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MCCA can keep ‘secrets’ about No Fault auto insurance fee for catastrophic claims

August 30, 2016 by Steven M. Gursten

On remand, MI Court of Appeals refuses to require disclosure under FOIA; Michigan Legislature is last chance for obtaining much-needed MCCA transparency


Transparency is “out” and secrecy’s “in” at the Michigan Catastrophic Claims Association (MCCA).

Despite the disclosure requirements of the Freedom of Information Act (FOIA), the Michigan Court of Appeals has ruled the MCCA has the legal right to keep “secret” its methods and calculations for setting its annual No Fault auto insurance assessment for catastrophic insurance claims.

This is a terrible blow that impacts everyone. The ruling hurts all of us who must pay a portion of our auto premiums towards an annual auto No Fault insurance fee for catastrophic personal injury claims from motor vehicle accidents, but who will continue to be kept in the dark about where a chunk of our yearly auto insurance premiums are going.

The ruling also hurts all car accident injury victims who have suffered serious injuries and whose auto No Fault medical claims handling now involve the MCCA. It hurts lawyers like me who represent these auto accident victims when we see the defense lawyers and adjusters hide behind this lack of openness and transparency in lawsuits and legal discovery.

But most of all it hurts the public and the public’s right to know how their No Fault fees are being assessed and how their dollars are being spent.

Transparency is essential – and long overdue – both within the MCCA’s financial calculations for the MCCA fee assessments and throughout the car insurance industry, whose secrecy shields the industry’s hypocrisy of making enormous profits from a system it continually complains to the Legislature is broken.

Republicans like to claim they are all for transparency in government, especially when it comes to how government spends money.

But what about when it comes to the MCCA?

The odds are indeed long that the Republicans – who currently control the Michigan Legislature – will take action now that we know the courts aren’t going to protect our right to know the MCCA’s “secrets.” Generous political campaign contributions to these politicians from Michigan’s auto insurance companies seem to give the insurance industry a pass in how they assess and spend a chunk of our auto No Fault premium every year. Much easier for the insurance industry to blame the car accident lawyers and to say Michigan need caps on auto No Fault medical treatment than it is for them to open their books to allow the public to see how our own auto premium fees are being assessed and spent.

Court: MCCA not subject to disclosure under FOIA

In CPAN v. MCCA, a two-judge majority on the Court of Appeals ruled that the MCCA is exempt from the FOIA, thereby removing the last bit of hope that Michigan courts will protect consumers and car accident injury victims about the price they must pay for auto insurance.

Specifically, the appellate judges in CPAN v. MCCA determined:

  • The MCCA is a “public body” within the meaning of and, thus, is covered by the FOIA.
  • The statutory amendment, which “exempted the MCCA’s records from FOIA disclosure,” didn’t violate the constitutional provision that former Justice Cooley described as being aimed at prohibiting the “‘mischief’” caused by “‘the enactment of amendatory statutes in terms so blind that the legislators themselves were sometimes deceived in regard to their effect, and the public, from the difficulty in making the necessary examination and comparison, failed to become apprised of the changes made in the laws.”

It’s unfortunate that Judge Elizabeth L. Gleicher’s dissent didn’t prevail because I think her observations about the constitutionality of the MCCA’s FOIA exemption are astute and compelling:

“The core objective of the Freedom of Information Act (FOIA) … ‘is to provide the people of this state with full and complete information regarding the government’s affairs[.]’ … Our Constitution’s provision prescribing the manner in which statutes may be amended … prevents the Legislature from cloaking alterations of previously-enacted laws in garb ‘calculated to mislead the careless as to its effect[.]’ … By inserting a FOIA exemption into a statute addressing certain operational mechanics of insurance ‘associations,’ the Legislature obscured from public view its significant diminution of the FOIA’s reach. Because this piecemeal amendment contravenes our Constitution, I respectfully dissent.”

To learn more about the Michigan Supreme Court order that led to the Court of Appeals ruling, please check out my blog post, “Michigan Supreme Court punts on MCCA transparency case, orders ‘re-do.’”

The big question now for everyone who wanted MCCA transparency is what will Michigan lawmakers do next – and will Republican lawmakers demand the same level of transparency for how Michigan citizens pay their auto No Fault insurance fee for catastrophic personal injury claims from motor vehicle accidents as these Republicans do from other government institutions?

I’ll address this in more depth and discuss and the future of MCCA transparency in tomorrow’s auto law blog.

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