Insurers battle over PIP benefits for woman "employee" providing attendant care
Nancy Clement was hurt when the car she was driving was struck by another motorist. Clement was driving Nancy Denman to an appointment in Denman's automobile. Clement was a caregiver for Denman, hired by Denman's daughter. Clement sought PIP benefits, but had to sue the Auto Club and Cincinnati Insurance Company after the two companies fought over which owed first priority to pay Clement's PIP benefits (medical and up to three years of wages and services).
The two companies fought over the definition of "employment" as used in the no fault act and under Michigan law. If Clement was "employed" by Denman, under the no fault act Denman's insurer, the Auto Club, would assume from Cincinnati (Clement's personal no fault insurer) the duty to pay PIP. Section 500.3114 does not define "employment" for no fault purposes, so the court looked to the "economic reality test" which controls in other situations.
The Court held that Denman's daughter controlled Clement's daily routine, not Denman; it suggested that Denman's daughter--not Denman-- had hired Clement and was the only person who could fire or discipline her. While Clement was paid ten dollars per hour, Denman's family made no "employee" deduction of taxes or benefits. Finally, while Clement's activities were "integral to Denman's well-being," Denman was not "in the business of being well," and therefore, Clement did not meet Michigan's definition of "employment."
While some of this decision makes sense, the opinion is faulty in part because it is based on the flawed suggestion that Denman's daughter was not acting as Denman's agent in supervising Clement's hiring, discipline, firing and "employment." Simply because the family did not properly pay employment taxes on Clement's wages should not have controlled the outcome where the family did, in fact, hire Clement, control her daily activity, and retain the right to discipline or fire her.