Disclaimer

The information presented in this document is for educational and informational purposes only. Direct Care Training & Resource Center, Inc. is not a law firm and does not provide legal advice or representation. Nothing contained herein should be construed as legal guidance, nor should it substitute for consultation with a qualified attorney. Individuals facing disputes related to insurance benefits, civil rights, or the Michigan PIP/No-Fault system should seek advice from a licensed attorney familiar with these matters.

Introduction:

The Michigan No-Fault (Personal Injury Protection, or “PIP”) system was designed to ensure prompt and adequate care for individuals injured in motor vehicle accidents. Unlike traditional tort systems, its statutory framework guarantees access to medical benefits, wage loss coverage, and rehabilitation regardless of fault. However, disputes frequently arise when insurers deny benefits, sometimes for reasons that appear arbitrary, fractured, or unsupported by the medical or legal record. Such practices raise the question of whether an injured party’s civil rights could be implicated when these denials interfere with their access to care and rehabilitation.

Statutory Rights Versus Civil Rights

At first glance, the denial of PIP benefits appears to be a contractual or statutory dispute governed by state law. Indeed, Michigan courts often frame these issues within the parameters of contract enforcement and statutory interpretation. For example, in Shavers v. Attorney General, 402 Mich 554 (1978), the Michigan Supreme Court emphasized that the No-Fault Act creates an “entitlement” to benefits, establishing a constitutionally protected property interest. The Court recognized that access to benefits is central to the Act’s purpose of ensuring injured motorists receive prompt medical and rehabilitative care. This framing suggests that wrongful or arbitrary denials go beyond mere breach of contract—they potentially deprive individuals of state-mandated rights.

Due Process Concerns

Civil rights protections include the right to due process, which guards against arbitrary deprivation of property or
liberty interests by state actors. While insurers are private entities, their function under Michigan’s No-Fault scheme is
heavily regulated and mandated by law. The Michigan Supreme Court in Shavers held that because the No-Fault
system is compulsory, its administration must comport with due process principles.

Further, federal courts have recognized that denial of statutory entitlements can raise due process issues. In Goldberg
v. Kelly, 397 U.S. 254 (1970), the U.S. Supreme Court held that welfare recipients must be given a meaningful hearing
before benefits are terminated, recognizing that statutory entitlements are property interests protected by the
Fourteenth Amendment. By analogy, an injured party under Michigan’s No-Fault system could argue that arbitrary
denials without adequate notice or opportunity to be heard deprive them of a similar property interest.

Equal Protection Implications:

Equal protection arguments may also be advanced if arbitrary denials disproportionately affect certain groups of claimants. In O’Donnell v. State Farm Mutual Automobile Insurance Co., 404 Mich 524 (1979), the Court reviewed the constitutionality of certain classifications within the No-Fault Act under equal protection principles, showing a willingness to scrutinize whether the statute or its application results in unequal treatment. If insurers adopt practices that deny benefits disproportionately to catastrophically injured individuals or those with limited ability to contest denials, claimants may argue that the equal protection guarantees of the Michigan and U.S. Constitutions have been
compromised.

Civil Rights Framing in Bad Faith Insurance Practices:

Michigan law has traditionally recognized insurer obligations of good faith and fair dealing.  While civil rights claims are not routinely applied in insurance disputes, courts have shown sensitivity to the potential for abuse when insurers act arbitrarily. In Aetna Casualty & Surety Co. v. Dow Chemical Co., 883 F. Supp. 1101 (E.D. Mich. 1995), the court observed that insurers may not engage in conduct that undermines the purpose of the insurance contract.

When  an insurer denies benefits based on cursory “paper reviews” or fractured reasoning, the denial may not simply violate contract law but could be reframed as depriving the claimant of equal access to medical care, particularly when systemic practices are at issue.

Our Article Summary and Conclusion…

To break it down with finality, while disputes over PIP benefit denials are commonly litigated as statutory or contractual issues, there is a credible argument—grounded in cases such as Shavers, Goldberg, and O’Donnell—that arbitrary denials implicate broader civil rights principles. When insurers, operating under the mandate of Michigan’s No-Fault system, deny benefits without a fair or rational basis, injured parties may reasonably assert that their rights to due process and equal protection have been undermined. This perspective reframes benefit denial not merely as a private dispute, but as a matter touching on fundamental protections designed to safeguard individuals against arbitrary deprivation of essential care.

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