410 Mich. 73

GREAT AMERICAN INSURANCE COMPANY v QUEEN

Docket No. 62185.

Argued October 2, 1979

(Calendar No. 6).

Decided December 23, 1980.

*84Johnson, Campbell & Moesta, P.C., for plaintiff.

*85Freedman, Krochmal & Colman for defendant Queen.

Conklin, Maloney & Loesch (Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen, by John P. Jacobs, of counsel) for defendant Moore.

Davidson, Gotshall, Kohl, Secrest, Wardle, Lynch & Clark (by Randall D. Bryant) for defendant Hughes.

Levin, J.

The issue is whether an employer’s or insurer’s right under the workers’ compensation act to be reimbursed out of any tort recovery by an employee from a third party in respect to the same injury which gave rise to the obligation to pay workers’ compensation benefits is modified by the provisions of the no-fault motor vehicle liability act.

We conclude that since the insurer in the instant case seeks reimbursement for payments which substituted for no-fault benefits otherwise payable, there is no right to reimbursement.

We do not agree with Justice Williams’ conclusion that there is "a clear and irreconcilable repugnance” between the no-fault act and the workers’ compensation act and "both acts cannot be given simultaneous effect” and that therefore the no-fault act operates to repeal the reimbursement provisions of the workers’ compensation act in all cases involving motor vehicle accidents. It is possible to give both acts simultaneous literal effect. The workers’ compensation carrier could be permitted reimbursement from "any tort recovery”, whether for economic or non-economic loss, although the employee’s right to proceed in tort is *86limited by the no-fault act.1

Nevertheless, we think it appropriate to inquire whether consideration of the legislative policies and judgments embodied in the provisions of both acts indicates a legislative intent that a workers’ compensation carrier’s reimbursement rights be modified in cases where the no-fault act is also operative.

When an employee is injured in a motor vehicle accident in the course of his employment, his entitlement to compensation for his injuries, from all sources, is governed by the workers’ compensation act and the no-fault act. His rights and entitlements under each act are affected by his being injured under circumstances which make him subject to the provisions of the other.

Under the workers’ compensation act the employee is entitled to statutory compensation and may also seek to enforce the legal liability of a third party.2 But, by operation of the no-fault act, that legal liability is limited.

Under the no-fault act he is entitled to no-fault benefits.3 But, once the liability of the no-fault insurer is determined, that liability is reduced by the amount of workers’ compensation benefits paid or payable because of the injury.4

If the legislative decision, set forth in the no-*87fault act, that no-fault insurers are entitled to reimbursement from third-party tort recoveries only to the extent recovery represents compensation for elements of loss compensated by no-fault benefits is not extended to workers’ compensation benefits which substitute for no-fault benefits, the third-party tort recovery of a person injured in a motor vehicle accident in the course of his employment would be reduced by no-fault benefits paid by the workers’ compensation carrier, while the third-party tort recovery of a person not injured in the course of his employment would not be reduced.

We are persuaded that had the Legislature considered the acts’ application to the case at bar5 — a motor vehicle accident occurring in the course of employment — it would have explicitly provided that when a workers’ compensation carrier provides benefits which would be payable by the no-fault insurer had the accident not occurred in the scope of employment but are instead payable by the workers’ compensation carrier because of the no-fault act’s mandatory set-off provision, its reimbursement rights are coextensive with those of the no-fault insurer whose liability it replaces and are *88thus limited to cases where there is tort recovery for basic economic loss.6

That conclusion does not, however, compel total nullification of the workers’ compensation carrier’s reimbursement rights in cases involving motor vehicle accidents. When the carrier pays benefits which do not substitute for no-fault benefits, because they exceed no-fault benefits in amount or duration, it should be treated like all other workers’ compensation carriers and be entitled to reimbursement out of any third-party recovery.

Allowing reimbursement for such benefits would work no discrimination against motor vehicle accident victims who happen to be injured in the course or scope of employment because reimbursement is permitted only for benefits which other motor vehicle accident victims do not receive.

I

Queen was injured in a motor vehicle accident in the course of his employment on January 12, 1976. Great American Insurance Company paid him $4,567 in workers’ compensation benefits. Queen claimed benefits from his employer’s no-fault insurer. The no-fault insurer subtracted the amounts paid under the workers’ compensation act from the benefits otherwise owing under the no-fault act.

Queen then sought to recover from the tortfeasors as permitted by § 3135 of the no-fault act. His claim was settled for $18,500. This sum was paid without notice to Great American.

Great American then brought this cause against Queen and the third-party tortfeasors claiming a lien on the settlement proceeds pursuant to § 827 *89of the workers’ compensation act. The trial judge granted summary judgment in favor of the defendants. The Court of Appeals affirmed per curiam.7

II

An employee’s common-law right to proceed in tort against persons other than his employer, or coworkers was not altered by the workers’ compensation act. An employee may sue such persons for all losses normally recoverable in tort. If he is awarded damages, the employer or workers’ compensation carrier is entitled to reimbursement for benefits paid and to a credit against future payments, without regard to whether the recovery is for the same elements of loss compensated by the benefits paid under the statute.

