classification drawn is, therefore, logic. requisite is sion without the force of It unconstitutionally discriminatory arbitrary where contri- governmental butions have been made the insured benefits, benefits, such as Federal Social survivors’ statutory provision, off because which are to be set under the by the the scheme reduces the no-fault insurance benefits does not amount of state or benefits received but Federal require private, insur- reduction amount of collateral face, statutory provision its violates ance benefits. On no- where classes traditional mandates both 1) pay receiving the same fault collateral benefits beneficiaries Mich 2) coverage, premium no-fault for the same receive a 3) reduction, scheme, premium any, if from the common securing coverage authorizing contributed to monetar^y collateral benefits. solely on the distinction between the two classes is based source compensation paid, from which the collateral an irrational distinction. *6 language provision statutory 7. The of the set-off broad is lacking unconstitutionally process it is over- due because rationally
broad and devoid of means
related to an otherwise
Although
gov-
legitimate legislative purpose.
payment of both
may
injury
for
ernmental and no-fault insurance benefits
be
an
arising
compensable
from
automobile accident which results
insured,
in economic loss to the
the
scheme also
permits
irrationally
government
the set-off of
benefits which
accident,
pension
disability
are not related to the
as
such
and
plans, and veterans’ benefits.
provision
policy
8. The
of
no-fault
the
automobile insurance
government
which reduces the benefits to the
of
extent
benefits
public policy.
is invalid
received
as offensive to
justice,
9. In the interests of
the declaration that the set-off
provision
given only
is unconstitutional must be
limited retro-
1)
pending-
active effect to
this
all
case and
lower court cases
2)
decided,
yet
which had raised the issue but had not
been
all
3)
appropriate
issue,
subsequently
cases
future
which
raise the
any
cases in which a retrial on remand because of
other issue
opinion
is to occur
after
date of this
where the set-off issue
4)
raised,
has been
cases in which the issue has been
adequately preserved
pending
appeal
eligible
which are
on
appeal
opinion.
after the
date of
Moody agreed
general analysis employed by
Justice
with the
However,
signed
opinion.
Justice Williams and therefore
his
he
judgment concerning
scope
Legislature’s
reserves
duplicative recovery
any
intent
to avoid
distinction be-
tween contributive and non-contributive
benefits.
(1976)
487;
App
70 Mich
Opinion of the Court — — 1. Constitutional Law No-Fault Insurance Reduction of — Equal Benefits Protection. Legislature’s judgment The in the no-fault insurance act that the recipients of health or accident should be benefits differently recipients government treated from benefits reducing supported by no-fault benefits is a rational basis State Farm Ins Equal Protection therefore under should be sustained legitimate legis- Clause; rationally promotes this distinction persons objectives enabling needs or with economic lative permitted exceeding wages under the the maximum benefits coverage supplemental they act to obtain the no-fault coverage directly placing extra need and of the burden of such throughout spreading persons, it the no- those instead on 1, (US Const, XIV; MCL Am Const art fault insureds 24.13109[1]). 500.3109[1];MSA — — — of Benefits 2. Reduction No-Fault Insurance Insurance Security. Social provision act which reduces no-fault insurance The the benefi- extent benefits which benefits Security requires ciary Federal Social a set-off of receives beneficiary by the the result of а received survivors’ benefits (MCL 500.3109[1]; accident death an automobile decedent’s 24.13109[1]). MSA — — Reduction of 3. Constitutional Law No-Fault Insurance — Due Process. Benefits requires provision act which a set- of the no-fault insurance against Security the no- Social survivors’ benefits off of Federal arbitrary beneficiary paid to the fault insurance benefits paid as a result of the same the Social because *7 degrees duplicate varying the no-fault benefits accident and due; persons government who redundant otherwise all receive arising the from accident are treated survivors’ benefits one guaranteed a loss same and all are maximum survivors’ benefit therefore, years; provision per month three $1000 of for (US Const, XIV; does not violate Due Process Clause Am 1963, 1, 17; 24.13109[1]). 500.3109[1]; Const art MCL MSA § — — — 4. Law No-Fault Due Process Constitutional Insurance Equal Protection. constitutionally Legislature The test determine whether the police power process equal its in accord with due exercised protection enacting particular the no-fault a scheme under legislation is a reasonable insurance act whether bears (US Const, permissible legislative objective Am relation to a 294). XIV; 1963, 1, 2, 17; Const art PA §§ — Separation — 5. Powers. Law Statutes Constitutional judgment judiciary may that of the its for The substitute long legisla- Legislature best or wisest so as what is basis; judgment supported by rational or reasonable tive is Mich recognizes preserves principle the constitutional this test 2). (Const 1963, 3, separation powers art — — No-Fault Reduction of 6. Constitutional Law Insurance — Benefits Due Process. Legislature’s providing a reduction of no-fault The intent government benefits which insurance benefits the amount of beneficiary require a of those benefits receives was to set-off payable duplicated no-fault benefits because of the thereby or contain the cost of basic insur- accident and reduce ance, legislative objective, a valid and the does not violate the Due Process Clause because means benefits, chosen, duplicative is ration- a set-off of (US Const, 1963, XIV; ally objective Am Const related to that 1, 17; 500.3109[1]; 24.13109[1]). art MCL MSA — — 7. Law No-Fault Insurance Reduction of Constitutional — — Equal Benefits Due Process Protection. provision requires The of the no-fault insurance act which an offer, rates, appropriately premium at reduced de- insurer reasonably ductibles and exclusions related to other health and coverage promotes legislative on the insured the valid accident benefits, objective reducing duplicative the means chоsen is end, rationally related to that and the distinctions drawn are basis; supported by provision a rational therefore the does not process though violate and due even some persons through slip provision can still colander (MCL 500.3109a; 24.13109[1]). receive additional benefits MSA — — 8. Constitutional Law No-Fault Reduction of Insurance Policy. — Benefits Public statutorily public policy has declared that the against this state now favors certain set-offs no-fault insurance benefits; authority courts no have to invalidate that Equal decision under the Protection or Due Process Clauses so long supported by as it some rational relation to some (US Const, 1963, legitimate legislative goals XIV; Am Const art 2, 17; 500.3109[1]; 24.13109[1]). MCL MSA §§ Dissenting Opinion Williams, J. Declaratory — — 9. Constitutional Law No-Fault Insurance Judgment Standing. — *8 injury Plaintiffs who have a claim for under the no-fault insur- pursuant ance act and whose beneñts have been reduced they that act the state or amounts received in beneñts from State Farm Ins declaratory standing programs relief on have seek Federal Due the Process and the scheme violates whether Michigan Equal United States Protection Clauses 1, (US 1963, 2, 17; Const, XIV; art Am Const 1963, §§ Constitutions 521.1). 500.3109; 24.13109; MSA GCR MCL Pleading. — — Breach of Contract 10. Insurance company complaint alleged did not A that an insurance which pay a automobile insurance full due under no-fault the beneñts allege of contract policy which a breach did not state facts policy provided a reduction in the where the insurance beneficiary government the the extent of beneñts beneñts to received, had been reduced that amount benefits 24.13109). (MCL500.3109;MSA — — State Ac- Law Fourteenth Amendment 11. Constitutional —tion Statutes. apply proscriptions The Fourteenth Amendment to actions conduct; merely private the Fourteenth and not to the state legislation impairs applies which due to all state Amendment (US Const, protection process equal Am of the laws or denies XIV). — — State Ac- Law Fourteenth Amendment Constitutional 12. —tion No-Fault Insurance. policy A reduction of no-fault automobile insurance beneficiary a receives in state or Federal benefits amount proscriptions of Four- state under the constitutes action upon legisla- Amendment the reduction is based a teenth where (US Const, XIV; 500.3109[1]; MSA Am MCL tive enactment 24.13109[1]). — — — Due 13. Constitutional Law No-Fault Insurance Process Equal Protection. constitutionally Legislature exercised To determine whether the equal process protection police power its with due accord enacting particular a scheme under the no-fault insurance power аct, police legislation bears the test is whether under permissible legislative objective or to a reasonable relation legitimate rationally to a classification is related (US 1, Const, XIV; art interest Am Const 294). §§2, 17; PA — — Equal Law Protection. Constitutional Classification 14. may treating persons justified two classes of be differently difference between where there is a natural classes; enjoys a the state or circumstances of situation *9 range distinguishing, selecting, wide of discretion and classif- ying, practical and it is sufficient if a classification is and not 2). (US palpably Const, XIV; 1963, 1, arbitrary Am Const art — — Presumption. 15. Constitutional Law Statutes challenging constitutionality Plaintiffs the of a statute must bear rebutting presumption constitutionality the burden of the of legislative judgment. which is accorded to the — 16. Constitutional Law Statutes. party challenging legislative judgment may A attack its constitutionality purely arguments legal if the judgment arbitrary legisla- is so and irrational as to render the tion unconstitutional on its face. — — 17. Constitutional Law No-Fault Insurance Reduction of — — Equal Benefits Due Process Protection. considering process In challenges due and to the provision of the no-fault insurance act which reduces beneffts by beneficiary the amount the receives in beneffts from state or programs, questions plaintiffs Federal are whether the have presumption constitutionality by establishing overcome the through legal argument by or otherwise that the evil identified basis, entirely scheme is without and whether the statutory scheme and the classification drawn under it reasonably legislative purpose correcting related to the (US Const, XIV; 1963, 1, 2, 17; evil Am Const art §§ MCL 500.3109[1]; 24.13109[1]). MSA — — — 18. Constitutional Law No-Fault Insurance Due Process Legislative Purpose. — Equal Protection legislative goal The system of the no-fault automobile insurance provide assured, is to victims of motor vehicle accidents ade- quate, prompt reparation losses, along of certain economic apparent goal with an rising to reduce or contain levels of premiums insureds, permissible legisla- borne all which are (US objectives police power Const, XIV; tive under the Am 1963, 1, 294). 