- Question 1: What are Michigan no-fault PIP benefits?
- Question 2: Who is eligible for Michigan PIP benefits?
- Question 3: What reimbursement limits are applicable to Michigan PIP benefits?
- Question 4: What insurance company pays Michigan PIP benefits?
- Question 5: What happens if governmental or private insurance benefits are also payable?
- Question 6: What should patients and providers know about processing Michigan no-fault PIP claims?
- Question 7: What liability claims can be made against Michigan at-fault drivers?
- Question 8: What are Michigan uninsured and underinsured motorist claims?
- Question 9: What should Michigan auto accident victims do to protect their rights?
Under the Michigan no-fault law, an accident victim has a right to pursue a tort liability claim against the at-fault driver to recover those damages that are not compensable with no-fault PIP benefits. There are two types of tort liability claims that can be pursued against at‑fault drivers: claims for “noneconomic loss damages” and claims for “excess economic loss damages.” Those claims will be briefly discussed below.
A. Tort Claims for Noneconomic Loss Damages
Under the no-fault law, noneconomic loss damages consist of those losses that affect a person’s quality of life, such as pain and suffering, disability, incapacity, loss of function, diminished social pleasure and enjoyment, mental anguish, emotional distress, scarring, disfigurement, etc. Under the law, an accident victim is legally entitled to recover compensation for these noneconomic loss damages, only if the victim sustained a “threshold injury.” Under the no-fault law, a threshold injury consists of one or more of the following: serious impairment of body function; permanent serious disfigurement; or death. The legal requirements for such threshold claims are discussed briefly below.
- SERIOUS IMPAIRMENT OF BODY FUNCTION DEFINITION—Under the prior no‑fault law, serious impairment of body function required proof of an objectively manifested impairment of an important body function that affects the person’s general ability to lead his or her normal life. [§3135(5)]. The 2019 legislation revised §3135 to restate the essence of this definition but in a more detailed manner by specifying what is required to prove serious impairment of body function. In that regard, the new legislation provides the following:
(a) The impairment must be objectively manifested, meaning that it is “observable or perceivable from actual symptoms or conditions by someone other than the injured person.” [§3135(5)(a)].
(b) The impairment must be of an important body function, meaning that it is “a body function of great value, significance, or consequence to the injured person.” [§3135(5)(b)].
(c) The impairment must affect the injured person’s general ability to lead his or her normal life, meaning that the impairment must have “had an influence on some of the person’s capacity to live in his or her normal manner of living.” Moreover, this element is deemed to be fact specific and “although temporal considerations may be relevant, there is no temporal requirement for how long an impairment must last.” [§3135(5)(c)].
- PERMANENT SERIOUS DISFIGUREMENT—The No-Fault Act does not define the threshold element of “permanent serious disfigurement.” Some appellate cases have interpreted that element to require some type of disfigurement that is readily noticeable by a casual observer. However, every scarring and disfigurement case is different and must be analyzed on a case-by-case basis.
B. Claims for Excess Economic Loss
The Michigan no-fault law, both before and after the 2019 legislation, provides that, in certain circumstances, an injured person can recover, in a tort liability claim against the at-fault driver, past, present, and future financial expenses that are not compensable by no‑fault PIP benefits. These excess economic loss damage claims include medical expenses that exceed the amount of no-fault PIP allowable expense benefit coverage applicable to the injured person. Therefore, those patients who incur medical expenses in excess of their applicable PIP coverages can sue the at-fault driver for those economic losses. In this regard, the 2019 legislation states, “damages for allowable expenses, work loss, and survivor’s loss as defined in sections 3107 to 3110, including all future allowable expenses and work loss, in excess of any applicable limit under section 3107c or the daily, monthly, and 3-year limitations contained in those sections, or without limit for allowable expenses if an election to not maintain that coverage was made under section 3107d or if an exclusion under section 3109a(2) applies.” [§3135(3)(c)]. Accordingly, seriously injured persons who choose capped no-fault coverage, or who have opted-out of no-fault coverage, will be able to sue at-fault drivers to recover their uncovered medical expenses and work loss.
