Navigating the Chaos: The New Auto Insurance Legislation

This analysis, entitled Navigating the Chaos – The New No-Fault Legislation was authored by CPAN’s legal team, the Sinas Dramis Law Firm, i.e. George T. Sinas, Stephen H. Sinas, and Thomas G. Sinas. The analysis provides an excellent summary of the massive and complex changes that have been made to the Michigan Auto No-fault Law as a result of this recently-passed legislation. This analysis is provided to you compliments of CPAN, and we hope it is helpful to you in understanding this new law. Please let us know if you have any questions.

 


No-fault legislation is a sell-out of Michigan citizens and a total gift to the insurance industry

No-fault legislation is a sell-out of Michigan citizens and a total gift to the insurance industry
Cornack: We urge the governor to rectify the injustice that this legislation will create

LANSING, Mich.—(May 24, 2019)— John Cornack, president of the Coalition Protecting Auto No-Fault (CPAN), issued the following statement in response to no-fault legislation passed by the Michigan Legislature today.

“The Michigan Legislature has just passed a destructive piece of legislation that decimates Michigan’s premier auto no-fault system. It is a sell-out of Michigan citizens and a total gift to the insurance industry.

For thousands of Michigan families, this legislation will result in the loss of their current lifetime medical expense coverage because they are simply no longer able to pay the unconscionable and extortionistic premiums Michigan insurers have been allowed to charge for the last 10 years. Rather than passing legislation that would more fairly regulate what insurers can charge, Michigan legislators have attempted to solve the problem by taking away people’s rights when they are injured.

As a result of this legislation, thousands of Michigan families will have no choice but to put their family at risk with the low levels of insurance coverages that this legislation now authorizes. Those low-level coverages will be woefully inadequate to provide the necessary medical care that catastrophically injured people, especially children, require in order to have a meaningful quality of life.

There may have been little that Governor Whitmer could have done to materially change the outcome of this political fiasco. However, there still remains much she can do to use the tools that are still in her legal toolbox in order to better level the playing field for Michigan citizens. We strongly urge the Governor to use those tools as soon as possible and do whatever else she can, in the months ahead, to rectify the injustice that this legislation will create.”


CPAN: We applaud Gov. Whitmer for standing up for Michigan drivers and Michigan consumers

CPAN: We applaud Gov. Whitmer for standing up for Michigan drivers and Michigan consumers
Cornack: We can lower Michigan premiums without depriving accident victims of care

LANSING, Mich.—(May 1, 2019)— John Cornack, president of the Coalition Protecting Auto No-Fault (CPAN), issued the following statement in response to Gov. Gretchen Whitmer’s directive that the Department of Insurance and Financial Services (DIFS) examine and report on the use of non-driving factors to set rates and the pricing of coordinated auto insurance policies.

“We applaud Gov. Whitmer for standing up for Michigan drivers and Michigan consumers. Setting rates based on non-driving factors like gender, job title, home ownership, credit score, and ZIP code is pure discrimination, and we need to hold insurance companies accountable for these unfair practices. As we’ve seen in California, strong consumer protections work – they have the strongest rules in the country, and have maintained the slowest pace of rate increases of any state while continuing a healthy insurance market. We can replicate that success here in Michigan if DIFS ensures stronger oversight of the insurance industry. This is an excellent first step toward lowering auto insurance premiums for consumers in our state while protecting essential care for accident victims.”


CPAN: We need to crack down on fraud throughout the no-fault system, including insurance companies that deny legitimate claims

CPAN: We need to crack down on fraud throughout the no-fault system, including insurance companies that deny legitimate claims
Cornack: We can lower Michigan premiums without depriving accident victims of care

LANSING, Mich.—(April 23, 2019)— John Cornack, president of the Coalition Protecting Auto No-Fault (CPAN), issued the following statement in response to today’s news report regarding a lawsuit filed by Allstate.

“CPAN strongly believes that Michigan needs reforms to reduce fraud throughout the no-fault system – whether its committed by providers, attorneys or the insurance companies that wrongly deny legitimate claims. We can lower Michigan’s too-high premiums without depriving accident victims of essential care by implementing common-sense, bipartisan solutions, including a fair and funded fraud authority, tighter regulations over insurance companies and their rating practices, and a fee schedule for medical providers. CPAN remains committed to protecting Michigan consumers and fighting on behalf of all Michigan drivers.”