The employee is thus permitted to rest content with a workers’ compensation award or to pursue his tort remedy and reimburse the employer or insurer for any amounts received under the workers’ compensation act. Because he need not repay more than he recovered in tort, the employee in effect recovers under the more generous of the two systems — tort or workers’ compensation — but not both. This was our holding in Pelkey v Elsea Realty & Investment Co.8

The workers’ compensation carrier argues that this case is governed by our decision in Pelkey. The circumstances which supported our rationale in Pelkey, however, and which exist in all workers’ compensation reimbursement cases except those involving motor vehicle accidents occurring after the passage of no-fault, do not obtain here. In *90Pelkey, damages recoverable in tort included compensation for all losses required to be compensated by the workers’ compensation carrier.

Pelkey was involved in a motor vehicle accident in the course of her employment with Elsea Realty. She sustained a compensable disability and received $3,364.60 in workers’ compensation. Pelkey, her husband, and the workers’ compensation carrier jointly settled their claim against the third-party tortfeasor for $10,000. $3,000 was allocated to Pelkey’s husband for loss of consortium; $3,364.60 was allocated to the workers’ compensation carrier as reimbursement and $3,635.40 was allocated to Pelkey for pain and suffering.

After settlement, Pelkey developed psychiatric complications requiring treatment and petitioned for compensation. The WCAB ruled the treatment related to the earlier injury and awarded compensation but determined that the insurer was entitled to a credit equal to Pelkey’s tort recovery less the costs of securing that recovery. Pelkey argued that tort recoveries for pain and suffering were not intended to be subject to an insurer’s lien based on compensation for economic loss.

We concluded that:

"[W]hen the Legislature stated that damages recovered by an employee from a third-party tortfeasor for 'personal injuries or death only’ could be reached by an insurer, the Legislature meant to include damages resulting from pain and suffering.”

We noted that prior to 1952 an injured employee was required to choose between the common-law tort remedy against third parties and the workers’ compensation remedy provided by statute and concluded that "[t]he right to reimbursement is justi*91fied by the abrogation of the election of remedies requirement”.

The workers’ compensation act provides a right to no-fault wage benefits, medical care, and scheduled benefits for specific losses. Where the person whose negligence caused the compensable disability is neither an employer nor a co-worker, the injured employee is also permitted to sue in tort. In such an action the employee is entitled to recover all damages normally recoverable in tort— wage loss, medical expenses, and pain and suffering. The third party’s liability is not reduced by amounts recovered under the workers’ compensation system.

In most cases, the amounts repaid to the insurer will represent payments from the third party for elements of damage already compensated by the insurer — medical expenses, wage loss, and pain and suffering in the case of an employee receiving scheduled benefits for a specific loss. In such cases the employee is merely reimbursing the insurer out of a double recovery.

Pelkey presented a different factual circumstance. There the tort liability of the third party was settled before the full extent of injury was known and the prediction of economic damages was inaccurate. The settlement awarded reimbursement for economic damages already paid by the workers’ compensation carrier; it did not anticipate that further treatment would be required. The real question in Pelkey was which party should bear the consequences of the recognized risks of the tort system which ascertains damages at the time of trial and does not permit modification thereafter.

In eliminating the requirement that the employee choose between suing the third party in *92tort and claiming benefits from the employer under the act, and in providing that the insurer is entitled to reimbursement from any tort recovery, the Legislature carried forward the policy of the earlier act that a worker injured by a third party in the course of his émployment should be permitted to recover benefits provided under the act or damages recoverable at common law, but not both. The new provisions made it possible for the employee to recover compensation under whichever scheme provided greater benefits; it was not intended to allow the employee to retain the best of both schemes.

In Pelkey we thus concluded that the insurer was entitled to reimbursement even out of that portion of the tort recovery denominated for pain and suffering. In this manner Pelkey was required to absorb the disadvantages as well as the advantages of her right to pursue a third-party tort recovery.

Pelkey holds that an employee who recovers damages in tort is not entitled to any greater compensation than a non-employee injured under similar circumstances. Thus, upon securing her third-party recovery, Pelkey was required to reimburse the insurer for amounts already paid and to grant it a credit for amounts to be paid in the future. She was left with no less than her total tort recovery since she was not required to reimburse the carrier for any amounts not actually received.

Application of Pelkey to this case would require that to the extent Queen recovers outside the workers’ compensation system he be permitted to retain no further compensation than that received *93by a motor vehicle accident victim not injured in the course of his employment.9

Ill

The no-fault act creates entitlement to statutory benefits and additionally abrogates common-law tort liability for below threshold non-economic loss and, in most cases, economic loss compensated by no-fault benefits.

