Perez v. State Farm Mutual Automobile Insurance

Levin, J.

(for reversal). The question presented is whether amounts required to be paid as workers’ compensation that have not been and will not be provided to a worker injured in a motor vehicle accident because the employer did not have workers’ compensation coverage are required to be subtracted from work-loss benefits otherwise required to be paid under the no-fault automobile liability act. The Court of Appeals held that the amount so payable but not paid is required to be subtracted from work-loss benefits by § 3109(1) of the no-fault act; one judge dissented. Perez v State Farm Mutual Automobile Ins Co, 105 Mich App 202; 306 NW2d 451 (1981). A second panel of the Court of Appeals relied on the dissenting opinion in Perez in reaching the opposite conclusion in Davis v Auto-Owners Ins Co, 116 Mich App 402; 323 NW2d 418 (1982).

We would hold, in agreement with the result reached by the Court of Appeals in Davis,1 that the *639amount so payable but not paid is not required to be subtracted from work-loss benefits. Workers’ compensation benefits that will not be paid because the employer failed to purchase insurance are not "the kind of governmental benefits the Legislature intended to be subtracted from no-fault benefits”. Jarosz v DAIIE, 418 Mich 565, 573; 345 NW2d 563 (1984). The "required to be provided” clause of § 3109(1) does not unambiguously alter this conclusion, and was apparently drafted with a different situation in mind. Construing § 3109(1) to mean that it does not require the subtraction of workers’ compensation benefits payable but not paid implements the legislative intent underlying the no-fault act and the legislative intent to render the workers’ compensation act and the no-fault act complete and self-contained statutory schemes.

I

On March 23, 1979, plaintiffs Herminio Perez and Emilio Lopez were injured when the truck in which they were riding collided with a tractor-trailer. They were using the truck in connection with the business of their employer at the time of the accident. Perez was a stockholder of the employer. He and the other stockholder were the only full-time employees. Lopez was a part-time em*640ployee. The employer had not secured workers’ compensation insurance.

State Farm Mutual Automobile Insurance Company, the no-fault insurer of the truck, refused to pay no-fault medical and work-loss benefits to Perez and Lopez. State Farm claims that workers’ compensation benefits, because they are "required to be provided” under state law, may be subtracted from no-fault benefits although workers’ compensation benefits are unavailable to the injured worker because the employer has failed to provide workers’ compensation coverage.2

II

Section 3109(1) provides:

"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.”3

The legislative purpose in providing work-loss benefits to an injured person under the no-fault act is to compensate him (and his dependents) by providing protection from the economic hardship caused by the loss of the wage earner’s income as a result of an automobile accident. O’Donnell v State Farm Mutual Automobile Ins Co, 404 Mich 524, 545-546; 273 NW2d 829 (1979), app dis 444 US 803; 100 S Ct 22; 62 L Ed 2d 16 (1979); Jarosz v DAIIE, supra, p 575.

*641Amounts payable as workers’ compensation benefits that will not be paid to an injured worker because his employer failed to obtain workers’ compensation coverage cannot duplicate no-fault work-loss benefits and are not required to be subtracted from no-fault work-loss benefits.4 There cannot be a duplicative recovery where only a single recovery is available.5

Ill

The dissenting opinion would permit the setoff by applying, without construction or interpretation, the "required to be provided” clause of § 3109(1), which it finds to be unambiguous:

"In the context in which it is used in § 3109(1), the language chosen by the Legislature conveys a single and unambiguous meaning; that a setoff shall be made either when the workers’ compensation benefits are provided or when they are not provided, but are 'required to be provided’.
"Section 3109(1) is not, on its face, ambiguous.”6

After noting that "[w]here there is no ambiguity [in a statute, courts] are not free to interpret or construe, but are bound to apply the provision as written”,7 the opinion concludes that amounts payable as workers’ compensation are "required to be provided”, and therefore must be subtracted from a no-fault recovery although they are not actually *642paid because the employer failed to obtain workers’ compensation coverage.

A

To be sure, this Court has said that "[i]f the language employed in a statute is plain, certain and unambiguous, a bare reading suffices and no interpretation is necessary”. Grand Rapids v Crocker, 219 Mich 178, 182; 189 NW 221 (1922).8 We do not agree, however, that the "required to be provided” clause of § 3109(1) is so clear and unambiguous.9

The most unambiguous aspect of § 3109(1) is the term "benefits”. The literal meaning of that term would require that all governmentally mandated benefits be subtracted from a no-fault recovery.

