Volume XXIII, No. 3 February 7, 2011

From the Law Offices of Garan Lucow Miller, P.C.

From the Co-Editors
James L. Borin & Simeon R. Orlowski

DEFENDANT PREVAILS UNDER NEW McCORMICK STANDARDS

Fractured thumb, with minor residual impairment,
does not qualify as “serious impairment of body function” –
even under McCormick, Court of Appeals holds.

CONTRIBUTOR – DANIEL S. SAYLOR
By all accounts, the Supreme Court’s decision in McCormick v Carrier, 487 Mich 180 (July 31, 2010), significantly lowered the “serious impairment” threshold for motor vehicle tort claims.  Indeed, many have analyzed the McCormick “test” essentially as having eliminated the threshold altogether.  Yet, according to the Court of Appeals in McManigal v Levosinski, unpublished per curium opinion of the Court of Appeals (No. 283030, January 11, 2011), this cannot possibly be what the McCormick majority intended.  Led by Judge (and now Justice) Brian Zahra, the panel in this case held that McCormick must not be applied in a way that would “render any impairment, even one that prevented a person from engaging in an activity only a few times per year, a threshold injury under MCL 500.3135(1).”

 The plaintiff in McManigal was in a motorcycle-automobile collision that resulted in a fractured right thumb joint.  Although the thumb was successfully treated with two-and-half  weeks of casting followed by a thumb splint for an additional then days, the healed fracture left plaintiff with a mild decrease in his thumb’s range of motion, a mildly decreased grip strength, and, according to his doctor, a “good likelihood” that he would suffer from traumatic arthritis in this joint “in the years to come.”

 In the ensuing law suit, defendant’s motion for summary disposition based on the “serious impairment” threshold was denied.  Ruling in favor of the plaintiff, the trial court found that he “had demonstrated that his injuries had affected his ability to lead his normal life.”  In its first review in 2009, the Court of Appeals reversed, applying Kreiner v Fischer, 471 Mich 109 (2004).  Plaintiff’s appeal to the Supreme Court was held in abeyance pending the outcome of McCormick.  After McCormick was issued, the Court sent McManigal back to the Court of Appeals for reconsideration under the newly established test for determining a “serious impairment of body function.”

 On remand, the Court of Appeals acknowledged McCormick’s rejection of the prior test under Kreiner, which relied on such factors as the nature and extent of the impairment, the extent of treatment required, the duration of the impairment, and any residual impairment.  Instead, said the Court of Appeals, McCormick “requires an examination of the plaintiff’s life before and after the accident in order to determine ‘the effect or influence that the impairment has had on a plaintiff’s ability to lead a normal life[.]’”  The court thus considered plaintiff’s pre-accident life to determine the extent his “impairment” impacted his post-accident ability to lead his normal life.

 Plaintiff had been employed as a property manager for an apartment complex, although he was not working at the time of the accident, as his employment had ended a month earlier.  But less than five months post-accident, plaintiff was hired to manage another apartment complex, and by working on the side as a painter, he earned an income of $75,000 per year over the next two years.

 Plaintiff also was able to resume most of his recreational activities once the cast and splint were removed, including bicycle riding, motorcycling, snowmobiling, hunting, fishing and playing pool.  He indicated, however, that the residual thumb impairment did impact some of these activities to some degree, and it prevented him from being able to bowl.

 Analyzing these before-and-after facts under the new “serious impairment” test, the court acknowledged that McCormick articulated three cautionary points:  First, to meet the threshold, the person’s general ability to lead his preincident normal life only needs to have been affected, not destroyed.  Second, it is not necessary for the person’s preincident life to have been affected by the impairment, only his ability to live his normal preincident life must be affected; thus “there is no quantitative minimum as to the percentage of a person’s normal manner of living that must be affected.”  And third, the statute creates no temporal requirement as to how long an impairment must last in order to have an effect on the person’s general ability to live his normal life.  In short, said the McManigal panel, the new statutory test requires “a review of whether the impairment ‘influences some of the plaintiff’s capacity to live in his or her normal manner of living’” (quoting, McCormick, 487 Mich at 215).