2, 17; Const art §§ PA — — 19. Constitutional Law No-Fault Insurance Reduction — — Legislative — Equal Benefits Due Process Protection Purpose. legislative purpose provision of the no-fault insurance act which beneficiary reduces benefits the amount receives in programs benefits from state or Federal is to elimi- duplicate premiums, nate beneffts or to reduce which are permissible legislative purposes police power under the Ins v State Fаrm (US 1, Const, XIV; 2,17; art rationally Am Const §§ based 500.3109[1]; 24.13109[1]). MSA MCL — —Law Reduction of No-Fault Insurance 20. Constitutional — Benefits Classification. provision in the drawn The classifícation by the reduces beneñts amount no-fault insurance act which pro- beneñciary in beneñts from state Federal receives is, therefore, requisite logic grams is without the force discriminatory unconstitutionally arbitrary and where contri- *10 governmental by those the insured for butions have been made beneñts, beneñts, Social survivors’ such as Federal (US Const, statutory provision the are to be set off under which 1963, 1, §§2, 17; 500.3109[1]; XIV; MSA art MCL Am Const ]). 24.13109[1 — — of Law No-Fault Insurance Reduction Constitutional 21. — Equal Protection. Benefits statutory the no-fault insurance act which reduces The scheme of by beneñciary the the receives collateral amount beneñts programs which the from state or Federal to beneñci- beneñts require ary does not reduced beneñts has contributed but which private, to collateral insurance beneñts on its for those entitled the mandates where violates traditional face 1) pay of no-fault insurance beneñciaries the same both classes 2) coverage, premium a for the same no-fault insurance receive 3) reduction, scheme, any, premium the if from common securing coverage authorizing monetarily contributed to beneñts; or collateral solely is on between the two classes based the source distinction compensation paid, an from which the collateral is irrational (US 1, Const, XIV; 1963, §2; art distinction Am Const MCL 500.3109[1]; 24.13109[1]). MSA — — Equal Law Classification Protection. Constitutional 22. which, Legislation carrying public purpose a out for the good, by justiñable is differenti- common limited reasonable and persons type to a distinct or class of is not for that reason ation germane object if of the enactment unconstitutional it is upon operation persons of uniform all the class and made in its naturally applies; if it to include and affect which it but fails class, persons of and extends immunities or alike all the same kind, privileges portion to one and denies them to others like subclassiñcation, arbitrary it comes within unreasonable (US legislation against prohibition the constitutional class Const, XIV; 1963, 1, §2). Am Const art Mich — — No-Fault Constitutional Law Insurance Reduction of 23. — Benefits Process. Due statutory language provision the no-fault beneñciary act which reduces beneñts the amount contributory receives in beneñts state or survivors’ from Fed- programs unconstitutionally eral overbroad and devoid legitimate legislative rationally means related to an otherwise purpose because, аlthough payment types of both of beneñts may arising compensable injury be for an from a automobile insured, accident which results economic loss to the statutory provision irrationally permits gov- also the set-off of accident, ernment which beneñts are not to the related such as (US pension disability plans, Const, and veterans’ beneñts XIV; 1, §17; 500.3109[1]; Am art Const MCL MSA 24.13109[1]). — — 24. Constitutional Law No-Fault Insurance Reduction of Policy. — Benefits Public provision A policy no-fault automobile insurance which reduces the beneñts the extent of beneñts which beneñciary public policy receives is invalid as offensive to (MCL500.3109[1]; 24.13109[lj). MSA
Opinion Jr., Moody, Blair — — — 25. Insurance No-Fault Insurance Reduction of Benefits Legislative Purpose. *11 scope Legislature’s duplicative The recovery of the intent to avoid any under the no-fault insurance act and distinction between ought contributive and non-contributive beneñts (MCL judgment 600.3109[1]; to be reserved for future MSA 24.13109[1]). (by Loge- Kirkendall, Calder & P.C. Robert E. man), plaintiffs. for Longley Dahling (by Bodman, & Theodore Souris Buschmann) and James R. and DeVine & DeVine Kantor) (by Allyn D. for defendant. Amici Curiae:
Foster, (by Collins, Swift & P.C. A. Webb Smith Farm Ins State Opinion of the Court McKeague), Mutual American David W. Alliance. Insurance Eugene Mugan F. Black. E.
Gerald for Allstate Bush, Luce, & Bankson Henderson Company. Insurance 3109(1)1 reverse). (to of the Section
Coleman, requires Michigan Act2 Insurance No-Fault any payable no-fault under of benefits the amount policy the amount reduced must be insurance beneficiary by payable the state ato of benefits require government, not also it does but Federal analogous payable to a benefi set-off of benefits an ciary by private pro or accident
health voluntarily persons may grams, add to which question principal The no-fault insurance. basic presented § discriminates is whether government recipients against benefits of Equal of the Clause Protection violation of Ap The Court Constitutions.3 state or Federal peals was 1 decision that ruled in a the decision We reverse unconstitutional.4 Legislature’s judgment Appeals. Court of recipients be treated should the differently recipients bene from supported by should basis and fits is rational rationally This distinction therefore be sustained. legislative objectives promotes legitimate enabling persons and/or needs with economic permitted exceeding wages the maximum benefits supplemental Act to obtain under the No-Fault placing coverage they the burden need and of 24.13109(1). 500.3109(1); MCL MSA seq. seq.; MCL 500.3101 et MSA 24.13101 et Const, 1, 2; Am XIV. Const art US *12 4 (1976). App 801 70 Mich 245 NW2d Mich Opinion of the Court such extra on coverage directly the shoulders of persons, those spreading throughout instead of it the ranks of no-fault insureds.
A subsidiary question is whether re § quires a set-off of Federal social security survivors’ benefits such as plaintiffs those received and, so, a result of decedent’s death if whether is totally arbitrary and thus violative the Due Process Clause of the state or Federal Constitut ions.5 We conclude that require does a § set-off of government these benefits but is not arbitrary because paid the benefits are as a result of the same accident and duplicate in varying degrees the no-fault benefits otherwise due. All persons who receive redundant survi vors’ arising from one accident are treated the same and all are guaranteed a maximum survivor’s loss benefit of per month for three $1000 It years. therefore does not violate the Due Process Clause of the state or Federal Constitutions.
This opinion is confined to the facts before the Court and does not purport to encompass other possible government benefits.
I Plaintiffs’ decedent was killed in an automobile accident in 1974. qualified Plaintiffs for survivors’ benefits under certain subdivisions Federal Social Act7 which provide for the payment of secondary benefits to the dependents of wage earner who is fully qualified to receive primary social security benefits at time of 1, 17; Const, Const art US Am XIV. 642 USC 402. etseq. 42 USC 401 *13 539 Farm v State Ins op Opinion the Court qualified bene also for survivors’ death.8 Plaintiffs policy by issued no-fault insurance under the fits the decedent. the defendant requires the the Act No-Fault Section government no-fault from benefits subtraction otherwise due: provided under required to be provided or "Benefits government shall be or the federal any laws of state the protection insurance bene personal the from subtracted injury.”9 the payable for fits otherwise policy by the defendant The no-fault issued legislatively incorporated man- the decedent provision: dated company under by the "Any payable amount (a) by reduced shall be terms of this required provided under paid, payable or to be amount government any the federal
the laws of state [*] [*] [*] >>10 provision, sub the defendant
Pursuant to this payable amount of survivors’ benefits tracted the plaintiffs from to the the Federal payable under of survivors’ benefits amount plain policy the decedent’s no-fault and sent monthly actual tiffs a check for the difference. The plaintiffs the Federal amount received from per government and the defendant totaled $1000 month, the maximum amount authorized § 310811of the No-Fault Act. pleadings specific of 402 The do not subdivisions indicate plaintiffs qualified secondary We assume
under which the for benefits. benefits, e, they qualified and/or that subdivision mother’s benefits. under subdivision widow’s g, 24.13109(1). 500.3109(1); 9 MCL MSA 10Appellant’s appendix, p 12a. 500.3108; MSA 24.13108. MCL 404 Mich op Opinion the Court court, in circuit the defendant
Plaintiffs sued and contract the insurance alleging a breach the Due Process violated contending that § and Michigan Clauses Protection Equal circuit court The Constitutions. United States summary judgment. motion a defense granted Appeals the Court appealed to plaintiffs decision, in a 2 to reversed that Court 3109(1) was unconstitut declaring majority granted we appealed defendant ional.12 The appeal.13 leave to
II General, 554; 402 Mich Attorney In Shavers v (1978), explained Williams 267 72 Justice NW2d when must take this Court approach the proper process or due protection equal with an confronted such as the legislation challenge to socioeconomic No-Fault Act: process the face of a due or. "[I]n legislative judgment is drawn
challenge,
'where
to the
inquiry 'must be restricted
question’, a court’s
known or which
any
facts either
issue whether
could
state of
support
it’.
reasonably
be assumed affords
144, 154;
Co,
Products
304 US
United States v Carolene
* * *
(1938).
