Rizik & Rizik: Attorneys at Law

A. INTRODUCTION

    The Michigan No Fault Automobile Insurance Act has existed since 1973 to simplify how you obtain compensation for injury and death in a motor vehicle accident. However, given the sheer number of crashes each year, it has become one of the most complex and litigated areas of the law.

    For every automobile accident occurring in Michigan, and some outside of Michigan involving Michigan residents, there are three chief, potential claims:

                    1. Personal Protection Insurance claim or lawsuit for PIP/first party/no fault benefits covering economic losses;
                    2. A negligence claim or lawsuit against the party at fault for non economic losses; and,
                    3. A claim to recover for collision damage to your vehicle.

    The no fault automobile law was intended to make it easier for the victims of motor vehicle negligence to collect certain benefits. However, as you will see, the methods of obtaining compensation and the strict time limits for bringing suit are complicated, and usually require an attorney's assistance. Also, in order to sue the at fault driver and vehicle owner you must show serious physical damage which often is subject to varying and conflicting opinions.

B. PERSONAL INJURY PROTECTION(PIP)/ FIRST PARTY/NO FAULT BENEFITS

1. What are they?

    If you experience accidental bodily injury in a motor vehicle accident, you may recover the following PIP/first party/no fault benefits from your auto insurance company:

                                a. Medical expenses;
                                b. Wage losses;
                                c. Replacement services expenses; and
                                d. In case of death, survivor benefits and a one-time death benefit.

    These PIP losses are actual economic losses different from non economic losses (such as conscious pain and suffering that we will discuss later) which you would claim against the at fault negligent driver and vehicle owner.

a. Medical Expenses. Medical expenses are "all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person's care, recovery or rehabilitation." Your automobile insurance company must pay these benefits for life, in an unlimited amount so long as they are "reasonable and necessary."

    Medical expenses include bills for doctor and hospital services, medicine, orthopedic devices and other medically necessary equipment (e.g., computers for those with traumatic brain injury; or fully equipped vans for transportation of paraplegics and quadriplegics). Medical expenses also include private duty nursing services, unskilled nursing services (sometimes including those which family members perform), modifications to vehicles and residences, medically necessary foods, apartment rent, and several types of rehabilitation, including vocational rehabilitation.

    In short, medical expenses include virtually anything reasonable and necessary to your health damaged by an motor vehicle crash. Reasonably necessary services include more than health care services, such as casting broken bones, surgery, physical therapy or head injury therapy. The law also includes on occasion the costs associated with a guardian and conservator appointed as the result of incapacity arising from injuries in an automobile accident.

    You are also entitled to receive "medical mileage"; however, the maximum amount available per mile (e.g., up to $.35/mile) varies with each insurance company. It includes miles driven to and from the doctor, hospitals, therapy, pharmacy, etc. for care and treatment of an accident related injuries. This does not include mileage driving to and from your attorney's office or court.

b. Lost Wages. Your auto insurance must pay you wages you lose for up to three years from the date of the accident. You will receive 85% of your gross wage. The other 15% is considered money you would owe in taxes. If your tax bracket is lower than 15%, then you will receive proportionately more in lost wages.

    In addition to the normal understanding of wages for purposes of computing the loss, salary increases, overtime, step increases, shift premiums and COLA may also be included in the computation. If you use sick and vacation time negotiated in a collective bargaining agreement through your union, then the PIP carrier may have to reimburse these to you as lost wages, because the negotiated benefits of your employment are lost to you.

c. Replacement Services vs Attendant Care. The no fault law also allows you to recover up to the first three years after an accident as much as $20.00 per day for expenses "reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he had not been injured, an injured person would have performed . . . " For example, if you can no longer perform household duties, due to your accident, such as mowing the lawn, laundry, housecleaning, replacement services benefits are available.

    Anyone, including a family member, may provide services and be compensated, so long as this person did not provide them before the accident. Also, your promise to pay the person rendering replacement services is enough. Actual payment is not necessary to making a claim.

    If you do not use the maximum amount available each day, you lose the difference, because replacement services benefits may not be stockpiled.

    A corresponding medical expense is "attendant care". This is not limited by the $20.00 per day maximum, and is more like skilled or unskilled nursing care. It limited only by what is "reasonable and necessary." (See "Medical Expenses" above).

d. Survivor and Death Benefits. If an insured dies as a consequence of a motor vehicle crash, his or her dependents may recover survivor benefits. Survivor benefits are lost financial support for the dependents, including the deceasedÕs social security, pension, worker compensation benefits, medical insurance premiums and other benefits of employment.

