Workman v. Detroit Automobile Inter-Insurance Exchange

Levin, J.

(concurring in part and dissenting in part). We disagree with the Court on Issue I and concur in the disposition of Issues II and III.

The first issue concerns § 3114 of the no-fault motor vehicle liability act,1 providing that a no-fault policy is deemed to apply to "the person named in the policy, his spouse, and a relative of either domiciled in the same household” (emphasis supplied), with the result that where a relative so domiciled is not insured, the householder’s insurer, rather than the insurer of the vehicle in the accident, is obliged to pay no-fault benefits.2

*513Deborah Workman lived with her husband in a trailer owned by her father-in-law, located on his property 40 to 50 feet from his house. The question is whether the trailer and the house or those there residing constitute a single household so as to require the father-in-law’s insurer to pay no-fault benefits to her. We would hold that Workman was not domiciled, within the meaning of the act, in her father-in-law’s household and therefore the insurer of the vehicle in which she was a passenger is obliged to pay no-fault benefits to her.

The second issue concerns the application of the set-off provisions of § 3109(1) to Medicaid payments received by Workman. We concur in the Court’s decision.

The third issue concerns reimbursement to an insurer for no-fault benefits it has paid out of a third-party tort recovery. Section 3116 originally provided that "after recovery is realized upon a tort claim, a subtraction [from first-party benefits] shall be made to the extent of the recovery * * *. If personal protection insurance benefits have already been received, the claimant shall repay to the insurers out of the recovery a sum equal to the benefits received, but not more than the recovery exclusive of reasonable attorneys’ fees and other reasonable expenses incurred in effecting the recovery”. Recently, on October 16, 1978, § 3116 was amended to limit reimbursement of the no-fault insurer to situations where the defendant was uninsured, or the accident occurred out of state or the injury was intentionally inflicted.3 Because it appears that the Legislature intended to clarify the statute, we concur in the Court’s conclusion that the insurer is not entitled to reimbursement.

*514I

Neither Workman nor her husband owned an automobile or had a no-fault policy at the time of the accident. The question is which of three no-fault insurers was required to pay no-fault benefits to her. Wolverine Insurance Company insured her mother (with whom she was temporarily residing); Community Services Insurance Company insured her father-in-law (who owned the trailer and property where she was permanently residing); Detroit Automobile Inter-Insurance Exchange insured her sister (the owner and driver of the automobile in which she was injured).

We all agree that Workman was not domiciled in her mother’s household at the time of the accident. She was merely visiting for a week to keep her little sister company.

The circuit court concluded that Workman was a relative domiciled in her father-in-law’s household and held that his insurer was responsible for payment of her no-fault benefits. In so holding, the court stressed the freedom of movement between the two houses, the electric and water connections to the main house, and that the trailer was a travel trailer not permanently affixed to the property.

This Court affirms that decision, applying a four-factor test to determine if Workman was domiciled in the same household as her father-in-law.

Workman, a daughter-in-law, is clearly a relative of the insured. She had no permanent residence other than the trailer and intended to continue to live there for an indefinite period. The question, therefore, is not whether she was a "relative” or "domiciled” in the trailer but, rather, *515whether the trailer and the house or those there residing constituted a single household.

Factors (1) and (4) of the Court’s test, "the subjective or declared intent of the person of remaining * * * in the place he contends is his 'domicile’ or 'household’ ”, and "the existence of another place of lodging by the person alleging 'residence’ or 'domicile’ in the household”, would be appropriate to a determination of which of several sometime abodes is the domicile,4 but have no bearing on whether the trailer and the house constituted a single household.

Also of little assistance is factor (2), "the formality or informality of the relationship between the person and the members of the household”, and, as it is stated, factor (3), "whether the place where the person lives is in the same house, within the same curtilage, or upon the same premises”. If the senior and junior Workmans lived in a two-family dwelling ("in the same house”) or side-by-side in an apartment house ("upon the same premises”) and enjoyed a close relationship they would still be members of separate households, notwithstanding an informal relationship, the shared house or premises and curtilage.

