The Michigan No-Fault law allows a lawsuit against the negligent driver under certain circumstances. To bring a suit, the other driver must be more than 50 percent at fault in causing the accident. Lawsuits may be brought against negligent drivers when an accident has resulted in death, permanent serious disfigurement, the serious impairment of a body function, or long-term income loss. These claims do not involve reimbursement of medical expenses, wage loss or replacement services for the first three years. Those losses are covered by individuals own No Fault insurance company or other applicable insurance carrier who has priority.

The frequent battle is whether or not the injury constitutes a serious impairment of a body function. The statute requires that there be an objective impairment that affects a person’s ability to live at least a portion of his or her life. On July 31, 2010, the Michigan Supreme Court and a new majority changed the no-fault threshold to focus on whether or not there is some observable impairment, not injury, and whether that impairment affects that particular person’s life, interests, or lifestyle. The current threshold still requires some objective observation, presumably by doctors or others, as to a physical impairment, but the focus now is not on whether you can do most of the things in your life but rather what things in your life are impaired or affected by your injury. The more objective the injury and impairment, the easier the decision on whether the serious impairment is met.

Furthermore, observations by coworkers and family members about the differences before and after may have a very significant effect on convincing a jury that you have a serious impairment of body function. You will need a doctor who is willing to explain without minimization the true nature of the problem and the impairment that it causes. A court may dismiss a claim if it determines that there is not sufficient objective evidence of a serious impairment.

The statute requires that it be an impairment of an important body function, and that may depend on the impairment’s impact on the quality of your life and the nature of the injury that you’ve sustained. On some occasions, it is necessary to hold off bringing a claim until the nature of the injury and its impairments are known so that if a serious long-term impairment exists, it can be demonstrated to the court and a jury. If you bring a claim now for an injury that the judge finds is not serious enough and dismisses the case, you will not be able to bring a claim for that injury later even though the condition worsens.

So, in addition to proving that the other driver was at fault in the accident in an automobile case, it is equally important that there be sufficient evidence of an objective nature of a serious impairment of some important body part that affects your life for your style, work and living. Besides family members and treating medical providers, you should mention to your lawyer, your friends, coworkers, and other persons who might be able to corroborate the before and after differences and explain the impact that the injury has had and the impairments that it has caused in your life.

What You Need to Know

In summary, the rules of an automobile negligence lawsuit include the following:

• The other driver must be more than 50% at fault for the accident for the injured person to recover noneconomic pain and suffering and other types of noneconomic damages. Economic damages such as excess wage loss or survivor’s loss after three years may be recoverable even if the other driver was less than 50 percent at fault.
• For an injured person to successfully bring a claim for noneconomic damages such as pain and suffering, there must be an objectively manifested impairment of an important body function that affects the person’s general ability to lead his or her normal life.
• No claim against the other driver for medical or wage losses or replacement services may be made if the benefits are covered under the No-Fault Act by a no-fault insurer. Generally, this means that no wage loss or replacement services may be claimed for the first three years and no medical expenses will be claimed against the negligent driver. However, wage losses or replacement services in excess of the three-year, first-party benefits are recoverable against the at-fault driver.
• If the injured person owned and was driving an uninsured motor vehicle noneconomic damages such as pain and suffering, embarrassment, or loss of enjoyment to life are not recoverable against the other driver. Economic wage losses or survivor’s losses may be recovered.

Timing for a Third-Party Suit

In general, a no-fault auto negligence lawsuit must be brought within three years from the date of the accident or the claim is forever barred. There are exceptions for the mentally impaired and for minors. A minor may bring a claim until his or her 19th birthday.

Retention of an Attorney

The Michigan Court Rules allow clients to hire an attorney for a no-fault matter on either an hourly or a contingent fee basis. Normally, the client hires the attorney on a contingent fee basis. A contingent fee means that the client will pay the attorney a percentage of the recovery for the settlement or amount secured by suit. The typical percentage is 33 percent. A Michigan Court Rule regulates the use of contingent fee agreements and allows a one-third contingent fee as a maximum. If a client retains an attorney on a contingent basis and the case is unsuccessful, the client does not owe the attorney money for attorney fees. However, if the matter is unsuccessful, the client is responsible to pay the costs of the litigation. The costs are not the attorney’s or the staff’s time but the out-of-pocket money the attorney spends to process your case. Typically, these costs include such things as filing fees, witness’s time at depositions, medical records, case evaluations, and other out-of-pocket expenses. Usually, the most expensive costs are to secure medical testimony to present to a jury (by either video deposition or live testimony) the nature of injuries. Although these costs are the responsibility of the client whether the matter is won or lost, most attorneys pay the costs as they are incurred and are reimbursed at the end of the suit.

If the is suit successful, under the contingent fee contract and court rules, the attorney is first reimbursed for the costs that have been advanced in processing the claim. The net amount of the settlement after costs are subtracted is then subject to the contingent percentage, usually one third, which represents the attorney’s fee. The net balance of the settlement or result is payable to the client.

Tax Consequences of a First-Party or Third-Party Recovery

In most cases the amount a claimant receives in a personal injury action, either for no-fault benefits or for auto negligence pain and suffering or long-term wages loss or survivor’s loss, is not taxable. However, any interest that a court awards is subject to income taxation.

This explanation of Michigan’s no-fault law is a general description without all of the details or exceptions. Please feel free to raise any question with a lawyer from Gray Sowle and Iacco P.C. regarding the law or procedure that applies to your particular claim.