[Wjhere the
778;
58 S
further was offered as to the limited nature of the Court’s role: Ferguson Skrupa, 726, 730-731; "See US 83 S Ct (1963), 10 L 2d where the United States Ed Supreme stated: Court " do not substitute their social and economic '[C]ourts bodies, judgment for the beliefs who are pass elected to laws. As this Court stated in a unani * * * opinion mous "we are not concerned with wisdom, need, appropriateness legislation.” Legislative scope have experiment bodies broad to with * * * problems economic legislature . "super- We refuse to sit as a ’ ”15 weigh legislation.” to wisdom proper judging legis- test for socioeconomic lation such Act was also No-Fuult us stated Shavers: "The test to legislation determine whether enacted
pursuant power police comports process with due legislation whether the bears a reasonable relation permissible Michigan legislative objective. See Can- Agricultural Board, ners v 337, 343-344; 397 Mich (1976). NW2d 1 "The test whether a statute determine enacted pursuant police power comports equal to the pro- with *15 is, tection essentially, the same. As the United States Supreme Court Dep’t declared in United States of Agri- Moreno, culture v 528, 533; 2821; 413 US 93 S L Ct 37 (1973): Ed 782 2d " 'Under analysis, legis traditional a sustained, lative classificаtion must be if the classifica tion itself is rationally legitimate govern related to a ”16 mental interest.’ recognizes preserves test and
This constitu- principle separation powers, tional which 15 Id., 38, p fn 614. 16Id, 612-613. Mich 524 404 Opinion of the Court system of our framework the fundamental
forms purpose government. that is make certain Its judgment judiciary for not substitute its does or what as is best to what that of the long Legislature’s judgment is as the is supported by So wisest. basis, the reasonable
a rational or are con- distinctions drawn made and the choices stitutional. Supreme Court The United States have instructed: our Court basis’, it some 'reasonable "If the has classification simply because the the Constitution does not offend nicety mathematical 'is not made with classification * * * inequality’. practice it results some because practical ones and problems 'The rough require, accommoda may justify, tions they if do not ’ * * * ”.17 severe, said, unnecessarily "If it the law is be fault in the suf injustice, do without may sometimes it, reply is: these are considerations ferer under our legislature, to the may very properly be addressed go expediency of judiciary they to the to the but not — law, constitutionality.”18 and not to its drawing society responsibility lines in a priorities, complex identifying as ours —of choosing weighing the relevant considerations Legisla- competing alternatives —is the between judiciary’s. ture’s, quired: is not re- Perfection drawing of distinctions is lines create "[T]he one. peculiarly Perfection in neither task and an unavoidable
making necessary classifications possible necessary.”19 nor Williams, 471, 485; 1153; Dandridge 25 L Ed 2d v 397 US 90 S Ct (1970), Salfi, 749, 769; Weinberger L45 Ed 491 2d 522 422 US 95 S Ct (1975). (1858). Cottrell, Sears v 5 Mich 307, 314; Murgia, 427 US Massachusetts Retirement v Board of *16 543 Farm Ins State v Opinion the Court Legislature necessary deal it
isNor problem every aspect at the same time: aof with principles that a the familiar guided by "[W]e it the Constitution because invalid under 'statute is not * * * did,’ that a than it might gone farther have time,’ which seems time, addressing legislature need [*] [*] [*] * * * »20 and that most acute itself 'strike 'reform to the to the at all evils at may phase take legislative mind’ one the same step problem at a superlegislature to short, do not sit "as a In we legislative pol desirability judge wisdom or icy to deter We sit as a court determinations”.21 basis for the there is a rational mine whether Legislature’s judgment. judg is, If then that there ment must be sustained: whether this Court’s role to decide "It is not enacting unwisely in wisely acted own social and will not substitute our statute. We Legislature, which is for those of the economic beliefs pass people laws.”22 elected
Ill
analysis
In
to facilitate
of whether
order
Equal
Protection Clause
violates the
Constitutions,
first
we will
the state or Federal
requires
question
it
a set-off
discuss the
of whether
Employment
(1976),
2562;
Bureau of
Ohio
96 Ct
Section provided required under provided to be or "Benefits government shall be the of or federal any the laws state bene personal protection insurance the from subtracted injury.”23 the payable for fits otherwise important principles of statu- of the most One interpretation tory of the statute is that the words Legislature’s light the of should be construed Dep’t Military e.g., Affairs, See, Moore v of intent. (1976). history of 247 NW2d 3109(1) Legislature’s intent the § indicates require bene- a set-off those towas payable duplicated the no-fault fits that thereby reduce accident and the because the insurance. contain cost of basic from Commis the Governor In a letter to analyzing proposed a series of Insurance sioner 1971, none which no-fault bills introduced provision, the Commissioner a set-off contained they "in to because tended criticized the bills overlap duplication auto between crease programs, sick other insurance Subsequent programs security”.24 leave and social provisions.25 ver The final did contain set-off bills § an was similar amendment sion According suggested by the Commissioner.26 24.13109(1). 500.3109(1); 23 MCL MSA A Gretzinger, Co: v State Mutual Insurance O’Donnell Farm Act, Attempt Michigan’s Rev DCL Judicial to Amend No-Fault 187, 192, fn 36. 25Id., 192-193. 26Id., 194. State Farm Ins Opinion of the Court
Commissioner, purpose of the amendment was provide complete "to a more and effective coordi nation of Michigan benefits between auto insur provided ance and the benefits laws of all government”.27 the states and the federal As noted case, Justice opinion Williams his in this Commissioner’s comments "make clear purpose scheme was framed in maintaining terms of or reducing pre mium costs for through all insureds the elimina duplicative tion of benefits recovery”.28 The survivors’ benefits plaintiffs received pursuant 402 of the Federal Social Security *18 duplicated Act the survivors’ benefits they received pursuant to the decedent’s no-fault pol- insurance icy. survivors’ benefits pursuant received the no-fault were policy paid as a result of the decedent’s death and were based on 3108 of the Act, No-Fault which states: protection "Personal insurаnce payable benefits are for a loss, survivors’ loss which consists of a after the died, date on which the deceased of contributions of tangible things value, including economic not ser vices, dependents of the deceased at the time of his death would have support during received for their dependency from the deceased if he had suffered * * * ,”29 the accidental bodily injury causing death The survivors’ benefits received 202 pursuant to § of the Social Security Act were paid likewise as a result of the decedent’s fatal accident and served substantially the same purpose as the no-fault benefits:
27Ibid.
28 Williams, J., 568, Opinion p fn 13. 29 500.3108; MCL MSA 24.13108. Opinion op the Court 1935, the Social originally enacted "As wage qualified monthly benefit for a Act authorized pay death benefit old and a years least at earners at an wage who died earner to the estate of able created Congress In 1939 622-624. age. 49 Stat earlier widows, children, wives,
secondary benefits 1362, 1364-1366. 53 Stat wage earners. See parents of depen provide persons intended to The benefits were against protection wage earner with dent on the economic er’s wage earn by loss of hardship occasioned Castro, 185-186 v De 429 US support. Mathews Generally speak (1976)]. L Ed 2d S Ct [97 secondary therefore, categories of beneficiaries ing, presumed to who were persons defined to include were time of his wage at earner dependent on the be added.)30 (Emphasis death, disability, or retirement.” from plaintiffs Thus, received the benefits scope fell within government the Federal 3109(l)’s set-off. it does have a arbitrary is not This set-off the valid promotes It rational basis. loss for economic insuring payment
objectives and of three years month for up per to $1000 of no- the cost reduce or contain attempting of the benefit eliminating some fault occur. The means that would otherwise duplication bene- chosen, duplicative a set-off of It reduces the fits, that end. related to rationally pay must companies amount the insurance *19 the out, to reduce making it for them possible only so charge, and it does they amount that must are redun- the benefits in those situations where bar, Thus, as in the case at all beneficiaries dant. for three to month eligible up per for $1000 their to compensate of survivors’ benefits years are never benefits security loss. Social survivors’ 3109(1) basis, does Having a rational interrupted. § (1977). Jobst, 47, 50; 2d 228 54 L Ed v 434 US 98 S Ct Califano State Farm Ins Opinion the Court of violate the Process Clause the state or Due of Federal Constitutions.
IV 3109(1) remaining question § The is whether аgainst government recipients discriminates Equal benefits violation of the Protection Clause of the state or Federal Constitutions. undisputed recipi-
It is that treats the government differently than it ents of recipients private or accident treats the health require private It does not insurance benefits. against no-fault benefits other- benefits be set off recipient, wise due. Unlike the benefit recipient private benefits can receive full no- up the maximum fault survivors’ benefits private per plus month, full benefits as well. $1000 Legislature The mere fact that the has chosen to government benefit draw a distinction between recipients recipients benefit does not If mean that distinction is is unconstitutional.
supported basis, it a rational then passes constitutional muster. had to wrestle with several
competing deciding considerations when it was any and, if whether act should contain set-offs encompass.31 so, what kind of set-offs it should proposed first-party Because compulsory, important act was to be it was premiums charged by the insurance be companies possible. be maintained as low as Oth poor disadvantaged people erwise, and the might necessary the state not be able to obtain Thus, insurance. need for cost- there was a viable 31See, Attempt Michigan’s generally, A Judicial Amend No-Fault Act, supra, 192-195. *20 Mich Opinion op the Court one Set-offs were kind. measures some cutting was that Another consideration possibility. by established month maximum per § $1000 with economic losses persons leave many would without ade that amount greater needs than and espe would be Large families compensation. quate benefits. cap this on survivors’ hard hit cially raised course, could be recovery the maximum Of amount, increase but this would higher to some higher premi program spread the cost of purchasers. ums over all dilemma, chose
Faced with First, compromise solution. experiment with a per guaranteed up would be persons $1000 all under 3108. This month survivors’ loss benefits for most adequate compensation provide would 3109(1), Second, duplicative virtue of people. no- against would be set off benefits it This would make fault otherwise due. needing no-fault insurance possible persons for all Third, it cost. no set-off would be to obtain at less insurance for health or accident required private with in- persons enable the benefits. This would month to exceeding per comes or needs $1000 their families re- purchase coverage the extra quired premiums extra without by paying (1) insurance, no-fault hardship purchasing (2) an- coverage purchasing basic $1000 the basic coverage against other to be set off $1000 (3) and then whatever finally purchasing insurance of that set- amount excess family off required to cover income loss $1000 purchased op- needs —all to be with after-tax —as It posed to tax —dollars. was resolved finally bear persons directly these with extra needs would needs; the burden of none of that burden those pay- would be borne the no-fault system. in full for premiums pay ment of extra would State Farm Ins Opinion of the Court coverage. Therefore, extra there would no dis- be totally voluntary option. crimination in this *21 promotes This solution several valid attempts objectives. It to reduce the cost of basic everyone possi- for no-fault insurance make it persons coverage ble for most to obtain most of the (It they discriminatory could, fact, need. in be to it.) 3109(1), prevent by Section the means chosen Legislature, rationally is, the as outlined above, legitimate objectives. related to these agree necessary It is not that we with the wis- judgments Legislature by dom of the made the in (We uphold may order to this section of the act. difference.) may agree, we not that no but makes necessary supposed Nor it that beneficial Legislature effects envisioned be at verified just ago this time. As stated a few months respect supposed Shavers with to other benefits of the act:
"The fact that
yet
these effects are not
evident does
legitimacy
goals sought
diminish the
to be
achieved or the
adopted.
reasonableness of the means
stage
At
early
functioning
this
in the
of the No-Fault
long-term
Act
developments
these
yet fully
cannot
be
Indeed,
itself,
litigation
assessed.
with
resulting
its
uncertainty
Act,
as to the viability
may
of the No-Fault
slow the
goals.
achievement
act’s
Our
decision
McGowan,
Manistee Bank
Trust Co v
[&
(1975)]
benefits associated with have 32Shavers, supra, 628-629. Mich Opinion of the Court they although have mate- or that
not materialized they the social eco- not worth rialized basis However, the rational costs. nomic between the distinctions drawn recipients recipi- and the primarily private to the desire ents of benefits — requirements persons possible for with make it exceeding the No-Fault Act assured the benefits coverage they without need extra obtain the purchasers— burdening other no-fault requires is constitutional. us hold V attempt did not address Section overlapping problem *22 health no-fault and after the No- benefits. Soon accident insurance passed by Legislature, however, Act Fault was the provi attempt the fine-tune an made to set-off was duplication could be this kind sions so that permitting persons .while, with needs still reduced exceeding provided by no-fault insur benefits the coverage required. they the extra ance The obtain Legislature § enacted 3109a33which states: personal protection insurance providing "An insurer offer, premium appropriately at shall reduced rates, reasonably related to and exclusions deductibles coverage on the insured. The health accident other required this to be offered deductibles and exclusions the subject prior approval by com- section shall' be payable to only apply missioner and shall the to benefits person policy, spouse in named domiciled any relative of either insured same household.”
