418 Mich. 565

JAROSZ v DETROIT AUTOMOBILE INTER-INSURANCE EXCHANGE

Docket No. 68003.

Argued May 3, 1983

(Calendar No. 6).

Decided March 12, 1984.

*568Kelman, Loria, Downing, Schneider & Simpson (by Michael L. Pitt) for the plaintiff.

Dickinson, Mourad, Brandt, Hanlon & Becker (by A. J. Galsterer, Jr.) and Gromek, Bendure & *569Thomas (by Carl L. Gromek and Nancy L. Bosh) for the defendant.

Ryan, J.

This case presents still another variation of the application of § 3109(1) of the no-fault insurance act.1

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.”

The primary issue is whether a portion of the social security old-age benefits being received by the appellant is the type of governmental benefit which, under § 3109(1), must be deducted from no-fault wage-loss benefits otherwise due.

We hold, on the facts of the case, that it is not and reverse the judgment of the Court of Appeals.

I

On June 27, 1977, plaintiff Joseph W. Jarosz, then 64 years of age, was injured while riding in a motor vehicle that was struck broadside. His injuries disabled him from working as a manager for Borman Foods where he had been paid $285 per week. As a result, DAIIE, his no-fault insurer, began paying him work-loss benefits under § 3107 of the no-fault act, correctly computed at 85% of his $285 weekly salary. On November 1, 1977, after turning 65 years of age, Mr. Jarosz began mandatory retirement pursuant to company policy. At about the same time, he applied for and began receiving social security retirement benefits *570of $455.20 per month, the amount to which he was entitled as an unemployed retiree.

On March 25, 1978, after learning of Mr. Jarosz’s retirement, DAIIE terminated the payment of work-loss benefits. Shortly thereafter, Mr. Jarosz furnished the insurance company with proof that, but for the accident, he would have gone to work for Supreme Steel Company on November 1, 1977, earning $200 per week. DAIIE therefore resumed the payment of work-loss benefits, retroactive to March 26, 1978.

In September, 1978, the insurer learned that Mr. Jarosz was receiving the full social security benefits for a retiree who has no work-related income. Ordinarily, retirees over 65 years of age may work full-time and receive social security retirement benefits; however, as wages increase, benefits are reduced according to a statutory formula. The formula calls for the deduction of $1 for every $2 earned over a specified amount. See 42 USC 403(b); 20 CFR 404.401-404.467. Upon learning that Mr. Jarosz was receiving social security benefits computed for a person who was unemployed, DAIIE took the position that it was entitled to deduct from the no-fault work-loss benefits the amount by which the social security benefits would have been reduced had appellant been earning $200 a week and collecting social security benefits. Mr. Jarosz believed that no deduction was permissible and protested the insurance company’s deduction of work-loss benefits. When the dispute could not be resolved amicably, Mr. Jarosz filed suit in the circuit court. In May, 1979, DAIIE tendered a check to appellant for an amount which represented a deduction for asserted overpayment of work-loss benefits. Appellant returned the check uncashed.

*571Appellant moved for summary judgment pursuant to GCR 1963, 117.2(3), claiming that there was no genuine issue concerning the material fact that DAIIE was not entitled to deduct any amount from no-fault benefits upon the basis of the amount of social security benefits he was entitled to receive. The trial court denied the motion by letter, and on March 13, 1980, granted the defendant’s corresponding motion for summary judgment, declaring:

"[T]he defendant can take into account social security benefits received by plaintiff to the extent that plaintiff is made whole, as it is the intent of the law to put the injured party in the same position that he would have been had there been no injury.”

Mr. Jarosz appealed.

In the Court of Appeals and before this Court, the insurer argued that this case turns upon the correct interpretation and application of § 3107 which defines the meaning of "work loss” and mandates the payment of no-fault work-loss benefits. According to appellee, a correct computation of Mr. Jarosz’s "loss of income” for purposes of determining the amount of work-loss benefits due under § 3107 would reveal that his income actually increased as a result of the accident. This is so, appellee argues, because the combination of full social security benefits and no-fault work-loss benefits computed on the basis of a loss of $200 per week salary is greater than the total of $200 per week salary and the reduced social security benefits for a working retiree, which is what he would have received had he not been injured and had been working at Supreme Steel.

Since, according to DAIIE, one of the purposes of the no-fault act is to restore an injured party to *572the position in which he would have been had he not been injured, but no better position, the no-fault work-loss benefits due under § 3107 should be reduced to an amount which, when taken together with the full social security benefits appellant is receiving, would restore him to the position in which he would have been had there been no accident. DAIIE claims that the financial effect upon Mr. Jarosz of reducing the no-fault benefits is identical to the result that would obtain had appellant not been injured and had been receiving social security benefits in the reduced amount to which he would have been entitled if he had earned wages of $200 per week.

