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No-Fault Insurance
Wayne State University Law School
Miller, Wayne J.

 
NO-FAULT INSURANCE (SUMMER 2015, Prof. Miller)
 
CHAPTER ONE – INTRO TO NO-FAULT
 
Minimum liability coverage required $20K
No-fault has no limit of coverage
Whenever there is a dispute btw No-Fault law and MCL, No-Fault law predominates
 
NF Automobile insurance system guarantees payment of certain economic losses to all victims of MVAs regardless of who is at fault
·         Intended to replace, in whole or in part, the tort liability system which states that a victim who is totally or partially at fault receives either nothing or only partial compensation for the damages suffered
 
The Basic NF Bargain
Economic losses – those expenses that can be counted in $$$$ (medical bills, loss of income, etc)
 
Non-economic losses – relates to diminished quality of life and incl intangible concepts as pain and suffering, disability, loss of function, deprivation of social pleasure and enjoyment, mental anguish and distress, etc.
 
Quid Pro Quo – compensation for certain economic losses is guaranteed regardless of fault and is paid by the accident victim’s own insurance co, while compensation for noneconomic loss is prohibited unless the victim has sustained an injury of sufficient severity to qualify for such compensation
·         Tort Threshold – injury severity standard for noneconomic loss claims
o   Unless the injury “crosses the threshold” the innocent victim is not permitted to recover noneconomic damage
·         Results in the creation of tort immunity for certain negligent drivers who injure other motorists but do not injure them seriously enough to be held liable for the victim’s noneconomic damage
·         The fault driver has tort immunity for those economic losses paid by the victim’s insurance company
 
NF in Other States
< 15 states have no-fault system   Pure NF system – all tort liability for noneconomic damages is eliminated; only compensation is for economic losses (medical expenses, wage loss) – adopted nowhere   Modified NF system – guarantees a certain level of economic loss benefits to all victims while imposing a threshold injury requirement on all victims who pursue tort claims for noneconomic loss against the negligent driver ·         Dollar threshold – requires that an injured person incur a min specified $ amt of medial expense and wage loss before he is eligible to file a tort suit against a negligent party for noneconomic damages ·         Verbal threshold – defines the severity of injury, not by quantitative $ concepts but by qualitative verbal concepts which define, in words an phrases, the severity of injury that is necessary to pursue noneconomic tort claims – MI’s threshold   Add on NF system – a tort system w/ optional NF insurance coverage for economic loss which is typically referred to as “add on coverage” which can be purchased for an extra premium and will pay the injured person for certain economic loses, such as limited medical expenses, partial wage loss, etc. ·         Injured person retains full access to the tort system incl.right to recover noneconomic damages from the tortfeasor ·         Injured person precluded from suing in tort for those economic losses that were paid by the injured person’s add on coverage   MI NF System Adopted by MI Legislature in 1972; went into effect in 1973   Introduces a compulsory insurance system – creates a class of motorists who must purchase mandatory NF coverages or face fine or imprisonment   Every MVA that occurs in MI and results in personal injury or death, creates 2 separate and distinct claims: the 1st is the claim for NF personal protection insurance (PIP) benefits; the 2nd claim is the 3rd party tort liability claim against the party at fault, which, for purposes of recovering noneconomic loss, is limited to ‘threshold injuries”   4 Types of NF PIP benefits payable under the MI system 1)       Allowable medical expense benefits; 2)       Wage loss benefits; 3)       Replacement service expenses; AND 4)       Survivor’s loss benefits   An accident victim has the right to pursue a tort liability claim against the at fault driver for noneconomic losses only if the victim has sustained a “threshold injury” in MI: ·         death, ·         permanent serious disfigurement, and ·         serious impairment of body function   PIP Claim – Benefits Recoverable (1)     PIP Benefit #1 – Allowable expenses – all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery or rehabilitation ·         Payable for life and payable w/o $ limitations ·         Benefits incl medical expenses, in-home nursing or attendant care, residential accommodations, medical transportation mileage, guardianship expenses, etc. (2)     PIP Benefits #2 – Work Loss Benefits – 31047 (1)(b) provides that where an injured victim cannot work as a result of an auto accident, work loss benefits are payable for up to a max of 3 yrs from the date of the accident ·         Compensation for “loss of income from work an injured person would have performed during the first 3 yrs after the accident if he had not been injured” ·         Payable at the rate of85% of gross pay, incl. overtime ·         Cannot exceed a monthly max which is adjusted to Oct of every yr to keep pace w/the cost of living ($4700) ·         Those individuals considered “temporarily unemployed” are entitled to work loss benefits under 3107a (3)     PIP Benefit #3 – Replacement Service Expenses – incl reimbursement for certain domestic services incurred by the injured person to replace those that he would have performed had the injury not occurred (payable under 3107 (1)(c)) ·         Can’t exceed $20/day and only payable for 3 yrs from the date of the accident ·         Incl. housekeeping, yard work, home maintenance, babysitting, etc (4)     PIP Benefit #4 – Survivor’s Loss Benefits – when MVA results in death, NF benefits are payable to the dependents of the decedent ·         Defined under 3108 and consist of the “loss of contribution of tangible things of economic value that dependents of the deceased would have rec’d for support during their dependency if the deceased had not suffered the accidental bodily injury causing death and expenses, not exceeding $20/day, reasonably incurred by these dependents during their dependency in obtaining ordinary and necessary services in lieu of those that the deceased would have performed for their benefit if the deceased had not suffered the injury causing death” ·         Payable for 3 yrs and are subject to the same max monthly benefit ceiling, which is applicable to work loss claims ·         Comprised of components such as after tax income, loss of fringe benefits, and a replacement service component ·         Only those persons classified as “dependent” on the decedent may make a claim for survivor’s loss benefits ·         MVAs resulting in death also qualify for pymt of funeral and burial expenses under 3107 (1)(a) which may be $1750-$5K depending on the coverage purchased by the insured   The Tort Liability Claim – Damages Recoverable Tort liability is controlled by 3135   2 types of damages recoverable in tort: (1) noneconomic losses AND (2) excess economic losses   (1)     Noneconomic Losses for Threshold Injuries – relate to diminished quality of life, incl. pain and suffering, disability, incapacity, loss of function, deprivation of social pleasure and enjoyment, mental anguish, and distress, etc a.       Noneconomic loss damages can be recoverable in tort only if the injured person has sustained a threshold injury (i.e. death, permanent serious disfigurement or serious impairment of body function) b.      If the injury does not “cross the threshold” there is no recovery for noneconomic loss   (2)     Excess Economic Losses Not Covered by PIP – consists of work loss in excess of the monthly and 3 yr limitations applicable to PIP work loss benefits and the daily and 4 yr limitations applicable to replacement service expenses ·         In cases where D is an uninsured tort-feasor, the injured person can recover all economic losses against the tort-feasor, even those that were compensable by the victim’s NF insurance co ·         Threshold injury is not required in oder to hold the tortfeasor liable for any type of economic loss   The Constitutionality of the MI NF Law NF appellate case law began w/ Shavers   Shavers v. Attorney General (p. 8): ·         Holding #1: Compulsory Auto Insurance is a Constitutional Exercise of Police Power – the Act does not exceed the traditional scope of the legislatures police power ·         Holding #2: Compulsory Auto Insurance Activates Due Process Protections re: Rate Making and Insurance Availability – unless compulsory insurance is fairly priced and widely accessible, the statutory scheme violates due process protections of the MI Con ·         Holding #3: MI NF Act Violates Due Process Protections of the MI and US Cons which Must be Corrected w/I 18 mths – violated due process b/c (1) there were insufficient protections against, excessive, inadequate or unfairly discriminatory rates; (2) there were inadequate provisions permitting motorists to attack indi

