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Ward v Titan Insurance Company

In this interesting 2010 published opinion from Michigan Court of Appeals the court addressed the issue of what specifically is required for “reasonable proof” of a wage loss claim when an auto driver is involved in an accident, injured and can no longer work. Under the Michigan No-Fault Act an insured driver, regardless of who caused the accident, can look to his own auto insurance company to pay wage loss benefits if his treating physician takes him off of work. Under the Michigan No-Fault Act, wages are owed by the no-fault insured at 85% of the gross wage pre-accident. This benefit is a three year benefit from the date of the accident for any insured who provides reasonable proof of their injury, inability to work, and the amount of wage they earned prior to the injury.

Cases interpreting the no-fault law are clear that a plaintiff must suffer a loss of income to be entitled to benefits under the no-fault statute. It is the claimant’s burden to prove the amount they would have earned had they not been injured in the automobile accident. Further, independent contractors can recover work loss benefits because work loss benefits includes lost wages, but also lost profit which is attributable through personal effort and employment.

In the Ward v. Titan case the plaintiff, Mr. Ward, testified during deposition that he was regularly employed at Club Tequila as a bouncer at the time of his accident. This testimony was corroborated by two of his fellow employees from Club Tequila, as well as an affidavit from a person that Ward claimed had employed him. The no-fault carrier, Titan Insurance Company pointed out to the trial court that the owner of Club Tequila denied ever having plaintiff as an employee. However, the person who did employ Ward, Teion Cruise later gave sworn testimony that plaintiff was in fact an independent contractor as a bouncer rather than a direct employee.

Essentially this case was a factual can of worms for the trial court. It looked as if there was testimony both ways on the issue of whether or not plaintiff was in fact employed at the time of his accident. The issue of whether he was employed, whether he was entitled to work loss benefits, how often he worked, what he earned, his prospects for continued employment, whether he was an employee or an independent contractor, were unclear from the discovery performed at the trial court level.

The defendant no-fault carrier, Titan, was very aggressive in their position not only at the trial court level but at the Court of Appeals. They argued that plaintiff did not produce documentation of his employment which required a denial of wage loss benefits. Fortunately for the plaintiff, they provided no legal support for this position. No-fault statute does require an employer to furnish a sworn statement regarding the earnings of an injured person often call a Wage Verification Form. But nowhere in the no-fault statute does it state that if this wage verification form is not provided an injured person absolutely fully and completely loses the right to wage loss benefits under the no-fault statute. Further, an argument was made that because Plaintiff testified at his deposition that the wages he claimed to have earned at Club Tequila as a bouncer were paid “under the table” and that he had failed to properly file income tax returns accounting for this “under the table” income that his work loss claim should be barred under the wrongful conduct rule.

Titan’s position here was misguided. The wrongful conduct rule only bars a claim of plaintiff “who founded his cause of action on his own illegal conduct.” Plaintiff’s claim in this case is not based upon his failure to properly file an income return, rather it is based on his allegation that his auto accident resulted in his resulting work loss injuries. The wrongful conduct rule cannot apply here because Plaintiff’s alleged failure to file income tax returns would be the only incidentally connected to his claim for work loss benefits. Further, from a legislative standpoint the court noted that failure to file a federal tax return is not listed as one of the reasons identified by the legislature to deny a person’s wage loss or personal protection insurance benefits.

For these reasons the Appellate Court granted plaintiff’s appeal stating that enough factual questions existed for the case to be remanded to the trial court and presented to a jury. With Michigan’s economy in the tank, we are seeing more and more self-employed individuals as factories and businesses continue to lay-off and close. Just because you are self-employed or an independent contractor doesn’t mean you can’t put together a viable work loss claim if you are injured in an auto accident. With attention to detail by you and your attorney, reasonable proof of your earnings can be established which will trigger those benefits from your auto insurance carrier.

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