Detroit car crash victims who need No-Fault most will suffer the greatest harm under D-Insurance. Solution: a reasonable No-Fault medical-provider fee schedule
I’ve never pulled my punches when it comes to voicing my many objections to Detroit Mayor Mike Duggan’s D-Insurance Plan.
I’ve called it dangerous, terrible, disappointing, devastating and “a bad deal for Detroiters.”
I still stand by what I’ve said as you can see in the Detroit Free Press’s “No-Fault fixes” story:
“Steve Gursten of Michigan Auto Law was among the personal injury attorneys who voiced opposition to D-Insurance. In an interview after the bill’s introduction, he warned that those who buy such policies but lack good commercial health insurance and get into a bad crash ‘are going to be trapped in that same really vicious downward spiral of people in pure tort states …’”
“‘They’re going to blow through their personal savings, they’re going to get pushed onto Medicaid, and they’re probably going to end up declaring personal bankruptcy because of incredible medical debt … Is that the system that we want?’”
One of the things that caught my attention in the story was a New Jersey personal injury attorney’s blasé attitude about what happens when a car crash victim’s catastrophic medical-care costs exceed her No-Fault PIP coverage:
“‘There is no provision for catastrophic. I wouldn’t call that the biggest problem in our system personally, but when it happens — it’s bad.’”
What?! What he is saying is that most people who are injured in car accidents suffer minor injuries and go on to make good recoveries. But for the unlucky people out there who are in the wrong place at the wrong time and suffer serious and catastrophic injuries, a capped No-Fault system doesn’t work.
How do I know this? I’ve now lectured at legal seminars across the nation. I organize and moderate the largest auto accident legal seminar in the United States every year. And I’m the president of the Motor Vehicle Trial Lawyers Association.
Plus, for 23 years, I’ve been helping people seriously hurt in car, truck and motorcycle accidents. I’ve litigated serious auto accident cases in Michigan and in many states around the country.
And I’m here to tell you that a catastrophically injured car crash victim being unable to get the catastrophic coverage she needs is more than “bad.”
It’s an enormous problem! One that will affect and harm thousands of people in Detroit and around the state of Michigan if D-Insurance is implemented here.
Here’s how it works in New Jersey, for example:
“[T]here are instances in New Jersey where a catastrophically injured [car crash victim] uses up his or her no-fault benefits and then burns through their personal assets paying for in-home care and assistance. These individuals can end up in Medicare nursing homes.”
Readers of the Freep story and this blog post need to understand is that if a plan like D-Insurance is implemented in Detroit (and throughout Michigan), this will happen to every person who is badly injured in a car crash and who doesn’t have good health insurance. I should add that as one of the fastest growing forms of health insurance being provided by public employers and hospitals is self-funded ERISA plans that have exclusions for auto accidents, this can also happen to thousands of people who do have good employer-provided health insurance.
This effects the poor the most, as always. It affects all those with jobs that offer substandard health insurance the most, and the uninsured. As Duggan well knows, these people are predominantly in Detroit, not the suburbs. These people are his constituents.
Those who need No-Fault the most will be hurt the most with D-Insurance.
What’s so dangerous about D-Insurance?
As I explained in my Feb. 20, 2017, blog post, “Detroit drivers deserve better than D-Insurance,” Mayor Duggan’s proposed low-cost auto insurance plan is dangerous and a bad deal for Detroit for the following reasons:
- No ‘full, unlimited No-Fault benefits.’ Under the D-Insurance Plan, an automobile accident victim is entitled to “only limited [No-Fault] benefits and not full, unlimited No-Fault benefits.”
- No catastrophic coverage. Under the D-Insurance Plan, an auto accident victim who suffers a catastrophic injury will not be covered by the Michigan Catastrophic Claims Association. But, instead, he or she will need to rely on his or her health insurance company, on Medicaid/Medicare, on his or her personal services, resources and/or assets, on lawsuits against the at-fault drivers and/or go without the treatment and services they need for their care, recovery and rehabilitation.
- $25,000 cap on all No-Fault benefits for non-critical medical care, wage loss and replacement services. Under the D-Insurance Plan, an auto accident victim’s combined No-Fault medical, wage loss and replacement services benefits would be capped at $25,000.
- $250,000 cap on “critical care” medical costs. Under the D-Insurance Plan, an injured auto accident victim’s “critical care” coverage (i.e., emergency room and/or trauma center until the point that the victim is stabilized and “can safely be discharged or transferred to another acute care hospital or trauma center or to a rehabilitation or other facility”) is capped at $250,000 — which does not transfer over to and/or cover non-“critical” medical care or “charges relate[d] to post-stabilization services.”
- No choice of doctor for auto accident victims under D-Insurance’s “managed care” system. Under the D-Insurance Plan, an auto accident victim could be forced into an auto insurer’s “limited provider network,” i.e., managed care, where “the insurer may require an injured individual … to obtain” treatment and care “from a provider … that is part of the [insurer’s] limited provider network.”
- Car insurance companies “playing doctor”: No medical care without “preauthorization.” Under the D-Insurance Plan, an auto accident victim could be required “to obtain preauthorization from the insurer” before receiving treatment and care — even from “an in-network provider.”
- Pay if you don’t play: Car accident victims could financially responsible for their own medical bills if they fail to first seek “preauthorization” from the car insurance company.