In concluding that there was a single household the Court points to several factors: shared mailing address, close relationship, access to facilities, occasional shared meals, and shared grounds. Two families in a two-family or apartment house could have the same relationship, but would not constitute one household.

A number of factors point to the opposite conclusion, and indicate that Workman was not a member of her father-in-law’s household. The junior *516Workmans had been married for four years and had a child. They had always lived apart from the senior Workmans except for three or four months in 1972, and had been living in a different town for about a year before moving into the trailer. They moved to the trailer to be within walking distance of the son’s new job, not to maximize the relationship with the in-laws. The junior Work-mans did their own grocery shopping, prepared their own meals (except for an occasional dinner with the parents), had their own bath and toilet facilities, refrigerator and television.

The question then becomes whether the statutory language, "domiciled in the same household”, should be construed to include a married son’s separate abode simply because he enjoys a close relationship with his parents and has access to their house and draws water and electricity from their house.

We construe this clause in the context in which it is found, a provision of the statute allocating responsibility between insurers, not one creating entitlements. If the question were whether Workman is eligible to recover no-fault benefits there would be a reason — to effectuate the legislative purpose of providing no-fault benefits — to opt for a liberal construction of the word "household” to afford maximum coverage. Here, we decide not whether no-fault benefits are payable at all but which of two insurers will pay them. A liberal construction will not effectuate the purpose to provide benefits, and may distort another legislative purpose.

Sections 3114 and 3115 establish the order in which no-fault insurers are required to pay benefits. An injured person looks first to his own insurer, then to the insurer of a relative in the same *517household, then to the insurer of the owner of the vehicle occupied when the accident occurred, and then to the driver’s insurer.

Persons who live in the same household with an insured but who are not themselves insured are a little like insureds and a little like those not insured. They stand in a close relationship both to an insured and, by reason of the accident, to a covered vehicle. The Legislature has chosen to treat an uninsured person as a unit with an insured relative provided they are "domiciled in the same household”.

Sections 3114 and 3115 appear to be a carefully considered division of responsibility between the insurer of the relative of an uninsured person and the insurer of the vehicle in the accident. A member of the same household looks to the relative’s insurer, a member of a different household looks to the vehicle’s insurer.

Because the construction placed on the word "household” completely determines liability and the Legislature appears to have had a neutral purpose and to have attempted to draw the line down the middle between the two insurers, we should accord that word as exact a meaning as possible. Doing so will deny no-fault benefits to no one.

Too liberal a construction of "domiciled in the same household” does violence to the statute’s allocation of the burden of providing first-party benefits by imposing additional insureds on the householder’s insurer.

Insurers should be able to calculate their risks. Knowledge of the approximate number of persons covered by the policies they issue may be crucial in such calculations, and therefore the persons for *518whom they are responsible should be readily identifiable.

Because a liberal construction of "household” does potential harm to the system’s priorities, and a strict construction does not, we would hold that members of the same household must live in the same dwelling unit. Workman was not a member of her father-in-law’s household. We would hold that DAIIE, the insurer of the vehicle, is required to provide Workman with no-fault benefits.

II

We concur with the Court’s disposition of the Medicaid set-off issue.

Ill

We are unable to join in Part IV of the Court’s opinion because we would not have reached the same result but for the recent amendatory legislation.5

*519The Court concludes, independently of the recent amendment, that § 3116 as originally enacted had the meaning given it by the amendment and therefore the no-fault insurer is not entitled to reimbursement from the tort settlement.

The original language of §3116 was unconditional: " * * * after recovery is realized upon a tort claim, a subtraction shall be made to the extent of the recovery * * *

There is no indication in § 3116 as enacted that it was to apply only in cases of double recovery. Many were struck by the seeming unfairness of the provision, but that perception does not authorize a court to rewrite it in the Legislature’s name. While the Court’s arguments are plausible, they seem to us to assume too much — that the sole purpose of reimbursement is to prevent double recovery — and to ignore other possible purposes. There are other ways in which unconditional reimbursement would further the goals of the no-fault system: there would be less litigation because an *520injured person would have to anticipate a tort recovery large enough to pay attorneys’ fees and reimburse the no-fault insurer and still yield a net recovery sufficient to make the effort worthwhile; less litigation would mean less of the premium dollar would be expended on attorneys’ fees and litigation costs and more would be available to pay insurance benefits to injured persons; court congestion should be relieved; the cost of insurance should be reduced as money is plowed back into the system through reimbursement.6

