Each entity filed a motion for summary judgment on its own behalf. The trial court ruled in favor of the MPCGA and declared Home-Owners was obligated to begin making payments to Mathis. Home-Owners appealed.

Priority of Coverage

Home-Owners was a no-fault insurer and could only be held liable for claims that involved "accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle" (MCLS §500.3105(1); emphasis added). Home-Owners argued that, under MCLS §500.3106(2)(b), when workers compensation benefits were “available to an employee who sustain[ed] the injury in the course of his or her employment” while getting into or out of a parked vehicle, those injuries did not qualify as an “accidental bodily injury” arising out of the “ownership, operation, maintenance or use of a motor vehicle as a motor vehicle” for which a claimant could be compensated. Since Mathis had been injured while exiting his parked truck rig, and workers compensation benefits could be presumed available based on the past payments made by Guaranty, Home-Owners argued it was not obligated to begin making the payments to Mathis.

The MPCGA, on the other hand, argued that, under MCLS §500.7931(3), a claimant had to exhaust the limits of other collectible coverage, other than the now-insolvent insurer, before the MPCGA would begin making payments. The MPCGA was a group composed of all insurers, except those writing life or disability coverage, authorized to do business in Michigan whose purpose was to cover the outstanding claims of insurers who became insolvent.

However, the trigger for the association’s obligation to begin paying such claims was not an insurer’s declaration of insolvency. If any other solvent insurers were obligated to pay benefits to the claimant of an insolvent insurer, those solvent insurers had to pay their limits for the claimant before the association would begin making payments. Only when no solvent insurers remained that had an obligation to the claimant would it trigger the MPCGA’s duty to cover the existing claims of an insolvent carrier. Therefore, the MPCGA could not have priority over another insurer.

Nevertheless, Home-Owners claimed the MPCGA could not claim credit for the payments made to Mathis through workers compensation. The last sentence in MCLS §500.7931(3) stated that the MPCGA’s liability wasn’t limited when the payments assumed by the MPCGA had originally been issued under workers compensation coverage. Based on this alleged lack of a limit, Home-Owners argued it was impermissible for the MPCGA to use the payments made under workers compensation coverage to offset the amount it owed to Mathis.

This argument, according to the court, was off center. Michigan workers compensation law struck a balance between payment sources when a workers compensation claimant was lawfully entitled to both weekly wage benefits and another benefit program. The statute that Home-Owners claimed was a bar to offsetting Mathis’s benefits from the MPCGA, MCLS §500.7931(3), simply provided that payments from the MPCGA could not be offset by any amount greater than what was calculated under Michigan workers compensation law. It did not dismantle and rebuild the guaranty act’s priority structure so the MPCGA was at the top of the list.

The trial court’s decision that found Home-Owners had priority over the MPCGA was affirmed.

Editor’s Note: Guaranty associations are the final backstop for claimants who are still owed benefits by an insolvent insurer. But before a guaranty association’s obligations are triggered, a claimant must exhaust payments from any other insurer who would be obligated to pay benefits to that claimant. Forcing a guaranty association to make payments when a claimant was still entitled to benefits from a solvent insurer would defeat the purpose of the guaranty association.

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