By. Michael B. Rizik Jr. Attorney at Law
Office: 810-953-6000
Cell: 810-610-2673
Email: lawyers@riziklaw.com

A. INTRODUCTION

The Michigan legislature passed the No-fault Automobile Insurance Act in 1973, completely changing how automobile and truck personal injury and wrongful death cases would be resolved. In 1996, the Michigan legislature revised the methods of compensating those victimized in motor vehicle crashes. Since then, the law has undergone various changes that discontinue then re-confer certain just claims to compensation. For those hurt or killed, the law provides generous economic benefits without regard to fault; however, the law, judges and juries have substantially reduced the power to file a lawsuit against the at-fault driver.

For every automobile accident occurring in Michigan or involving a Michigan resident out-of-state, there are three 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.

Today's law has its advantages and disadvantages over other compensation systems. One advantage is that your auto insurance company must quickly pay economic losses or it may be penalized. Under other states systems of compensation, you must sue the negligent party to recover out-of-pocket damages. This sometimes takes several years, while you remain financially strapped.

A disadvantage is the weakened ability to sue a negligent driver for conscious pain and suffering, mental and emotional distress, lost enjoyment of life, and damage to your motor vehicle. Additionally, an automobile lawsuit may take several years to resolve, so you may not see compensation during this time.

Michigans law arguably makes it easier for non-attorneys to collect certain benefits. However, as you will see, the method of obtaining compensation and the strict time limits for bringing suit are complicated, and usually require an attorney's assistance.

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

1. What are they?

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

1. Medical expenses for life, including medical mileage;
2. Wage losses for up to three years;
3. Replacement services expenses for up to three years; and
4. In death cases, survivor benefits for up to three years, and a one-time death benefit.

These losses are concrete, economic losses (as opposed to non-economic losses such as conscious pain and suffering) which you would claim against the at-fault negligent driver.

1. Medical Expenses. You may claim 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" and the medical charges are usual and customary.

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 consist of private duty nursing services, unskilled nursing services (sometimes including those which family members perform), handicap accessible vehicles and residences, medically necessary foods, apartment rent, and rehabilitation, including vocational rehabilitation.

In short, medical expenses include virtually anything reasonable and necessary to your health damaged in an auto 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 varies with each insurance company. This includes miles driven to and from the doctor, hospitals, therapy, and pharmacy for tests, prescriptions, and care and treatment of accident-related injuries.

2. Wage Losses. You may recover wage losses from your automobile insurance carrier 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), unless your tax rate is lower.

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, then your auto insurance company may have to reimburse these to you as lost wages, because they are benefits of your employment are lost to you as a consequence of the accident.

Monthly wage loss payments are limited according to the statute. However, the monthly limit is adjusted upward annually to reflect the increased costs of living. If your monthly wages exceeds the limit, you may turn to the at-fault driver for the surplus amount.

3. Replacement Service Expenses vs Attendant Care. You may recover for 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 cannot perform household duties such as mowing the lawn, laundry, housecleaning, etc., replacement service benefits are available.

Anyone, including a family member, may provide replacement 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 usually enough. Actual payment is not always necessary for 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 benefit similar to replacement services is "attendant care" services. These are not limited by the $20.00 per day maximum, and are more like skilled or unskilled nursing services limited only by what is "reasonable and necessary." (See "Medical Expenses" above).

4. Survivor and Death Benefits. If an insured is killed in a motor vehicle crash, his or her dependents may recover survivor benefits "which consist of a loss, after the date on which the deceased died, of contributions of tangible things of economic value, not including services that dependents of the deceased at the time of his death would have received for support during their dependency from the deceased if he had not suffered the accidental bodily injury causing death . . . "

Survivor benefits are lost financial support for dependents, including the deceased's social security, pension, worker compensation benefits, medical insurance premiums and other benefits of employment.

These benefits are subject to the same monthly limitation as wage loss benefits, described above. 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. The $20.00 per day replacement services provision is part of survivor benefits. Therefore, financial support and service expenses combined may not exceed the monthly limitation in effect on the accident date. As with wage loss benefits, dependents may not receive survivors loss benefits for more than three years.

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 & Uncoordinated PIP Benefits?

You purchase PIP benefits in one of two forms: Coordinated and Uncoordinated. With coordinated benefits policy your no-fault carrier is secondarily liable while another insurance carrier is primarily liable for PIP benefits. For example, if you have traditional health insurance available, your no-fault carrier is liable for the accident-related medical bills that health care insurance has not paid. An exception to this involves ERISA health coverage through a "qualified" plan. If you have this through your employer, most likely your PIP coverage is primary and ERISA is secondary. Another exception is Medicare and Medicaid, which is secondary to your PIP coverage, which is primary.

The same is true if you have disability insurance through your employer. With a coordinated policy, that would be primary, and no-fault wage loss coverage would be secondary.

A few words of caution: if your primary carrier is a HMO/PPO/PPOM or other form of managed health care, you must first seek health care within the 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 any obligation to pay health care bills not preapproved or not subject to 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 health insurance 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 your attorney to discover 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 deceased's 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.

Medicare benefits are not a governmental benefit that can be setoff.

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 without regard to 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."

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:

1. The person was using an unlawfully taken motorcycle, without belief of entitlement to it;

2. The person was the owner or registrant of the motorcycle but no mandated insurance was purchased; or

3. 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 benefits' coverage.

6. When and How May You Claim Benefits?

The no-fault law has uncompromising and perplexing time limits within which you must claim and obtain benefits. There are two, related 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.

The written notice mentioned above must follow a specific form for easy 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 (usually an 8½ x 14 yellow or white form) satisfies the notice requirements.

7. What Does A PIP Lawsuit Involve?

If 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 your court Complaint, which starts the lawsuit, followed by the insurance company's Answer To The Complaint, which denies responsibility. Then each side trades written questions known as Interrogatories that the other side must answer. This is sometimes 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 mediation, case evaluation and trial. The whole process may take a year or more.

If your suit proves successful, benefits may be payable with 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.

3. THIRD PARTY/NEGLIGENCE CLAIMS FOR NONECONOMIC 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.

Also, as stated above, if your accident related economic damages exceed those your PIP insurance paid, you may be able to sue the negligent driver for them as well. For example, if your monthly lost wages exceed the monthly, statutory maximum, 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 which you must clear 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 indisputable "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 vehicle's 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, while driving your own vehicle, 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 owner's knowledge or permission.

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

2. When Must You Sue?

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

C. What If A Drunk Driver Is At Fault?

a. Statistics. Some sources say that about 40% of all automobile crashes involve alcohol. This indicates that liquor liability laws work, because in 1990 the figure was an astounding 50%. Statistics also show that almost 1 out of every 2 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. The victims are crime victims no less than murder victims.

b. The Michigan Dramshop 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 is in addition to 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 attorney's immediate help is vital to protecting your rights.

c. Social Host Liability. The Michigan Dramshop 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. Seek an attorney's assistance immediately to ensure your rights as a crime victim are protected.

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

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 protection, you must hire a bankruptcy attorney of your own to make sure the proper steps are followed in bankruptcy court to protect your order or judgment.

D. YOUR CAR AND NO-FAULT

1. What Claim Is Available?

The third claim the Michigan No-fault Act authorizes is the right to repair or replace your vehicle. 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:

1. 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.


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


3. 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, which is usually, but not always, 1 year from the accident date. 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, serious 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 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.

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

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 compensation!