No-fault benefits consist of medical expenses unlimited in amount and duration and work loss or survivor’s benefits for three years. These compensate purely economic elements of damage. Persons severely injured may sue the third-party tortfeasor for work loss exceeding that compensated by the no-fault carrier, for non-economic loss where injury is severe, and for basic economic loss if the driver is denied tort immunity under the act.

The no-fault insurer’s right to reimbursement out of tort recoveries from third parties is governed by § 3116 of the no-fault act and this Court’s decision in Workman.10 The right to reimbursement extends only to those atypical cases where *94tort recovery is permitted for elements of damage compensated by no-fault benefits; there is no right to reimbursement unless there is duplicate recovery.11

The no-fault act also provides that in determining the amount owed by a no-fault insurer, "Benefits provided or required to be provided under the laws of any state * * * shall be subtracted from the personal protection insurance benefits otherwise payable for the injury”.12 In Mathis (see fn 4), we determined that workers’ compensation benefits are required to be set off under this provision.

IV

Had the Legislature intended that a worker injured in a motor vehicle accident receive only the compensation received by other workers incurring similar disabilities in accidents not involving motor vehicles, it could have so provided by excluding persons injured in the course of their employment from the no-fault act. In Mathis, we held that workers’ compensation is not the employee’s exclusive remedy against his employer and that the employer’s no-fault carrier is also liable for benefits under the no-fault act.

The decision to accord workers benefits under *95the no-fault act was made in the context of their common-law rights being limited under the no-fault act as are the rights of other motor vehicle accident victims. Employees, like all others, are not permitted to sue for below-threshold economic or non-economic damages.

Thus, we are presented with a legislative judgment that persons injured in motor vehicle accidents in the course of their employment should receive the compensation and have the limited right to tort recovery of other motor vehicle accident victims.

Permitting employees to receive full no-fault benefits is one thing, but permitting such recovery in addition to workers’ compensation benefits would be quite another. The Legislature therefore provided that workers’ compensation benefits are to be subtracted from no-fault benefits otherwise payable. The provision which requires this subtraction applies to all benefits paid under state or federal law and expresses a legislative decision to forbid double recovery under government programs and to allocate the cost of providing the minimum level of benefits mandated by the no-fault act as much as possible to other sources. The provision requiring set-off appears to be directed to the allocation of costs between insurance systems and the avoidance of double recovery and does not appear to be intended to provide motor vehicle accident victims injured in the course of their employment with less compensation than motor vehicle accident victims not so injured.

The Legislature provided that no-fault insurers are entitled to reimbursement from third-party tort recoveries only to the extent recovery represents compensation for elements of loss compensated by no-fault benefits. The Legislature’s deci*96sion to deny reimbursement rights unless there is double recovery expresses a judgment that tort recovery for non-economic loss and excess economic loss should not be reduced by no-fault economic loss benefits. If that decision is not extended to workers’ compensation benefits which substitute for no-fault benefits, the third-party tort recovery of a person injured in a motor vehicle accident in the course of his employment would be reduced by so much of the no-fault benefits "otherwise payable” as are paid by the workers’ compensation carrier, while the third-party tort recovery of a person not injured in the course of his employment would not be reduced.

We are persuaded that the Legislature intended that persons injured in motor vehicle accidents in the course of their employment be entitled to the same compensation received by all other motor vehicle accident victims and that workers’ compensation benefits be subtracted from no-fault benefits to prevent double recovery and to allocate costs to the other benefit systems, and that the Legislature did not intend that the third-party recovery of a person injured in the course of his employment be subject to greater subrogation claims in favor of insurers simply because a portion of the benefits otherwise payable under the allowable expense, work loss, and survivor’s loss sections are paid by a different source pursuant to the section requiring subtraction of benefits provided under state law.

Our decision in Pelkey requires that the employee who is permitted to sue a third party in tort be permitted to receive no more than one who is injured under similar circumstances but not in the course of his employment. It is fully consistent with that holding to conclude that the workers’ *97compensation carrier’s right to reimbursement for benefits which substitute for no-fault benefits is governed by § 3116 of the no-fault act.

V

Our conclusion is not based on a constitutional right to be made whole or to retain damages recovered in tort unless there has been a double recovery. The constitutionality of the legislative scheme which allows reimbursement of the workers’ compensation carrier for economic benefits from tort recoveries for pain and suffering was upheld in Pelkey and I adhere to the view expressed in my opinion in Workman that such reimbursement schemes are rational and constitutional.

