Prepared By:
Law Offices of
Alexander & Angelas, P.C.
Attorneys and Counselors at Law
29777 Telegraph - Suite 2631
Southfield, MI 48034-7651
(248) 355-9797
TABLE OF CONTENTS
TO WHAT TYPE OF ACCIDENT DOES THE NO-FAULT ACT APPLY
PRIORITY OF PROPERTY PROTECTION CLAIMS
PERSONAL INJURY PROTECTION BENEFITS
ORDER OF PRIORITY FOR PERSONAL PROTECTION BENEFITS
PERSONS NOT ENTITLED TO PERSONAL INJURY PROTECTION BENEFITS
ACCIDENTS OCCURRING OUTSIDE OF THE STATE
ALLOWABLE MEDICAL EXPENSES AND ACCOMMODATIONS
PAYMENT AS DISCHARGE OF LIABILITY
REIMBURSEMENT AND DEDUCTIONS
AMONG PIP CARRIERS
RECOVERY OF PIP BENEFITS FROM OWNERS OF UNINSURED MOTOR VEHICLES
CATASTROPHIC CLAIMS ASSOCIATION
PARTIAL
RECOUPMENT, INSURERS IN
THE SAME ORDER OF PRIORITY
CAVEAT
This manual is intended for informational purposes. Michigan's no-fault law is constantly changing and is subject to judicial interpretation. Specific or unique factual situations may result in varying applications of the no-fault laws.
The statutes cited herein may have either been paraphrased or condensed. Reference should always be made to the actual law, as periodically amended by the state legislature. Always rely on professional legal assistance should questions arise.
In 1973, the Michigan Legislature enacted what has been commonly referred to as the "Michigan No-Fault Act." The purpose of the Act was two-fold:
(1) to ensure that individuals involved in a motor vehicle accident who incurred medical expenses and/or loss of wages were properly reimbursed; and,
(2) to stem the rising tide of litigation by allowing only the "catastrophically injured" to seek compensation for "non-economic loss."
Whether these goals have been accomplished is the subject of intense debate. However, there is little doubt that the bifurcation of the no-fault scheme has dramatically increased the level of knowledge required of a claims analyst in the terms of handling a vehicle accident claim.
This difficulty arises from the fact that in many instances the Act itself provides little guidance in terms of when and how it is to be applied. Furthermore, in some instances the exceptions "swallow the rule."
There are three types of insurance under the No-Fault Act. They are:
(1) personal protection insurance often referred to as PIP benefits or first-party claims;
(2) property protection insurance; and,
(3) residual liability insurance or third-party claims.
MCL § 500.3105
DOES THE NO-FAULT ACT APPLY
Generally speaking the No-Fault Act applies to all accidents involving the use, maintenance and/or operation of a motor vehicle.
Some examples of judicial decisions regarding motor vehicles are as follows:
(1) automotive crane was a motor vehicle - McFadden v Allstate Ins, 164 Mich App 20 (1987);
(2) four wheel go-cart was a motor vehicle - Coffey v State Farm Ins, 162 Mich App 264 (1987);
(3) forklift was not a motor vehicle - Jones v Employers Ins, 157 Mich App 345 (1987);
(4) wheel loader used for construction was a motor vehicle - Jones v Continental Gas, 186 Mich App 656 (1991); and,
(5) bulldozer was not a motor vehicle - Woods v Progressive Mutual Ins Co, 15 Mich App 335 (1968).
MCL § 500.3101(e) defines motor vehicle as:
A vehicle, including a trailer, operated or designed for operation upon a public highway by power other than muscular power which has more than two wheels. Motor vehicle does not include a motorcycle or moped as defined in section 32b of Act 300 of the Public Acts No. 149, being section 257.32b of the Michigan Compiled Laws. Motor vehicle does not include a farm tractor or other implement of husbandry which is not subject to the registration requirements of the Michigan Motor Vehicle Code pursuant to section 216 of the Michigan Vehicle Code, Act No. 300 of Public Acts 149 being section 257.216 of the Michigan Compiled Laws.
