Author(s): Dennis P. Partridge, Todd D. Barry

THE WORKERS’ COMPENSATION DEPARTMENT OF GARAN LUCOW MILLER, P.C. RECOVERS NO-FAULT BENEFITS PAID AS A RESULT OF WORK-RELATED INJURIES

Recently, the Workers’ Compensation Department of Garan Lucow Miller, P.C. secured reimbursement of $825,057.00; $585,000.00; and $250,000.00, respectively on behalf of our No- Fault clients.

Under Michigan law, the receipt of No-Fault (PIP) benefits has no effect on an individual’s right to workers’ compensation benefits. However, the receipt of workers’ compensation benefits does have an impact on the right to No-Fault benefits. MCL 500.3109 provides that No-Fault benefits are to be reduced when the Claimant also receives “benefits provided or required to be provided under the laws of any state or the federal government.” In short, workers’ compensation benefits are primary.

For any claim where No-Fault benefits have been paid, continue to be paid, or anticipated will be paid, the circumstances of the accident need to be investigated to determine whether it arose out of or occurred during the course and scope of employment. In situations, where No- Fault benefits have been paid on a work-related injury claim, not only is the No-Fault insurer entitled to be reimbursed but it actually has the right to formally intervene in a workers’ compensation action to seek that reimbursement. Russell v Welcor, Inc., 157 Mich App 351 (1987).

Even in situations where the Claimant fails to file a workers’ compensation claim, the No- Fault carrier on its own behalf may initiate proceedings before the Workers’ Compensation Agency by filing an Application for Mediation or Hearing – Form C. Netherlands Insurance Co. v Bringman, 153 Mich App 234 (1986). In fact, in Camburn v Northwest School District, 459 Mich 471 (1999), a No-Fault carrier paid benefits, intervened in the workers’ compensation proceeding and appealed the decision of the Appellate Commission to the Court of Appeals and then the Supreme Court, pursuing the case even after the Plaintiff had redeemed his claim.

So what happens if the Claimant has already redeemed his or her workers’ compensation claim? In Gregory v Transamerica, 425 Mich 625 (1986), the Michigan Supreme Court held that the No-Fault carrier gets credit for “the amount of the full workers’ disability benefits for the full period of disability, as if there had been no redemption.” In short, it results in a post redemption set-off against past and future No-Fault benefits that are considered like-kind benefits.

Do the work comp Cost Containment Provisions of the Health Care Service Rules apply thereby limiting a No-Fault carrier’s right to reimbursement for medical expenses? The answer is no. Under the Michigan Workers’ Disability Compensation Act, if a Claimant pays medical bills directly, he or she is entitled to full reimbursement from the workers’ compensation carrier without regard to the Cost Containment rules. The No-Fault carrier effectively stands in the shoes of the worker and is therefore entitled to full reimbursement just as the worker would be. Auto-Owners Insurance Co. v Amoco Production Co., 468 Mich 53 (2003).

It is highly recommended that any questions as to course and scope of employment and employer/employee relationship be reviewed by counsel. The employer/employee relationship poses a particular pitfall where an employer may insist that the employee was actually an independent contractor or not in the course and scope of employment, deviation or to and fro. The economic reality test which previously governed employee/independent contractor definitions is no longer valid. What the parties consider the relationship to be, how the Claimant is paid, whether taxes are withheld, who provides the equipment, controls the worksite or the manner in which the work activity is carried out are no longer determining factors as to whether a Claimant is considered an employee or independent contractor for purposes of the Workers’ Compensation Act. It has been superseded by the definition in the comp statute. Hoste v Shanty Creek Management, Inc., 459 Mich 561 (1999); Reed v Yackell, 473 Mich 520 (2005).

In that regard, we recommend that you consult counsel whenever there is a work component to a No-Fault claim. Additionally, we recommend that all No-Fault claims be scrutinized carefully to determine whether there is a work relationship component as you may be entitled to reimbursement of No-Fault benefits paid or payable. It has been our experience that some No-Fault carriers may not be aware of their right to recover or initiate a claim directly at the Workers’ Compensation Agency.

If you have paid No-Fault benefits on a claim which may have arisen out of a work place injury, consult with the Workers’ Compensation Department of Garan Lucow Miller, P.C. regarding your rights to seek reimbursement directly through the Workers’ Compensation Agency. We are prepared to answer your questions and assist you in navigating No-Fault reimbursement claims through the Workers’ Compensation Agency.

