Illegal aliens, felons and drunk drivers barred from PIP benefits under proposed No-Fault reform bills

Why these laws are a really bad idea by Michigan House Republicans

The House Republicans in Michigan have a really bad idea. Let’s take one part discrimination, add a pinch of stupidity, and sprinkle liberally with greed and it gives us the recipe to some of the worst proposed legislation (and politics) I’ve ever read. New proposed House Bills 4993 and 5587-5589 would ban illegal immigrants, felons and drunk drivers from receiving Michigan No-Fault personal injury protection benefits (PIP) if they’re injured in a car accident.

That would mean you and I and the rest of the public would be forced to foot the entire financial burden as these all of these people are shifted from the auto insurance that they have paid for to Medicaid.

These new proposed laws are a giant gimme to the auto insurance companies in our post-Citizens United world of unlimited political contributions by corporations and insurance companies. And it is clearly discriminatory. It carves out clearly unpopular classes of people to punish, so these politicians can say how tough they are.

Look, no one likes people who drink and drive, or felons. I happen to love immigrants, as I strongly believe they have helped build this country. Every economic study shows that they add great value to our country, and unlike Japan and Europe, our population growth will be a tremendous national advantage in this century. But the current extreme version of the Republican party today doesn’t like them “non-native” people either, so illegal immigrants get lumped in with the drunk drivers and felons.

For those of you who are unfamiliar with PIP benefits, Michigan has a great insurance system where drivers covered by No-Fault auto insurance receive important PIP benefits and medical coverage if they’re hurt in an auto accident. PIP covers all reasonably necessary medical expenses for life. It also covers lost wages for up to three years, replacement services (help around the house) and attendant care (in-home nursing services for activities of daily living like dressing, bathing and monitoring).

According to a House Fiscal Agency Legislative Analysis, denial of Michigan PIP benefits would apply to the following groups of people:

o (HB 4993) Anyone who is not authorized under federal law to be present in the United States.

o (HB 5587) Anyone using a motor vehicle in the commission of a crime or to escape from a crime that’s punishable by more than one year in prison.

o (HB 5588) Anyone operating a motor vehicle (or motorcycle) while intoxicated, visibly impaired or with any amount of a controlled substance in his or her body.

o (HB 5589) Anyone who was a passenger in a motor vehicle (or motorcycle) that was stolen, if the person knew it was stolen.

What’s in it for us, the taxpayers?

Cindy Denby (R-Handy Township) sponsored HB 5587. According to published reports, Denby said those committing felonies should not be entitled to Michigan PIP benefits, and that Michigan drivers can’t afford to fund the costs of their PIP benefits.

But Denby has it all wrong. Auto insurance companies in Michigan have the freedom of unregulated pricing, unlike insurance companies in most other U.S. states, where excess profits can be regulated by state insurance commissioners. So if the cost of auto insurance is high in Michigan, it is because the insurance companies price them that way. Michigan’s auto insurance companies actually lead the entire nation in profitability, and that is far more outrageous and harmful to the citizens of this state than anything Denby mistakenly believes she is fixing.

Bills like this are designed not to make auto insurance prices drop. They are simply gifts to the insurance industry, designed to put even MORE money in the auto insurance companies’ deep pockets by allowing them to walk away from risk that they have already insured against, and collected insurance premiums to insure against. The auto insurance companies are huge contributors to Republican legislators’ political campaigns, and it seems Denby and her fellow Republicans want to give their big campaign contributors an early Christmas present.

A recent story in MLive stated that Michigan auto insurers paid out more than $2 billion in PIP claims in 2011, according to the state Office of Financial and Insurance Regulation. The insurance companies may spin the fact that premiums have skyrocketed due to do uninsured drivers and groups like those mentioned above. But Michigan insurance companies are profitable, and are even raking in record-breaking profits.

Rep. Margaret O’Brien (R-Portage), who sponsored HB 5588, said in published reports that her constituents are upset about the rising costs of No-Fault insurance. Still, she said she’s not sure how much PIP costs would be reduced according to these bills. But the point of her bill, she stressed, is to prevent people who break the law from receiving PIP benefits.

So let me get this straight: O’Brien is going to complain about No-Fault insurance costs, yet her bill provides no proof or method to lower these costs. Its only purpose is to exclude certain groups of people from receiving these insurance benefits and forces the rest of us as taxpayers to now cover the entire cost of all future medical care?

These bills offer absolutely nothing to the taxpayers, Michigan drivers, or those who buy No-Fault. Again, if these bills become law, and these groups of people are not covered, the costs for their medical care will be diverted from the auto insurance companies (remember, highly profitable and largely unregulated pricing) to the taxpayers. The taxpayers will foot the bill because these people will fall under Medicaid and then Medicare.

We all pay more under these bad bills.

There are currently another set of No-Fault insurance “reform” bills in the works that would cap unlimited lifetime medical benefits to a dangerous low, leaving all auto accident victims without medical care and attendant care. These bills too would also push injured auto accident victims from No-Fault insurance to Medicaid, and leave the taxpayers footing the bill. There’s also no provision in any of this legislation to guarantee any cost savings on auto insurance premiums. Not one penny.

Why exclude people who need help?

Why in the world are the House Republicans spending time and energy on these bills that only serve to exclude people? These bills are discriminatory and they lack compassion. They further punish people who have been seriously injured in auto accidents by denying them insurance coverage.

As an aside, in Michigan, drivers are required by law to purchase No-Fault auto insurance. So if an immigrant or a felon has auto insurance and hurts someone else in a crash, their auto insurance policy would pay to cover the injured accident victim’s PIP benefits under these bills. On the other hand, according to these bills, the immigrant or felon’s No-Fault would not apply to their own injuries, so the insurance companies get a pass, pocket the premiums, and the people who purchased the insurance are hung out to dry.

The point of Michigan No-Fault is that it doesn’t matter what you have done, or who is at-fault for an auto accident. If you pay into the No-Fault system, you get your medical expenses and expenses related to your auto accident injury covered. That’s why we call it “No Fault.”

Since when are legislators in the business of arbitrarily deciding insurance coverage based on one’s morals? We could really make these House Republicans happy if we just switch from No-Fault insurance to character insurance and let these legislators judge morality of all accident victims. Let’s really open up the floodgates regarding who deserves and who is not worthy of medical care.

– Steve Gursten is an insurance lawyer handling auto accident lawsuits. He is head of Michigan Auto Law and president of the Motor Vehicle Trial Lawyers Association. Steve frequently writes and speaks about Michigan No-Fault “reform” and auto insurance, and is available for comment.

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. Call (248) 353-7575 to speak with one of our Michigan insurance lawyers.