Court rules SMART bus accident victim was right to file notice of No-Fault claim with SMART bus, not with his mother’s insolvent car insurance company
Does Michigan’s No-Fault Law require a SMART bus accident victim to file his application for No-Fault benefits with a liquidated, insolvent car insurance company?
Of course not.
After all, that wouldn’t be very “SMART,” would it?
But being “SMART” — or more to the point, ridiculously absurd, which is exactly how the Suburban Mobility Authority for Regional Transportation (SMART) normally looks when I write about them on the pages of this auto lawyers blog — is what they did here.
It certainly was ridiculously absurd when SMART took this legal position when Stanley Jackson sought Michigan No-Fault insurance benefits for injuries he suffered in a SMART bus accident.
Specifically, SMART said it shouldn’t have to pay Jackson’s benefits because he should’ve first filed with American Fellowship Mutual Insurance Company (his mother’s car insurance company) — even though the insurer had already been liquidated and ceased to exist at that point.
The Michigan Court of Appeals in Jackson v. Suburban Mobility Authority for Regional Transportation politely agreed that SMART was being ridiculously absurd. The appellate court notes:
- “SMART argues, in effect, that because American existed at the time of the injury [and] for a time thereafter, plaintiff was obligated to file a claim against American, even after American became insolvent, in order to proceed against SMART. This argument elevates procedure over substance. As discussed [i.e., “in theory American should have been a higher-priority insurer than SMART”], it might be accurate had American still existed when the no-fault limitations period expired; however, that limitations period did not obligate plaintiff to provide notice or file a claim until after it was no longer possible to proceed against American in any way. SMART’s argument would at this point simply mandate jumping through useless procedural hoops.”
- “In any event, a no-fault insurer may not deny benefits on the basis of a potentially existing higher-priority insurer.”
The court’s ruling in this SMART case was, indeed, smart because it slams the brakes on an abuse that I, as well as other Michigan lawyers who help people injured in bus accidents, see SMART and other bus companies too often trying to pull off.
These bus companies are essentially trying to game he No-Fault system’s priority rules to try to avoid having to pay benefits to seriously injured bus accident and bus crash victims.
The Jackson case is an example of this, with SMART trying to argue that a bus accident victim should’ve tried to get benefits from a defunct insurance company that no longer even existed. If SMART’s position was accepted, it could have meant utter devastation to the individual injured in the bus accident, as all of his No Fault PIP benefits would likely have been time-barred by Michigan’s harsh one-year statute of limitations on incurred No Fault benefits. That means all of the doctor and hospital bills would be lost, and the bus accident victim would have been personally responsible for all of it, as well as losing all the incurred wage loss and other No Fault benefits that would have also been lost.
Michigan Bus Accident Attorneys better get “SMART” when dealing with SMART
This case presents an all too common example of how SMART and other bus companies — and auto insurance companies, too — will throw logic and common sense to the side of the road if they think it will help them avoid their No-Fault obligations. Unfortunately, as I’ve written about in the past, this position has usually ended well for SMART and other Michigan bus companies.
Who pays for a bus crash victim’s Michigan No-Fault benefits?
Under Michigan’s No-Fault law, a bus accident victim — just like with a car crash or truck accident victim — MUST file an application for No-Fault benefits with the proper car insurance company within one (1) year from the date of the accident, or you will forever lose any benefits to which you might be entitled.
The No-Fault Law’s “priority” rules determine what the “proper” auto insurance company is. Generally, the rules provide:
- First priority — No-fault insurer of injured occupant
- Second priority — No-fault insurer of injured occupant’s spouse
- Third priority — No-fault insurer of resident relative of injured occupant
- Fourth priority — No-fault insurer of owner or registrant of the vehicle occupied at the time of the accident
- Fifth priority — No-fault insurer of the operator of the vehicle occupied at the time of the accident
- Sixth Priority — Michigan Automobile Insurance Placement Facility
Who pays for an uninsured bus crash victim’s No-Fault benefits?
This is the situation that Stanley Jackson, the SMART bus accident victim in Jackson, found himself in.
Because he was uninsured and didn’t have his own auto insurance or auto insurance through a spouse, he was insured through his mother’s American Fellowship Mutual Insurance Company policy — because he lived with his mother and she is a “resident relative” under Michigan’s No Fault Priority law.
However, when American Fellowship was liquidated and ceased to exist, Jackson no longer had No-Fault coverage.
Under No-Fault’s normal “priority” rules, he would’ve applied for benefits through the Michigan Automobile Insurance Placement Facility.
But under No-Fault’s “Vehicles in the Business of Transporting Passengers” exception, because Jackson was injured in a bus accident on a SMART bus and because he had no other source of insurance, he was entitled to seek benefits through SMART.
