No-Fault Repeal Legislation: Bad Policy, Poorly Written

A blog post by CPAN Legal Counsel George Sinas

The sponsors of the 7-bill package identified as HB 5517 – 5523 claim that these bills will repeal the Michigan No-Fault Act and return Michigan to a system of pure tort law. Apart from the social irresponsibility of such legislation, is the harsh reality that these bills, as currently written, are a drafting nightmare that are virtually impossible to fully understand.

Clearly these bills outlaw the sale of all no-fault PIP policies after January 1, 2020. Therefore, people injured in auto accidents after that date must pursue other legal rights. Yet those rights are unclear under the language of these bills. The point is well demonstrated by a review of the language of HB 5517 which appears at page 42, line 19 through page 45, line 22. Anyone supporting these bills should be challenged to explain exactly what that language really means. On one hand, this language could be read to mean that victims of accidents occurring after January 1, 2020 have full legal rights to pursue, in tort, economic and non-economic loss claims against the at-fault driver. However, this language could also be read to mean that, for policies issued after January 1, 2020, the tort law provisions of the statute do not apply in any respect. As a result of this confusion, no clear rules emerge for auto accidents occurring after January 1, 2020. In fact, the ambiguity is of such a nature that one could argue there are no specific rules governing the rights of people injured in auto accidents occurring after January 1, 2020.

At a minimum, the language deficits that exist in this legislation, if passed, will probably result in years of litigation seeking clarification from the Michigan appellate courts regarding the true intent of the legislature. Michigan citizens deserve far better than this mess. If the legislature is going to seriously consider repealing the Michigan Auto No-Fault Law and replacing it with a pure tort law system (a policy decision that would be an egregious mistake), those offering such legislation have a duty to write it in a manner that is precise and unambiguous. These bills are a colossal failure in that regard.

What is even worse, is that the proponents of these bills do not seem to care much about the current ability of the Michigan tort system to fully replace the No-Fault System. Apparently, it is the intent of this legislation to provide that auto accident victims will have only one place to turn for reimbursement of medical expenses, lost wages, and diminished quality of life – the at-fault drivers’ liability insurance policy. Nevertheless, these bills have left in place the antiquated state minimum liability insurance requirements mandating that drivers carry only $20,000 of liability insurance. That minimal level of coverage will not be enough to pay for even a few days of hospitalization, let alone compensate the other substantial expenses incurred by accident victims.

In addition to the fundamental failures discussed above is the disturbing fact that this package of bills sets the stage for insurance companies to help themselves to the $21 billion-dollar MCCA bank account after the MCCA closes out its last PIP claims. Under the MCCA “Plan of Operation,” insurance companies can theoretically act to refund to themselves any “surplus” that may exist in the MCCA coffers. The only protection against such a taking is the prohibition contained in the current no-fault statute that allows the Michigan Department of Insurance and Financial Services Director to invalidate any provision in the MCCA Plan of Operation that would be inconsistent with the objectives of the MCCA. Recognizing that this provision could interfere with a money grab by insurance companies, the bill [HB 5517] at page 39, line 17 to page 40, line 1, eliminates the power of the Department Director to block such efforts to commandeer money belonging to Michigan policy holders. Perhaps that is the real motivation for the repeal of the Michigan No-Fault System – to allow insurance companies to seize the $21 billion-dollar fund amassed from the MCCA assessment fees Michigan drivers were required to pay over the past four decades.

No one who is sincerely interested in creating an auto insurance reparation system that adequately meets the needs of seriously injured citizens could ever support such a reprehensible piece of legislation as that which is embodied by HB 5517 – 5523. CPAN believes it is time to stop playing politics and look for reasonable and realistic solutions to reform the Michigan Auto No-Fault Law – a law which has consistently achieved national recognition as a model insurance system.

The Top Five Things Mike Duggan and Tom Leonard Don’t Want You to Know about their Auto Insurance Bill

Vote No on HB 5013

LANSING – The House Insurance Committee just voted to move legislation forward that would have dramatic and draconian effects on Michigan auto insurance system. House Bill 5013, sponsored by Rep. Lana Theis (R-Brighton), is being pushed by Detroit Mayor Mike Duggan and House Speaker Tom Leonard. The bill would make significant changes to Michigan’s auto insurance system by setting stringent caps on medical coverage, taking away legal rights from Michigan auto accident victims, imposing unsustainable fee schedules on health care providers and shifting costs to Michigan taxpayers.

The House Insurance Committee passed the bill on a 9-5 vote, with two legislators passing. In response to today’s events, Coalition Protecting Auto No-Fault President John Cornack issued the following statement:

“The number of problems with this bill could be stacked as high as the Capitol dome. There are ways to reduce Michigan’s auto insurance rates and improve the system without destroying it. Unfortunately, this bill’s supporters would rather sweep the criticisms under the rug so that they can rush forward with a vote rather than working on a comprehensive, long-lasting solution.”

Here are the top five facts about the Duggan-Leonard no-fault bill that its supporters don’t want to talk about:

1) The Cap on Care is $25,000 NOT $250,000
Contrary to statements made by the bill’s supporters, the $250,000 cap proposed in the bill only provides $225,000 in emergency care. Once the patient is stabilized the cap drops to $25,000 for all non-emergency and post-acute medical needs.