Although to make did not choose 24.13109(1). 500.3109a; MSA MCL State Farm Ins Opinion Court mandatory, it with had done set-off 3109(l)’s set-off, benefit this distinc- perceived necessity justified by is of mak- tion greater ing persons possible with needs to it coverage require pay they reduced obtain the through deducti- on the no-fault rates approved by the Commissioner. and exclusions bles persons slip through colan- That some can still benefits does der of 3109a and receive additional Mathe- not mean the is unconstitutional. statute possible required. precision neither nor matical promotes Section the valid ob- 3109a reducing jective duplicative benefits; the means rationally end; related to that and the chosen is supported by a rational distinctions drawn This is also constitutional. basis. statute
VI specter Our brethren have raised the of Boettner Co, 482; v State Farm Mutual Ins 388 Mich (1972), NW2d 795 and Blakeslee v Farm Bureau Co, Mutual Ins NW2d 786 (1972), opinion.34 in a footnote to their Neither of application these cases was raised for leave appeal par by any or briefed of the numerous participated who have this case—and for ties good inapposite reason. Both are to the case. The question provi in each was whether certain set-off *23 companies sions created violated Legislature’s public policy statutorily declared recovery. bar, of In favor full the case at public statutorily has that the declared policy of this state now favors certain set-offs. We authority no invalidate that have Williams, J., 575, Opinion p of fn 20. Opinion of the Court rational some as it is long supported so decision basis.
VII
Belcher,
254;
404 US
S Ct
In Richardson
(1971),
Supreme
the United States
Reverse. No volved.
35 Richardson, supra, 84. *24 553 v State Farm Ins Dissenting Opinion by Williams, J.
Kavanagh, C.J., Ryan, JJ., Levin con- J. Coleman, curred with summary judgment J. This Williams, case squarely raises both the facial process1 viability and due §of of the No- seq.; Act,2 Fault Insurance MCL 500.3101 et MSA seq. 3109(1), commonly 24.13101 et Section refer provision, red to as the "set-off” reads as follows:
"(1) provided required Benefits or provided to be under the any laws of state or the federal shall personal be protection subtracted from the insur ance payable benefits otherwise injury.”3 for the MCL 500.3109; MSA 24.13109. set-off,
A
however,
similar
is not
likewise man
respect
directly
dated with
to an insured’s
financed
1 Const,
XIV;
1963,
1,
US
(equal protection);
Am
Const
art
3§
Const
1963,
(due
process).
art
17§
infra, plaintiffs
As indicated
rebutting
must bear the burden of
presumption
constitutionality.
of a
may
statute’s
That task
be
accomplished by
plaintiffs
one or
may
both of two methods:
either
persuasive legal arguments
forward
indicating
judgment culminating
statutory
in the enactment of the
§3109(1)
face,
under
is unconstitutional on its
see Borden’s Farm
Co,
Baldwin,
194;
187;
Products
Inc v
293 US
55 S Ct
The liability sought on reduce its to no-fault insurer plaintiffs, in due no-fault the no-fault fund dependents, by the amount sured’s Federal Social Security for benefits survivors’ through made Social had which contributions been wage Security deductions.5 § statu- contend that Plaintiffs first operates deny tory to govern- arbitrarily class of the laws to the mental benefit no-fault drawn to its Distilled insureds. 24.13109(1) 500.3109a; provides Compare in which MCL MSA pertinent part: protection providing personal shall insurance benefits "An insurer rates, offer, premium appropriately exclu- deductibles and at reduced coverage reasonably accident on sions insured. related to other health and ” * * * Shavers, plaintiffs supra, that therein lacked In this Court held 1963, declaratory regarding standing to relief under GCR 521.1 seek plaintiff "[tjhere proof any the record because is no that § injury a claim for which been denied or reduced [in had amount an had 554, 592, 3109(1)]”. pursuant fn 12. Justice 402 Mich similarly principle Opinion Advisory re: this addressed Levin 441, 484; Constitutionality (1973): 208 NW2d of 1972 PA 389 Mich properly hypothesize particularized "It is not within our function to persons up, speculatively, who or to set classes claims strawmen might and disadvantaged ways claim to be classifications various provisions of the act.” clearly problem undisputed It We no such here. have * * * plaintiffs reduced provides injury herein claim for which been an [has] "[have] 3109(1)]”. Security pursuant Act amount Social [in payment Security to four survivors’ for of Social benefits categories statutorily if their was "insured”. individuals decedent seq. pleadings presented for Court USC 402 et While the Security Act review do not indicate under which section of plaintiffs out Social benefits, with- have their survivors’ we can assume securеd provided conclusively finding plaintiffs have been 402(e). 402(g) pursuant to 42 and 42 USC USC .555 v State Farm Ins Dissenting Opinion Williams, J. plaintiffs’ argument proceeds essence, as follows. pay premium All no-fault insureds the same dollar presumably coverage. identical no-fault No- receipt fault governmental insureds entitled to the of certain particularly benefits, , Federal Social monetarily benefits, survivors’ contribute governmental system.6 to that insurance No-fault receipt private, insureds entitled to the eral collat monetarily insurance benefits likewise con private system. tribute to that Further, insurance injuries compensable by the nature of those tide governmental system frequently insurance compensable by emanating also funds from the system. premises Based on these private, shared both collat plaintiffs insureds, eral syllogism conclude their §3109(1) with the contention that affords these artificially similarly two created classes of situated *26 widely divergent no-fault insureds treatment with disputed out statutory basis, rational as the scheme mandates the set-off of certain collateral requiring benefits while not the set-off of other solely similar collateral benefits on the basis of the spring. source or fund from which those benefits In plaintiffs short, signif- contend that there exists no undisputed plaintiffs herein, It is that statutory dependents insured, decedent no-fault personally did not contribute to the Social Security authorizing fund they survivors’ benefits to which are Rather, plaintiffs entitled. their governmental through collected this benefit against deceased father wage and husband whom the deduction facts, was levied. Under this opinion set of we are of the plaintiffs having should be considered as made the Social fund contribution in the same manner as we would have considered the no-fault automobile accident. insured decedent’s contributions had he survived the Obviously, principle, there is no difference in concerned, insofar as contributions present between the instance and the payor instance where the actual has not been killed in an automobile personally accident disability but institutes suit for bene- personally fits disparate Additionally, plaintiffs financed. herein suffer further through operation treatment of this set-off scheme when compared privately with survivors of a insured whose benefits would similarly subject be to set-off. Dissenting Opinion Williams, contributory govern- icant difference between a program contributory private benefit and a mental program; both, therefore, benefit should be treated similarly.
Formulating analysis their with reference to the plaintiffs test, traditional elabo- rate that there exists no rational relation between legislatively created classes of no-fault these two admittedly beneficiaries, hand, on the one and the permissible legislative purposes duplicative ben- premium reduction, efit elimination or on the cost uphold constitutionally other, sufficient to the dif- similarly ference in treatment afforded these two situated classes under this scheme. Plaintiffs al- lege inescapable duplica- that this conclusion is practi- tive benefit elimination is neither realized cally through operation legally nor permitted beneficiary since the duplicative is to retain legisla- Further,
benefits. since the tively premium any, rates, desired reduction in if equally insureds, flows to both classes of no-fault discriminately exclusively its achievement is borne governmental by benefit class of no-fault bene- ficiaries. additionally
Plaintiffs contend that de- governmental nies benefit no-fault beneficiaries process due off of all recipient of law insofar as it the set- mandates paid casualty
whether or not that benefit is plaintiffs’ position related as no-fault It is. scheme does not bear a reasonable permissible admittedly relation to an otherwise *27 legislative purpose. example, according For to its language, permit literal would the set-off contributory governmental pension longevity of a against casualty benefit a no-fault benefit which patently duplicative longevity award. Farm v State Ins Dissenting Opinion Williams, opinion, simplest form,
Our its concludes that logical constitutionally permissi- it is neither nor duplication ble either eliminate benefit or ac- complish premium by subtracting per- reduction sonally paid-for Security Social survivors’ benefits paid-for personally from no-fault benefits while not requiring analogous, per- likewise sonally subtraction of
paid-for private insurance benefits. We following specific this reach conclusion on the (i) grounds: requires the reduction of alleged duplication patently discriminatory in a solely manner as it focuses its burden on one class (ii) similarly insureds; situated no-fault the dis- puted statutory operates place the bur- commonly premium reduction, den of shared cost any, Security beneficiary if on the Social survivor (iii) alone; class there exists no rational basis subtracting paid-for longevity benefits from a paid-for casualty benefit since no sense are such paid-for duplicative. reaching In con- dealing clusion, we are mindful that we are not duplicative gratia gov- with the elimination оf ex payments. ernmental transfer agree superficial that, We while a distinction may contributory governmental exist between a system contributory private and a insur system, logically distinguisha ance there exist no permissible leg ble characteristics relevant to the judgment constitutionally justify islative which disparate ing persons treatment afforded those receiv governmental
collateral benefits and those persons receiving private benefits, collateral where premium both classes have received a common any, reduction, both, if at least the case of benefits, Federal Social survivors’ have payments coverage authorizing made to secure the 42 USC benefits. See *28 Mich 524 404 558 Dissenting Opinion Williams, J. §3109(1) statutory is such,
401. As two facially as it creates insofar unconstitutional solely on the differently classes based treated compensation the collateral from which source emanates. App therefore, the Court We, affirm grant of sum trial court’s reversal eals7 mary judgment respect with insurer to defendant constitutionality this scheme. to the
I. Facts
fatally injured
Gary
auto-
an
was
O’Donnell
February 19, 1974. Plaintiffs
on
mobile collision
of decedent.
and children
are
wife
a "no-fault”
under
was insured
The decedent
policy
Farm
defendant State
issued
automobile
Mutual Automobile
pursuant
Company,
Insurance
Michigan
Act,
PA
1972
Insurance
No-Fault
to the
294
(hereinafter
Act”
the "No-Fault
to as
referred
Act”).
or "the
pur
dependents
for
of decedent
are
Plaintiffs
poses
under
survivors’
of Social
policy
under
well as
as
insurance
defendant’s
Act.8
§ 3110 of the No-Fault
pro-
policy with defendant
Decedent’s
dependents,
plaintiffs,
entitled
were
that
vided
Co,
App
Ins
v State Farm Mutual Automobile
O’Donnell
(1976) (Bashara, P.J., dissenting
and recommend-
245 NW2d
remand).
