Michigan no-fault “reform” looks to be back on the table according to Michigan insurance industry insiders. It is expected a new package of bills will be introduced sometime in mid-April. This will mark the third straight legislative session were amendments to the present Michigan no-fault system will be taken up by lawmakers.
Last year, Governor Snyder backed a package of bills that sought to end Michigan’s lifetime medical benefit for victims injured in a car accident. Currently, auto insurers are responsible for paying reasonable and customary medical charges for all medical expenses related to a motor vehicle accident. There is no dollar limitation and this is a life time benefit. Governor Snyder wished to end this by placing a cap on medical expenses.
This same package of bills also sought to institute a fee schedule for medical providers, similar to the schedule currently utilized in worker’s compensation cases. Currently, medical providers are entitled to the reasonable and customary charge which tends to be higher than the arbitrarily low worker’s comp fee schedule. The governor also wanted to institute a “fraud bureau” to fight alleged fraud in the current no-fault system. This bureau would be funded by and administered by the insurance carriers themselves.
Notably, the package did not include a corresponding bill to stop fraud perpetrated by insurance carriers upon claimants.
In return, Michigan policyholders were promised a small premium reduction that was only guaranteed for one year.
This package of bills did not make it out of committee last year, this despite strong Republican majorities in both the state house and state senate. Republican legislatures have traditionally been stalwart supporters of insurance industry efforts in Michigan.
However, it appears the insurance industry will try again this term. Although it is certainly true Michigan has one of the highest auto insurance rates in the country, if the new package of bills resembles anything like what’s been purposed in the past, auto insurance rates will not be meaningfully reduced. Instead, the insurance company will reap all the rewards while Michigan citizens give up all the benefits.
A close review of most Michigan insurance policies demonstrates that the major cost for Michigan auto policies is theft and collision protection. This is especially true in more urban areas such as the city of Detroit, Flint and Lansing. This has nothing to do with the medical benefit found in personal injury protection (PIP). In fact, the cost for PIP is often significantly lower than the cost for theft and collision.
In addition, a cap on medical expenses merely shifts the burden from the auto carriers to individual taxpayers. Instead of car insurance companies paying for medical expenses, health insurers such as Medicare and state Medicaid plans will front the costs. These costs will only further drain the already depleted federal Medicare fund and state managed Medicaid plans.
Last, claimants are still left with no private cause of action against car insurance carriers who refuse to adjust outstanding claims in good faith. Michigan does not have“bad faith” law per se so insurance carriers can unnecessarily cut-off claimants or refuse to pay outstanding benefits without any fear of paying compensatory damages.
The Lee Steinberg Law Firm, P.C. will continue to monitor the latest Michigan no-fault “reform” effort in Lansing.
