Preview:

Michigan Supreme Court Lansing, Michigan

Opinion
ARTHUR T. JARRAD, Plaintiff-Appellee, v INTEGON NATIONAL INSURANCE COMPANY, Defendant-Appellant. _______________________________ BEFORE THE ENTIRE BENCH CORRIGAN, J. In trial this court no-fault and the

Chief Justice:

Justices:

Clifford W. Taylor

Michael F. Cavanagh Elizabeth A. Weaver Marilyn Kelly Maura D. Corrigan Robert P. Young, Jr. Stephen J. Markman

FILED MAY 3, 2005

No. 126176

coordination-of-benefits Court of Appeals ruled

case, that

the an

employer's self-funded long-term disability plan may not be coordinated with no-fault wage loss benefits. We hold that

a self-funded long-term disability plan constitutes "other health and accident coverage" that is subject to

coordination under MCL 500.3109a.

We therefore reverse the

judgment of the Court of Appeals, and remand the matter to the trial court for entry of an order granting summary disposition for defendant.

I. UNDERLYING FACTS AND PROCEDURAL HISTORY Plaintiff accident. sustained injuries in an automobile

At the time of the accident, he was employed by Under a collective a long-term

the Michigan Department of Corrections. bargaining agreement, the state

provided

disability (LTD) plan that covered plaintiff. company administered the plan and

An insurance benefit

processed

payments, but the plan was self-funded by deductions from employees' paychecks and employer contributions. Following the accident, plaintiff began receiving Under

monthly payments of $2,220.04 under the LTD plan.

the coordination-of-benefits clause in plaintiff's no-fault policy, defendant, plaintiff's no-fault insurer, deducted the LTD benefits from its no-fault wage loss payments, for a net amount of $1,467.76 a month for three years following the accident.1 Plaintiff filed this action to challenge the The parties filed cross-motions The trial court granted summary

coordination of benefits. for summary disposition. disposition for plaintiff. The decision.2 Court of

Appeals

affirmed

in

a

two-to-one

The majority noted that MCL 500.3109a permits

coordination of no-fault benefits with "other health and

Under MCL 500.3107(1)(b), no-fault wage loss benefits are payable for up to three years after the accident. Unpublished opinion per curiam, issued January 27, 2004 (Docket No. 245068). 2
2

1

accident coverage . . . ."

The majority explained that in

LeBlanc v State Farm Mut Automobile Ins Co, 410 Mich 173, 204; 301 NW2d 775 (1981), this Court had construed the word "coverage" as "a word of precise meaning in the insurance industry, [that] refers to protection afforded by an

insurance policy, or the sum of the risks assumed by a policy of insurance." While this definition has expanded

under Court of Appeals case law to include medical benefits received from health plans typically provided by insurers, the majority opined that no such expansion of the term "coverage" has occurred regarding work-loss benefit plans. Moreover, the majority construed Spencer v Hartford

Accident & Indemnity Co, 179 Mich App 389; 445 NW2d 520 (1989), to preclude coordination where an employee receives "wage loss benefits from his employer through a formal wage continuation agreement." plan pursuant to a collective bargaining

The majority distinguished Rettig v Hastings

Mut Ins Co, 196 Mich App 329; 492 NW2d 526 (1992), because in that case LTD benefits were provided under an insurance policy, rather than directly by the employer under a

collective bargaining agreement. Judge Zahra, the dissenting Court of Appeals judge in this case, opined that the self-funded LTD plan constituted "other health and accident coverage" that is subject to coordination under MCL 500.3109a. 3
Unlike Spencer, where

the employer paid wage continuation benefits directly to the employee, the instant case involves an insurance-type benefit paid by a third party from accumulated payroll

contributions. which the

The dissent would have followed Rettig, in of Appeals held that provided payments LTD by for benefits health medical

Court

"constitute insurance

protection plans, which

typically include

expenses resulting from an accident as well as wage-loss replacement added). Judge Zahra also opined that the self-funded nature of the plan was not dispositive, because in drafting

Download ARTHUR JARRAD V INTEGON NATL INS CO.pdf

Michigan Law