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A Better Partnership
July 07, 2016

COA finds old-age social security benefits should be included in survivor’s loss calculations under the No-Fault Act

The Michigan no-fault act provides that insurers are liable to pay personal protection insurance for survivor’s loss, which consists of a loss of contributions of tangible things of economic value. The Michigan Court of Appeals, in Scugoza v. Metropolitan Direct Property and Casualty Ins. Co. No. 327076, affirmed a trial court ruling that old-age social security benefits are “tangible things of economic value.”  

At the time of his car accident related death, Nicholas Scugoza was entitled to a gross sum of $1611.09 per month in social security benefits. Karen Scugoza eventually sued the defendant insurer for refusing to pay survivor’s loss benefits that included the social security benefits her late husband received monthly.
The Court of Appeals notes that “tangible things of economic value” was never defined by the legislature, yet the plain meaning of the terms clearly points towards social security benefits being both tangible and of economic value. The Michigan Supreme Court in Miller v. State Farm Mutual Auto Ins Co,  had previously interpreted the phrase “contributions of tangible things of economic value” to include all demonstrable contributions that would have been made to the dependents by the deceased but for his death. Following Miller, the Court of Appeals has found the phrase to encompass funds derived from a broad range of sources including: child support, loans taken out by an unemployed person, and funds received from a trust.  
Defendants arguments that the wrongful death act restrict the types of compensation available under MCL 500.3108(1), and that social security payments do not qualify because they are not employment related, The Court rejected those arguments, concluding that the plain language of MCL 500.3108(1) encompasses old-age social security benefits. 

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