CPAN announces reforms to fix Michigan’s no-fault system, protect accident victims

Reforms will improve auto insurance efficiency, transparency, fairness and accountability

Lansing, Mich. – Medical providers, brain injury advocates and legal experts joined the Coalition Protecting Auto No-Fault (CPAN) today to reveal the organization’s proposals to bring much needed efficiency, transparency, fairness and accountability to Michigan’s auto no-fault system.

“Michigan’s no-fault laws are critical to the care and rehabilitation of tens of thousands of auto accident victims every year, but we also know the system is not perfect. There are a number of issues that need to be addressed and we are committed to finding the appropriate solutions,” said CPAN president, John Cornack. “The reforms CPAN is proposing are specific, surgical reforms that will improve Michigan’s auto insurance system while also guaranteeing that our state’s most seriously injured people will still be able to receive the care they need.”

CPAN’s list of 24 reforms can broadly be broken down into two main categories: those that promote premium reductions and costs savings, and those that increase fairness.

Reforms that promote cost savings include:
• Adopt a fee schedule for health care providers treating auto accident victims
• Cap hourly rates for family-provided attendant care
• Aggressively tackle fraud and claims handling abuse

“CPAN has continuously been a staunch advocate for the creation of a balanced fraud authority, and insurance companies have been asking lawmakers for several years to adopt cost containment measures, including fee schedules and attendant care, so we believe we have landed on some strong reforms where we can find common ground and make real change happen in the Lansing this year,” said Cornack.

Cornack notes that CPAN had aggressively opposed both fee schedules and caps on attendant care in previous years. By agreeing to a reasonable fee schedule based on 185 percent of the Workers Compensation schedule, CPAN aims to prevent what has become a standard insurance company practice of delaying payments and underpaying health care providers. Under CPAN’s proposal, Level 1 trauma centers would not be subject to an auto no-fault fee schedule.

Reforms that promote fairness include:
• Stop non-driving rating factors, such as credit scores, from impacting insurance rates
• Require auto insurers to obtain prior authorization before implementing a rate increase
• Subject the Michigan Catastrophic Claims Association (MCCA) to Michigan’s transparency laws

“Credit scores and other non-driving factors have been proven to disproportionately impact minorities and low-income drivers,” said Brain Injury Association of Michigan President Tom Constand. “And given that Michigan law requires all drivers to purchase auto insurance, we believe the state should review and authorize rate increases before they take effect, just like they do with our utility bills.”

The MCCA was created by Michigan Legislature and serves as a reinsurance fund that reimburses auto insurance companies for personal injury claims exceeding $545,000. Each Michigan driver currently is required to pay $160 annually per vehicle to fund the MCCA, and it currently holds about $20 billion in assets. CPAN currently has a lawsuit in the Michigan Supreme Court that would force the MCCA to open its ratemaking data to public scrutiny.

“Drivers have no choice but pay into the MCCA each year, but they also have no idea how those rates are set and no way to determine whether the fund is being appropriately managed,” said Cornack. “Our reforms will lift the shroud of secrecy at the MCCA and give consumers a better idea of how their rates are set.”

The full details of CPAN’s 24 auto no-fault insurance reforms are available on its website at ProtectNoFault.org. The organization and its members plan to work in a bi-partisan manner with both lawmakers and insurance companies introduce and pass its reforms by the end of this year.

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Additional Documents:

Fact Sheet

Frequently Asked Questions

Detailed List of Reforms


CPAN Calls on State of Michigan to Investigate Auto Insurance Redlining in Detroit

ProPublica Story Shows Why Michigan Needs to Investigate Whether Auto Insurance Companies are Engaged in Redlining

LANSING – The independent nonprofit journalism organization ProPublica recently published a report examining auto insurance premiums and payouts in California, Illinois, Texas and Missouri. The report finds that insurers charged as much as 30 percent more for premiums in zip codes where most residents were minorities, compared to white neighborhoods with similar accident risks or costs.