ing
provides:
Decеdent’s part, relevant that: "(5) company under the Any payable by the amount (a) by of this insurance shall be reduced
terms required provided under paid, payable or be amount * * * government .” any the laws of state or federal para- mandated payments by This reduction (5)(a) of defendant’s insurance is simi- graph policy Act, mandated of the No-Fault larly by § which states: provided required provided
"Benefits to be under any the laws of state or the federal shall be personal protection subtracted from the insurance bene- 500.3109(1); payable injury.” fits otherwise for the MCL 24.13109(1). MSA qualified Security Plaintiffs for Federal Social provides: Section 3108 of the No-Fault Act protection payable "Personal insurance benefits are for a survivors’ loss, loss which consists of a after the on which the deceased date died, ing would have received for value, tangible things of contributions of of economic not includ- services, dependents of the deceased at the time of his death support during dependency their from causing bodily injury if deceased death and red he had not suffered the accidental expenses, exceeding reasonably per day, not incur- $20.00 by dependents during dependency these their and after date obtaining necessary ordinary on which the deceased died performed services in lieu their benefits have of those that the deceased would causing injury if death. The benefit he had not suffered the payable of a for survivors’ loss in connection with death $1,000.00 person payable beyond single 30-day period and is not shall not exceed years the first 3 date of the accident.” MCL after the 500.3108; MSA 24.13108. Mich Dissenting Opinion Williams, per totaling survivors’ benefits month. Pursu- $556 (5)(a) paragraph policy ant to both of the Act, of the No-Fault defendant re- plaintiffs’ per- (the duced recoverable $1000-maximum protection sonal insurance benefits $556 amount of Federal Social survivors’ bene- owing plaintiffs) paid plaintiffs per fits month. $444
During pendency litigation, of this plaintiffs’ ap- survivors’ benefits have increased proximately thereby reducing defendant’s 35% no- liability per fault month. $243.20 complaint Plaintiffs filed a two-count in circuit alleged court. Count I that defendant had breached paying plaintiffs the insurance contract per $1,000 full month in benefits. Count II re- quested declaratory judgment respect with to the question relating of whether the §to 3109 of the No-Fault Act violated the Due Equal Process and Protection Clauses of the Michi- gan and United States Constitutions. Plaintiffs’ complaint requested declaratory relief as follows: *30 "a. That MCLA 500.3109 is a denial [MSA 24.13109] procеss of due provided law as in the Fifth and Fourteenth Amendments to the United States Constitu- I, tion and Michigan Article Section 17 of the Constitu- tion for the reason that said act bears no reasonable relationship purpose to the of the act and that said act deprives those who are receiving governmental benefits receiving from the no-fault premiums benefits for which paid. were "b. That MCLA 500.3109 is a denial [MSA 24.13109] * * * equal protection for the is reasons that said act arbitrary and discriminatory in it creates two (governmental different classes recipients benefit non-governmental benefit recipients) solely upon the source from compensation which the paid.” extra is summary judgment
Defendant moved for on v State Farm Ins Dissenting Opinion Williams, J. supporting counts; both defendant file did not properly affidavits. trial court restricted its inquiry complaint to whether the failed to state a upon granted. claim which be relief could GCR 117.2(1). granted The trial court defendant’s motion for summary judgment. The held in court its order:
"1. plaintiffs’ complaint That count I of fails to state plaintiffs’ a cause of action for the reason that com- plaint allege fails to state facts which the defend- provisions any ant breached of the of said contract. plaintiffs’ complaint
"2. That count II of fails to state in a cause of action that State Farm Mutual Automo- Company, entering bile Insurance in a contract of in- which requirements surance Michigan conforms to the statutes, particular and- MCLA 500.3109 24.13109], engaged is not action; itself state [MSA consequently, any claim that the contract is itself un- unsupportable constitutional as a matter of law.” August Appeals 4, 1976, On the Court of separate opinions by Judge written T. M. Burns Judge (Presiding Judge J.V. Brennan Bash- dissenting) summary affirmed the trial court’s ara judgment as to count I and reversed the trial grant summary judgment court’s as to count II. Although referring process to "a fundamental due issue” inherent in the scheme under 3109(1), majority opinions essentially concen- plaintiffs’ equal protection challenge. trated on Appeals holding The thrust of the Court of that the classification matrix created was the statu- tory 3109(1) allowing receipt scheme of the full — personal protection injury of both no-fault insur- ance benefits and insurance benefits to one persons deducting class of personal while from the no-fault *31 protection
injury benefits of another class persons any benefits received under the laws Dissenting Opinion Williams, not bear any or the Federal state —did "legitimate purpose” relationship to a a rational "against arbitrarily those who discriminated and reсeive certain 70 Mich benefits”. App 487, 498. uphold Judge dissent, (1) in his would: Bashara, plaintiffs’ ruling I of as to count
the trial court’s (2) ruling complaint; court’s that the trial overrule case; this involved in action” no "state there was (3) respect the constitutional that, to with and questions hold proce- proper plaintiffs, "the
raised App judge”. 70 Mich the trial to dure is to remand 487, 503. Appeals appealed deci- the Court of
Defendant granted August 1976, Court de- On sion. fendant appeal appeal and ordered such leave to Shavers v Attor- to this Court with be submitted (1978). ney General, 554; 267 NW2d 402 Mich light of the no- detailed consideration In of our Shavers, undertaken in we fault insurance grounds prepared case on to decide this are now unconstitutionality. facial
II. Issues Presented General plead- thorough review of the exhaustive After a perceive ings case, the follow- in this we submitted ing issues:
(1) granting trial court erred in whether the respect summary judgment with defendant a count I of (alleging plaintiffs’ complaint that de the insurance contract fendant had breached plaintiffs per paying $1,000 month issue benefits) ground "plaintiffs’ com on the allege plaint to state facts which fails *32 563 State Farm Ins v by Dissenting Opinion Williams, of said any provisions breached defendants contract”;10
(2) for in granting the trial court erred whether respect judgment with summary defendant declar complaint (requesting plaintiffs’ II of count the statu respect to whether with atory judgment is violative tory scheme established § 3109[1] ground on the equal protection) process due in state engaged itself "is not that defendant 11 action”;* and (3) in its rationale court erred the trial whether (2), respect supra, with of issue disposing established scheme statutory whether Equal Pro- the Due Process and violates States Michigan and United tection Clauses the facts More based on specifically, Constitutions. case will consider whether of this we which that class operates deny benefits, including governmental for its paid has benefits, both Security survivors’ Federal Social do We not equal process and due law. protection constitu- to the express any opinion respect with gratia ex non-contributory, tionality a set-off of payments. transfer negative answer issue in We first affirma- issues in the latter two constitutional tive.
III. Issues Breach of Contract and State Action (1) (2), supra, long. us need detain
Issues respect to these Judge As stated with Bashara Appeals opinion: in his Court of dissenting issues correctly opinion judge ruled "I am of the the trial p Appellant’s Appendix, 14a. p Appellant’s Appendix, 15a. Dissenting Opinion Williams, J. allege of contract. The I breach count failed to of contract because pled allege do not breach facts insurance contract for a reduction no-fault provided government benefits received. benefits to the extent proscrip- II. The this lawsuit is count "The heart of Const, Amendment, US Am of the Fourteenth tions XIV, merely and not actions of the state apply to Kraemer, 1; 68 Shelley 334 US S Ct private 836; conduct. (1947). Amendment L Ed 1161 The Fourteenth impairs legislation which all due applies to all state *33 Cases, Rights protection. Civil process equal or denies (1883). 3, 11; 18; 27 L Ed 109 US S Ct (5)(a) paragraph undisputed for "It is that the basis legislative enactment of policy is the the insurance 24.13109(1). 500.3109(1); This is a state MCLA MSA Greenville, 244; 272 US City Peterson v action. See 83 S Ct (1963). 1119; I the trial 10 L Ed 2d believe action, determining no there was state judge erred consequently failing to consider the constitutional and 487, App 502-503. questions raised.” 70 Mich conclusion as majority’s persuaded by We are reasoning dissenting Judge Bashara’s well as Judge Bashara’s regard. specifically adopt this We (1) (2) opinion. of this as to issues analysis further address issue only we need Accordingly, i.e., (3), plaintiffs’ re- supra, consideration to the respect relief with quest declaratory under question of whether Equal the Due Process and Pro- violates Michigan and United States tection Clauses Constitutions.
IV. Plaintiffs’ Attack on Constitutional Statutory Scheme: Applicable Equal Protection and Due
Process Tests facial due Since this final issue involves both challenges to a statu- process 0’I)onnell v State Farm Ins Dissenting Opinion by Williams, J. scheme of tory the Michigan No-Fault Insurance Act, our discussion in Shavers concerning appropriate constitutional standards in this area is apposite. Shavers, In this Court held that "traditional” process substantive due and equal protection espoused tests Court in its con- sideration of other social welfare general eco- legislation nomic were applicable standards by which to consider constitutional challenges to the various statutory schemes of the No-Fault Act. 402 554, 611-618. Manifestly, these tests must likewise be applied in the case at bar.
We articulated applicable "traditional” due process test in the following terms: "The legislation test to determine whether enacted pursuant police to the power comports process with due legislation is whether the a bears a reasonable relation to permissible legislative objective.” 554, 402 Mich 612.