Despite this unambiguous term, however, this Court today declares that "[c]ertainly not all '[bjenefits provided or required to be provided under the laws of any state or the federal government’ must be subtracted from no-fault personal protection insurance benefits otherwise due”. Jarosz v DAIIE, supra, p 573 (emphasis in original). The Court sets forth a two-part test for determining which governmentally mandated payments within the literal terms of § 3109(1) are "benefits” required to be subtracted and which government payments, though also falling within the literal terms of § 3109(1), are not "benefits” required to be subtracted from a no-fault recovery. This test is then applied in such a way as to hold that although the social security retirement payments at *643issue in Jarosz are "benefits provided * * * under the laws of * * * the federal government”, they are not "benefits” required by § 3109(1) to be subtracted.

The dissenting opinion does not explain why the "required to be provided” clause of § 3109(1) is so unambiguous as to require mere application, while the term "benefits” is sufficiently ambiguous to require the formal two-part test enunciated in Jarosz to properly construe that term. Just as this Court construed the term "benefits” in Jarosz and concluded that some government payments but not others are "benefits”, so this Court today construes the "required to be provided” clause to determine whether sums payable as workers’ compensation that are not paid to an injured worker because his employer failed to obtain workers’ compensation coverage may nevertheless be subtracted from no-fault work-loss benefits.

B

Section 3109(1) is based on two model acts: UMVARA10 and MVBPIA.11 Both of these model acts provide for the subtraction of benefits and advantages a person "receives or is entitled to receive” because of the injury.12 The "provided or required to be provided” language of § 3109(1) is functionally equivalent to the "received or is entitled to receive” language of UMVARA and MVBPIA; there is no indication that the Legislature intended any substantive change in the mean*644ing or content of the provision when it altered the words contained in the two model acts.13 This language appears to have been addressed to the question whether a person entitled to no-fault benefits may either deliberately or unwittingly forego governmentally mandated payments and nonetheless be entitled to full no-fault benefits. Schermer, Automobile Liability Insurance (2d ed), § 8.01, pp 8-3 to 8-4.14

Some state statutes provide that only benefits "received” or "recovered” are required to be subtracted.15 "The implication is, therefore, that an insured may forego taking such benefits without incurring the risk of a deduction.” Id., pp 8-4 to 8-5. Other state statutes as well as UMVARA and MVBPIA, on the other hand, permit the subtraction of workers’ compensation payments that the insured is "entitled to receive”, or that are "payable” or "collectible” by him,16 "and thus it would appear [they] are deductible upon a showing of availability to the insured”. Id., p 8-4.

*645By enacting the "required to be provided” language of § 3109(1), the Legislature seems to have aligned the Michigan no-fault act with the latter group of states and with UMVARA and MVBPIA. By declaring that workers’ compensation payments "provided or required to be provided” are to be subtracted from a no-fault recovery, the Legislature appears to have set forth a straightforward answer to the question it was addressing: an injured worker must pursue available workers’ compensation payments because they are deductible simply by virtue of their availability. The "required to be provided” clause does not mean that sums payable as workers’ compensation that are not available to the injured worker because his employer failed to provide workers’ compensation coverage are nonetheless to be subtracted from no-fault work-loss benefits.17

The "required to be provided” clause of § 3109(1) means that the injured person is obliged to use reasonable efforts to obtain payments that are available from a workers’ compensation insurer.18 *646If workers’ compensation payments are available to him, he does not have a choice of seeking workers’ compensation or no-fault benefits; the no-fault insurer is entitled to subtract the available workers’ compensation payments even if they are not in fact paid because of the failure of the injured person to use reasonable efforts to obtain them.

