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New Auto Insurance Company Delay Tactic

February 22, 2008 by Steven M. Gursten

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:

  1. 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.

  2. Claims adjusters say the person is “under investigation” – with no explanation of why.

  3. 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”.

  4. Insurance adjusters also refuse to pay medical providers and hospitals that have provided necessary medical treatment and have outstanding medical bills.

  5. 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:

  1. Give up and be personally liable for all medical bills incurred since the car accident; or

  2. Try to reason with the insurance company adjuster (who is now breaking the law); or

  3. 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:

  1. 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.

  2. 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).

  3. 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.

  4. 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.

[Community Guidelines]

11 Replies to “New Auto Insurance Company Delay Tactic”

  1. Hello,

    I was and am beig horribly abused by AAA of Michigan for NO Fault Benefits. I suffered a herniated disk in my cervical spine in 2002. My physiscan in Michigan wanted to do surgery and AAA told the physician I did not have a claim which was a LIE and Fraud. The doctor dumped me as a patient and I was unable to get my surgery. I ended up oversea having spinal cord surgery because I had no other health insurance and this was an auto accident. As a result I took out a mortgage on my house to pay for the trip. When I returned after the surgery was done the insurance company AAA of Micigan than said that it was an unreasonable surgery yet they refused to allow me to have my surgery locally and in my own country.

    I then had to go back oversea for my 1 year check up and to see about the next phase of my surgery which was rotator cuff tear surgery. I went to the ClevelandClinic and two Doctors wanted to perform bilateral shoulder surgery and knee surgery from the same accident but the spine needed to be addressed first. when the MRI was taken oveseas I was then told I had atrophy of my shoulder uscles and surgery was too late. Had the Cleveland Clinic been able to operate 3 years ago this would not have occured. I ow have permanent nerve damage and o chance of recovery as a direct result of the neglience, Bad Faith of AAA of Michigan

    I am told I am under investigation and my claims are neither paid or denied and now my 1 year back rule has expired. I have written to our Insuranc e Commission who has done nothing to help me and have recently sent a letter to Mike Cos our Attorney General. My claims adjuster has been removed but that stll has not changed me being able to get treatment. The isnurance adjuster claims I have no medical coverage which is a lie.

    an attorneya ctually wrote a letter to the Insurance Commissioner telling them to stop refusing me my medical care but tis also has done nothing. No attorney will take my case because of the complications ad the fact I settled part of my case with the person’s insurance who hit me and so only a PIP claim exists. I guess lawyers are not out to help people, just make money for themselves.

    My house is in foreclosure because I cannot pay the mortgage becase AAA never paid me for my surgery. I now live on the stree or in my car. I HATE AMERICA for allowing this to happen and Bush needs to go in Washington. HE IS NOT A GOOD PRESIDENT in my opinion.

  2. I feel for you. AAA stopped paying for my home care. After, Brain, Neck and Back. I don’t believe I have fallen in the One year limitation. Since my neck and back was done in 07 and 08 but I can’t even get them to put rails in my bathroom and “They ordered them” Some law that they passed years ago, doesn’t allowed the catastrophic Patients of accidents to “Live a normal life” they probably wish we were dead” I am just trying to function in my home” thats all..I can’t work anymore, I excepted that. What happened to quality of life? What you were use to? What you have now? I feel for you! Been there done that!

  3. My wife had both legs almost cut off in a recent auto accident. Ever since then State farm has made our life a living hell. Even with one of the best auto attorneys in the state, State Farm has managed to “slow pay” medical bills destroying our credit. The also outright lied and said we had to move from a “dangerous” tri-level home to a handicapped apartment when we didn’t have to by law. Now every day is either dictaded by doctors, State Farm litigation, lawyers or various other appointments. Our 2yr old son doen’t have much of life now and nor do we. This has been going on for two years with no end in sight. She’s had over 40+ surgeries and counting.
    Living in Michigan you would think that after the money comes from the Michigan Catastrophic Claims Fund that State Farm would let up and ensure the bills are paid. That would be wrong. They have no interest in their client other than trying to screw them. It just gets worse and worse. Good luck to you all and in the same boat as most.

