Dear Reader,

Perhaps the only "silver lining" in the tragedy of a catastrophic motor vehicle accident is the presence of the unique financial support offered by the No-Fault Act. Still, problems in applying no-fault insurance may confront injury victims. The No-Fault Insurance Act is a complicated and confusing piece of legislation. This booklet will serve as a brief introduction to the act and to problems commonly encountered by catastrophically injured persons.

The No-Fault Act provides two broad divisions of claims. The Act is divided between so-called "economic" and "non-economic" loss. "Non-economic" loss is commonly referred to as pain and suffering damages or third-party damages. Compensation for this pain and suffering is sought from the person at fault for the accident. Although these non-economic losses are of major importance, this introduction will focus instead on "economic" loss benefits.

"Economic" loss is also called first-party coverage, no-fault, or "PIP" benefits. These include medical and work loss benefits. They are generally paid by the injured person’s insurance company, without regard to fault (hence "No-Fault").

Let's focus on medical and related benefits. The legal authority for these benefits is provided in the following few words of the No-Fault Act: benefits are to be paid for "... all reasonable charges incurred for reasonably necessary products, services and accommodations for the injured person's care, recovery or rehabilitation." This brief sentence has been and continues to be the subject of many court battles.

What is "reasonably necessary"? That will obviously depend on the facts of each case. For example, would it be necessary to provide a wheelchair for a person who suffers a broken arm in an accident? Clearly not. Would it be reasonable to provide a wheelchair to a person who suffers two broken legs in an accident? Perhaps, depending on the severity of the fractures and other factors. One can readily see that the determination of "reasonably necessary" varies on a case by case basis and may involve some negotiation with the insurance company.

What is meant by "products, services, and accommodations"? This is a phrase that is very broad and is an area that is constantly being explored by attorneys. For example, of major interest to the catastrophically injured is a decision that holds that home care is covered, even if provided by a family member. (See Part II of No-Fault Alerts^TM) Of course once again the question of reasonableness arises. The amount to be paid to family members varies with the case. If mere supervision is required then perhaps minimum wage is reasonable. If the family is providing care at the level of a Registered Nurse, then $18.00 or $20.00 per hour may be reasonable. Families should not be reluctant to claim compensation, because the time involved can be enormous and often at the expense of other jobs.

Another "product, service or accommodation" is reimbursement for transportation expenses involved in seeking medical care. Although it is clear that insurance companies must pay for transportation, it is not clear how much they must pay. Workers' Compensation insurers must comply with the travel reimbursement schedule used by the State of Michigan. This schedule varies annually, but has generally been between 25-30¢/mile. No-fault carriers are not required to use this schedule. As a result there is much confusion among insurance companies and claimants. Some pay virtually nothing, some pay more.

Another "accommodation" of interest is home modification. Few homes are originally built barrier free and thus will require modification to suit the catastrophically injured. Ramps, lifts, emergency exits, bathroom facilities and more may be needed.

Another "product" is the handicapped-equipped van. The No-Fault law clearly permits this, if necessary. Again, though, there exists confusion among carriers as to payment. Some simply refuse to pay, others will pay for purchase and equipping. It again comes down to the factual question of reasonableness, and is therefore a subject of negotiation or fact determination.

Another PIP benefit that deserves mentioning at this point is the allowance for replacement services. (Discussed in Part IV of the No-Fault Alerts^TM section.) The No-Fault Act allows up to $20.00 per day for expenses "... reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he had not been injured, an injured person would have performed during the first three years after the date of the accident, not for income but for the benefit of himself or of his dependent." This is completely separate from and is not to be confused with the allowance for home care. Home care is for nursing or supervising or attendant care of the catastrophically injured person. Replacement service is to pay for any services that the injured person must purchase to do things that he or she used to do him or herself. For example, if the catastrophically injured person formerly cut the grass, washed windows, took out the garbage, did the laundry, etc., and has to hire someone else to do those services right now, even if it's a family member, then the person who is hired is entitled to reimbursement from the No-Fault carrier up to $20.00 per day. Again, this total amount is often subject to negotiation.

As one can see from the foregoing brief outline of No-Fault benefits, the No-Fault Act consists of certain broad and vague entitlements. Although theoretically providing many benefits to the catastrophically injured person, the application of these broad entitlements depends on the facts of each case and on the relationship between the insurance company and the family.

Sincerely,

Wayne J. Miller, ESQ.