Thompson v. Detroit Automobile Inter-Insurance Exchange

Cavanagh, J.

(dissenting). Plaintiff Francis Thompson, while insured by the defendant, was injured in an automobile accident, which resulted in a disability preventing him from returning to work. As a result, he receives work-income loss benefits under the no-fault insurance act, MCL 500.3107(b); MSA 24.13107(b), as well as social security disability insurance benefits under the Social Security Act, 42 USC 423. In addition, his wife, plaintiff Sarah Thompson, and their two dependent children receive social security insurance benefits based upon his disability.

In computing the benefits owed to Francis Thompson under the no-fault act, the defendant reduced the monthly amount payable to him by the total amount of monthly social security payments made to each member of his family. Defendant claimed that its right to such a setoff exists under MCL 500.3109(1); MSA 24.13109(1).

Plaintiffs filed suit against the defendant con*627testing the setoff of the social security benefits paid to Sarah Thompson and their two children; the setoff as to Francis Thompson’s benefits is not in dispute. Plaintiffs moved for summary judgment, requesting that the defendant be prohibited from setting off the social security dependents’ benefits. The circuit court granted the plaintiffs’ motion, and the Court of Appeals affirmed. 107 Mich App 256; 309 NW2d 228 (1981). We granted the defendant’s application for leave to appeal in order to consider whether § 3109(1) of the no-fault act permits the defendant to set off social security dependents’ benefits from work-income loss benefits payable under the act. 414 Mich 873 (1982).

Section 3107 of the no-fault act provides for the payment of benefits to cover loss of income suffered by an injured person insured under the act. This controversy centers on an interpretation of § 3109(1) of the act, which states:

"Benefits provided or required to be provided under the laws of any state or the federal government shall be subtracted from the personal protection insurance benefits otherwise payable for the injury.” MCL 500.3109(1); MSA 24.13109(1).

In O’Donnell v State Farm Mutual Automobile Ins Co, 404 Mich 524; 273 NW2d 829 (1979), we were asked to determine whether § 3109(1) requires a setoff of social security survivors’ benefits from the survivors’ receipt of benefits under the no-fault act. We concluded that § 3109(1) requires a setoff of social security survivors’ benefits when those benefits are paid as a result of the same accident which entitles the survivors of the insured decedent to benefits under the no-fault act because the governmental benefits duplicated in varying degrees the no-fault benefits also due. *628O’Donnell, p 538. We reached this conclusion on the basis that:

"The history of § 3109(1) indicates that the Legislature’s intent was to require a set-off of those government benefits that duplicated the no-fault benefits payable because of the accident and thereby reduce or contain the cost of basic insurance.” O’Donnell, p 544.

In a case similar to the one before us now, we were asked to decide whether under § 3109(1) the defendant could deduct from no-fault wage-loss benefits otherwise due a portion of the social security old-age benefits being received by the plaintiff. Jarosz v DAIIE, 418 Mich 565; 345 NW2d 563 (1984). We held that the applicable test regarding whether governmental benefits provided or required to be provided must be deducted from no-fault benefits under § 3109(1) is whether the governmental benefits:

"D Serve the same purpose as the no-fault benefits, and
"2) Are provided or are required to be provided as a result of the same accident.” Jarosz, p 577.

Thus, the key to determining whether § 3109(1) requires a setoff of social security disability benefits for dependents from those benefits payable under the no-fault act is whether the social security benefits are payable as a result of the same accident and whether they are duplicative, i.e., whether they serve the same purpose as the no-fault benefits. In this case the social security benefits were payable as a result of the same accident so we turn our attention to the question of whether they serve the same purpose as the no-fault benefits due.

*629Defendant argues that all social security payments, whether made for the death, disability, or retirement of the insured, serve substantially the same purpose, i.e., to protect the insured and the insured’s dependents against the hardship of a loss of wage-earning support, and therefore that all such benefits should be subject to a setoff from any no-fault benefits due. Defendant further argues that, on the basis of our holding in O’Donnell, if Francis Thompson were to die from the injuries he received in his accident, the social security survivors’ benefits to which his dependents would be entitled would reduce the no-fault benefits payable to them pursuant to the setoff provision of § 3109(1) and that, therefore, it would be illogical for us to hold that the predecessor of such survivors’ benefits is not likewise set off from any no-fault benefits.

Plaintiffs counter that the social security disability benefits payable to a spouse or child of the wage earner are not duplicated in any form, to any degree, by any no-fault benefits and that therefore no deductions should be permitted from the wage benefits payable under the no-fault act. The no-fault benefits for which the defendant is responsible are payable only to Francis Thompson because the injured wage earner is the only person who qualifies for work-income loss benefits under § 3107(b). The amount of these benefits is determined solely on the basis of the injured worker’s insurance coverage and wages; the amount of benefits is not affected by the worker’s marital status or the number of dependent children.

The Court of Appeals agreed with the plaintiffs that the mandatory setoff provision of § 3109(1) is inapplicable because there is no duplication of benefits. The Court concluded that the purpose in *630providing work-income loss benefits to the insured under the no-fault act is not the same as that in paying social security disability benefits to the insured’s spouse or children.