The Court of Appeals preferred to rest its analysis and decision upon § 3109(1), but concluded that the insurer’s proposed result was correct: DAIIE was entitled under § 3109(1) to subtract from the no-fault work-loss benefits otherwise due an amount equal to the portion of social security benefits representing the differential described above because that amount duplicated the no-fault work-loss benefits.2

We granted appellant’s application for leave to appeal.3

Like the Court of Appeals, we think this litigation is correctly analyzed under § 3109(1) of the no-fault act and not § 3107. Nevertheless, in Part III, we will address DAIIE’s § 3107 theory.

II

While, we have not considered a case involving facts precisely duplicating those presented by this case, resolution of the legal problem, as we per*573ceive it, does not require us to navigate entirely uncharted waters. We have considered the application of § 3109(1) in other factual settings,4 and in each case we have been required, as we are here, to determine whether governmental benefits of various kinds must be deducted from no-fault personal protection income benefits otherwise due. To repeat, § 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.”

The specific question we are required to decide in this case is whether the social security old-age benefits Mr. Jarosz is receiving are the kind of governmental benefits the Legislature intended to be subtracted from no-fault benefits. In answering that question, we take this occasion to delineate a standard or test by which such benefits may be identified in future cases.

A

Certainly not all "[b]enefits 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. Some governmental benefits bear no relationship whatever to no-fault benefits or to the reason no-fault benefits are paid. Benefits bearing *574no such relationship are not subject to setoff. Our task is to find a formula by which governmental benefits which are required to be set off under § 3109(1) can be distinguished from those which are not. The task was begun in O’Donnell v State Farm Mutual Automobile Ins Co, 404 Mich 524; 273 NW2d 829 (1979). We agree with the Court of Appeals and the parties before us today that O’Donnell established the analytical framework from which the standard we seek may be derived. In O’Donnell, as in this case, we were confronted with claims that a setoff of governmental benefits against no-fault benefits violated the Equal Protection and Due Process Clauses of the state and federal constitutions.5 In O’Donnell, social security survivors’ benefits were involved; here, old-age retirement benefits are involved. We held that social security survivors’ benefits were properly deductible from no-fault survivors’ benefits under § 3109(1). We were led to that conclusion by a two-step analytical approach: first, we determined whether social security survivors’ benefits were the kind of "[bjenefits provided or required to be provided under the laws of any state or the federal government” that the Legislature declared must be subtracted from no-fault benefits under § 3109(1). Second, having decided that they were, we determined whether the legislatively mandated subtraction was constitutional.

In making the first determination in O’Donnell, p 544, we observed that

"[t]he history of § 3109(1) indicates that the Legislature’s intent was to require a setoff 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.”

*575It was plain, we thought, that survivors’ benefits under the federal Social Security Act served substantially the same purpose as no-fault insurance survivors’ benefits. Both were meant to compensate persons dependent on the decedent-wage earner by affording them protection from the economic hardship caused by the loss of the wage earner’s support. Id., pp 545-546. In addition, they were paid as a result of the decedent’s fatal accident. It was clear that the provisions of both the no-fault and the social security plans specifically entitled the beneficiaries to payment of benefits for the same purpose upon the happening of the same event. The social security benefits were duplicative of the no-fault survivors’ benefits and thus clearly were subject to setoff under § 3109(1).

The second issue in O’Donnell, the constitutionality of § 3109(1), resulted in a determination of the law’s validity because, we concluded, the legislative purpose of reducing or containing the cost of no-fault insurance was a matter of legitimate governmental interest and the means chosen, a setoff of duplicate government benefits, was rationally related to that goal. This constitutional standard, that legislation enacted pursuant to the police power bear a rational relationship to a permissible legislative objective, is essentially the same for due process and equal protection analyses. Shavers v Attorney General, 402 Mich 554, 612-613; 267 NW2d 72 (1978). Measured against this requirement, we held the setoff of social security survivors’ benefits against no-fault survivors’ benefits to be constitutional.

Our decision in O’Donnell, which we specifically confined to its own facts,6 provided, therefore, a framework for determining the kinds of govern*576mental benefits which must be subtracted from no-fault benefits under § 3109(1), but did not purport to announce a specific standard or test for application to other kinds of governmental benefits. While our vision down the litigation tunnel is not limitless, we will delineate that standard today in order to enable bench, bar, insurers, and our citizens to predict with greater certainty the financial effect of coordinated no-fault benefits under § 3109(1).

Despite the self-limiting reach of the decision announced in O’Donnell, we have cited it as authority for the method by which it is to be determined whether other governmental benefits are within the ambit of § 3109(1).7 The parties in this case agree as to the application of O’Donnell’s very generalized standard; they disagree about how it is to be particularized for their case.

Appellant argues that the correct application of § 3109(1) will result in a subtraction of governmental benefits from no-fault benefits when two threshold requirements are met: 1) the state or federal benefits are provided or required to be provided "as a result of the same accident”, and 2) they "duplicate in varying degrees the no-fault benefits due”.