Rather, our conclusion is based on a perception that the Legislature intended the workers’ compensation carrier to substitute for the no-fault insurer to the extent that workers’ compensation benefits substitute for no-fault benefits otherwise payable. Thus, the payment of workers’ compensation benefits which do not substitute for no-fault benefits, because they exceed no-fault benefits in amount or duration, gives rise to a right to reimbursement from third-party tort recoveries in the same manner as the payment of workers’ compensation benefits for non-motor vehicle related injuries.

In this case, the carrier seeks reimbursement for medical treatment which would be compensable under the no-fault act — there is no right to reimbursement for such payments.

Coleman, C.J., and Kavanagh and Fitzgerald, JJ., concurred with Levin, J.

*98Coleman, C.J.

(concurring in the result). I concur in the even-handed opinion of my Brother Levin, although I remain convinced that "corrective legislative action is advisable, if not imperative”. Matter of Granger v Urda, 44 NY2d 91, 99; 404 NYS2d 319, 322; 375 NE2d 380, 383 (1978).

Ryan, J.

(concurring in the result). We are asked to resolve an apparent conflict between the Worker’s Disability Compensation Act of 1969 (WDCA) and the no-fault insurance act.

The specific issue is whether the employer’s workers’ compensation insurer is entitled to reimbursement from the employee’s tort recovery against the third-party tortfeasor for "noneconomic loss”, which recovery is sanctioned by the no-fault act, MCL 500.3135, subds (1), (2)(b); MSA 24.13135, subds (1), (2)(b). I agree with Justice Williams that the answer is "no”, but write separately to emphasize that my agreement rests upon a different rationale.1

The facts of the case are fully detailed in the opinion of my colleagues.

Earlier this year we addressed a problem created by the intersection of the WDCA and the no-fault act in an analogous setting — employees were injured in motor vehicle mishaps in the course of their employment. Mathis v Interstate Motor Freight System, 408 Mich 164, 183, 187; 289 NW2d 708 (1980). We held there that

"an employee who suffers accidental bodily injury in *99the course of his employment while occupying a motor vehicle owned by the employer is entitled to collect no-fault benefits from the no-fault insurer of the employer’s vehicle, and is not limited to workers’ compensation as his sole remedy.”

We also held that, under § 3109(1) of the no-fault act, the

"workers’ compensation benefits must be set off against the no-fault benefits otherwise due.”

The essential difference between Mathis and this case is the involvement of a third-party tortfeasor from whom the employee obtained a recovery in tort in addition to collecting his no-fault and workers’ compensation benefits.2 The existence of the third-party tortfeasor in this case implicates the provisions of the WDCA and no-fault act that concern the right of the injured party to bring an action in tort as distinguished from an administrative claim for the statutory benefits.

The WDCA provides:

"In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier for any amounts paid or payable under this act to date of recovery and the balance shall forthwith be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future pay*100ments of compensation benefits.” MCL 418.827(5); MSA 17.237(827X5).

The no-fault act provides:

"(1) A person remains subject to tort liability for noneconomic loss caused by his ownership, maintenance or use of a motor vehicle only if the injured person has suffered death, serious impairment of body function or permanent serious disfigurement.
"(2) Notwithstanding any other provision of law, tort liability arising from the ownership, maintenance or use within this state of a motor vehicle with respect to which the security required by subsections (3) and (4) of section 3101 was in effect is abolished except as to:
"(b) Damages for noneconomic loss as provided and limited in subsection (1).
"(c) Damages for allowable expenses, work loss and survivor’s loss as defined in sections 3107 to 3110 in excess of the daily, monthly and 3 year limitations contained in those sections. The party liable for damages is entitled to an exemption reducing his liability by the amount of taxes that would have been payable on account of income the injured person would have received if he had not been injured.” MCL 500.3135; MSA 24.13135.

What we said in Mathis with respect to the separate purposes of the WDCA and the no-fault act bears repetition here and is the basis for the analysis underlying my conclusion today:

"The Worker’s Disability Compensation Act (WDCA) and the no-fault insurance act are complete and self-contained legislative schemes addressing discrete problems. Neither act refers expressly to the other.
"The WDCA provides a substitute for common-law tort liability founded upon an employer’s negligence in failing to maintain a safe working environment. Compensation under this act is for industrial injuries aris*101ing out of and in the course of the injured person’s employment. Compensation is paid by the employer or the employer’s workers’ compensation insurer under an indemnity contract.
"The no-fault act provides a substitute for common-law tort liability based upon the ownership or operation of a motor vehicle. Under this act, victims of motor accidents receive insurance benefits from a no-fault insurance carrier as compensation for their injuries. Shavers v Attorney General, 402 Mich 554, 578-579; 267 NW2d 72 (1978).” Mathis, supra, 179.

Under both acts, the primary purpose is to provide benefits to the injured party for economic injury. As Justice Moody observed in Mathis, "both benefits are payable to compensate the recipient for the same economic injuries suffered as a result of the accident”.3 The two statutes differ, however, as to the manner in which the injured party may proceed against a third-party tortfeasor.