Consumers once again pay the price for lack of MCCA transparency

Consumers once again pay the price for lack of MCCA transparency

Insurance company-controlled board will raise annual fee from $192 to $220 starting July 1

LANSING, Mich.—(March 27, 2019)— John Cornack, president of the Coalition Protecting Auto No-Fault (CPAN), issued the following statement in response to today’s news that the Michigan Catastrophic Claims Association (MCCA) will be raising its annual per vehicle fee from $192 to $220 starting July 1.

“The Michigan Catastrophic Claims Association, which is run by Michigan auto insurance companies, has more than $20 billion sitting in its coffers. Every year it asks for more money, yet it refuses to show us the rate-making data it uses to determine its financial health and set its annual assessment. This is yet another example of the auto insurance industry not being held accountable due to a lack of strong consumer protections in Michigan. We need to bring full transparency to the MCCA as part of any no-fault reform package.”


CPAN testifies on the dangers of implementing limited protection coverage policies

CPAN testifies on the dangers of implementing limited protection coverage policies

Kroese: Limited protections means accident victims, including children, won’t get the care they need

LANSING, Mich.—(Feb. 27, 2019)— Two representatives from the Coalition Protecting Auto No-Fault Board of Directors, Margaret Kroese and Steve Sinas, today testified in front of the Senate Insurance and Banking Committee on the dangers of enacting limited protection coverage auto insurance plans – otherwise known as Personal Injury Protection (PIP) choice. The following statement can be attributed to Kroese, who is the executive director of neurorehabilitation at Hope Network.

“Limited protection coverage means that catastrophically injured auto accident victims – including children – won’t get the essential care they need. That outcome is guaranteed in any proposal that includes so-called PIP choice. This is a ‘solution’ that will only create more problems.”

“According to the Michigan Office of Highway Safety Planning, of the almost 10 million people living in Michigan in 2017, 78,394 were injured in a car crash, or one out of every 127. Over six thousand people needed hospitalization – their injuries were severe. Some of those injured were left with permanent disabilities.”

“I believe there is a better, simpler way to bring down costs without taking away the coverage.  The proposals put forward by CPAN offer efficiencies to the current system. They include a fee schedule, reduction in litigation, elimination of non-driving rating factors, cracking down on fraud throughout the system, and increased oversight on rate setting.”

“California, which has the strongest consumer protections in the country, has seen the slowest premium growth in the country, thanks to enacting exactly the kinds of reforms that CPAN has advocated for. To argue that CPAN’s proposed reforms won’t lead to rate reduction misses this important proven result in California.”

“These wide sweeping reforms will result in substantial saving to policyholders across the state without forcing families into bankruptcy, shifting the cost of care onto the back of taxpayers (as we’ve seen in other states like Colorado which saw a 205% increase in Medicaid costs associated with just care related to motor vehicle accidents when they ended no-fault), or depriving accident victims of the care they need to recover as much as they can and to live as independently as possible.”


CPAN: Fee schedule is just one component of balanced, comprehensive auto no-fault reform

CPAN: Fee schedule is just one component of balanced, comprehensive auto no-fault reform

Cornack: Enact reforms that reduce costs for drivers, not just insurance companies

LANSING, Mich.—(Feb. 20, 2019)— John Cornack, president of the Coalition Protecting Auto No-Fault (CPAN), issued the following statement in response to today’s Senate Insurance and Banking Committee hearing. The hearing focused on implementing a medical fee schedule to help lower health insurance costs for accident victims.

“CPAN strongly believes that we can reduce auto insurance premiums without depriving auto accident victims of essential care—and that requires taking a balanced, comprehensive approach to reforming auto no-fault.

“A reasonable fee schedule is just one component of that approach, and has always been one of the many reforms for which we advocate.

“We continue to fight for all Michigan families and drivers, and we call on legislators to enact real, genuine reforms that will reduce costs for drivers, not just insurance companies. In addition to a fee schedule and cracking down on fraud, we need state government to provide effective oversight of the insurance industry, and ensure that rates are fair and equitable. We also need to ban the use of discriminatory, non-driving rating factors when setting rates.

“In order to provide true rate relief to consumers, we need to hold the insurance companies accountable and pass common-sense, bipartisan reforms.”


CPAN: We can work together to lower auto insurance premiums without limiting the essential care that catastrophically injured residents need to thrive

CPAN: We can work together to lower auto insurance premiums without limiting the essential care that catastrophically injured residents need to thrive

 

LANSING, Mich.—(Feb. 12, 2019)— Tom Constand, speaking on behalf of the Coalition Protecting Auto No-Fault (CPAN), this evening thanked Gov. Gretchen Whitmer for her thoughtful State of the State address and for her call to legislators to work in a bipartisan fashion to lower auto insurance premiums.

