
    ROTH v CADILLAC INSURANCE COMPANY
    Docket No. 67512.
    Submitted May 3, 1983, at Lansing.
    Decided October 10, 1983.
    Leave to appeal applied for.
    Alan K. Roth was injured in an automobile accident and was unable to work for several months. His insurer, Cadillac Insurance Company, paid no-fault work-loss benefits. Upon his return to work, Roth was immediately laid off due to economic conditions. He did not qualify for unemployment benefits or trade readjustment allowance benefits because, due to his injuries, he had not worked the requisite number of weeks prior to the layoff. Roth brought an action against Cadillac Insurance seeking payment of those benefits, which he would have received had he not been injured and had worked, as work-loss benefits under the insurance policy. The Saginaw Circuit Court, . Hazen R. Armstrong, J., held that work-loss benefits were not payable for loss of "benefits to which an employee might be entitled when he is not working” and entered judgment for defendant. Plaintiff appealed. Held:
    
    The unemployment and trade readjustment benefits are not the type of benefits which were in the contemplation of the Legislature when the no-fault provision was enacted. Application of the plaintiff’s argument that he would have been eligible for the benefits "but for” the accident would allow reimbursement beyond that contemplated. The trial court did not err in denying those benefits.
    Affirmed.
    D. F. Walsh, J., dissented. He would hold that, because a worker earns his unemployment and trade readjustment benefits by working during the qualifying weeks, the entitlement to those benefits is a part of the compensation the plaintiff would have received had he been able to work. Therefore, he had a right to work-loss benefits representing the income he would have received from unemployment and trade readjustment benefits because of the layoff. Judge Walsh would reverse.
    References for Points in Headnotes
    
       7 Am Jur 2d, Automobile Insurance § 361.
    Validity and construction of "no-fault” automobile insurance plans. 42 ALR3d 229.
    
      Opinion op the Court
    1. Insurance — No-Fault Insurance — Work Loss — Unemployment Compensation — Trade Readjustment Allowance.
    Unemployment compensation benefits and trade readjustment allowance benefits for which an employee injured in an automobile accident did not qualify when laid off from his employment after returning to work, because his injuries prevented him from working the requisite number of weeks prior to the layoff, are not "work loss” benefits payable to the injured person pursuant to the automobile no-fault insurance act (MCL 500.3107[b]; MSA 24.13107[b]).
    Dissent by D. F. Walsh, J.
    2. Insurance — No-Fault Insurance — Work Loss — Unemployment Compensation — Trade Readjustment Allowance.
    
      Unemployment compensation beneñts and trade readjustment allowance beneñts for which an employee injured in an automobile accident did not qualify when laid off from his employment after returning to work, because his injuries prevented him from working the requisite number of weeks prior to the layoff, are "work loss” beneñts payable to the injured person pursuant to the automobile no-fault insurance act because the entitlement to such beneñts is a part of the compensation the employee would have received had he been able to work (MCL 500.3107[bj; MSA 24.13107[bj).
    
    
      Hauffe, Lawler, O’Grady & Geyer (by Thomas J. Lawler), for plaintiff.
    
      McGraw & Borchard, P.C. (by Michael C. Weiss), for defendant.
    Before: Allen, P.J., and R. B. Burns and D. F. Walsh, JJ.
   Allen, P.J.

Are unemployment compensation and trade readjustment benefits, for which plaintiff did not qualify because he had not worked the required number of weeks during the preceding year due to injuries he received in an automobile accident, "work loss” benefits which plaintiff may recover under MCL 500.3107(b); MSA 24.13107(b) of the Michigan no-fault insurance act? The trial court held that "work loss” benefits "are payable only for loss of income from work which the injured person would have performed, not, however, for benefits to which an employee might be entitled when he is not working” and on October 6, 1982, entered judgment for defendant. From said judgment, plaintiff appeals of right. The question presented is of first impression. We affirm.

The case was submitted to the trial court on a stipulated statement of facts, the relevant portions of which are set forth herein. Plaintiff was injured in an automobile accident March 6, 1979, as a result of which he was unable to work at his job in the Chevrolet Motor Division in Saginaw until January 28, 1980. During the period of his unemployment he was fully reimbursed by defendant insurer for all medical expenses and lost wages. On the day plaintiff returned to work, January 28, 1980, he was laid off due to general economic conditions and their adverse effect on plaintiff’s employer. Plaintiff’s layoff was not attributable to the automobile accident. Had plaintiff not been involved in the automobile accident, he would have been laid off on December 10, 1979, due to economic conditions.