DAIIE, on the other hand, contends that the proper analysis requires only the one-step determination whether the state or federal benefits duplicate the no-fault benefits and argues that in O’Donnell the fact that the social security benefits and no-fault benefits were paid on account of the same accident was not the application of a separate criterion, but only an indication that the benefits were duplicative.8 DAIIE declares:

*577"Contrary to the assertions of plaintiff, it is duplication of benefits, not the event which triggers payment, which is the focus of the analysis of the social security benefits in O’Donnell. This Court repeatedly emphasized that § 3109(1) was intended to avoid duplication of benefits and thus to enable insurers to keep premiums low without harm to beneficiaries. O’Donnell, supra, pp 544-546, 547-549. The fact that the benefits at issue in O’Donnell were paid as a result of the same accident which resulted in payment of PIP benefits is nothing more than an indication that the benefits are duplicative. It is not a separate criterion for application of § 3109(1).” (Emphasis in original.)

We agree with DAIIE’s response that the keystone of the correct analysis is whether the benefits are duplicative. However, to complete the analysis, more is required.

B

We conclude that the correct test is: state or federal benefits "provided or required to be provided” must be deducted from no-fault benefits under § 3109(1) if they:

1) Serve the same purpose as the no-fault benefits,9 and

2) Are provided or are required to be provided as a result of the same accident.

*578Some confusion may have been engendered by two statements we made in O’Donnell which at first reading may appear to conflict. The first statement comports with the two-step formulation proposed by appellant, and the second more nearly replicates the test we have announced today.

In O’Donnell, p 538, we said:

"We conclude that § 3109(1) does require a setoff of these government benefits but is not arbitrary because the benefits are paid as a result of the same accident and duplicate in varying degrees the no-fault benefits otherwise due.”

However, we also said:

"The survivors’ benefits received pursuant to § 202 of the Social Security Act were likewise paid as a result of the decedent’s fatal accident and served substantially the same purpose as the no-fault benefits”. Id., p 545.

In isolating the first of the foregoing statements as a correct statement of the test for application of § 3109(1) in other governmental benefit cases, the appellant was mistaken. That statement was concerned with the issue of the constitutionality of the setoff of social security survivors’ benefits against no-fault survivors’ benefits and not with establishing a standard for determining whether the social security benefits in O’Donnell fell within the scope of § 3109(1), as the second statement was. In O’Donnell, which was explicitly limited to its facts, the duplicative nature of social security survivors’ benefits and no-fault survivors’ benefits was obvious. We were not primarily concerned, in the first of the quoted statements concerning constitutionality, with enunciating a test for determining the range of comparable benefits covered *579by § 3109(1). The test we have formulated today follows, therefore, the analysis we employed in O’Donnell in the second statement quoted above and applied in subsequent cases:

"In the leading case concerning § 3109(1), O’Donnell v State Farm Mutual Automobile Ins Co, 404 Mich 524; 273 NW2d 829 (1979) * * * [w]e observed that government benefits provided as a result of the same accident for which no-fault benefits are also payable, and which serve the same purpose as no-fault benefits, are within the scope of § 3109(1)”. LeBlanc v State Farm Mutual Automobile Ins Co, 410 Mich 173, 190; 301 NW2d 775 (1981). See O’Donnell, p 545.

See also Citizens Ins Co of America v Tuttle, 411 Mich 536, 551, fn 9; 309 NW2d 174 (1981); Mathis v Interstate Motor Freight System, 408 Mich 164, 187, fn 7; 289 NW2d 708 (1980).

At the risk of belaboring the point, still another word might be in order to further clarify the standard we announce today and, in the process, to bring a heightened measure of certainty and predictability to the application of this difficult area of no-fault law.

In examining our decisions in O’Donnell, Mathis, and LeBlanc, it appears that we may have used the word "duplicate”, and its adjectival form duplicative, somewhat imprecisely in an effort to characterize the kind of governmental benefits that must be subtracted from no-fault benefits under § 3109(1). We have said, for example, that such benefits are "paid as a result of the same accident and duplicate in varying degrees the no-fault benefits otherwise due”. Mathis, supra. Actually, it is more accurate to conceptualize duplicate benefits as those which satisfy both elements of today’s two-pronged test: 1) benefits which serve *580the same purpose as no-fault benefits, and 2) benefits which are provided or required to be provided as a result of the same accident. If both criteria are met, the governmental benefit can be said to be duplicative and thus subject to setoff under § 3109(1).10

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. If an inappropriately generalized notion of purpose or legislative intent is used, it might be concluded that almost any governmental benefit can be seen as duplicating no-fault benefits. For example, at first glance, social security old-age benefits can be seen as a substitute for wages which would otherwise be earned, just as no-fault work-loss benefits are a substitute for wages which would have been earned, and, therefore, both benefits appear to satisfy the first prong of our two-pronged test: benefits which serve the same purpose. More careful analysis reveals, however, that social security old-age benefits are meant to be a substitute for wages earned, but age, usually the age of the beneficiary, triggers payment and identifies the eligible person. No-fault work-loss benefits, on the other hand, are a substitute for wages which a *581person actually would have earned but for an automobile accident. Clearly, since the occurrence of an accident is totally irrelevant to Congress’ social security old-age benefits plan, the legislative purpose or intent regarding the identity of beneficiaries as well as the triggering event for payment of old-age benefits differs from that underlying no-fault work-loss benefits.