Van Purchases and Modifications – (softening?) Griffith v State Farm and Affirming Davis v Citizens

On June 25, 2009, a panel of the Michigan Court of Appeals issued an opinion for publication, rejecting the defendants’ attempt to use the “bright-line rule” that if an injured person uses a product, service or accommodation both before and after a motor vehicle accident, the incurred expense cannot meet the causal relationship tests clarified in Griffith for an “allowable expense.”

That case, Begin v Michigan Bell Telephone, ___Mich App. ___ (2009), arose out of a 1988 motor vehicle accident that occurred while Plaintiff was working for the defendant. Plaintiff suffered accidental injuries rendering him a quadriplegic. Michigan Bell insured itself for both workers’ compensation and no-fault benefits. The primary benefit in dispute was Plaintiff’s claim for a new modified van.

The parties placed a settlement on the record providing, among other things, that the defendant would pay $25,059 for the van plaintiff had purchased. Since plaintiff’s accident, defendant had purchased three other vans without protest. In addition, Defendant did not contest paying for modifications to the van to accommodate the plaintiff’s disabilities. However, as part of the settlement agreement, Defendant attempted to preserve its right to appeal from the judgment regarding the issues involving Griffith v State Farm Mut Auto Ins Co, and Davis v Citizens Ins Co of America.3

In Davis, the court applied a three-part test originating from the concurring opinion of Justice Boyle in Manley v DAIIE. The three factors to establish an “allowable expense”under § 3107(1)(a), according to the Davis Court, are: “(1) the charge must be reasonable; (2) the expense must be reasonably necessary; and (3) the expense must be incurred.” In Griffith, the Supreme Court held that food provided in a non-institutional setting to a severely injured motor vehicle accident victim is not an “allowable expense” under the no-fault act because it “is neither ‘for accidental bodily injury’ under MCL 500.3105(1) nor ‘for an injured person’s care, recovery, or rehabilitation’ under MCL 500.3107(1)(a).”

In the appeal following this settlement, the defendants claimed entitlement to judgment as matter of law under Griffith, reasoning that because plaintiff used a van for transportation before his injuries, his accident-related injuries did not create his a need for a van. The Court of Appeals adamently disagreed, stating that it did not read Griffith as establishing the bright-line rule that the defendants espoused; rather, it reiterated that entitlement to no-fault benefits is dependent on the facts and circumstances of each case. The appellate court also held that the facts of the case were clearly distinguished from Griffith because in this case the plaintiff claimed, and presented evidence, that his transportation needs were different from those of an uninjured person and that the modified van he sought reimbursement for was related to his care necessitated by injuries arising out of the operation or use of a motor vehicle.

In keeping with another recent published appellate opinion, Hoover v Michigan Mutual Insurance Company 281 Mich App 617 (2008)4, the Court also noted that Griffith did not suggest that only the marginal increase in the cost of such food served in an institutional setting would be an allowable expense. Rather, the item used by the injured person before the accident was so blended with the product, service, or accommodation necessitated by the accident that the whole cost is an allowable expense if it satisfies the necessary statutory criteria. Thus, any attempt to require “cost sharing” between the claimant and the insurer has been rejected.

Of significance is the Court’s position that although Griffith clarified judicial construction of both MCL 500.3105(1) and MCL 500.3107(1)(a), that decision did not specifically overrule the Court of Appeals’ decision in Davis and only specifically overruled Reed v Citizens Ins Co of America, which had held that room & board may be “allowable expenses.” Thus, the Davis decision which is always cited by claimants’ counsel as justification for van purchases, remains

3A note of caution: The Court also rejected the procedure used by the defendant to attempt to preserve its appellate rights, holding that although defendants reserved their right to appeal the trial court’s denial of their motion for summary disposition under MCR2.116(C)(8), the record reflected that the defendants waived appellate review of the issues of reasonableness under MCL500.3107(1)(a). The Court held that a party that waives an objection to a rule of practice or to evidence, stipulates to facts, or confesses judgment, generally cannot later claim the right to appellate review of those matters, citing Westgate v Adams, 293 Mich 559, 564; 292 NW 491 (1940). binding precedent until it is reversed or modified by the Supreme Court, or by a special panel of the Court of Appeals.