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No Fault “reform” bill HB 4612: Great for the insurance companies, terrible for you

May 28, 2013 by Steven M. Gursten

My column this month in Attorney At Law magazine

HB 4612 insurance company wishlist

I write a monthly column for lawyers. Most of my advice columns in Attorney at Law Magazine are for other Michigan lawyers, and include tips and strategies for car accident and truck accident cases. But this month I chose to write about the new No Fault “reform” bill House Bill 4612, frankly because almost no one fully understands just how terrible this would be for accident victims and drivers.

Here’s my column:

Gov. Rick Snyder and Rep. Pete Lund (R-36th District) recently announced HB 4612 under the guise that it will save Michigan drivers money on auto insurance. But as of press time, that savings amounts to only about $150 per household vehicle in the first year. After that first year, there is no guarantee of future savings for drivers.

In exchange for this “savings,” we’re being asked to give up quite a bit, especially when Michigan’s insurance industry has been “significantly more profitable than the national average” according to a former state insurance commissioner, and when even Pete Kuhnmuench of the Insurance Institute of Michigan has said (as recently as 2007) that “the insurance industry’s profitability has a positive impact on the state of Michigan…Insurance companies are profitable”  (Insurance Institute of Michigan, 6/7/2007 press release).

Will there even be any savings for consumers? Hidden fees and new assessments in HB 4612 —  such as consumers being required to pay a new “annual catastrophic claims fee,”  raising $21 million each year for the Michigan Automobile Insurance Fraud Authority and paying a $25 annual Medicaid fee — could quickly cancel out future savings past year one.  It may even cause drivers to pay more for auto insurance.

HB 4612 represents the most extreme and brazen wish-list of the insurance industry to date. Here’s the list, as of press time:

  • Caps No Fault medical benefits at $1 million.
    What it means for drivers: This eliminates reasonably necessary lifetime No Fault medical benefits and pushes catastrophically injured accident victims onto taxpayer-funded Medicaid.
  • Reasonable and necessary products, services and accommodations is replaced with “medically appropriate” products, services or accommodations.
    What it means for drivers: The insurance companies get to choose what treatment is “medically appropriate.”
  • Limits on rehabilitation therapy.
    What it means for drivers: The new, unprecedented and permanent changes will limit accident victims’ access to important rehabilitative therapy.
  • Limits payments for family members providing attendant care to $15 an hour.
    What it means for drivers: Family members who provide their loved ones with in-home nursing services will not be paid the same amount as certain agencies providing the same care.
  • New $21 million annual assessment for fraud and theft authorities is aimed only at consumers, not insurance companies.
    What it means for drivers: Through new fee assessments, consumers will pay for Gov. Snyder’s new $21 million “Michigan Automobile Insurance Fraud Authority.”  What is troubling, to say the least, is that this new fraud authority is only directed toward     consumers and fails to hold insurance companies and claims adjusters who commit fraud accountable.
  • Claims processing of insurance adjusters is not admissible at a trial.
    What it means for drivers: Bad faith denials and any evidence of an insurer’s fraud or failure to pay legitimate claims is inadmissible in court.
  • If the claimant’s claim is excessive or in some respect fraudulent, the court can award the insurer legal fees.
    What it means for drivers: As with the new “Fraud Authority,” this is directed only at consumers, but not the other way around.
  • Whether a charge is reasonable will be a question of law for the trial judge.
    What it means for drivers: Currently, what is reasonable is a question of fact for a jury. This shifts the power from  juries to judges.
  • Innocent and seriously injured motorcycle operators riders have an even lower cap of $250,000 in No Fault medical benefits.

One of our Michigan Auto Law attorneys said it best in Michigan Lawyers Weekly:

“There are so many features of this bill that have never been proposed before, I would characterize this as the most extreme wish list the insurance industry could come up with … I could not imagine that any legislator who takes the time to read this and understands the no fault system, could vote for this.”

Related information:

Everything you need to know about Michigan No Fault reform

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