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.”


PIP choice would be a ‘solution’ that actually creates new problems, by reducing care and shifting costs from insurance companies to taxpayers

CPAN: PIP choice would be a ‘solution’ that actually creates new problems, by reducing care and shifting costs from insurance companies to taxpayers

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 dismantling Michigan’s no-fault auto insurance system and replacing it with Personal Injury Protection (PIP) choice, which would allow insurance companies to sell junk plans with no guaranteed rate reduction.

“There are two fundamental problems with so-called PIP choice. First, it will deprive Michigan citizens of essential care. PIP choice means families will go bankrupt because they can’t pay their medical bills, and catastrophically injured children won’t receive the care they need. That’s unacceptable.

“Second, implementing PIP choice would likely result in a hidden tax increase on all Michigan citizens, as catastrophically injured drivers would have to declare medical bankruptcy and end up on state Medicaid. In fact, the nonpartisan House Fiscal Agency in 2017 found that a PIP choice plan would shift $150 million in costs to the Medicaid system. That’s a good deal for insurance companies and a bad deal for everyone else. As Gov. Whitmer said in her State of the State address last night, we should reject ‘solutions’ that actually create new problems.

“There’s a better way to lower rates – through effective rate regulation, prohibiting the use of non-driving rating factors when setting rates, implementing a fee schedule for health care providers, cracking down on fraud, and enacting other 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: Lack of consumer protections in Michigan is what’s truly ‘shameful’

CPAN: Lack of consumer protections in Michigan is what’s truly ‘shameful’

DETROIT—(Feb. 7, 2019)—The U.S. District Court for the Eastern District of Michigan today heard a motion filed by the state of Michigan seeking to dismiss a lawsuit filed by the City of Detroit which sought a declaration that the Michigan no-fault statute was unconstitutional and should be invalidated. The Coalition Protecting Auto No-Fault filed a motion several months ago seeking permission to intervene in this lawsuit for the purpose of preserving Michigan’s auto no-fault law from being declared void.

At today’s hearing, Judge George C. Steeh ruled that he would take the state’s motion to dismiss the City of Detroit lawsuit under advisement in order to give state legislators and state officials opportunity to correct deficiencies that he declared had resulted in a “shameful situation.”  The court did not rule on CPAN’s motion to intervene, nor did it address other intervention requests.

Although CPAN, in its intervention pleadings, agreed with the City of Detroit that Michigan motorists have a constitutional right to auto no-fault insurance at “fair and equitable rates,” as mandated by the landmark 1978 decision of the Michigan Supreme Court in Shavers vs. Attorney General, CPAN vehemently disagrees with the position of the City of Detroit that the proper remedy is a judicial declaration that the law is invalid. Rather, CPAN takes the position that there are a number of things that could have been done and were not done over the years by state government – in particular, the Department of Financial and Insurance Services – to keep auto no-fault affordable.

CPAN General Counsel George T. Sinas commented on the situation, stating:

“What is shameful is that the Michigan Department of Insurance and Financial Services (DIFS) has done virtually nothing significant in the last 25 years to make sure that auto insurance rates were affordable for the average citizen. For example, it has failed to properly implement a statutory provision requiring the department director to make a specific determination that premiums for coordinated benefit policies had been “appropriately reduced;” it has failed to implement the decision of the Michigan Supreme Court in Shavers vs Attorney General by formulating standards to ensure that premiums were “fair and equitable;” it has failed to exercise its authority to obtain certain ratemaking data from the Michigan Catastrophic Claims Association that would verify whether the annual MCCA assessments were appropriate; and it has failed to exercise its authority under the Uniform Trade Practices Act that gives the department authority to issue refunds if it finds that insurance companies are engaging in “unfair” practices.

These failures by the bureau are even more reprehensible given recently disclosed evidence that insurers are engaging in unfair ratemaking practices that result in higher rates being paid by women, widows, blue-collar workers, non-homeowners, economic profiling and others. Furthermore, this abdication of responsibility further confirms that in reality DIFS has largely been a rubber stamp protector of the insurance industry.

If anything is shameful, it is that legacy of neglect. There is little doubt that had DIFS done its job, we all would have been paying lower rates.