  4. AAA has been stalling for over a year, ridiculous excuses, lies, and delay tactics, over and over again. i wish our lawmakers and the insurance commission in michigan would begin to stand up for the citizens of our state and put a stop to the insurance companies ignoring their responsibilities to their clients.

  5. I thought it was just me.. had coordinated benefits with AAA and Blue Cross. Was in a serious accident, where I lost my job. AAA stopped paying lost wages after 6 months, repeatedly said they did not get the bills I sent for reimbursement. I was unaware that they did not pay the Rehab facility the 20% not covered by Blue cross until it went to collection 11/2 years later. The Rehab did not care that I had insurance, they just wanted their money. My bank account was frozen, my short-term disability through my employer was garnished, and I ended up in court. It was me and 2 attorneys (AAA and the Therapy clinic). The jury trial was set to go, but the judge said $5000.00 was not worth going to trial and I was ordered to pay. She did not care that the Rehab had kept documentation of every call to AAA asking for payment. AAA denied receiving bills. This was my first claim after being with AAA for 30 years!!!

  6. Why don’t we call “No Fault” what it is? No Fault itself is a blatant tactic from Insurance comapnies who don’t want to pay anything at all. Instead of making people who are ACTUALLY at fault pay for the damages they cause, no fault punishes everyone, even the innocent.

    My wife was driving our van and was hit from behind by a careless person who left the scene after explaining that she was in a hurry. The police issued a ticket to the person for the accident. My wife was not at fault in any way, but because of the nonsense of no fault, the other driver got away completely free. Since I had been laid off we had reduced our coverage to the minimum Liability required in Michigan. I had a choice between feeding my family or cutting back. Since I couldn’t afford comprehensive insurance every month, my vehicle has still not been repaired.

    We submitted a “mini-tort” for the maximum of $500 (Big deal. $500 when the damages are in excess of $7000) but were told by the other driver’s insurance company that they would not pay because the other driver had not, “Authorized them to make any payment.”

    REALLY? Not authorized them? First, the other insurance company should have fixed every bit of damage to our vehicle. Second, since when can a customer tell an insurance company NOT to pay?

    What a complete RACKET! Where’s Elliot Ness when you need him to go after the Racketeers?

  7. Look at the political power of the insurance companies, which will now sadly only be magnified in this post-Citizens United World of unlimited corporate campaign spending. The problem sadly will not be getting better, especially as the insurance companies and the Chamber seem to have a stranglehold on the Republican party. While everyone wants lower auto insurance premiums, the obvious, easiest, and most direct solution – allowing the insurance commissioner in Michigan to regulate the insurance industry’s profits when they are excessive compared to the rest of the nation – is a complete nonstarter.

  8. All people not treated fairly and legally by MI no fault companies should (my opinion) make a complaint with the O.F.I.R (Michigan insurance oversight people). The complaint will probably go nowhere, as it is my understanding that the insurance companies fund the division. But then when you go to the judge, it shows that you made a reasonable attempt to follow the proper protocol. Us injured folk need to stand up to these giants and say NO MORE! period and end. My injuries are terrible, surgery after surgery. No chance oif ever being gainfully employed again, though trying. I have to get to a point of less pain, so that I can take less pain medication. People look at me, they see I am disabled and they know I am on pain medication. I would not want to work with me either. Point is, there needs to be a better support group, and more “community” efforts by us injured to stand up to these people. No-Fault is not an entitlement, it is a contract for services if you are injured in an auto-accident, eg (insurance). I have personally been told stories about adjusters “meeting their quota’s in denials” and then going to the super bowl on the Insurance company. This should be criminal. It would be if we did it. If you want to know the truth, look at the donor lists for our state representatives. These insurance companies have found ways to donate more than the legal limit….. we know an elected official these days will not go against the people that gave them money,,,,,,, UNLESS – the people stand up to be heard loud and clear! I am interested in starting an online forum for this type of existence. Once the politicians see that there are massive numbers of voters grouping and being cheated, they will think twice. We need a ten thousand person march/roll/hobble to the capital steps. This will show some unity amongst us people that are truly effected. I understand the frustrations I am hearing. I almost committed suicide due to the fact that “I” was allowing the insurance companies to take what was left of my life away. It has been a long and almost daily fight. They count on us insured and injured folk to not be able to wait it out while we fight them. Just imagine if we had a non-profit that helped us insureds get by while we fight them in court. In theory, there is much that we can do, but I always see that people do not band together and follow through. If I were to start something like this and people not take the walk with me, then I would be targeted. But if we all worked together, rolled in our wheelchairs with picket signs in front of the insurance company buildings, be seen on the news and internet…… it just may wake some people up. But we need numbers people. Big numbers. Good luck to all, and may God bless you all!

