When Insurance Companies and Adjusters Abuse No-Fault PIP Cases
The premise behind the Michigan No-Fault law when it was enacted in 1973 was the striking of a balance between the more generous payment of essential needs, such as payment of medical bills and wages after a car accident, offset by making it more difficult to sue the negligent driver who caused the accident by requiring the injuries suffered rise to the level of a threshold test. This test for personal injuries following a Michigan car accident was called a “serious impairment of body function.” Timely payment of medical bills and wage loss by one’s own No-Fault insurance company was balanced by making it more difficult to sue the insurance company of the driver who caused the accident. It has not always worked out as was intended.
Michigan is one of the few states that does not allow lawyers to claim punitive damages when benefits are wrongly denied, no matter how egregiously the denial. Michigan also does not allow Michigan personal injury lawyers to file claims under the Michigan Consumer Protection Act, or for infliction of emotional distress against an adjuster who either deliberately or indifferently refuses to pay Michigan first-party PIP benefits that are due and owing. Short of filing a first-party PIP lawsuit seeking interest and attorney fees, there are very few mechanisms available for Michigan attorneys to ensure that adjusters and insurance companies follow the law.
These significant limitations for Michigan lawyers attempting to help people who have suffered personal injury or wrongful death in car accidents have led to significant abuse since the Michigan No-Fault Act became law in 1973. Insurance companies and adjusters now routinely engage in practices that were never contemplated when the law took effect. And, short of the payment of interest and attorney fees on claims that these adjusters and insurance companies should have paid anyways, there is almost no penalty mechanism available for Michigan lawyers when adjusters choose to ignore the law.
Some adjusters now like to set up quick “independent medical examinations” or IMEs with notorious defense doctors who almost always find the claimant is able to return to work and does not need further medical treatment. These “cut off” exams, performed in the first months after a car accident, allow insurance companies to terminate benefits. It also allows the adjusters to refuse to pay for necessary medical treatment. For an injured person without other health insurance, it can become very hard to ever get the expensive medical diagnostic testing and treatment with medical specialists necessary to make a recovery from a serious car accident. Early “cut-off” examinations are one example of an abuse that was never intended or contemplated when our laws took effect, and short of hiring a Michigan attorney to file a lawsuit within one year of the termination or suspension of benefits, there is very little that can be done.
Another common abuse is to schedule these examinations with defense doctors just before an expensive medical procedure such as major surgery. With the costs for some of these operations running in the tens of thousands of dollars, almost no hospital or surgeon will agree to proceed with such a procedure without written pre-approval from the No-Fault insurance company that they will pay. And, since Michigan law requires an insurance company to pay only “incurred” expenses, the insurance company does not need to give pre-approval even when requested. The effect is that the insurance company can effectively delay needed medical treatment such as surgeries by setting up these examinations. Again, the only recourse a Michigan personal injury attorney has in these situations, once the procedure has been incurred, is to file a lawsuit and seek interest and attorney fees on the incurred, owing expenses that the insurance company should have paid from the beginning, or file a declaratory action that can take considerable time.