The 2019 legislation also makes it clear that principles of pure comparative negligence will apply to the payment of excess medical expenses. This means that a defendant’s percentage of fault will be the only portion that the defendant’s insurer will be required to pay for the plaintiff’s excess medical expenses. [§3135(2)(b)]. This comparative negligence allocation will often require pursuing a tort claim to resolve.
In addition to medical expenses that exceed applicable PIP caps, excess economic loss tort claims under the 2019 legislation include the following types of claims:
- MEDICAL EXPENSE CLAIMS OF OUT-OF-STATE RESIDENTS—The medical expenses of an out-of-state resident may be recovered in tort against the negligent driver without limitation. However, these expenses are only recoverable if the out-of-state person sustains a threshold injury (i.e., death, serious impairment of body function or permanent serious disfigurement), as set forth under §3135. [§3135(3)(d)]. Furthermore, all economic loss and noneconomic loss damage claims of out-of-state residents are subject to the 51% comparative negligence rule, which means that no damages are recoverable by an out-of-state plaintiff who is found to be more than 50% at fault for the accident. [§3135(2)(b)].
- EXCESS ECONOMIC LOSS CLAIMS BY ACP CLAIMANTS—There is a question as to whether ACP claimants who are subject to the $250,000 and $2,000,000 caps can maintain excess economic loss tort claims against at-fault drivers for uncovered medical expenses in excess of those caps. The excess tort claim provisions of §3135(3)(c), quoted above, refer only to tort claims for expenses in excess of those limited under §3107 to §3110. The cap on ACP claimants, however, is found in §3172(7). Nevertheless, that section of the legislation specifically references expenses payable under §3107c(1)(b). Therefore, this cross-reference can fairly be read to permit excess economic loss tort claims by ACP claimants.
- EXCESS ECONOMIC LOSS CLAIMS FOR AMOUNTS EXCEEDING FEE SCHEDULES—As indicated earlier, there is a question as to whether a medical provider can pursue a patient for the provider’s charges that exceed those payable under the 2019 legislative fee schedules. If the patient is liable to the provider for such excess amounts, can the patient then recover those excess amounts in a tort claim against the at-fault driver? The answer is not clear from the text of the 2019 legislation. As indicated above, the excess economic loss tort claim created by §3135(3)(c) references only expenses in excess of those limited under §3107 to §3110. The new fee schedule limitations are found only in §3157. Therefore, this could present a situation where a patient may be financially liable for provider charges in excess of the new fee schedules but might not be able to recover those excess expenses from the at-fault driver.
C. Wrongful Death Liability Claims
If a person sustains wrongful death as a result of the negligence of a third party, the estate of the injured person is entitled to pursue a wrongful death liability claim against the party at fault for purposes of recovering noneconomic damages and certain economic-loss damages. Wrongful death liability claims are controlled by the Michigan Wrongful Death Act (MCL 600.2922). In addition, where the wrongful death arises out of a motor vehicle accident, then the provisions of the No-Fault Act will also control the claim. In this situation, it is imperative that the requirements and procedures of both statutes be strictly observed.
Under the Michigan Wrongful Death Act, close relatives of the decedent are entitled to be compensated for certain specific damages they may have suffered as a result of the decedent’s death. These damages include: loss of financial support; loss of services; and most importantly, loss of the love, affection, companionship and society of the decedent. Those relatives entitled to be compensated for such losses include surviving spouses, children, parents, grandparents, brothers and sisters, and stepchildren of the decedent. However, in order to pursue a wrongful death claim, the statute requires that an estate be formally opened in the name of the decedent and that a Personal Representative be appointed for that estate by the probate court with jurisdiction over the matter. The wrongful death claim is then pursued in the name of the decedent’s estate, not in the individual names of the surviving relatives.