Further, citing the United Supreme States Court’s admonitions in United Dep’t States Agriculture Moreno, US 93 S Ct 2821; 37 L (1973), *34 Ed 2d 782 this Court articulated the equal "traditionаl” protection standard to be applied in this area of concern. We stated: " 'Under equal protection traditional analysis, legis- a lative sustained, classification must be if the classifica- tion itself is rationally legitimate govern- related to a ” mental 554, interest.’ 402 Mich 613. The details of this test were upon elaborated by Ryan Justice in his separate opinion in Shavers: "Reduced to simplest, its the guaran- tees of both constitutions Legislature mean that the may not take may what be termed a 'natural class of persons’, split two, that in class and arbitrarily then Mich Dissenting Opinion Williams,' original unit factions of the severed designate rules for the different thereupon enact and two classes However, a natural there is when of each. treatment or circumstances between the situation difference may justified be persons, two classes a wide enjoys differently. state treating them in selecting, and distinguishing, in range of discretion is if a classification it is sufficient classifying, and Co arbitrary. Ins palpably Orient practical and (1899).” 281; 43 L 19 S Ct Ed Daggs, 172 US 554, 662. Mich legislative wisdom, made we to the In deference application tests, "it of these is in the that clear challenged legislative judgment that the axiomatic constitutionality”. presumption of is accorded 613. presumption Recognizing of constitu- Legisla- judgments tionality to be accorded nature, that: we indicated ture is rebuttable may legislative judgment challenging the party "a legal purely constitutionality in terms of its attack (if arbitrary legislative judgment is so arguments legislation unconstitu- as to render and irrational ** face) 554, 614. .” 402 Mich its tional on *. approach Cognizant analytic of the bifurcated general principles Shavers, our established questions pre- deciding the constitutional task sented herein must be as follows: equal considering plaintiffs’ process In due challenges statutory protection un- scheme to the (i) 3109(1), determine this Court must der "presump- plaintiffs have overcome whether through establishing constitutionality” tion of legal argument identi- the evil or otherwise under fied entirely (ii) whether basis; determine without *35 Farm State Ins Dissenting Opinion Williams, scheme or classification ma- statutory either under is related to reasonably trix drawn correcting the evil that is legislative purpose rationally identified. that while the first opinion prong are of the
We satisfied, this has been analysis statutory as to the on its face second scheme is deficient 3109(1) unconstitu- rendering prong, thereby at as the subtraction on its face least insofar tional survivors’ benefits Federal Social concerned. Purpose Legislative
V. Discussion: Statutоry Classification indicated, supra, testing protec- equal As both attacks schemes process tion and due Act, the Court must first deter- under No-Fault challenged mine whether scheme has valid legislative purpose. General, supra, Shavers v
In Attorney opined we goal system of the no-fault "[t]he provide was to victims of motor vehicle accidents assured, reparation for cer adequate, prompt 554, tain economic 578-579.12 losses”. Mich Consistent with legislative objective this was the apparent to either reduce determination rising or contain costs presently premium levels borne all insureds. case,
The Court of Appeals reasoning Shavers, handed down prior to our decision personal scheme, injury protection As to the Act’s we elaborated "comprehensive expeditious system”, that its was reason- benefit ably liability system recovery, including were curing pronounced related to certain of the tort deficiencies injuries evidence that: "minor long overcompensated, injuries undercompensated, serious were payment delays commonplace, system was overbur- were the court dened, and those with low income and little education suffered dis- crimination”. 402 579. *36 404 524 568 Mich by Dissenting Opinion Williams, J. comprehensive legisla- recognized this implicitly Burns, writing M. for the Judge T. judgment. tive Court, pur- the of that further discerned majority 3109(1) following of in the manner: pose § purpose the "Presumably, of reduce § program eliminating by overall duplicative can 355; of the no-fault cost less, pay If he recovery. the insurer has to recognized App charge less. As Shavers [65 (1975)], 325 the reduction of the cost of NW2d classification, proper pro- and insurance is a hibitive Mich basis for problem cost was a that needed solution.” 70 487, 495. App legislative objective are satisfied that We sought by promulgation to be achieved disputed encompasses either pre objectives duplicative of benefit elimination reduction, mium cost or both. This characteriza disputed purpose support tion of the scheme’s finds 3109(1)13 in both the and the history § signed Michigan’s by Act was into law Gover- No-Fault Insurance (1972) 31, nor Milliken on October two 1972. Mich Senate J 2032. After years by of substantial alteration and modification undertaken Senate, Michigan Representatives both the House of and presently appears adopted it was in that enactment. 1971, April detailing In four House Bills were introduced a proposed no-fault scheme of 1 Mich House automobile insurance. J (1971) bills, however, specifically provided 783-784. None these governmentаl response benefit set-off.It was in to the absence of such provision then-acting a Commissioner Insurance Van Hooser voiced his concern to Governor Milliken that adversely tween automobile insurance these House Bills duplication overlap tended to increase remedial and be (e.g., programs and other benefit Medicare) attempt Social and an In Commissioner receivable insured. an result, remedy apparently to opined entitlement undesirable general language, regard payable that the "shall be without any program providing wage other bene continuation fits”, should be deleted E. from the bill’s format. Letter from Russell Hooser, Michigan Insurance, Van liken Mil Commissioner of to Governor (June 1971) 4, 4734, 4735, concerning analysis of House Bills 212, p reproduced 4736 and in Defendant’s Exhibit No. Joint Appendix These House Bills Attorney submitted to this Court in Shavers v General. subsequently died in committee with no action having been taken on the recommendation. Commissioner’s 26, 1971, Michigan April Senate Bill 520. On Senate introduced State Farm Ins Opinion Dissenting Williams, drafts, 3520, (1971) House 663. Unlike the above J 1 Mich Senate (B) (A) expansive provided for an of that bill subds Indeed, mandated the subtraction this bill set-off scheme. benefit both exception Secu- of Social public benefits—with payable an insurer. otherwise rity the amount benefits—from part: pertinent provided in Senate Bill 520 3520 of Section Calculating Net Loss: "Sec. 3520. In "(A) chapter, provided Except in this all benefits as otherwise of an advantages injury, person receive because receives or is entitled to complete protection insur- than and added from sources other (1971). Bill 520 loss.” Mich Senate ance are subracted from arguments draft for this summarized the Van Hooser Commissioner insurance. legislation, stating: cost of automobile "It would reduce the * * * (and resulting duplication of benefits It would eliminate coordinating premiums) by benefits from automobile double with all other *37 Hooser, Michigan E. Van benefits”. Letter from Russell (June 1971), 4, p 2 to Governor Milliken Commissioner of Insurance concerning reproduced Defendant’s analysis Bill 520 of Senate 212, Appendix this Court in Shavers v submitted to Exhibit No. Joint Attorney General. Bill of Senate Approximately after the introduction two months 520, contrary directed a in the Senate which bill was introduced another expressed Bill 520. Section 9 in Senate set-off result to that (1971) 1000-1001, 782, provided in J Bill 1 Mich Senate of Senate pertinent part: 9(1). disability a claimant and survivor benefits The amount of "Sec. act, security United entitled to recover under the social recovers or is States injury bodily Code, 42, seq., of accidental 301 et because title sections protection personal insurance be subtracted from shall injury.” Bill 782 payable Mich Senate for the benefits otherwise (1971). payment provision mandated this set-off Unlike Senate Bill personal protection as well as of both the insured other security exception public of social benefits with benefits. Bill 782 "would noted that while Senate Commissioner Van Hooser injured adequate compensation persons in auto prompt assure accidents expenses, expenses, rehabilitation in this state for medical loss”, encourage an in- wage it would likewise loss and survivor’s duplica- to eliminate cost of auto insurance as it failed crease in the tion of benefits. Letter Milliken to Governor from Commissioner Van Hooser (June reproduced 4, 1971), concerning p 782 2 Senate Bill Attorney Accord- 212 in Shavers v General. Defendant’s Exhibit No. ingly, proposed 782 Bill an amendment to Senate the Commissioner Letter, insurance. would reduce the cost of auto which he determined substantially p the final mirrored 4. The Van Hooser amendment adopted. as version of § Milliken, Admittedly only Commissioner to Governor addressed purpose of the § that the Van Hooser’s comments make clear reducing maintaining statutory in terms of scheme was framed duplicative through premium for all insureds the elimination costs Dissenting Opinion Williams, J. considering the constitu of those cases majority of this scheme.14 tionality objec legislative comprehensive Considering the promulgation be effectuated sought tive statutory of the Act, purpose find the we an exercise to be both under consideration scheme rationally legislative judgment permissible judgment, to this In deference based.15 requirement that the first conclude we must fulfilled; has been test traditional presumption overcome have not plaintiffs legis a valid scheme has statutory challenged purpose. lative concluded, Ap- the Court of as did
Having so
ourselves
to whether
now address
peals,
must
we
engi-
and means
classifications
challenged
§3109(1)
neered under
legitimate
to this
related
reasonably
conclude,
in the
jurists
did the
purpose. We
Employment
cases of Fox v
analogous principal
Comm,
153 NW2d
379 Mich
Jacobs,
320; 194
App
36 Mich
and Bowser
(1967),
matrix
(1971),
the classification
NW2d
recovery.
accept
as indica-
the Commissioner’s comments
benefits
tive
regard.
We
of,
mirroring,
legislative judgment
substantially
in this
if not
Note,
See,
generally,
Insur-
v State Farm Mutual
*38
Act,
Michigan’s
Attempt
1977
No-Fault
Co: A Judicial
to Amend
ance
DCL Rev
187.
14
Co,
App
Mich
Mutual Automobile Ins
83
Greene v Statе Farm
Co,
505;
(1978);
83 Mich
Hawkins v Auto-Owners Ins
VI.
Challenge
Equal
Protection
gravamen
plaintiff’s equal protection
3109(1)
challenge
purpose
that,
§
while
may
permissible
statutory
one,
be
distinguishable
naturally
character-
there exist no
legislative judg-
permissible
to the
istics relevant
brief,
purpose allegedly
yet a third
In its
defendant asserts
3109(1). Proceeding
justifying
employed by
the classification matrix
§
premise
from the
compensation
Legislature”,
that the No-Fault Act was enacted to "achieve full
by
for all economic
so defined and limited
losses
purpose of
defendant concludes that
the evident
3109(1)
(i)
designed
was
that no more and no less than
"assure
§
* * *”
(ii)
any
actual economic loss is recovered from
source
as
* * *
ancillary
to reduce no-fault
insurance carriers’
effect
"[a]n
exposure
and,
keep
coverage
consequently, to
the cost of no fault
Brief,
primary
manageable
Appellant’s
p
within
thrust of
limits”.
18. The
therefore,
argument
regard,
is that the
defendant’s
this
alleged
by
rationally promote
classifications drawn
legitimate purpose
legislatively
statutory
of the
scheme under consideration: the
provision
secondary
primary
mandated
rather
than
coverage by
opinion that this
insurance
purpose
economic loss. We are of the
asserted
defendant was not embraced
in view of the fact that
include benefits
benefits were
the "subtractions” mandated
prior
casualty.
enjoyed
to the
Since these
automobile
apart
compensable by
enjoyed wholly
casualty
from the
no-fault,
component
compensa-
they
considered a
of the
could
be
resulting
casualty.
ble economic loss
from the automobile
legislative development
have reviewed the
We
under consideration as well
the No-Fault Act as a whole in
scheme
our
support
and can nowhere find
for defendant’s
Shavers decision
legislative purpose. Unpersuaded by defendant’s
assertion of this
particular
disputed
purpose,
need
characterization of the
scheme’s
we
regard.
not further address defendant’s contentions
*39
Dissenting Opinion Williams, J.
disparate
rationally justify
treat-
which
ment
ment
distinction
the collateral benefits—does
apparent
only
these two classes.
afforded
source of
classes—the
these
between
constitutionally
disparate
those no-
justify
afforded
treatment
governmental
receiving collateral
insureds
fault
receiving col-
insureds
no-fault
those
and
benefits
private
benefits.
insurance
lateral
identity
contrary,
character-
of class
theOn
patent.
received
have
Both classes
istics is
same
any,
premium
reduction,
both classes
if
cost
premium
identical
paid
dollar
the same
have
coverage,
the case of
both,
at least
and
no-fault
benefits,
made
have
survivors’
Social
coverage
monetary
secure
to
contributions
governmental
authorizing
both
legal
persuasive
plaintiffs
Further,
cite
benefits.
support
authority
contentions.
