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Does latest MCCA transparency bill go far enough?

May 22, 2014 by Steven M. Gursten

Rep. Mike Callton’s HB 5423 asks for calculations used to determine the annual per vehicle assessment

Rep. Mike Callton

Should the Michigan Catastrophic Claims Association (MCCA) be required to tell the public why it charges what it does for its annual assessments?

Rep. Mike Callton (R-87th District) thinks so. On March 25, 2014, Rep. Callton introduced House Bill 5423, which says:

The MCCA’s Board of Directors “shall disclose to the public the calculations” used in determining and setting the MCCA’s annual per vehicle assessment.

(Note: This is not part of the Democratic package of auto insurance bills we recently discussed.)

For those of you who are unfamiliar with the MCCA, it’s a private, nonprofit association made up of a five-person board (unfortunately, comprised from the insurance industry) who manage the fund that reimburses auto No Fault insurance companies for each Personal Injury Protection medical claim that exceeds $530,000. Auto insurance consumers pay a MCCA assessment that funds the MCCA.

Currently No Fault insurance consumers pay an annual fee of $186 per vehicle.

But Rep. Callton’s legislative proposal begs the question:

Does HB 5423 go far enough in terms of bringing transparency to the MCCA?

Callton’s bill is especially relevant, as today the Michigan Court of Appeals ruled in a lawsuit that the MCCA records are exempt from FOIA requests.

Still, the Coalition Protecting Auto No-Fault (CPAN) doesn’t believe Callton’s bill goes far enough in getting the data from the MCCA.

CPAN spokesperson Josh Hovey told the Livingston Daily’s Christopher Behnan:

“‘In order to understand how MCCA rates are calculated, the public needs to have access to not only the calculations and charges the MCCA issues, but also all actuarial and economic assumptions and other relevant information used to make those calculations.’”

I applaud Rep. Callton’s courage for addressing this important issue.

And I also believe CPAN’s Hovey is right.

Yes, we need the math. But the public needs and deserves more information than just the “calculations” that result in any given year’s MCCA assessment of PIP reimbursement. We need the assumptions behind it, too.

Judge says what MCCA transparency should look like

Ingham County Circuit Court Judge Clinton Canady III revealed what he thought MCCA-transparency entailed when he issued his December 2012 order in Coalition Protecting Auto No-Fault v. The Michigan Catastrophic Claims Association, ruling that the Michigan Catastrophic Claims Association was subject to the Michigan Freedom of Information Act and, thus, was required to disclose “information … regarding [the] MCCA’s rate [assessment] calculation …”

Judge Canady said the “general rate [assessment] calculation information” that the MCCA was ordered to “disclose” included the following:

  • “Amount of funds contained in MCCA reserves …”
  • “Number of claimants …”
  • “Administrative costs …”
  • “Nature and type of investments of the reserves …”
  • “Amount currently paid by insurers …”
  • “Specific accounting as to increase/decrease in yearly rate calculated …”
  • “Etc.”

Lawmakers say what MCCA transparency should look like

Judge Canady’s ruling in Coalition Protecting Auto No-Fault v. The Michigan Catastrophic Claims Association is in line with previously proposed MCCA-transparency legislation.

Senate Bill 102 (introduced by Sen. Glenn Anderson (D-Wayne County) on January 29, 2013) and House Bill 4551 (introduced by Rep. Phil Cavanagh (D-Redford) on April 16, 2013)  proposed that business performed by the MCCA’s Board of Directors be conducted at public meetings in compliance with the Michigan Open Meetings Act (MCL 15.261 to 15.275).

Additionally, both SB 102 and HB 4551 proposed that writings related to the MCCA Board’s “official function” be subject to the Michigan Freedom of Information Act (MCL 15.231 to 15.246).

No Fault Auto Insurance “Reform” and MCCA transparency

The need for greater transparency into No Fault medical benefits for catastrophically injured auto accident victims may be the one point on which No Fault insurance supporters and Republican lawmakers who want to change No Fault insurance in Michigan can both agree.

In their plan for No Fault “reform,” House Speaker Jase Bolger (R-63rd District) and House Republicans have included transparency measures for their new MCCA (an incorporated version of the presently unincorporated MCCA). You can read about Bolger’s “Substitute for HB 4612” here.

For example, the new MCCA would be required to comply with the Michigan Freedom of Information Act (subject to a “financial or proprietary information” exception). (Page 37 of the House GOP draft bill)

And the new MCCA would be required to disclose MCCA rate-calculation information, which would include, but would not be limited to, the following (Pages 30-32 of the House GOP draft bill):

  • “[C]laims opened and closed in the year, the amount expended on the claims, and the anticipated future costs of the claims, with the assumptions, methodology, and data used to make the future projections.”
  • “The total number of open claims and their anticipated future costs, the assumptions, methodology, and data used to make the future projections, a categorical summary of claims paid, both open and closed and the expected future costs of claims …”
  • “The number of new claims projected for the upcoming year, if any, their anticipated future costs, and the assumptions, methodology, and data used to make the future projections.”
  • “A statement of the current financial condition of the incorporated association and the reasons for any deficit or surplus in collected assessments compared to losses.”
  • “A statement of the assumptions, methodology, and data used to make revenue projections … [and] to determine the incorporated association’s annual assessments.”

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