Because a minimum of 14 weeks must be worked during the calendar year preceding claimant’s actual layoff (January 28, 1979, to January 28, 1980) in order to qualify for unemployment compensation benefits, it was stipulated that plaintiff did not qualify for unemployment benefits. Likewise, because he had not worked a minimum of 26 weeks, plaintiff was not eligible to receive trade readjustment allowance (TRA) benefits. Other employees who were laid off for economic reasons and who had worked the required number of weeks received such benefits. It was also stipulated that had plaintiff not been injured in the automobile accident on March 6, 1979, and had he been working from that date through December 10, 1979, he would have been eligible to receive unemployment compensation and TRA benefits totalling $13,703. Plaintiff filed suit in circuit court for 85% of $13,703, viz.: $11,647.55, plus 12% (MCL 500.3142; MSA 24.13142), together with interest from the date of filing the complaint (MCL 600.6013; MSA 27A.6013), and attorney fees (MCL 500.3148; MSA 24.13148). On September 22, 1982, the trial judge issued a written opinion denying such benefits but recognizing that there was no case law on the exact issue presented.

The controlling statutory provision is MCL 500.3107(b); MSA 24.13107(b), which reads as follows:

"(b) Work loss consisting of loss 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 and expenses not exceeding $20.00 per day, reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he had not been injured, an injured person would have performed during the first 3 years after the date of the accident, not for income but for the benefits of himself or of his dependent. Work loss does not include any loss after the date on which the injured person dies. Because the benefits received from personal protection insurance for loss of income are not taxable income, the benefits payable for such loss of income shall be reduced 15% unless the claimant presents to the insurer in support of his claim reasonable proof of a lower value of the income tax advantage in his case, in which case the lower value shall apply. The benefits payable for work loss sustained in a single 30-day period and the income earned by an injured person for work during the same period together shall not exceed $1,000.00, which maximum shall apply pro rata to any lesser period of work loss. The maximum shall be adjusted annually to reflect changes in the cost of living under rules prescribed by the commissioner but any change in the maximum shall apply only to benefits arising out of accidents occurring subsequent to the date of change in the maximum.” (Emphasis supplied.)

This provision has been interpreted by this Court in three opinions with somewhat conflicting results. Krawczyk v DAIIE, 117 Mich App 155; 323 NW2d 633 (1982); Farquharson v Travelers Ins Co, 121 Mich App 766; 329 NW2d 484 (1982); Kruzel v DAIIE, 128 Mich App 35; 339 NW2d 720 (1983). In Krawczyk, the employee was denied recovery of $390 in health insurance premiums paid by him while unable to work, $4,066 in profit-sharing otherwise due from a profit-sharing plan, and $510 in pension benefits. The Court allowed recovery of interest at 12% on payments which, under the act, were overdue and for attorney fees.

In Farquharson, a different panel of this Court was asked to determine whether: (a) the employer’s contribution to a pension plan, (b) payment of health insurance premiums, and (c) the employer’s federal Social Security tax paid on plaintiff’s wages, were "work loss” benefits recoverable under the statute. The panel was also asked to decide whether the trial court erred in disallowing recovery of interest under the no-fault act and attorney fees. Disagreeing with Krawezyk, the panel held that items (a) and (b) were recoverable "work loss” benefits but that Social Security benefits were "not 'income’ to the employee under § 3107(b)”. 121 Mich App 775. However, the panel agreed with Krawezyk that interest at 12% and attorney fees were recoverable.

Kruzel raised the narrow issue of whether the amount which the employer was paying for an employee’s hospitalization insurance policy but which was paid by the employee during the period he could not work because of injuries sustained in an automobile accident was a "work loss” benefit under § 3107(b). The Kruzel panel concluded that health insurance coverage was a fringe benefit included within the term "wage loss”.

