House Bill 5013 would “virtually destroy the no-fault system as we know it and would result in a major cost-shift of auto accident related medical treatment to Michigan’s Medicaid budget/taxpayers, health insurers, employers and patients.” ~ CPAN Legal Team
As part of the ongoing no-fault reform efforts in Lansing, House Bill 5013 was introduced in the Michigan Legislature on September 26, 2017. The no-fault reform proposal has primarily been touted as a way to slash auto insurance rates for Michigan motorists.
However, upon a thorough review by Lansing car accident lawyers George Sinas, Stephen Sinas and Tom Sinas — who comprise the legal team for the Coalition Protecting Auto No-Fault (CPAN) — it turns out that House Bill 5013 does not guarantee auto insurance rate relief for Michigan motorists.
So what exactly does House Bill 5013 do? Basically, the measure would be “the end of no-fault as we know it,” according to the CPAN legal team. In addition to not guaranteeing auto insurance rate reductions, House Bill 5013 would:
- authorize unprecedented dollar cap limitations on no-fault benefits.
- give insurance companies substantial control over a patient’s medical care.
- increase the power of insurance companies, while taking away the legal rights of patients.
House Bill 5013 Will Shatter Existing No-Fault Benefits
House Bill 5013 would destroy the promise of lifetime medical care that’s currently at the core of the Michigan no-fault insurance system. Basically, the proposal would result in a severe loss of benefits for thousands of Michigan auto accident victims. Here’s how.
First, the bill lets insurance companies sell no-fault PIP benefit policies with woefully inadequate lifetime benefits caps. Options would include:
- a lifetime benefit cap of $25,000. Note: contrary to some reports, this is not a $250,000 cap and, instead, is a $25,000 lifetime cap with a narrow exception for $225,000 in emergency medical care.
- a lifetime benefit cap of $500,000.
These two caps apply not only to medical expenses, but to all PIP benefits, including work loss and replacement services. This means that people who suffer a serious car accident injury and incur medical expenses that exceed their selected PIP benefit cap (which will happen in most serious injury cases where the $25,000 cap has been chosen) will have no PIP work loss benefits available to them.
Second, House Bill 5013 jeopardizes the care of children injured in a car crash. Most Michigan children have access to lifetime medical care under the current no-fault system. But because the bill allows consumers to purchase limited benefit caps, children who suffer severe injuries in a Michigan auto accident will face a loss of lifetime care if their parents purchased limited benefit coverage — especially if they selected the $25,000 benefit cap.
Third, House Bill 5013 is problematic because it: 1) prevents people insured under capped policies from recovering their excess medical expenses from the at-fault driver; 2) dramatically reduces reimbursement to medical providers that treat car accident victims; 3) severely cuts family-provided attendant care benefits; 4) reduces benefits for motorcyclists; 5) imposes medical transportation limitations; and 6) allows senior citizens to opt out of no-fault coverage. In fact, according to the House Fiscal Agency analysis, House Bill 5013 could increase costs for Medicaid by some $150 million each year after 10 years.
Fourth, Michigan taxpayers would also take a hit under House Bill 5013. This is because the medical expenses no longer covered by PIP benefits will be shifted to other payment systems, and ultimately to taxpayers and employers. This will potentially create the need for higher taxes, and employers will face the possibility of increased costs of healthcare coverage.
Overall, House Bill 5013 could cause financial ruin for many Michigan families. Why? Because those seriously injured in auto accidents who have chosen the $25,000 PIP benefit cap, and who incur substantial medical expenses in excess of that cap, will likely be unable to pay their medical bills. For many people, this will mean filing for bankruptcy, which will further impair Michigan’s economy and financial recovery.
House Bill 5013: No Guaranteed Slashing Of Insurance Premiums
According to the CPAN legal team’s analysis, House Bill 5013 does not guarantee a reduction in Michigan auto insurance rates, although the measure has been presented as such.
Why no guaranteed rate reduction? Two reasons:
- the premium reduction required by the bill applies only to the premium for PIP benefits — it doesn’t apply to the total premium, which, in reality, is comprised of coverage far more costly than the premium for PIP benefits.
- no premium reduction is necessary if an insurance company can convince the Insurance Bureau that the failure to reduce the premium is “justified” by “using generally accepted and reasonable actuarial techniques.”