MCL § 500.3101(f) defines motor vehicle accident as:
A loss involving the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle...
Although both the definitions appear to be rather straightforward, there has been a considerable amount of litigation attempting to further define or redefine the definition of a motor vehicle. Attempts to expand the definition of a motor vehicle have been made in that, an individual involved in a motor vehicle accident is entitled to "personal injury protection benefits without regard to fault."
MCL § 500.3106
MCL § 500.3106 provides:
(1) Accidental bodily injury does not arise out of the ownership, operation, maintenance or use of a parked vehicle and a motor vehicle unless any of the following occur:
(a) The vehicle was parked in such a way as to cause unreasonable risk of bodily injury which occurred;
(b) Except as provided in subsection (2) the injury was a direct result of physical contact with equipment permanently mounted on the vehicle, while the equipment was being operated or used, or property being lifted onto or lowered from the vehicle in the loading or unloading process; and,
(c) Except as provided in subsection (2) the injury was sustained by a person while occupying, entering into, or alighting from the vehicle.
(2) Accidental bodily injury does not arise out of the ownership, operation, maintenance or use of a parked vehicle as a motor vehicle if benefits under the Workers' Disability Compensation Act or similar laws of another state or under a similar federal law are available to an employee who sustains an injury in the course of his or her employment while doing either of the following:
(a) Loading, unloading, or doing mechanical work on a vehicle unless the injury arose from the use or operation of another vehicle. As used in this subdivision another vehicle does not include a motor vehicle being loaded on, or unloaded from or secured to, as cargo or freight, a motor vehicle;
(b) Entering into or alighting from the vehicle unless the injury was sustained while entering into or alighting from the vehicle immediately after the vehicle became disabled. This subdivision shall not apply in the injury arose from the use or operation of another vehicle. As used in this subdivision "another vehicle" does not include a motor vehicle being loaded on, or unloaded from or secured to as cargo or freight, a motor vehicle.
Basically, this section was enacted to preclude recovery of no-fault benefits where workers' compensation benefits are available to an employee who sustains injury while loading or unloading or doing mechanical work (as opposed to "maintenance") on a vehicle. Neither a motorcycle driver nor his passenger would be entitled to personal injury protection benefits if the motorcycle strikes a parked car which is lawfully parked.
The case law interpreting this particular statutory provision has been developed as the result of individuals who were injured shortly after they exited their vehicle. For example, an individual who slips and falls while getting out of a vehicle as the result of an icy sidewalk is generally not entitled to make a claim for personal injury protection benefits. An individual who is injured while closing a garage door after parking an automobile is not entitled to no-fault benefits. Harkins v State Farm Mutual Auto Ins Co, 149 Mich App 98 (1986).
An individual is not entitled to recover personal injury protection benefits for injuries suffered while loading a boat onto a trailer if he slips and falls on a boat ramp while attempting to align the boat with the trailer attached to the truck because he was not injured as a direct result of the process of loading the boat onto the trailer or his attempts to step onto the trailer but, rather, was injured due to the slippery condition of the boat ramp. Johnson v Auto Owners Ins Co, 138 Mich App 831 (1984).
MCL § 500.3125
PRIORITY OF PROPERTY PROTECTION CLAIMS
When a property damage claim is made the law provides the following order of priority for payment:
(1) Insurers of owners or registrants of motor vehicles involved in the accident; and,
(2) Insurers of operators of vehicles involved in the accident.
MCL § 500.3105
PERSONAL INJURY PROTECTION BENEFITS
Under the Michigan No-Fault Act, the owner or the registrant of a motor vehicle required to be registered in the state is required to maintain security for payment of benefits under the personal protection insurance, property protection insurance and residual liability insurance provisions of the Act.
