A signed independent-contractor waiver and a 1099 couldn't stop a truck's insurer from landing first in line for a driver's no-fault benefits.
In a published decision dated June 22, 2026, the Michigan Court of Appeals ruled that Carolina Casualty Insurance Company - the insurer of the truck a driver was in when he hit a deer - sits first in line to pay his no-fault benefits, ahead of his own carrier, Auto Club Insurance Association (AAA of Michigan).
The case came down to a question insurers argue about all the time: employee or independent contractor? Under Michigan's no-fault act, MCL 500.3114(3), an employee injured in a vehicle the employer owns collects personal protection insurance benefits from that vehicle's insurer, not from a personal policy.
The driver was hauling auto parts from Michigan to Kansas on September 14, 2022 when his truck struck a deer in Missouri. He drove for a company called Transport Systems, in a truck owned by one of its owners and insured by Carolina. He and his spouse also had their own AAA policies on personal cars.
When he filed for no-fault benefits, Carolina said it owed nothing - he was an independent contractor, so the bill belonged to AAA. The trial court agreed. AAA appealed and won a reversal.
Applying Michigan's "economic reality test," the appeals court looked past the labels to how the job actually worked. The driver worked about six days a week, only for Transport Systems. A dispatcher gave him his loads and set the times and places. He was paid weekly, drove the company's truck and trailers, and had to run a required app, "Keep Trucking," to log his hours. He said he couldn't really drive for anyone else, noting "they don't like it when we keep refusing" loads.
Yes, there was a 1099, no tax withholding, no health coverage or workers' comp, and pay funneled through his brother's company. But the court said those only created "the semblance of an independent contractor relationship." No single factor decided it. The reality, the panel found, was an employee.
Carolina pointed to an "Independent Contractor Waiver of Coverage" dated January 11, 2022 with the driver's name and signature on it. He testified he'd never seen it and that the signature was "very similar to my signature but it's not exactly." The court gave it little weight, calling it "principally relevant to the issue of workers' compensation benefits" and noting employer forms like it are "inherently self-serving." Courts, it added, "must be vigilant not to elevate form over substance."
The takeaway for the carriers: Carolina is first in priority under MCL 500.3114(3). The court returned the case for summary disposition in AAA's favor and awarded costs to the appellants.
