The Michigan Supreme Court enforces statutory limits on PIP insurer liability


In Admire v Auto-Owners(May 23, 2013), the Michigan Supreme Court clarified a no-fault insurer’s responsibilities for post-accident expenses. If costs related to care and recovery can be separated from ordinary costs — for example, if an insured can purchase an ordinary van and then add modifications necessary because of his injury — the insurer need only pay for the modifications, not the van itself. As shown below, this result follows from the plain language of the no-fault act.

Under the no-fault act — and as the Court already held in Griffith v State Farm Mut Auto Ins Co a no-fault insurer need only compensate a plaintiff for costs related to “an injured person’s care, recovery and rehabilitation.” The plaintiff in Admire was injured when his motorcycle collided with a car. Consequently, he needed a wheelchair-accessible van. Although the insurer paid for the van and modifications for a few years, it later took the position that it was only liable for the modifications. The van — a transportation cost that was unrelated to the plaintiff’s injuries (unless it was being used to transport the plaintiff to a medical appointment or the like) — was not related to the plaintiff’s “care, recovery, and rehabilitation.” But the wheelchair-accessible modifications were.

The Michigan Supreme Court agreed that the insurer was liable only for the latter costs under the no-fault act. In an opinion authored by Justice Zahra, the Court explained that costs are recoverable only if related to an injured person’s care, recovery, or rehabilitation:

[Any product, service, or accommodation consumed by an uninjured person over the course of his or her everyday life cannot qualify because it lacks the requisite causal connection with effectuating the injured person’s care, recovery, or rehabilitation. An ordinary, everyday expense simply cannot have the object or purpose of effectuating an injured person’s care, recovery, or rehabilitation because it is incurred by everyone whether injured or not.

Moreover, the van was a “combined” product– one in which an ordinary object (the van) was combined with modifications relating to care, recovery, and rehabilitation. A combined product “can be separated easily, both conceptually and physically…” The plaintiff may recover only those costs that “are of a new character and are thus for the injured person’s care, recovery, or rehabilitation.” The analysis might differ if modifications were fully integrated into an ordinary product but the Court did not expand on that distinction in Admire. Admire has a clear bottom line. No-fault insurers must make a careful assessment of expenses claimed by insureds and determine whether each expense is related to “care, recovery, and rehabilitation.” If items necessary for care are integrated into ordinary items, a no-fault insurer need only reimburse the insured for the former.

To use the Michigan Supreme Court’s practical example, if an insured needs special insoles because of an injury under the no-fault act, an insurer need only pay for the insoles, not the shoes.

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