    These benefits are limited in the same way as wage loss benefits, described above: they may not exceed the monthly limitation, and they are available only for three years from the date of death. Also, the law reduces these benefits by the amount the deceased would have paid in taxes, but not what he would have consumed had he lived. And it includes the $20.00 per day replacement services.

    Additionally, in the event of death, you may claim a minimum of $1,750.00 for use in paying funeral and burial expenses. You may purchase additional coverage in $500.00 increments at insurance renewal time.

2. What Are Coordinated v Uncoordinated PIP Benefits?

    PIP benefits come in two forms: Coordinated (a.k.a., excess) and Uncoordinated (a.k.a., full). If you purchased a coordinated benefits policy before your accident, your no fault carrier is secondarily liable while another insurance policy is primarily liable for PIP benefits. For example, if you have employer-provided health insurance, your no fault carrier is liable for accident-related medical bills your the health care insurance has not paid. An exception to this involves ERISA health coverage through a "qualified" plan. If you are covered under this, then your PIP coverage is probably primary and ERISA is secondary. Another exception is Medicare and Medicaid, which is secondary to your primary PIP coverage.

    The same is true if you have disability coverage through your employer. That would be primary, and the wage loss coverage of your automobile insurance would be secondarily liable, if you have coordinated PIP wage loss coverage.

    A word of extreme caution: if your primary carrier is a HMO/PPO/PPOM or other form of managed health care, first you must seek health care within your health care network. If you elect to treat outside your network, then you must first seek the proper referral or preauthorization according to your health insurance plan's requirements. Failure to follow your health insurance policy's requirements regarding the circumstances under which you must seek a referral or preauthorization for treatment may release your PIP carrier from the obligation of paying health care bills not pre-approved or not preceded by the proper referral procedures. In other words, the financial burden would fall on you to pay those bills. Please make sure you follow all referral and preauthorization procedures outlined in your managed health care contract.

    On the other hand, you may purchase an uncoordinated/full benefits policy. Here, your automobile insurance carrier generally is liable for PIP benefits even though they have been paid under another insurance policy. For example, if your health insurance pays accident related medical bills totaling $10,000, the no fault carrier must pay you the same amount. Therefore, the advantage of an uncoordinated PIP policy is that you are legally entitled to "double-dip." The advantage of a coordinated policy is premium savings each year.

    Your no fault carrier may offer at a reduced premium rate a PIP deductible of $300. Such a deductible will be specified in the policy of insurance, or on an endorsement or declaration sheet.

    After an auto accident, it is important for you and your attorney to determine which form you have it could make a major dollar difference to you.

3. How Do Governmental Benefits Figure In?

The no fault statute permits your auto insurance carrier to deduct from monthly wage loss or survivors' benefits any amount you or your dependents receive in governmental benefits. This means that if you receive workers compensation benefits for the vehicle accident for which you claim PIP benefits, the no fault carrier will lessen monthly no fault benefits by that amount. Or, if a deceasedÕs survivors receive government social security benefits, your PIP carrier can deduct those from no fault survivors' benefits; however, it may not deduct social security old age benefits.

4. Whose Insurance Policy Pays PIP Benefits?

    This can be tricky. At accident time, if you are covered by a no fault automobile insurance policy, because you are an insured motorist or reside with an insured relative, that policy will pay benefits irrespective of whether you are the car's driver, passenger or a non-occupant.

    If you are occupying an employer-furnished vehicle, then that insurance must pay.

    If you do not have your own auto insurance policy or live in a household without no fault protection, but sustain injury while an occupant of a motor vehicle, then you must obtain coverage from the owner or operator of the vehicle occupied. If you do not have a policy yet sustain injury while a non occupant (i.e., pedestrian or bicyclist), then you must obtain no fault coverage from the "vehicle involved" in the accident.

5. What About PIP Benefits and Motorcycle Accidents?

    A motorcycle owner or registrant must purchase liability insurance for property damage, bodily injury, or death suffered by another due to the "ownership, maintenance, or use of that motorcycle."

    Also, the motorcycle owner or registrant may purchase first party medical benefits in increments of $5,000.00, payable if the owner or registrant is involved in a motorcycle accident. No wage loss coverage may be purchased the same way.

