On October 13, 2011, HB 4936 was reported out of the Michigan House of Representatives Insurance Committee and is now headed to the floor of the Michigan House for a full vote. This Bill would make major changes to the Michigan auto no-fault insurance law that, for all practical purposes, would bring an end to the Michigan no-fault system as we know it.
The most significant feature of this Bill is that it will eliminate lifetime, full medical coverage for Michigan citizens. No one will ever be able to buy this coverage any longer. On the contrary, coverage for medical care and rehabilitation expenses will be available only in specific coverage levels of $500,000, $1,000,000, or $5,000,000.
Decision day in Lansing is rapidly approaching regarding proposed legislation that would make major changes in the Michigan auto no-fault law. In fact, to knowledgeable observers, these changes will basically be the end of the Michigan auto no-fault system as we presently know it. What many people do not realize, however, is that the guts of these proposed changes were previously presented to Michigan voters in the form of ballot proposals that were voted on in two separate elections in the 1990s. The first was an initiative in 1992 known as Proposal D. The second was a referendum in 1994 known as Proposal C. Those two ballot proposals (Proposal D and Proposal C) are very similar to HB 4936 currently pending in the Michigan House of Representatives. All three of these proposals have the same features: (1) limitation on lifetime medical care coverages; (2) medical expenses controlled by government fee schedules; and (3) insurance company immunity for mistakes made in the sale of insurance policies. Both Proposals D and C were defeated by Michigan voters by large margins of approximately 62% to 38%. In other words, Michigan voters have twice told the insurance industry they do not want any part of an auto no-fault system that incorporates these concepts.
The great debate about the Michigan auto no-fault law is really heating up in Lansing. The proposed legislation is identified as HB 4936. If it passes, it will essentially end the Michigan auto no-fault insurance system as we have come to know it. The Michigan auto insurance industry, along with some help from their good buddies, the Michigan Chamber of Commerce, are the only entities who really support this Bill. Virtually everyone else has lined up to oppose it—including the Coalition Protecting Auto No-Fault (CPAN). CPAN is a broad-based, bipartisan coalition that was formed approximately eight years ago to preserve the model Michigan no-fault system. CPAN is comprised of approximately 22 medical and consumer organizations, including the Michigan State Medical Society, the Michigan Osteopathic Association, the Michigan Health and Hospital Association, the Brain Injury Association of Michigan, the Michigan Association for Justice, Michigan Citizens Action, the Michigan State AFL-CIO, etc. It is indeed unusual in Lansing to see so many divergent political associations working together on a single issue. If such a broad-based group is opposing HB 4936, and the only real supporters of the Bill are the insurance companies, that should speak volumes.
HB 4936 (H-2)
October 24, 2011
On October 13, 2011, HB 4936, sponsored by Representative Peter Lund, was reported out of the Michigan House of Representatives Insurance Committee and is now headed to the floor of the Michigan House for a full membership vote. This Bill would make major changes to the Michigan auto no-fault insurance law that, for all practical purposes, would bring an end to the no-fault system as we know it. The version of the Bill reported out of Committee, identified as H-2, is summarized below.
HB 4936 threatens to destroy Michigan’s widely acclaimed auto no-fault law. In order to gain a better understanding of the significant legal ramifications of this proposed legislation it must be carefully analyzed. However, it is first important to understand the essence of our existing no-fault law. The Michigan no-fault law was passed in 1972 and went into effect in 1973. The law was based on a fundamental quid pro quo: it created a system wherein all motor vehicle accident patients would receive lifetime, full needs coverage for expenses known as “allowable expenses” in exchange for the imposition of fair limitations on the victim’s right to sue in tort for noneconomic damages in those cases not involving serious injury. The “allowable expenses” that are payable under the statute are set forth in §3107(1)(a). This section obligates insurance companies to pay “all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery or rehabilitation.”