Similarly, the fact that benefits are paid as a result of the same accident (criterion 2) is a characteristic of duplicate benefits. To the extent that DAIIE contends that benefits can be duplicative and not paid as a result of the same accident, we disagree. In reality, if benefits are duplicative, then they are paid as a result of the same accident. But the converse is not necessarily true. Put another way, if benefits are not paid as a result of the same accident, they are not duplicative.

To some extent, this second criterion (benefits required to be provided as a result of the same accident) of the two-part test overlaps the first criterion (serving the same purpose). That is inevitable and it is because both are characteristics of duplicative benefits.

Still, we find that application of the two-part test is useful, partly because the event triggering payment is easily verifiable. Moreover, the fact that one can determine easily whether benefits are not paid as a result of the same accident provides a quick, accurate method of determining if benefits are not duplicative. In such a case, further analysis of certain benefits thus becomes unnecessary.

Determining whether benefits are paid as a result of the same accident seems self-explanatory. Yet, we will elaborate in order to clarify any misconceptions.

For benefits to be duplicative under the standard *582we have announced today, substantially equivalent qualifications and provisions would have to exist. In other words, the federal or state law that provides the governmental benefits or requires them to be provided must specifically base payment of benefits upon the happening of an event, and an automobile accident must qualify as such an event.

This is not to say that federal or state statutes must be identical to no-fault provisions in every way, but they must be substantially the same, at least in the triggering mechanism for payment. For purposes of the second criterion of our two-part test, the benefits received must be contingent upon the occurrence of the same automobile accident.

C

Applying our two-part test to the facts of this case, we find that the amount in dispute — the difference between what the plaintiff is now receiving and what he would have been paid had he been receiving reduced social security benefits together with wages from Supreme Steel — may not be set off against no-fault work-loss benefits otherwise due. The challenged payment fails both portions of the test. First, this differential amount, although arguably serving the same general purpose as no-fault benefits, the prevention of hardship due to lost wages, does not serve the same particular purpose as work-loss no-fault benefits. The differential payment challenged in this case was not made because the plaintiff was disabled from work and thereby suffered work loss. It was made because the plaintiff did not have additional income in excess of the statutory limit. For purposes of the disputed differential payment, the *583reason why the plaintiff does not have income in excess of the statutory limit is irrelevant; any reason is sufficient and a disabling injury causing work loss is not required. Therefore, the particular purpose served by the differential amount is not the same as the purpose served by the no-fault work-loss benefits. Second, the triggering event for the challenged differential payment is not the disabling automobile accident which triggers the no-fault work-loss payment. Instead, the triggering event for the challenged differential amount is the plaintiff’s age.11 The challenged differential benefit is not "provided or required to be provided” because the plaintiff is disabled; it is only "provided or required to be provided” to persons who have reached 65 years of age. Therefore, the triggering event is not a disabling automobile accident causing work loss; the triggering event is the plaintiff’s age. Even assuming that, but for the accident, the plaintiff would not have received the disputed amount, the accident is not the triggering event since the accident alone will not precipitate payment of the disputed benefit. The disputed payments are made only if the plaintiff does not have outside income in excess of the statutory limits, for whatever reason, and the plaintiff has reached 65 *584years of age. Therefore, it is the confluence of purpose and triggering event which demonstrates that the governmental benefits in question fail to meet the two parts of the O’Donnell test as we have restated it today. Therefore, the challenged benefits do not duplicate no-fault work-loss benefits.

Ill

DAIIE’s primary argument is that Mr. Jarosz’s social security benefits must be considered in determining the amount of loss of income as a result of the accident, for the purpose of determining no-fault "work loss” benefits under MCL 500.3107; MSA 24.13107.

DAIIE’s innovative analytical approach to this case, offered for the first time in the Court of Appeals and repeated before this Court in oral argument, is that "§ 3109 never comes into play here”. Instead, the insurer argues, Mr. Jarosz’s social security benefits must be considered in determining the amount of loss of income that resulted from the accident for the purpose of determining the amount of no-fault work-loss benefits due under § 3107. According to DAIIE, because of Mr. Jarosz’s social security benefits, he is actually receiving, together with his no-fault work-loss benefits, more money than he would be receiving if he were working at Supreme Steel and collecting reduced social security benefits. Consequently, DAIIE asserts, Mr. Jarosz has no actual loss of income as a result of the accident. Thus, his work-loss benefits should be reduced until the combination of benefits equals what he would have been receiving if he were working.

What DAIIE fails to recognize is that work-loss *585benefits are paid for loss of income from loss of work. Section 3107 provides:

"Personal protection insurance benefits are payable for the following:
"(b) Work loss consisting of income from work an injured person would have performed during the first 3 years after the date of the accident if he had not been injured”.

Social security old-age benefits may arguably be income, but they are not income from work. The fact that Mr. Jarosz has income in the form of social security old-age benefits does not, in any way, vitiate the fact that he has lost income from work.

