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MI car insurance claim denials up 236%. Is fraud reform the answer?

September 19, 2017 by Steven M. Gursten

Insurers scream “No-Fault fraud,” even as they cause huge spike in Michigan No-Fault benefit denials and cut-offs of car crash victims

Michigan No-Fault benefit denials

There’s going to be a number of No-Fault reform legislative proposals expected to be released over the next few weeks. But there is one very important No-Fault reform that you almost certainly won’t be reading about from Detroit Mayor Mike Duggan, Michigan Attorney General Bill Schuette, Speaker Tom Leonard or Senate Majority Leader Arlan Meekhof, and that’s the staggering 236% increase in No-Fault benefit denials and cut-offs to car crash victims by insurance companies.

Politicians talk about the need to stop No-Fault fraud.

Well, this is insurance fraud committed on a staggering scale.

Stopping these bad faith cut-offs to car accident injury victims and insurance company denials of desperately needed No-Fault insurance benefits is something that likely won’t be talked about.

But it should be. This is the second No-Fault reform “fact” that I discussed in my first blog post in this series and it’s a great follow-up to yesterday’s discussion of Michigan’s highly profitable car insurance companies.

As an auto accident attorney, I see how devastating this is to people. But we live in a state without bad faith laws or punitive damages, and without a Michigan Consumer Protection Act that can protect consumers when insurance companies deliberately deny and cut off No-Fault PIP benefits to car accident victims.

Without any of these protections, insurance companies can shout about “insurance fraud,” even as they commit insurance fraud to thousands of Michigan citizens.

For car crash victims who depend on No-Fault Personal Injury Protection benefits, this is devastating. Not only do Michigan No-Fault benefit denials threaten their ability to get necessary medical care, but it interferes with the medical recovery and rehabilitation benefits they need, and it causes enormous, needless financial stress when lost wages and replacement services are stopped — often without any reason given at all.

For insurers, it’s yet another weapon in their arsenal — right along with their cynical, game-playing IME policies — for boosting profits on the backs of the most vulnerable automobile accident victims.

And for the last four years, insurance companies in Michigan have relied on decisions like Admire v. Auto-Owners — an absolutely awful Michigan Supreme Court decision in which the majority misapplied the No-Fault law to deny a van for an auto accident victim — to slash payments to hundreds of their most vulnerable insureds.

Insurer fraud has gotten worse with big spike in No-Fault benefit denials

In 2013, I blogged about the 177% spike in insurance company denials and cut-offs of No-Fault benefits to car crash victims — a trend that my fellow Michigan Auto Law car accident attorneys and I are all too familiar with.

Specifically, based on the “new filings” data for “No-Fault Automobile Insurance” (“NF”) lawsuits compiled in the Statistical Supplements contained in the Annual Report of the Michigan State Courts, denials and cut-offs of No-Fault benefits increased approximately 177% from 2,701 in 2002 to 7,485 in 2012.

Not surprisingly, things have only gotten worse.

By 2016, No-Fault cut-offs and insurance denials had shot up a staggering 236% to 9,077 since 2002.

I’m pleased to know at least one legislative faction is planning to address benefits denials. The Fair and Affordable No-Fault insurance reform plan would bring a legislative fix to the damage Admire has caused for auto accident victims who are entitled to their benefits.

Tomorrow, I’ll talk about the questions that need to be answered regarding the savings that drivers and consumers will be guaranteed by No-Fault auto insurance reform.

This is the third entry in a six-part series on what we auto accident attorneys at Michigan Auto Law believe the public must ask our state legislators, and the No-Fault insurance companies that do business in Michigan, if we are being asked to give up essential No-Fault benefits and protections under any proposed No-Fault insurance reform plan. Our other entries are:

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