Section 827(5) of the WDCA, set out above, permits the injured party to recover "any amount” from the third party, including amounts that would duplicate workers’ compensation benefits. "[T]ort recovery under the Worker’s Disability Compensation Act is for all damages, economic and noneconomic * * Workman v Detroit Automobile Inter-Insurance Exchange, 404 Mich 477, 511; 274 NW2d 373 (1979). This duplication is eliminated, however, by the statutory requirement for reimbursement of the payer of workers’ compensation benefits out of the recovery obtained from the third-party tortfeasor. MCL 418.827(5); MSA 17.237(827)(5). Under the WDCA, therefore, when an employee’s injury arising in the course of employment is attributable to a third party who is neither the employer nor a coemployee, the work*102ers’ compensation benefits can be made essentially irrelevant: the employee’s entire recovery is obtainable from the third party on a common-law tort theory.

The no-fault scheme, however, is different. Under the no-fault act, recovery from third parties based upon tort is limited to those injuries that fall outside the coverage of no-fault benefits: non-economic loss and economic loss exceeding no-fault benefits. Thus, there is no duplication of compensation and, therefore, no need to reimburse the no-fault insurance carrier. This was our holding in Workman, supra, which is now codified.

"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 defined in sections 3107 to 3110 in excess of the amount recovered by the claimant from his or her insurer.” MCL 500.3116(4); MSA 24.13116(4).4

Comparison of the WDCA and the no-fault act "indicate[s] that the Legislature, although by different methods, in both acts provided against double recovery”. Workman, supra, 511. It appears, therefore, that prevention of double recovery is a legislative mandate informing both acts, and indeed both acts as "complete and self-contained legislative schemes” achieve this purpose.

In the case before us, however, we are faced with circumstances in which neither act can be applied as a complete and self-contained program because here they are jointly operative. Moreover, *103we are prevented by statute and case law, as will be explained, from declaring that only one of the two acts shall govern the facts of this case.

As Justice Levin correctly implies, the tort liability of third parties in cases like this is determined solely by § 3135 of the no-fault act.5 Paragraph 2 of that section provides in pertinent part:

"Notwithstanding any other provision of law, tort liability arising from the ownership, maintenance or use within this state of a motor vehicle with respect to which the security required by subsections (3) and (4) of section 3101 was in effect is abolished except as [herein provided].” MCL 500.3135(2); MSA 24.13135(2) (emphasis added).

"[A]ny other provision of law” unquestionably encompasses the WDCA and, in particular, § 827(5), which permits an injured employee to bring an action in tort against the third-party tortfeasor for "any” damages. Consequently, to the extent that § 827(5) of the WDCA sanctions tort actions to redress employees’ injuries arising from the use of a motor vehicle, it is rendered inoperative by the no-fault act.6 The WDCA, however, is not entirely excluded from the compensation scheme. By virtue of our construction of § 3109(1) of the no-fault act in Mathis, supra, when workers’ compensation and no-fault benefits are both paid out for the same injury, the workers’ compensation benefits must be applied first.

"The responsibility for * * * benefits rests ñrst on the employer or workers’ compensation insurer, and the *104amount of that payment is to be deducted from the liability of the [no-fault] personal protection insurance carrier.” Mathis, supra, 183.

Consequently, the workers’ compensation benefits will always constitute a portion of the recovery.

What is significant about the foregoing analysis is that the workers’ compensation benefits are subsumed within the no-fault benefit award. In other words, although the source of the recovery is attributable in part to workers’ compensation benefits, the recovery itself adheres to the compensation structure of the no-fault act.7 Since it is established that there is no overlap between no-fault personal protection benefits and tort recovery under § 3135 of the no-fault act (save for intentional torts, which are not in issue here), it follows that there is no overlap between workers’ compensation benefits and § 3135 recovery. The legislative *105mandate is for reimbursement where there is double recovery. Without double recovery, there is no need for reimbursement.

In further support of this view, I refer again to paragraph 5 of § 827 of the WDCA.

"In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier for any amounts paid or payable under this act to date of recovery and the balance shall forthwith be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payments of compensation benefits.”

On account of the effective abrogation of the first sentence of the quoted paragraph by the operation of § 3135 of the no-fault act, as explained above, it is only logical to conclude that the second sentence, which provides for reimbursement of the workers’ compensation carrier, and which was enacted as part of a self-contained program of compensation (for injuries due to the tortious conduct of third parties) in conjunction with the cause of action allowed by the immediately preceding sentence, is also effectively abrogated by § 3135.

Unlike my colleagues, I find Pelkey v Elsea Realty & Investment Co, 394 Mich 485, 492; 232 NW2d 154 (1975), to be inapposite to this case. The Pelkey Court interpreted § 827(5) of the WDCA reproduced above and held that:

"When the Legislature stated that damages recovered *106by an employee from a third-party tortfeasor for 'personal injuries or death only’ could be reached by an insurer, the Legislature meant to include damages resulting from pain and suffering.”