  9. Auto owners insurance Co has cut off PIP benefits after my daughter was hit head on with a head injury. They are denying her injuries even after a jury trial she won which they are also appealing because they refuse to pay the settlement..always hire a lawyer early on after any injury and use a private caseworker not your own insurance companies which you are entitled to. It is criminal what MI insurance companies are doing and we must fight back and not give in and that includes our judges and courts

  10. Hello Nancy i just wanted to say that i am extremely sorry and that i can feel your pain as my son was also an innocent person in a car accident but the insurance company ,,, STATE FARM” :/ TURNED HIM INTO THE VICTIM!! HOW SAD IS THAT? my son was the passenger in a car that the person decided to drive a 120mph and then loose control flipping it over 4 times causing my son to sustain major knee injuries requiring surgery back and neck injuries and also a closed head injurie. ***STATE FARM*** USED ILLEGAL DELAY TACTICS AND GOT OUT OF HAVING TO PAY FOR ANY OF THE INJURIES. drug my son and i through the mud for years just playing us and that great little game that they are best at. the driver of the car found and proven guilty on all aspects got to walk scott free after having to show up in court ONLY ONE TIME. WHAT I HAVE LEARNED IS ….. THAT OUR COURT SYSTEMS AND AUTO INSURANCE COMPANIES ARE ALLLLLLLLL CROOKED AND I JUST HAVE ONE QUESTION TO ASK????? HOW DO ANYYYY OF THEM GO TO BED AT NIGHT AND REST THEIR HEADS AND DO THEY REALLLLY GET A GOOD NIGHTS SLEEP??? BECAUSE I KNOW I DO!!! THIS WAS EVEN MORE FRUSTRATING WHEN THE ***STATE FARM*** LAWYER CAME UP TO ME AND SAID…. ” I JUST WANT TO APOLOGIZE FOR WHAT I AM DOING BECAUSE I KNOW THAT YOU AND YOUR SON ARE TELLING THE TRUTH BUTTTT,……… ” I GOTTA DO MY JOB” SICKENING RIGHT???? AS my sons life was destroyed and he lives in chronic pain daily and on pain meds just to get through the day destroying his organs, in need of cognitive brain training another knee surgery, counciling and much more leaving my son to start his adult life off with over 100 thousand plus in medical bills poor health and loss of respect for the people whom we thought were supposed to be there for you in a time of need……. ***STATE FARM*** THE COURT SYSTEMS THE LAWYERS THE DOCTORS FUNNY NOOOO ACTUALLY SAD HOW THEY ALL WORK TOGETHER!!! :(( **** STATE FARM IS NOTTTTT LIKE A GOOD NEIGHBOR**** NANCY I REALLY JUST WANTED TO SAY I KNOW WHAT YOU ARE GOING THROUGH AND THAT I WILL PUT YOU, YOUR DAUGHTER AND FAMILY IN MY PRAYERS… GOD BLESS AND IF YOU WANT TO TALK YOU CAN REPLY HERE AND GIVE ME AN EMAIL… ANYTIME!!! DAY OR NIGHT 🙂 THANKS FOR LISTENING!!! WELL I HOPE YOU LISTENED LOL

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