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It is also questionable whether the plan's quired to buy insurance which would dufirst party insurance would be considered plicate coverages they possess from other an adequate substitute for present tort sources raises the question as to whether reparations for personal injuries. Here this compulsion deprives them of property again, the question of adequacy would without due process. logically be judged against the remedy in

Any objective analysis shows that the nocent victims of auto accidents now have

AIA plan would not offer adequate sub

a available to them – the remedy which the

stitutes for remedies now available to innonew plan would completely abolish.

cent victims of auto accidents and would, Under the present system a person in

therefore, violate the Due Process Clause. jured through the carelessness of another may pursue his right to collect damages

EQUAL PROTECTION from the person who injured him. If the injured person has a valid claim, his dam The Fourteenth Amendment to the ages are paid by the person who injured United States Constitution also provides him (or from insurance coverage which that no state may deny any person within the tortfeasor paid premiums to create). its jurisdiction equal protection of the Under the new proposal, a person must laws. The Keeton-O'Connell plan would buy insurance protection for himself to re be challenged here because it only allows cover some benefits if another person neg tort actions by persons whose out-of-pocket ligently injured him. The change would loss exceeds $10,000 or whose pain and sufresult in a shift of responsibility from the fering is valued at over $5000. Keeton and person causing injury (the present system) O'Connell consider this problem in their to the person who is injured. A court book.30 A different situation is presented would have to engage in fancy semantic under the AIA plan, and the Keeton-O'juggling to hold that this is, in fact, a Connell arguments would not be appli"remedy."

cable even if they were valid. Even if a court could stretch its imagi The Equal Protection question relating nation to a point where it could consider to the AIA proposal would be whether its the AIA proposal as a substitute remedy classifications unconstitutionally discrimifor the present system, the question would nate against any class of persons. Three remain as to whether the remedy is an areas of classification in the plan are of adequate substitute. Again, it is logical to immediate concern: judge adequacy against the type of remedy innocent victims of auto accidents present 1) The limitation of recovery for work ly have available.

loss to $750 a month which would Under the present system, a person who

only partially compensate those who is entitled to recover damages for injury

earn more. caused by negligence of another has the

2) The allowance of recovery for propright to recover medical and hospital ex

erty damage to owners of all properpenses; loss of wages; loss of earning ca

ty, except motor vehicles. pacity; and payment for disfigurement,

3) The determination of the allowance disability, pain and suffering – all limited for disability and disfigurement only by the actual extent of his loss. He based upon the size of medical and need not make any payment or buy any

hospital bills and not upon the nainsurance to recover. Under the AIA plan ture and extent of injury which, in payment would be made for medical and many cases, would cause a person hospital expenses (limited to semi-private with severe disability or disfigureroom expense) ; limited wage loss; and

ment to recover less than one who is limited disfigurement and disability loss.

less seriously injured. There would be no recovery for lost Under an Equal Protection attack, the earning capacity or pain and suffering. All

test of a state's establishment of such motorists would be required to buy insur- classifications is whether they rest on ance in order to recover these limited ben- grounds wholly irrelevant to the achieveefits, whether or not other insurance cov- ment of the state's objective. A statutory erages they enjoy would be duplicated. The fact that many motorists would be re- 30Keeton & O'Connell, note 27 supra at 491

discrimination will not be set aside if any cluded that since the Columbia plan and facts reasonably may be conceived to justi. workmen's compensation were more radify the The Supreme Court cal departures from tort remedies than has stated:

their “Basic Protection" plan, a fortiori

their plan must be constitutional.34 While [T]he law need not be in every respect

such a bootstrap operation in instant conlogically consistent with its aims to be

stitutionality presents an interesting exerconstitutional. It is enough that there

cise in logic, it is not persuasive. is an evil at hand for correction, and that it might be thought that the par.