Under personal protection insurance, an insurer is liable to pay benefits for accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle. MCL § 500.3105 further defines the obligation of the insurer as follows:
(2) Personal protection insurance benefits are due under this chapter without regard to fault;
(3) Bodily injury includes death resulting therefrom and damage to or loss of a person's prosthetic devices in connection with the injury; and,
(4) Bodily injury is accidental as to a person claiming personal protection benefits unless suffered intentionally by the injured person or caused intentionally by the claimant. Even though a person knows that bodily injury is substantially certain to be caused by his act or omission, he does not cause or suffer injury intentionally if he acts or refrains from acting for the purpose of averting injury to property or to any person including himself.
MCL § 500.3106 provides a "parked vehicle" exception to what constitutes "ownership, operation, maintenance or use of a motor vehicle." This exception is discussed in a later section.
Generally, personal injury protection benefits consist of the following:
(1) Allowable expenses consisting of all reasonable charges incurred by reasonably necessary products, services, and accommodations for an injured person's care, recovery or rehabilitation;
(2) Work loss consisting of a loss of income from work an injured person would have performed during the first three years after the date of the accident if he had not been injured;
(3) Expenses not exceeding $20 per day reasonably incurred in obtaining 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; and,
(4) Survivors benefits and funeral expenses.
MCL § 500.3114
PERSONAL PROTECTION BENEFITS
One of the first questions which arises in an accident involving a motor vehicle is whose insurer is required to pay. The "order of priority" is set forth in MCL § 500.3114 and briefly summarized as follows:
(A) IF AN OCCUPANT OF A PRIVATE VEHICLE:
(1) The occupant's own auto insurer; and if none,
(2) The auto insurer of the occupant's husband or wife or relative living under the same roof; and if none,
(3) The auto insurer of the owner of the occupied vehicle; and if none,
(4) The auto insurer of the driver of the occupied vehicle; and if none,
(5) Assigned claims fund.
(B) IF AN OCCUPANT OF AN EMPLOYER'S VEHICLE:
(1) The employer's auto insurer if an employee, his or her spouse or relative if either living under the same roof; and if none,
(2) The occupant's own auto insurer; and if none,
(3) The auto insurer of the occupant's husband or wife or relative living under the same roof; and if none,
(4) The auto insurer of the owner of the occupied vehicle; and if none,
(5) The auto insurer of the driver of the occupied vehicle; and if none,
(6) Assigned claims fund.
(C) IF AN OCCUPANT OF A "FOR HIRE VEHICLE, BUS OR TAXI":
(1) The occupant's own auto insurer; and if none,
(2) The auto insurer of the occupant's husband or wife or relative living under the same roof; and if none,
(3) The auto insurer of the owner of the occupied vehicle; and if none,
(4) The auto insurer of the driver of the occupied vehicle; and if none,
(5) Assigned claims fund.
(D) IF A NON-OCCUPANT, SUCH AS A PEDESTRIAN, BICYCLIST, ETC.:
(1) The non-occupant's own auto insurer; and if none,
(2) The auto insurer of the non-occupant's husband or wife or relative living under the same roof; and if none,
(3) The auto insurer of the owner of the motor vehicle involved; and if none,
(4) The auto insurer of the driver of the motor vehicle involved; and if none,
(5) Assigned claims fund.
(E) IF AN OPERATOR OR PASSENGER OF A MOTORCYCLE:
(1) The insurer of the owner of the motor vehicle involved in the accident; and if none,
(2) The operator of the motor vehicle involved in the accident; and if none,
(3) The motor vehicle insurer of the operator of the motorcycle involved in the accident; and if none,
(4) The motor vehicle insurer of the owner of the motorcycle involved in the accident;
(5) Assigned claims fund.
