By Stephen H. Sinas
The Michigan Legislature continues to contemplate changes to the Michigan Auto No-Fault Insurance Law. Over the next couple of weeks, the “lame duck” legislature is considering various smaller changes to the law. In 2015, the incoming legislature is poised to consider even more substantial changes to the law. In order to evaluate the wisdom of changing the Michigan Auto No-Fault Law, the people of Michigan must understand their basic rights under the current form of the law.
Before the Michigan Auto No-Fault Law was enacted over 41 years ago, the damages people suffered in motor vehicle accidents were all subject to traditional tort law principles. Under these principles, people injured in motor vehicle accidents had to sue the at-fault driver in order to recover payment of their damages, including their medical expenses. If there was a dispute about fault, the injured person’s medical bills would not be paid until the litigation was over. If the injured person was ultimately found to be at-fault, the person would not be entitled to recover medical expenses from his or her own automobile insurance, and there would not usually be another source of insurance from which the injured person could recover payment for his or her damages and medical expenses. This system was fraught with delays and led to many unfair and inadequate results, especially for those most catastrophically injured in motor vehicle accidents.
PIP COVERAGE
The Michigan Auto No-Fault Law was enacted to provide a better way for Michigan to deal with the high costs and damages caused by motor vehicle accidents. One of the fundamental promises under the law is to provide insurance coverage that pays for a motor vehicle accident victim’s medical expenses, regardless of whether the person was at-fault for the accident. This coverage is known as “no-fault personal injury protection (PIP) coverage”, a/k/a “first-party no-fault coverage.” A person injured in a motor vehicle accident in Michigan only can be denied PIP coverage in these four limited situations: (1) the person intentionally caused the accident to occur; (2) the person was operating a motor vehicle he or she owned and failed to insure with no-fault insurance; (3) the person unlawfully took the motor vehicle he or she was operating at the time of the collision; or (4) the person was not a resident of Michigan and did not have automobile insurance through an insurance company authorized to sell insurance in Michigan. As long as those four limited situations do not apply, a motor vehicle accident victim will be able to recover payment of his or her medical expenses arising out of the accident.
It should be further noted that those injured while riding a motorcycle are only entitled to no-fault PIP coverage when injured in an accident that also involves a “motor vehicle” (e.g, a car hitting a motorcyclist). Under the law, a motorcycle is not a motor vehicle. Rather, a motor vehicle is any vehicle “operated or designed for operation upon a public highway by power other than muscular power which has more than 2 wheels.” If there is no involvement with a motor vehicle (e.g., a motorcyclist runs off the road because of his or her own doing), the motorcyclist will not be entitled to no-fault PIP coverage.
ALLOWABLE EXPENSE BENEFITS
Importantly, the Michigan Auto No-Fault Law provides broad and comprehensive coverage for the treatment of motor vehicle accidents injuries. Specifically, the law allows motor vehicle accident victims to pursue PIP benefits called “allowable expense benefits,” which consist of any “product, services or accommodations reasonably necessary for the injured person’s care, recovery, or rehabilitation.” Michigan Courts have interpreted this language to include payment for the following: in-home patient care, handicap-accessible home accommodations, handicap-accessible transportation accommodations, medical mileage, vocational rehabilitation, guardian/conservatorship services, medical case management services, etc. Notably, a no-fault insurer must only pay a “reasonable charge” for these benefits. However, there are no annual or lifetime monetary caps on the amount an injured person can recover for allowable expense benefits. As long as the injured person can demonstrate the ongoing need for the benefits, the person can claim allowable expense benefits for life.
The comprehensive medical coverage available under the Michigan Auto No-Fault Law is especially beneficial for the people who are most catastrophically injured, such as the victims suffering from severe brain injury or spinal cord injury. The victims who survive these tragic injuries require extensive care and treatment for the rest of their lives. In comparison to the twelve other states that have auto no-fault insurance systems, Michigan unquestionably provides the most comprehensive medical coverage in the nation. Furthermore, all of the other no-fault states have low monetary caps for medical expense coverage that are easily exceeded in accidents resulting in serious injuries.
Ultimately, Michigan provides the best coverage in the nation for those catastrophically injured in motor vehicle accidents. Our auto no-fault system prevents Medicaid and other tax-payer funded government insurance programs from being saddled with the enormous costs of treating those injured in motor vehicle accidents. Moreover, due in large part to the reliable funding that comes from Michigan’s no-fault system, Michigan has some of the best trauma centers and rehabilitation facilities in the nation. These facilities provide high-quality care and services that are not readily available in other states. So, while auto insurance rates in Michigan are higher compared to some other states, the cost of auto insurance in Michigan is not nearly the highest in the nation. Yet, we provide the very best and most comprehensive coverage for the care and treatment of motor vehicle accident injuries in the country.