of their
allege
hand,
there
Defendants,
other
on the
gov
distinguishing
between
characteristics
exist
ernmental
coverage
private insurance
fund
disparate
justify
coverage
treat
which
fund
recipi
no-fault
classes of
these two
afforded
ment
ents in furtherance
perceives defendant
of what
objective
Act,
the No-Fault
be the
structuring
aas
i.e.,
of no-fault
primary
secondary
source
than as a
rather
attempts
Additionally,
compensation.17
defendant
legal authority
plaintiffs’
distinguish and rebut
Belcher, 404 US
of Richardson v
on the basis
92 S Ct
(1971), attempts to
254;
In view of the facts here that classes of both premium pay no-fault the same dollar for insureds personal protection identical maximum coverage, no-fault (ii) both classes have received a common (iii) premium any, reduction, if cost both monetarily classes have coverage authorizing contributed to secure the pri
both
benefits,
vate
facially
we must find this
violative of traditional
regard
sup
mandates. Our conclusions
ported by analogous Michigan precedent: Fox v
Employment Security Comm,
Mich
(1967);
App
Jacobs,
NW2d
Bowser v
*42
320;
If scheme involve the elimination before us is considered to apparent duplicative recovery, it is this of permissible purpose practically neither nor con 3109(1) by stitutionally realized classification solely in classes is based matrix as the distinction compensa from which the collateral on the source tion is 3109(1) paid.21 irrationally permits Section private duplicative no-fault and the retention of insurance benefits engaged directly that class which has Yet, collateral, it such insurance. concurrently the reduction of insurer- mandates paid by the amount of benefits no-fault benefits directly paid for the no-fault insured likewise auspices yet fortuitously under the of a received governmental program. cannot We sanction irrational class differentiation. disparate finding unconstitutionally clas-
This emphasized sification is further one notes when 24.13109(1), § 3109a, 500.3109a; that provides MCL MSA optional private, collat- for an set-off of eral insurance of the in- benefits at election Blakeslee, 464, 474, citing expressed our statement 388 Mich we following in Boettner: " permit company 'It would be unconscionable to an insurance offering statutorily required coverage premiums for it with to collect coverage away one hand and allow it to take the with the other ” using a self-devised "other 388 Mich insurance” limitation.’ 487-488. sense, permits In a real an insurer premiums personal protection coverage to collect with one hand permitting partially completely while insurer to either take coverage away governmen- through guise that tal benefit set-off. with the other practice objectionable Just as we found that cases, stacking equally objectionable these we find them here. Actually, subject may the benefits to subtraction under § instances, duplicative. point not even be for does not arise from a in those This is illustrated example, sought subtracted where the benefit to be all, casualty rather arises from an automobile at but longevity payment disability. or a war-related *43 Farm Ins v State Dissenting Opinion Williams, J. 3109(1) sured, § mandates such a set-off while recipient governmental desires benefit whether logic There is no to a or not. such subtraction attempt support in to eliminate an this difference duplicative recovery.22
B. Premium Cost Reduction pursuant
Similarly, classifications drawn 3109(1), enacting Legislature § Michi- in all premium gan pay rate the same uniform motorists coverage but all do not receive for no-fault urged by defendant that such same It is benefits. achieving permissible means for classifications the agree premium lowering do rates. We premium re- cost focuses burden recipients alone. duction on That larly benefit simi- confronted with a set-off while class is private who from insureds benefit situated premium not. This conclusion reduction are alone or obtains whether we review conjunction § 3109a. with 24.13109(1), 3109a, 500.3109a; MSA
Section MCL part: provides in relevant personal protection "An providing insurance insurer offer, appropriately premium benefits shall at reduced rates, reasonably related deductibles exclusions coverage other health accident on the insured. [*] [*] [*] permit
The effect insured who has this section a no-fault private engaged collateral, insur- ally similarly mental and do and we scheme violative of We note realized its otherwise situated therefore passing classes equal protection. feel alike, constrained permissible judgment by recipients. mandating a set-off for both Legislature to declare this This the could have constitution- treating classification govern- did not these Mich Dissenting Opinion Williams, J. premium rates if a reduction to receive anee private, collat- elected set-off insured has 3109(1), other on the amounts. Section eral benefit *44 premium compels pay the hand, full insured to an acquiescence concurrently requiring to rate while governmental mandatory for of benefits set-off paid. has the insured which sense, insureds have both classes of In a real paid form whatever for their collateral benefits Yet, have those who those benefits have assumed. permitted engaged private, are collateral benefits recoup their benefit costs of collateral some to through premium pursu appropriate reduction
an governmen those receive §to while who ant 3109a recoupment of a similar tal benefits are denied out-of-pocket costs benefit their collateral some of premium appropriate through equally reduc an private no-fault effect, benefit In collateral tion. insureds larger permitted disproportionately are their full or reduced benefits for elected no-fault premium similarly payment situated than are rate recipient-insureds governmental at benefit mandatory premium full rate.23 analysis proceeding of Further, an from 3109(1) similarly that alone, are convinced § we apparent expressed in Legislature’s view of In reluctance permit private, absence Legisla- benefits in the 3109a a set-off collateral § reduction, argued premium might it of a direct ture misconceived notion that be governmental solely on the based mandated a set-off benefits uniformly governmental availa- guided conception to all no-fault insureds. If this ble Legislature erroneous 3109(1), equally conclu- in its enactment of an erroneous through similarly permissibly that all insureds are treated sion disagreement operation with would indeed Our arise. uniformly fact, apparent. not is In all no-fault insureds are notion eligible governmental apparent one when for becomes assistance. This eligible for only individuals are considers Federal Social statutorily four narrow classes of was also if their decedent survivors’ benefits treatment, seq. Uniformity "insured”. 42 USC et scheme; therefore, championed is the § clearly rather, again unconstitutionally disparate classification once uniformity. emerges feigned from this veil of Farm State Ins Opinion Dissenting Williams, pre effectuating permissible the burden of unconstitutionally objective cost reduction
mium governmental upon solely benefit class rests private collateral Unlike the no-fault insured insureds. recipient governmental insured class, the compelled purchase no-fault insur is first class coverage com on claims ance, full no-fault denied ostensibly programs pensable by reducing premiums, purpose is then savings premiums full denied the benefit private similarly benefit class situated while the operates essence, both arbitrar this scheme not. In ily compel discriminately those insureds no-fault benefits to both entitled to subsidize greater savings premium class for the including to receive those entitled insureds of all and hold benefits.24 *45 24 655; McGowan, 394 Mich 232 Co Bank & Trust wherein v See Manistee equal protection (1975), the this Court considered NW2d 636 disputed passenger Michigan guest act viability statutorily act. injured, non-paying recovery negligently tort to denied guest/non- possible purpose passengers. for the As one automobile analyzed Legislature, guest by Court the the the classifications drawn permissibly limit allegation liability, disputed enacted to act was thereby litigation, insurers to offer man- enable reduce Applying coverage premium traditional datory rates. at reduced challenged protection equal classifi- test to "reasonable relation” cation matrix in this particular respect, Justice Levin found equal protection statutory stated for the deny plaintiffs of the laws and majority: "Conceding, arguendo, there rates are lower because that insurance not, more, statute, guest premiums do without is a lower insurance essentially arbitrary justify an classification. years persons injured Thursdays 50 and 60 "If or men between on ordinary negligence, age recovery there would be for of assurance of less lower insurance rates. were denied recoveries, possibility litigation, fewer and the Nevertheless, agree classifi- would that such all 'arbitrary’ despite the relief afforded down as cations would be struck owning public’. purse of the motor 'the Legislature may legitimate in the to intervene "It be for the by increasing selected But the means costs of automobile insurance. object reasonably related to to do so must be recovery ordinary guest passengers sought negligence insurance rates Thursdays Denying for to be attained. objective reasonably to the lower no more related is injured persons denying recovery on than would be age. years 50 and 60 or men between Mich Opinion Dissenting Williams, Analysis Equal Protection Case C. support of facial conclusion for our
findWe developed by unconstitutionality case law as Indeed, in the this Court both this state. the courts Appeals faced have earlier been Court of and the gov- challenges analogous with challenges were schemes; these set-off ernmental Employment presented in both Fox (1967), and NW2d 644 Comm, 379 Mich App Jacobs, 320; 194 NW2d Bowser v (1971). unemployment weekly were Fox,
In receiving employees statutorily those denied to temporary permanent, permanent, partial total Recipi- compensation disability benefits. workers’ "specific benefits, ben- loss” of workers’ death ents efits, accept employees those who elected to "lump compensation award, how- sum” workers’ passengers cost of as not better to bear the a class are able "Guest class, owning public. they are not premiums As a for motor lower necessarily sources of are especial wealthy they necessarily have all nor do all recovery recovery. do not have other sources Those who publiс may resources and become forced to exhaust their own charges.” 394 Mich 677-678. opined was whether further that it even uncertain Justice Levin public thereby protect governmental efforts to costs and reduce justification purse larly of a simi- were sufficient selection disparate class for treatment. situated Analogous Manistee to the this Court in scenario confronted Bank, recipients this case before us involves benefit insureds, pay premium private the same losses the same as suffer who insureds, private governed benefit the identical no-fault as scheme insurer to of-pocket Yet, the no-fault when it comes time for insureds. loss, permitted compensate its out- to reduce the insurer *46 governmental recipients liability respect it while with pocket, fully compensate private insured the same must out of disparate championing instances the notion that this while in both treatment all insureds. in Manistee this the attempt premium costs for undertaken in an reduce guests plight by Much like confronted the constitutional Bank, relationship perceive we no rational between can fact, reduction; appears segregation premium it class recipient effectively paid higher premium for has recovery. reduced Farm State Ins v by Dissenting Opinion Williams, J. permitted weekly statutorily ever, to receive were compensation. unemployment writing major- T. M. Kavanagh, Justice disputed statutory object ity, opined possibility preclude of benefit scheme was object duplication; the Court was identified legislative purpose. permissible The distinc- aas the two compen- between drawn tion potential weekly unemployment classes eligibil- recipients on the basis of a worker’s sation ity compensa- permanent temporary or for either "specific opposed benefits, loss” to death tion as benefits, "lump benefits, however, was sum” impermissible, arbitrary classifica- an held to be opined, so, the Court be- scheme. This was tion certain workers under the cause permitted unemployment benefits to obtain were Citing similarly not. situated were while others People Chapman, 584; 4 301 Mich NW2d (1942), Lapeer quoted Haynes v Circuit which from (1918), Judge, 138; 166 201 Mich NW Court stated:
