SUMMARY

Any time a person suffers injury, his or her rights are determined by the context of the injury and in most cases, these rights are defined by state law. For example, the rights of an injured employee against his employer are defined by workers compensation rules. If someone is hurt in a car accident, their rights are defined by the no fault law. Special tort “reform” statutes have placed limitations on medical malpractice and product liability recoveries and other “reform” rules apply to comparative negligence, alcohol abuse and other particular situations.

Michigan generally does not allow punitive damages for injury claims and places limitations on non-economic damages. A death claim must be pursued by the Estate of the decedent, usually, and not by the “heirs”.

In many situations, the injured person’s recovery may be claimed by ERISA insurers and other lien-holders who have paid medical or wage loss expenses. The injured person must exercise great care in resolving claims, so that substantial rights are not “waived” .

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LIMITATIONS ON RECOVERY

Workers Compensation, Social Security and bargained-for benefits

For the most part, we will discuss compensation in the civil lawsuit context. These clients may also have the right to receive “collateral” benefits from another source. Normally, these benefits are not mutually exclusive, however, the injury victim is normally not allowed a “double recovery”. Thus, it is not uncommon for a successful injury claimant to be obligated to repay another insurer or governmental entity the expenses it incurred.

The recovery in most of the above systems is almost always drastically reduced in return for the guarantee of a minimal payment. Thus, for example, an injury suffered at work will result in payment of limited wages, without regard to comparative negligence or assumption of the risk. Damages awarded under these systems must be evaluated separately by a knowledgeable practitioner.

Punitive damages

Unlike many states, Michigan rarely allows for the recovery of punitive damages. Punitive damages are virtually never allowed in personal injury cases, with a very few exceptions involving intentionally insulting behavior. Punitive damages may be allowed under certain circumstances involving property damages, such as in the wrongful taking of timber resources. The courts do not approve punitive damages as a matter of course and will only allow them to be awarded where there is a statute expressly providing for punitive damages or a Court Rule that allows for the recovery of sanctions to compensate for avoidable legal expenses.

Many states consider that the award of punitive damages stands as a public policy deterrent to intentionally unsafe behavior. (Thus the infamous verdicts involving the Ford Pinto, trucks with saddle-bag gas tanks, and McDonald’s coffee served take-out at unsafe temperatures.) Michigan has always rejected this approach to deterring unsafe products or actions and has never systematically allowed this form of damages.

Compensatory damages

Virtually all Michigan injury damage law is founded on the concept of fair compensation for suffering expense, financial loss or significant personal discomfort due to the fault of another.

Economic loss

The wrongdoer is required to “make good” the victim’s loss of wages, lost medical expenses, lost domestic services, and loss of enjoyment of life. In the auto context, wages for injured persons are normally limited to historical earnings or demonstrated future loss. Temporarily unemployed injured people are compensated based upon their last month of full time employment. .In an auto death case, the family can recovery losses of “tangible things of economic value”, which can include health coverage and retirement benefits, for example, in addition to wages..

In all other non-auto contexts, lost earnings are defined by the loss of “earning capacity” This measure is far more fair to unemployed people, persons who work in the home, retired people and young people whose careers have not yet developed.

Non-economic loss: In appropriate cases, the victim can be compensated for less measurable damages, such as pain, anxiety , humiliation or loss of mobility, for example. Some people believe that this loss, in general, is best summarized as the “loss of the normal enjoyment of life”.

In the context of automobile injuries, the victim cannot recover compensation for non-economic damages unless he or she has suffered a “threshold” injury: either death, permanent serious disfigurement, or a serious impairment of a bodily function. The latter “serious impairment” standard has been the source of a great deal of litigation and dispute. It requires proof of an objectively manifested injury, and a recent decision by a majority of the Michigan Supreme Court would require that the “serious” injury have “life-altering” impact. It need not be permanent to be serious, but the length of time the injury continues is a significant factor to be considered. “Serious injuries” cannot be proven by pain alone, and frequently the court will not take into account the self-restriction of painful or unsafe activities: the “reform” courts insist that restrictions must be imposed by a treater.

Other compensation systems for negligent wrongful conduct do not have an injury threshold and allow all injured persons to bring legal action. In practice, though, most “minor” injuries do not warrant the expense and difficulty of litigation. As a result, most cases are only economically viable if they seek redress for serious or significant injuries. Small injuries resulting from negligent conduct can sometimes be negotiated by the parties directly or occasionally with the help of an attorney. Although it is dangerous business for an injury victim to negotiate his own claim, in the case of smaller claims, sometimes it is the only reasonable alternative.

Liens and collateral sources

Part of the tort “reform” movement that started in the 1980s was an effort to limit all injured persons to “one recovery”. If similar damages are payable to an injury victim through privately-purchased insurance, a hearing will normally be held at the conclusion of litigation. If the private payor demands repayment, the wrongdoer or his insurer will be obligated to satisfy the judgment, and that share of the judgment will be turned over to the company with a lien. If the private payor has no subrogation or repayment rights, the amount of its payment will be deducted from the verdict owed by the wrongdoer, with an adjustment for premiums paid by the victim. In essence, the protection purchased by the victim prior to the injury inures to the benefit of the wrongdoer, and the victim’s lawsuit inures to the benefit of the health insurer.