"In our opinion, Farquharson is the better reasoned opinion. We do not believe the Legislature intended to exclude fringe benefits from 'work loss’ benefits. Fringe benefits are a form of income payable in kind rather than in cash. If fringe benefits paid by the employer are excluded under § 3107(b), an employee who receives the cash equivalent of the benefit and buys his or her health insurance would be entitled to reimbursement, but plaintiff, and all others like her, would not. This is an unreasonable result and one which we do not believe the Legislature intended. Furthermore, excluding employer paid 'fringe benefits’ from the ambit of 'work loss’ would be inconsistent with the broad policy objectives of the no-fault statute.

"Accordingly, we conclude that hospitalization premium payments normally paid by the employer constitute a Toss of income from work’ and are reimbursable under § 3107(b).”

Plaintiff first argues that under the reasoning set forth by Judge (now Justice) Cavanagh in Nawrocki v Hawkeye Security Ins Co, 83 Mich App 135; 268 NW2d 317 (1978), plaintiff is entitled to recover. We disagree. That case involved the question of whether plaintiff could recover wages lost when, upon recovering from injuries sustained in an automobile accident, plaintiff was not rehired because his employer had filled the position with another employee. Cieariy, § 3107(b) pertains to lost wages. The issue in the instant case is entirely different, viz.: does § 3107(b) include unemployment compensation and trade readjustment benefits. Furthermore, there was no question but that Nawrocki lost his job because of his accidental injuries, whereas in the instant case plaintiff’s post-disability layoff was due to general economic conditions totally unrelated to the automobile accident or the injuries sustained therein.

Plaintiff next argues that "but for” the automobile accident plaintiff would have been able to work the necessary number of weeks required to qualify him for both unemployment and trade readjustment benefits. However, the "but for” test is more valid as a test of exclusion than as a test of inclusion. 2 Harper & James, The Law of Torts, p 1110; Smith, Legal Cause in Actions of Tort, 25 Harv L Rev 103 (1911). Furthermore, the basic issue presented here is not one of causation but one of statutory construction: did the Legislature in enacting § 3107(a) intend that it cover benefits such as unemployment compensation and TRA benefits. We don’t think the Legislature intended so broad a coverage.

We do not perceive unemployment compensation and TRA benefits to be "fringe benefits” as that term is commonly understood. Farquharson and Kruzel, supra, construed § 3107(a) as permitting recovery of fringe benefits paid by the employer. Fringe benefits were defined as "a form of income payable in kind rather than in cash”. Unemployment compensation is not paid "in kind” but in cash. Furthermore, it is paid by the government although the employer indirectly pays a portion, thereof. Similarly, TRA benefits are government paid and clearly are not employer-type fringe benefits.

While we sympathize with the plaintiff in this instance, we believe imposition of "but for” causation would open § 3107(b) to reimbursement far beyond that contemplated by the Legislature when the statute was first enacted. If change is to be made, it should be made by the Legislature and not by this Court.

Affirmed. No costs, a question of public importance being involved.

R. B. Burns, J., concurred.

D. F. Walsh, J.

(dissenting). I must respectfully dissent. In my judgment the result reached by the majority is unfair to the plaintiff, contrary to the intent and policy of the no-fault legislation and not mandated by the language of the pertinent statutory provision.

MCL 500.3107(b); MSA 24.13107(b) provides that "work loss” consists of "loss 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”. It seems to me that the whole concept of qualifying weeks in the Employment Security Act, MCL 421.1 et seq.; MSA 17.501 et seq., and the Trade Act of 1974, 19 USC 2101 et seq., is that the employee earns his unemployment compensation and trade readjustment allowance benefits by the work he performs during the qualifying weeks. Therefore, part of the compensation plaintiff would have received for work he would have performed in the months he was disabled as a result of the accident was entitlement to unemployment and trade readjustment benefits should future economic conditions require layoff. Since he was unable to earn his entitlement to this unemployment income by virtue of the fact that his injuries prevented him from working during the qualifying weeks, he had a right to work-loss benefits in the amount of the income he would otherwise have received as a result of his enforced layoff.

I would reverse. 
      
       During the period of convalescence, plaintiff was twice cleared for work in a janitor classification and attempted to perform such assignment. However, due to a fall because of injuries to his eyes in the automobile accident, plaintiffs employment as a janitor was of brief duration, and in no way is relevant to decision in the instant case.
     
      
       One member of the Krawczyk panel (visiting Judge Stanley Everett) disagreed with the majority on the question of profit-sharing. He believed that the profit-sharing plan falls within the definition of "work loss”.
     