We find that the manifest intent of the Legislature was to define "work loss” under § 3107 as income loss attributable solely to the inability to work without regard to non-work-related sources of income. To the extent that the Legislature shares DAIIE’s concern that an insured should not be financially better off not working after an accident than while working before the accident, it has addressed the subject in § 3109 and has provided for the coordination and setoff of certain kinds of benefits according to the formula we have discussed.

The decision of the Court of Appeals is reversed and the trial court’s summary judgment for the appellee is vacated. Summary judgment for the appellant on the issue whether appellee is entitled to set off social security benefits against no-fault work-loss payments is granted. The case is remanded to the circuit court for proceedings consistent with this opinion.

*586Williams, C.J., and Cavanagh and Boyle, JJ., concurred with Ryan, J.

Levin, J.

(dissenting). This appeal concerns the coordination of social security retirement and no-fault benefits.

The majority holds that social security retirement benefits are not "[bjenefits provided or required to be provided under the laws of any state or the federal government”, required by § 3109(1) of the no-fault automobile liability act to be subtracted from work-loss benefits payable by a no-fault insurer to an injured person.1

The majority distinguishes social security retirement benefits from workers’ compensation benefits, required to be subtracted in Mathis v Interstate Motor Freight System, 408 Mich 164, 187; 289 NW2d 708 (1980), social security survivors’ benefits, required to be subtracted in O’Donnell v State Farm Mutual Automobile Ins Co, 404 Mich 524, 546; 273 NW2d 829 (1979), app dis 444 US 803; 100 S Ct 22; 62 L Ed 2d 16 (1979),2 and social security disability benefits, required to be subtracted in Thompson v DAIIE, 418 Mich 610; 344 NW2d 764 (1984), on the ground that social security retirement benefits become payable upon attainment of age 65 without regard to whether the worker has suffered an injury or disability, and may become payable although the worker continues to have income from wages.3

Section 3109(1) of the no-fault act provides:

*587"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.”4

We acknowledge that while a literal reading of the term "benefits” would require the subtraction from no-fault benefits of all benefits provided by federal law, the Court may properly limit the breadth of the term "benefits” to the meaning that the history or the structure of the act indicates the Legislature intended. The majority does not, however, claim that anything in the history or the structure of the act justifies limiting the term "benefits” to disability, survivors’, or injury-related benefits.5

The legislative history of the act demonstrates that:

*5881) In commenting upon the coordination provision of one proposed no-fault bill that provided only for the subtraction of "workers’ compensation” benefits, the Commissioner of Insurance observed in a letter to the Governor that the provision tended to "increase the duplication and overlap between auto insurance and other insurance programs, sick leave programs and social security”. The commissioner proposed striking the words "workmen’s compensation”, so that the coordination provision would require the subtraction of "benefits recoverable under the laws of any state or the federal government”,6 language that parallels § 3109(1).

2) The bill that was eventually enacted, as originally introduced, provided for the subtraction of *589only social security "disability and survivors’ ” benefits.7

3) In conference, the House bill, that would have limited the subtraction to benefits provided or required to be provided "because of the injury”, was rejected in favor of the Senate bill, not containing such a limitation, that was enacted.8

*5904) § 3109(1) is modeled on a section of the Uniform Motor Vehicle Accident Reparations Act (UMVARA) that provides for the subtraction of social security retirement benefits.9

Section 3109(1) is the broadest alternative source reduction provision in any no-fault legislation. Schermer, Automobile Liability Insurance (2d ed), § 8.05, p 8-16. The Legislature chose not to adopt *591any of the more limited setoff provisions contained in no-fault laws which had been enacted or were pending before other state legislatures across the country10 or that were introduced during the extended legislative consideration of the no-fault act.11 In enacting a more general, less specific, coordination provision than the provisions in the UMVARA and in bills given active legislative consideration, the Legislature provided no support for the view adopted by the majority that social security retirement benefits are not required to be coordinated.

In confining the operative effect of the term "benefits” to workers’ compensation, survivors’, and disability benefits payable because of an automobile injury, the Court reads into the no-fault act limitations found in the New York no-fault act12 that the Legislature, rejecting several efforts to *592impose such limitations, rejected in favor of the unmodified, all-encompassing term "benefits”.

Nevertheless, we recognize, as suggested in O’Donnell, supra, p 546, that the Legislature may have intended that there be subtracted only those benefits that are "duplicative”,13 and that, depend*593ing on the meaning given the term "duplicative”, the benefit paid to a veteran for a war injury or the portion of a social security retirement benefit that is paid although the recipient has income from wages may be beyond the intendment of the term "benefits” as used in § 3109(1).

The social security retirement benefits at issue in this case, however, would not have been paid to Jarosz if he had not been injured in the automobile accident and unable to work at his post-retirement job. DAIIE did not subtract the portion of the social security retirement payment that Jarosz receives solely because he is 65 years old, and that he would receive even if he were earning income from wages at a post-retirement job. Rather, the amount that is at issue in this case is the portion of the social security retirement payment that Jarosz receives solely because he lost income ($200 per week) for work he would have performed at a post-retirement job if he had not been injured.

