Detroit Free Press No-Fault Articles – Not The Full Story:
This week, the Detroit Free Press published a series of articles that have been extremely critical of the Michigan No-Fault car accident system.
The articles have touched on a number of different topics, ranging from the high costs of auto insurance premiums in Detroit, to aggressive solicitation of auto accident victims by medical providers and car accident attorneys, to so-called “solutions” to make auto accident insurance more affordable.
Let me say from the outset that there are problems with the current Michigan no-fault system. Like any complicated thing that involves insurance and access to health care, nothing will be perfect. For certain there are some unscrupulous medical providers who clearly run up huge medical bills for unnecessary medical treatment so they can submit their pound of flesh to the auto insurance carrier.
In addition, it is certain there are immoral and unethical lawyers who ambulance chase their way to obtaining clients and building up unsubstantiated cases so they can extract a settlement and attorney fee.
But I have to take say as a practitioner and somebody who is in the trenches on a daily basis, this is the exception rather than the rule. And this is what makes it so frustrating reading the Free Press articles. They provide little to no counter weight to the various issues that surround this complicated and important topic. Instead the reader gets a barrage of horrific horror stories of the worst sorts, aggregated in a very distilled fashion meant to instill fear in the average Michigan policyholder and citizen. Even more concerning is the fact many of the facts and statistics utilized by the Free Press are the same ones the insurance industry has been parroting for years now.
The hit job begins right at the beginning. At the top of each article is a minute-long cartoon video that reads like it was created by the car insurance lobby itself. The video depicts a person getting rear ended and picking up his or her smart phone to dial 1-855-GET-MONEY, as if obtaining compensation for a car accident injury is just that simple. Expensive lawsuits and runaway medical costs are the reason for high insurance rates for Detroiters we are told. Of course, nothing is mentioned of the insurance carrier’s role in denying just about every auto claim. The video goes on to blame lawyers for medical costs that can go into the hundreds of thousands of dollars. If only we had so much power!
Then the Free Press asserts blame for high insurance premiums on the large increase in lawsuits, high medical charges and victim solicitation. Let me again reiterate that the high cost of medical treatment and victim solicitation are problems. And these problems need to be addressed in a bi-partisan effort that punishes the wrong doers while protecting the system.
But the Free Press article merely asserts blame on bad lawyers and bad doctors and fails to point out other reasons for the high cost of car insurance in the city of Detroit. For example, there has been an increase in the number of no-fault PIP lawsuits over the past 10 years. But what the article fails to mention is this increase can be traced to Devillers v. Auto-Club Insurance, a 2005 no-fault PIP case that greatly compressed the time frame car accident victims had to file a lawsuit to protect their outstanding benefits. After Devillers, a claimant had 1 year to file a lawsuit, or he or she would forever lose the right to wage loss benefits or the payment of medical expenses.
The Free Press also utilizes the dubious study commissioned by Mayor Duggan in 2015 and released by Pinnacle Actuarial Resources of Bloomington, Illinois – you know the hometown headquarters of State Farm Insurance – to show that PIP coverage comprises 44% of the cost of a city of Detroit auto policy. The article does little to educate the reader that such a high PIP cost component rarely, if ever, exists outside the city of Detroit. The article also fails to highlight who exactly Pinnacle Actuarial Resources is and who paid for the commission of this “study.”
The various articles barely touch on the reasons for the high cost of car insurance. For example, red lining occurs on a daily basis in the city by insurance carriers. This red lining utilizes credit scores, zip codes and other characteristics to evaluate a policyholder as a higher risk, and thus more expensive to insure. Many folks believe red lining is discriminatory and seeks to punish people simply because of their economic background.
Most importantly, the articles fail to point out car insurance carriers have made absolutely no guarantee they will ever decrease auto rates if a cap on medical expenses or PIP benefits is instituted. How do we know that insurance carriers won’t just pocket the savings? None of the “solutions” coming from Mayor Duggan or the Republican legislature have included a cap on the increase of insurance rates of any guaranteed reductions.
Last, the Free Press is negligent – there, I said it – in highlighting the most obvious problems with instituting wholesale changes to the Michigan no-fault law. Currently, people seriously injured in a car accident have a place to turn to when seeking payment of medical expenses. Without the current system, claimants will turn to taxpayer funded systems like Medicare or Medicaid for payment. Rather than the cost going away, the cost will simply be transferred from the car insurance carriers to U.S. and Michigan taxpayers.
Just as significant, the health care industry is the largest employer in the state of Michigan. It passed the auto industry many years ago. A vast change in the Michigan no-fault system will lead to huge job losses across the state, in urban areas and rural areas. The reasonable reimbursement rates Michigan hospitals receive from auto carriers pays for the sub-standard and awful reimbursement rates these facilities are forced to accept from Medicaid and Medicare. Without this revenue source, financial Armageddon in the Michigan hospital group is not far away.
We will be keeping a close eye on how this article plays out over the next few weeks and months. I’m sure car insurance industry backed legislators will use these articles to argue for rampant reform that benefits their lobbyists and benefactors. I can only hope that people maintain a reasonable and logical view of this very important topic.
