As a result of the 2019 changes to the Michigan No-Fault Law, many more people injured in auto accidents will have to claim their no-fault benefits through an entity known as the Assigned Claims Plan. These people will face the reality that their no-fault medical expense coverage will be capped at $250,000. Moreover, people pursuing no-fault benefits from the ACP must follow specific procedures and execute certain documentation, and they must do so on a timely basis. The information below helps answer many questions regarding the principles that apply to people pursuing no-fault benefits through the ACP.
What is the Assigned Claims Plan and who is eligible to receive PIP benefits from the Assigned Claims Plan?
The Assigned Claims Plan (“ACP”) is a statutorily created entity that acts as the insurer of “last resort” for anyone who is injured in a motor vehicle accident but not entitled to PIP benefits from any other source designated under the no-fault act.
Generally, but subject to a few exceptions, an injured person must turn to her own automobile insurance provider for PIP benefits. If an injured person isn’t named under a Michigan automobile insurance policy, she must turn to either her spouse’s provider or to the provider of a “resident relative.” All other eligible persons must submit their claims to the ACP. The basic contact information of the MAIPF and the ACP is as follows:
Michigan Assigned Claims Plan
P.O. Box 532318
Livonia, MI 48153
(734) 464-8111 (phone)
(734) 744-8552 (fax)
Public Acts 21 and 22 of 2019 made several significant changes to both the process that claimants must adhere to in submitting their claims to the ACP, and to the procedures that the ACP must adhere to in processing those claims.
In order to ultimately receive PIP benefits from an assignee insurance provider, an applicant must first file a special claim form with the ACP. These claim forms are provided by the ACP, and can be accessed here.
IMPORTANT: the noticed of claim must be served on the ACP within one year of the date of the accident.
Once an application is filed, the ACP has 60 days to request from the applicant, in writing, any additional materials (i.e. “reasonable proof of loss”) it may need to verify and process the application. The no-fault act itself—MCL 500.3172(3), specifically—does not offer any further explanation as to what constitutes “reasonable proof of loss,” and thus Michigan courts will have to establish appropriate parameters for these requests.
Once an applicant complies with the ACP’s request for “reasonable proof of loss,” the ACP must review the application and make an initial determination as to its eligibility for assignment. In making such a determination, the ACP can order—in addition to ordering that the applicant submit “reasonable proof of loss”—that the applicant submit to an examination under oath.
It is statutorily required that the applicant cooperate with the ACP in the initial determination process, but Michigan courts have recognized that failure to cooperate is not grounds for the ACP to irrevocably deny an application. Harris v. Michigan Automobile Insurance Placement Facility (Unpublished opinion of the Michigan Court of Appeals, Docket No. 345593, January 16, 2020). Rather, the ACP can only temporarily suspend its processing of the application, and must resume once the applicant becomes compliant.
In the event that the ACP deems a claim eligible for assignment, it must promptly assign the claim to an authorized Michigan automobile insurance provider that, in turn, administers the claim on behalf of the ACP. The ACP must also inform the claimant of the assignee insurer’s identity and address.
Subject to one exception, the no-fault act caps coverage for claims submitted to the ACP at $250,000. MCL 500.3172(7)(a) provides, “the [ACP] and the insurer to whom a claim is assigned by the [ACP] are only required to provide personal protection insurance benefits under section 3107(1)(a) up to . . . [$250,000].” Thus, there is a lingering question as to whether the $250,000 cap applies only to allowable expense benefits payable under MCL 500.3107(1)(a), or to all PIP benefits.
The one exception to the $250,000 cap is for so-called “$250K PIP excluders”—those persons who elect to forego PIP coverage altogether because they, their spouses, and all their resident relatives have other health or accident coverage that extends to auto-related injuries. Under the revised no-fault act, those persons are afforded a 30-day grace period after their other health or accident coverage lapses during which they can obtain the required security under MCL 500.3101(1). If they are injured during this grace period, their claims must be submitted to the ACP and are subject only to a heightened $2,000,000 cap.
Public Acts 21 and 22 of 2019 made several, significant changes to the priority rules for payment of PIP benefits. In December 2020, the ACP published its own bulletin regarding these priority rule changes. Read bulletin here.
If an injured person is not personally named under a Michigan automobile insurance policy, is not married to someone who is personally named under a Michigan automobile insurance policy, and is not domiciled with any resident relatives who are named under a Michigan automobile insurance policy, she looks to the ACP. There are few exceptions to this rule.
Those injured while using a motorcycle turn first to the insurer of the owner or registrant of the motor vehicle involved in the accident; second to the insurer of the operator of the motor vehicle involved in the accident; third to the motor vehicle insurer of the operator of the motorcycle involved in the accident; and fourth to the motor vehicle insurer of the owner or registrant of the motorcycle involved in the accident. If there are no applicable insurers under this priority order, then, and only then, can motorcyclists file a claim with the ACP. And, coverage for any such claim will be capped at $250,000.
Those injured while using a vehicle owned by an employer of their spouse or resident relative, will claim no-fault benefits from the insurer of the employer-owned vehicle. There are also possible exceptions if the person is injured in what is known as a “vehicle for hire.”