IV

The view that § 3109(1) does not permit the subtraction of unavailable workers’ compensation benefits is consistent with the underlying purpose of the no-fault act and with the legislative intent to render the workers’ compensation act and the no-fault act complete and self-contained statutory schemes.19

*647A

In Davey v DAIIE, 414 Mich 1, 10; 322 NW2d 541 (1982), this Court set forth the legislative purposes underlying both the no-fault act in general and § 3109(1) in particular:

"Enactment of the no-fault act was a major departure from prior methods of obtaining reparation for injuries suffered in motor vehicle accidents. The Legislature modified traditional tort principles of compensation by creating a comprehensive statutory scheme of reparation with the objective of providing assured, adequate and prompt recovery for certain economic losses arising from motor vehicle accidents. Miller v State Farm Mutual Automobile Ins Co, 410 Mich 538, 568; 302 NW2d 537 (1981); Belcher v Aetna Casualty & Surety Co, 409 Mich 231, 243; 293 NW2d 594 (1980); Shavers v Attorney General, 402 Mich 554, 579; 267 NW2d 72 (1978). We have also recognized a complementary legislative objective which is the containment of the premium costs of no-fault insurance. O’Donnell v State Farm Mutual Automobile Ins Co, 404 Mich 524, 549, 567; 273 NW2d 829 (1979).”20

The view here set forth that § 3109(1) does not *648permit the subtraction of workers’ compensation benefits that are not in fact available to the worker gives effect to both the general goal of the no-fault act and the particular purpose of § 3109(1).21 Where workers’ compensation benefits are available, but the injured worker does not exercise reasonable efforts to obtain them, the particular purpose of § 3109(1) to contain the cost of no-fault insurance prevails and the workers’ compensation benefits are required to be subtracted from the no-fault benefits. But where, as here, the workers’ compensation benefits are not available, the overall objective of the no-fault act to provide assured, adequate, and prompt recovery through the no-fault system prevails and no subtraction is permitted.22

B

In Mathis v Interstate Motor Freight System, 408 Mich 164, 179; 289 NW2d 708 (1980), this Court noted that "[t]he Worker’s Disability Compensation Act (WDCA) and the no-fault insurance *649act are complete and self-contained legislative schemes addressing discrete problems.” Thus neither statutory scheme should be permitted to frustrate the purposes and objectives of the other statutory scheme.23 Under the view here set forth that § 3109(1) does not permit the subtraction of unavailable workers’ compensation payments, the no-fault act would remain a separate and self-contained legislative scheme: the unavailability of workers’ compensation payments would not preclude the no-fault scheme from providing the injured person with an assured, adequate, and prompt recovery.

To be sure, the employer is ultimately liable to pay workers’ compensation benefits to which an employee is entitled if the employer fails to provide workers’ compensation insurance coverage.24 It is also true that the workers’ compensation act increases the opportunity for recovery of a judgment entered against the employer by denying the employer certain exemptions from seizure and sale of property normally allowed, and by subjecting officers and directors of corporate employers to personal liability.25

This remedy against the employer, however, does not bar the injured worker from obtaining full no-fault work-loss benefits. The workers’ compensation act and the no-fault act are "complete and self-contained legislative schemes”, Mathis, *650supra, p 179, and neither scheme should be permitted to frustrate the purposes and objectives of the other scheme. The remedy afforded by the workers’ compensation act to an injured worker whose employer has failed to obtain workers’ compensation coverage — a potentially lengthy and costly lawsuit against the employer — is wholly inadequate to accomplish the no-fault act’s purpose of providing assured, adequate, and prompt recovery for economic loss arising from motor vehicle accidents. Although the "required to be provided” clause of § 3109(1) calls for reasonable efforts to obtain available workers’ compensation payments, it does not, in light of the underlying purpose of the no-fault act, call for a potentially lengthy and costly effort of suing the employer when workers’ compensation payments are unavailable because the employer failed to obtain workers’ compensation coverage.

V

In sum, the "required to be provided” clause of § 3109(1) is no more susceptible to simple application than the term "benefits”. The "required to be provided” clause of § 3109(1) means only that the injured person is obliged to use reasonable efforts to obtain available workers’ compensation payments. The clause does not authorize subtraction of unavailable workers’ compensation benefits.

In the instant case, workers’ compensation payments are unavailable to Perez and Lopez because their employer has failed to provide workers’ compensation coverage. The amount of such workers’ compensation payments may not be subtracted from the no-fault work-loss benefits.

The decision of the Court of Appeals is reversed *651and the cause is remanded for reinstatement of the trial court’s order granting summary judgment in favor of Perez and Lopez and further proceedings consistent with this opinion.

Williams, C.J., and Kavanagh, J., concurred with Levin, J.

