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New No Fault ‘hurdles’ proposed under HB 5854

October 13, 2014 by Steven M. Gursten

Pedestrians, bicyclists and other non-drivers will have a harder time getting No Fault benefits after a motor vehicle accident under new ‘assigned claims plan’ from Rep. Lund

No Fault hurdles for car accident victims

Rep. Pete Lund (R-Macomb County) is back. Apparently, his past efforts trying to help dismantle Michigan’s No Fault auto insurance system weren’t enough. So the pro-insurance industry Representative is back with another terrible idea that would hurt auto accident victims in Michigan.

But it sure will keep the insurance industry happy.

First, in April 2013, Lund introduced the abysmal House Bill 4612 to gut auto accident victims’ No Fault protections and benefits. For more info, check out our “Auto Insurance Consumers’ Guide To Michigan No Fault Reform & House Bill 4612.”

Now, nearly 18 months later, Rep. Lund has introduced another proposal, House Bill 5854, that erects new No Fault insurance “hurdles” for the auto accident victims who depend on the Michigan “Assigned Claims Plan” for their No Fault benefits:

Pedestrians, bicyclists and other non-drivers who don’t have and don’t have access to No Fault auto insurance coverage in the event they’re injured in a Michigan car crash.

Under existing No Fault law, when a pedestrian, bicyclist or other non-driver is injured in a Michigan car crash and doesn’t have  access to No Fault auto insurance coverage, he “may obtain” No Fault “benefits through the assigned claims plan” so long as:

  • He files a notice of claim; and,
  • His claim is not “obviously ineligible.” (See MCL 500.3171; 500.3172; 500.3173a and 500.3174)

So long as those requirements are met, the “assigned claims plan” arranges for the auto accident victim’s claim for No Fault benefits to be assigned to and handled by a Michigan No Fault auto insurance company.

That makes sense.  Many people who are pedestrians and who ride bikes don’t own cars or have a need for auto insurance. So the idea is that these people should be able to make a No Fault PIP claim to recover benefits from the car that hit them.

However, Lund seems to think that isn’t a good idea.

To “rectify” the situation, Lund has proposed the following new No Fault “hurdles” that auto accident victims would have to meet in order to obtain the No Fault PIP benefits they need so they can start to rebuild their lives:

  • An auto accident victim seeking No Fault benefits through the “assigned claims plan” may be required to show how she has “exercise[d] due diligence” in determining that the eligibility factors apply to her claim. (Page 8 of HB 5854)
  • An auto accident victim seeking No Fault benefits through the “assigned claims plan” “shall” be required to “provide a satisfactory proof of loss …” (Page 9 of HB 5854)
  • An auto accident victim seeking No Fault benefits through the “assigned claims plan” “shall” be required to “cooperate in the investigation of eligibility …,” which may include submitting to “examinations under oath and examinations by physicians selected by” the auto insurance companies that run “the Michigan Automobile Insurance Placement Facility [MAIPF] …” (Page 12-13 of HB 5854)

Foxes guarding the hen house

It should be emphasized there’s no evidence – zero – of any insurance fraud or abuse as the current law is written.

That said, here are some other problems I see with Lund’s proposal:

  1. These new No Fault “hurdles” are  burdensome and unnecessary (after all, this person walking down the street or riding his bike just got hit by a car!);
  2. This proposed bill puts the power of deciding whether the requirements to meet clearly discretionary hurdles have been cleared by people who are either working for auto insurance companies – who have an obvious stake and bias in the determination – or as yet unknown entities.

The Michigan Automobile Insurance Placement Facility (MAIPF), which makes the “initial determination of a claimant’s eligibility for benefits under the assigned claims plan,” is run by Michigan auto insurance companies. To read more, take a look at our post, “Michigan auto insurance companies take control over Assigned Claims Plan.”

As a No Fault insurance attorney, it would seem the MAIPF’s conflict of interest in determining eligibility for the assigned claims plan is readily apparent: If they determine that a claimant is eligible, then they must assign the PIP claim (which means paying out No Fault benefits) to themselves or to one of their fellow Michigan auto insurers.  Those payments go on the “loss” side of the ledger column.

As for the “Assigned Claims Plan,” there’s no publicly available information about the identities of the person, persons and/or entities that “operate” the assigned claims plan.

This is particularly troubling considering the task of “defin[ing] the requirements for a satisfactory proof of loss” is entrusted under Lund’s HB 5854 to the unelected (and, for the most part, unknown to the public) officials running the “assigned claims plan,” rather than the Legislature.

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