ProPublica notes that many auto insurers included in the study operate nationally, which means that “minority neighborhoods across the country may be paying too much for auto insurance, or white neighborhoods, too little.”

In response to the story, the Coalition Protecting Auto No-Fault is calling on the Michigan Department of Insurance and Financial Services to conduct a similar study in Michigan’s urban communities.

“Detroit drivers pay some of the highest auto insurance premiums in the country and insurance companies cannot justify it any longer. It doesn’t make sense that drivers are getting charged significantly more for premiums simply because they live on one side of 8 Mile verses the other, but that’s exactly what’s happening,” said CPAN President John Cornack.

“The person living on the Ferndale side of 8 Mile still is driving the same roads and would be going to the same hospitals, yet the Detroit resident gets charged far more. That sounds an awful lot like redlining to me and we are calling on the state to look into it.”

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Group Launched to Fight for Fair Auto Insurance Rates in Detroit

Several community leaders in Detroit joined together today to raise their voices against Detroit’s high auto insurance rates. Spearheaded by former State Rep. Brian Banks, the Detroit Alliance for Fair Auto Insurance launch included Detroit City Council President Brenda Jones, Spirit of Love Church Pastor DaRell Reed and auto accident survivor Saundra Gay.

The new organization will seek to educate Detroit residents about Michigan’s auto insurance system and empower them to be advocates for fair auto insurance reforms at the state capitol. Key issues raised at the news conference, which can be viewed on the group’s Facebook page, include the insurance company practice of using non-driving related factors like credit scores to set higher rates, and redlining in Detroit.

Ms. Gay, who was injured in a rollover accident in 2000, is quoted on the group’s news release as saying “I’m alive today and able to be a productive member of society because of the care and upport provided by Michigan’s no-fault auto insurance coverage. It’s critical that lawmakers in Lansing do everything they can to reduce rates while ensuring accident victims get the care they need.”

The Detroit Alliance for Fair Auto Insurance said it plans to hold a series of town hall discussions throughout Detroit in May where they will educate residents about their auto insurance policies and discuss ideas for lowering auto insurance rates.

CPAN is pleased to see that the organization was adamant that any changes to Michigan’s no-fault system must protect accident survivors while also lowering rates.

More information about the Detroit Alliance for Fair Auto Insurance can be found at www.DetroitFairInsurance.org.

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Michigan Drivers Handed Secretive $10 Auto Insurance Rate Increase

LANSING – The Coalition Protecting Auto No-Fault (CPAN) learned today that Michigan drivers will pay an additional $10 on their auto insurance premiums this year. The cost increase is the result of the insurance industry-controlled Michigan Catastrophic Claims Association (MCCA) increasing the fee charged to every Michigan auto insurance policy from $160 to $170 per vehicle.

The MCCA is a reinsurance fund created by the state legislature that helps reimburse insurers for costs of caring for catastrophic auto accident victims for any claim above $555,000. The organization, which reports holding $18.8 billion in assets, is governed by a board of insurance industry executives and is not subject to state Open Meetings or Freedom of Information laws.

In response to today’s announcement, CPAN spokesperson Josh Hovey issued the following statement:

“The MCCA is an important tool that helps ensure Michigan’s most seriously injured auto accident survivors receive the care they need. But the public has a right to know how it sets its rates. This is an organization created by our state government that is allowed to be controlled entirely by insurance companies without any transparency whatsoever. It’s unacceptable.”

CPAN has issued several Freedom of Information Act (FOIA) requests to the MCCA in an attempt to obtain the organization’s rate-making data, but those requests have been denied. CPAN and the Brain Injury Association of Michigan are currently involved in a FOIA lawsuit against the MCCA. That lawsuit is now in the Michigan Supreme Court.

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The Coalition Protecting Auto No-Fault: The Coalition Protecting Auto No-Fault is a broad-based coalition of consumer advocate groups, lawyers, doctors, nurses and other health care providers working together to keep Michigan’s model no-fault insurance law intact. Learn more about CPAN by visiting www.ProtectNoFault.org.