The question that becomes: who’s going to make DIFS do what it’s supposed to do?”

CPAN is hopeful that the federal court will grant its petition to intervene as it has become obvious that this federal lawsuit will be a major factor in shaping the future of auto no-fault in Michigan.


CPAN welcomes new DIFS Director Fox, calls for new era of stronger consumer protections and regulation of insurance industry

CPAN welcomes new DIFS Director Fox, calls for new era of stronger consumer protections and regulation of insurance industry

FOIA records show former Director McPharlin was too cozy with insurance companies

LANSING, Mich.—(Jan. 14, 2019)—The Coalition Protecting Auto No-Fault today welcomed Anita Fox into her new role as director of the Department of Insurance and Financial Services, and called on her to reform the department into one that protects the interests of consumers rather than the insurance industry.

Today, Fox officially replaces outgoing director Patrick McPharlin, who had a cozy and secretive relationship with the industry he was supposed to be policing, according to records obtained by CPAN through the Freedom of Information Act.

“CPAN looks forward to working with Director Fox to make auto insurance more affordable while protecting the benefits that catastrophically injured auto accident victims need to lead productive, meaningful lives,” said John Cornack, president of CPAN. “For too long, no one has held Michigan’s insurance companies accountable. Michigan consumers need a bulldog in state government to protect them from the insurance industry’s discriminatory practices – instead, Patrick McPharlin was a lap dog for the big insurance companies.”

Documents that CPAN recently obtained through a Freedom of Information Act request relate to the DIFS “President’s Council” – a group of insurance company CEOs who regularly met with McPharlin. Only emails and meeting agendas were made available through the FOIA – no minutes of President’s Council meetings exist, although it’s clear that issues relevant to the public were discussed.

For example, an agenda item for Jan. 28, 2016 was titled “Make Michigan theinsurance industry state.” In letters sent to each insurance company CEO invited to sit on the Council, McPharlin said he wanted to hear about “laws we need to enact, repeal, or modify” to make the CEOs happy.

In a letter to State Rep. Donna Lasinski, McPharlin confirmed that the issue of tax reform was discussed at one of the President’s Council meetings. CPAN, Rep. Lasinski and other consumer advocates in the Michigan Legislature have called on DIFS to take a more proactive approach in ensuring that the insurance industry pass along to consumers the massive windfall they received as part of federal tax reform enacted in 2017. While no minutes exist from the meeting, DIFS clearly opted not to crack down on insurance companies, which have continued to rake in huge profits while jacking up prices on consumers. For example, during the first nine months of 2018, Allstate, ranked in the top 5 for market share in Michigan, increased its Adjusted Net Income by $716 million over the same time period in 2017.

Cornack noted that a recent poll commissioned by CPAN found that 65 percent of respondents said auto insurance rates are high because the State of Michigan does a poor job regulating rates to protect consumers.

“With stronger oversight from state government and a new opportunity for bipartisan solutions in the Legislature, we hope that 2019 will represent a new era—one where we put the needs of consumers above the profits of big insurance companies,” he said. “We are encouraged that we can work together to find a solution that lowers insurance premiums while protecting benefits for all Michigan drivers and families.”



SB 1014 (H-1) 10 Reasons to Just Say “NO“

SB 1014 (H-1)
10 Reasons to Just Say “NO”

On November 3, 2017, the Michigan House of Representatives rejected HB 5013, which would have allowed insurance companies to sell substandard auto no-fault insurance policies to Michigan families with woefully inadequate caps on medical care and income loss benefits for auto accident injuries. Now, SB 1014 (H-1) seeks to authorize the sale of very similar substandard, capped no-fault insurance policies. Contrary to some characterizations, the first capped option under the SB 1014 (H-1) is not a $250,000 cap. Rather, it is a $25,000 lifetime cap with a narrow exception for $225,000 in emergency medical care. The second capped option is a $250,000 cap, with no distinction between emergency medical care and non-emergency care. The third capped option is a $500,000 cap, with no distinction between emergency medical care and non-emergency care. Importantly, these three capped options apply not only to medical expenses, but to all PIP benefits, including benefits for income loss and household services. These inadequate benefit caps are applicable to all family members in a household who are covered by the policy. Moreover, the bill authorizes the sale of these substandard no-fault policies with no true guarantee of insurance premium reductions. The bill also provides many loopholes for insurance companies to avoid charging fair insurance rates to Michigan consumers. For the same reasons that HB 5013 was rejected as horrible policy for Michigan, SB 1014(H-1) must also be rejected. The following provides at least 10 compelling reasons to just say“NO” to this bill.