Meanwhile, House Bill 5013 is also troublesome because it gives unprecedented control over an injured person’s medical care to the government and to insurance companies. For example, it calls for restricted care through a “utilization” review and would allow for intimidation tactics to be used against medical providers, potentially causing their reluctance to provide treatment to car accident victims.
In addition, House Bill 5013 gives more power to the insurance companies, while taking away the rights of Michigan auto accident victims. This is because the bill: 1) all but eliminates an injured person’s right to penalty interest and fees; 2) allows an insurance company to recoup its fees and costs if no-fault benefits were found to be “not medically necessary” or if the injured person’s claim was for “an excessive amount”; 3) offers careless insurance agents immunity from any liability; and 4) does nothing to help eliminate abusive and unfair practices by insurance companies.
CPAN Legal Team Members Testify On House Bill 5013
On October 3, 2017, the House Insurance Committee held a hearing on House Bill 5013. Lansing car accident lawyer Stephen Sinas and Grand Rapids auto accident attorney Tom Sinas presented joint testimony on the legislation.
Tom emphasized to the committee that House Bill 5013 does not guarantee any insurance rate reduction. “As a matter of fact, all it does is it intends to reduce rates by 40 percent for those people who buy the cheapest policies that have only $25,000 in general coverage,” he said.
Tom also pointed out the bill does nothing to address underlying insurance concerns, including how insurers set their rates. “There are things that we don’t do in this state — for example, we don’t make it illegal for insurance companies to charge people different amounts of money based on their zip code,” he told the committee. “If we want to tackle rates, we’ve got to be honest about the problems that are driving up rates, before we decide to get rid of all these protections we’ve had for over 40 years.”
Stephen added that House Bill 5013 affords “very little power” to Michigan consumers. “The power goes to insurance companies, and I don’t know quite frankly how anybody could vote for that,” he said. “It looks like it was completely drafted by the insurance industry. There’s nothing but favors in it for the insurance company.”
Fair And Affordable No-Fault Reform Is Needed In Michigan
In the end, House Bill 5013 is not beneficial to Michigan consumers. Instead, it only benefits the insurance companies.
What Michigan really needs is the “Fair and Affordable No-Fault Reform Package” that has been proposed by a bipartisan group of state lawmakers. According to CPAN, whether you are a driver, an accident survivor, a healthcare provider or an insurance company, the Fair and Affordable No-Fault Reform Package has something in it for everyone.
Key components of the package include:
- implement a fee schedule for medical providers. The schedule would be set at 185% of the workers’ compensation rate, which reflects the complex treatment and increased attention that car crash victims require.
- establish an hourly rate schedule for family-provided attendant care. The schedule would allow for rates that are reasonably related to the nature and extent of the patient’s disability and needs, including patients who require 24/7 care.
- keep insurers from using non-driving related factors (such as credit score, gender and job title) to determine auto insurance rates. These factors have nothing to do with how cautious someone drives or how expensive their vehicle is to fix.
- require the Michigan Catastrophic Claims Association be more transparent with its annual per vehicle fee assessment, and require the MCCA’s rate-making data be made available to the public.
- create a meaningful Fraud Prevention Authority that will address fraud committed by claimants and providers, as well as prevent insurance companies from denying legitimate claims, which increases litigation and expenses.
- amend wage loss benefits to better align with the auto accident victim’s actual salary loss.
- correct the Admire v Auto Owners court decision, which has been used by insurance companies to deny paying for legitimate expenses needed by auto accident victims.
- correct the court decision in Bahri v IDS Property Casualty Ins Co, which lets insurance companies void an entire policy if a claim submission was made in error, or if the insurance company alleges fraud.
- reinstate the “innocent third-party rule,” which came to a screeching halt in the case of Bazzi v Sentinel Ins Co, thereby protecting innocent third-party claimants who did not participate in the fraudulent procurement of a policy.
- correct the May 2017 Michigan Supreme Court decision in Covenant Medical Center v State Farm, which prevents medical providers from suing insurance companies on behalf of auto accident victims when insurers refuse to pay for treatment that has been rendered.
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Stay with the Auto No-Fault Law Blog for updates on no-fault reform in Lansing. Meanwhile, if you have questions about no-fault reform or have been injured in a Michigan auto accident, our experienced attorneys are here to help. Contact our Michigan accident lawyers today for a free initial consultation.