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What is a ‘reasonable charge’ for family-provided attendant care services?

December 22, 2011 by Steven M. Gursten

Attendant care lawyer says dollar value of No-Fault attendant care depends on factors such as rates charged by health care agencies

Seriously injured auto accident victims who require attendant care finally have a fighting chance to force Michigan’s No-Fault auto insurance companies to pay a more fair value for family-provided attendant care services.

In Hardrick v. Auto Club Insurance Association, et al., the Michigan Court of Appeals ruled the hourly attendant care rates that health care agencies charge their customers are relevant in determining the “reasonableness” of the hourly attendant care rate charged by a victim’s family member.

Good news for auto accident victims and attendant care lawyers

For attendant care lawyers who have been battling auto insurance companies for years as to the admissibility of this evidence, this was welcome news. And the ruling is very good news for Michigan auto accident victims and their families who provide attendant care.

It’s bad news for Michigan’s No-Fault insurance companies, which is why it may be appealed to the more partisan Michigan Supreme Court.

But for now, this is a good law that lawyers handling attendant care cases can use.

Why use agency rates for attendant care in Michigan?

Actually, I’ve been using agency rates since I tried an attendant care case in Kalamazoo, Michigan about 15 years ago, because it’s such important evidence.

But this very recent case makes it explicitly clear that trial courts must allow this as relevant evidence for juries asked to determine “reasonableness” of how much hourly rate attendant care should be valued.

Because agency rates tend to be much higher than what insurance company adjusters prefer to pay for voluntary attendant care, agency rates force insurance company adjusters to pay a higher hourly rate for attendant care. The insurance industry’s preferred benchmark is hourly wages of agency-employed attendant care providers.

Michigan’s No-Fault insurers have railed against commercial agency rates for attendant care

Many Michigan auto insurance companies have argued repeatedly and emphatically that agency rates are “irrelevant” and must not be considered as a factor in determining the value of attendant care services provided by an auto accident victim’s family member.

But now, the Court of Appeals has put the No-Fault insurers’ dubious claim to rest once and for all:

“We hold that the market rate for agency-provided attendant care services bears relevance to establishing a [reasonable] rate for family-provided services.”

‘Reasonableness’ of attendant care

Under Michigan’s No-Fault Act, the “reasonableness” of a charge for attendant care services — whether provided by a health care agency, a victim’s family member or an independent contractor — will determine whether a No-Fault insurer is obligated to pay it.

According to the No-Fault Law’s “allowable expenses” provision, which has been interpreted to encompass attendant care services, a No-Fault insurer must pay “all reasonable charges” for “products, services and accommodations” that are “reasonably necessary” to an auto accident victim’s accident-related “care, recovery or rehabilitation.” (MCL 500.3107(1)(a))

Reasonableness factors in Michigan attendant care

Determining the “reasonableness” of a charge for attendant care services involves consideration of “many factors,” including “any evidence bearing on fair compensation for the particular services rendered,” explained the Court of Appeals in Hardrick.

As such, the court emphasized the importance of agency rates in assessing the reasonableness of an hourly attendant care rate, especially when the providers include members of the auto accident victim’s family:

“The amount charged for attendant care services substantially similar to the services provided by [the victim’s family] affords a logical basis for calculating a ‘reasonable charge.'”

However, the court noted that neither agency rates nor other “reasonableness” factors were “dispositive” of what constitutes a reasonable hourly attendant care charge. Instead, they are just part of the “collage of factors” that a jury can consider.

Among the other “reasonableness” factors discussed by the Hardrick court were:

o The hourly wage paid by a health care agency to its employee who provides attendant care services to the agency’s customer/patient.

o Overhead costs incurred by the actual attendant care providers.

o Opportunity cost incurred by the actual attendant care providers, e.g., the income-earning opportunities that a provider sacrifices in order to provide attendant care services to a family member who was seriously injured in an auto accident.

Steven Gursten is one of the nation’s top insurance lawyers handling attendant care lawsuits. He is head of Michigan Auto Law and president of the Motor Vehicle Trial Lawyers Association. He frequently writes and speaks about auto insurance, attendant care and the No-Fault law, and is available for comment.

Related information to protect yourselves:

Michigan attendant care case law

What is the hourly rate for attendant care in Michigan?

How No-Fault “reform” would drastically reduce Michigan attendant care benefits

Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights to better serve you. Call (800) 777-0028 for a free consultation with one of our attendant care lawyers.

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