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Lawyers’ Corner: Survivors’ Loss Benefits in Scugoza v Metropolitan Direct Property & Casualty Ins Co

In the most severe auto accident cases – those involving wrongful death claims – the challenge is often make sure the family is taken care of after a primary earner dies. Trial attorneys need to know where to look to find survivors’ loss benefits under the No-Fault Act. Now a recent published Michigan Court of Appeals Case has given lawyers a new place to look: social security benefits.

A wrongful death action isn’t just about compensation for loss. It is also about providing for the family that a motorist’s negligence left behind. For some, a survivors’ loss benefit is an easy calculation based on W-2s and actuarial tables. But in other cases trial lawyers have to get more creative to make sure their decedents’ families are taken care of.

That’s where a recent published Michigan Court of Appeals case comes in. In Scugoza v Metropolitan Direct Property and Casualty Insurance Company, the court examined the survivors’ loss benefit statute, MCL 500.3108(1), and found it broad enough to include non-traditional income sources like old-age social security benefits.

Karen Scugoza’s husband, Nicholas Scugoza, was killed on September 20, 2013. He died from injuries sustained in a car accident. At the time, Nicholas supported himself and his wife Karen using old-age social security benefits of $1,611.90 per month.

In the wrongful death action against Nicholas’s auto insurer, Metropolitan Direct P&C Ins Co., Karen sought survivors’ loss benefits based off of those old-age social security benefits. But the insurance company claimed it was not liable for that type of income. Specifically, it claimed that it should only be responsible for compensation that would be allowed under the Wrongful Death Act, MCL 600.2922, and that the benefits sought were not employment related. But the Michigan Court of Appeals didn’t agree.

At issue was MCL 500.3108(1), which states:

[P]ersonal protection insurance benefits are payable for a survivor’s loss which consists of a loss, after the date on which the deceased died, of contributions of tangible things of economic value, not including services, that dependents of the deceased at the time of the deceased’s death would have received for support during their dependency from the deceased if the deceased had not suffered the accidental bodily injury causing death and expenses, not exceeding $20.00 per day, reasonably incurred by these dependents during their dependency and after the date on which the deceased died in obtaining ordinary and necessary services in lieu of those that the deceased would have performed for their benefit if the deceased had not suffered the injury causing death.

The question was whether Scugoza’s old-age social security benefit counted as “contributions of tangible things of economic value” that Mrs. Scugoza would have been entitled to had her husband not suffered an accidental, motor-vehicle related injury causing death.

What Counts Toward Survivors’ Loss Benefits?

In defining “contributions of tangible things of economic value,” the court turned to the plain language of the statute. It found only two limitations on the type of contributions received for support:

  1. The contribution must be tangible; and
  2. The contribution must have economic value.

The court defined “tangible” to mean “capable of being appraised at an actual or approximate value” according to Meriam Webster’s Collegiate Dictionary. “Economic value” has a legal definition of “the rate of worth set on property.” So in order to be considered support under MCL 500.3108(1), the court ruled the benefit must be something that is “capable of being valued or having its worth ascertained.”

That included old-age social security benefits. The benefits were distributed monthly based on a predetermined monthly value, which the court noted had previously be determined to be a type of income. The court found these benefits “are designed as a tangible means of financial support” having economic value that the Scugozas used for support.

Nor could the statute be limited to wages or salary. The court referenced Miller v State Farm Mut Auto Ins Co, which provided a non-exhaustive list of tangible things of economic value, including:

  • Medical insurance benefits;
  • Disability coverage;
  • Pensions;
  • Investment income
  • Annuity income; and
  • Other benefits.

This list is not connected to the deceased’s employment status. Therefore, even though it was not salary or wages, Nicholas’s old-age social security benefits were intended to provide financial support or income to its recipients, based on the economic value in the month preceding the month of the recipient’s death.

In further support of its decision, the court considered the legislative intent behind the section, which indicated that “survivors’ loss benefits should at least roughly correspond to economic loss damages recoverable under the wrongful death act.” That statute focused on the financial loss incurred by the survivors, and includes support “not always reflected in wage or salary.”

Applying Scugoza to Wrongful Death Lawsuits

Scugoza provides considerable support to trial attorneys seeking survivors’ loss benefits in auto accident cases. It opens the door to creative arguments about a dependent’s source of support. Depending on a particular family’s financial situation, Scugoza may be used to define support as including anything from monthly annuity payments, to child support, in addition to the old-age social security benefits described here.

Trial attorneys should make sure they do a thorough investigation into how a deceased’s family was paying the bills before the accident. There may be additional survivors’ loss benefits available, regardless of whether the deceased was earning a paycheck at the time of the crash.

David Christensen is an auto accident attorney at Christensen Law in Southfield, Michigan. He represents the families of deceased motorists in wrongful death cases. If your client is facing the loss of a loved one to a motor vehicle collision, contact Christensen Law today for a referral.