Passenger Injury With Coordinated Michigan No-Fault Coverage
On March 9, Maya is a passenger in the car driven by her friend Drew. Drew’s Michigan auto policy has $250,000 in PIP medical coverage and is coordinated with health insurance. Maya has her own Michigan auto policy with unlimited PIP, also coordinated, and employer health coverage. The other driver, who ran a red light, has $100,000 bodily injury limits. Maya’s accident-related medical bills are $180,000; her health insurer has paid $90,000 and denied the remaining $90,000 as out-of-network. Maya misses 11 weeks of work and claims $22,000 in lost wages. Drew’s car has $4,200 in damage and a $1,000 collision deductible. Maya also asks Drew’s insurer to pay $3,000 for “pain and suffering” and the car damage because she was in the car. Drew’s insurer asks how to coordinate the medical bills and what it owes.
1. Which insurer is first in priority for Maya’s PIP medical benefits, and does Maya’s own auto policy or employer health plan change that?
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Under Michigan's no-fault priority rules, the insurer of the owner or registrant of the vehicle occupied by the injured person is first in priority. Maya was a passenger in Drew's car, so Drew's insurer stands first for PIP benefits, not Maya's own auto insurer. Maya's own policy is not primary merely because she has one.
Health insurance matters because Drew's policy is coordinated. Coordination means the PIP insurer pays only allowable expenses not covered by the health plan, subject to the no-fault fee schedule. If Drew's policy were uncoordinated, it would pay without regard to Maya's health coverage. Maya's employer health coverage is therefore relevant to the amount Drew's PIP pays, but it does not change the first-priority insurer.
2. How should Drew’s PIP adjuster handle the $180,000 in medical bills given coordination, the out-of-network denial, and the $250,000 limit?
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Step 1: Verify the health plan's payments and denials. The health insurer paid $90,000 and denied $90,000 as out-of-network. The adjuster needs the EOBs, the policy's coordination provision, and the provider bills.
Step 2: Apply coordination. Drew's PIP is responsible for allowable expenses not paid by the health plan. An out-of-network denial does not automatically shift the full billed amount to PIP; the adjuster applies the no-fault fee schedule and pays the allowable amount.
Step 3: Apply the $250,000 limit. The remaining allowable amount, after fee-schedule reductions, is payable up to the limit. If the limit is exhausted, the adjuster must identify the next priority source, but do not assume Maya's own policy is next without checking the statute and policy.
Step 4: Pay lost wages separately. PIP pays 85% of lost wages, subject to the monthly maximum, not the medical limit. Verify the 11-week wage loss.
3. What, if anything, does Drew’s insurer owe for the car damage, Maya’s pain and suffering, and Maya’s lost wages?
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Car damage: Drew's collision coverage pays $3,200 ($4,200 minus $1,000 deductible). Maya does not own the car and has no claim for its damage. Drew may seek the $1,000 deductible from the at-fault driver's insurer under Michigan's mini-tort rule, up to the $3,000 cap. He cannot collect the full $4,200 from mini-tort if collision already paid the balance.
Pain and suffering: No-fault PIP does not pay noneconomic damages. Maya may pursue the at-fault driver's bodily injury liability only if her injuries meet Michigan's tort threshold (death, serious impairment of body function, or permanent serious disfigurement). Drew's insurer owes nothing for that.
Lost wages: PIP pays 85% of $22,000, or $18,700, subject to the statutory monthly maximum and proof of wage loss. The adjuster should not pay the full $22,000.