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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL


Opinion No. 5673

April 1, 1980

INSURANCE:

Payment of no fault insurance work loss benefits to school teachers

A school teacher may collect no fault insurance work loss benefits during the summer in which the accident occurs if summer employment was being performed, or if the teacher would be employed during the summer if the accident had not occurred, or if the teacher is usually employed during the summer.

Honorable Alfred A. Sheridan

State Representative

The Capitol

Lansing, Michigan

You have requested my opinion as to whether an automobile insurance company may refuse to pay teachers work loss benefits arising from no fault insurance during the summer in which an accident occurs. We are advised that insurance companies insist on delaying 'work loss' benefits until the commencement of the next school term. Since the 'work loss' benefit begins on the date of the accident, a teacher would not receive the full three years of benefit under the current practice of the insurance companies.

Work loss is one of the personal protection insurance benefits under Michigan's no fault insurance law, 1956 PA 218, Sec. 3107, as added by 1972 PA 294, MCLA 500.3107; MSA 24.13107. Section 3107 provides for the payment of work loss benefits in subsection (b) as follows:

'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 benefit 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.'

The work loss benefits which may be paid under this section have been increased from $1,000 per month to $1,636 per month, as of October 1, 1979, by the Commissioner of Insurance, as provided above. The loss of two months' benefits would thus constitute a substantial loss to teachers which would be a permanent loss as the period of benefits is not extended due to the delay in payment of benefits.

Section 3107 has been construed by the Michigan Court of Appeals in Nawrocki v Hawkeye Security Insurance Co, 83 Mich App 135, 143-144; 268 NW2d 317, 321 (1978). lv app den 406 Mich 896 (1979), to require that there be an accrued loss rather than a mere loss in earning capacity. The court arrived at its conclusion based upon the definition of 'work loss' used by the drafters of the uniform motor vehicle accident reparations act, 13 ULA 349, et seq, and stated:

'The Michigan no-fault act was based upon the uniform motor vehicle accident reparations act, 13 ULA 349, et seq. 'Work loss' is defined in Sec. 1(a)(5)(ii) of that act, and the commissioners' comment on this definition leaves no doubt that work loss as used in that act does not mean loss of earning capacity:'

In Struble v Detroit Automobile Inter-Insurance Exchange, 86 Mich App 245, 251, 255, 256; 272 NW2d 617, 621, 623 (1978), lv app den 406 Mich 885 (1979), the Michigan Court of Appeals again referred to the uniform motor vehicle accident reparations act, supra, in concluding that actual losses must occur in order for a 'work loss' to be found. The Court discussed the definition or work loss as follows:

"Work loss', as are the other components of loss, is restricted to accrued loss, and thus covers only actual loss of earnings as contrasted to loss of earning capacity. Thus, an employed person suffers no work loss from injury until the time he would have been employed but for his injury.' 13 Uniform Laws Annotated 358, 362; comments to Sec. 1(5)(ii) of the uniform act.' (emphasis added)

The Court concluded that 1956 PA 218, Sec. 3107, subsection (b). supra, was constitutional in the following analysis:

'In applying the 'rational basis' test, the inquiry has traditionally focused upon the character of the classification in question, the relative importance of the governmental benefits that they do not receive to the individuals in the class discriminated against, and the state interest asserted in support of the classification. . . . Here the state interest is to provide recovery to those persons who have sustained an actual wage loss resulting from an automobile accident and to allow for reduced insurance rates. There is a rational relation between the legislative objective and Sec. 3107(b), even under the interpretation made by the trial court in the present case. Under that section, recovery is only allowed where it can be shown that there was an actual work loss.' (citations omitted)

In the case of Kennedy v Auto-Owners Insurance Co, 87 Mich App 93; 273 NW2d 599 (1978), the Court had before it a similar fact situation in that the plaintiff was a student at a university at the time of the accident. During the summer, plaintiff had been employed full time and during the first semester of the preceding school year, plaintiff had been employed part time by the university. The lower court found the plaintiff entitled to work loss benefits, awarding him an amount equal to earnings from a full time job at the rate of the full time job he had been employed in during the summer prior to his accident under the provisions of 1956 PA 218, Sec. 3107a, MCLA 500.3107a; MSA 24.13107(1), which provided work loss benefits to an injured person who is temporarily unemployed at the time of the accident based on earned income for the last month employed full time preceding the accident. The Court of Appeals found that if the plaintiff could show that he would have been employed part time or seasonally but for his injury, then he has suffered loss of income as a result of the injury for which he should be compensated. The Court held that, in determining the amount of benefits, the lower court had erred, concluding:

'. . . Plaintiff is entitled to year-round payments for full-time work only if he would have performed such work had he not been injured. The trial court in his findings of fact concluded:

"Except for the disability resulting from his injuries, plaintiff would have obtained employment while attending school. Plaintiff would have sought off-campus employment, because a school rule limited on-campus student employment to 20 hours a week. In addition to his work during the school year, plaintiff would have obtained full-time employment during the summer recess. If he had not planned to return to college in the fall of 1975, he would have obtained full-time employment.'

