The recent amendment to the Michigan No-Fault Law is a windfall to the insurance industry and will cause tremendous harm to victims of motor vehicle accidents. The new legislation will take immediate effect as of June 11, 2019 (many provisions will not become effective until later dates as stated in the legislation). Supporters of the legislation have argued that the Bill will lower rates for all Michigan drivers. What the proponents fail to explain is that the potential savings only relate to the personal injury protection (PIP) coverage of the policy, normally about 45% of an auto policy. Insurers can increase the premiums on other portions of your policy without any limitations. Drivers who elect to maintain their current level of PIP coverage will likely see their premiums increase substantially because there will be a smaller pool of participants to share the cost of lifetime medical coverage. Further, since accident victims will be able to sue drivers for medical expenses, policyholders will require higher limits of bodily injury coverage to protect assets from tort lawsuits. Under the old law, drivers could not sue drivers for medical expenses arising out of the accident, making bodily injury coverage less expensive.
The law fails to make insurance companies take responsibility for the current high rates of insurance. Proponents of the amendment boast about provisions barring the use of zip codes to determine rates, yet the amended law also has language which allows insurance companies to use geographic territories to determine rates. This is a classic insurance bait and switch given that the insurers can use geographic locations to continue to charge higher rates in mostly urban areas. This Bill will not solve this problem but rather perpetuate redlining and victimizes all accident victims who now will have reduced care and still allows insurers to continue discriminate against specific communities.
Michigan taxpayers will feel the financial burden of this new law since the State will have to allocate additional funds to the Medicaid program to pay for the long term care of seriously injured accident victims. The current law will only provide $50,000.00 of medical coverage to drivers enrolled in Medicaid. This will place a substantial financial burden on the existing Medicaid system. Michigan taxpayers will ultimately pay for this cost shift to the State of Michigan Medicaid program. The law provides that the older citizens on Medicare and others with qualified health insurance can completely opt out of PIP coverage. Medicare does not cover the long term care needs of their members.
The provisions of the new law are retroactively applied to existing accident victims who are currently entitled to benefits under the old law. Severely injured accident victims will have their care options limited since fewer medical providers will be able to offer quality care under the proposed fee structures. Medical providers may refuse to accept patients with no-fault insurance because of the reduced reimbursement rates. Families are limited to 56 hours of weekly attendant care provided by family members or friends in the home. This law will certainly be challenged in Court as to whether it is Constitutional as it is applied to current accident victims. The big losers are Michigan consumers and their families who will have reduced coverage and very little savings. The following is a brief summary of the changes in the law:
SUMMARY OF NEW MICHIGAN NO-FAULT LAW
PIP CHOICE – COVERAGE OPTIONS
Drivers will no longer be required by law to purchase lifetime no-fault medical coverage. Drivers will have the option to select $50,000.00 (if a driver and resident relatives are enrolled in Medicaid), $250,000.00, $500,000.00 or maintain lifetime coverage. Drivers can also purchase a managed care option or elect to not maintain coverage for personal injury protection benefits if the driver has coverage under Parts A & B of Medicare or other qualified health insurance. Wage loss and replacement services are not included in the coverage caps. The effective date is July 1, 2020.
FAMILY ATTENDANT CARE
Insurance companies are not required to pay for more than 56 hours per week of in-home, family provided attendant care. However, an insurer has the option to contract with the family to pay for attendant care above 56 hours per week. This change applies to services rendered after July 1, 2021.
POTENTIAL SAVINGS FOR DRIVERS
Effective after July 1, 2020 and before July 1, 2028, the new Michigan No-Fault Law provides savings for drivers who select a lower level of medical coverage. Auto insurers cannot determine premium rates on non-driving factors such as sex, marital status, home ownership, education level and credit scores. However, insurers can use geographic areas to determine rates. The insurers can still use other factors for rate setting including credit history.