MCL § 500.3113
PERSONAL INJURY PROTECTION BENEFITS
A person is not entitled to be paid personal protection insurance benefits for accidental bodily injury if at the time of the accident any of the following circumstances exist:
(1) The person was using a motor vehicle which was taken unlawfully unless he reasonably believed he was entitled to take and use vehicle;
(2) The person was the owner or registrant of a motor vehicle involved in the accident with respect to which security required by the No-Fault Act was not in effect; or,
(3) The person was not a resident of this state, was an occupant of a motor vehicle not registered in this state and was not insured by an insurer which had filed a certification of compliance.
MCL § 500.3113.
A non-resident who occupies a motor vehicle not registered in this state may nevertheless make a claim for PIP benefits if his insurance carrier had filed a certificate of compliance with this state regardless of the policy terms.
For example, if an Indiana resident is injured in an automobile accident occurring in the State of Michigan while driving a motor vehicle registered in the State of Indiana and insured by Leader National Insurance Company, that individual will nevertheless be entitled to PIP benefits irrespective of whether his "Indiana policy" makes provision for payment of those benefits where the insurance company filed a certificate of compliance with the State of Michigan.
MCL § 500.3111
ACCIDENTS OCCURRING OUTSIDE OF THE STATE
An individual may, under the Michigan No-Fault Act, make a claim for PIP benefits for out of state accidents provided that:
(1) at the time of the accident, claimant was a named insured under a personal protection insurance policy or covered by a no-fault policy of a spouse or relative domiciled in the same household; or,
(2) claimant was an occupant of a vehicle involved in an accident whose owner or registrant was insured under a no-fault insurance policy or has provided security approved by the Secretary of State.
MCL § 500.3107
ALLOWABLE MEDICAL EXPENSES AND ACCOMMODATIONS
PIP benefits are payable for allowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person's care, recovery and rehabilitation. The Act neglected to define what is "reasonable" and this term has fallen prey to judicial interpretation. In interpreting various claims the courts have focused on two key phrases:
(1) reasonably necessary; and,
(2) reasonable charges.
Some examples of "reasonably necessary products, services and accommodations" are as follows:
(1) home nursing care by both licensed RN and LPN;
(2) unlicensed nursing personnel;
(3) orthopedic appliances including wheelchairs, walkers and braces;
(4) recreational therapy;
(5) nursing home care;
(6) remodeling or addition to a handicap person's residence so as to allow him or her to use or live in a residence just as a non-handicap person would;
(7) reasonable and necessary travel expenses to obtain medical treatment;
(8) room and board in an institution; and,
(9) modified house built by insurer, legal title to revert to insurance company after death of insured.
The basic rule utilized by the courts in determining whether or not an item is an allowable expense is as follows
Products, services, or accommodations which are as necessary for an uninjured person as for an injured person are not allowable expenses.
Manley v DAIIE, 127 Mich App 44 (1983).
Nevertheless, where ordinary housing expenses are incurred in an institutional setting (e.g., food or phone bill), they will ordinarily be allowable.
The Michigan Supreme Court has held in Nasser v Auto Club Ins Assoc, 435 Mich 33 (1990) that the plain and unambiguous language of § 3107 makes both reasonableness and necessity explicit and necessary elements of a claimant's recovery. The burden of proof on these two issues lies with the plaintiff and absence of either element is a defense to an insurer's liability.
Reimbursement or coverage for the following PIP claims are not required:
(1) optometric service; and,
(2) the use of therapeutic sound or electricity for the reduction or correction of spinal subluxations in a chiropractic service.
MCL § 500.3107 (continued)
A. WAGE LOSS:
Wage loss benefits are limited to the loss of income from work an injured person would have performed during the first three years after the date of the accident. The No-Fault Act provides a statutory maximum amount of wage loss benefits. The statutory maximum is based upon a schedule which is periodically adjusted for inflation. The current statutory maximum from October 1, 2002 to September 30, 2003 is $4,070.00 per month.
