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Specht v. Citizens Insurance Company of America

Michigan Court of Appeals
Feb 26, 1999
234 Mich. App. 292 (Mich. Ct. App. 1999)

Summary

In Specht v. Citizens Insurance Company of America, 234 Mich. App. 292, 593 N.W.2d 670 (1999), the Michigan Court of Appeals held explicitly that "[w]here, as here, a claim for worker's compensation benefits is still pending when the no-fault carrier is sued for benefits, the no-fault carrier will be unable to prove its entitlement to a setoff.

Summary of this case from Durmishi v. National Casualty Company

Opinion

No. 204280

January 13, 1999, at Grand Rapids.

Decided February 26, 1999, at 9:15 a.m.

Law Offices of Thomas A. Geelhoed (by Thomas A. Geelhoed), for the plaintiff, Grand Rapids.

Jonathan Shove Damon Attorneys and Counselors (by Jonathan S. Damon), for the defendant, Grand Rapids.

Before: HOOD, P.J., and NEFF and MARKEY, JJ.


This is a no-fault insurance case. Defendant insurer appeals as of right from a $73,662.63 jury verdict in plaintiff's favor, arguing that the trial court should have granted its motion to dismiss for lack of jurisdiction under MCR 2.116(C)(4). We affirm.

Plaintiff was injured in an automobile accident while driving her own vehicle during the course of her employment. She filed both a claim with the Bureau of Worker's Disability Compensation and a lawsuit against defendant, her no-fault insurance carrier. Defendant's only argument on appeal is that the pendency of the claim before the worker's compensation bureau deprived the trial court of jurisdiction to decide whether plaintiff's injuries arose out of the work-related automobile accident. We disagree.

Plaintiff received no-fault benefits until about September 1993 and worker's compensation benefits until about March 1994. This case concerns medical expenses, work-loss benefits, and replacement services incurred after those dates.

Whether the trial court had subject-matter jurisdiction is a question of law that we review de novo. Bruwer v. Oaks (On Remand), 218 Mich. App. 392, 395; 554 N.W.2d 345 (1996).

"The Worker's Disability Compensation Act (WDCA) [MCL 418.101 et seq.; MSA 17.237(101) et seq.] and the no-fault insurance act [MCL 500.3101 et seq.; MSA 24.13101 et seq.] are complete and self-contained legislative schemes addressing discrete problems. Neither act refers expressly to the other." Mathis v. Interstate Motor Freight System, 408 Mich. 164, 179; 289 N.W.2d 708 (1980). "The WDCA provides a substitute for common-law tort liability founded upon an employer's negligence. . . ." Id. On the other hand, "[t]he no-fault act provides a substitute for common-law tort liability based upon the ownership or operation of a motor vehicle." Id. Thus, when an employee such as the present plaintiff is injured in a motor vehicle accident during the course of employment, entitlement to compensation for injuries is governed by both the WDCA and the no-fault act. See id. at 183; see also Great American Ins Co v. Queen, 410 Mich. 73, 86; 300 N.W.2d 895 (1980).

Under the no-fault act, an insurer "is liable to pay benefits for accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle. . . ." MCL 500.3105(1); MSA 24.13105(1). These benefits include medical expenses, work-loss benefits, replacement services, and death benefits. MCL 500.3107; MSA 24.13107. The injured employee is entitled to similar benefits under the WDCA. See, e.g., MCL 418.315(1); MSA 17.237(315)(1), MCL 418.319; MSA 17.237(319), MCL 418.321; MSA 17.237(321), MCL 418.351; MSA 17.237(351), MCL 418.361; MSA 17.237(361), MCL 418.371; MSA 17.237(371). Therefore, it is well settled that when an employee is injured in a motor vehicle accident during the course of employment, the no-fault carrier is entitled to a setoff or reimbursement in the amount of the worker's compensation benefits that were or will be paid for the same injuries. See MCL 500.3109(1); MSA 24.13109(1); see also Great American, supra at 86; Mathis, supra at 186-187; Booth v. Auto-Owners Ins Co, 224 Mich. App. 724, 731; 569 N.W.2d 903 (1997); Conway v. Continental Ins Co, 180 Mich. App. 447, 449-450; 447 N.W.2d 761 (1989).

Where, as here, a claim for worker's compensation benefits is still pending when the no-fault carrier is sued for benefits, the no-fault carrier will be unable to prove its entitlement to a setoff. Id. at 450. "Indeed, [except with regard to payments already made,] a setoff cannot be made until the amount of workers' compensation benefits to which plaintiff is entitled is finally determined." Id. Nevertheless, the no-fault carrier is not entitled to delay payments in order to wait for the bureau's determination. Id.; Cannell v. Riverside Ins Co, 147 Mich. App. 699, 706; 383 N.W.2d 89 (1985). Rather, this Court has held that the no-fault carrier is entitled to "intervene" and "actively participate" in the worker's compensation proceeding in order to protect its "reimbursement interest." Russell v. Welcor, Inc, 157 Mich. App. 351, 354-356; 403 N.W.2d 133 (1987) (relying on MCL 418.847; MSA 17.237[847]); see also McCain v. Auto-Owners Ins Co (On Rehearing), 223 Mich. App. 327, 330; 566 N.W.2d 629 (1997); Allstate Ins Co v. Sentry Ins Co of Michigan, 175 Mich. App. 157, 161; 437 N.W.2d 338 (1989).