Without arguing the merits of the holding, and without calling specific attention to the peculiar circumstances attending that case, it is sufficient to note that Pelkey considered only the WDCA; that Court did not construe the WDCA and the no-fault act together, as we are obliged to do here, because the no-fault act was not in effect when the cause of action arose. Accordingly, I do not find Pelkey instructive with respect to the question we address today.

For the foregoing reasons, I concur in the result reached by my Brother Williams. That result obviates the need to consider constitutional issues.

Williams, J.

(for affirmance). This matter requires us to consider whether, when an employee is injured in a motor vehicle accident during thé course of employment, the employer’s Worker’s Disability Compensation Act insurer is entitled to reimbursement of economic loss benefits out of the employee’s recovery of no-fault act noneconomic loss from the tortfeasor.

The issue is presented because two legislative schemes are applicable to such an injury: the Worker’s Disability Compensation Act (WDCA), and the no-fault insurance act (NFA). Each act is a complete and largely self-contained scheme addressing discrete problems; neither act expressly refers to the other. In the limited area of overlap —the factual situation of the instant case — it must be determined whether the WDCA’s reimbursement provision penetrates the NFA’s scheme of reparations.

*107The WDCA provides a substitute for common-law tort liability founded upon an employer’s negligence in failing to maintain a safe working environment. Recovery under the WDCA is intended to compensate employment-related industrial injuries and is paid by either the employer or the employer’s WDCA insurance carrier under an indemnity contract. The WDCA provides the only source of reparation for an injured worker unless that injury was proximately caused by a force not within the employer’s control, e.g., a defective machine. In such exceptional circumstances, the compensation carrier may be subrogated to the injured employee’s economic and noneconomic third-party recovery. Pelkey v Elsea Realty & Investment Co, 394 Mich 485; 232 NW2d 154 (1975).

The NFA provides a substitute for common-law tort liability based upon the ownership or operation of a motor vehicle. Under this act, victims of motor vehicle accidents receive insurance benefits from a no-fault insurance carrier as compensation for their injuries. Shavers v Attorney General, 402 Mich 554; 267 NW2d 72 (1978). If the injured party is an employee, the employer’s no-fault carrier is liable to pay personal injury protection (PIP) benefits. MCL 500.3114(3); MSA 24.13114(3). Again, within the NFA, the only source of reparations for the injured victim is the PIP insurance unless the injury is one causing "death, serious impairment of body function or permanent serious disfigurement”.1 In such exceptional circumstances, the law allows the accident victim to sue the third-party tortfeasor, but only for noneconomic losses; in such a case the no-fault carrier who has paid PIP benefits is not entitled to reimbursement from this third-party noneconomic recovery. Workman v De *108troit Automobile Inter-Insurance Exchange, 404 Mich 477; 274 NW2d 373 (1979).

The issue in this case is whether the WDCA carrier can employ his WDCA reimbursement entitlement against an NFA injured party’s NFA non-economic recovery from the tortfeasor. We hold that the insurer is not entitled to reimbursement under these circumstances. The Court of Appeals is affirmed.

I

On January 12, 1976, defendant Peter Queen, an Oakland County deputy sheriff, was driving a patrol car in the course of his employment when he was struck by codefendant Patricia Moore’s oncoming vehicle. Deputy Queen’s serious injuries were aggravated when his automobile was subsequently struck from behind by another vehicle driven by codefendant Michael Hughes.

Plaintiff Great American Insurance paid workers’ compensation benefits totaling $4,567 to Deputy Queen in accordance with its contract with Oakland County. Pursuant to MCL 500.3114(3); MSA 24.13114(3), Deputy Queen also collected certain no-fault benefits for excess economic losses from the insurer of the Oakland County vehicle he was operating at the time of the accident; these losses were not covered by the Great American workers’ compensation policy. He then sought to recover from the third-party tortfeasors, defendants Moore and Hughes, for his noneconomic losses, pursuant to MCL 500.3135(1); MSA 24.13135(1). The case was settled for a total of $18,500. Neither auto insurance company notified Great American of their no-fault disbursements to Queen.

*109Great American thereafter filed suit against Deputy Queen, Moore, and Hughes under the Worker’s Disability Compensation Act, MCL 418.827; MSA 17.237(827), based upon a purported lien against any third-party payment made to Queen as a result of an automobile accident.

On October 31, 1977, the trial judge granted summary judgment in favor of all three defendants, finding that Great American’s lien was invalid and unenforceable. The Court of Appeals affirmed the trial court in a per curiam opinion rendered October 3, 1978. Great American Ins Co v Queen, 86 Mich App 362; 272 NW2d 659 (1978).