While supporters of HB 5013 will contend that accident victims will be able to rely on traditional health insurance or Medicaid, these insurance plans do not provide for many of the rehabilitative services needed by serious auto accident victims.

In addition, many of the very backers of HB 5013 are the same politicians who opposed the expansion of Medicaid through the Affordable Care Act.

2) HB 5013 is a Tax Increase for the Entire State
Because many seriously injured drivers will have capped care, the House Fiscal Agency Analysis predicts a massive cost shift to state taxpayers. Once an accident victim exceeds the cap, they will ultimately need to rely on Medicaid for their care. As a result, it is estimated that Michigan taxpayers will see a $10 million increase in the first year the bill goes into effect with costs rising to $150 million per year after 10 years.

3) HB 5013 Punishes Children
Under Michigan’s current law, virtually all Michigan children involved in an auto accident – even those whose parents fail to purchase auto insurance – receive lifetime coverage for their injuries. Under HB 5013, children will be subject to the coverage limits their parents purchase. This could leave a catastrophically injured child with just $25,000 in care to meet their needs for the rest of their life.

4) Shields Insurance Companies and Agents from Lawsuits
The legislation virtually eliminates a patient’s right to sue an insurance company due to the chilling effect that strengthened legal powers granted to insurers under this bill. HB 5013 includes language that requires patients to pay insurance company attorney fees and court costs if the benefits in question were found to be “not medically necessary” as opposed to “reasonably necessary,” as is stated under the current law. The phrase “medically necessary” has a very strict legal definition that essentially refers only to life-sustaining care.

In addition, insurance agents who fail to accurately inform consumers of the limitations of their insurance coverage are completely immune from any civil liability for their actions. This places all responsibility on the consumer to understand the complexities of Michigan’s auto insurance laws and zero responsibility on the agent who sells the policy.

5) Unprecedented Immunity for At-Fault Drivers
Unlike other no-fault states that cap care, HB 5013 would make Michigan the only state in the nation that makes reckless, drunk or otherwise negligent drivers immune from being sued for unpaid medical expenses. This immunity problem does not exist under the current law because the accident victim’s medical expenses are not capped.

Cornack notes that any no-fault reform package passed by the legislature must include a ban on the use of unfair rating practices that allow insurers to charge higher rates based on non-driving factors like gender, job title and credit score. That is why CPAN is supporting the Fair and Affordable No-Fault Reform package.

Learn more about the impacts of HB 5013 by reading CPAN’s legislative analysis.


Catastrophic Accident Survivor Brian Woodward Talks No-Fault Reform

Detroit resident Brian Woodward was catastrophically injured 30-plus years ago in an auto accident. Listen to him share what his life would be like if he would have purchased an auto insurance policy with a $250,000 cap such as the Duggan/Leonard PIP Cap Plan plan (HB 5013) being discussed in the House Insurance Committee Hearing tomorrow.

Click below to listen to his interview on the Mildred Gaddis Show, WPZR 102.7 FM.

CPAN Praises “Fair and Affordable” Auto Insurance Reform Legislation

Proposed bills would implement cost-containment measures, create fair auto insurance rating practices and bring more transparency to Michigan’s auto insurance system

LANSING, MI – A bipartisan group of Michigan lawmakers announced today a comprehensive set of legislation aimed at improving Michigan’s no-fault auto insurance system. The legislation, which lawmakers have dubbed the “Fair and Affordable No-Fault Reform Package,” is currently in the process of being drafted and is expected to be introduced in the coming weeks.

“While we have not yet seen the final bills, this is the closest we have seen to a complete no-fault reform package in a long, long time,” said Coalition Protecting Auto No-Fault President John Cornack. “The proposals unveiled today would bring dramatic and lasting improvements to Michigan’s insurance system that all sides would benefit from. Whether you are a driver, an accident survivor, a healthcare provider or even an insurance company, there is something to like in this package.”

Earlier this year, CPAN unveiled a 24-point plan to reform Michigan’s auto insurance system. The proposals announced today incorporate many but not all of CPAN’s recommendations, including:

  • Adopt reasonable fee schedules and attendant care limits to rein in medical costs related to auto injuries;
  • Stop non-driving related factors from unfairly impacting auto insurance rates;
  • Bring transparency to the Michigan Catastrophic Claims Association by making its ratemaking data available to the public;
  • Aggressively tackle fraud and claims handling abuse by creating a state fraud authority.

Cornack was particularly enthusiastic about proposals that will tackle unfair insurance ratings practices, such as using credit scores and job titles to set auto insurance rates.

“Everyone in this state should be pleased that lawmakers are bringing fairness to auto insurance rating practices,” said Cornack. “Our research has shown that insurance companies will use every excuse imaginable to increase rates for drivers. One company even charges as much as 33 percent more to women than men for the same car, address and driving record. That is completely wrong and must be stopped.”