Choice is good, but not at the expense of critical health care benefits

Our friends at the Brain Injury Association of Michigan said in a recent Facebook post, “lame duck session is coming and is scarier than Halloween.” Unfortunately, this year, that’s turning out to be true.

Late last week, Representative Jason Sheppard, R-Temperance, introduced legislation — HB 5951 — that once again puts Michigan’s no-fault system and its critical medical benefits at grave risk. The bill proposes different levels of medical benefits, starting at an abysmal $250,000 cap on medical coverage. This would leave accident victims with limited coverage and zero options.

Research shows when given the option, most consumers would only buy the cheapest option. The problem with this is unfortunately drivers cannot choose whether or not they are involved in an auto accident that changes their lives forever. For those with the cheaper options, insurers cut coverage and shift medical costs to taxpayer-funded programs like Medicaid. The increase in Medicaid cost would be significant. When Colorado eliminated their auto no-fault insurance system, their Medicaid costs associated from just the care related to motor vehicle accidents increase 205% within four years. That is absolutely not the right approach — both for those injured in an auto accident and for Michigan taxpayers.

Legislative options that cut coverage for those injured and moves the cost burden to taxpayers are becoming all to common to fix a system that all can agree needs lasting and comprehensive reform. Reducing medical benefits doesn’t only harm drivers looking for an easy way to save a few bucks each month, but it will be a detrimental impact to our state budget by overusing programs like Medicaid.

Michiganders cannot afford to allow the legislature to allow drivers to risk their recovery and our tax dollars.

No one wishes they will have to use the uncapped medical benefits of Michigan’s no-fault system, but then again, no one wishes to be in a catastrophic accident that changes their lives forever.

We need auto insurance reforms that helps contain costs without impacting the quality of care provided. We also need strong anti-fraud measures, streamlined claims processing and reasonable requirements for family-provided attendant care. Together, these reforms will reduce auto insurance costs while ensuring that Michigan’s most seriously injured accident victims have access to the quality care they need.


CPAN Responds to Michigan Court of Appeals Decision in MCCA Transparency Case

LANSING – Michigan Court of Appeals issued ruling today in the Coalition Protecting Auto No-Fault’s transparency lawsuit against the Michigan Catastrophic Claims Association (MCCA).

Earlier this year, the Michigan Supreme Court remanded CPAN’s case back to the Court of Appeals and instructed the Court to specifically address the issue of whether the MCCA is a “public body” as defined by Michigan law and whether the legislature’s exemption of the MCCA from the state Freedom of Information Act was constitutional.

Today’s Court of Appeals decision agreed with CPAN’s assertion that the MCCA is indeed a public body as defined by Michigan law. However, the Court split 2-1 in determining whether the MCCA’s exemption from FOIA laws was constitutional.

In response to the court’s decision, CPAN spokesperson Josh Hovey issued the following statement:

“This case is about far more than auto no-fault insurance. Yes, CPAN believes that having open access to the MCCA’s financial records is vital to understanding Michigan’s auto no-fault system. But at its core, this case has broad implications for the openness and transparency of Michigan’s government overall.

CPAN is pleased that the court agreed with its argument that the MCCA is indeed a ‘public body’ because it was created by an act of the Michigan legislature. However, the majority’s decision that the legislature can amend the state’s FOIA laws without amending the actual Freedom of Information Act should be of major concern to anyone who values government transparency.

The effect of the majority decision is to make it possible for the legislature to exempt itself from Article 4, Section 25 of the Michigan Constitution, which very specifically requires the legislature to ‘re-enact and publish at length’ any statute that is being amended by the subsequent act, which was done with the MCCA’s FOIA exemption. If this decision is allowed to stand, it will now be much easier for the legislature to hide exemptions to FOIA in other statutes, as was clearly pointed out in the dissenting opinion.”

CPAN’s legal counsel plans to review the court’s decision in detail over the next several weeks to determine its options for appeal.

