Changes to No-Fault Law (Part One)
As you have probably learned by now, No-Fault law in Michigan as we knew it changed drastically in 2019. The original law was enacted back in 1973 under Governor William Milliken. The No-Fault system evolved over time with many interpretations of the law and guiding authority provided by the courts.
Our No-Fault system in Michigan was relatively unique in that it provided an avenue for injured parties to recover unlimited lifetime medical benefits for allowable expenses, which was very costly for insurers and in turn, for insureds paying auto insurance premiums. This is no longer the case for many with the recent amendments to the No-fault law, which allow policy holders to choose various levels of PIP coverage and opt out of certain coverages under very specific circumstances. The most recent amendments had three very important dates. Some took immediate effect as of June 11, 2019, and others not until July 2020. Still others do not take effect until July 2021. This article provides a general overview of only some of the changes, and is not meant to be a comprehensive review of all of the changes to No-Fault in Michigan.
Under the No-Fault system generally, an injured party would seek most damages from their own automobile insurance carrier regardless of fault, with few exceptions to include mini tort claims, excess economic and non-economic damage claims against an alleged at fault party which met a certain injury threshold. Those injuries, called “threshold injuries,” had to result in permanent serious disfigurement, death, or serious impairment of body function, to be legally compensable. MCL 500.3135 governs such claims. Now, injured parties can recover excess economic damages to include all future allowable expenses, work loss, and survivor's loss. Since PIP benefits for allowable expenses for medical care will no longer be unlimited in all cases, there is now the potential for some significant excess economic damage claims for medical expenses.
With respect to claims for non-economic damages mentioned above, the statute has codified the criteria outlined in McCormick v. Carrier, 487 Mich 180, 795 N.W.2d 517 (2010), previously relied on by practitioners. MCL 500.3135(5) now provides a lengthier statutory definition of "serious impairment of body function."
The mandatory minimum coverage for residual liability insurance to cover those serious injuries and resulting increased excess economic and non-economic damage claims mentioned above has gone up with the changes to No-Fault, from $20,000 per person/$40,000 per occurrence to $250,000/$500,000, but the law provides an opportunity to opt out and obtain lower limits of $50,000/$100,000 as of July 2020.
Some of the more notable changes that took immediate effect included an express statutory cause of action for providers pursuant to MCL 500.3112. This was an area that had been the subject of ongoing dispute for quite some time. Medical providers had for many years previously pursued No-Fault benefits directly from carriers and after many legal challenges, the Court in Covenant Med. Ctr., Inc. v. State Farm Mut. Auto. Ins. Co., 500 Mich. 191, 895 N.W.2d 490 (2017) held that they did not have a direct cause of action. Following this decision of the Michigan Supreme Court, providers simply started pursuing their claims independently in court by virtue of an assignment of rights from the underlying claimant/injured party. Changes to the No-Fault law have now codified the providers’ right to bring a suit directly against the insurance carrier to obtain payment of bills.
There were also significant changes to MCL 500.3114 and 3115. These sections tell us which insurance carrier injured parties should look to after an accident for payment of their first party benefits. The rules of priority for injured parties or claimants injured while occupants of motor vehicles or motorcycles, are covered in Section 3114. Those injured while non-occupants are covered in Section 3115. In short, the amendments in June 2019 resulted in substantial changes to the priority rules for injured claimants without a personal or household policy. If an accident occurred on or after June 11, 2019, then claimants under both categories must look to the Michigan Assigned Claims Plan for payment of PIP benefits.
In closing, although we are starting to see the implications of some of these changes, there are still many unknowns. Look for the second part of this article pertaining to additional No-Fault Changes in coming editions of Inter Alia.
Garan Lucow Miller, PC