Legislators announcing the Fair and Affordable No-Fault Reform package included Rep. Rep. Ben Frederick (R-Owosso), Rep. Donna Lasinski (D-Scio Township), Rep. Joseph Graves (R-Argentine Township), Rep. Sherry Gay-Dagnogo (D-Detroit), Rep. Michael Webber (R-Rochester); Rep. Tim Greimel (D-Auburn Hills); Rep. Pete Lucido (R-Shelby Township); and Rep. Ed Canfield (R-Sebewaing).

“We are particularly encouraged to see Democrats and Republicans working together come up with a solution that protects accident survivors while still lowering rates across the state,” said Cornack. This sort of bipartisan approach is something that has all too often lacking when it comes to this issue.”

In addition to containing medical costs and addressing unfair rating practices, lawmakers also announced legislation to fix problems caused by two recent Michigan Supreme Court cases that have drastically harmed Michigan’s no-fault auto insurance system.

Admire vs. Auto Owners has been used by insurance companies to deny paying no-fault benefits for legitimate expenses needed by auto accident victims, including handicapped accessible transportation and even specialized food needed by patients. Lawmakers plan to introduce legislation to ensure that accident survivors will have these basic needs met.

Legislation will also be introduced to fix the disastrous court ruling Covenant Medical Center vs. State Farm, which prevents medical providers from suing insurance companies on behalf of auto accident patients when insurers refuse to pay for treatment that has been rendered. The decision puts patients squarely in the crosshairs of litigation, because health care providers will no longer be able to battle insurance companies on behalf of their patients.

“Both of these decisions were a miscarriage of justice that, if allowed to go uncorrected, posed a serious threat to Michigan’s no-fault system,” said Cornack. “We greatly appreciate the work these lawmakers have done and continue to do to bring lower rates to drivers while protecting the elements that make Michigan’s no-fault system so great.”


Without Transparency, Michigan Catastrophic Claims Association is Taxation Without Representation

LANSING – Coalition Protecting Auto No-Fault (CPAN) President John Cornack used today’s tax filing deadline to take the Michigan Catastrophic Claims Association (MCCA) to task for practicing “taxation without representation.”

The MCCA is a private non-profit organization created by Michigan Legislature in 1978. It 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. In June, that fee rises to $170.

“Our founding fathers were adamant that there should be no taxation without representation, yet that is exactly what we have happening with the MCCA,” said Cornack. “Here we have an organization created by the Legislature that holds more than $18 BILLION of the public’s money, operating with no real public oversight. It’s a travesty.”

MCCA’s board includes AAA Insurance, Auto-Owners, Citizens Insurance, Farmers Insurance and State Farm. The Michigan director of the Department of Insurance and Financial Services serves as a non-voting ex-officio member. MCCA board meetings are not subject to the Open Meetings Act, and the organization refuses to comply with state Freedom of Information Act laws.

CPAN has filed a FOIA lawsuit seeking to open the MCCA’s rate-making data. The Michigan Court of Appeals ruled last year that the MCCA is a public body as defined by Michigan law, but disagreed with CPAN’s assertion that the organization’s FOIA exemption is unconstitutional. The case is currently in the State Supreme Court.

In addition, legislation has been introduced in both the State House and Senate that would bring transparency to the MCCA. Senate Bills 240 and 241 would require MCCA to abide by Michigan’s Open Meetings and FOIA laws. House Bill 4354 would do the same but also require a member of the public to also sit on the MCCA board and give the State Insurance Commissioner the authority to disapprove of MCCA rate charges that are deemed excessive.




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


CPAN Praises No-Fault Transparency Legislation

LANSING – Sen. Steve Bieda (D-Warren) introduced legislation today that would bring much needed transparency to Michigan no-fault auto insurance system. The legislation, Senate Bills 240 and 241, requires the Michigan Catastrophic Claims Association (MCCA) to abide by Michigan’s Open Meetings and Freedom of Information (FOIA) acts.

In addition to Sen. Bieda’s bills, Reps. Henry Yanez (D-Sterling Heights) and Abdullah Hammoud (D-Dearborn) introduced House Bill 4354 in the State House. In addition to subjecting the MCCA to the Open Meetings Act and FOIA, his bill would require the State Insurance Commissioner to appoint a member of the public to sit on the MCCA board and empower the commissioner to disapprove of any total MCCA charge the commissioner deems excessive.

The MCCA is a fund created by the state legislature that reimburses Michigan auto insurers for personal injury claims above $555,000. The $18.8 billion fund is governed by a board of insurance industry executives who refuse to comply with state transparency laws.

In support of the legislation, CPAN spokesperson Josh Hovey issued the following statement:

“Today, more than ever, transparency is essential for a functioning democracy. We hope lawmakers from both parties will join together to support transparency and accountability for their constituents and all Michigan drivers.

“The MCCA is a critical piece of Michigan’s auto insurance system because it enables auto insurance companies to provide lifetime coverage for our state’s most seriously injured accident victims. But as a state-created organization that charges $170 on every insured vehicle in Michigan, the public expects transparency. If the insurance company executives are confident that’s a reasonable charge, they should have no problem opening up the MCCA books to public scrutiny.

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.


 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  

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.


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