Michigan’s no-fault system is designed to compensate Michigan drivers for economic damages, such as wage loss and medical expenses, that arise from the operation of a motor vehicle, regardless of fault. Under this system, people injured in a motor vehicle accident recover most of their economic losses directly from their own insurers. In 1995, the Legislature amended the statute to define the phrase, "serious impairment of body function," as "an objectively manifested impairment of an important body function that affects the person’s general ability to live his or her normal life." The definition provided clarity to the courts, as evidenced by the fact that over the course of the next nine years, less than 10 Court of Appeals decisions per year addressed the serious impairment threshold.
The no-fault system also allows for Michigan drivers to recover for non-economic losses, such as pain and suffering, in certain circumstances. The "threshold requirement" to recover non-economic damages is that the claimant has suffered "death, serious impairment of body function, or permanent serious disfigurement." This requirement has existed in the Michigan No Fault Act since it was enacted in 1973. From 1973 until 1995, however, the phrase, "serious impairment of body function," was not defined by the Legislature; therefore, it was subject to a significant amount of interpretation by the courts.
In 2004, however, everything changed. With its controversial decision in Kreiner v Fischer, the Michigan Supreme Court interpreted the apparently clear definition of "serious impairment of body function," and in doing so, threw the no-fault system into a tailspin.
Ruling that the definition of "serious impairment of body function" was ambiguous and therefore subject to judicial interpretation, the Kreiner majority concluded that "the objectively manifested impairment of an important body function must affect the course of a person’s life" so that "the effect of the impairment on the course of a plaintiff’s entire normal life must be considered." Critics of Kreiner maintained that with this decision, the Court essentially added a requirement to the serious impairment threshold that the claimant’s injuries caused a permanent change to the trajectory of his or her life.
Critics of Kreiner also agreed that this interpretation of "serious impairment of body function," limited a victim’s right to recovery beyond the intent of the Legislature, and opened a relatively straightforward law to significant judicial interpretation. Indeed, in the nine years since Kreiner was decided, more than 250 Court of Appeals decisions have addressed the serious impairment threshold. Of those, more than 90 percent relied upon Kreiner to conclude that the injured person did not suffer a serious impairment.
Recently, in an attempt to restore the legislative meaning given to the serious impairment threshold, the Michigan Supreme Court, spearheaded by a new majority, has overturned the Kreiner definition of "serious impairment of body function."
In McCormick v Carrier, the Michigan Supreme Court did away with the Kreiner analysis of serious impairment, and ruled that the unambiguous definition of the phrase speaks for itself. The McCormick Court concluded that a man who suffered a complex fracture to his ankle when he was run over by a truck, requiring extensive surgery and a 19-month absence from work, met the serious impairment threshold, even though his case had been dismissed for failure to show a serious impairment under the Kreiner test.
Attorneys representing plaintiffs and defendants alike had eagerly awaited the McCormick decision since January, when the Michigan Supreme Court heard argument on the case. Since release of the opinion just before midnight on August 1, 2010, both sides have hotly debated the impact that the decision will have on no-fault cases in Michigan.
While only time will tell the true impact of the Court’s ruling in McCormick, supporters of the decision hail it as a return to the original letter of the law. What’s more, supporters suggest that McCormick may ultimately lead to less litigation. Before the release of the McCormick decision, no-fault insurers had denied claims that, prior to Kreiner, would have met the serious impairment threshold . For example, during the Kreiner era, insurers succeeded in denying claims for compound fractures, fractured vertebrae, and other injuries that had met the serious impairment threshold under the statutory definition of the phrase.
As a result, injured motorists had no choice but to turn to the courts to challenge insurers’ denial of their claims. With Kreiner out of the picture, no-fault carriers must rely on the language of the statute alone when determining whether a claimant has met the serious impairment threshold. Because the statutory threshold is less stringent than the threshold defined in Kreiner, it is possible that fewer claims will be denied and, in turn, fewer lawsuits filed.
Whatever the ultimate impact of McCormick on lawsuits and insurance rates, attorneys across Michigan agree that the decision marks a new era at the Michigan Supreme Court and that the decision is likely just the first of many to have a major impact on the laws of the state. Given the changing tide, it is advisable to consult with an attorney whenever you are involved in an injury accident — regardless of your personal fault — to ensure that your rights are protected.
