FILE PHOTO COURTESY OF SINAS DRAMIC
by Cynthia Price
In February of this year, a survey of Michigan voters found that the support for reforming our auto no-fault law is overwhelming.
Over 70 percent say they would like to see such reform.
That does not mean, however, that there is a majority view on how to reform the law, nor even on what the purposes of reform should be.
The Insurance Alliance of Michigan, which conducted the survey, has one idea. “Rampant fraud within the auto no-fault system, a lack of cost controls and the one-of-a-kind mandate that every driver
purchase unlimited, lifetime medical benefits are factors that continue to drive up the cost of insurance for every Michigan driver,” stated Dyck Van Koevering, general counsel for IAM. “Michigan’s outdated, broken system has caused auto insurance premiums to skyrocket to the third-highest in the nation. Insurance fraud alone costs the average Michigan family hundreds of dollars per year.”
Naturally, opponents of the IAM ‘s agenda say that it is not the system but the insurance companies which are causing the auto insurance premiums to skyrocket.
Because there is currently no legislation on the table, it may be difficult to determine the insurance industry’s current thinking, but one way to approach the matter is to look at bills introduced last year.
Some of the proposals in those bills included limiting how much coverage could be given, through No-Fault, to families who provide in-home care, and eliminating the guarantee of medical benefits for uninsured auto accident victims.
The bills faced heavy opposition and, despite vigorous attempts at passage in lame duck, died at the end of the 2015-2016 session in December.
The industry has also proposed fee schedules that would put controls on what medical professionals may charge for certain procedures in order to qualify for reimbursement; “benefit choice” for Michigan residents who may not want unlimited lifetime medical benefits as the statute mandates; and a fraud authority to eliminate fraud and scams.
However, there are many other proposals currently being floated to address consumer concerns about high rates —which the National Association of Insurance Commissioners says are the third-highest in the country.
The Coalition to Protect Auto No-Fault (CPAN) is a key group making some of those proposals.
Originating in 2003, CPAN was formed by a group of professional organizations whose members felt “that it was in the public interest to preserve Michigan’s model no-fault auto insurance system and to make sure that the Michigan auto insurance industry kept the original no-fault promise it made to Michigan citizens when the No-Fault Act was passed in 1972.”
CPAN members include medical associations, particularly the Michigan State Medical Society, the Michigan Dental Association, the Michigan Committee on Trauma, the Michigan Academy of Physician Assistants, the Michigan Association of Chiropractors, the Michigan Nurses Association, the Michigan Orthopedic Society, Spectrum Health System and Mary Free Bed Rehabilitation Hospital.
The other component consists of consumer organizations which have a stake in no-fault. These include the Brain Injury Association of Michigan, the Michigan Association for Justice, the Michigan Disability Rights Coalition, and the Area Agency on Aging.
Grand Rapids attorney Thomas G. Sinas of Sinas Dramis Law Firm serves as Associate Legal Counsel (as does his brother Stephen). His father, George T. Sinas, has been involved for many years, currently serving as an ex-officio member of the executive committee.
Comments Tom Sinas, “I think one of the most distinct problems in reforming no-fault is to take out what has become too adversarial of a dynamic. The insurance claims were designed to be handled without confrontation. We need to eliminate the issues that are making it so adversarial in order to make the system more efficient.”
In May, CPAN released a series of recommendations which may signal its willingness to compromise on some of the important issues. In fact, the report’s introductory comments specifically state, “...in the pending legislative session, CPAN is ready to negotiate a fair, balanced, and comprehensive package of legislative reforms that would accomplish two major objectives: (1) promote cost savings and premium reductions for consumers; and (2) provide needed protection to seriously injured auto accident victims who are frequently treated unfairly in the claim handling process.”
Specifically, CPAN has changed its position on fee schedules. The recommendations acknowledge its previous opposition, giving the reason for it, and then support a fee schedule for all medical providers except Level 1 trauma hospitals, “based upon 185% of the workers’ compensation fee schedules, with cost-of-living adjustments.”
A second important prong of recommendations would require that insurors obtain prior approval for premium rate increases. Currently, the Michigan Insurance Commissioner may object to rate increases only if they are “excessive,” which is ill-defined. The report suggests that greater definition be added, and others (specifically attorney/blogger Steven Gursten of Michigan Auto Law) have suggested that the commissioner have complete authority.
The report notes that the Michigan Supreme Court, in its decision in Shavers v Attorney General, 402 Mich 554 (1978), ruled that there is a constitutional right to have compulsory no-fault insurance “available to Michigan motorists at fair and equitable rates.”
As of July 1, the fee that Michigan auto insurors pay per vehicle to cover the cost of medical care for people who were seriously injured in an auto accident increased from $160 to $170 per vehicle. This fee goes to fund the Michigan Catastrophic Claims Association (MCCA), which reimburses auto insurance companies when medical costs exceed $550,000 (which also increased July 1, up from $545,000).
“In the early days it was very low, and it’s been as high as $185, but one of the big issues is that MCCA meetings are not subject to the Open Meetings Act or to FOIA, so they don’t disclose how it is that they set this rate,” says Sinas. “Part of what you need to change is to take this shrouding away from their deliberations. We’ve sued, arguing it was unconstitutional, but the Court of Appeals said the legislature had carved out an exception that they thought should stand, and the Supreme Court declined to hear it. So it needs to be fixed legislatively.” CPAN’s recommendation F reads, “Require Full Transparency of the MCCA.”
Though the stage is set for change, both sides acknowledge they must find legislative champions.
CPAN’s Frequently asked Questions sheet states, “Bills have not yet been introduced because CPAN is working hard to find consensus and develop a balanced and comprehensive no-fault reform package.”
And on a telephone press conference in June, the Insurance Alliance’s Van Coevering said, “Support is growing. Legislators told us that what they heard at the doors was that their constituents are very concerned about the price of auto insurance, so we think reform may become a priority.”
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