Slocum v Farm Bureau General Insurance Co of Michigan: The Right to Loss Benefits Under Michigan’s No-Fault Act

In a recent published Court of Appeals opinion, Slocum v Farm Bureau General Insurance Co of Michigan, (Docket No. 343333), the Court of Appeals was called upon to consider a consolidated appeal about “whether a deceased’s dependents are entitled to the replacement cost of obtaining medical and dental benefits similar to those provided by the deceased’s former employer or to the monetary value of the premiums paid by the former employer.” Because under Michigan’s no-fault act support of dependents is supposed to be maintained, the Court concluded that dependents were entitled to the cost of obtaining substantially similar policies to those that were provided them by the deceased’s former employer.

In Slocum, Robert Slocum was killed in a motorcycle accident, leaving behind his wife and her biological son, whom Slocum had adopted, as well as his two minor children from a previous marriage. Slocum’s widow and all of his children depended on him for financial support and their medical and dental insurance, which was provided through Slocum’s employer.

Slocum’s widow submitted a claim to Farm Bureau and USAA, the insurance companies which had insured the cars involved in the accident, to request immediate payment of Slocum’s monthly after-tax income of $2,097.33. She also requested lost fringe benefits, including medical and dental insurance. However, neither insurer provided any benefit.

A few months later, Slocum’s widow sent a follow up letter to Farm Bureau that documented Slocum’s wages and medical and dental insurance that he had enjoyed through his employer as well as information regarding what it would cost to replace the insurance for her and the children.

Under MCL 500.3108, Farm Bureau was responsible for paying Slocum’s survivors’ loss benefits. Although Farm Bureau acknowledged its responsibility under MCL 500.3108, it filed a complaint alleging that Slocum’s widow had not provided adequate proof of the medical and dental insurance policies that had covered Slocum and his dependents or of the amount of Social Security benefits his dependents had received.

Subsequently, Slocum’s widow filed a complaint against Farm Bureau and USAA, alleging that each had failed to pay the dependents their rightful survivor’s rights benefits and requested the court to order penalty interest and an award of attorneys fees connected to their refusals.

The trial court held that “the insurers were liable for the ‘replacement cost or expense’ to each dependent of ‘substantially similar’ medical and dental benefits to those they received from [Slocum].” The trial court also concluded that Farm Bureau should only be responsible for reasonable attorney fees which were incurred by Slocum’s widow in connection with the initial delayed payment for the dependents.

Farm Bureau, Slocum’s widow, and Caroline each moved for reconsideration and when the trial court denied their motions, they appealed.

“The goal of the no-fault insurance system is to provide victims to motor vehicle accidents assured, adequate, and prompt reparation for certain economic losses.” The survivor’s loss benefits have two components. The first involves economic losses, which includes the loss of contributions of tangible things of economic value excluding services. The second is the replacement services costs, which include expenses below or at $20 per day, which stem from replacing the ordinary and daily services formerly enjoyed by dependents. “Tangible things of economic value” is defined as anything capable of holding a quantifiable value or worth.

According to MCL 500.3108(1), Slocum’s medical and dental insurance and his after-tax wages are all “tangible things of economic value.”

“Because the goal of the survivor’s loss provision was to maintain the level of support that the survivor received from the deceased” and “[b]ecause the monetary value of the pre-accident premium would have been insufficient to maintain Robert’s dependents’ level of support after his death, [the Court of Appeals determined] that the trial court properly concluded that the insurers were liable for the cost of coverage substantially similar to what [Slocum]’s dependents received before [Slocum] died.”