The position that constitutional obstaticular legislative measure was a rational

cles to the AIA plan will be overcome for

the same reasons that they were with workway to correct it.a2

men's compensation laws is untenable. Do Under such a test, it is difficult to see any the same or similar problems exist in logical reason why innocent owners of ve- the area of auto reparations as existed at hicles should be treated differently than the time workmen's compensation laws other property owners. It is also difficult were developed? One author has described to muster a logical reason, other than ease the conditions existing in the early 1900's of mathematical determination, for com- which brought about workmen's laws as puting a benefit for disability or disfigure- follows: ment on a percentage of hospital and medical expenses rather than on the nature and

The industrial accident rate in this extent of the injury itself. As to the classi country at that time was more than fication for wage loss, it is easy to see why

double that of the United Kingdom, a limit was set. To allow unlimited wage

France and Germany. Yet injured workloss recovery would mean higher premium ers were typically unable to obtain comcosts for the insurance plan. Any limited

pensation for their injuries. Dismissal benefit plan must be sold on its low cost.

and black-listing were powerful deter

rents to bringing an employer into court. It appears that the AIA plan limitations

Even if a workman or his widow did are arbitrary and subject to serious consti

institute suit, the fellow servant rule and tutional challenge under the Equal Pro

the doctrines of contributory negligence tection Clause.

and assumption of risk made the pros

pects of recovery exceedingly remote. WORKMEN'S COMPENSATION ANALOGY

Such conditions could not pass unnoProponents of no-fault auto compensa.

ticed, and the outcries of politicians, lation plans argue that if workmen's com bor leaders and popular writers lead to pensation laws were held constitutional, a

an instant demand for reform.35 no-fault auto plan should be treated simi. larly:

While there are problems in the opera

tion of the present auto reparations sysIf a proposal is sound and in the public tem, analysis shows that they do not apinterest, constitutional obstacles will be proach the magnitude of those involving overcome as they were for similar rea employee accident reparations at the besons when workmen's compensation laws ginning of this century. In fact, the major were enacted.33

problems in the auto reparations field lie

in the areas of marketing, underwriting Keeton and O'Connell pursued the same

and the cost of insurance, not the manner thought regarding constitutional objection

in which persons injured in auto accidents to their plan; however, theirs was a more

recover compensation. circuitous route. They first observed that the proponents of the Columbia plan be

Regarding auto accident reparations, lieved their proposal to be constitutional.

there are marked dissimilarities to the Then, Keeton and O'Connell observed

problems which brought about workmen's that workmen's compensation laws were

compensation laws. Although some critics held constitutional. Finally, they con

of the present system claim that its pay.

ments are slow and that auto cases clog 31 Note 29 supra at 48

the courts, statistical analyses have refuted 32Williamson v. Lee Optical of Okla., 348 US 483, 488 (1955)

34 Keeton & O'Connell, note 27 supra at 484 33 Note I supra at 9

35 Note 29 supra at 52

that claim. The facts show that court con. gestion exists in only a small number of jurisdictions and is not caused by auto cases and that most auto cases are settled promptly and without the necessity of court suit.36 It should also be noted that the majority of Americans have first party insurance coverages which pay hospital and medical expenses and wage loss without regard to fault. Families in the United States are protected by roughly 800 billion dollars worth of life insurance and Social Se. curity coverage is extensive. 3. In all but two jurisdictions uninsured motorist coverage is mandatory or must at least be of fered to an insured, or an unsatisfied judg. ment fund exists.38 Medical payments coverage providing benefits without regard to fault may be purchased if the insured desires that protection. Insurance companies are engaging in advance payments and open-end release techniques which bring needed money to persons injured in auto accidents promptly. Finally, the development of the contingent fee system allows even the most destitute claimant to have his claim prosecuted by well-trained, competent counsel. Thus, persons injured in auto accidents do not share the same plight as injured workmen of the early 1900's whose chances of receiving compen. sation were at least remote.

Another important distinction between a no-fault auto reparations system and workmen's compensation can be illustrated by the following quotation from the Supreme Court decision which upheld the constitutionality of the New York Workmen's Compensation Law:

expense that ordinarily is paid by the employer. Who is to bear the charge? It is plain that, on grounds of natural justice, it is not unreasonable for the State, while relieving the employer from responsibility for damages measured by common-law standards and payable in cases where he or those for whose conduct he is answerable are found to be at fault, to require him to contribute a reasonable amount, and according to a reasonable and definite scale, by way of compensation for the loss of earning power incurred in the common enterprise, irrespective of the question of neg. ligence, instead of leaving the entire loss to rest where it may chance to fall that is, upon the injured employee or

his dependents.39 While it may be easy to agree with the court that natural justice would support a plan by which an employer is required to provide compensation for the injuries employees suffer as a natural hazard of employment, it would be strange indeed to argue that it is natural justice to absolve tortfeasors of all liability and force the persons they injure to expend their own funds to insure that limited compensation will be available. An analogy to workmen's compensation must be strained beyond all bounds to make it apply to auto accident reparations and proposed no-fault compensation plans.

