Archive for November, 2011
The great debate currently taking place in Lansing regarding the future of the Michigan auto no-fault insurance law has primarily focused on the specific legal changes that this law will enact. For example, the elimination of lifetime full medical coverage; the significant limitation of in-home attendant care for homebound patients; the drastic limitation in medical coverage for motorcyclists involved in motor vehicle accidents; the imposition of governmental price control fee schedules; the lack of choice for many citizens, including non-motorists and workers who drive employer vehicles; and the likelihood of higher insurance premiums for many citizens. Although these issues create a powerful case why this Bill should be resoundingly defeated, they only tell a part of the story. It is not only the content of HB 4936 that is contrary to the public interest; so too are the numerous adverse economic and social consequences this Bill will have for the state of Michigan if is adopted. In short, this Bill will be a disaster for Michigan’s economy for a number of reasons, including the following:
As the auto no-fault insurance debate gets hotter in Lansing, Michigan, citizens are being told that reform legislation was needed because the auto no-fault insurance system, is in its current form, “not sustainable.” In other words, Michigan insurance companies are predicting that future costs will rise so rapidly that auto no-fault insurance premiums will be unaffordable. Therefore, we need to dramatically change the system.
It is interesting that the insurance industry made these same arguments in 1992 and 1994, when Michigan voters resoundingly defeated two similar insurance industry proposals to change the Michigan no-fault law—Proposal D in 1992 and Proposal C in 1994.
Nevertheless, the insurance industry is back with the same old fear mongering. This time, their silver bullet cure is HB 4936, which the industry claims will bring insurance premiums down for Michigan citizens. The problem with that is that there is not one single word in this proposed legislation that requires insurance companies to lower premiums! That’s right—no guarantee of any premium reduction.
As the auto no-fault debate rages on in Lansing, HB 4936 heads for the floor of the Michigan House of Representatives for a vote. If it passes there, it will then go over to the Michigan Senate where its fate will ultimately be determined. The major feature of this Bill is that it eliminates the central feature of Michigan’s current auto no-fault law—lifetime full medical care. In its place, policyholders will only be able to buy medical coverage in three incremental levels—$500,000, $1,000,000, or $5,000,000. In other words, the insurance industry has concluded that no Michigan consumer needs, or should have the right to purchase, more than $5,000,000 of lifetime medical coverage to cover catastrophic auto accident injuries. The proponents of the Bill have made this determination in spite of the fact that over the last 35 years, there have been a number of cases where catastrophically injured patients and their families incurred multiple millions of dollars in medical expenses. Therefore, central to determining whether this Bill makes any sense is having the full facts about the history of catastrophic claims in Michigan over the last four decades.
The battle currently raging over Michigan’s auto no-fault insurance system is really a microcosm of a bigger battle that is being waged on a national level—should citizens allow their politicians to reduce lifetime medical care coverages? We saw this issue surface last summer during the national debt ceiling debate when many politicians refused to approve a new federal debt ceiling unless Congress passed laws significantly reducing Medicare coverages for senior citizens. The message delivered to Congress was loud and clear—Americans do not want to give up their health care in order to help politicians solve problems that can be addressed with other solutions.
The same dynamic is occurring here in Michigan with regard to the insurance industry’s efforts to pass legislation that would effectively end the Michigan no-fault system as we presently know it. Under the current Michigan no-fault law, all persons sustaining injury in motor vehicle accidents have lifetime full medical coverage for “all reasonably necessary products, services, and accommodations for an injured person’s care, recovery, or rehabilitation.” Therefore, any one who is injured in a motor vehicle accident in this State is assured their full medical needs will be met as long as they live.
There is a great debate going on in Lansing that will determine whether the auto insurance industry will be successful in its efforts to end the Michigan no-fault law as we presently know it. If that happens, Michigan citizens will lose very important rights and benefits they have had for almost 40 years. The best defense against such an attack is for citizens to fully understand the rights they have under our current law. To that end, we offer this summary we will call No-Fault in a Nutshell.
1. How Does the Auto No-Fault Law Work? The basic concept of the Michigan auto no-fault insurance law is to assure payment of certain insurance benefits to all victims of motor-vehicle accidents regardless of who was at fault. In exchange for that right, the law imposes certain limitations on the rights of accident victims to pursue tort liability claims against the negligent parties who caused the accident. Under the Michigan no-fault Law, it is important to keep in mind that every motor-vehicle accident occurring in this state, has two separate and distinct claims: the first is for no-fault personal protection insurance (PIP) benefits, and the second is the tort liability claim against the party at fault for recovery of certain noneconomic and excess-economic-loss damages. Although the no-fault law was originally intended to simplify motor-vehicle accident claims, it has become a very complex law containing a number of important rules and requirements that must be followed to protect the legal rights of the auto-accident victim. This pamphlet is intended to provide a basic overview of the Michigan no-fault law but should not be considered a substitute for legal advice from an attorney who practices extensively in this area of the law.