Jarosz, p 580, sets forth a four-point test to determine whether particular governmental benefits serve the same purpose as no-fault benefits:

"In every case, in order to determine whether the governmental and no-fault benefits serve the same purpose (criterion 1), a particularized assessment of the questioned governmental benefit is necessary to identify the ultimate beneficiary, the nature of the benefits, the reason for paying them, and the events triggering entitlement to them.”

We acknowledge that the nature of both benefits is the replacement of lost income and support. In addition, the triggering event is the same. However, analysis of the remaining points reveals that social security disability benefits paid to the worker’s family serve a different purpose than no-fault work-loss benefits paid to the worker and are therefore not subject to setoff under § 3109(1).

As to the ultimate beneficiary, our brothers Ryan and Levin believe that the injured worker and the worker’s family are the ultimate beneficiaries of both benefits. We disagree. No-fault benefits are paid only to the disabled worker. In contrast, social security disability benefits are paid separately both to the worker and to the dependent children and spouse of the worker. Benefits payable to a dependent child inure directly to the child despite the requirement of dependency status; no indices of parental ownership ever attach to such funds. See Mask v Mask, 95 NM 229; 620 P2d 883 (1980), and Fuller v Fuller, 49 Ohio App 2d 223; 360 NE2d 357 (1976). Benefits payable to *631the wage earner’s spouse are not payable on the basis of dependency; a spouse who is separated or divorced from the wage earner is entitled to benefits if the spouse provides care for any dependent child of the disabled worker. 42 USC 402(b).

Unlike Justice Levin, we attach some significance to the fact that Congress purposely chose to pay a portion of the social security disability benefits to the worker and the remainder directly to the spouse and dependents, rather than making all payments to the worker. The wisdom of this division of payment is particularly evident where the worker and the worker’s spouse are estranged or divorced and child support is not regularly provided by the worker. No-fault payments benefit dependents only indirectly, whereas disability payments benefit them directly.

The reasons for paying no-fault work-loss and social security disability benefits are also different. Work-loss benefits are provided to an injured insured worker to replace lost wages, subject to the limitations in § 3107(b). These benefits are not based upon the number of the insured worker’s dependents. Section 3107(b) basically provides simple income insurance protection, which requires benefits to be computed to compensate the insured worker approximately dollar for dollar for the amount of wages lost because of the worker’s injury or disability. No benefits are payable to the worker’s dependents.

On the other hand, social security disability payments are based upon a more complex premise, including both income insurance protection and, to a certain extent, a social welfare program designed to provide at least subsistence payments to disabled workers as well as to their dependents. Weinberger v Wiesenfeld, 420 US 636, 647; 95 S Ct *6321225; 43 L Ed 2d 514 (1975). Social security disability benefits are not designed to compensate the wage earner alone as are benefits payable under the no-fault act. Disability benefits paid to the wage earner’s family have no comparable counterpart under the no-fault act.

Assuming that no-fault is also a social welfare program, it is a social welfare program vis-á-vis the injured worker only. Although the net effect of both work-loss and disability payments is generally to maintain the entire family’s standard of living, the "purpose” and "effect” of particular benefits are not synonymous. Only the former must be considered in determining whether benefits are duplicative and subject to setoff under § 3109(1). Jarosz, supra, fn 9.

Our holding that social security disability benefits paid to the worker’s family are not subject to the mandatory setoff provision in § 3109(1) does not conflict with our holding in O’Donnell that social security survivors’ benefits are subject to such a setoff. As we noted in O’Donnell, supra, p 546, social security survivors’ benefits are intended to provide persons dependent upon the wage earner with protection against the economic hardship occasioned by the loss of the wage earner’s support. Survivors’ benefits payable under § 3108 of the no-fault act are also intended to compensate the dependents of the deceased for the support they would have received during their dependency had the injured worker not suffered the accidental bodily injury causing death. MCL 500.3108; MSA 24.13108. Since the social security survivors’ benefits duplicate in considerable degree and purpose the survivors’ benefits provided for under the no-fault act, the setoff provision of § 3109(1) is applicable.

*633However, disability benefits under the Social Security Act and the no-fault act do not serve the same purpose as do survivors’ benefits under both acts. Furthermore, unlike survivors’ benefits, social security disability benefits to a worker’s dependent children or spouse do not duplicate in any degree disability benefits payable to the worker under the no-fault act. Therefore, it is entirely rational to treat these two types of benefits differently under § 3109(1). The fact that § 3109(1) would become applicable should the injured worker subsequently die because of an injury does not change this. At the time of the injured worker’s death, a different type of benefit is payable, and it is not inconsistent to subject the benefit to a different treatment.

Although in some instances an injured worker and his family may receive more from no-fault and disability payments than the actual wages lost, benefits which do not duplicate no-fault benefits cannot be set off under § 3109(1). The family’s better financial position has no relation to the determination of whether the benefits duplicate one another. Jarosz, supra, fn 10.

The judgment of the Court of Appeals should be affirmed. Appellees should be permitted to tax costs.

Williams, C.J., and Brickley, J., concurred with Cavanagh, J.