Michigan No-Fault Benefits

The No-Fault Automobile Act was enacted by the Michigan Legislature to provide adequate and prompt compensation to parties injured in automobile accidents, regardless of who is at fault. Ohio has its own separate compensation system. Under the Michigan Act, those injured in automobile accidents may be entitled to collect under two separate and distinct claims: First Party benefits and Third Party benefits. First Party benefits provide economic compensation from an injured party’s own insurance company regardless of fault. Third Party benefits are only payable if a party injured in an automobile accident has suffered death, serious impairment of body function, or permanent serious disfigurement.

First Party Benefits

There are four major classification of First Party benefits: (1) allowable medical expenses; (2) wage loss benefits; (3) replacement service expenses; and (4) survivor's loss benefits (when an accident results in death). It is not uncommon, due in part to the complex issues and confusion surrounding the No Fault system, that disputes between injured parties and insurance companies arise concerning the viability of First Party Benefits. If such a dispute arises, injured parties sometimes have no other choice than to file a lawsuit against the insurance company to recover those benefits.

The allowable medical expense benefit can be unlimited both as to the amount provided, and the duration of compensation. Included in this benefit are medical expenses such as hospital charges, prescriptions and medical equipment. Allowable medical expenses also provide for in-home nursing care and physical and vocational rehabilitation. Under certain situations, injured parties may also be entitled to receive compensation for renovations to a home to make the home handicap accessible, or for the purchase or modification of a vehicle.

In addition to allowable medical expenses, a person injured in an automobile accident may also be entitled to work loss benefits. Work loss benefits are payable for up to three years for those who are unable to work as a result of an automobile accident. Such benefits are paid at the rate of 85% of the injured party’s gross pay, including overtime. Benefits cannot exceed the monthly maximum amount determined by the State.

Those injured in an automobile accident may also be entitled to replacement service expenses. Replacement service expenses allow an injured party to receive up to $20.00 per day for money spent having others perform necessary services that an injured person would have been able to perform prior to the accident. This benefit would include expenses for such services as yard work, laundry, housekeeping and home maintenance. Replacement service expenses, like work loss benefits, are payable for up to three years.

If an automobile accident ends in a death, the dependents of the deceased may be entitled to recover survivor's loss benefits. Dependents are defined as a spouse or child under eighteen. Survivor loss benefits are payable for up to three years, but the compensation amount cannot exceed a monthly maximum amount determined by the State. Such benefits may also provide for funeral and burial expenses up to $5,000, depending on the type of coverage.

Third Party Benefits

To pursue a claim for AThird Party benefits, an injured party must show that a third party was at fault, or negligent, for the accident. If successful, a person injured in an automobile accident may be able to collect non-economic damages, i.e. damages for pain and suffering. Non-economic damages are not available unless the injured person has suffered one of the following: (1) serious impairment of body function; (2) permanent serious disfigurement; or (3) death.

Whether non-economic damages are warranted depend on the circumstances of each individual case, and the status of the ever-changing law. In July 2004, the Michigan Supreme Court reinterpreted the Act, imposing additional requirements on injured parties seeking compensation for their injuries. The Kreiner Court stated that in addition to establishing a serious impairment of body function, it must also be established that the person’s ability to conduct the course of his or her normal life has been affected.

The impact of the Kreiner decision remains to be seen. The evolving case law has established various factors in determining whether an injury meets the threshold requirement. The factors include the duration of the injury, whether any activities enjoyed prior to injury have been affected and to what extent, whether the injury is “objectively manifested” by medical evidence, and whether a person’s lifestyle before the accident was affected by the injury. Since Kreiner, the Court of Appeals determined that a car accident victim who began to experience back spasms after the accident did not suffer a serious impairment of body function. In making its determination, the Court noted that after the accident, the injured party continued to work full-time and to engage in vigorous activities as part of his employment, even though he could no longer play with his children or go hunting as he had before the accident. The Court found that this was not enough evidence to show that the injury affected his general ability to lead his normal life.

Alternatively, since Kreiner, two Circuit Court Judges found the existence of a serious impairment of body function, finding the injured parties’ ability to conduct the course of their lives had been greatly affected. In a recent Montcalm county Circuit decision, a 73-year old grandmother, who sustained a broken wrist in a car accident suffered a serious impairment of body function. The Judge noted that before the accident, the grandmother’s life was spent gardening, cooking, sewing and maintaining her home. Because she could no longer engage in those activities, her ability to conduct her normal affairs was severely limited.

Similarly, a Bay County Circuit Court judge found that a motorcyclist, who suffered a severe ankle injury when he collided with a van, suffered a serious impairment of body function. The motorcylist’s injuries required three separate surgeries, the third of which rendered him unable to return to his job as a sales manager of a motorcycle dealership. In making his decision, the Judge found that the motorcylist’s injury was “objectively manifested” in both CT scans and X-Rays and left no doubt that his injury affected his general ability to lead his normal life.

The ever-changing case law makes it all the more apparent that the best way to determine whether an injury is compensable under the Michigan Automobile No Fault Act is to consult attorneys specializing in automobile no fault cases.

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