 

Constand, who is a CPAN board member and also president and CEO of the Brain Injury Association of Michigan, issued the following statement:

 

“CPAN remains committed to passing comprehensive auto no-fault reform that protects all Michigan families and drivers, and we look forward to working with Gov. Whitmer and lawmakers from both sides of the aisle to lower auto insurance premiums without depriving auto accident victims of the care they need.

 

“Michigan can maintain high-quality care while lowering premiums through effective rate regulation, implementing a fee schedule for health care providers, cracking down on fraud, and enacting other common-sense, bipartisan reforms.

 

“We remain steadfastly opposed to any plan that limits the essential care that auto accident victims can receive. Capping essential care means families will go into bankruptcy because they can’t pay their medical bills. Capping essential care means catastrophically injured children will not have the opportunity to lead happy, healthy lives. Capping essential care means reducing people’s ability to achieve independence or return to work. Michigan citizens deserve better.”


CPAN files federal court documents seeking to require state government officials to protect Michigan drivers from excessive and discriminatory auto insurance rates

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CPAN files federal court documents seeking to require state government officials to protect Michigan drivers from excessive and discriminatory auto insurance rates

Consumer group requests intervention in Mayor Duggan’s lawsuit in order to achieve real rate relief while preserving medical care

DETROIT — The Coalition Protecting Auto No-Fault (CPAN) today announced it has filed a motion in the U.S. District Court for the Eastern District of Michigan aimed at protecting Michigan drivers from excessive and discriminatory auto insurance rates. The court documents seek intervention to join a lawsuit filed in August 2018 by Detroit Mayor Mike Duggan. In that lawsuit, Mayor Duggan alleged that because auto insurance rates are excessive, the Michigan no-fault law has become unconstitutional and, therefore, should be judicially repealed. Although CPAN agrees that Michigan drivers deserve meaningful relief from high insurance premiums, it vehemently disagrees with Mayor Duggan as to the proper remedy for addressing the insurance rate problem.

In its court filing, CPAN alleges that Michigan’s high auto insurance rates are directly related to the unfair and discriminatory rate making practices utilized by Michigan insurance companies, particularly with regard to factors such as gender, marital status, educational level, home ownership, and credit scoring. CPAN charges that these rate making practices violate Michigan law and should have been prohibited long ago by the Michigan Department of Insurance and Financial Services (DIFS), which is currently headed by Director Patrick M. McPharlin.

“What CPAN is fighting for is quite simple:  We want the person in this state who is charged—by law—with protecting Michigan drivers from excessive rates to actually do his job,” said CPAN President John Cornack.  “For far too long, insurance companies have gotten away with inflicting high, discriminatory auto insurance prices against Michigan drivers. The leader charged with keeping the insurance industry in check has done nothing. Why? Is there a fox watching the henhouse? If Director McPharlin won’t stand up and protect Michigan taxpayers, we aim to require him to start doing so through this lawsuit.”

CPAN is a coalition of consumer advocacy groups and health care professionals that has fought for many years to prevent insurance companies from taking away vitally important rights to medical care for the victims of motor vehicle accidents. CPAN contends that under the landmark 1978 Michigan Supreme Court decision in Shavers v Attorney General, Michigan drivers have a constitutional right to fair and equitable auto insurance rates.

“There is no question that under the Shavers decision, Michigan motorists have a due process, constitutional right to fair and equitable auto insurance rates,” said CPAN General Counsel George T. Sinas. “Unfortunately, however, the state of Michigan has not adequately protected those rights with effective oversight of the insurance industry. The proper solution to protect Michigan motorists is most certainly not to dismantle the entire no-fault system which Mayor Duggan’s lawsuit seeks to do. Rather, CPAN’s proposed remedy seeks to preserve the auto no-fault system, while at the same time, forcing insurance companies to utilize rate making practices that will result in fair and equitable auto insurance premiums. Unfortunately, however, the Mayor’s lawsuit does not have that same objective. Rather, his lawsuit seeks to throw the baby out with the bath water, while CPAN seeks to clean up the bath water and save the baby.”

Specifically, in its court documents, CPAN asks the U.S. District Court to:

  • Find that multiple insurance rate-making practices that are currently permitted by the state of Michigan violate constitutional protections for Michigan drivers, including rate-making that takes into account gender, marital status, level of education, occupational status, credit history, home ownership, and ZIP codes.
  • Require the state of Michigan to prohibit any and all rate-making practices that are not consistent with the constitutional protections recognized in the 1978 Michigan Supreme Court Shavers case.
  • Compel the state of Michigan to properly enforce the no-fault laws related to guaranteeing that premiums charged are not excessive.

