Motorcyclists Can Stack No-Fault PIP Coverage In Michigan

Michigan motorcyclists can “stack” No-Fault PIP medical coverage so that when they use up No-Fault benefits from a higher-priority insurer they can seek additional benefits from a lower-priority insurer that provides more expansive coverage, according to the Michigan Court of Appeals.

In Mary Free Bed Rehabilitation Hospital v. Esurance, the Court of Appeals ruled that an injured motorcyclist or his or her treatment provider whose medical expenses have exhausted the $250,000 No-Fault PIP medical coverage “limit in the policy of a higher-priority insurer, may move down the priority list and claim additional benefits from a lower-priority insurer that provides unlimited coverage.”

This is a great opinion for motorcyclists who continue to be disadvantaged by Michigan’s No-Fault law.  Our law in Michigan forces injured motorcyclists to first seek No-Fault benefits from the insurer of the vehicle owner or driver who hit them, before they can seek coverage from their own auto insurance policy. 

This is also a commonsense ruling. Before this, an injured motorcyclist would be limited by random chance to the medical coverage of whatever the policy was of the motor vehicle that struck them, even if that policy was clearly inadequate for their medical needs, and even though their own auto insurance policy (with policy limits that they chose for themselves specifically to protect them if they were ever injured in a crash) would provide adequate insurance coverage to ensure they have the necessary No-Fault benefits.   

Injured motorcyclist seeks to stack No-Fault coverage from Esurance and USAA

Aaron Slade was riding his cousin’s motorcycle when he was catastrophically injured in a head-on collision with a car that was owned and being driven by its owner, Haley Tanner.

Slade suffered serious injuries, including a traumatic brain injury. He was treated at several facilities and, then, ultimately, was transferred to Mary Free Bed Rehabilitation Hospital for inpatient rehabilitative care.

Under Michigan law, Slade sought No-Fault benefits to pay for his medical care from Tanner’s auto insurance company, Esurance.

Esurance paid out the maximum under Tanner’s No-Fault PIP medical policy – $250,000 – but then refused to pay more because the policy’s coverage had been exhausted.

Slade then sought No-Fault benefits from USAA, which covered Slade through his father’s policy. Slade lived in his father’s household at the time of the crash. The USAA policy provided unlimited No-Fault PIP medical benefits.

USAA denied coverage, insisting that Esurance was the higher-priority insurer under Michigan law and that Esurance had already provided the coverage that Slade was entitled to. Once Slade had used up the coverage under the Esurance policy, USAA argued, he was done.

In other words, USAA took the position that the No-Fault law did not allow Slade to “stack” the Esurance and USAA policies – meaning that Slade should not be permitted to seek No-Fault benefits from USAA after he had exhausted the Esurance policy’s limits.

The trial court agreed with USAA.

Which insurance company pays for an injured motorcyclist’s No-Fault benefits?

Generally, Michigan’s auto No-Fault insurance law provides that if a motorcyclist is injured in an accident “that shows evidence of the involvement of a motor vehicle,” then the motorcyclist will recover No-Fault benefits to pay for medical bills and lost wages from the following insurers in the following order of priority:

• First, the “insurer” of the owner of the motor vehicle involved in the accident (MCL 500.3114(5)(a))

• Second, the “insurer” of the operator of the motor vehicle involved in the accident (MCL 500.3114(5)(b))

• Third, the “motor vehicle insurer of the motorcyclist operator involved in the accident” (MCL 500.3114(5)(c))

• Fourth, the “motor vehicle insurer” of the motorcycle’s owner or registrant (MCL 500.3114(5)(d))

• Fifth, if no insurance coverage is available through any of these sources for the motorcyclist, then an injured motorcyclist will have to file a claim for No-Fault benefits with the Michigan Assigned Claims Plan. (MCL 500.3114(6))

The “order of priority” for the payment of No-Fault benefits clarifies the order in which auto insurance companies are obligated to pay benefits to injured motorcyclists.

Stacking is permitted if coverage from the highest-priority insurance is used up

The Michigan Court of Appeals, in its published ruling in Mary Free Bed Rehabilitation Hospital v. Esurance, ruled that “an injured motorcyclist or treating medical provider may recover from lower-priority insurers under MCL 500.3114(5) when the PIP benefits of higher-priority insurers are exhausted.” This is commonly referred to as “stacking” policy coverages.

This is particularly important when the higher-priority insurer has less coverage than a lower-priority insurer.

To this point, the Court of Appeals stated:

• When the No-Fault PIP medical benefits that are “sought exceed the first-in-priority insurer’s policy limits” and “when a lower-priority insurer has a higher limit [such as unlimited No-Fault PIP medical], we hold that the plain language of MCL 500.3114(5) allows an injured motorcyclist or their treating medical provider to recover from such lower-priority insurers once coverage by a higher-priority insurer is exhausted.”

• “This is because nothing in the language of Section 3114(5), which sets out a sequential list of insurers, prohibits continuing down the priority ladder to obtain benefits if a higher-priority insurer’s policy is inadequate.”

The court explained that its ruling furthers the goals of the No-Fault law:

• “To deny an injured motorcyclist access to their own unlimited-coverage policy, should a higher-in-priority policy associated with the accident vehicle be capped, runs counter to the spirit of the no-fault act . . .”

• “Our reading also accords with the act’s purpose of providing those injured in car accidents ‘assured, adequate, and prompt’ coverage to which they have a claim [citing the Michigan Supreme Court’s ruling in Shavers v. Attorney General], by not limiting an injured person to an inadequate policy just because it happens to be higher in priority when another policy provides more coverage.”

Finally, the court noted that Michigan’s No-Fault law contains no “stacking” prohibition. Under a previous version of the law, the No-Fault law had “an ‘antistacking’ provision,” but after a drastic legislative overhaul of the law in 2019, “the no-fault act no longer contains this bar on stacking coverage.” 

Significantly, the court observed that: “The Legislature could have chosen to retain an antistacking provision to prevent motorcyclists from stacking policies to recover benefits from multiple insurers in different orders of priority, but it did not.”

Injured in a motorcycle accident in Michigan? Call our attorneys now!

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