Michigan Supreme Court; Docket No. 57931,57935, 57916, 57934; Published
Opinion by Justice Williams; (with J. Ryan, J. Fitzgerald, and J. Coleman Concurring in Part; Dissenting in Part)
Official Michigan Reporter Citation: 402 Mich 554; Link to Opinion
Compulsory Insurance Requirements for Owners or Registrants of Motor Vehicles Required to Be Registered [§3101(1)]
Specific Exclusions from Motor Vehicle Definition [§3101(2)(e)]
Obligation of Non-Resident Owner/Registrant to Insure a Vehicle [§3102(1)]
Work Loss Benefits: Nature of the Benefit [§3107(1)(b)]
Nature and Scope of PPI Benefits (Property Damage and Loss of Use) [§3121(1)]
Vehicles and Trailers, Including Motorcycles [§3123(1)(a)]
Disqualification of Uninsured Owners / Operators for Noneconomic Loss [§3135(2)]
Legislative Purpose and Intent
In a very lengthy four justice Opinion, the Michigan Supreme Court declared that the no-fault statute was constitutional to the extent that it provides insurance benefits to victims of motor vehicle accidents as a substitute for tort remedies which it partially abolishes. However, the mechanisms controlling the rate making procedure for the compulsory insurance coverage are constitutionally inadequate to assure that the coverage is available at fair and equitable rates. The act will remain in effect for eighteen months, during which period the legislature and Commissioner of Insurance may remedy the constitutional deficiencies in the act The Supreme Court will then re-examine the matter to determine if the constitutional deficiencies have been remedied and will enter an appropriate order. During the eighteen month period, the legislature and the Insurance Commissioner may take whatever action they deem necessary to remedy the due process deficiencies in the rate making procedures. In addition, motorists will be required to obtain no-fault insurance as a condition precedent to registering and operating a motor vehicle. Finally, the no-fault act's constitutionally valid provisions as declared in the opinion and subsequent opinions will remain in effect and the Commissioner of Insurance shall actively enforce the present regulatory scheme in the spirit of this opinion in order to assure the availability of no-fault insurance at fair and equitable rates. All rights accrued by individuals against their insurers remain valid until final review.
The Court then went on to address certain substantive issues with regard to various sections of the no-fault statute. The more notable items in the decision are as follows:
1. Since the legislation is important, complicated, novel and experimental, it is afforded a presumption of constitutionality with minimal scrutiny under due process and equal protection. If any reasonably assumed state of facts justifies a legitimate objective of the legislature, the legislative judgment will be upheld. The Court gave great deference to the legislative objectives of reducing insurance premiums, achieving a minimal system of reparation for auto accident victims, avoiding lengthy delays in the litigation process, relieving the heavy burden imposed on state courts and mitigating the harshness of the contributory negligence doctrine.
2. The Court upheld the constitutionality of §3101(1) which requires registrants and operators of motor vehicles to maintain compulsory personal injury insurance, property damage insurance, and residual liability insurance subject, however, to the Court's ruling on the inequity in the rate making procedures.
3. The Court held that the "PIP scheme" which requires motorists to carry PIP insurance (§3101), which partially abolishes tort liability per §3135, which distinguishes between uninsured motorists and victims of insured vehicles, comports with both due process and unequal protection requirements.
4. The Court upheld the property protection scheme which requires property damage protection insurance (§3101), which abolishes tort liability with respect to nonintentionally caused property damage [§3135(2)3], which provides third party protection for both tangible (nonmoving) property and safely parked cars up to $1,000,000 [83121 and §3123(a)]. The Court's holding that the abolition of tort remedies for property damage is constitutional, reverses the Court of Appeals decision which invalidated the prohibition against tort claims for property damage.
5. The Court held that §3102(2), which excludes two wheel motor vehicles from coverage (motorcycles) under the act does not violate equal protection. The Court noted that motorcycles are rarely at fault in automobile accidents and the inclusion of motorcycles in a no-fault system would result in insurance premiums so high as to preclude most motorcycles form purchasing insurance.
6. The Court found that it was presented with an inadequate factual record to determine whether or not the wage loss benefits scheme provided in §3107 violates equal protection. Therefore, the Court remanded this issue to the trial court to develop a factual record to test the challenge that (a) the wage loss benefits scheme invidiously discriminates between workers in the home and workers outside the home in terms of maximum benefits payable in case of injury; and (b) it creates an arbitrary, statutory classification by restricting the recovery for injuries to those employed in the home to expenses "reasonably incurred" for replacement services.
7. The Court also determined that it was presented with an inadequate factual record to determine whether the statutory scheme with respect to nonresidents and out-of-state motorists [§3102(1), 3113, and 3135(2)] requiring such motorists to maintain no-fault insurance when in the state for more than thirty days in any calendar year violates due process and equal protection. The Court reminded this issue to the trial court for further development of the record.
8. As an added note, the Court did not address the issue of first party reimbursement (§3116); the setoff of governmental benefits [§3109(1)]; the Insurance Commissioner's approval of deductibles [§3109(3)] and priority problems with regard to motorcyclists, pedestrians, and other nonoccupants (§3114 and §3115). In addition, the exact scope of an uninsured motorist's liability under §3135 was left unresolved. The Court, however, did state that "an uninsured motorist may be liable in tort for all injuries suffered by the victim." If that statement is true, men uninsured motorists would have no immunity for injuries below the serious impairment threshold or for economic losses. Such a holding would be contrary to the conclusion reached by the Court of Appeals in Schigur v Wesibend (item number 58).
Justices Ryan and Coleman dissented only in part. They felt the Court should have refrained from addressing the issue concerning due process procedures for rate making and availability of insurance since that issue was not properly raised by the parties. Furthermore, they felt there was no property interest or entitlement in the constitutional sense in the availability of no-fault insurance at fair and equitable rates. The differential treatment of wage earners and persons working in the home in §3107 is not unconstitutional. Nor is it unconstitutional to require replacement services to be "reasonably incurred." Ryan and Coleman also stated that the exclusion of transient, nonresident motorists is constitutional since it merely recognizes Michigan's lack of authority over nonresidents.
Justice Fitzgerald, concurring and dissenting in part, advocated greater judicial restraint on the procedural due process issue and also expressed that nothing was to be gained by remanding this particular litigation for further fact finding.
Justice Coleman also wrote a separate opinion advocating that judicial restraint should prevent the Supreme Court from addressing the procedure of due process issues sua sponte. Justice Coleman expressed concern that the majority's conception of private enterprise and government regulation could precipitate an undue administrative burden and financial hardship on the insurance industry.