The Bahri decision is scaring doctors from treating car crash victims and their injuries. A real fix can only come from the Michigan Legislature
First, a bit of history. Michigan’s No-Fault car insurance law was specifically enacted in 1973 to cure the many serious problems of the pure tort-liability system that preceded it. One of the biggest problems from the pre-auto No-Fault law days in Michigan was that auto accident victims could wait years to get wage loss and medical bills paid from an automobile accident. If the at-fault driver didn’t have enough insurance money, the risk of unpaid medical bills, economic loss and wage loss fell entirely on the innocent accident victim. The Michigan No-Fault law was enacted to address and remedy these problems.
Sadly, the horrible ruling in Bahri v. IDS Casualty Property Insurance — which could be the worst judicial opinion I’ve ever read — has resurrected some of these serious problems back to life.
The “fraud rule” that emerged from the Bahri case has been used (and badly abused) by insurers, adjusters, defense lawyers and a number of judges to void No-Fault coverage for hundreds of car crash victims.
But the “Bahri No-Fault fraud rule” has also created a dangerous and dreadful dampening effect on doctors’ willingness to take the financial risk of treating innocent car accident victims, thereby jeopardizing victims’ ability to receive the medical care necessary to their recovery and/or rehabilitation that our auto No-Fault law was predicated upon.
There is today tremendous uncertainty among doctors and hospitals that any “fraud” found at some future date by a patient they are treating in good faith means they lose everything on their bills.
That means there have been fewer doctors and now hospitals that have been willing to treat auto accident injury victims. This has meant that, in entire areas of Michigan, people who have been seriously injured in auto crashes and who are completely innocent and haven’t even been accused of fraud are having an increasingly hard time finding a doctor to render medical care and treatment for them.
Bahri has turned the entire Michigan No-Fault Act on its head!
There’s some hope after the recent Michigan Court of Appeals opinion in Hatcher v. Liberty Mutual Insurance Company that attempts to stop some of the most abusive and ridiculous accusations of fraud from insurance companies, particularly with its conclusions that:
- “The existence of inconsistent statements in and of themselves is not sufficient to … provide a basis to claim, let alone prove, intentional fraud” by a car crash victim.
- “Mistakes of fact or isolated examples of conduct inconsistent with a claim for benefits are not sufficient for an insurer to achieve summary disposition on an allegation that the insured attempted to fraudulently establish a proof of loss.”
However, as welcome as the Hatcher ruling is for Michigan auto accident attorneys dealing with insurer bad faith and abuse, it’s not the fix that’s truly needed to the eliminate the problem that have been created by Bahri case and the willingness of insurers to accuse nearly anyone of committing fraud, no matter how innocent, inconsequential or small the underlying matter.
Indeed, a true Bahri-fix — one that makes it less risky for doctors and hospitals to treat car crash victims — must come from the Michigan Legislature.
Bahri strikes fear among medical providers, doctors and hospitals who treat car crash victims
The doctors I know who will treat car crash victims are terrified of taking zero on big bills because an insurance company is going to accuse their patient of fraud — at some future date. It has not mattered yet that these doctors rendering care are innocent third-parties, nor has it mattered how trivial and innocent the mistakes have been that are made by their patients when insurance defense lawyers and claims adjusters begin to fly-speck replacement service calendars, etc., looking for anything they can call “fraud.”
That’s the real-world, immediate and dampening effect that the “Bahri No-Fault fraud rule” has had. This has not been remedied by Hatcher.
The only real fix must be a legislative fix.
If the patient does not list a child in the household in the No-Fault application, or a person is seen without a cane one time, our attorneys have seen these people labelled as frauds.
And insurance companies are actually winning on way too many of these motions to dismiss.
Many medical providers all over the state are pulling out of auto accident medical care and treatment and refusing to treat my clients because they cannot protect themselves from some possible future allegation of fraud that might cause them to lose an entire balance on a bill. Draw the wrong judge (especially in Wayne County), and no matter how specious the allegation of fraud, there is a chance the doctor — and the patient — will now lose everything when the insurance policy is rescinded.
This has gotten completely out of control.
Hatcher helps bring some needed help for lawyers and their clients, but it does not correct the overall problem of the terrible dampening effect that Bahri is having on people now being unable to receive critical medical care all over this state.
It is time for a legislative fix to possibly the worst auto No-Fault case we’ve ever seen in Michigan.
Ills of Michigan’s tort-liability system that No-Fault was intended to cure
As the Michigan Supreme Court observed in its 1978 decision in Shavers v. Attorney General:
- “The Michigan No-Fault Insurance Act, which became law on October 1, 1973, was offered as an innovative social and legal response to the long payment delays, inequitable payment structure, and high legal costs inherent in the tort (or “fault”) liability system.”
- “The goal of the no-fault insurance system was to provide victims of motor vehicle accidents assured, adequate, and prompt reparation for certain economic losses.”
- “Under this system, victims of motor vehicle accidents would receive insurance benefits for their injuries as a substitute for their common-law remedy in tort,” i.e., they could sue for pain and suffering only if they could prove they suffered from a “serious impairment of body function.”
More specifically, here are the problems with Michigan’s tort-liability system that No-Fault was intended to fix:
- Michigan’s tort liability system was criticized as “incomplete, inequitable, inefficient and slow” and doing “a poor job of providing for seriously injured auto accident victims.”
- In particular, it was found that the tort liability system had an “inequitable payment structure” because a “high percentage of persons injured in automobile accidents received no reparations under the tort system” and the system “systematically under-compensated the most seriously injured” car crash victims.
- Moreover, “lengthy delays existed under the tort system in compensating those injured in automobile accidents — often in cases where the need for prompt compensation was strongest.”
- As such, given the “long payment delays,” “[s]everely injured people [were forced] to bear devastating financial burdens while waiting for lawsuits to be settled.”