These alternative rationales prevent us from saying that a statute requiring reimbursement whether or not the recovery is duplicative is unconstitutional or that the Legislature originally must have intended that reimbursement be required only where there is duplicative recovery.7

1978 PA 461 has become law, and it is necessary to reconsider Workman’s claim in its light.

The no-fault act was passed six years ago and the meaning and constitutionality of § 3116 have been in dispute ever since.8

*521While this litigation was pending and the insurance industry and consumers were awaiting our construction of the section, the Legislature spoke to the issue, apparently in response to the uncertainty regarding its proper construction and validity.

Whether legislation is to be applied retroactively depends on legislative intent.9 An enactment need not be made explicitly retroactive; legislative intent may be evidenced in other ways. When amendments are passed in the midst of controversy over a provision’s meaning, the usual presumption that an amendatory act declares new law is overcome and a legislative intent to clarify rather than to change the law may be inferred.10

This principle was accepted by this Court in Detroit Edison Co v Dep’t of Revenue, 320 Mich 506, 520; 31 NW2d 809 (1948), where an amendment to a taxing statute, passed after the tax years in question, resolved a dispute concerning the construction of the statute between the Department of Revenue and the State Board of Tax Appeals.* 11

*522The amendment to § 3116 began as House Bill 5925. An analysis of that bill states that its purpose was clarification.12 While the analysis represents the view of the Department of Commerce and does not emanate from the Legislature itself, it is part of the legislative history and lends support to the view that the amendment was intended to clarify the meaning of § 3116.

In the instant case, we are satisfied from the circumstances attendant on the amendment’s passage that the Legislature intended its new version of § 3116 to control cases arising both before and after its enactment.

Because it now appears that the Legislature intends that § 3116 require reimbursement out of a third-party tort recovery only where the defendant is uninsured, the accident occurs out of state, *523or the injury was intentionally inflicted, we concur in the Court’s result on this issue.

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

MCL 500.3101 et seq.; MSA 24.13101 et seq., as amended.

See MCL 500.3114(4), 500.3115(1); MSA 24.13114(4), 24.13115(1).

1978 PA 461; see fn 5 for text of § 3116 as amended.

For example, whether Workman’s permanent residence was with her mother or her father-in-law.

Section 3116 as amended provides:

"(1) A subtraction from personal protection insurance benefits shall not be made because of the value of a claim in tort based on the same accidental bodily injury.

"(2) A subtraction from or reimbursement for personal protection insurance beneñts paid or payable under this chapter shall be made only if recovery is realized upon a tort claim arising from an accident occurring outside this state, a tort claim brought within this state against the owner or operator of a motor vehicle with respect to which the security required by section 3101(3) and (4) was not in effect, or a tort claim brought within this state based on intentionally caused harm to persons or property, and shall be made only to the extent that the recovery realized by the claimant is for damages for which the claimant has received or would otherwise be entitled to receive personal protection insurance beneñts. A subtraction shall be made only to the extent of the recovery, exclusive of reasonable attorneys’ fees and other reasonable expenses incurred in effecting the recovery. If personal protection insurance beneñts have already been received, the claimant shall repay to the insurers out of the recovery a sum equal to the beneñts received, but not more than the recovery exclusive of reasonable attorneys’ fees and other reasonable *519expenses incurred in effecting the recovery. The insurer shall have a lien on the recovery to this extent. A recovery by an injured person or his or her estate for loss suffered by the person shall not be subtracted in calculating beneñts due a dependent after the death and a recovery by a dependent for loss suffered by the dependent after the death shall not be subtracted in calculating beneñts due the injured person.

