The Fair and Affordable No-Fault Reform Package Benefits Michigan Drivers, Accident Survivors and Health Care Providers
Michigan’s auto insurance laws have long been considered a model for the country, but increasing insurance rates, recent court cases and other issues have created flaws in the system that must be addressed.
For the first time, House Republicans and Democrats have joined together to create a bi-partisan comprehensive no-fault reform package that will provide a lasting fix to Michigan’s auto insurance system. Led by Republican State Rep. Ben Frederick (R-Owosso) and Democrat Rep. Donna Lasinski (D-Scio Township), the Fair and Affordable No-Fault Reform proposal is similar to a 24-point reform plan CPAN proposed earlier this year. The Fair and Affordable No-Fault Reform proposal aims to reduce costs for drivers while also preserving lifetime injury coverage and adding consumer protections to Michigan’s auto insurance system.
Here’s what the reform package will do:
Make Michigan Auto Insurance More Affordable
- Create a fee schedule for all medical providers treating auto accident victims
- The fee schedule would be set at 185 percent of Workers Compensation for all medical providers treating accident victims and would include cost-of-living adjustments, provided payment is made promptly. This fee schedule would NOT apply to Level 1 trauma centers, which helps preserve funding for those facilities that are among the first to receive and stabilize catastrophic auto accident victims.
- Set a reasonable rate schedule for family-provided attendant care
- The legislation would set an hourly rate schedule for family-provided attendant care that would allow for rates that are reasonably related to the nature and extent of the patient’s disability and needs, including providing for patients who require 24/7 care.
- Ban insurers from using unfair rating practices
- Prohibit non-driving rating factors (including credit score, gender, occupation, education level and zip code) from being used to determine auto insurance rates. CPAN research has found that some insurance companies will charge Detroiters almost $700 more a year for auto insurance just because they are a factory worker instead of a doctor or lawyer; other companies charge women 38 percent more for auto insurance simply because of their gender. This type of pricing is wrong and must stop.
- Create a fraud prevention authority
- The Fraud Prevention Authority will address fraud committed by claimants and providers as well as prevent insurance companies from wrongly and knowingly denying legitimate claims, which drives up litigation and expenses for all.
- Encourage the coordinated coverage
- The legislation would encourage the purchase of coordinated no-fault policies, which saves costs for insurers and consumers, by providing that health insurers that pay benefits in lieu of auto insurers are not given tort lien rights that are greater than no-fault insurers.
- Reduce unnecessary litigation
- Prevent unnecessary litigation by extending the one-year-back rule applicable to legal actions that seek payments of benefits to a three-year-back rule.
Make Michigan Auto Insurance More Fair
- Make auto insurance more transparent
- Require the Michigan Catastrophic Claims Association independently and publicly verify the appropriateness of its assessments (currently $170 per insured vehicle) by making its ratemaking data available to the public.
- Prohibit the MCCA from meddling in accident victim’s claims
- The legislation would prohibit the MCCA from acting as a super-adjuster on behalf of insurance companies. The MCCA should only serve as an indemnifier that reimburses auto insurers for medical expenses that exceed the statutorily set limit (currently $550,000).
- Make independent medical examinations truly independent
- Often times insurance companies will require patients to obtain a second or even third opinion before authorizing important medical treatment. The legislation would establish fair standards and qualifications for physicians who provide independent medical exams on behalf of insurance companies.
- Amend wage loss benefits
- Instead of a one-size fits all system, the legislation would ensure wage loss benefits are better aligned with the auto accident victim’s actual wage/salary loss.
- Admire Fix
- Corrects the Admire vs. Auto Owners Michigan Supreme Court decision, which has been used by insurance companies to deny paying for legitimate expenses needed by auto accident victims, including handicapped accessible transportation and even specialized food needed by patients.
- Bahri Fix
- Corrects the unjust decision of Bahri vs IDS Property Casualty Insurance Company, which currently allows insurance companies to void an entire policy if a claim submission was made in error, or if the insurance company alleges fraud.
- Bazzi Fix
- Re-instates innocent party rule, which was ended in the case of Bazzi vs Sentinel Insurance Company, thereby protecting innocent third party claimants who did not participate in fraudulent procurement of a policy.
- Covenant Fix
- Corrects 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.
TAKE ACTION: Write your lawmakers and tell them you support the Fair and Affordable auto insurance reforms plan that protects accident victims and lowers costs WITHOUT capping care on seriously injured accident victims!