MEDICAL PROVIDER FEE SCHEDULE
A No-Fault fee schedule based on the Medicare rates will be mandated and it would govern charges from doctors, hospitals, clinics, rehabilitation facilities and any provider who care for auto accident victims. Depending on the type of facility involved and whether a substantial portion of its patients are indigent, whether it is a freestanding rehabilitation facility or a Level I or II Trauma Center; reimbursement will range from 190% to 250% of the amount payable under Medicare. If the service was not covered by Medicare, and the provider did not have a charge description master in effect, the reimbursement rate will range from 55% of the providers charge for services as of January 1, 2019 for treatment rendered after July 1, 2021; (54% for treatment rendered after July 1, 2022 and 52.5% for treatment rendered after July 1, 2024). There are higher reimbursements for rehabilitation centers and trauma centers.
HEALTHCARE PROVIDER HAS A DIRECT CAUSE OF ACTION
A healthcare provider may make a claim and assert a direct cause of action against an insurer to recover overdue benefits for products, services or accommodations provided to an injured person. (Effective date June 11, 2019).
PIP PROCESSING CHANGES – REASONABLE PROOF REQUIREMENTS
If a provider fails to submit a bill within ninety (90) days of when the product, service or accommodation is provided, the insurer has sixty (60) days additional time to process the claim before it is overdue.
DRIVERS MAY SUE FOR EXCESS MEDICAL BENEFITS
Under the new Michigan No-Fault Law, a person injured in a car accident can sue for excess medical costs and economic expenses, i.e., those medical costs and expenses that will exceed the dollar amount of the No-Fault PIP cap amount they have selected. However, medical payers may have liens that will need to be satisfied and will reduce third party settlements.
SAVINGS FOR AUTO INSURANCE COMPANIES
The new Michigan No-Fault Law allows insurers to avoid reducing their premiums if they can demonstrate to the Insurance Commissioner that the new law=s mandatory rate reductions would violate their rights or leave them at risk of having too little Acapital@.
HIGHER BODILY INJURY LIMITS
The new law requires drivers to purchase higher limits for bodily injury coverage ($250,000 per person/$500,000 per occurrence) presumably to potentially cover the medical expenses of accident victims who are no longer covered by their own auto policies. A lower level of bodily injury insurance $50,000 per person/$100,000 per occurrence may be purchased if the applicant opts out of higher coverage and signs a waiver form provided by the insurer. (Effective date July 1, 2020).
TOLLING OF THE ONE-YEAR-BACK RULE
The one-year-back rule will not apply until an insurer has formally denied a specific claim for payment unless the person claiming the benefit fails to pursue the claim with reasonable diligence. (Effective date – June 11, 2019).
The new Michigan No-Fault Law will create an Anti-Fraud Unit to investigate all Acriminal and fraudulent activities in the insurance market.@
INDEPENDENT MEDICAL EXAMINATIONS BY INSURANCE COMPANY DOCTORS
The new Michigan No-Fault Law imposes the following rules for IMEs of car accident victims by insurance company-hired IME doctors: (1) the IME doctors must be licensed in Michigan; (2) the examining IME doctor must be a licensed, board certified, or board eligible physician qualified to practice in the area of medicine appropriate to treat the car accident victim=s condition; (4) During the year before an IME, the IME doctor must have devoted a majority of professional time to clinical practice of medicine/specialty or teaching in an accredited medical school. (Effective date June 11, 2019).
NEW RULES REGARDING MCCA
Provides that the Michigan Catastrophic Claims Association (MCCA) would not have liability for a loss under PIP Coverage for a motor vehicle accident policy to which the $50,000, $250,000, and $500,000 PIP coverage limits will apply after July 1, 2020.
MULTIPLE PROVISIONS WHICH ARE AMBIGUOUS AND WILL RESULT IN INCREASED
LITIGATION IN THE COURTS
There are many new provisions which were poorly drafted and will undoubtably lead to more lawsuits. The retroactive application to no-fault claimants who were injured before May 40, 2019 raises significant Constitutional issues and other legal challenges.
Our lawyers help clients in Ann Arbor, Ypsilanti, Detroit, and throughout Michigan with injury claims resulting from injuries and other accidents. We are committed to helping the injured recover full and fair compensation for economic losses, pain, and suffering. Please feel free to contact the firm at any time for advice or for help with your no-fault insurance injury claim.