The designation of the Personal Representative is controlled by the Michigan probate law. Under the probate law, certain family members are given “preference” in terms of the appointment of a Personal Representative. In this regard, the parents of a deceased child have statutory preference to be appointed Personal Representative of the child’s estate. Similarly, a surviving spouse has statutory preference to be appointed Personal Representative of the estate of his or her deceased spouse. Where the decedent is a non‑married adult with children, the statutory preference regarding the appointment of a Personal Representative resides with the children, but it can only be enforced by an appropriate adult acting on the child’s behalf after being formally appointed by the probate court. Therefore, the first order of business in pursuing a wrongful death claim is to identify the person or persons who should be appointed Personal Representative of the decedent’s estate and file an appropriate petition in the probate court seeking to open an estate and designate a Personal Representative. Once this is done, the wrongful death claim can be officially pursued.
D. Liens On Tort Liability Claims
Every tort liability claim requires a careful analysis of whether there are any potential liens that could be asserted against any monetary recovery resulting from that claim. Typically, such liens are asserted by insurance companies or other payors who pay benefits to an injured person who purses additional compensation through a tort claim. If the lien is valid and substantial, it can have enormous implications for auto accident victims who pursue tort liability claims. There are several types of liens that can potentially apply to auto tort liability claims.
The first lien is the PIP lien that, in some circumstances, can be claimed by auto no-fault insurers who pay PIP benefits to the injured person. Such liens are very limited and controlled by §3116 of the No-Fault Act, and mainly arise in out-of-state accidents.
Another type of lien is a workers’ compensation lien, which can occur when a person suffers an auto accident injury in the course of his or her employment. These liens are controlled by the Michigan Workers’ Compensation Act and important appellate case law.
Another type of lien is a health insurance lien that can, in certain circumstances, be asserted by a health insurer or plan that pays medical expenses on behalf of an injured person. If the benefits were paid by a traditional health insurance policy, then the health insurer’s lien rights are very limited and are typically treated the same as the liens of PIP insurers. However, under the 2019 legislation, if the tort recovery results in medical expenses that were paid by health insurance, then the health insurance company may very well have lien rights that can be asserted against such a tort recovery.
In addition, if medical expenses were paid by a self-funded ERISA health plan, then an ERISA lien may exist that can be very broad because such a lien is controlled by federal law, which gives ERISA plans more expansive rights than no-fault PIP insurers and traditional health insurance companies.
Finally, there may be Medicaid and Medicare Liens if those governmental programs paid benefits for auto accident injuries. These liens can be asserted on behalf of governmental bodies and are controlled by detailed state and federal law. Proper processing of the PIP benefit claim can often avoid altogether, or substantially reduce, these governmental liens.
A complete discussion regarding tort liens is beyond the scope of this publication. Suffice to say, however, that the issue of a potential lien must be carefully considered in all auto liability claims in order to protect the injured person’s right to receive monetary compensation for their injuries.
E. Time Limits For Tort Liability Claims
The general rule under Michigan law is that tort liability claims are governed by a three‑year statute of limitations that runs from the date of the injury. This three-year limitation period applies to bodily injury as well as wrongful death claims. There are certain exceptions to this rule that apply to children or those who are mentally incompetent. However, it is best to assume that the statute of limitations for tort liability claims is always three (3) years from the date of the accident, without regard to these possible exceptions. Moreover, it is generally the case that if the victim intends to pursue a tort liability claim, the process should begin immediately, so that valuable evidence is not lost or the claim is not otherwise weakened by the passage of time. Accordingly, accident victims who have potential tort liability claims should move quickly to protect their rights.
F. Liability Claims Between Family Members And The “Step-Down” Problem
Some insurance companies sell auto insurance policies that contain very controversial provisions known as “step-downs.” These provisions apply most often when one family member (e.g., spouse, child, parent, sibling, etc.) pursues a tort liability claim under that policy against another family member with whom they live. Step-down provisions can also apply when the policy holder or a member of his or her family is injured while riding in a family vehicle driven by a non-family member. Step-down provisions reduce the amount of liability insurance coverage available to the injured family member down to the state‑mandated minimum regardless of how much liability insurance was purchased by the policy holder or the severity of the injury. In other words, these provisions treat the policy holder and his or family members more harshly than strangers injured in the same accident. Unfortunately, Michigan appellate courts have upheld an insurance company’s enforcement of step-down provisions, even in catastrophic injury cases. Sadly, few people know that that they have a step-down provision in their policy until it is too late.