It does not appear that the constitutional hurdles would be as easily crossed. Even Keeton and O'Connell admit that their plan would be unconstitutional in those states in which there is a constitutional ban against limiting the amount recoverable for personal injuries or death.40

[T]here is the loss of earning power; a loss of that which stands to the employee as his capital in trade. This is a loss arising out of the business, and, however it may be charged up, is an expense of the operation, as truly as the cost of repairing broken machinery or any other 36 Note 10 supra; see also, Court Delay And The Auto Accident Claim. 7 For The Defense 58 (Oct 1966): Court Congestion - A Localized Urban Problem, 8 For The Defense 49 (Sept 1967); Auto Torts Not Cause of Court Congestion, 8 For The Defense 57 (Oct 1967); Second DRI Study Shows Court Delay Is Limited Problem, 9 For The Defense 73 (Dec 1968); Ross, DRI Studies Refute Court Delay Claims Of Critics, 36 Ins Counsel I 46 (Jan 1969) 37 Note 29 supra at 54

38DRI Monograph, Uninsured Motorist Protec. tion at 38 (Nov 1968)

COMPLICATIONS AFTER ENACTMENT The enactment of a no-fault auto compensation plan would create a serious problem if it were later found unconstitutional. It is possible that the constitutionality of such a plan may not be challenged until long after it becomes law. If such were the case, the problems created by a finding of unconstitutionality would be massive. Once a plan was enacted the insurance industry would have to reorganize - new policies would have to be devised, printed and dis

39New York Central R. Co. v. White, 243 US 188, 203 (1917)

10 Keeton & O'Connell, note 27 supra at 505

tributed; claims personnel would have to be retrained, etc. Later, if the plan were found unconstitutional, the whole process would have to be reversed. As one insurance executive has noted, the situation would be similar to trying to unscramble an egg." In addition to the logistical problem for the insurance industry, there would be the plight of the person injured in an auto accident between the time the new plan came into effect and a return to the tort system. He would have a valid tort claim against the person who injured him, but there would be no liability policy to cover the claim.


It should be clear that the title, “Complete Personal Protection Automobile In surance Plan," is a misnomer. The plan is not complete. It is far from being per sonal.

Claimants under the plan would be treated more like machines than individ. uals. If a machine is damaged an amount of money can be set to have it repaired; the plan pays hospital and medical bills. If a machine is unproductive while it is being repaired, it is losing money; the plan pays for work loss. If a machine can't be returned to full productivity through repair it is easy to set a percentage on its new output; the plan has a disability benefit

41 Kemper Insurance Reports, The Keeton-O'Con. nell Plan: Reform Or Regression? (Oct 1967)

based on an easily calculated percentage. Each of these items lends itself to a neat, fixed, precise bookkeeping entry.

Finally, machines have no feelings; the plan does not consider pain and suffering a fit item for compensation since it varies too much from person to person and there is no precise formula for its computation.

One of the merits of the present system lies in the fact that it treats each person as a person – an individual whose loss is different from that of others and who suffers loss in a different way than others. It is true that the present system has been sharply criticized. It is just as true that many of the criticisms are exaggerated and undocumented. Problems do exist in the operation of the present system but these problems can be resolved within the framework of that system. Leaders of the Bar and insurance industry are devising solutions, some of which are already being applied.

It is claimed that hardly anyone is satisfied with the present auto reparations system and that a change to a no-fault system is demanded. It is often easy to mistake the cries for revolutionary change of a small, well organized minority as a man. date from the majority. However, it should be remembered that the majority is seldom organized and less often vocal. It should also be remembered that all change is not growth and all movement is not necessarily forward.


