One chart says it all after after Garrett v. Washington and State Farm: How Uninsured Motorist lawsuits are completely different from first-party No Fault (PIP) lawsuits
Yesterday, I wrote about State Farm’s attempts to avoid paying out on ‘uninsured motorist’ cases. The latest case involves the giant insurance company being rejected for the third time by the Michigan Court of Appeals in Garrett v. Washington and State Farm Mutual Automobile Insurance Company. But the manner in which the Garrett Court rejected this latest attempt by State Farm – and the erroneous reasoning behind it – is a major cause for concern for all personal injury lawyers who litigate car accident cases.
As I discussed yesterday, the Garrett Court again stopped State Farm’s attempt to avoid paying a claim for “uninsured motorist” benefits. The problem is that the three appellate judges said – unlike the two previous decisions that strongly rebuked State Farm – they didn’t think there was anything wrong with what State Farm was doing. In fact, the Garrett appellate judges went one step further. They also wrote that they would have ruled in State Farm’s favor — if they weren’t bound by law to follow the court’s previous rulings in identical cases.
Where the judges get it wrong, and the very dangerous mistake they are making in Garrett, is in failing to appreciate that an uninsured motorist claim is completely different from a lawsuit for first-party No Fault PIP benefits.
These substantial differences – including that Michigan has an injury threshold law that auto accident victims are required to meet before they can recover monetary compensation for injuries and pain and suffering, whereas there is no injury threshold test required for a first-party lawsuit – are explained in Court of Appeals’ published opinions of Adam v. Bell and State Farm Mutual Automobile Insurance Company and the unpublished opinion in Miles v. State Farm Mutual Automobile Insurance Company. I quote extensively from both cases in the analysis I posted yesterday.
State Farm did not asked the Michigan Supreme Court to review either the Miles or Adam rulings. Which is, well, strange. By not seeking Supreme Court review, most lawyers would reasonably conclude that State Farm did not disagree with the previous two rulings on the issue.
For now, attorneys must expect that one way or another, this issue of whether an uninsured motorist lawsuit must be filed with a lawsuit seeking No Fault benefits will, ultimately, end up before our state’s high court.
Practice tips to protect Uninsured Motorist cases
The most simple protection for auto accident attorneys – both for now and until the Michigan Supreme Court weighs in – is to include specific carve outs for uninsured/uniderinsured motorist coverage (UM/UIM) cases in all No Fault PIP claim settlements and releases.
A specific carve out that excludes any later claim for uninsured or underinsured motorist coverage protects the accident victim if his or her injuries continue to worsen or reach a point that a later claim for injuries and pain and suffering becomes viable, for example.
There are many other reasons why it makes logical sense for attorneys to wait and not file an uninsured motorist lawsuit together with a PIP/No Fault lawsuit. Another example might be needing to wait to see the full extent of the injuries and disability so an uninsured motorist claim can also include a claim for excess economic losses (this would be filed as part of the uninsured motorist case if it looks like an accident victim will have a total or partial disability that will prevent a return to work). File an uninsured (UM) lawsuit too quickly, such as with an early lawsuit for PIP benefits if an insurance company is refusing to pay an outstanding medical expense or wage loss – as the Garrett Court mistakenly believes should be done – and the entire claim for excess economic losses that would be brought as part of an uninsured or underinsured lawsuit would be lost.
Teaching the Court: How No Fault PIP lawsuits differ from ‘uninsured motorist’ lawsuits
Below is a chart reflecting the substantial differences that the Miles and Adam Courts detailed between No Fault PIP benefits (i.e., reimbursement for medical expenses and wage loss, replacement services, medical mileage, and attendant care) and “uninsured motorist” coverage (i.e., providing bodily injury coverage to an injured auto accident victim in the event that the at-fault driver who caused the accident was not insured or if the insured is involved in a motor vehicle accident with a hit and run driver).