ADDITIONAL PIP
BENEFITS
In addition to allowable expenses benefits, no-fault PIP coverage also includes three other benefits: (1) work loss benefits; (2) replacement service benefits; and (3) survivor’s loss benefits. Work loss benefits are payable for up to three years for “loss of income from work an injured person would have performed . . . if he or she had not been injured.” Work loss benefits are payable at the rate of 85% of gross pay, including overtime. However, the work loss benefit cannot exceed the legal monthly maximum, which is currently $5,392 per month.
Replacement service benefits consist of reimbursement to the injured person for expenses incurred to obtain ordinary and necessary services that the injured person would have performed had the injury not occurred. This benefit is limited to $20 per day for up to three years after the accident. It is primarily meant to cover household services, such as housekeeping, yard work, snow removal, etc.
Survivor’s loss benefits are payable when a person dies in a motor vehicle accident. These benefits are payable for up to three years to the “dependents” of the person who died. Survivor’s loss benefits are subject to the same monthly maximum that applies to work loss benefits. These benefits primarily consist of the after-tax income of the person who died, the value of any fringe benefits lost as a result of the person’s death, and the value of the household chores and services the person provided to the family. Additionally, insurance companies are also required to pay, at minimum, $1,750 for funeral and burial expenses.
CAN YOU SUE THE AT-FAULT DRIVER?
In exchange for the right to recover these no-fault benefits regardless of fault, the Michigan Auto No-Fault Law imposes limits on an accident victim’s right to pursue claims against the at-fault driver. Under the law, the claims an accident victim can bring against the at-fault driver are limited to damages for “noneconomic loss” and “excess economic loss.”
Noneconomic Loss Damages
Noneconomic loss damages include losses that affect a person’s quality of life, such as pain and suffering, disability, incapacity, mental anguish, scarring and disfigurement, etc. However, an injured person can only recover noneconomic loss damages if that person sustained a “threshold injury,” which is defined as one or more of the following: (1) serious impairment of body function; (2) permanent serious disfigurement; or (3) death. Essentially, by imposing these limits, the Michigan Auto No-Fault Law prevents people from pursuing noneconomic loss damages in situations involving relatively minor injuries. Under traditional tort law principles, if someone was injured at all in a motor vehicle accident, the person would be entitled to make a claim for noneconomic damages, even though the person’s damages may be small. The threshold requirement weeds out those minor claims and allows only those with more serious injuries to pursue noneconomic damages against the at-fault driver. This limitation on the type of claim an injured person can claim against the at-fault driver is part of the exchange or “quid pro quo” that is necessary to balance the costs of covering motor vehicle accident victim’s medical expenses regardless of fault.
EXCESS ECONOMIC LOSS DAMAGES
Excess economic loss damages consist of the loss of income the injured person suffered because of his or her injuries that was not otherwise covered by no-fault PIP benefits (described above). Therefore, if a motor vehicle accident victim loses income in excess of the applicable monthly maximum amount, or loses income beyond the three year work loss benefits that are payable, the victim can pursue that excess income loss from the at-fault driver. Moreover, the victim does not need to have a threshold injury to recover these damages. The victim must simply show that his or her injuries were the proximate cause of the subject income loss.
THE ROAD AHEAD FOR THE MICHIGAN AUTO NO-FAULT LAW
Ultimately, the Michigan Auto No-Fault Law has provided a sensible and effective system of insurance to address the huge costs and damages caused by motor vehicle accidents. Of course, there may be ways in which the Michigan Auto No-Fault Law could be further improved so the system is more efficient and effective. However, as the Legislature considers changes in attempt to improve the law, it has to be careful that it does not “throw out the baby with the bath water” and change the law in such a way that limits or undermines the rights and benefits available under the law. These rights and benefits are too critically important to the health and well-being of those who are suddenly and tragically injured in motor vehicle accidents – a possible fate we could all face on any given day we get inside a motor vehicle. If you would like more information about your rights under the Michigan Auto No-Fault Law, visit autonofaultlaw.com.
Stephen H. Sinas is an attorney at the Sinas Dramis Law Firm. His practice focuses on personal injury law, Michigan No-Fault insurance litigation, health care law and constitutional rights litigation. He is licensed to practice law in the State and Federal Courts of Michigan. He has litigated cases in trial courts throughout Michigan, as well as in the Michigan Court of Appeals, and the Michigan Supreme Court.
This was printed in the December 13, 2014 – December 26, 2014 edition.