    A motorcyclist is not entitled to PIP benefits for accidental bodily injury if:

        a. The person was using an unlawfully taken motorcycle, without belief of entitlement to it;
        b. The person was the owner or registrant of the motorcycle but no mandated insurance was purchased; or
        c. The person was not a registrant of this state, or was an occupant of a motor vehicle or motorcycle not registered in this state and was not insured.

    If the motorcyclist is entitled to PIP benefits because he sustained injuries in an accident with a motor vehicle, he may collect benefits from only the insurer of the owner or registrant of the motor vehicle, the motor vehicle's operator, or insurer of a motorcyclist who purchased medical benefitsÕ coverage.

6. When and How May You Claim Benefits?

    The no fault law has unyielding and sometimes bewildering time limits within which you must claim and obtain benefits. There are two interrelated one year statutes of limitations. First, unless you have furnished the PIP carrier a written notice within one year of the accident, or the insurance company has paid some benefit to you, you must file suit within one year of the accident to recover benefits.

    If you have given written notice or your insurance company has made payment within one year of the accident, then you must sue for each unpaid expense within one year of the most recent allowable expense incurred. If you file suit timely, you may recover those expenses which you incurred not more than one year before the date the complaint was filed.

    These are tricky because different insurance companies interpret the law differently -- some are strict and others are not. And different courts interpret the law differently. Therefore, with this snarled design, you usually need an attorneyÕs assistance.

    The written notice mentioned above must follow a specific form for insurance company processing. It must give the name and address of the claimant and indicate, in ordinary language, the name of the person injured and the time, place and nature of his injury. The no fault PIP Application (the long yellow or white form) satisfies the notice requirements.

7. What Does A PIP Lawsuit Involve?

When your auto insurance company refuses to pay benefits or pays them inadequately, incompletely or late, you may have no choice but to file suit. This lawsuit involves a breach of the contract by your insurance company, and it is unwise to undertake this without a lawyer on your side. Such a suit involves a Complaint, which starts things going, followed by the insurance companyÕs Answer which denies responsibility. Then each side trades written questions known as Interrogatories that the other side must answer. This is followed by your deposition and the deposition of your doctors, independent medical evaluators and other witnesses. If the case still is unresolved, it may go to a formal case evaluation and trial. The whole process may take a year or more.

If your suit proves successful, benefits may be payable at 12% per annum interest. In addition, if the Court determines that your insurance company acted unfairly when dealing with you, your attorney is entitled to a reasonable fee for his services.

C. THIRD PARTY/NEGLIGENCE CLAIMS FOR NON-ECONOMIC INJURIES

1. Whom May You Sue and For What May You Sue?

    The next claim the law authorizes you to make is against the at-fault, negligent driver for non-economic injuries. These damages include conscious pain and suffering, lost enjoyment of life, mental and emotional distress, and lost love and companionship, for example.

    In addition, if your accident related economic losses exceed those your PIP insurance paid, you may sue the negligent driver for them as well. For example, if your monthly lost wages exceed the limitation mentioned in Section II, 2, above, you may sue to collect the excess. You may sue also for excess funeral and burial expenses, and medical bills.

    Under the pre-1973 tort system of compensation, you needed to prove the other driver acted negligently causing your loss in order to receive compensation. But that has changed. Now, you must prove an additional element: one or more of three threshold injuries: a) death, b) serious impairment of a body function, or c) permanent serious disfigurement.

    Consider these threshold injuries as hurdles over which you must pass in order to go from injured but uncompensated to injured and compensated. The "death" threshold is obvious. However, in 1996, the Michigan legislature redefined the meaning of a "serious impairment of a body function." The new law provides:

            "Serious impairment of a body function means an objectively manifested impairment of an important body function
               that generally affects the person's general ability to lead his or her normal life."

    An accident leaving you wheelchair-bound for life is an obvious and undisputable "objective manifestation." An automobile accident in which you sustained a small scratch on your leg, and for which you didn't seek treatment, may constitute an objective injury, but may not have affected your "general ability to lead . . . [a] normal life"; so you likely did not sustain a threshold injury and cannot sue.

    If a drunk driver rear-ended you, resulting in neck and upper back muscle strain, you required six or seven months of treatment, including heavy doses of muscle relaxers, you were out of work or school for five or six months, and needed help taking a bath because you couldn't move your neck or arms, then you may have sustained a serious impairment of a body function. A judge may not let your case get to the jury, if there is no material, factual dispute on the nature and extent of your injury. However, if there is a dispute, then your case will probably be decided by a jury.

