COMMENTARY: No-Fault reform - a brave new world

By Agenique Smiley

With the signing of Senate Bill 1 on May 30, 2019, Governor Gretchen Whitmer forever changed the practice of what is known as “auto law” and thrust practitioners into a brave new world. As of July 1, 2020, the Michigan Legislature’s monumental reform of the No-Fault Automobile Insurance Act (No-Fault Act) converts Michigan from a strictly no-fault to a mixed no-fault/tort state.

Medical Expenses

Although, under the new no-fault regime, there has been an elimination of the requirement that auto insurance policies provide for lifetime medical benefits, the insured’s right to recover first-party benefits – attendant care, wage loss, medical expenses, etc. – from his or her own insurer has not changed. The elimination of the lifetime benefit has given way to a tiered system for personal injury protection (PIP) insurance, found at MCL 500.3107c.

Interestingly, this new system also offers an “opt out” – no PIP coverage – option for individuals receiving Medicaid or Medicare benefits. Also, considering our emerging “gig” economy, no-fault reform did not leave out Uber and Lyft drivers – as of July 1, 2020, they will be required to carry $250,000, $500,000 or unlimited PIP coverage.

‘Serious Impairment of Body Function’ and the Objective Person Standard

Another eye-opening change to the no-fault landscape was the Michigan Legislature’s modification of MCL 500.3135(5), codifying the Supreme Court’s holding in the seminal case, McCormick v Carrier, 487 Mich 180; 795 NW2d 517 (2010), slightly modifying the definition of “serious impairment of body function,” requiring – as a threshold for recovery – a showing that an impairment satisfies all of the following:

a. It is objectively manifested, meaning it is observable or perceivable from actual symptoms or conditions by someone other than the injured person.

b. It is an impairment of an important body function, which is a body function of great value, significance, or consequence to the injured person.

c. It affects the injured person's general ability to lead his or her normal life, meaning it has had an influence on some of the person's capacity to live in his or her normal manner of
living. Although temporal considerations may be relevant, there is no temporal requirement for how long an impairment must last. This examination is inherently fact and circumstance specific to each injured person, must be conducted on a case-by-case basis, and requires comparison of the injured person's life before and after the incident.

As indicated above, the codified version of the McCormick standard is a slight departure from the previous version which did not require that the injured party’s symptoms or
conditions be “perceivable…by someone other than the injured person.”  Id.  The additional requirement that someone other than the injured party also find that his or her injuries – as observed or perceived from actual symptoms – are objectively manifested is significant because it makes the burden of proof less subjective.

As the Court of Appeals held in Patrick v Turkelson, 322 MichApp 595; 913 NW2d 369 (2018), the inquiry focuses on whether the impairment is objectively manifested; therefore, although a injured party may have legitimate subjective complaints of pain and debilitation, they are insignificant to make a showing that the impairment is objectively manifested.

The injured party must produce evidence of the physical manifestation of his or her impairment. Of course, the easiest way to accomplish this task is through medical testimony.

But it is not required.

The Patrick Court also held that an impairment of an important body function affects an injured party’s general ability to lead a normal life if it influences that person’s capacity to live his or her normal manner of living. Patrick v Turkelson, 322 MichApp at 607. Here is where evidence of the physical manifestation of the injured party’s impairment would be quite important because it would serve a dual purpose. It would not only speak to the impairment itself but also to the change in the injured party’s manner of living. The observations of the “person other than the injured person” would also be helpful at this juncture because he or she could provide valuable insight as to the changes in the injured party’s “manner of living” pre and post-accident. It is important to note that the statute only requires that the injured party’s general ability to lead his or her normal life be “affected” not “destroyed.” McCormick v Carrier, 487 Mich at 202-203.

Although there is no express temporal requirement as to how long an impairment must last in order to have an effect on a person’s general ability to live his or her normal life, in order to determine whether an impairment has resulted in the injured party having to completely abandon a pre-accident activity or whether his or her ability to lead a normal life was affected, the court must compare the injured party’s life before and after the accident.

This inquiry, although primarily subjective because it hinges on a comparison of the injured party’s life before and after the subject accident, is still dependent upon the initial finding of an objectively manifested impairment. The inquiry requires a “subjective, person-and-fact-specific” investigation that must be conducted on a case-by-case basis.

McCormick v Carrier, 487 Mich at 203. Here, the High Court is indicating that the inquiry is both subjective and objective by requiring an inquiry into both the person and the facts.

An inquiry into facts inherently calls for an objective eye towards interpretation, therefore, once again, the Court is making reference to the requirement that a person, other than the injured party, must find that his or her impairment is objectively manifested.

A once well plotted and familiar territory has, once again, become foreign and new, and auto law practitioners must embark on a journey through a brave new world as they negotiate – and, undoubtedly, litigate – through the new no-fault system.
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Agenique Smiley is an attorney in Royal Oak.