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Insurance Industry Proves It Will Use Every Possible Excuse to Raise Rates, But Never to Lower Them

Michigan lawmakers recently repealed an $80 million tax credit mistakenly given to auto insurance providers in 2012.  Now that this tax credit repeal has taken effect, insurers are using it as an excuse to impose a $40 rate hike on Michigan drivers. The problem: insurance companies never lowered our rates when they were enjoying their big tax credit.

According to a recent Detroit Free Press article, instead of decreasing as a result of the tax credit auto insurance premiums actually increased from an average of $1,172 to $1,264 between 2012 and 2013. Interestingly, this was the same time period when insurers were fiercely arguing in favor of draconian changes to no-fault injury coverage because they said it was the only way to lower insurance rates.

The treatment and rehabilitation services provided under Michigan’s no-fault system have often been the difference between an accident survivor living a rich, purposeful life or living permanently in an adult foster home. That is why CPAN is actively working to help provide the legislature with real reforms that improve Michigan’s auto insurance system and reduce premiums without compromising the quality of care provided.

We need auto insurance reforms that helps contain costs without impacting the quality of care provided. We also need strong anti-fraud measures, streamlined claims processing and reasonable requirements for family-provided attendant care. Together, these reforms will reduce auto insurance costs while ensuring that Michigan’s most seriously injured accident victims have access to the quality care they need.



D-Insurance isn’t what you think it is

Detroit News

Mayor Mike Duggan and the insurance companies that support his cause are trying to pull the wool over many eyes about the effect his proposed D-Insurance legislation will have on the people of Detroit.

Currently, the Michigan No-Fault Auto Insurance Law guarantees that children who are seriously injured in auto accidents have comprehensive medical coverage for any product, service or accommodation that is “reasonably necessary” for their “care, recovery or rehabilitation.” There is no monetary cap to this coverage and it is available for the entire life of the child for as long as their injury exists. The law provides this coverage to children, even if their parents failed to buy auto insurance.

But under Mayor Duggan’s plan, children whose parents buy D-Insurance will be locked out of the comprehensive medical coverage available to all other children in the state. D-Insurance children will only have $25,000 in coverage for medical treatment necessitated by an auto accident. Moreover, this $25,000 coverage has to be shared with all other family members injured in the same accident.

D-Insurance only provides $250,000 worth of coverage for medical treatment that is “necessary to save the individual’s life or treat life-threatening or permanently disabling injuries until the individual is stabilized.” It does not apply to any expense that is necessary for the person’s actual recovery and rehabilitation.

Detroit families who buy D-Insurance will also be robbed of their right under the Michigan No-Fault Law to choose their own medical providers without having to seek approval from their insurance company. When lives are on the line, families want the best treatment available for their loved ones, but D-Insurance will result in unacceptable delays in essential, time-sensitive care.

This legislation further allows insurance companies to sell this virtually worthless and Draconian insurance coverage with absolutely no guarantee that it will bring down auto insurance rates in Detroit by even a single penny.

Mayor Duggan’s legislation also allows the same type of abysmal insurance coverage to be sold in any other city in Michigan which demonstrates more than 35 percent of its motorists are uninsured. D-Insurance will inevitably spread throughout Michigan and will jeopardize the quality injury coverage Michigan has been proud to provide to catastrophically injured accident victims, especially children.

There is no question that Detroiters need relief from the unfair and unjust auto insurance rates they have no choice but to pay, but D-Insurance is a cut-rate policy that does more harm than good. Insurance companies should work together with the health care community to develop some common sense reforms. There is room for both sides to come together on imposing strong anti-fraud measures, streamlining claims processing, and fair cost-containment measures.

These reforms will reduce costs incurred by insurance companies and likely induce meaningful rate reduction by insurance companies to make coverage more affordable for all while ensuring that Michigan’s seriously injured accident victims have continued access to the quality care they need and deserve.

Dr. Owen Perlman is a specialist in Physical Medicine and Rehabilitation at St. Joseph Mercy Hospital-Ann Arbor.