Michigan auto insurance companies take control over Assigned Claims Plan: a program providing No Fault PIP insurance benefits to uninsured auto accident victims

Oversight authority shifted from publicly elected secretary of state to private, for-profit auto insurers; changes include new over-broad application and intentionally intimidating fraud “warnings”

Michigan auto insurance companies now control the newly created Michigan Automobile Insurnace Placement Facility (MAIPF), which was previously called the Assigned Claims Plan.

The rub is that it has a lot of consumer advocates, Michigan insurance lawyers and lawyers who help people with no fault insurance claims, insurance industry watchdogs, and people worried about the glaring conflict of interest this presents all shaking their collective heads together wondering how this ever happened.

The Michigan Assigned Claims Plan is the program that ensures Michigan No Fault insurance benefits will be provided to uninsured auto accident victims, provided those uninsured drivers were not the owner/operator of the car involved in the crash.

That has not always been the case.

For more information, click here to read a comprehensive analysis of Michigan No Fault reform and the latest developments.

For the last 40 years, since the Michigan Assigned Claims Plan’s inception, Michigan law has entrusted the publicly elected Secretary of State with oversight authority over the program.

However, that changed on January 1, 2013, the effective date of a 2012 amendment to Michigan’s No Fault Law.

Under the change in the law, control over the Michigan Assigned Claims Plan was taken away from the Secretary of State and given to a group of for-profit auto insurance companies called the “Michigan Automobile Insurance Placement Facility” (MAIPF).

Two other noticeable changes have coincided with the for-profit auto insurance companies in MAIPF taking control over the Michigan Assigned Claims Plan:

• The auto insurers at MAIPF replaced the old Assigned Claims Plan application for benefits with a new exhaustive application for benefits whose scope exceeds the eligibility parameters articulated by the Michigan No Fault Law.
• The auto insurers at MAIPF have included unprecedented fraud warnings, which clearly border on intimidation, in both the MAIPF’s newly-drafted Assigned Claims Plan and its no fault application for benefits.

Controlled by for-profit auto insurance companies

Primary authority for running the Michigan Assigned Claims Plan lies with the MAIPF’s 11-member Board of Governors, which includes seven for-profit auto insurance companies (Allstate, Auto-Owners, Hastings Mutual, State Farm Mutual, Amerisure Mutual, Auto Club Insurance Association and Citizens Insurance of America), two insurance agent representatives and two public representatives.

The duties of MAIPF’s for-profit auto insurer members include adopting, implementing, maintaining and administering a new “Assigned Claims Plan,” which sets out the “procedures for disbursement” of No Fault benefits to uninsured auto accident victims. MAIPF’s plan is subject to review only by the Governor-appointed Commissioner of the Department of Insurance and Financial Regulation. (MCL 500.3171(2) and (3))

Additionally, the “initial determination” of an uninsured auto accident victim’s “eligibility for [No Fault] benefits under the assigned claims plan …” is made by the for-profit auto insurer-members of MAIPF. (MCL 500.3173a(1))

Eligibility for No Fault benefit “through the assigned claims plan” is determined exclusively by the factors set forth in MCL 500.3172(1).

Assigned Claims Plan eligibility

An injured Michigan auto accident victim may collect No Fault benefits through the Michigan Assigned Claims Plan, as administered by MAIPF, if she meets any of the “eligibility” criteria set out by MCL 500.3172(1) of the Michigan No Fault Law:

• “No personal protection insurance is applicable to the injury.”
• “No personal protection insurance applicable to the injury can be identified.”
• “The personal protection insurance applicable to the injury cannot be ascertained because of a dispute between two or more automobile insurers concerning their obligation to provide coverage or the equitable distribution of the loss.”
• “The only identifiable personal protection insurance applicable to the injury is, because of financial inability of one or more insurers to fulfill their obligations, inadequate to provide benefits up to the maximum prescribed.”

Consequently, if an injured Michigan auto accident victim is determined to be eligible to collect No Fault benefits through the Assigned Claims Plan, then the MAIPF will assign the victim’s claim to a Michigan auto insurance company for payment of the victim’s No Fault benefits.

Application questions that are irrelevant to Assigned Claims Plan ‘eligibility’

Now that for-profit auto insurance companies have taken over control of the program responsible for providing No Fault benefits to uninsured auto accident victims, the application for benefits has doubled in size: “Application For Personal Injury Protection Benefits”

One reason is the presence of new questions that delve into the following issues which have nothing to do with the “assigned claims plan” “eligibility” factors set forth in the No Fault Law:

• A “full description of how the accident occurred.” (#18)
• Whether the auto accident victim was “contacted by a doctor’s office or other person about this claim,” and, if so, the name, address and phone of the “doctor” or “other” person. (#22)
• The auto accident victim’s pre-existing or prior medical conditions (including medications) that existed before the auto accident and treatment history. (#26-28)
• Does the auto accident victim “have a primary care doctor?” If so, who? (#29)
• “How did [the accident victim] normally get to work prior to this accident? (#41)
• “Was there damage to the vehicle [the accident victim was] occupying or struck by?” If so, describe the damage. (#43)
• Was the damaged vehicle towed and/or repaired? If so, by whom? And, where is the damaged vehicle now? (#43, a, b, c)
• “Did [the accident victim] lease or have use of the involved vehicle at any time before the date of the accident? What was the frequency at which [the accident victim] used the vehicle?” (#43, d and e)
• Did the accident victim: Have his own set of keys to the vehicle? Have to ask permission to drive the vehicle? Get denied permission to use the vehicle? Ever put gas in the vehicle? Ever do any maintenance on the vehicle? (#43, f-j)
• Names, addresses, phone numbers and insurance status of the vehicle’s occupants. (#43, q)
• Names, addresses and phone numbers of witnesses to the accident. (#44)
• Whether the accident victim has “ever filed a claim for Personal Injury Protection Benefits,” and, if so, with what auto insurer and under what claim number? (#47)

Unprecedented (and deliberately intimidating?) fraud warnings

Until the for-profit auto insurance company members of the MAIPF took over the Michigan Assigned Claims Plan, neither the No Fault Law, the assigned claims plan nor the application for benefits warned uninsured auto accident victims about fraud or false statements.

No doubt the silence on those issues resulted from the fact that neither false statements nor fraud were causing problems for the assigned claims plan or the No Fault system.

But then, control over the program shifts from the Secretary of State to the group of for-profit auto insurance companies and, suddenly, fraud and false-statement warnings abound.

Now, the No Fault Law provides that a knowingly “false statement” made in support of a claim for No Fault benefits through the assigned claims plan is “a fraudulent insurance act,” which renders the claim “ineligible for payment or benefits under the assigned claims plan.” (MCL 500.3173a(2))

This same language is included in the MAIPF-created assigned claims plan and it is repeated twice on the last two pages of the MAIPF-created application.

The fraud and false-statement warnings are a significant change for two reasons:

• The legislative history behind the warnings provide for no evidence to substantiate the need for enhanced vigilance against fraud.
• The only consequences for a false statement and “a fraudulent insurance act,” as specified in the No Fault Law and in the MAIPF-created assigned claims plan and application, is that a person’s claim for No Fault benefits will be deemed “ineligible for payment or benefits under the assigned claims plan.” Significantly, there is no declaration that offending claims (and/or the persons responsible for those claims) will be referred to the police for investigation, arrest and criminal charges.

For more information, click here to read a comprehensive analysis of Michigan No Fault reform and the latest developments.