State Farm seeks to distinguish Davis on the ground that in that case the plaintiff was unrelated to the employer who failed to obtain workers’ compensation coverage, while in the present case one of the plaintiffs, Perez, was an incorporator and 50% stockholder of his *639corporate employer. State Farm apparently concedes that Davis cannot be distinguished on this ground with respect to the other plaintiff, Lopez, who was an employee, but not a stockholder.

Even with respect to Perez, however, State Farm’s attempted distinction is unpersuasive. Perez’ status as an incorporator and 50% stockholder of the corporate employer might be significant for purposes of the workers’ compensation act. We need not consider this possibility here. For purposes of § 3109(1) of the no-fault act, the only status of Perez that is relevant is his status as a person injured in a motor vehicle accident, the same status possessed by Lopez in the instant case and by the plaintiff in the Davis case.

On cross-motions for summary judgment, the circuit court on January 17, 1980, determined that State Farm was required to pay no-fault benefits without subtraction of the unavailable workers’ compensation benefits. A divided Court of Appeals reversed. Perez v State Farm Mutual Automobile Ins Co, supra. This Court granted leave to appeal. 414 Mich 864 (1982).

MCL 500.3109(1); MSA 24.13109(1).

O’Donnell v State Farm Mutual Automobile Ins Co, supra, p 544; Jarosz v DAIIE, supra, pp 574-575. But see Jarosz v DAIIE (Levin, J., dissenting, fn 13).

See Davis v Auto-Owners Ins Co, supra, p 414 (quoting Perez v State Farm Mutual Automobile Ins Co, supra, p 208 [Burns, J., dissenting]).

Post, p 658. (Emphasis in original.)

Post, p 655.

See also MacQueen v City Comm of Port Huron, 194 Mich 328, 342; 160 NW 627 (1916).

See Davis v Auto-Owners Ins Co, supra, p 413; Ostrowski v Roman Catholic Archdiocese of Detroit, 479 F Supp 200, 206 (ED Mich, 1979), aff'd 653 F2d 229 (CA 6, 1981) (dicta).

Uniform Motor Vehicle Accident Reparations Act. See 14 ULA, Civil Procedural and Remedial Laws, p 41.

Motor Vehicle Basic Protection Insurance Act, see Keeton & O’Connell, Basic Protection for the Traffic Victim: A Blueprint for Reforming Automobile Insurance (Boston: Little, Brown & Co, 1965).

UMVARA, 14 ULA, § 11, p 78; MVBPIA, § 1.10, p 306.

Utah’s no-fault statute contains the UMVARA and MVBPIA language. In Western Casualty & Surety Co v Marchant, 615 P2d 423, 425 (Utah, 1980), the Supreme Court of Utah, in another context, did not disturb a trial court’s finding that where the employer did not carry workers’ compensation coverage, the employee was not "entitled to receive” any workers’ compensation payments.

The dissenting opinion appears to recognize that the "required to be provided” clause of § 3109(1) was not drafted with the present situation in mind:

"The Legislature’s choice of language suggests that it very likely enacted the setoff provisions as though viewing the matter primarily from the perspective of the employer’s duty, rather than from the perspective of an employee whose employer violated the law by failing to provide the required governmental benefits. * * * It is likely that the Legislature chose the language it used on the basis of a supposition of employer obedience to the law, not disobedience of it.” Post, pp 656-657.

See, e.g., Fla Stat Ann, 627.736(4); Kan Stat Ann, 40-3110; Md Ann Code, art 48A, § 540.

See, e.g., Conn Gen Stat, 38-333(c); Minn Stat Ann, 65B.61, subd 2; NJ Stat Ann, 39:6A-6; SC Code Ann, § 56-ll-150(d); Utah Code Ann, 31-41-7(3)(a).

Several of the cases discussed by the parties in their briefs are not pertinent where workers’ compensation payments are unavailable to the injured worker because the employer failed to provide workers’ compensation coverage. In Thacker v DAIIE, 114 Mich App 374; 319 NW2d 349 (1982), Moore v Travelers Ins Co, 475 F Supp 891 (ED Mich, 1979), and Luth v DAIIE, 113 Mich App 289; 317 NW2d 867 (1982), workers’ compensation payments were available to the injured worker although they were not actually paid to him. In Thacker and Moore, the injured workers redeemed their workers’ compensation claims for less than the total amount of available workers’ compensation payments they would otherwise have received; in Luth, an injured federal employee elected, pursuant to the federal workers’ compensation statute, 5 USC 8118(c), to utilize the sick and vacation days he had accumulated rather than to apply for available federal workers’ compensation payments.

