Allstate loses hyper-technical PIP "loophole" argument and must also defend "serious impairment" claim
Penny Jo Johnson was struck by a motor vehicle driven by an Allstate insured, John Recca. She lived with her mother-in-law, and neither woman owned a car, so Allstate was legally obligated to pay her Personal Injury Protection (PIP) benefits. It would also owe a duty to its insured at-fault, Recca, to pay any non-economic or "excess" economic damages incurred by the victim.Allstate persuaded the trial judge to dismiss Johnson's "serious impairment" claim, arguing that the auto impact had "merely" aggravated her pre-existing seizure disorder and degenerative spine disease and did not cause a herniated disc or head injury. It also persuaded the judge to dismiss her claim for "replacement domestic service" expenses, to the extent that they exceed the three-year, $20.00 per day maximum payable by Allstate as a PIP benefit.
On appeal, the Court of Appeals overturned both of these decisions. It pointed out that logical statutory interpretation of the no fault act rendered the service expenses in excess of PIP benefits an "excess economic loss" payable by the at-fault. In the 36 years since the Michigan no fault act was adopted, we're not aware of any other insurer even questioning this issue.
With regard to the serious impairment claim, the Court noted a conflict of testimony regarding whether Johnson had suffered a herniated disc and whether the surgery she underwent was caused by the motor vehicle trauma. On that basis, it sent the case back to the trial court to be evaluted pursuant to the 2010 McCormick decision interpreting the no fault threshold for suit.