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How much must an insurance company pay for an auto accident victim’s transportation services under No Fault?

June 6, 2013 by Steven M. Gursten

Ruling says payment now depends on whether No Fault transportation expenses are related to medical treatment or not – a sucker punch to those who need medical transportation most

ZCD Transportation v. State Farm a sucker punch for auto accident victims needing replacement services

A recent, published opinion by the Michigan Court of Appeals in ZCD Transportation, Inc., v. State Farm Mutual Automobile Insurance Company,  has ruled that the amount that a No Fault auto insurer will have to pay for a seriously injured auto accident victim’s transportation services depends on how those services are characterized:

  • If the transportation services are “directly related” to the victim’s medical treatment, then the services qualify as “allowable expenses” and thus, the No Fault insurer’s obligation to pay is unlimited in both amount and duration.
  • If the transportation services are “solely to maintain” the victim’s “pre-injury quality of life,” then the services qualify as “replacement services” and the No Fault insurer’s obligation to pay is limited to a maximum of $20 per day for only the first three years after the accident.

ZCD was the “jab” in the face.  The knockout punch came from the rather activist Republican majority on the Michigan Supreme Court.  The jab-hook combination – and it is a combination – is particularly significant in light of the other recent Michigan Supreme Court case which changes the law and tosses out the decades-old Michigan law that allowed seriously injured auto accident victims to sue for “excess” replacement services, i.e., reimbursement for replacement services  in excess of the daily and three-year limitations in third-party auto negligence cases.

Just like that, it’s gone.  Seriously injured auto accident victims like Arnie Grinblatt, the plaintiff in the ZCD Transportation case, can’t ask their No Fault insurance companies to pay these transportation services anymore, and they also can’t ask the responsible party who caused their injuries to pay it anymore either.  Because the Michigan Supreme Court took the entire law of excess replacement services away from them.

How sad.  And what a terrible disservice the Court’s activist Republican majority has done to Michigan’s auto accident victims.

For more information, check out Michigan Auto Law’s blog post, “The Michigan Supreme Court’s ‘supreme’ contradiction on excess economic replacement services.”

An auto accident victim’s need for transportation services

In ZCD Transportation, Inc., the issue was whether the transportation services that accident victim Arnie Grinblatt had contracted for were to be compensated as “allowable expenses” or “replacement services.” Replacement services can be performed by family members and can include investment income, housekeeping, lawn and garden maintenance, car maintenance, meal preparation, baby-sitting/child care and driving family members to school and appointments.

Mr. Grinblatt’s accident-related injuries rendered him “too weak to move himself from [his Amigo personal mobility scooter] to the driver’s seat of his van and vice-versa,” thereby making it necessary that he hire ZCD Transportation, Inc., to provide transportation services. As a result of a previous car accident in 2001, Mr. Grinblatt had been “unable to walk and got around using” a scooter prior to the accident that led to his need for transportation services.

Limits on ‘allowable expenses’ & ‘replacement services’

The distinction between the No Fault benefits known as “allowable expenses” and replacement services is significant because there are different limitations on each benefit:

  • Under Michigan’s No Fault Law, “allowable expenses” are unlimited in amount and duration so long as the products, services and/or accommodations that are the subject of the expenses are “reasonably necessary” to an auto accident victim’s care, recovery or rehabilitation. (MCL 500.3107(1)(a))
  • Meanwhile, “replacement services” expenses are limited to a maximum of $20 per day and can be collected only “during the first 3 years after the date of the accident” for those “expenses … incurred in obtaining ordinary and necessary services” that an accident victim would have done for himself or herself “if he or she had not been injured …” (MCL 500.3107(1)(b))

Which type of No Fault benefit covers transportation services?

In ZCD Transportation, Inc., the Court of Appeals clarified that the nature of the need for transportation services determines whether they are paid for as an “allowable expense” with no limitation on amount or duration or as a “replacement service,” which is subject to the $20 per day and three-year limitations:

  • For transportation service expenses to be considered an “allowable expense,” the transportation services must “directly related to [the auto accident victim’s] medical treatment …”
  • However, if the transportation services are “solely to maintain [the auto accident victim’s] pre-injury quality of life,” then the transportation services will be considered replacement services.

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