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. CPAN 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 then 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.