In computing an individual's wage loss claim, one must first obviously ascertain whether the individual was employed at the time of the accident incurred. This is accomplished by ascertaining the identity of the insured's employer and sending the employer a Wage Verification Statement. Once the individual's gross weekly or monthly wage is ascertained, the no-fault insurance carrier is allowed to make a 15% tax adjustment. Wage loss computations become complicated where lost fringe benefits are claimed.
Wage loss under section 500.3107 refers only to income lost attributable solely to the inability to work. It provides no benefits for lost non-work related sources of income. Lost investment income is not included as "wage loss." Freeman v Colonial Penn Ins, 138 Mich App 444.
The issue of "fringe benefits" was considered by the Michigan Supreme Court in Krawzyck v DAIIE, 418 Mich 231 (1982), where claimants attempted to claim:
(1) loss of profit sharing payments;
(2) employer contribution to pension plans;
(3) a pro rata portion of health insurance premiums; and,
(4) employer's portion of Social Security taxes.
The Michigan Supreme Court concluded that the fringe benefits of the kind claimed were not recoverable as "loss of income from work." However, the court did authorize as a part of the loss income package, payments made by the insured's employer pursuant to a profit sharing plan which was part of the employee's regular wages. Loss of bargained for sick and vacation time due to injury also constitutes loss of income.
A self employed wage loss claimant present the most significant challenge to an adjuster. An insured's business expenses are properly deducted from gross receipts in determining loss of income for purposes of computing wage loss benefits. Benefits are due only on net self- employment income.
Neither the court nor the insured are required to rely upon the insured's federal income tax returns for purposes of determining what expenses are deductible from wage loss calculations.
Only certain costs of doing business should be subtracted from the gross receipts. These included shared rental, materials and supplies, advertising, laundry and cleaning, accounting service, utilities, telephone, license and office expenses. There were a number of other business related expenses that the plaintiff reported on his Schedule C which the court did not consider to be legitimate business expenses for purposes of the No-Fault Act. The decision concerning whether certain business-related expenses should be deductible business expenses for purposes of determining work loss benefits is primarily a factual question. In this case, we cannot say that the trial court's findings were clearly erroneous. Thus we refuse to adopt the rule advocated by a defendant that all of a self-employed claimant's business expense returns reported on Schedule C of his or her tax return should automatically be deducted in determining work loss benefits under the No-Fault Act. Therefore, we affirmed the trial court's ruling on this issue.
Adams v Auto Club Ins. Assoc., 154 Mich App 186 (1986).
The Court of Appeals in Adams did not give any indication as to what expenses are not properly deductible. Items such as depreciation should generally not be included in computing an individual's entitlement to wage loss benefits.
The wage loss benefit provisions provide a three-year statutory maximum. However, wage loss benefits are payable only until the plaintiff has recovered from his injuries and is able to return to work.
In addition to the payment of lost wages, the courts have interpreted the No-Fault Act to require "vocational rehabilitation." In essence, rehabilitation benefits include all reasonable charges for reasonably necessary products and services to restore an injured person to a condition of physical health and productive activity within the limits of his or her physical disability through reasonable and necessary vocational and/or occupational training. In some instances, no-fault insurers have been required to pay expenses incurred not only for retraining an individual, but also tuition, room and board. Tenant v State Farm, 143 Mich App 419 (1985). Again the courts have held:
Whether expenses are reasonably necessary to a plaintiff's rehabilitation is generally a question of fact for the jury.
Nelson v DAIIE, 137 Mich App 426, 231 (1984).
An injured person has the responsibility to seek workers compensation recovery if applicable. Worker's compensation payments are a set off to an insurance company's wage loss payments. It should be noted that Michigan's worker's compensation law provides only 80% of an individual's average weekly wage where the No-Fault Law requires 85% (15% is deducted under the No-Fault Act for taxes). Thus, even if a No-Fault claimant is receiving workers compensation benefits, there may still be a wage differential payable by the No-Fault carrier.
MCL § 500.3107(a) provides in pertinent part:
Subject to the provisions of section 3107(B) work loss for an injured person who is temporarily unemployed at the time of the accident or during the period of disability shall be based on the earned income for the last month employed full-time preceding the accident.