It is true that our Supreme Court has stated that "`[i]ssues concerning injuries and whether they grew "out of and in the course of the employment relationship" are to be exclusively within the purview of the work[er]'s compensation [bureau], and the merits of such a claim are to be first evaluated by the [bureau].'" Szydlowski v. General Motors Corp, 397 Mich. 356, 359; 245 N.W.2d 26 (1976), quoting Herman v. Theis, 10 Mich. App. 684, 689; 160 N.W.2d 365 (1968); see also MCL 418.841(1); MSA 17.237(841)(1). More recently however, the Court has acknowledged that, taken literally, the rule lends itself to an overbroad interpretation and that, "[p]roperly stated, the Szydlowski principle is that the bureau has exclusive jurisdiction to decide whether injuries suffered by an employee were [sustained] in the course of employment." Sewell v. Clearing Machine Corp, 419 Mich. 56, 62; 347 N.W.2d 447 (1984). "The courts, however, retain the power to decide" other related issues such as the existence of an employment relationship. Id.; Integral Ins Co v. Maersk Container Service Co, Inc, 206 Mich. App. 325, 330; 520 N.W.2d 656 (1994); see also Conway, supra at 449-450 (in an action for no-fault benefits, the no-fault carrier has the burden of proving its entitlement to a setoff).

Our Supreme Court has recently agreed to decide the issue whether courts are bound by the bureau's determination concerning whether an employment relationship exists. See State Farm Mut Automobile Ins Co v. Roe (On Rehearing), 226 Mich. App. 258, 270; 573 N.W.2d 628 (1997), lv gtd 459 Mich. 878 (1998).

Defendant's reliance on St Paul Fire Marine Ins Co v. Littky, 60 Mich. App. 375; 230 N.W.2d 440 (1975), is misplaced. In St Paul, a worker's compensation carrier sued for a declaratory judgment concerning its liability to its insured/employer. Id. at 376. The issue was whether the injured employee, who allegedly had been practicing law without a license, was covered by the worker's compensation policy, given its exclusion of coverage of persons employed in violation of the law. Id. Thus unlike in the present case, the issue before the court was the scope and meaning of the worker's compensation policy. Id. at 376-379. We also note that St Paul was decided before Sewell clarified the Szydlowski/Herman rule and may not have survived that decision. See Sewell, supra at 62.

Similarly, in Michigan Property Casualty Guaranty Ass'n v. Checker Cab Co, 138 Mich. App. 180, 182; 360 N.W.2d 168 (1984), the successor of the defendant employer's bankrupt worker's compensation carrier sued for a determination whether the injured employee was covered by its policy. In light of Sewell and other cases, this Court noted that the "circuit court has jurisdiction to determine rights arising out of an entirely different relationship and in an entirely different type of proceeding in which the employer-employee relationship is only incidentally involved." Id. at 183 (dicta). The court nevertheless agreed that "the underlying question is whether claimant [employee] is entitled to workers' compensation benefits," and thus concluded that the action was within the bureau's exclusive jurisdiction. Id. at 183.

In the present case, by contrast, a determination whether the accident occurred during the course of plaintiff's employment was both unnecessary and irrelevant to the question of her entitlement to no-fault benefits. There was also no need to examine or interpret the terms of the worker's compensation policy issued to plaintiff's employer. Rather, defendant's liability depended only on whether plaintiff was injured during the course of an accident covered by the no-fault policy that she purchased from defendant.

We therefore find that whether defendant was liable to plaintiff for no-fault benefits was clearly an issue over which the circuit court had jurisdiction. See Sewell, supra at 62. Plaintiff's employment relationship was, at best, only tangentially involved. Checker, supra at 183. Thus, the trial court correctly refused to dismiss plaintiff's action for lack of subject-matter jurisdiction.

Affirmed.


Summaries of

Specht v. Citizens Insurance Company of America

Michigan Court of Appeals
Feb 26, 1999
234 Mich. App. 292 (Mich. Ct. App. 1999)

In Specht v. Citizens Insurance Company of America, 234 Mich. App. 292, 593 N.W.2d 670 (1999), the Michigan Court of Appeals held explicitly that "[w]here, as here, a claim for worker's compensation benefits is still pending when the no-fault carrier is sued for benefits, the no-fault carrier will be unable to prove its entitlement to a setoff.

Summary of this case from Durmishi v. National Casualty Company
Case details for

Specht v. Citizens Insurance Company of America

Case Details

Full title:LAHNA SPECHT, Plaintiff-Appellee, v. CITIZENS INSURANCE COMPANY OF…

Court:Michigan Court of Appeals

Date published: Feb 26, 1999

Citations

234 Mich. App. 292 (Mich. Ct. App. 1999)
593 N.W.2d 670

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