'Nowhere did the court indicate a finding that plaintiff would have worked full time at $3.25 per hour while attending college, nor would the evidence before the court support such a finding.

'We therefore remand to the trial court for a new determination of the level of benefits to which plaintiff is entitled. If on the basis of plaintiff's past work record the court determines that he would have worked full time during the summer and part time during the school year, benefits shall be awarded on that basis.' Kennedy v Auto-Owners Insurance Co, supra, 87 Mich App at 97-98; 213 NW2d at 602

Finally, in Gerardi v Buckeye Union Insurance Co, 89 Mich App 90, 95; 279 NW2d 588, 590 (1979), the Court of Appeals concluded that an order which denied the defendant insurance company's motion for summary judgment was in error because the plaintiff had failed to allege an actual loss of income which she would have earned but for the accident. Instead, the plaintiff had alleged that she would lose income in the future because her employment as a registered nurse would have to be delayed by one year due to the injury. The Court stated:

'. . . Obviously, plaintiff would not have been able to work as a registered nurse prior to her accident; she thus has no previous earnings as a nurse upon which work loss may be calculated. Neither can plaintiff demonstrate that during the year lost as a result of the accident, she would have received income working as a registered nurse. Presumably, plaintiff would have spent that year completing the necessary academic requirements.'

The above cases establish the principle that there must be an actual work loss if recovery is to be had under 1956 PA 218, Sec. 3107, supra. In the case of teachers, there is no actual loss of income during the summer months unless the teacher is employed during those months. Under Kennedy, supra, a teacher would be entitled to the amount of actual work loss as a teacher beginning with the term in September. The loss to the teacher would be on the basis of the actual loss for the time during which the teacher is unable to work as a teacher. This would mean that the benefits would have to be calculated based upon nine and one-half months of work at the rate of pay commencing in September, with the assumption that there are no earnings during the summer months unless the teacher was engaged in summer employment or demonstrates that he or she would have been employed during the summer but for the injury suffered or is usually employed during the summer. The teacher may request that the benefits be paid only during the nine and one-half working months or that they be paid over the entire year if the shorter duration would result in a lower total payment due to the statutory cap on benefits. If the teacher had engaged in summer employment during the summer of the accident or demonstrates that he or she would have been employed during the summer but for the injury suffered or had usually been employed in the summer, then under 1956 PA 218, Sec. 3107, supra, the teacher would be entitled to collect during the three years following the accident both work loss benefits for the employment as a teacher and for summer employment.

It is also necessary to consider 1956 PA 218, Sec. 3107a, supra, in determining whether benefits may be paid to a teacher during the summer in which an accident occurs, which provides:

'Subject to the provisions of section 3107(b), work loss for an injured person who is temporarily unemployed at the time of the accident or during the period of disability shall be based on earned income for the last month employed full time preceding the accident.'

The status of a teacher during the summer is not that of an unemployed person under the Michigan Employment Securities Act, 1936 Ex Sess PA 1, Sec. 27(i), MCLA 421.27(i); MSA 17.529(i). The Michigan Court of Appeals has held that the denial of unemployment benefits to school district employes during the summer months is not unconstitutional. Larkin v Bay City Public Schools, 89 Mich App 199; 280 NW2d 483 (1979), lv app den 406 Mich 979 (1979). The summer months are considered a 'denial period' during which school district employees are not entitled to unemployment benefits. Essentially, school district employees are not unemployed during the summer and benefits, such as health insurance and life insurance, continue during the summer months. In some school districts, teachers are paid in 26 bi-weekly installments so that the salary continues to be paid during the summer. There is no break in the employment relationship with the school district and the school district continues to be the employer, but there is no actual work performed during the summer unless the teacher teaches summer school.

Finally, 1956 PA 218, Sec. 3107a, supra, states that it is subject to the provisions of 1956 PA 218, Sec. 3107, subsection (b), supra, where work loss is defined as 'consisting of loss of income from work an injured person would have performed during the first three years after the date of the accident if he had not been injured.' Therefore, the above cited cases would require the conclusion that there was no loss of income from work the injured person would have performed during the summer months in which the accident occurred. For these reasons, 1956 PA 218, Sec. 3107a, supra, is not applicable to the situation of teachers. Teachers may only collect benefits during the summer in which the accident occurs if summer employment was being performed, the teacher would have been employed but for the accident, or if the teacher was usually employed during the summer. Furthermore, in such cases where the teacher is paid less than the teacher's teaching salary, the work loss benefits will be determined only for that summer at that level and in September they will commence at the salary paid teachers that September, as set forth in Kennedy, supra.

In conclusion, therefore, it is my opinion that teachers may commence collecting work loss benefits during the summer months in which an accident occurs where the teacher was performing summer employment, or if the teacher would have been employed if the accident had not occurred, or if the teacher is usually employed during the summer.

Frank J. Kelley

Attorney General


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