Social security retirement benefits that would not be paid if the person over 65 had not been injured in an automobile accident and had been working are functionally and essentially the same as the workers’ compensation benefits dealt with in Mathis, the social security survivors’ benefits dealt with in O’Donnell, and the social security disability benefits dealt with in Thompson. But for the automobile accident and the resulting injury or disability, such social security retirement benefits would not have been paid. Such social security retirement benefits serve the same income maintenance and replacement purpose served by workers’ compensation benefits, social security survivors’ *594and disability benefits, and no-fault work-loss benefits.

The majority opinion — holding that because in some other case social security retirement benefits may become payable without regard to injury/disability or wage loss, all social security retirement benefits (including those that would not be payable but for wage loss resulting from automobile injury/disability) are not benefits within the meaning of § 3109(1) — appears to have adopted the analysis (i) expressed in the dissent in Cruz v Chevrolet Grey Iron Division of General Motors Corp, 398 Mich 117, 160; 247 NW2d 764 (1976), where this Court held that the coordination of social security and workers’ compensation benefits was not violative of the Equal Protection Clause,14 and (ii) re*595jected in Alessi v Raybestos-Manhattan, Inc, 451 US 504; 101 S Ct 1895; 68 L Ed 2d 402 (1981), where the United States Supreme Court held that workers’ compensation benefits may, consistent with the Employee Retirement Income Security Act, be subtracted from benefits otherwise payable pursuant to an employer’s pension plan.15

Recognizing that it may be appropriate to limit the generality of the term "benefits” to exclude government payments that would be paid even if there had not been wage loss resulting from an automobile accident, and which in that sense are not "duplicative”, we would hold that at least the social security retirement benefits at issue in this case are required to be subtracted pursuant to § 3109(1) because they would not have been paid but for the automobile accident and Jarosz’s resulting injury/disability and inability to earn wages at his post-retirement job, and in that sense are duplicative of the no-fault benefits paid because of his inability to earn wages at his post-retirement job.

I

On June 27, 1977, Joseph W. Jarosz suffered *596injuries in an automobile accident that prevented him from working at his job as a store manager. Detroit Automobile Inter-Insurance Exchange, the no-fault insurer, paid him work-loss benefits based on his salary of $285 per week. A few months after the accident, Jarosz became 65 and was mandatorily retired pursuant to company policy. He then began receiving social security retirement payments based on the amount to which he was entitled as an unemployed retiree.

DAIIE terminated the payment of work-loss benefits because of Jarosz’s retirement. The no-fault act provides that work-loss benefits are paid for "loss of income from work an injured person would have performed * * * if he had not been injured”.16 (Emphasis supplied.) Jarosz provided evidence to DAIIE that, but for the accident, he would, after retirement, have gone to work for another company and earned $200 per week ($10,-400 per year). DAIIE thereupon resumed payment *597of work-loss benefits based on a "salary” of $200 per week.

Because Jarosz did not, as a result of the accident, actually begin to work at the new job, he continued to receive social security retirement payments at the rate calculated for an unemployed retiree. DAIIE learned of the social security payments and reduced its check to Jarosz by the amount the social security payment would have been reduced had Jarosz been earning $200 per week at the new job. Jarosz refused to accept the reduced amount and filed this action.17

II

In O’Donnell v State Farm Mutual Automobile Ins Co, supra, p 544, this Court said that the Legislature intended "to require a setoff 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”. Similarly, see Mathis v Interstate Motor Freight System, supra, p 187; LeBlanc v State Farm Mutual Automobile Ins Co, 410 Mich 173, 191; 301 NW2d 775 (1981). Cf. Great American Ins Co v Queen, 410 Mich 73; 300 NW2d 895 (1980).

If, despite the all-encompassing language of § 3109(1), the term "benefits” is to be limited on the authority of O’Donnell to those government payments that are "duplicative”, the term "dupli*598cative” should be given a meaning consistent with the meaning that appears to have been intended in O’Donnell. There the Court relied on the letter previously referred to from the Commissioner of Insurance to the Governor to support its statement that the history of § 3109(1) indicates a legislative intent to require the setoff of "government benefits that duplicated the no-fault benefits payable because of the accident”; the Court noted that the letter "criticized [certain proposed] bills because they tended to 'increase the duplication and overlap between auto insurance and other insurance programs, sick leave programs and social security’ ”. O’Donnell, supra, p 544 (emphasis supplied).18 The Court continued that "[t]he final version of § 3109(1) was similar to an amendment suggested by the Commissioner”, who recommended that the provision read "benefits recoverable under the laws of any state or the federal government”. Thus the effort to eliminate "dupli*599cation” did not distinguish between social security disability and survivors’ benefits, on the one hand, and social security retirement benefits, on the other.