This Court granted leave to appeal, 405 Mich 823 (1979). Oral argument was conducted on October 2, 1979.

II

In construing the statutory schemes set up by the WDCA and the NFA it is useful to compare the respective mechanisms employed to "make whole” the injured claimant.

Under the NFA, an employee who is injured in a work-related automobile accident has recourse against the employer’s no-fault carrier by virtue of MCL 500.3114(3); MSA 24.13114(3):2

"An employee, his spouse, or a relative of either domiciled in the same household, who suffers accidental bodily injury while an occupant of a motor vehicle owned or registered by the employer shall receive personal protection insurance benefits to which he is entitled from the insurer of the furnished vehicle.”

*110If the employee is seriously injured, and the accident is the result of the negligence of a third party who is not a coemployee, MCL 500.3135; MSA 24.13135, confers a right to sue for noneconomic damages only:

"(1) A person remains subject to tort liability for noneconomic loss caused by his ownership, maintenance or use of a motor vehicle only if the injured person has suffered death, serious impairment of body function or permanent serious disfigurement.
"(2) Notwithstanding any other provision of law, tort liability arising from the ownership, maintenance or use within this state of a motor vehicle * * * is abolished except as to:
"(b) Damages for noneconomic loss as provided and limited in subsection (1).” (Emphasis added.)

In the event that the injured employee realizes a recovery against the third-party tortfeasor for NFA noneconomic losses, the process of being "made whole” will comprise both a PIP recovery from the employer’s NFA carrier, and a noneconomic recovery from the tortfeasor.

PIP carriers who had made payments to injured employees would then invoke MCL 500.3116; MSA 24.13116, which stated:3

"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. However, after recovery is realized upon a tort claim, a subtraction shall be made to the extent of the recovery * * *.” (Emphasis added.)

This statute was before the Court in Workman, *111supra. Noting the "apparent and patent absurdity”4 of granting a limited tort recovery in MCL 500.3135, then effectively taking away any tort recovery under MCL 500.3116, we held:5

"[A]n insurance carrier * * * is entitled to reimbursement from the tort recovery of a person injured as a result of a motor vehicle accident only if, and to the extent that, the tort recovery includes damages for losses for which personal injury protection beneñts were paid. Thus, since § 3135 abolishes tort remedy for losses covered under the personal injury protection insurance provisions of the act, an injured plaintiff should recover nothing for which the insurance carrier will have a right of reimbursement under § 3116.” (Emphasis added.)

Workman thus stands for the proposition that the employer’s PIP carrier cannot be reimbursed from the employee’s noneconomic recovery against the third-party tortfeasor.

In contrast to this NFA reparations scheme is the process to be followed in WDCA by a person injured in the course and scope of employment. Entitlement to compensation is provided by MCL 418.301; MSA 17.237(301):

"(1) An employee, who receives a personal injury arising out of and in the course of his employment by an employer who is subject to the provisions of this act, at the time of such injury, shall be paid compensation * * * JJ

The injured worker is not foreclosed by the WDCA from seeking collateral recovery. A right of action against third parties is expressly conferred by MCL 418.827(1); MSA 17.237(827)(1):

*112"(1) Where the injury for which compensation is payable under this act was caused under circumstances creating a legal liability in some person other than a natural person in the same employ or the employer to pay damages in respect thereof, the acceptance of compensation benefíts or the taking of proceedings to enforce compensation payments shall not act as an election of remedies but the injured employee or his dependents or personal representative may also proceed to enforce the liability of the third party for damages in accordance with the provisions of this section.” (Emphasis added.)

Once a recovery on a third-party claim has been realized, the WDCA subrogation section becomes applicable. In pertinent part, it reads:

"(5) In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall ñrst reimburse the employer or carrier for amounts paid or payable under this act to date of recovery and the balance shall forthwith be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payments of compensation benefits.” (Emphasis added.)

In light of these parallel systems of reparations, the question is whether § 827(5) of the WDCA and our prior opinion in Pelkey, supra, overcome the more recent enactment of § 3135 of the NFA and our opinion in Workman, supra.

Defendants argue strenuously that the conflicts between the NFA and the WDCA require a finding of repeal by implication. Since we are directed by Ashwander v Tennessee Valley Authority, 297 US *113288; 56 S Ct 466; 80 L Ed 688 (1936), to consider nonconstitutional issues which will dispose of a case before resolving the case on a constitutional basis,6 we first address defendants’ claim that statutory construction precludes a WDCA carrier’s subrogation from the injured claimant’s third-party recovery.

