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What do you think about our Insurance Commissioner’s plan for No Fault reform?

January 30, 2017 by Steven M. Gursten

DIFS Director says changes to the law should focus on ‘reducing the costs’ of auto insurance for consumers and making sure car accident victims ‘are taken care of’

Michigan’s Insurance Commissioner recently shared his views on “reforming” Michigan’s auto No Fault Law to make car insurance more affordable for consumers.

Specifically, Department of Financial and Insurance Services (DIFS) Director Patrick McPharlin told Gongwer News Service that he and DIFS were “focused on”:

  • “[R]educing the cost for the individual person buying insurance … and not the insurance companies, doctors, hospitals or attorneys.”
  • “[D]oing right for our citizens. You have to do this reform so you make sure the people who need it to have care are taken care of. This is not to be a burden to them by any means …”

This sounds a lot like what I’ve been saying on the pages of this auto and No Fault law blog for a long time. It’s promising and it sounds very different from the propaganda and spin we regularly hear from the auto insurance industry and some of the mostly GOP politicians in the Legislature who carry water for the insurance industry in Michigan.

We can lower prices for auto insurance and still protect No Fault for car accident victims

It’s always been possible to lower the cost of Michigan’s No Fault auto insurance while still protecting the No Fault insurance benefits and protections that are so vital for car accident victims in this state.

In fact, I proposed 13 specific ways to accomplish this goal in my blog post, “A 2017 No Fault reform guide for new lawmakers on how to lower car insurance rates and preserve No Fault benefits.”

Given Director Pharlin’s comments, I think he would be particularly interested in the first three proposals on my list:

  • Create a truly fair No Fault medical-provider fee schedule which would not only lower car insurance rates and preserve No Fault PIP benefits, but would have the added benefit of eliminating a lot of the lawyer PIP fraud, ambulance chasing and personal injury lawyer solicitation that we see in cities like Detroit. Doctors get paid faster, we eliminate the thousands of provider lawsuits clogging our courts, and medical providers no longer have to pay lawyers or wait years in court to secure a reasonable fee for medical treatment.
  • Create a “Fraud Authority” that is as zealous about identifying and punishing No Fault fraud committed by Michigan’s auto insurance companies as it is about going after people.
  • Empower Michigan’s Insurance Commissioner to stop auto insurers from charging “excessive” prices.

A true path to No Fault reform

What I really liked about Director McPharlin’s comments was his focus on doing what’s “right for our citizens.”

How sensible, fair … and, well, refreshing, compared to many of the Republican-sponsored insurance company proposals that I’ve criticized on this blog.

It stands in stark contrast to efforts to reform auto No Fault in Michigan that have preceded it.

Towards the end of the last legislative session, we saw prime examples – House Bill 5951 and an unintroduced proposal during “lame duck” – of what has become the standard parade of No-Fault-reform horribles from the GOP and their benefactors in the auto insurance and hospital industries:

The plans to change No Fault suffered from the following, similar, critical flaws:

  • Failed to guarantee actual, long-term, meaningful savings for consumers.
  • Pushed a reckless “PIP Choice” scheme that would leave car accident victims without catastrophic medical coverage and woefully underinsured – in terms of No Fault medical benefits – in the event of a less than catastrophic automobile accident.
  • Imposed drastic, unprecedented limitations on the weekly number of compensable hours for family-provided, in-home attendant care, leaving car accident victims who require 24/7 care without care for a total of about four and a half days each week.
  • Sought to eliminate the guarantee of unlimited No Fault medical benefits for uninsured car accident victims (such as passengers and pedestrians) and replace it with a cap of $400,000
  • Failed to discuss how forfeiting vital No Fault benefits and protections would – in addition to not guaranteeing savings – cause a “cost shift,” i.e., increase what consumers pay for health insurance, out-of-pocket and for taxes to support Medicaid/Medicare.

Director McPharlin, to the extent that lawmakers follow his lead, may be signaling a turn for the better for consumers and for car accident victims. A true path to No Fault reform in Michigan that is fair for BOTH consumers and insurance companies, not just for the powerful insurance industry.

It’s about time.

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