Former No-Fault insurance attorney writes of major mistake in the language of House Bill 4936 & Senate Bill 649 (formerly 293-294)
Today’s guest blog is written by Sanford Lakin. Sandy is retired now, but was considered one of Detroit’s preeminent plaintiff and defense attorneys. Sandy is looking at House Bill 4936 and Senate Bill 649 as an experienced Michigan insurance attorney, and writes of a very dangerous trap for the public and for seriously injured auto accident victims in this state.
As Sandy Lakin explains, if this proposed legislation becomes law, it will have devastating personal consequences that will result in financial ruin for those who can least afford it – those who have suffered catastrophic personal injury from an auto accident in Michigan.
Here is Sanford Lakin’s guest blog on the pending No-Fault insurance reform legislation:
I write this letter opposing the above bill as a concerned citizen. I am a retired attorney who specialized in various litigation areas including that of insurance coverage both for plaintiffs and defendants. I have been retired for over 10 years and have no personal or professional involvement in the present effort to change No-Fault coverage, other than as a concerned consumer.
Background: Michigan’s current No-Fault auto law was passed in 1973. It is unlike any other No-Fault act in mandating all Michigan motorists to carry medical (PPI) coverage as part of their motor vehicle insurance. In doing so, the insurer is required to provide unlimited PIP benefits.
No-Fault was designed to rectify deficiencies of the traditional tort (fault) system, by eliminating issues of tort liability (blame) of injured motorists or passengers injured in connection with use of a motor vehicle. Its major intent is to make available necessary medical coverage (PIP) and avoid legal expenses, costs and delays inherent in litigation. It especially offered the uneducated and less fortunate the ability to get proper and necessary health care without being forced to prematurely settle traditional claims for medical expense with the opposing party’s insurer, usually under the duress of extreme economic need. It also reduced the burden on public welfare or similar programs to pay for such necessary medial expenses, especially as relate to catastrophic injures and expensive long term treatment.
Under current No-Fault law, the motorist’s insurer is required to cover the insured’s lifetime legitimate and relevant medical expenses with no dollar limit on its contractual obligation. Because of this potential and substantial exposure, the legislature created the Michigan Catastrophic Claims Association (MCCA), to which all insurers offering Michigan No-Fault policies must belong. The current act distributes losses (extensive medical expenses for ‘catastrophic injuries’) among all insurance carriers issuing Michigan auto policies, so that any clams do not cause a disproportionate burden on any one (especially a smaller) insurance company.
The proposed act changes the design and intent of the coverage available under original No-Fault, which as a set off, had dramatically reduced an injured party’s common law right to sue for pain, suffering, loss of earning capacity, and other recognized common law tort compensation. The philosophy was similar to that when worker’s Compensation law was enacted in the early 1900s, which barred a workers common law tort claims against an employer, in exchange for “sure” medical and some wage loss benefits.
I am not aware of any provision of the proposed legislation that has evaluated and documented exactly what savings would be available to an insured depending on what extent of coverage he/she may want to purchase. I would assume that cheaper premiums will offer less PIP coverage. As human experience has demonstrated, most people, especially the poor, would likely get the cheapest policy in order to get insurance and be able to drive on the public highways. But if some of these folks sustain severe injuries requiring extensive and ongoing medical care and support, these excessive costs will be thrown upon the public. i.e., the tax payers under Medigap or related programs, one of the very situations the original No-Fault plan intend to avoid!
At least proponents of the amendment must be required to statistically demonstrate the financial burden expected on the public welfare from “catastrophic claims” that would not be covered in the policies with lower premiums, Further,they should be compelled to offer limited PIP coverage at reduced premiums based on the alleged savings to insurers under the proposed amendment.
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