Further, the term "duplicative” should be given a meaning consistent with the underlying purpose of the no-fault act. The Legislature provided work-loss benefits to an injured person to replace "loss of income from work an injured person would have performed if he had not been injured”.19 Consistent with this purpose, those governmentally mandated payments — including social security retirement payments — that, like the work-loss benefits provided by the no-fault act, replace income from work the injured person would have performed if he had not been injured are "duplicative” of the no-fault work-loss benefits and are "benefits” within the meaning of § 3109(1).20

Treating governmentally mandated payments as "benefits” within the meaning of § 3109(1) to the extent they replace income from work an injured person would have performed if he had not been injured is consistent with the results this Court has reached in other cases. In O’Donnell, supra, p 546, the Court referred to the United States Supreme Court’s statement in Mathews v De Castro, 429 US 181, 185-186; 97 S Ct 431; 50 L Ed 2d 389 (1976), that social security survivors’ payments "were intended to provide persons dependent on *600the wage earner with protection against the economic hardship occasioned by loss of the wage earner’s support”, and concluded that social security survivors’ payments, like the work-loss benefits provided by the no-fault act, replace income lost as a result of the wage earner’s fatal automobile accident. In Mathis v Interstate Motor Freight System, supra, the payments made under the workers’ compensation act replaced lost wages attributable to the accident, and this Court held that workers’ compensation payments are required by § 3109(1) to be subtracted. In the companion case of Thompson v DAIIE, supra, this Court holds that social security disability benefits paid to dependents replace lost income from wages and are required to be subtracted.

Ill

The majority declares that "state or federal benefits 'provided or required to be provided’ must be deducted from no-fault benefits under § 3109(1) if they:

1) 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.”21

The social security retirement payments at issue here satisfy both of these criteria.

A

The social security retirement payments at issue in this case were paid only because Jarosz lost income from work and thus serve the same pur*601pose as no-fault work-loss benefits which also are only payable for loss of income from work.

Jarosz would, to be sure, have received some social security payments simply by virtue of having reached his 65th birthday even if he had been able to continue to work. A person who is 65 years old is entitled to full social security payments as long as any earnings he receives from work do not exceed the exempt earnings ceiling (which in 1983 was $6,600).22 Even if a person is 65 years old and continues to earn an income greater than the exempt earnings ceiling, he may still receive some social security payments, but the payments will be reduced by $1 for every $2 earned in excess of the exempt earnings ceiling.23

DA TIE did not subtract the payments that Jarosz would receive, as a person over 65, even if he continued to work, and therefore those payments are not at issue in this case. The sum which DAIIE subtracted equals the portion of the social security retirement benefits that would not have been paid to Jarosz if he had been working at his post-retirement job.

When Jarosz reached 65, he became entitled to social security retirement payments consisting of two components: (1) the component paid solely because he was 65 years old; and (2) the component paid because, as a result of the accident that *602occurred before he was 65, he was unable at 65 to work at his post-retirement job and thus lost income from wages. If Jarosz had not been injured in the automobile accident and had been able to work at his post-retirement job earning $200 per week, he would not be entitled to receive the social security payments DAIIE seeks to subtract from the no-fault benefits — component (2) — although he is 65 years old.

Neither the social security retirement payments here in issue nor the no-fault work-loss benefits would be payable but for Jarosz’s inability, as a result of the accident, to work at the $200 per week post-retirement job, and thus they both serve the same purpose of replacing income that he would have earned had he been able to work at the post-retirement job. The social security retirement payments at issue in this case are paid to Jarosz not because he is 65 years of age, but rather because he has lost income from wages as a result of the accident.

If a worker is less than 65 years old and has lost income from wages because of disability, the social security system provides disability payments to replace that lost income; such payments are labeled social security disability benefits rather than social security retirement benefits, but, when payable, are paid in substantially the same amount as retirement benefits calculated at the same time.24 To the extent post-65 social security retirement payments replace lost income they serve the same purpose as pre-65 social security disability payments that this Court holds must be subtracted from no-fault work-loss benefits. Thompson v DAIIE, supra.

Being 65 years of age is but one of several *603eligibility requirements that must be satisfied before a worker may receive the social security retirement payments at issue in this case. Other eligibility requirements include having paid money into the social security system and having the appropriate number of quarters of coverage. These eligibility requirements could not justify the conclusion that the "purpose” of the payment is other than replacement of income lost as a result of the accident. Although there are a number of eligibility requirements for the social security survivors’ payments at issue in O’Donnell, i.e., (i) the death of a worker who had paid money into the social security system and who had the appropriate number of quarters of coverage, and (ii) dependency on the worker, survivors’ payments were said to "serve[ ] substantially the same purpose as the no-fault benefits”. O’Donnell, supra, p 545.25 The legis*604lative purpose of replacing lost income from work does not change when the loss of income is attributable to a disabling injury and not death, nor does the purpose change when the worker is 65; to hold otherwise is to ignore that survivors’ benefits are not payable to a spouse unless the spouse is deemed to have difficulty working, either because the spouse is 62 years old or has a child in care.26

B

The social security retirement payments at issue in this case were provided to Jarosz as a result of the same accident for which no-fault benefits are payable. To conclude that the social security retirement payments in issue were not provided as a result of the automobile accident is to ignore that these social security payments would not be paid but for Jarosz’s loss of income from wages, which in turn resulted from the automobile accident. The automobile accident that entitled Jarosz to no-fault work-loss benefits is exactly the same event but for which the social security retirement benefits in issue would not be paid.