Accordingly, an individual who is not employed at the time an accident occurs can nevertheless receive wage loss benefits if he or she can establish that they were merely "temporarily unemployed" at the time of the accident.
The term "temporarily unemployed" is one which is determined on a case-by-case basis. An individual who was unemployed for eight weeks at the time of the accident and was discharged from his most recent employment because of repeated absenteeism can, if he testifies that he intended to secure employment, qualify as an individual who is temporarily unemployed. Szaba v DAIIE, 136 Mich App 9 (1984). If a claimant demonstrates that he or she would have, but for an injury, been employed irrespective of the fact that he or she has no prior work history, then that person is entitled to lost wage benefits. Gobler v Auto Owners Ins Co, 428 Mich 51, on remand 162 Mich App 717 (1987).
An individual who at the time of an accident had not been employed for nearly two months, his/her previous job lasted less than three months, and he/she had a "casual employment history," is not an individual who is "temporarily unemployed." Davis v State Farm Mutual Ins Co, 159 Mich App 734 (1987). If an insured who receives PIP benefits following an accident discovers that his employer hired someone else to fill his job and the claimant can find no work after he was physically able to resume normal activity, the insured is entitled to continuation of wage loss benefits. Nawrocki v Hawkeye Security Ins Co, 83 Mich App 135 (1978).
MCL § 500.3107 (continued)
An injured insured is entitled to receive expenses not exceeding $20 per day reasonably incurred in obtaining ordinary and necessary services in lieu of those that he, if he had not been injured, would have performed during the first three years after the accident. These are "replacement services."
A replacement service claim is difficult to defend. Most claimants, after they have sought counsel, invariably submit some sort of replacement service claim, including but not limited to, the following:
(1) taking out the garbage;
(2) mowing the lawn; and,
(3) cleaning the house.
An affidavit is submitted and the claimant represents to the insurance carrier that he has hired someone or someone has agreed to perform these services at the rate of $20 per day.
In reviewing a replacement service claim, it must be recognized that the money need not be paid in order to make the claim. A claimant need not submit checks or receipts in support of his or her replacement service claim. A claim for replacement services must be supported by facts sufficient to establish an agreement to pay for the replacement services. An estimation of the amount of or value of services is insufficient. Where an insurer pays the insured for replacement services and the insured failed to pay provider of replacement benefits, this evidence tends to show that there was no such agreement. See: Chible v Michigan Mutual Ins. Co., 116 Mich App 116 (1982); Fortier v AETNA Casualty, 131 Mich App 784 (1984).
The first and foremost consideration in evaluating claims for lost wages and replacement services is to determine whether there is any medical support for the inability to work or perform household chores.
MCL § 500.3112
PAYMENT AS DISCHARGE OF LIABILITY
Payment of PIP benefits in good faith to or for the benefit of a person who the insurer believes is entitled to the benefits discharges the insurer's liability to the extent of the payments unless the insurer has been notified in writing of the claim of some other person. Without a court order, the insurance company may pay accrued PIP benefits to the dependents of the injured person or to a surviving spouse.
MCL § 500.3108
MCL 500.3108 provides in pertinent part:
Except as provided in subsection (2) personal protection insurance benefits are payable for a survivors loss which consists of a loss, after the date on which the deceased died, of contributions of tangible things of economic value, not including services, that dependents of the deceased at the time of the deceased's death would have received for support during their dependency from the deceased if the deceased had not suffered accidental bodily injury causing death and expenses, not exceeding $20 per day, reasonably incurred by these dependents during their dependency and after the date upon which the deceased died 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.
Furthermore, as with the case of lost wages, survivor's benefits are payable only for the first three years following the date of the accident.