 Under this test, the Court of Appeals held as a matter of law that plaintiff did not meet the “serious impairment” threshold, and directed that defendant was entitled to summary disposition.  The court focused on plaintiff’s ability after the accident to work at the same employment he held prior to the accident, and the fact that bowling, the one activity that was substantially impacted by his impairment, was not shown to be more important to him than his many other hobbies.  Thus, while acknowledging that “a person’s normal life need not have been destroyed” in order to have been affected, and that there is no minimum “percentage” of the person’s life that must be affected, the court concluded that a significant impact on plaintiff’s ability to bowl was not enough to meet the tort threshold:
  To conclude otherwise would, under the facts presented by this case, render any impairment, even one that prevented a person from engaging in an activity only a few times per year, a threshold injury under MCL 500.3135(1).  Nothing in the language of the majority opinion in McCormick indicates that such a broad result was intended.
McManigal, slip op, at 7.
 Of particular interest in this defense-favorable decision by the Court of Appeals is the fact that the newly appointed Supreme Court justice, Brian Zahra, was a member of the Court of Appeals panel.  Undoubtedly, the new Supreme Court will be reexamining the McCormick “serious impairment” standard in an upcoming case.  In the event the plaintiff in McManigal appeals, Justice Zahra’s prior involvement in the case likely would prompt his recusal from participating at the Supreme Court level.  Accordingly, for those hoping eventually to see McCormick overruled, it would be better for the Court to grant leave to appeal in a case other than McManigal.  It should not be a long wait.

 In the meantime, the decision in McManigal provides reason to believe that, even under McCormick, the “serious impairment” threshold still operates to prevent lesser injuries from qualifying for recovery of tort damages.
 
ALLOWABLE EXPENSE – FURTHER CLARIFICATION
OF THE DECISION MAKING PROCESS
CONTRIBUTOR – JAMES L. BORIN
The Supreme Court has issued an Order granting reconsideration “for the purposes of clarifying the remand instructions to the Court of Appeals”.  The Order reads thusly:

 “On order of the Court, the motion for reconsideration of this Court’s November 9, 2010 Order is considered, and it is GRANTED for the limited purpose of clarifying the remand instructions issued by the Court of Appeals.  The Court of Appeals stated that “[w]hether a cost constitutes an allowable expense is a question of law and so it is to be determined by the court, not the jury.”  Although whether an expense constitutes an “allowable expense” under MCL 500.310791)(a) is generally a question of law for the court, Griffith v State Farm Mut Automobile Ins Co, 473 Mich 521, 525-526 (2005), “the question whether expenses are reasonable and reasonably necessary is generally one of fact for the jury.”  Nasser v Auto Club Ins Assoc, 435 Mich 33, 55 (1990).  Therefore, to the extent that there are material questions of fact pertaining to whether the expenses in this case are reasonable and reasonably necessary, these questions of fact must be decided by a jury.”
 Accordingly, if an insurer challenges the compensability of an incurred expense, the trial court will generally determine whether same constitutes an allowable expense.  If there are questions of fact as to reasonableness and/or reasonable necessity, and if a jury demand has been filed, these questions should be determined by the jury.

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TAX CONSIDERATIONS IN HIRING RELATIVES
TO PERFORM ATTENDANT CARE
CONTRIBUTOR – JAMES L. BORIN

 The issue of taxable income for family care givers has been a consistent concern to no-fault insurers.  A recent Article in the Wall Street Journal, December 11-12, 2010, provides further perspective on that concern.  A complete copy of the article is attached and, while certainly an authoritative source, the Wall Street Journal is clearly no offering tax advice.  Accordingly, if you have questions on a particular claim, same should be addressed to a CPA.

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GLM SPRING DEPOSITION BOOT CAMP

 Please be advised that the Deposition Boot Camp being presented on March 2, 2011 is filled to capacity.  Please note that Garan Lucow Miller is planning on hosting another Boot Camp at a later date.  Please watch Law Fax for further details.