1. Every Child Can be Left Behind – Under current law, every Michigan child is entitled to lifetime medical coverage for auto accident injuries. Under the bill, every child loses this existing right to lifetime medical coverage forauto accident injuries, if the child’s parent does not buy or cannot afford to buylifetime coverage and instead buys a capped no-fault policy. Children in those households will not have the lifetime medical and rehabilitation coverage that is essential for a child dealing with the lifelong consequences of catastrophic injury.

2. Bad Choices for Senior Citizens – The bill purports to give senior citizens a choice to save premium dollars by entirely opting out of no-fault PIP coverage. In reality, this is a bad choice for Michigan seniors. Seniors are not given the choice to retain the part of no-fault coverage that makes it possible for them to stay in their home if they sustain severe, disabling injuries in an auto accident. The bill provides an “all-or-nothing” choice for seniors with no specific, substantial, and guaranteed premium reduction for making such a bad choice. A truly fair senior citizen opt-out is one that allows seniors to opt-out of no-fault coverage to the extent medical expenses are covered by other health plans, while retaining no-fault coverage for those expenses that are not.

3. Reprehensible Protections for Drunk and Careless Drivers – Those irresponsible drivers who cause victims to incur medical expenses beyond a capped no-fault PIP policy will be immune and have absolutely no liability for compensating the victim for those uncovered medical expenses. This injustice does not exist under the current no-fault system because all accident victims have lifetime medical coverage and do not incur uncovered medical expenses.

4. Drastic Reduction of Family-Provided Attendant Care Benefits – Catastrophically injured patients will lose 50% of their right to family- provided attendant care benefits, which will now be limited to only 12 hours per day. For the remaining care, families will be required to hire strangers to care for them in their home.

5. Increased Risk for Patient Bankruptcy and Taxpayer Liability – Seriously injured persons with capped no-fault policies who incur substantial medical expenses in excess of that cap will likely face financial disaster because of these uncovered expenses. For many, this will mean bankruptcy. The auto accident related medical expenses that will no longer be covered will be shifted to Michigan taxpayers through increased financial burdens in the Medicaid system.

6. Inadequate Medical Fee Schedules Resulting in Cost Shifting – Under the bill, providers treating auto accident victims will be only compensated at rates payable under the Michigan Workers’ Compensation fee schedule. These substantially lower rates will cause a disincentive for the best medical providers to render care to auto accident victims and will cause the unreimbursed portion of medical care to be shifted to other health care payment systems, including employer-provided health insurance and other insurance plans.

7. Phony Protection from Unfair Rate-Making Practices – Although the bill purports to prohibit rate-making practices based upon gender, marital status, education, etc., it will allow those very same practices to be utilized if a no-fault insurer files group insurance rates. Various insurance companies are currently exploiting this loophole, which this bill does not close. Moreover, the bill does not prohibit the use of a person’s credit history, it only bars use of the “credit score” (the specific number assigned by the credit reporting agency). Because of this, insurers will still be allowed to use credit history, zip codes, and other data tracked by the credit scoring companies. This section offers only illusory protection from unfair rate-making practices.

8. Phony Premium Reductions – The bill purports to mandate a reduction in premiums. However, this premium reduction is illusory for two reasons: a) the premium reduction required by the bill applies only to the premium for PIP benefits, not to the total premium, which, in reality, is comprised of coverages that are frequently more costly than the premium for PIP benefits; and b) under the bill, no premium reduction is necessary if an insurance company is able to convince the Department of Insurance and Financial Services (DIFS) that the failure to reduce the premium is “justified” by “using generally accepted and reasonable actuarial techniques.”

9. Phony MCCA Transparency – Even though the bill requires an independent audit of the MCCA, it does not require the disclosure of the MCCA’s“rate-making data,” which is essential to determining the appropriateness of the MCCA annual assessment that is passed onto Michigan drivers.