    A graphic example of clearing the "permanent, serious disfigurement threshold" would be a million dollars per year fashion model who sustained gnarled glass punctures in her face so that scarring prevented her from earning a living. Clearly, this would be a permanent, serious disfigurement allowing her to sue.

    Also, the amended law requires a doctor to diagnose head injuries for your case to get to a jury. So, a neurologist, neurosurgeon, psychiatrist or neuropsychiatrist, as well as your family physician, must diagnose a head injury to secure your right to a jury trial.

    The 1996 amendments also adopted two new provisions which severely limit the right to sue an at-fault vehicleÕs driver/owner. A jury may not issue an award of non economic damages to you if you were more than 50% at fault. This would generally prevent drunk drivers, for example, from suing. Also, you may not sue for non economic damages if you had no automobile insurance covering you.

    In addition to being able to sue the at-fault driver of the other vehicle, you may sue the owner of that vehicle. Here, your attorney must show that the at-fault driver had the car with the ownerÕs knowledge or permission.

    In the event you file a third party suit for excess economic damages, you need not prove a threshold injury.

2. UNINSURED AND UNDERINSURED MOTORIST COVERAGE

Uninsured (UM) and underinsured (UDM or UIM) motorist coverage optional insurance you purchase for the other driver, believing that he will be uninsured or underinsured for his negligence. UM and UDM/UIM coverages pay for pain and suffering damages as well as excess economic losses, i.e., those not covered by PIP.

Uninsured motorist coverage acts as a BI/PI coverage taking care of you should the other driver be uninsured and negligent. So, if your injury is worth $100,000.00, the at-fault party has no insurance to compensate you for your injuries, and you $100,000.00 uninsured motorist coverage in your auto policy, then your insurance company will be liable to pay this as if it were the at-fault party's insurance carrier. Similarly, underinsured motorist coverage is triggered if your personal injury loss value exceeds the other insured vehicle's coverage. For example, if your injury is worth $40,000, but the total applicable BI/PI insurance carried by the other vehicle is $20,000. UDM will then pay. In both instances, your auto insurance company will file a suit against the at-fault party to reimburse what it pays under these coverages.

There are two types of underinsurance: one is pure-type UDM. This may be defined to mean protection available to the insured to make up for damages which the at-fault party's insurance does not cover. The other, more predominant type pays only to the extent that the loss exceeds the underinsured's limits, up to the limits of the UDM coverage. An example of the latter type is where an injury's value is $100,000, and underinsurance limits are $100,000, but the at-fault, underinsured has only $20,000 of BI/PI coverage. Here, UDM coverage will pay $80,000.

Unlike the typical negligence case, generally uninsured and underinsured policies require arbitration of disputes rather than court litigation.

3. When Must You Sue?

Generally, you must sue the at-fault driver for damages within three years of the accident date. There are exceptions, such as when a minor is injured or if the injury results in some type of legal incompetence, and a longer time for suing is permissible. However, these complicate the statute of limitations' requirements, so it is extremely important to see an attorney immediately after your accident.

If your automobile insurance policy demands that uninsured and underinsured matters be arbitrated, you must begin your case within the time period specified in the policy. Some policies specify that arbitration must be brought, for example, within two years of the accident date. Other policies require you to commence arbitration within the same time period you would bring a negligence case in court. Then again, some insurance policies don't require uninsured or underinsured cases be arbitrated, and may or may not specify a date for filing suit in court. You should always consult an attorney to determine if and when uninsured or underinsured coverage comes into play.

4. What If A Drunk Driver Is At Fault?

a. Statistics. Statistics in Michigan disclose that about 40% of all automobile crashes involve alcohol. They show that liquor liability laws work, because in 1990 the figure was an astounding 50%. Statistics also show that almost one out of every two Americans will be involved in his lifetime in an alcohol related automobile crash. In Michigan, alcohol-related automobile crashes kill several hundred and injure several thousand people each year.

    Therefore, it is important in every such crash to make sure your attorney investigates whether or not alcohol was involved. Drunk driving crashes are not only matters of civil concern, but are crimes. These victims are crime victims no less than murder victims.

b. The Michigan Dram Shop Law. If the at-fault driver was drunk at the time of the crash, you may have an additional right to sue a retail liquor licensee (e.g., bar or beer and wine store) for illegal alcohol service. Under the Michigan Dram Shop Act, a retail liquor licensee may not supply alcoholic beverages to a minor or visibly intoxicated person. If illegal service causes or contributes to illegal intoxication and results in injury to an innocent person, then he may sue not only for automobile negligence, but also under the Michigan Dram Shop Act.