ars, but not operated upon rails
 
OLD: 3102 (2)(e): vehicle, incl. trailer, operated or designed for operation on a highway by power other than muscular power which has > 2 wheels
·         Doesn’t incl. MC or a moped; ORV; farm tractor or other implement of husbandry, which is not subject to the registration requirements of the MI vehicle code
 
NEW: 3101
Lee v. DAIIE (p. 26): a vehicle need not be required to be registered in order for it to be considered a MV under the NF statute
·         No linkage btw the definition of MV and the requirement of registration
·         P injured while unloading a US gov’t owned mail truck, which is not required to be registered
·         Concept of “required registration” in 3101 (1) deals /w the kind of MV that must be insured
o   MV as defined in 3101 (2) does not depend on whether a vehicle must be registered
o   3105 (1) only requires the involvement of a MV for entitlement of PIP benefits, not an insured vehicle or a registered vehicle
 
NF benefits can be payable for the use of such a non-registered vehicle, assuming all other conditions pertinent to entitlement and non-disqualification have been satisfied
 
Prior to the no-fault system, the insurance was worker’s compensation
·         It is a mandatory system of no-fault insurance
 
Since no-fault, there is a mandatory insurance that everyone must have: Obamacare
 
No-Fault: everyone must have auto insurance
 
Mandatory insurance required by MI: (1) personal protection insurance (PPI) aka no-fault insurance; (2) property protection insurance, and (3) residual liability insurance aka the fault system
 
Residential liability insurance covers the tort claims (not the economic loss issues)
 
Things that are MVs – Case Law
(1)     Tractor-Trailers
·         Even if not attached to a tractor or other power source, it is considered to be a MV
·         Kelly v. Inter-City Truck (p. 27): a semi-trailer, whether attached to a truck cab or free-standing, is a MV under 3101 (2) of the NF Act – entitles P who sustained injuries in the course of unloading such a trial to recover benefits
·         Progressive Ins Co, et al v. Burns (p. 27): trailer was a MV, so had to be registered and insured
(2) Go-Carts
·         Coffey #1: 4 wheel go-carts powered by a one-cylinder 2 ½ horsepower engine are MVs b/c it was being operated by power other than muscular power and it had > 2 wheels; and operated on a public highway
o   b/c the go-cart was operated on a public highway that it had to be registered
o   b/c it had to be registered, 3101 (1) required that it also be insured
o   Since it was not insured, the driver was disqualified
(3)Wheel Loaders: construction vehicle w/ a shovel-type scoop mounted on the front end, which is used to load dirt, gravel, or other substances onto dump trucks, railroad cars, etc
o   A vehicle is operated upon a public highway or designed for operation on the highway are separate considerations
o   Whenever a vehicle is operated on a public highway that element of the statutory definition is met
o   B/c it was being operated on a public highway at the time the injury occurred, NF benefits were payable
(4)     Dual Purpose Vehicles – vehicles w/ 2 primary purposes
o   Bialochowski v. Cross Concrete (p. 28): a cement truck was  a dual purpose MV w/I 3101 (2) as it was designed both for operation on a public highway and to perform other tasks – MV for purposes of the Act
o   If a vehicle is a “dual purpose vehicle” it does not lose its status as a MV when an injury occurs off the public highway while the vehicle is engaged in its non-MV function, but benefits may not always be payable in these situations