The setoff required by § 3109(1) is not limited to cases in which the accident triggers the start-up of the governmentally mandated payments sought to be subtracted. To the extent that, but for the accident, the governmentally mandated benefit would no longer be paid, the payment replaces income lost as a result of the accident and is required to be subtracted.27

*605The Social Security Act mentions only three triggering events: death, retirement, and disability.28 Nowhere does the act provide for payments to be triggered by an automobile accident. The Social Security Act conditions survivors’ payments not upon the occurrence of an automobile accident, but rather upon loss of income because of the death of the worker; a surviving spouse who is at least 62 years of age or has a child in care will receive survivors’ payments upon the death of the worker regardless of what causes the death. Similarly, the Social Security Act conditions disability payments before age 65 not upon the occurrence of an automobile accident, but rather upon loss of income because of the disability of the worker; a worker will receive disability payments regardless of what causes the disability. Finally, the Social Security Act conditions the retirement payments in issue not upon the occurrence of an automobile accident, but rather upon both a loss of income from wages and attainment of age 65; a worker who is 65 years of age will receive the social security retirement payments at issue here only if a total loss of income from wages is suffered regardless of what causes that loss of wage income.

In O’Donnell, supra, where the worker’s death was caused by an automobile accident, this Court held that social security survivors’ payments are required to be deducted from the no-fault work-loss benefits. In Thompson, supra, the worker’s disability was caused by an automobile accident, *606and this Court holds that the social security disability payments to the worker’s dependents are required to be deducted from the no-fault work-loss benefits. Similarly, if the worker’s loss of income from wages at age 65 is caused by an automobile accident, the social security retirement payments payable solely because of the wage loss are required to be deducted from no-fault work-loss benefits.

C

The majority opinion states:

"For benefits to be duplicative under the standard we have announced today, substantially equivalent qualifications and provisions would have to exist. In other words, the federal or state law that provides the governmental benefits or requires them to be provided must specifically base payment of benefits upon the happening of an event, and an automobile accident must qualify as such an event.”29

Since substantially the same benefit is payable as a retirement, survivors’, or disability benefit, see fn 24, age 65 cannot properly be regarded as a distinguishing qualification — only the label of the benefit is different.

The social security survivors’ payments in O’Donnell were specifically based on a loss of income because of the death of the worker (however caused), and the social security disability payments to the worker in Thompson were specifically based on a loss of income because of disability (however caused). Although an automobile accident as such does not "specifically” "qualify as such an event”, this Court held in O’Donnell that *607when the event (i.e., a loss of income from work because of death) results from an automobile accident, the survivors’ payments are required to be subtracted from a no-fault recovery; in Thompson, the event (i.e., a loss of income from work because of disability) resulted from an automobile accident, and the disability payments to the worker were subtracted from the no-fault recovery. Similarly, the social security retirement payments at issue here are "specifically based” on a total loss of income from wages at age 65 (however caused). Although an automobile accident as such does not "qualify as such an event”, when the event (i.e., a loss of income from work at age 65) results from an automobile accident, the retirement payments are to that extent required to be subtracted from no-fault work-loss benefits. The "qualifications and provisions” for entitlement to the social security retirement benefits at issue here and no-fault work-loss benefits are "substantially equivalent”.

The majority opinion also states:

"For purposes of the second criterion of our two-part test, the benefits received must be contingent upon the occurrence of the same automobile accident”.30

No federal or state statute or regulation conditions entitlement to workers’ compensation, or to social security survivors’ or disability benefits, on the occurrence of an automobile accident. Nevertheless, it has been held that such benefits must be subtracted. See Mathis, supra; O’Donnell, supra; Thompson, supra.

IV

The failure to subtract the social security retire*608ment payments at issue here renders Jarosz financially better off after the automobile accident than he would have been had he not been injured. The Court of Appeals opinion in this case undertook a mathematical analysis of Jarosz’s situation, and concluded that in the year 1979, for example, Jarosz would have received the sum of $283.80 per week from work-loss benefits and social security payments if no subtraction were required although his income from post-retirement wages and social security payments would only have been $222.34 per week had he not been injured.31 Such a result is not consistent with the legislative purpose of requiring coordination by subtracting governmentally mandated benefits.32

*609V

DAIIE alternatively argues that Jarosz’s retirement payments must be considered in determining the amount of his "loss of income” resulting from the accident pursuant to § 3107 of the act.33 We see no need to decide this question, as we base our conclusion on the mandatory setoff requirement of § 3109(1).

We would affirm the decision of the Court of Appeals and remand the cause to the circuit court for further proceedings consistent with this opinion.

Kavanagh and Brickley, JJ., concurred with Levin, J.

Jarosz v. Detroit Automobile Inter-Insurance Exchange
418 Mich. 565

Case Details

Name
Jarosz v. Detroit Automobile Inter-Insurance Exchange
Decision Date
Mar 12, 1984
Citations

418 Mich. 565

Jurisdiction
Michigan

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