    An important feature of the Michigan Dram Shop law is that in order to sue the retail liquor licensee, you must name and retain in the suit until the very end the at-fault minor or visibly intoxicated person.

    Another important feature is that suit against the bar or beer and wine store must commence within two years of the crash date, effectively reducing the automobile negligence statute of limitations to two years from the previously mentioned three years. This 2-year statute of limitations follows a requirement that within 120 days of the date you retain an attorney, you must send written notice to the retail liquor licensee you intend to sue. Again, in the case of death or other legal incapacity, the time periods will vary. Nevertheless, the failure to follow these notice and statute of limitations provisions will probably bar you from suing the retail liquor establishment. An attorneyÕs immediate help is vital to protecting your rights.

c. Social Host Liability. The Michigan Dram Shop law covers drunk driving personal injuries and death when there has been illegal, retail liquor service. But what about non-retail situations, such as graduation open house parties or wedding receptions, where alcohol is furnished to minors? Here, Michigan law imposes "social host liability" in certain circumstances.

    In such a social setting, if a minor is served alcohol and becomes impaired, and injures or kills himself or others, the "social host" who furnished the intoxicants can be held civilly liable to compensate the victims.

    The statute of limitations follows the general three year negligence limitation period, modified only by some legal incapacity as discussed above. To play it safe, seek an attorneyÕs assistance immediately to ensure your rights as a crime victim are protected.

e. Bankruptcy And Liquor Liability Laws. Many times, injuries from alcohol and drug related vehicle crashes are serious. So serious in fact that the caseÕs value far exceeds available insurance and other assets. So the perpetrator attempts to avoid liability by filing for bankruptcy protection. This will not work most of the time.

    The U.S. bankruptcy laws specifically exempt from discharge debts incurred as a result of violating liquor liability laws. To follow this through, your attorney must first obtain an order or judgment in the appropriate civil court. Then, if the defendant seeks bankruptcy protections, you must hire a bankruptcy attorney to make sure the proper steps are followed in federal bankruptcy court to protect your order or judgment.

D. THE NO FAULT LAW AND YOUR CAR

1. What Claim Is Available?

The third claim the Michigan No Fault Act authorizes is the right to repair or replace your car. To do this at an insurer's expense, however, you must purchase optional collision or comprehensive automobile insurance. Without this type of coverage, you will not be compensated for damage to your car by another's negligence, except under the following three conditions:

a. You sue the at-fault driver under the mini-tort law in Small Claims Court. If you can prove another person was at fault, you may obtain from his insurance company $500 or the amount of your collision or comprehensive coverage deductible, whichever is less.

b. You may sue the at-fault party if he intentionally caused harm to your vehicle.

c. You may sue a negligent driver if he was uninsured.

2. When Must You Sue For Vehicle Damage?

A suit against your automobile insurance for such property damage must be brought within the time period outlined in your automobile insurance policy. If none is mentioned, then you have 6 years from the accident date to sue your carrier. A suit against the at-fault driver's/vehicle owner's insurance must be brought within one year of the accident date. Also, if the at-fault party intentionally causes your crash or was uninsured, you must sue him within one year of the crash.

Failure to sue under any of the scenarios above will bar suit after these limitation provisions expire.

E. DO YOU NEED AN ATTORNEY?

    If you or anyone you know has experienced death, personal injury or property damage in an automobile crash then consult an attorney immediately. Insurance companies do not always disclose all PIP benefits available. An attorney will be able to secure for you all, appropriate no-fault benefits.

    Many times, the insurance company will discourage you from hiring legal counsel, then attempt to engineer a settlement of first party, third party or collision coverage benefits. While it is true that insurance company representatives omit occasionally to advise you of your full scope of rights, invariably it happens. Also, insurance companies will frequently negotiate with you to pay the least amount of money possible -- that is its job, right?

    Insurance companies may stretch settlement negotiations until the statute of limitations has elapsed, then terminate negotiations altogether. Under these circumstances your rights are likewise cutoff.

    Statistics show that upwards of 95% of auto negligence cases settle without going to trial. However, a quickly shrinking number of cases settle before you file suit, because insurance companies like to keep their money and invest it until they absolutely have to pay you. By delaying hiring an attorney, you likewise delay receiving compensation for your injuries.

    It is therefore important for you to be represented by legal counsel immediately after an auto accident, if for no other reason than to guarantee your rights are championed. Don't surrender your right to fair and just compensation!