“By seeking to throw out the entire auto no-fault law, Mayor Duggan is clearly on the opposite side of the issue from his voters,” Cornack said. “According to a recent survey of Michigan voters by ROI Insight, nearly two-thirds (64 percent) of voters statewide support protecting lifetime catastrophic care for auto accident victims. That number climbs to nearly 70 percent (69 percent) in the city of Detroit.”

“In addition,” Cornack said, “eight in ten (80 percent of) voters in Detroit—nearly two-thirds statewide—blame the state of Michigan for high auto-insurance rates, because of inadequate oversight and regulation of the insurance industry.”

In states without the benefit of an auto no-fault system, victims of auto accidents are often forced into bankruptcy due to the cost of care, which can last a lifetime depending on the severity of injuries sustained. In other states, the costs of such care are shifted to taxpayers generally, because costs are shifted to the state through the Medicaid system. When Colorado changed from a no-fault to a tort state, its Medicaid cost increased by 205 percent.


CPAN celebrates its 15th anniversary

This month, CPAN is celebrating its 15th anniversary. It is truly amazing how fast the years have flown by since we started the historic CPAN Coalition in 2003. As we reflect on all of the great things our organization has accomplished over the last 15 years to preserve our great auto no-fault system, it is worthwhile to recall the words of former Michigan Supreme Court Chief Justice Michael F. Cavanagh, when he spoke at the CPAN 10th anniversary celebration held in Lansing on October 26, 2013. At that time, Justice Cavanagh said these words:

“My 40-year career as a Judge in the Michigan appellate courts has paralleled the birth and the subsequent maturation of the Michigan Auto No-Fault Insurance law. The two of us have literally grown up together. During that 40-year period, I have watched this law develop from a controversial legal concept into a comprehensive injury reparations system that is not only unique to Michigan, but is something that has consistently earned national acclaim. During my many years as a judge, I have participated in cases where I have witnessed first-hand, how the Michigan auto no-fault system has provided the structure within which lives shattered by catastrophic injury were rebuilt and made productive once again. Without the vast resources that are harnessed by this special law, and without its clearly intended purpose of fully serving the patients it was designed to benefit, many of those precious lives would have been destroyed.

However, any comprehensive legislative scheme that is as bold as the Michigan Auto No-Fault Act was designed to be, is bound to draw the criticism and opposition of powerful special interests that would be benefitted by a reduction in its scope or by its outright elimination. Therefore, those individuals and organizations who sincerely wish to protect and perpetuate this unique system must rise to the formidable challenges that such threats present. Up until CPAN was created 10 years ago, there was no single purpose, broad-based, bipartisan organization that could take on the great responsibility of preserving the original Michigan no-fault law and protecting the rights of the thousands of patients it serves. That is why I believe the citizens of Michigan owe a deep debt of gratitude to CPAN for its willingness to perform that most important role.

During the last 10 years, CPAN has acquired a formidable presence in the public sector regarding matters dealing with the Michigan auto no-fault law. I could not express this point any better than did Republican Representative Gail Haines from the 43rd District, when she recently stated, and I quote:

‘CPAN has emerged as a knowledgeable, well respected, credible, bipartisan voice that policy makers and the public can trust regarding matters dealing with the Michigan Auto No-Fault System.’

The existence of CPAN has also been a great benefit to the Michigan appellate courts. Over the last 10 years, CPAN’s legal team has filed nearly 30 amicus curiae briefs in the Michigan Supreme Court and in the Michigan Court of Appeals in a number of important cases dealing with the interpretation of the Michigan No-Fault Act. I cannot over-emphasize how helpful that effort has been for Michigan judges. These CPAN amicus briefs are often times able to analyze the legal issues in a manner that is more global and socially relevant than the actual litigants are able to do in their case specific briefs. As a result, these amicus briefs have provided our judges with very important perspectives regarding the interpretation of this law. I can also tell you that these CPAN amicus briefs have been exceptionally well written. Therefore, all CPAN members should be proud of your organization’s impressive amicus campaign and you should commit yourself to its continuation.

In spite of all that CPAN has done over the last 10 years, I am sure you are well aware that your work is just beginning. The battles you will be fighting in the months and years ahead, both legislatively and judicially, will only intensify. Therefore, if you want your mission to be successful, you must re-commit yourselves, your resources, and your members to the task at hand. Your organization is indeed historic and so is its work.”