A Deeper Dive: PIP in the State of Michigan
As you may recall, Weltman recently posted a blog entitled Know Your Subrogation Rights with MedPay and PIP, which was a follow up to our recent #AskaPro webinar on the same subject. The blog recapped some of the key answers provided by our panel of subrogation attorneys. Due to many follow-up questions and interest in the area, Michigan attorney Thomas (Tom) Duquette and shareholder Tiffani Palmer wanted to dive a bit deeper into Michigan PIP-specific questions!
Michigan has a comprehensive No-Fault Act which mandates PIP coverage for its motorists and restricts tort liability without a showing of a threshold injury. As a result, an injured motorist must normally seek benefits first from its own insurance policy, then from the policy of a spouse or resident relative.
Michigan law permits an insurer to recover all benefits paid to its insured from the at-fault person involved in the motor vehicle accident. This includes, PIP, collision coverage, rental benefits, and uninsured motorist benefits.
In Michigan when an insurer is seeking reimbursement for PIP it has paid, the insurer may bring an action based on traditional tort theory and as a direct action under Section 3177 of the No-Fault Act (MCL 500.3177).
A cause of action brought under Section 3177 is separate and distinct from an insurer’s right of recovery under tort theories of liability. The difference between the two is that Section 3177 provides for reimbursement without considering fault. MCL 500.3177 explicitly provides, in pertinent part, that an “insurer obligated to pay [PIP] benefits for accidental bodily injury… may recover all benefits paid, incurred loss adjustment costs and expenses, and incurred attorney fees from the owner or registrant of an uninsured motor vehicle or from his or her estate.”
How Else Does Section 3177 Help Insurers Collect?
Michigan has a comprehensive No-Fault Act which mandates PIP coverage for its motorists and restricts tort liability without a showing of a threshold injury. As a result, an injured motorist must normally seek benefits first from its own insurance policy, then from the policy of a spouse or resident relative.
How Does This Affect Subrogation?
As stated above, the Michigan No-Fault Act prevents operators and owners of motor vehicles from being subject to certain tort liability arising out of motor vehicle accidents when proper no-fault insurance is in effect. However, there are three exceptions to this immunity - motor vehicle accidents involving uninsured motorists, intentional acts, or out-of-state accidents. For the purpose of this, Weltman Insight, we will focus on the uninsured motorist exclusion.Michigan law permits an insurer to recover all benefits paid to its insured from the at-fault person involved in the motor vehicle accident. This includes, PIP, collision coverage, rental benefits, and uninsured motorist benefits.
In Michigan when an insurer is seeking reimbursement for PIP it has paid, the insurer may bring an action based on traditional tort theory and as a direct action under Section 3177 of the No-Fault Act (MCL 500.3177).
A cause of action brought under Section 3177 is separate and distinct from an insurer’s right of recovery under tort theories of liability. The difference between the two is that Section 3177 provides for reimbursement without considering fault. MCL 500.3177 explicitly provides, in pertinent part, that an “insurer obligated to pay [PIP] benefits for accidental bodily injury… may recover all benefits paid, incurred loss adjustment costs and expenses, and incurred attorney fees from the owner or registrant of an uninsured motor vehicle or from his or her estate.”
What It Means for Our Clients
MCL 500.3177 is beneficial for our no-fault insurer clients because it requires less to prove. Whereas to recover under a traditional tort theory, an insurer must establish that the claimant driver was uninsured at the time of an accident and a majority at fault for causing the accident, the insurer must only show that the claimant owner/registrant vehicle was involved in a motor vehicle accident and that vehicle was uninsured at the time of the subject motor vehicle accident.How Else Does Section 3177 Help Insurers Collect?
The statute also provides that if a judgment is entered against the uninsured owner/registrant and that debtor fails to make payment within 30 days of entry of the judgment, the failure to pay is a “ground for suspension or revocation of his or her motor vehicle registration and license…” This is a powerful statutory collection mechanism for our clients, as it serves as an extremely necessary incentive for judgment debtors to either make payment in full or enter into an installment payment plan.
Our team is constantly monitoring this topic. If you have additional questions or would like to learn more about Weltman’s consumer collections and/or subrogation solutions, connect with Tiffani and/or Tom at any time.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