What’s the #1 No-Fault fix for Detroit?
It’s the same thing I’ve said for years:
Create a No-Fault medical-provider fee schedule modeled on the one used in the Michigan Workers’ Compensation system — but with more generous reimbursement to medical providers.
That would give everyone — consumers, drivers and car crash victims — the best of both worlds by preserving vital No-Fault benefits and protections and lowering auto insurance premiums.
More specifically, here’s what a truly reasonable and fair No-Fault medical-provider fee schedule will do:
- It will leave intact all of the existing protections and benefits guaranteed by No-Fault: That way, Detroit car accident victims won’t have to rely on health insurance and Medicaid and Medicare — with their coverage limitations. And the many Detroiters without health insurance or Medicaid won’t have to go without medical care.
- It will stop price-gouging of No-Fault auto insurers: Detroit medical providers will no longer be able to charge No-Fault auto insurance companies 340% more (or 3.4 times more) than what they charge to Workers’ Compensation for the same procedure.
- It will generate considerable No-Fault savings, which must be passed along to consumers in the form of lower car insurance premiums: A fee schedule could a medical-provider fee schedule generate savings of approximately 71% on No-Fault medical claim costs in Detroit.
- A truly fair fee schedule will remove the financial incentive that drives many “billboard lawyers” and “ambulance chasing” lawyers that are currently violating Michigan law and committing insurance fraud by participating in medical-legal referral services that drive up medical costs unnecessarily, with the lawyer then taking a one-third attorney fee on the medical bills.
- A fee schedule will also end the networks of runner, cappers, soliciting “case managers” that are currently camped out in many Detroit-area hospital waiting rooms and who walk into patients’ rooms handing out lawyer business cards.
- It will end the misuse and abuse of our No-Fault system by “ginning” up costly PIP claims and flooding the courts with needless first-party No-Fault lawsuits.
More critical No-Fault fixes to lower the cost of car insurance in Detroit
There are plenty of No-Fault fixes for high Detroit car insurance prices that (mostly Republican) lawmakers — and insurance industry lobbyists — have inexplicably failed to discuss, let alone support.
Below are car insurance “reform” ideas that I previously proposed in my No-Fault Reform Guide and in my New Lawmakers’ Guide to No-Fault Reform — which I believe apply with equal, if not greater, force to the No-Fault crisis plaguing Detroit drivers:
- Enact a No-Fault 80/20 loss ratio rule, which would require Michigan car insurance companies to either pay out No-Fault claims or pay refunds to their insureds. Modeled on the federal Affordable Care Act’s 80/20 Medical Loss Ratio, a No-Fault 80/20 loss ratio rule would require Michigan’s No-Fault auto insurance companies to spend no less than 80% of their insureds’ premium dollars on their insureds’ No-Fault benefits or pay refunds to their insureds. I first proposed this idea on Nov. 22, 2012. Then, I raised it again Jan. 23, 2013. In 2014, the idea was proposed in House Bill 5528, but the bill, unfortunately, “died” due to inaction at the end of the 2013-14 legislative session.
- Eradicate IME abuse. One form of the incredible abuse that auto insurance companies heap on Michigan car crash victims is insurers’ use of notorious IME doctors like Rosalind Griffin to “deny” or “cut-off” No-Fault benefits to people who are truly hurt and, thus, desperately need NF benefits. There are two ways that we can deter and, hopefully, prevent outright perjury by insurance-company-hired IME doctors and prevent material misrepresentations of IME exam results that many insurance and defense doctors are committing to cash in on the money. Specifically, it’s time for IME reform and I believe we would do well to begin by implementing the following rules in Detroit motor vehicle accident cases — and throughout Michigan: (1) Allow car crash victims an automatic right to videotape and/or record IME exams; and (2) Require IME doctors to spend the majority of their professional time actually treating patients.
- Create a “Fraud Authority” that is as zealous about identifying and punished No-Fault insurance fraud committed by Michigan insurance companies as it is about going after people who are cheating the system. Make no mistake that fraud by insurers exists and tragically, is far more frequent and pervasive in Michigan than most people who have never been seriously hurt in a car crash can even believe. Examples of insurance company fraud include: Using clearly biased insurance company or IME doctors; unreasonably denying and cutting off benefits; withholding of information by adjusters; lying to adjusters and deliberately providing misinformation by claims adjusters; and, intentional underpayment of No-Fault benefits.
- Enact “Bad Faith” Legislation which would impose on Michigan No-Fault auto insurance companies a “duty to deal fairly and in good faith” with their insureds and which would hold insurers “liable for compensatory, consequential, and exemplary damages … costs of litigation, including actual attorney fees” for failure to do so.
- Amend the Michigan Consumer Protection Act to make it applicable to Michigan auto insurance companies. Because the Michigan Supreme Court has ruled that auto insurers are, generally, exempt from the restrictions and sanctions available under the Michigan Consumer Protection Act, Michigan auto insurance consumers have no recourse against Michigan auto insurers who engage in “[u]nfair, unconscionable, or deceptive” business practices.
- Bring Michigan into the 21st century by allowing Michigan auto insurance consumers to collect “punitive damages” from wrongdoing auto insurance companies. Since approximately 1884, punitive damages have been forbidden under Michigan law.
