How to Make a No-Fault Claim
Although the actual filing of the claim is relatively straight-forward, there are two principal requirements in which a victim of a Michigan accident must be ready to prove to establish his or her entitlement to these benefits.
The Reasonable Proof Requirement
A no-fault insurance company is not obligated to pay any benefits until the insurer “receives reasonable proof of the fact and of the amount of loss sustained.” See MCL 500.3142(2). If an insurer does not pay benefits within 30 days after receiving such reasonable proof, the benefit is deemed “overdue.”
Under the recent Michigan no-fault insurance reforms passed in 2019, when an insurer receives proof of claim more than 90 days after the service was rendered or expense incurred, the insurer has 90 days to issue payment, as opposed to the regular 30-day payment rule.
Unfortunately, the statute does not define the concept of “reasonable proof.” In one decision, the Michigan Court of Appeals held that a claimant is not required to document “the exact amount of money that is [owed]. The statute requires only reasonable proof of the amount of loss, not exact proof.” See Williams v AAA Michigan, 250 Mich App 249 (2002).
Ordinarily, no-fault insurance companies require that the claimant submit several types of claim forms before payment on a claim is made. Typically, these three forms are:
- an application for no-fault benefits;
- an attending physician’s report form; and
- an employer’s wage loss verification form.
It is advisable for the claimant to provide these forms to the no-fault insurance company so that the claimant cannot later be accused of failing to provide “reasonable proof.”
The Incurred Requirement
No-fault insurance companies have a legal obligation to pay claims for allowable expenses under MCL 500.3107(1)(a) and replacement service expenses under Subsection 3107(1)(c) only when the expense has been “incurred.” The statute does not define the word “incurred.” However, a number of Michigan appellate cases have held that to incur an expense, a person must have either paid for the expense or become legally obligated to pay the expense.
The incurred requirement has been very problematic for many patients, particularly those with catastrophic injuries who require products, services, and accommodations that are very expensive, e.g., handicapper housing, special vehicular transportation, residential facility admission, etc. Unless the injured person has “incurred” expenses for such items, the insurer has no legal responsibility to pay the expense.
There are several ways that patients can “incur” expenses other than by paying the full cost of the item in cash. These include entering into contracts to purchase the product, service, or accommodation or borrowing money to pay for the needed item.
In addition, patients can file “declaratory judgment” lawsuits asking for a court to rule that an insurer will be liable to pay for the cost of certain specific products, services, and accommodations once the injured person has incurred the expense for such items. However, declaratory-judgment actions typically do not permit the plaintiff to recover penalty sanctions under the No-Fault Act for interest and attorney fees. Therefore, declaratory-judgment actions are frequently not as effective as traditional lawsuits for unpaid benefits that are filed after the plaintiff has incurred the expenses which are the subject of a claim.