10. Economic Disaster for the Michigan Health Care Economy – Michigan’s healthcare economy is robust and essential to the overall economic health of Michigan. This bill, which eliminates lifetime coverage for auto accident injuries and drastically reduces medical provider reimbursement rates, will significantly diminish revenue to that sector of Michigan’s economy, thereby precipitating a loss of jobs and an impairment of Michigan’s economic growth.

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For more information about the legal implications of this Bill, please contact the CPAN Legal Team of George T. Sinas, Stephen H. Sinas, or Thomas G. Sinas, of the Sinas Dramis Law Firm in Lansing and Grand Rapids. Those telephone numbers are: Lansing Office at (517) 394-7500 and Grand Rapids Office at (616) 301-3333.


CPAN joins bipartisan lawmakers in calling on state government to crack down on insurance industry’s refusal to lower rates in light of corporate tax reform

CPAN joins bipartisan lawmakers in calling on state government to crack down on insurance industry’s refusal to lower rates in light of corporate tax reform

Lawmakers question why corporate savings not passed down to consumers

LANSING – The Coalition Protecting Auto No-Fault today joined with a bipartisan group of Michigan legislators calling on the state Department of Insurance and Financial Services (DIFS) to ensure that insurance companies pass along the savings they received from the federal tax reform enacted last December.

CPAN President John Cornack expressed his support for a letter sent to DIFS Director Patrick McPharlin, submitted by State Rep. Donna Lasinski and co-signed by several Michigan legislators. The letter notes that “if insurers have not adjusted their rates to account for the lower tax, their rates likely became excessive, leaving Michigan residents overpaying for auto, home, and renters coverage they need.”

“Rep. Lasinski is absolutely correct – the insurance industry received a massive tax break as part of federal tax reform, but instead of passing that relief onto consumers, it appears that they’ve once again opted to line their own pockets,” Cornack said. “For too long, state government has looked the other way while the insurance industry has bled residents dry. It’s time for DIFS to stand up to insurers and protect Michigan consumers. All lawmakers fighting to lower auto insurance rates for Michigan drivers should be compelling DIFS to take action.”

In January 2018, the Consumer Federation of America (CFA) sent a letter to McPharlin and state insurance commissioners throughout the country, asking what actions the industry would be taking to reduce rates to reflect the windfall from tax changes and to ensure rates return to reasonable levels.

In her follow-up letter to Director McPharlin, Rep. Lasinski writes: “As we understand it, neither you nor your staff responded to CFA’s query. More important than your lack of response to the CFA, however, is the apparent lack of response to the underlying problem. We are not aware of any systematic DIFS effort to ensure that insurance companies have appropriately reduced their rates in response to changes in federal tax law.”

Instead, insurance companies continue to rake in huge profits while jacking up prices on consumers. During the first nine months of 2018, Allstate, ranked in the top 5 for market share in Michigan, increased its Adjusted Net Income by $716 million over the same time period in 2017, which, Allstate explains, was “driven by higher premiums earned, lower catastrophe losses and a lower effective tax rate…” Meanwhile, Allstate customers saw a total premium increase of $331 million between January 2018 and September 2018 alone.

Douglas Heller, an insurance industry expert who has worked with CPAN to uncover the insurance industry’s discriminatory practice of using factors like gender, job title and ZIP code when setting rates in Michigan, said that the profit provision of an insurance rate filing incorporates anticipated taxes, so the corporate tax cut would allow for a lower rate filing while providing insurers with the same rate of return. Heller noted that earlier this year the California Insurance Commissioner directed his Department’s staff “to commence a regulatory review of these insurers’ rates given the major tax windfall under the new federal tax rules” and also issued a notice to all insurers stating that “any insurer with excessive rates, whether in whole or in part due to…changes to the federal income tax rates or due to any other reason, must file a rate change application with the Department to seek an appropriate insurance rate reduction.”

“Consumers Energy and DTE along with many utilities—another regulated industry—announced plans to cut rates due to their tax reform windfall, and insurance companies should be doing the same,” Heller said. “Michigan’s lack of effective oversight of these insurance companies is the main driver of the too-high auto insurance rates paid by policyholders. Requiring stronger regulation is the best way to provide relief to consumers.”