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
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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