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Top 5 things to know about new Senate Bill 1148, the latest Republican-backed No Fault ‘reform’ plan

There’s no guarantee of savings under SB 1148, but consumers will face new tax for Catastrophic Claims Assessment, $21 million annual assessment and limits on at-home attendant care

Sen Arlan Meekhof

Sen. Arlan Meekhof introduced SB 1148

With the end of the 2013-14 legislative session in sight, at least some of Michigan’s Republican lawmakers (those most in the pocket of the insurance industry?) still insist on plodding forward with legislation to dismantle Michigan’s No Fault auto insurance system.

The most recent effort is from Sen. Arlan Meekhof (R-30th District in Kent County) who, on November 13, 2014, introduced Senate Bill 1148. The Meekhof bill promises no savings for auto insurance consumers. Indeed, it almost guarantees  increases in the cost of auto insurance and strikes a blow at providers of in-home attendant care nursing providers.

Although it’s not as draconian and unfair as some of its predecessor bills I’ve written about at length on this auto law blog, SB 1148 is certainly no friend to consumers and Michigan auto accident victims.

On the other hand, if you’re an insurance company, you will really like what’s in SB 1148.

Overall, here are the Top 5 things consumers, auto accident victims, the public and lawmakers need to know about Sen. Meekhof’s SB 1148:

  1. There is no promise of guaranteed savings for auto insurance consumers.
  2. Consumers will be forced to pay a new, annual “Catastrophic Claims Assessment.” (Pages 11, 31-32 of SB 1148)
  3. Consumers will be forced to pay for a new, annual $21 million assessment to fund the Michigan Automobile Insurance Fraud Authority and the Automobile Theft Prevention Authority. (Pages 42-43 of SB 1148)
  4. Consumers will be forced to continue to pay the ongoing, existing Michigan Catastrophic Claims Association (MCCA) assessments. (Pages 8, 15, 22, 32 of SB 1148)
  5. Providers of in-home attendant care will be subject to new, unprecedented and drastic limitations on their hourly and weekly reimbursement rates. (Pages 38-40 of SB 1148)

Other highlights of SB 1148 include:

  • No proposed cap on No Fault medical benefits.
  • No proposed No Fault medical provider fee schedule.
  • An incorporated MCCA will replace the existing unincorporated MCCA.
  • The new incorporated MCCA will be subject to the Michigan Freedom of Information Act and will be required to submit an annual Financial Statement containing claims information as well as the assumptions, methodology and data used to “make future projections” and to “determine the incorporated association’s annual [Catastrophic Claims] assessments.” (Pages 27-28, 33 of SB 1148)
  • Absent are many of the treacherous proposals advanced in previous plans for so-called No Fault “reform,” such as restrictive definitions of “reasonable charge” and “reasonably necessary” allowable expenses and restrictions on rehabilitation benefits and on home and vehicle modifications.

New, unprecedented limitations on in-home attendant care

The limitations on in-home attendant care proposed in SB 1148 break down into two categories: providers who are family and/or household members; and providers who not.

In-home attendant care restrictions for providers who are family and/or household members include:

  • Payment is limited to 56 hours per hour regardless of the level of care provided.
  • Payment is limited to $15 per hour regardless of the level of care provided.
  • Both limitations apply even if provider is licensed to provide attendant care and/or is “in any way connected with an individual or agency who is licensed or authorized to render the care.”  (Pages 38-39 of SB 1148)

In-home attendant care restrictions for providers who are not family and/or household members include:

  • Payment limited to total of 24 hours per day “for services performed by 1 or more individuals.”
  • Co-pay requirement – “After 30 days, payment is subject to a copayment of 20% up to a maximum of $200.00 per month.” (Page 39 of SB 1148)

Weirdest, most perplexing No Fault proposal of SB 1148 – allowable expenses

Whether you agree with its goal or not, there’s a lot that’s straightforward about SB 1148. But one aspect that’s not is the bill’s proposed amendment to the No Fault statute that deals with “allowable expenses.”

Under existing No Fault law, a Michigan auto accident victim is entitled to collect No Fault “personal protection insurance benefits” for “allowable expenses” (i.e., reimbursement for medical expenses, home- and/or vehicle-modifications, rehabilitation services and attendant care) so long as the related charges are “reasonable” and the “products, services, and accommodations” are “reasonably necessary” for the auto accident victim’s “care, recovery or rehabilitation.” (MCL 500.3107(a))

Strangely, SB 1148 tinkers with the “allowable expenses” statute in such a way as to create the impression that “allowable expenses” will – after January 1, 2015 – cease to be provided under the No Fault Law.

Specifically, here’s how Sen. Meekhof’s bill proposes to amend MCL 500.3107(a) (bolded, underlined text):

“[P]ersonal protection insurance benefits are payable for … for loss occurrences under motor vehicle accident policies issued or renewed before January 1, 2015, subject, if applicable, to Chapter 21B, allowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services, and accommodations for an injured person’s care, recovery, or rehabilitation.” (Page 36 of SB 1148)

As if it’s not strange enough to suggest that No Fault “allowable expenses” will not be available and collectable for claims under No Fault policies issued or renewed after January 1, 2015, there’s the inexplicable reference to the as-yet, non-existing – and irrelevant – “Chapter 21B.”

Currently, there is no “Chapter 21B” in the Michigan Insurance Code.

Instead, “Chapter 21B” is currently only a proposed addition to the Insurance Code – an addition that exists exclusively, albeit in a quite limited fashion, in Senate Bill 340 and House Bill 4718, which were introduced in May 2013.

Unlike the “allowable expenses” provision of the No Fault Law, which deals with medical benefits for auto accident victims, the proposed “Chapter 21B,” which would not  be a part of the No Fault Law, deals with “Insurer Interests in Repair Facilities” – in other words providing that an “automobile insurer” “may not own or acquire an ownership interest in a repair facility.”

Tomorrow, I will discuss how SB 1148 compares with other No Fault “reform” plans that are currently on the table.

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