ANALYSIS OF THE PLAN'S ELEMENTS Announced at a news conference called by the American Insurance Association in Washington, D.C., on October 21, 1968, the plan provides:

1. System Of Compulsory Insurance: It is recom

mended that the plan be compulsory. If approved, this coverage would be a prerequisite to registering or operating an automobile in

the state enacting the proposals. 2. Elimination of Tort-Fault System: All insureds

covered under the plan would be immune from all tort actions resulting from operation

of motor vehicles within an AIA plan state. 3. Residual Tort Liability: (a) Since the immunity from tort liability

could not apply if an AIA plan insured causes injury or property damage with his vehicle in a state not having enacted the plan, compulsory, residual liability insurance would also be provided. The lia. bility limits would be those "most com. monly in use under state financial

responsibility laws." (b) A non-insured motorist (a person from a

state not having the AIA plan or, a per. son from an AIA plan state who somehow evaded the compulsory insurance requirement) who causes injury or property damage in an AIA plan state would remain liable in tort. However, if an AIA plan insured made any recovery against such a person in a tort suit, the insurer would have the right to seek reimburse. ment from its insured for any amount of

benefits it had paid under the plan. 4. Who Is The Insured?: Under the plan, the

auto owner and his family are covered as well
as occupants of the owner's vehicle and pe-
destrians who are not otherwise covered.
(a) Multiple Policies: If an injured person is

a passenger or pedestrian he must seek
benefits from his own insurer, if he has
one (except if he is a passenger in a
"public vehicles in which case the cover-
age of the vehicle would be primary).
If the passenger or pedestrian does not
have AIA plan insurance available to him,
claim can be made against the insurer of
any involved vehicle. In that case, "the
usual rules of contribution would apply
so as to distribute the loss equitably

among the insurers." 5. Coverage For Out-Of-State Accidents: The

benefits provided under the plan would be available to the named insured, a relative residing in his household, guest passengers and pedestrians, even if the accideni happened in

a state not having adopted the AIA proposal. 6. Assigned Claims Plan: The plan would apply

to losses suffered or caused by non-residents within the state enacting it. For example, a resident pedestrian not covered by the plan

who is injured by a non-resident motorist would be entitled to full AIA plan benefits from the assigned claims program. The same would be true for a non-resident driver and his passengers who are injured in an accident in an AIĂ plan state. However, note 3. (b) supra as to the potential tort liability of the non-resident motorist. The assigned claims plan is also designed to apply in cases in which a person not covered by the AIA plan suffers

injury caused by a hit and run motorist. 7. Benefits Available: Under this first party in

surance system persons injured in auto acci-
dents would be entitled to the following bene-
fits, without regard to their fault:
(a) Medical And Hospital Expenses: Expenses

for medical attention, drugs, etc., and
semi-private hospital accommodations
would be paid under the plan without a
maximum limit on the amount recover.

(b) Work Loss: Benefits for work loss would

be paid and would consist of loss of in-
come from work (e.g. wages) and ex-
penses reasonably incurred for services in
lieu of those the injured person would
have performed without income (eg. cost
of maid service during time a housewife
is disabled). There is a 15% tax deduc-
tion from any amount of work loss bene-
fits recoverable. The maximum amount
of recovery for work loss is $750 a month.
Death Benefits: Benefits would be paid
to the survivors of a person who dies as
the result of an auto accident and consists
(1) Loss, after date of death, of contri-

butions of tangible things of eco-
nomic value (not including services)
that statutory beneficiaries would
have received from the deceased had
he not suffered the injury causing

death, and; (2) Expenses reasonably incurred by such

statutory beneficiaries after the date of death in obtaining ordinary and necessary services in lieu of those the deceased would have performed for their benefit had he not suffered the

injury causing death. Economic loss suffered by an insured be. fore death, and unpaid at the time of death would be paid to the beneficiaries in a lump sum. Funeral Expenses: In case of funeral and burial expenses, reasonable charges not to

exceed $1000 would be paid. (e) Permanent Impairment Or Disfigurement:

The plan would make no payment for pain and suffering; however, a benefit would be paid for permanent impairment or disfigurement. The size of the benefit would vary, depending on the extent of the injury, bui would not exceed 50% of the hospital and medical specials.

Pe of the Venor pedestribe to him,

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