Michigan Court Lowers Threshold for Damage Suits Under No-Fault

August 3, 2010

The Michigan Supreme Court has made it easier for auto accident victims to sue for pain and suffering under the state’s no-fault law.

The new court ruling lowers the threshold of what is considered a serious impairment of body function that must be met before a claim for non-economic damages may be considered.

Michigan’s no-fault law restricts claims for pain and suffering unless the impairment has affected “the person’s general ability to lead his or her normal life.”

By a narrow 4-3 majority, the Supreme Court agreed to overturn its own 2004 ruling in the Kreiner case that set a higher threshold. The court now says that Kreiner imposed claims restrictions that exceeded the plain language and intent of the no-fault law.

The Kreiner majority held that the “common meaning” of whether an impairment has affected “the person’s general ability to lead his or her normal life” is whether it has affected the person’s general ability to “conduct the course or trajectory of his or her entire normal life.”

The new case involved Rodney McCormick, who suffered a broken ankle and other injuries when he was run over by a truck at the GM plant loading dock where he worked. His ankle injury and two related surgeries kept him out of work for 19 months and interrupted his golfing and fishing recreational activities for a period of time. He never returned to his original job as a medium truck loader, but he suffered no loss in pay because of the change in job. He testified at trial that while his life was back to normal, he still suffered pain and a reduced range of motion. His doctors also said he faced the potential for increased susceptibility to degenerative arthritis, which his insurer questioned.

A lower court found that McCormick’s impairment was not sufficient to permit a non-economic damages claim under the Kreiner rules.

However, the high court overruled. Writing for the Supreme Court majority, Justice Michael Cavanagh said that the Kreiner rule erred in attaching conditions such as time and extent of an injury and its effect on a person’s ability to lead a normal life that were never included by the Legislature in the statute.

“This “common meaning” [in Kreiner] is quite different from the actual statutory text in form and substance. Significantly, the Kreiner majority’s interpretation of the statute interjects two terms that are not included in the statute or the dictionary definitions of the relevant statutory language: trajectory and entire. Both terms create ambiguity where the original statutory text had none, and the Kreiner majority thus erred by selectively defining the words used in definitions of statutory terms in order to shift away from the common meaning that the words have in the context,” Justice Cavanaugh wrote.

The court indicated that whether an injured person has been kept from some, not all, normal activity for any period of time, not necessarily a lifetime, may be considered in determining if a non-economic damages claim is legitimate.

The court cited Kreiner for veering from the language of the law in several areas.

For one, it said that the statute merely requires that a person’s general ability to lead his or her normal life has been affected, not destroyed. “Thus, courts should consider not only whether the impairment has led the person to completely cease a pre-incident activity or lifestyle element, but also whether, although a person is able to lead his or her pre-incident normal life, the person’s general ability to do so was nonetheless affected,” the decision states.

Also, it found that the plain language of the statute only requires that some of the person’s ability to live in his or her normal manner of living has been affected, not that some of the person’s normal manner of living has itself been affected. There is no quantitative minimum as to the percentage of a person’s normal manner of living that must be affected.

Finally, the high court found that the statute does not address how long an impairment must last in order to have an effect on “the person’s general ability to live his or her normal life.” The court said there is no such requirement in the plain language of the statute and, further, that while the law provides that the threshold for liability is also met if the injured person has suffered death or “permanent” serious disfigurement, it does not require that a serious impairment of body function also be “permanent.”

Insurers Warn

Insurers expressed disappointment, warning that the ruling could lead to a flood of new lawsuits and higher premiums for motorists.

“We are gravely concerned about the impact of this decision on our policyholders,” said Pete Kuhnmuench, executive director for the Insurance Institute of Michigan, speaking for Michigan auto insurers. “This ruling impacts the fundamental concept of no-fault, which balances comprehensive and immediate benefits in exchange for limits on costly personal injury lawsuits.”

He said the decision rewrites the standards for “serious impairment of body function” as established in the 2004 Kreiner decision and “could provide for additional litigation and could seriously undermine the viability of our no-fault statute.”

Michigan’s no-fault law was enacted in 1973. It is the only state in the country that requires insurance companies to provide unlimited, lifetime medical benefits to motorists injured in auto accidents. In exchange for providing these high medical benefits, the law also limits lawsuits for only the most serious of injuries

The 2004 Kreiner decision and its instructions to the lower court brought consistency to subsequent court decisions and stability to the auto insurance marketplace, according to IIM’s Kuhnmuench.

Cavanaugh was joined by Chief Justice Marilyn Kelly and Justices Diane Hathaway and Elizabeth Weaver in the majority. Dissenting were Justices Maura Corrigan, Stephen Markman and Robert Young Jr., who said the ruling undermines the no-fault system designed to limit lawsuits in exchange for high benefits.

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