Under the Michigan No-Fault Insurance Act (the "Act"), a person who is injured as a result of a motor vehicle accident must first look to his own insurance company for recovery of "economic losses" such as medical bills, rehabilitation expenses and lost wages and survivor's losses. Recovery for lost wages is limited to three years under the Act. All owners of motor vehicles in the State of Michigan are required to have no-fault insurance coverage on the automobile.

If the no-fault insurance company ("no fault carrier") does not pay economic losses caused by the motor vehicle accident, the injured party may sue the no fault carrier in a court of law. This type of lawsuit is commonly called a "first party action." Such a lawsuit is required to be filed within a period of one year following the no-fault carrier's failure to pay the disputed expense. Such a period is commonly called the "statute of limitations."

The injured party or survivor also has the right to seek recovery of any economic losses in a tort action against the party whose negligence caused the injuries to the extent that such economic losses exceed the maximum amounts required to be paid by the no-fault carrier. Such losses can be recovered against the negligent party without having to meet the "tort threshold" required for recovery of "non-economic damages."

RECOVERY OF "NON-ECONOMIC LOSSES" AGAINST THE NEGLIGENT PARTY

When we refer to "non-economic losses," we refer to those losses which are not capable of exact mathematical computation. Common examples are the "pain and suffering," "loss of enjoyment of life," and "mental anquish" of the seriously injured party or the "loss of love, society and companionship" of the next of kin of a person who lost his or her life in a motor vehicle accident. In order to seek recovery of "non-economic losses" from the driver or owner of the other motor vehicle, the injured party must meet certain requirements referred to as the "tort threshold." The term, "tort" refers to an action seeking recovery for damages caused by a person's negligence or other wrongful conduct.

The tort threshold under the No-Fault Act requires the injured party to prove EITHER (1)that the injured party has suffered a serious impairment of body function; OR (2) that the injured party has suffered a permanent serious disfigurement; OR (3) that the injured party died.

Under the Act, the phrase serious impairment of body function is defined as "an objectively manifested impairment of an important body function that affects the person's general ability to lead his or her normal life." Basically, the impairment must be shown to be objectively manifested, involve an important body function, and have an impact on the injured party's lifestyle.

The Act does not define the phrase important body function. A number of appellate court opinions under the former Act held that injuries involving fractures of weight bearing bones in the legs, injuries to the neck, and injuries to the back, all involve important body functions. In some cases, bone fractures which readily healed, and left no permanent disability, were held not to constitute the impairment of an important body function.

Nothing in the Act requires an injured party to prove that his or her impairment is "permanent," and former Michigan appellate court opinions have held that an impairment "need not be permanent to be serious." Obviously, in the case of a permanent serious disfigurement, the disfigurement must be shown to be permanent in nature.

If the injured party has died as a result of his injuries, the claim against the negligent party must be brought on behalf of the deceased person's estate in what is commonly called a Wrongful Death Action. The lawsuit is filed by the Personal Representative of the estate who is appointed by the Probate Court. Those persons who are entitled to share in the monetary recovery (the Next of Kin) are defined in the Michigan Wrongful Death Act.