Any coverage afforded by the ACP will be coordinated with traditional health insurance. Therefore, persons with traditional health insurance who are injured in motor vehicle accidents and seeking PIP benefits through the ACP must first turn to their health insurers for payment of their medical expenses. The only exception to this general coordination rule applies to persons enrolled in Medicare, Medicaid, or ERISA plans.
The no-fault act specifically identifies the two groups of persons who are ineligible for coverage through the ACP if injured while occupying a motor vehicle: (1) “Medicare Opt-Outers” and (2) the aforementioned “250K PIP Excluders.” “Medicare Opt-Outers” are those individuals entitled to—and who choose to—opt out of PIP coverage altogether both because they, themselves, are enrolled in Medicare Parts A and B, and because their spouses and/or all resident relatives have either “qualified health coverage” or no-fault PIP coverage under separate policies; “250K PIP Excluders,” again, are those individuals who decline PIP coverage because they, their spouses, and all their resident relatives have other health or accident coverage that extends to auto-related injuries. If any persons in these two groups are injured while occupying a motor vehicle, they will be ineligible for coverage through the ACP. There is an exception, however, for any persons in these two groups who are injured in the aforementioned 30-day grace period after their other health or accident coverage lapses.
Notably, “Medicare Opt-Outers” and “250K PIP Excluders” are only excluded from coverage through the ACP if they are injured while occupying a motor vehicle. If any person belonging to either of these groups is injured by a motor vehicle, while not, herself, occupying a motor vehicle (e.g. a pedestrian or a bicyclist), she will still be eligible for benefits through the ACP.
There is a third class of persons that can be deemed retroactively ineligible for coverage under the ACP: those who commit fraud in association with their claims to the ACP. This includes persons who submit false information in support of their initial applications to the ACP, as well as persons who commit “fraudulent insurance acts” in support of their claims after their claims have been assigned to providers to administer.
The Michigan Court of Appeals, in the case of Candler v. Farm Bureau General Insurance Company of Michigan, 321 Mich. App. 772 (2017), set forth the following, controlling, five-part test for determining whether a claimant has committed a “fraudulent insurance act” for purposes of MCL 500.3173a:
Accordingly, in order to qualify as part of a fraudulent insurance act under this subsection, the false statement merely must have been presented “as part of or in support of a claim to the [MAIPF] for payment or another benefit” . . . Therefore, a person commits a fraudulent insurance act under this statute when (1) the person presents or causes to be presented an oral or written statement, (2) the statement is part of or in support of a claim for no-fault benefits, and (3) the claim for benefits was submitted to the MAIPF. Further, (4) the person must have known that the statement contained false information, and (5) the statement concerned a fact or thing material to the claim. Importantly, MCL 500.3173a(2) does not require that any particular recipient have received the false statement in order for the act to qualify as a fraudulent insurance act, as long as the statement was used “as part of or in support of a claim to the [MAIPF].”
Michigan Courts have also held that MCL 500.3173a does not contain the additional fraud element of intent. In other words, a claimant need not have both knowledge of a statement’s falsity and an intent to defraud in order to commit fraud under MCL 500.3173a. Mere knowledge is sufficient. Williams v. Nationwide Mutual Fire Insurance Company (Unpublished opinion of the Michigan Court of Appeals, Docket No. 346875, June 4, 2020).
Most of the new rules regarding the ACP set forth by Public Acts 21 and 22 of 2019 became effective immediately as of June 11, 2019. This includes the new priority rules discussed above. The $250,000/$2,000,000 cap on benefits payable under the ACP, however, was not to be applied until after July 1, 2020. The Director of the Department of Insurance and Financial Services explained the reasoning behind selecting an alternate effective date for the $250,000/$2,000,000 cap in DIFS Order No. 19-049-M:
If the Director interpreted Section 3172(7) as having an effective date prior to July 2, 2020, pedestrians and uninsured occupants who claim benefits from the MACP subject to the $250,000 cap, and whose expenses exceed that amount, will be able to sue an at-fault driver for the remainder. However, the defendant driver would be limited to the pre-amendment residual liability protections, and any amount of liability over those amounts could subject the defendant to significant financial harm. This potentially catastrophic exposure to residual liability—which was not contemplated by the policyholder at the time of entry into the existing insurance contract—contravenes the Code’s long-standing legislative purpose of policyholder protection.
The Michigan Automobile Insurance Placement Facility (“MAIPF”), which administers the ACP, filed suit in the Michigan Court of Claims challenging the Director of the Department of Insurance and Financial Service’s order to insurers not to apply the $250,000/$2,000,000 cap prior to the later effective date designated in the amended no-fault act. The MAIPF argued, essentially, that claims submitted to it after June 11, 2019, but before July 2, 2020, as a result of the new priority rules, should be subject to the $250,000/$2,000,000 cap. The Court of Claims rejected this argument, opting instead to give full effect to the Legislature’s unambiguous intent to create a delayed effective date for the $250,000/$2,000,000 cap.