"(3) A personal protection insurer with a right of reimbursement under subsection (1), if suffering loss from inability to collect reimbursement out of a payment received by a claimant upon a tort claim is entitled to indemnity from a person who, with notice of the insurer’s interest, made the payment to the claimant without making the claimant and the insurer joint payees as their interests may appear or without obtaining the insurer’s consent to a different method of payment.

"(4) A subtraction or reimbursement shall not be due the claimant’s insurer from that portion of any recovery to the extent that recovery is realized for noneconomic loss as provided in section 3135(1) and (2)(b) or for allowable expenses, work loss, and survivor’s loss as deñned in sections 3107 to 3110 in excess of the amount recovered by the claimant from his or her insurer." MCL 500.3116; MSA 24.13116 (emphasis supplied to show amendatory language of 1978 PA 461).

Since net payouts would be reduced it should be possible to reduce premiums and hence the cost of insurance.

See Shavers v Attorney General, 402 Mich 554, 620; 267 NW2d 72 (1978). Cf. Easom v Farmers Ins Co, 221 Kan 415; 560 P2d 117 (1977) (the legislature there also subsequently amended the statute). See, also, Hawaii Rev Stat (1977 Supp), § 294-7 providing for subrogation of the no-fault insurer to the extent of 50% of the no-fault benefits paid.

In Shavers v Attorney General, supra, the circuit judge declared that "§ 3116 of the act is construed to require subtraction from personal protection insurance benefits paid or payable under the act only when like benefits have been recovered upon tort claims”. The Court of Appeals and this Court held that a declaratory judgment on this issue was inappropriate as the plaintiffs in that case did not show that decision on this issue was necessary to guide their future conduct.

In Murray v Ferris, 74 Mich App 91; 253 NW2d 365 (1977), the Court of Appeals construed § 3116 to provide for unconditional reimbursement and declared the section violative of the Equal Protection and Due Process Clauses as it deprived victims of serious accidents of an opportunity to be made whole for their damages.

*521In the instant case, the circuit court also found § 3116 unconstitutional to the extent it required reimbursement out of plaintiffs tort settlement.

"The question whether a statute operates retrospectively, or prospectively only, is one of legislative intent. * * *

"The rule that statutes or amendments are to be given a prospective operation merely, like all other rules of interpretation, is only resorted to in order to give effect to the presumed and reasonably probable intention of the legislature * * * 73 Am Jur 2d, Statutes, §§ 350-351, pp 487-488.

See 82 CJS, Statutes, § 384, p 906; Union League Club v Johnson, 18 Cal 2d 275, 279; 115 P2d 425, 426 (1941).

This Court said:

"In 1 Sutherland Statutory Construction (3d ed, 1943), p 418, § 1931, it is said:

“ 'If the amendment was enacted soon after controversies arose as to the interpretation of the original act, it is logical to regard the amendment as a legislative interpretation of the original act — a formal change — rebutting the presumption of substantial change.’

*522"In view of the factual situation existing at the time of the amendment it is a logical conclusion that the primary purpose of the legislature was * * * to clarify the statute because of the differences of opinion.” Detroit Edison Co v Dep’t of Revenue, 320 Mich 506, 521-522; 31 NW2d 809 (1948).

The United States Supreme Court has said:

"After controversies had arisen as to the interpretation to be given to the statute, upon the question in issue in this case, * * * Congress passed the act of 1872 * * * . This enactment was evidently intended to remove any doubt previously existing as to the meaning of the statute and declare its true construction and meaning. Had it been intended to apply only to cases subsequently arising it would undoubtedly have so provided in terms.” Bailey v Clark, 88 US (21 Wall) 284, 288; 22 L Ed 651 (1875).

"Section 3116 is amended to make clear that the insured must reimburse the insurer for personal protection insurance benefits received only if the insured has realized recovery upon a tort claim for like benefits.”

The analysis further explains:

"The intent behind this section is to prevent double recovery by a victim of both personal injury protection benefits and tort recovery for the same economic losses, but the current language fails to achieve this. * * * The language in this bill makes clear that the insured is required to reimburse his insurer only when the recovery in a tort suit is for like benefits to those already received from the insurer.”