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STATE OF MICHIGAN
COURT OF APPEALS


THOMAS P. MCCARTHY, Plaintiff-Appellee, v MICHIGAN DEPARTMENT OF TRANSPORTATION, Defendant-Appellant, and AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellee.

UNPUBLISHED April 4, 1997

No. 198951 Court of Claims LC No. 91-013173-CM

ON REMAND

Before: Taylor, P.J., and Griffin and Markey, JJ. PER CURIAM. Defendant Michigan Department of Transportation (MDOT) appeals as of right a portion of a judgment rendered against it in favor of plaintiff. In supplemental briefs filed after remand from the Supreme Court, the parties have advised this Court that the judgment has been partially satisfied. At this juncture, the only portion of the judgment on appeal is an award in plaintiff's favor against defendant MDOT in the sum of $6,439,446.40 for future medical expenses. In our previous opinion, we reversed the judgment of the lower court based on governmental immunity. In doing so, we found it unnecessary to address defendant's other issues on appeal. On further appeal, the Supreme Court in lieu of granting leave to appeal remanded the case for reconsideration in light of Pick v Szymczak, 451 Mich 607; 548 NW2d 603 (1996). On remand, defendant MDOT does not reargue governmental immunity but rather asserts an issue that was previously raised but not decided by this Court.

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I The dispositive issue raised on remand is whether the lower court erred in ruling that no-fault insurance medical benefits are not a collateral source for which defendant MDOT is entitled to a setoff pursuant to MCL 600.6303; MSA 27A.6303. We hold that the lower court erred in ruling that such benefits are not a collateral source. Accordingly, we reverse and vacate that portion of the judgment that denies a setoff for no-fault insurance medical benefits.1 It is clear that no-fault insurance medical benefits are a collateral source for which defendant is entitled to a setoff. MCL 600.6303(4); MSA 27A.6303(4) provides in pertinent part: As used in this section, "collateral source" means benefits received or receivable from an insurance policy. . . . Nevertheless, the lower court refused to allow defendant MDOT to set off this collateral source because of a contractual lien asserted by defendant Auto Club Insurance Association. The circuit court reasoned as follows: . . . Defendant's [MDOT] attempt to reduce its liability by application of MCL 600.6303; MSA 27A.6303 is misplaced. ACIA [Auto Club Insurance Association] has a contractual lien on the proceeds of this recovery. Notice was timely given and ACIA is pursuing its claims. That act provides that: collateral source does not include benefits paid or payable by a . . . legal entity entitled by contract to a lien against the proceeds of a recovery by a plaintiff in a civil action for damages, if the contractual lien has been exercised . . . MCL 600.6303(5); MSA 27A.6303(5). The statute prohibits this reduction. In Great Lakes American Life Ins Co v Citizens Ins Co, 191 Mich App 589; 479 NW2d 20 (1991), we held that contractual reimbursement rights are subject to the restrictions and limitations of the no-fault act. Further, we held that contractual liens that conflict with MCL 500.3116; MSA 24.13116 are unenforceable. By operation of

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Michigan Law