There is a new auto new insurance company delay tactic in Michigan.Claims adjusters are putting innocent people “under investigation” to avoid or delay paying auto no fault insurance PIP benefits.These are lawful, reasonable, no fault claims made by people that were injured in Michigan car accidents.This blog explores how and why illegal delay tactics work for insurance companies, which companies deploy such tactics, what 3 options are available for injured people “under investigation”, and what Michigan Lawyers can do to help their clients.
How this Delay Tactic Works:
Insurance companies stop paying the Michigan no fault insurance benefits that they are required to pay.Goal:delay payment long enough for 1 year statute of limitations to pass.
Claims adjusters say the person is “under investigation” – with no explanation of why.
There is nothing the insured person can do to fix the situation or to re-open the insurance claim – as they are given no reason for being “under investigation”.
Insurance adjusters also refuse to pay medical providers and hospitals that have provided necessary medical treatment and have outstanding medical bills.
If more than 1 year passes from when no fault insurance benefits were incurred, those injured will lose all benefits they and their doctors are owed.
Which auto insurance companies use this delay tactic?
Lawyers who help people injured in auto accidents in Michigan find that claims adjusters at State Farm, Farm Bureau and Auto Owners are the most frequent offenders.
Why are insurance companies in Michigan allowed to do this? Isn’t it illegal?
There is no law in Michigan that allows insurance companies to do this.It is a blatant violation of the Michigan No Fault Act, which itself is built on the fundamental principle of prompt payment of incurred no fault insurance benefits within 30 days of reasonable receipt of proof.Insurance companies are using this new claims tactic to deliberately delay payment of no fault PIP benefits beyond the 1 year statute of limitations date from when insurance benefits are incurred.They are taking advantage of the Michigan Supreme Court’s recent draconian re-interpretation of the Michigan one year back rule in Devillers v. ACIA, 473 Mich. 562 (2005).
Devillers v Auto Club:In September of 2000, Michael Devillers, a teenager, was seriously injured in a car accident.AAA of Michigan was responsible to pay his Michigan no fault insurance PIP benefits.As a result of his injuries, Michael required constant in-home attendant care by his mother.At some point, AAA discontinued his no fault attendant care payments, but AAA did not inform the Devillers that they were terminating his no fault insurance benefits until almost 2 years later.The Devillers brought suit seeking payment of Michael’s insurance benefits once they were informed by AAA that his insurance benefits were cutoff.AAA then argued that the Devillers were barred from recovering insurance benefits because of the Michigan “1 year back” statute of limitations found under MCL 500.3145(1).The trial court denied AAA of Michigan’s motion, noting that under Lewis v. DAIIE, the 1 year statute of limitations had been tolled until the time that the Devillers were first notified of the insurance cut-off.On Appeal, the Michigan Supreme Court overruled Lewis creating a strict one year statute of limitations.No exceptions.
Devillers is a terrible decision.The Devillers were never notified as to why their benefits were suspended.They were then told they were terminated 2 years later. Once they were told they would no longer receive attendant care insurance benefits, they hired a Michigan lawyer to bring a lawsuit.
Without judicial tolling, there is simply no incentive to stop a Michigan no fault insurer from delaying, suspending and placing people “under investigation” until the claims are barred by the one year statute of limitations.
What Can Innocent (Insured) Accident Victims Do?
When this “under investigation” delay tactic is used, the injured claimant must resort to 1 of 3 options – within 1 year from when no fault benefits were incurred:
Give up and be personally liable for all medical bills incurred since the car accident; or
Try to reason with the insurance company adjuster (who is now breaking the law); or
Hire a Michigan lawyer to sue the insurance company for nonpayment of no fault insurance benefits
Insurance Company Wins Either Way
Delay Tactics Save Millions with No Consequences. This “giving up” by hundreds or thousands of people every year is saving Michigan insurance companies millions by avoiding claims that they are legally required to pay.Without insurance bad faith law, there is very little Michigan lawyers can do to deter this type of illegal, bad behavior by Michigan insurance companies.Lawyers have no “big stick.”
Lawsuits against insurance companies still offer savings.When a person chooses to hire a Michigan lawyer to file a lawsuit for PIP benefits, the insurance company still wins.Litigation and legal discovery provide many opportunities for the insurance company to avoid paying the full amount that is owed.There are mandatory court ordered case evaluations, facilitations and other alternative dispute resolution mechanisms that are designed to reach compromise settlements and avoid the costs and time of a trial.
Michigan insurance companies have no incentive to pay claims as required by law.There are no consequences, and they know that delaying months or years almost always allows them to avoid partial or full payment.
What Michigan No Fault Lawyers Should Do
Michigan auto accident attorneys representing a person whose claim has been suspended for months without explanation should:
File a Motion for Summary Disposition. Explain to the trial court that the client’s unpaid medical expenses, no fault wage loss, replacement services and other insurance benefits have been unreasonably placed “under investigation” status beyond the 30 days that is required under Michigan law.
Remind the trial court that under the Michigan No Fault Act a person is only required to submit “reasonable” proof, not exact proof, of the amount of a loss sustained or benefit incurred when seeking compensation from his insurance company. Under Lewis v. DAIIE, a trial court is authorized to make a finding that reasonable proof was provided by the insured as a matter of law and that summary disposition is an appropriate remedy under MCL 500.3142(2).
Michigan no fault insurance lawyers should remind the court that their client is entitled to full payment as the insurer has not paid the incurred medical expenses within 30 days of reasonable proof being received, and that the client is also entitled to simple interest on the overdue payment and no fault attorney fees under ? 3142 and ? 3148, respectively of the Michigan No Fault Act.
Lawyers should supplement this summary disposition motion with all overdue medical bills and proof of the dates that they were submitted to the insurance company.This proves that requests for no fault benefits were submitted in a reasonable and timely manner. Also include any response given by the no fault insurer, proving that there has been no explanation for the unreasonable nonpayment and no basis to the claim being “under investigation.”
Since there is no more judicial tolling of the 1 year back rule after Devillers, it is no surprise that insurance companies are putting more and more people “under investigation.”By taking the steps recommended above, your injured client may still receive the insurance benefits which they are entitled to.