"' which, public pur- "Legislation carrying out a reasonable and pose good, for the common is limited type or class of justifiable differentiation to a distinct persons because is not for that reason unconstitutional legislation, germane object if of the enact- class to the upon operation all ment and made uniform persons it its if applies; but naturally of the class to which it persons all fails to include and affect alike class, to one privileges immunities or same and extends kind, by like portion and denies them to others of subclassification, it comes arbitrary unreasonable against class prohibition within the constitutional ’ ” legislation.” 589. pro- equal auspices the "traditional” Under the disputed test, the Court held that tection *47 Mich Dissenting Opinion Williams, J. plaintiffs denied scheme classification statutory a to effectuate attempt its despite protection equal ben- duplicative legislative objective permissible elimination. efit direct Fox is not a that cognizant are
While we action, it per- we believe present analogue proposition for the support offers suasively violative here drawn classifications opinion fact, are of the In we equal protection. we are further than Fox Court went finding govern- proceed to required presently infirm constitutionally mental set-off com- nor workers’ unemployment that neither contri- financial any made beneficiaries pensation in the rights whereas benefit for their bution made contributions the beneficiaries case instant rights. for all benefit unconsti ruling of facial for our support
Further case of analogous closely found in the tutionality is Jacobs, 194 NW2d App 36 Mich Bowser v (now-Justice Levin, recom (1971) dissenting and fact). In findings of for further mending remand equal Bowser, considered Appeals the Court scheme under statutory of a viability protection Claims Act. dis Vehicle Accident the Motor those em bar operated totally puted scheme from compensation entitled to workers’ ployees claim that act. Those for benefits under applying situated, had nonetheless but who similarly ants insurance, collateral, voluntary secured however, against recourse permitted were con plaintiffs’ agreed with majority fund. The "tradi violative of cern that the classification was Writing mandates.25 tional” similarly jurisdictions schemes held such Other have compensable disabil- reducing recovery by under an insured’s claims compensation paid ity out of workers’ laws the amount benefit See, e.g., policy. contrary public Allied. funds to be invalid State Farm Ins Dissenting Opinion Williams, Court, stated: Judge Chief Lesinski * * * legislation
"The of this social aim injured by uninsured tortfeasors compensate those recovery. have had no source of would otherwise who *48 seen, But, persons who have available some as we have Fund recovery permitted to reach the avenues employees are constrained to injured are not. We but legislature arbitrarily carved out agree that the has from who have recourse to the Fund. this class This classification is one made without those
the force of unconstitutionally compelling logic; we find it natory.” Mich discrimi- 320, App 36 328. characterizes Bowser inapt on the
Defendant under ground statutory presently scheme in a set-off recov- merely consideration mandates while the Bowser required a statutory scheme ery distinc- bar to We do not find this recovery. total of the fact that persuasive, tion view especially Bowser and the case at bar the concern is both than the one of classification rather statutory We aggregáte recovery. amount of an insured’s find the basis of the Bowser court’s reasoning appropriate for consideration in the matter before us. principal
Defendant’s to the Court of rebuttal rests Appeals ruling unconstitutionality upon Supreme the decision of the Court United States Belcher, Richardson v 254; 78; 404 92 S Ct US (1971) (Justices 30 L 231 Douglas, Ed 2d Marshall Larriva, (1973); 385; App Mutual Ins Co v 19 P2d 997 Ariz 507 Co, Property Casualty Travelers Ins Co v National Farmers Union & (1972). quoted Appeals aptly 252 Ark SW2d The Court of following language Co decision: from the Travelers Insurance " right simply provide by it 'The claimed NFU would [the insurer] compen- with a windfall in the case of one covered the workmen’s purpose Motorist Act was to sation laws. The protect of the Uninsured ” insured, App 497. not the insurer.’ 70 Mich Dissenting Opinion Williams, arguable, dissenting). find this We Brennan persuasive. distinguishable not but required presented in Richardson facts The Supreme a "tradi- Court to consider United States challenge § 224 of tional” disputed Social required compensation Act. and Federal workers’
the set-off of state against Federal Social Secu- similarly disability rity Those situated benefits. voluntary, benefits, how- but entitled required a similar set- ever, to maintain were Supreme decision, Court, 4 to in a ruled off. The treatment accorded these the difference in constitutionally infirm consid- was not two classes purpose peculiar legitimate legislative ering the sought i.e., scheme, to be furthered encouragement of state workers’ affirmance compensation writing schemes. Justice Stewart majority in stated: Richardson *49 judgment a "It that the offset reflected is self-evident compensation and by Congress that workmen’s instances disability programs certain the workmen’s purpose, served a common compensation that programs precedence take should overlap. area of
" * * * original com- purpose of state workmеn’s pensation satisfy inadequately was a met laws to need Congress by private insurance or tort claim awards. rationally could conclude that this should continue need States, federal met that a primarily be and the efforts began program duplicate might gradual weakening atrophy States of the lead to the programs.” 404 US 82-84. state manifestly is
We convinced that Richardson distinguishable from the case at bar. ruling Supreme
First, the United States Court’s State Farm Ins Opinion by Dissenting Williams, specifically relationship relied on Federal-state congressional upon desire not to encroach program. policy obviously pres- a state That ent in case. the instant factually
Second, the two situations under com- parison markedly pivotal differ. This is so in two respects. significant
The first factual distinction centers on the fact that Richardson concerned the set-off relationship non-beneficiary contributory of two systems from which the insured would benefit gratuitously, whereas the instant case concerns relationship beneficiary the set-off of two contribu- tory systems. posed Unlike the situation in Rich- required ardson, this Court is not to rule on a attempt classificatory to eliminate re- payments; dundant, rather, free transfer we are manifestly distinguishable attempt faced with a set off insured-financed against coverage. insured-financed no-fault significant
The second factual in- distinction volves the circumstance the Richardson sought disability against to set off a benefit disability benefit, a whereas the scheme under longevity against review seeks to set off a benefit disability dissimilarity benefit. We find this com- pelling. distinguishable
Third, we find Richardson legislative purposes sought terms of the to be accomplished engineered schemes Congress Michigan the United States and the Legislature. Reduced to their common denomina- apparent legitimate tor, both schemes have as an *50 purpose duplicative recovery. the elimination of sought by This elimination was to be achieved through bodies, however, these two two entirely Indeed, Richardson, different vehicles. 524 by Dissenting Opinion Williams, provision Congress as a set-off vehicle a enacted government’s risk on its own Federal reduce the Here, unlike Richard- Federal, fund. Michigan enacted a set-off has son, the private indus- reduce the insurance as a vehicle essence, try’s fund. In risk on partially operates § to either the completely scheme
discharge private contractual, no-fault operated obligations scheme while the Richardson obligations discharge public created and con- to trolled powers. general Congress pursuant welfare to its foregoing analysis of Rich On basis majority’s persuaded rea ardson, arewe dispositive soning holding is not therein suggested by defendant.26 We case us as before conceptual analysis persuaded that further appropriate Fox and Bowser is both offered both supportive present of our for our consideration unconstitutionality. finding of facial Challenge VII. Due Process additionally contend that the Plaintiffs facially as it is unconstitutional property personally in the form of confiscates process premium payments without due financed plaintiffs support contention, In of this of law. provided analysis essentially the same forward 3109(1). challenge in their Supreme the Florida Court’s decision Defendant also cites (Fla, 1974), Co, proposi- Lasky for the v State Farm Ins So 2d present equal protection. tion that scheme is not violative of bound, Indeed, Court; we are not this was result reached however, although holdings supreme courts such of other state authority frequently if well-rea- considered in our deliberations persuasive. Lasky latter to fall into that soned and We do not find category persuasiveness Supreme Court’s constitu- as the Florida analysis presented for its review is devoid tional of the set-off scheme legal authority. any policy discussion and lacks the citation of *51 State Farm Ins Dissenting Opinion Williams, J. similarly upon analysis
Defendant rests the same proffered plaintiffs’ equal protection it to rebut challenges. opined consistently have
We that the over-all objective adequately, of the No-Fault Act is to assuredly, promptly compensate victims of automobile accidents for certain economic losses. We have likewise determined that 3109(1) engineered by permissi- has as its purpose duplicative ble either the elimination of recovery premium or the reduction of costs for all insureds. beyond peradventure payment per-
It is protection sonal insurance benefits as well as the payment governmental benefits under the no- triggered by injury arising fault scheme are an compensable from a automobile accident and re- sulting in economic loss to Yet, the insured. statutory language irrationally broad §of permits the set-off of non-accident as well as acci- governmental dent related benefits. unqualified, language Indeed, the overbroad only indicates the absurd result that not
may the insurer subtract insured subsidized acci- dent-related Social here, benefits as but may e.g., the insurer Federal, state, disability also set off municipal employee pension plans, benefits, veterans’ and other non-automobile casualty paid related from a recipient fund and financed insured. No doubt, were we to constitutional, hold this section setting-off we could envision an insurer an in- governmental pension sured’s benefits awarded employment longevity, because of the insured’s against liability injury the insurer’s no-fault occasioned an automobile accident. example
It is clear from the above Mich Dissenting Opinion by Williams, language unconstitutionally scheme is over- rationally broad and devoid means to an related legitimate legislative purpose. otherwise
VIII. Conclusion duplicative We find that the elimination of bene- *52 premium fits and the maintenance or reduction of permissible costs are exercises of the judgment. persuaded, however, We are not either the classifications drawn or the means se- judg- lected to effectuate this 3109(1) through ment ably § the enactment of reason- legitimate govern- relate to these otherwise purposes. mental Accordingly, we find the scheme of 3109(1) facially deny plaintiffs proc-
§ both due ess and of the laws. 3109(1)
Having facially § found unconstitutional, provision we likewise find the contract invalid as public policy. e.g., See, offensive to State Farm Shelly, Mutual Automobile Ins Co v (1975). NW2d 641 Although Appeals the Court of found be no effect as of the enactment, date of its we justice hold that in the interests of our declaration unconstitutionality given only must be limited ruling We, therefore, retroactive effect. hold the (i) today applicable announced to be to: the instant pending presently case and all lower court cases which have raised this issue but which a deci- (ii) appropriate sion has not been rendered; all disputed future cases in which this section subsequent (iii) opinion; to the date of this those cases in which a retrial is to occur after the date opinion any of this because of remand on other issue where the set-off issue has been Farm Ins v State Opinion Moody, Jr., J. Blair (iv) appeal pending raised; on those cases opinion eligible appeal the date this after adequately preserved. which this issue has been Appeals finding of uncon- the Court of We affirm entry judgment stitutionality consist- and order question opinion. public costs, a No ent with being involved.
Fitzgerald Moody, Jr., JJ., and Blair concur- J. Williams, red with (concurring with Williams, Moody, Jr., Blair
J.) agree general analysis employed by I with the sign opinion. therefore his Justice Williams judgment concerning scope However, I reserve Legislature’s duplicative intent of the recovery avoid any distinction between contributive and non-contributive benefits.