There is little doubt that the most recent legislative pronouncement in a given area will repeal an earlier act to the extent that the two pieces of legislation are repugnant and inconsistent, despite the general rule that repeals by implication are not favored in the law.7

Considering the vastly different overall impact in this area of the NFA and the WDCA, we conclude that there is a direct repugnance. This comprehensive impression of repugnance is reinforced by specifically recalling that the NFA allows the employee to sue for recovery only for "death, serious impairment of body function or permanent serious disfigurement”, whereas the WDCA allows a third-party suit for any type of proximately caused injury; by specifically recalling that the NFA allows only noneconomic recovery, whereas the WDCA allows general recovery; and by specifically recalling that the NFA disallows the insurer any reimbursement from the employee’s recovery, whereas the WDCA allows the insurer reimbursement, both economic and noneconomic (pain and suffering), from the employee’s recovery. In short, the repugnance appears strong.

The rule of statutory construction in cases of *114conflict between two legislative acts permits a finding of repeal by implication only where the repugnancy is clear and irreconcilable, and both acts cannot be given simultaneous effect. We find a clear and irreconcilable repugnance between the NFA and § 827(5) of the WDCA. This is so because the reimbursement section of the WDCA was enacted as 1952 PA 155 and recodified as 1969 PA 317. The NFA was promulgated by 1972 PA 294. Accordingly, because of this patent conflict, statutory construction mandates a repeal by implication of MCL 418.827(5).

Further, even if we were to hold that an examination of the pertinent passages of the acts did not yield an implicit repealer, we would nonetheless be compelled to find a repeal by implication because to permit § 827(5) to stand in the face of the limited tort recovery under the NFA would result in the creation of an unconstitutional classification, as discussed in Part III. We do not believe that the Legislature, in enacting the WDCA and the NFA, intended such a result.

Ill

Our obligation in reviewing legislative acts is to give them constitutional effect if possible. Accordingly, we seek a reading of each statute which avoids unconstitutionality. In the instant case, we are compelled to hold that the reimbursement provision of the WDCA has been superseded by the enactment of the NFA. A contrary resolution is unacceptable because it would require effectuation of a provision which violates the constitutional guarantee of equal protection of the laws. Const 1963, art 1, § 2.

This Court in Shavers, supra, enunciated the *115test for equal protection and due process in construing the NFA:8

"The test to determine whether legislation enacted pursuant to the police power comports with due process is whether the legislation bears a reasonable relation to a permissible legislative objective. * * *
"The test to determine whether a statute enacted pursuant to the police power comports with equal protection is, essentially, the same.”

The legislative objective of the NFA is to make whole the seriously injured automobile accident victim. This Court unanimously found in Shavers, supra, that such was a permissible legislative objective. However, this objective is frustrated as a result of the interplay between the NFA and MCL 418.827(5), which results in the creation of two arbitrary classes of similarly situated individuals, i.e., automobile accident victims.

The first class is comprised of automobile accident victims who are not injured in the course and scope of their employment. These automobile accident victims are made whole by seeking economic loss benefits from their own PIP carriers and noneconomic losses from the third-party tortfeasor. By virtue of Workman, supra, and the recent legislative amendment of MCL 500.3116, the PIP carrier is not entitled to reimbursement from the third-party recovery.9

The second class is composed of automobile accident victims who are injured in the course and scope of their employment. These victims similarly recover economic loss benefits.10 However, in suits *116against the third-party tortfeasor, the employee-victims find that, unlike their similarly situated counterparts, MCL 418.827(5) authorizes a lien in favor of the WDCA carrier against any tort recovery. Despite the fact that both classes are similarly situated, MCL 418.827(5) treats the latter class so differently, by diminishing their net recovery through WDCA subrogation, that the permissible legislative objective is frustrated.11

This diverse, unreasonable treatment of similarly situated members of a class solely because of the arbitrary presence or absence of an employment relationship bears no reasonable relationship to the recognized and permissible purpose of the NFA, to render injured accident victims whole. Such contingency constitutes an arbitrary and unreasonable variance in the treatment of one natural class — seriously injured accident victims— and is, therefore, barred by the constitutional guarantee of equal protection.12 Const 1963, art 1, §2. _

*117IV

We hold today that, in the context of the interplay between the NFA’s restrictive third-party recovery and the WDCA’s nonrestrictive subrogation provision, a WDCA insurance carrier is not entitled to reimbursement of economic loss benefits out of the employee’s recovery of NFA noneconomic loss from the tortfeasor. We believe that the Legislature intended that the NFA should repeal inconsistent segments of the WDCA. A contrary reading of legislative intent is unacceptable because it would require a violation of the constitutional equal protection guarantee. Accordingly, we are compelled to conclude that MCL 418.827(5) is inapplicable to any recovery obtained under the pertinent provisions of the NFA.

The Court of Appeals is affirmed. No costs, a public issue being involved.

Blair Moody, Jr., J., concurred with Williams, J.

Great American Insurance v. Queen
410 Mich. 73

Case Details

Name
Great American Insurance v. Queen
Decision Date
Dec 23, 1980
Citations

410 Mich. 73

Jurisdiction
Michigan

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