To dream the impossible… Many elements of the Democratic No Fault Reform Plan come from series of bills from 2009
This week, I’m writing about an upcoming 14-bill package for reforming Michigan’s auto insurance system that has been recently proposed by House Democrats in Michigan. The bills aim to keep auto insurance rates lower for auto consumers. They would also increase punishments for the insurance companies that use unfair or deceptive practices to avoid paying valid insurance claims under the existing No Fault law.
Today, I’d like to discuss the legislative developments that have taken place over the last few years that have laid the groundwork for the current Democratic plan to improve No Fault insurance.
Back in 2009, it looked like the Michigan House of Representatives was going to make some serious headway in terms of requiring auto insurance companies to finally start acting in “good faith” and providing penalties and punishments for insurers who insisted on acting in “bad faith” in their dealings with insured customers.
For thousands of injured automobile accident victims, such legislation would have been welcome relief. After all, insurance companies in Michigan regularly treat accident victims far worse than insurance companies do in other states. The difference is that in almost all other states, there are bad faith laws to protect consumers from abuse and neglect.
In Michigan, such laws do not exist.
And those protections matter. In other states, people would not be sent to notorious cut-off doctors for “independent medical examinations” (also known as IMEs and insurance medical examinations). Yes, insurance doctors exist in every state. But I see how these insurance doctors operate in other states. You just don’t see the obscene cut-offs of desperate medical benefits and wage loss after 10-minute examinations that lawyers like myself routinely see here.
While people can hire lawyers to represent them in Michigan and to sue their insurance companies, the most they can get is what they were supposed to if the insurance company had acted as it was supposed to. And that’s after the delays and costs of litigation and the attorney fee that is all taken before an injured person receives what they’re entitled.
That is why Michigan consumers are so desperately in need of real protection.
Unfortunately, the series of bills that were passed out of the House in 2009 died from inaction once they landed in the Senate.
The bills provided the following protections for consumers:
- House Bill 4844 amended Michigan’s No Fault Law to require that Michigan No Fault auto insurance companies “deal fairly and in good faith with an injured person claiming” No Fault benefits. Additionally, the bill provided that No Fault auto insurers who breached their “duty to deal fairly and in good faith” were “liable for compensatory, consequential, noneconomic, economic and exemplary damages proximately caused by the breach and the costs of litigation, including actual attorney fees.”
- House Bill 5020 required that property and casualty insurance companies “deal fairly and in good faith with an insured claiming those benefits.” Additionally, the bill provided that insurers who breached their “duty to deal fairly and in good faith” were “liable for compensatory, consequential and exemplary damages proximately caused by the breach and the costs of litigation, including actual attorney fees.”
- House Bill 5145 provided that auto and property and casualty insurance companies who breach their duties to “deal fairly and in good faith” more than once will be “subject to an administrative fine of $1,000,000.00.”
- House Bill 5147 and House Bill 5148 provides that the president or CEO of an auto or property and casualty insurance company “who knowingly creates, fosters, or encourages an environment that leads to systemic wrongful denial of claims” due to breaches of the insurers’ duties to “deal fairly and in good faith” is “guilty of a felony punishable by imprisonment up to 4 years or a fine of not more than $50,000, or both.”
- House Bill 5150 provided that an “individual” can sue an insurance company for “damages sustained by the individual as a result of an unfair method of competition” or “an unfair or deceptive act or practice …”
- House Bill 5146 provides that if an insurance company has been found to have undertaken “an unfair method of competition” or “an unfair or deceptive act or practice,” there is “a presumption that the [insurer] was acting in bad faith,” and the “burden of disproving the bad faith” is on the insurer.
- House Bill 5151 provides that if a court or the Insurance Commissioner determines that an insurance company “has acted in bad faith in failing to timely pay benefits,” the insurer shall contact the three largest national credit reporting agencies and attempt to ensure that its insured’s credit history is not affected by delinquent payments caused by the insurer’s bad faith.
In tomorrow’s blog post, I will discuss the “affordability” aspect of the Michigan House Democrats’ plan for auto insurance reform.