Most medical providers, including Blue Cross, Medicare, Medicaid, workers compensation, and ERISA health insurance or wage continuation plans have statutory or contractual provisions for the re-payment of the medical and wage obligations they have incurred. Usually, under these systems, the payor must bear its share of the expense of litigation, however, under some statutory systems this is not mandatory. Further, these “lien” rights apply to the first dollar collected by the victim regardless of the nature or extent of the recovery. Thus it sometimes happens that a lien holder will claim the entire insurance policy available to the victim, and there is no recovery available to pay for lost wages or pain and suffering. More frequently, some form of compromise is effected between the lienholder and the injury victim.

It is absolutely essential that lien issues be considered prior to settlement if possible so that decisions may be made with a full understanding of the impact of the lien and an understanding of the likely net recovery. Sometimes, particularly with aggressive insurers or non-responsive bureaucracies, this is simply not possible.

“Caps”

During the height of tort “reform” in Michigan, statutes were enacted that limited non-economic damage recoveries in Product Liability and Medical Malpractice. The original limits were as low as $280,000.00 in some circumstances and no higher than $500,000.00, and applied regardless of death or severe injury. These limits are tied to inflation and increase on an annual basis.

Under most statutory provisions, the jury is not informed of the cap on non-economic damages, and the victim’s attorney is not allowed to explain the concept. After the verdict, the recovery is simply reduced to the “capped” judgment.

One sad byproduct of such caps is a willingness by “capped” insurers to gamble. As a practical matter, if an insurer faces no risk of a “runaway jury” and knows that it will ultimately pay no more than a certain limited amount to satisfy a verdict, it will often reject any reasonable settlement offer and attempt to negotiate only for fifty cents on the dollar. As a result, the “effective” cap is significantly smaller that the actual cap and the injury victim is presented with a Hobson’s Choice: take substantially less than the law allows, or incur substantial risk and expense to obtain what the law provides.

Coverage Limits

Although there are few caps in the automobile context (with the noteworthy exception of a $20,000.00 per injury limit on any recovery against automobile rental businesses), most drivers purchase only a small limit of auto liability coverage. Since most people are essentially judgment-proof beyond their insurance, and since most insurers won’t pay their insurance coverage without a release of their insured, there is a de facto or practical cap on compensation for most automobile-related injuries. Under auto coverage, the insurer is normally obligated to pay a judgment to the coverage limit and to present a defense on behalf of the insured. It will not agree to pay the coverage amount, normally, unless it can also walk away from its defense obligation by securing the release of its insured.

By law, the injury victim and her attorney are not allowed to inform the jury of the fact of insurance or of the operative limits. The insurance companies believe, accurately, that this holds down verdict amounts. In the case of individuals, especially, the jurors express concern after trials that the wrongdoer may not have coverage or that his or her limit of coverage may be inadequate. For this reason, they will frequently compromise on a smaller “safe” compensation award. As one juror told us after a verdict “I knew that the question of insurance coverage was important, and I figured if you didn’t explain the coverage levels to us, that must mean that you didn’t like the low limits: so I figured there was a small policy, if any. You should have told us what the limits were.” Believe me, we’d like to give that information to jurors; they can be trusted to make reasonable, unbiased decisions if they know the truth.

Consortium

The law recognizes that spouses and children have primarily non-economic injury claims that are “derivative” of the injuries suffered by a loved one who is badly hurt. These claims are all included within the single limit of insurance coverage for injury, and are the basis in wrongful death cases for the family members’ “loss of society and companionship”. Thus, for example, if a wife and mother is killed in a motor vehicle collision and the wrongdoer has insurance limits of $100,000.00 per injury/$300,000.00 per incident, the family of the woman (including husband, children, siblings, parents, grandchildren and heirs) must SHARE the injury limit of $100,000.00. They have not suffered separate “injuries”, but only derivative injuries (unless they witnessed the death).

In the case of serious injury, the law recognizes that there is injury to the marital relationship of the spouse, as well. This consortium claim may include loss of enjoyment and activity; it may include loss of domestic services; it may include loss of sexual function. The most compelling spousal consortium claim arises when the spouse has suffered all of these losses and is also “sentenced” by another’s negligence to provide long-term care to a catastrophically injured loved one.

Recovery for losses in a commercial case

If your business has to sue because of a breach of contract, you should be aware that your right to recover damages is limited by Michigan law. You cannot, for example, recovery for any emotional distress suffered as a result of someone's breach of a contract. Generally, you will be limited to damages that could reasonably have been expected to arise as a result of the breach of the contract. The lawyers at Thompson, O'Neil & VanderVeen, P.C. can explain your rights to you.

STATUTES OF LIMITATION

Whenever the law grants a right to seek recovery for wrongdoing, it also places restrictions on how long the victim has in which to take legal action. If the victim delays too long in seeking compensation, he is said to have “slept on his rights” and his claim will not be heard. These limits are called “statutes of limitations” and they vary depending on the nature of the wrong that was committed. In many cases, there are other limitations on taking legal action, as well.

If you or a loved one has been injured, it is important that you promptly contact a qualified personal injury lawyer to investigate your rights so that you do not lose your right to recover damages.

You can review the time limits here.