MCL § 500.3109
In computing the benefits payable to an injured person who makes a PIP claim, the No-Fault Act allows an insurance carrier to deduct benefits provided or required to be provided under the laws of any state or federal government irrespective of whether the policy calls for a "coordination of benefits." MCL 500.3109.
The following is a list of benefits which the courts have determined can be subtracted:
(1) workers' compensation benefits;
(2) Social Security disability benefits; and,
(3) Medicare benefits.
In addition to "statutory set-offs," the No-Fault Act allows an insurer to offer reduced premiums, deductibles and exclusions where an insured obtains other health and accident coverage. These policies are commonly referred to as "coordinated." MCL § 500.3109(a). Under a coordinated benefits policy, the no-fault insurance carrier is secondary and the insurer's health and accident insurance carrier is primarily responsible for the payment of PIP benefits.
MCL § 500.3116
REIMBURSEMENT AND INDEMNIFICATION AMONG
PERSONAL PROTECTION INSURERS; TORT CLAIM
A no-fault carrier may not subtract from PIP benefits because the claimant has a third-party tort claim based on the same accidental bodily injury. A no-fault insurer is not entitled to a lien against any third-party recoveries.
A no-fault carrier is also not entitled to be either reimbursed or indemnified for PIP benefits paid to an insured under most circumstances. A no-fault insurer cannot claim a lien against proceeds accruing from a third-party claim to the extent that an insured realizes recovery for non-economic losses.
The exceptions to the foregoing rule occurs where a tort claim arises outside of Michigan, PIP benefits are paid as a result of damages or injuries caused by an owner or operator of a motor vehicle who did not have no-fault insurance, or where a tort claim arose as a result of an intentionally caused harm to person or property. Under these circumstances, a no-fault carrier paying PIP benefits may seek to recover those benefits.
MCL § 500.3177
RECOVERY OF PIP BENEFITS FROM OWNERS
OR REGISTRANTS OF UNINSURED MOTOR VEHICLES
A no-fault insurer which is obligated to pay PIP benefits as a result of accidental bodily injury may recover these PIP benefits from the owner or registrant of an uninsured motor vehicle. Failure of such person to make payment within thirty (30) days after a judgment is a ground for the suspension or revocation of his or her motor vehicle license.
MCL §§ 500.3151-3153
MCL § 500.3151 states that a claimant filing a claim for PIP benefits "shall submit" to a mental or physical examination by physicians upon request. MCLA § 500.3152 requires that a person so examined is entitled to receive a medical report of the examining physician upon request. The medical report must set out in detail the physician's findings and conclusions. Finally, MCLA § 500.3153 states that although a court is empowered to order an independent medical evaluation, such order may not allow for the arrest of the examinee for disobeying an order to submit to a physical or mental examination. However, the court order compelling a medical or mental examination may preclude the disobedient claimant from supporting or opposing designated claims or defenses pertaining to a mental or physical condition. An order may also allow for a judgment by default against a disobedient claimant together with the assessment of costs to an insurer for its reasonable expenses and attorney fees.
MCL § 500.3142
MCL § 500.3142 provides that PIP benefits are payable as the loss accrues. Benefits become overdue if not paid within thirty (30) days after an insurer receives reasonable proof of the claim and the amount of loss sustained. A no-fault insurer must pay that portion of a claim which is substantiated by reasonable proof. Just because reasonable proof has not been provided with respect to the entire claim does not absolve the insurance company from paying the portion factually supported. All overdue payments bear simple interest at the rate of 12% per annum.
The issue of interest comes into play primarily when an action is tried and the court determines that an individual was entitled to PIP benefits which had not been timely paid by the insurance carrier. It should be noted that a "good faith belief" will not defeat a claim for penalty interest. The only defense to a penalty interest claim is to persuade the trier of fact that "reasonable proof" had not been submitted. Nasser v Auto Club Ins Assoc, 169 Mich App 182 (1980); reaffirmed on rehearing, 171 Mich App 741. Penalty interest may be awarded in addition to statutory judgment interest.