This construction of the "required to be provided” clause of § 3109(1) is consistent with a common definition of the word "require”. One panel of the Michigan Court of Appeals, in construing § 3109(1), has said that "the plain meaning of 'require’ (as shown in Webster’s New World Dictionary) is 'to ask or insist upon, as by right or authority; demand’ ”. Thacker v DAIIE, supra, p 378.

*646Consistent with this definition, the "required to be provided” clause of § 3109(1) means that Perez and Lopez must "ask, demand, or call” for any workers’ compensation payments that are available to them. If, however, those payments are unavailable to Perez and Lopez because their employer failed to provide workers’ compensation coverage, this provision does not mandate that they nonetheless be subtracted from no-fault work-loss benefits.

This view of § 3109(1) is also consistent with this Court’s decision in the analogous case of Mays v Ins Co of North America, 407 Mich 165; 284 NW2d 256 (1979). That case concerned a similar setoff provision in a private disability insurance contract:

"The Weekly Benefit Amount shall be reduced by the weekly prorata portion of any benefits payable under the Workmen’s Compensation Act and the primary disability monthly benefit payable under the Federal Social Security Act regardless of actual receipt of such benefit due to the Insured’s failure to apply therefor (primary disability monthly benefit means the benefit relating to the Insured only and not including any additional benefit which might be payable because of the presence of dependents).”

After holding that the "regardless of actual receipt of such benefit due to the Insured’s failure to apply therefor” clause applied only to social security payments and not to workers’ compensation payments, id., p 171, this Court concluded that "[a] setoff of such [workers’ compensation] benefits, even if no application was filed, cannot be countenanced under the instant provision, except when such benefits are actually received”. Id., p 172.

*647State Farm argues that Mays can be distinguished on the basis that the policy in that case provided for the subtraction of "benefits payable” under the workers’ compensation act, whereas § 3109(1) mandates the subtraction of "benefits required to be provided” under the workers’ compensation act. This distinction is not persuasive, as the two phrases are functionally equivalent. See text accompanying fn 13.

Although we agree with State Farm that the Mays holding with respect to a private insurance contract is not controlling or dispositive of the present question arising under the statutory no-fault scheme, we find the Mays decision prohibiting a setoff of unavailable workers’ compensation payments to be consistent with the views that we express here today.

The virtues of an assured, adequate, and prompt no-fault recovery were extolled by this Court in Shavers v Attorney General, 402 Mich 554, 622-623; 267 NW2d 72 (1978):

"Such [no-fault] payments may substantially compensate all personal injury victims of motor vehicle accidents for economic loss, including the victims of motor vehicle accidents, who were, under the tort system, uncompensated or undercompensated for their economic *648losses. Prompt payment provided for under the act may remedy the delays under the tort system. By partially abolishing tort liability to those who suffer personal injuries as a result of motor vehicle accidents, the act may lessen the number of motor vehicle personal injury tort suits in the courts. The prompt availability of compensation for economic losses may relieve the undereducated or those with lower income from the pressure — 'legal’ or economic — to settle serious claims prematurely and for less than an equitable amount.”

Although the dissenting opinion adverts to the statement in Davey that the cost-reduction goal of § 3109(1) is "complementary” to the goal of the statute as a whole to provide assured, adequate, and prompt recovery so that both objectives should be given effect, post, pp 661-663, it would "apply” the "required to be provided” clause of § 3109(1) in such a way as to frustrate and defeat the overall objective underlying the no-fault act. The dissenting opinion would deny Perez and Lopez an assured, adequate, and prompt recovery for their economic losses.

See Davis v Auto-Owners Ins Co, supra, p 414 (quoting Perez v State Farm Mutual Automobile Ins Co, supra, p 208 [Burns, J., dissenting]).

Under the dissenting opinion’s view of § 3109(1), the failure of the workers’ compensation act to provide for payments where the employer has failed to procure workers’ compensation coverage would effectively frustrate the purpose of the no-fault act — which does provide for payments where the owner or driver is uninsured or unidentified (MCL 500.3177; MSA 24.13177) — to provide assured, adequate and prompt recovery for economic loss arising from motor vehicle accidents.

See MCL 418.647; MSA 17.237(647).

See id.