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What’s the latest on Michigan No Fault Insurance “Reform” efforts?

May 26, 2014 by Steven M. Gursten

Our Michigan Auto Law No Fault newsletter is out with the newest developments on proposed changes to our No Fault laws and lawyer commentary

House Speaker Jase Bolger has two No Fault "reform" packages.
House Speaker Jase Bolger has two No Fault “reform” packages.

Our latest edition of the Michigan Auto Law No Fault Insurance newsletter is now out.  Our newsletter is a free resource that provides all the breaking news and our own insurance attorneys’ legal analysis on what the  efforts to change Michigan’s 40-year-old No Fault insurance system will mean for people injured in car accidents, the medical providers who treat accident victims, and those who currently receive attendant care benefits.

Below is a summary of what we cover in our latest report:

The Democrats’ auto insurance reform response is now out

Here’s the big news on no fault reform.  The Democrats in the Michigan House of Representatives are proposing a new  “reform” plan of their own of Michigan’s auto insurance system. And this time they are taking aim squarely at how insurance companies treat many accident victims today, and the lack of transparency in the MCCA.

At press conference on May 1, 2014, House Democrats previewed a 14-bill package which would aim to keep auto insurance rates lower for auto consumers and increase punishments for auto insurance companies that use unfair or deceptive practices to avoid paying valid insurance claims and Personal Injury Protection (PIP) medical claims under the existing No Fault law.

Specifically, the House Democrats’ plan has three main goals:

  1. Consumer protection – Protecting consumers from auto insurance companies who act in bad faith or otherwise “take unfair or deceptive action.”
  2. Affordability – Ensuring that auto insurance companies do not charge “excessive” prices and do not increase prices for improper reasons.
  3. Transparency – Protecting auto insurance company employees “who expose unfair or deceptive practices” and requiring the Michigan Catastrophic Claims Association to share with the public information about the MCCA’s finances, including its annual per-vehicle assessment.

Auto insurance “reform” legislation

Included in the auto insurance “reform” plan that Michigan House Democrats are proposing are the following three “reform” bills that have already been introduced:

  • House Bill 5461: Introduced by Rep. Thomas F. Stallworth III (D-7th District) on April 23, 2014, HB 5461 eliminates auto insurers’ “file and use” practice by requiring auto insurance companies to justify rate increases,” i.e., demonstrate that the proposed increased rates are not “excessive,” before the rates can be “imposed on drivers.” The bill also provides a 15-day waiting period for the Insurance Commissioner to either approve or disapprove auto insurers’ proposed rate increases.
  • House Bill 5000: Introduced by Rep. Alberta Tinsley Talabi (D-2nd District) on September 24, 2013, HB 5000 prohibits auto insurance companies from engaging in the “unfair or deceptive act or practice” of setting and/or raising auto insurance rates based a person’s employment, trade, business, occupation, profession, education level, or “credit history or lack of credit history.”
  • House Bill 4551: Introduced by Rep. Phil Cavanagh (D-10th District) on April 16, 2013, HB 4551 requires that the Michigan Catastrophic Claims Association be subject to the Michigan Freedom of Information Act and the Michigan Open Meetings Act. The bill also provides that Michigan’s Insurance Commissioner could reject the MCCA’s annual assessment as “excessive” and that one of the MCCA’s Board of Directors be a “member representing the general public.”

What has – or hasn’t been – happening with Michigan No Fault Personal Injury Protection “reform legislation

  • No action on Pappageorge’s SB 818: The Michigan Legislature has taken no action on Senate Bill 818, the so-called No Fault “reform” proposal that was introduced on  February 25, 2014 by Sen. John Pappageorge (R-13th District). To read more about Sen. Pappageorge’s bill and its provisions regarding No Fault “reasonable charges,” a medical-provider fee schedule, restrictions on in-home, family-provided attendant care and changes to the MCCA, check out our blog post, “What’s really in Sen. John Pappageorge’s SB 818 on No Fault Law Reform?”
  • Speaker Bolger hasn’t (re)-introduced his plan: Despite his media blitz last month regarding his plan for No Fault “Reform,” Michigan House Speaker Jase Bolger has not introduced a bill encapsulating his plan in the Michigan House of Representatives. Bolger called the 91-page “draft” bill “Substitute for House Bill 4612,” which was last year’s proposal for changing No Fault. For more information, take a look at our blog post, “Top 6 reasons to say ‘NO’ to House Speaker’s new No Fault ‘Reform’ plan.”
  • No action on Lund’s HB 4612: The Michigan Legislature has taken no action on House Bill 4612, the No Fault insurance “reform” bill, which was introduced by Rep. Pete Lund (R-36th Macomb County) in April 2013 and has received the full-throated support of Gov. Rick Snyder.
  • No action on Virgil Smith’s SB 251: The Michigan Legislature has taken no action on Sen. Virgil Smith (D-4th District)’s Senate Bill 251, which would eliminate No Fault’s guarantee of reasonably necessary  No Fault medical benefits and replace it with a $50,000 cap on No Fault Personal Injury Protection medical benefits. Nor has the Legislature taken action on Sen. Smith’s Senate Bill 326, which proposes a “Low Cost Automobile Insurance Pilot Program.”
  • No action on Farrington’s HB 4959: The Michigan Legislature has taken no action on House Bill 4959, a bill sponsored by Rep. Jeff Farrington (R-Utica) (nor has the Legislature taken action on the identical bill introduced in the Senate, Senate Bill 510, by Sen. Rick Jones (R-24th District)), which makes the horrendous, reckless and dangerous proposal to exclude senior drivers over 65 from No Fault’s medical benefits provisions.
  • No action on “transparency” bills: The Michigan Legislature has taken no action on either the Senate or the House bills calling for transparency at the Michigan Catastrophic Claims Association (MCCA) by requiring the MCCA to comply with Michigan’s Freedom of Information Act and Michigan’s Open Meetings Act. To read more about Sen. Glenn Anderson (D-Kalamazoo)’s Senate Bill 102, please check out his guest post on the Michigan Auto Law blog, “Sen. Glenn Anderson says reforming the MCCA would ‘protect drivers’ and ‘lower rates.” Similarly, to read more about Rep. Phil Cavanagh (D-Redford)’s House Bill 4551, click here. 

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