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Duggan, Leonard No Fault PIP Cap is $25K — not the $250K they promise

September 27, 2017 by Steven M. Gursten

Detroit Mayor says $250,000 is the No Fault PIP cap under new reform bill. The truth? Just $25,000 of that is for car crash victims. The remaining $225,000 goes to the big hospitals for acute emergency care only after car accidents

No Fault car insurance
Detroit Mayor Mike Duggan

Repeat after me: There is no $250,000 cap on No Fault car insurance under Detroit Mayor Mike Duggan’s and Tom Leonard’s new No Fault reform plan that was announced yesterday.

There is no $250,000 minimum No Fault cap.

There is no $250,000 minimum No Fault cap.

Yes, they really are making it all up, because $250,000 sounds much better than it actually is.

In a highly publicized press conference, Detroit Mayor Mike Duggan touted this as the centerpiece of his and House Speaker Tom Leonard’s “Driver’s Choice Insurance Reform” No Fault car insurance plan:

“Drivers would be able to choose [the] option[] of $250,000 … for personal injury protection (PIP), which covers medical care in the event of serious injury during auto collisions.”

The only problem?

Duggan isn’t telling everyone the full story.

How $250,000 is really $25,000: Driver’s Choice Insurance Reform really isn’t one

Let’s now compare the spin to the reality of what’s written in black-and-white in the 77-page House Bill 5013, which was introduced late in the day on September 26, 2017.

Specifically, Duggan left out the following crucial plot twists in his telling of the tale:

  • The No Fault car insurance cap doesn’t actually provide $250,000 that is to be used exclusively for a car crash victim’s medical expenses. In other words, the $250,000 is intentionally misleading because it is really split two ways: $225,000 “for an emergency medical condition and related emergency care only” and $25,000 “for all other personal protection insurance [No Fault PIP] benefits …” (House Bill 5013, pages 35-36)
  • The $225,000 can “only” be used to pay for “emergency” medical expenses, i.e., the medical bills association with a victim’s ER visit after a car accident.
  • “All other” No Fault car insurance benefits — non-emergency/ER medical expenses, wage loss reimbursements, replacement services and survivor’s loss — must be paid for out of the remaining $25,000.
  • $25,000 wouldn’t cover the average No Fault PIP medical claim in Michigan, nor would it cover two of a victim’s three years of No Fault wage loss benefits if he or she makes $30,000 per year or more.
  • Auto accident victims whose medical expenses exceed the $25,000 cap will be prohibited from suing to recover for those “excess” medical expenses. (House Bill 5013, pages 43-44)

$25,000 for total PIP was terrible under D-Insurance, and is just as terrible for all of Michigan now as part of the “Driver’s Choice Insurance Reform”

This deceptive proposal is a recycled reject, dragged from the wreckage of Duggan’s roundly rejected D-Insurance plan.

It’s hard to conceive that Mayor Duggan, who described himself as a “metrics nut” to The Economist magazine, could move forward on any plan to reform No Fault insurance without having a clue as to how big the profit margins are for the insurance companies that sell No Fault car insurance in Michigan.

But he has.

Duggan flip-flops on excess medical claims in his No Fault car insurance reform plan

I don’t see why Duggan is so against allowing car crash victims to sue for “excess” medical (to cover medical expenses that exceed the No Fault cap they’ve chose) that he has prohibited such claims in his Driver’s Choice Insurance Reform plan. (House Bill 5013, pages 43-44)

In fact, it wasn’t too long ago that he thought it was great idea and important right for car crash victims to have.

On his dinsurance.com website in 2015, the “Michigan’s No-Fault Auto Insurance” page states the following in the “Average Cost per PIP claim”:

“It’s important to note, in other states with a limit on the amount an auto insurer is charged by health care providers for a PIP claim, injured parties are not left to cover the costs of their medical care themselves and they are not restricted from receiving proper medical care.”

For example, in Massachusetts, which has “a no-fault PIP system with a cap on how much health care providers can benefit from auto insurers,” once the PIP cap is reached, “one of two possible options kicks in to cover the rest: 1) the injured party’s health insurance becomes liable for payment; or 2) the injured party sues the negligent driver and the negligent driver’s auto insurance pays for the treatment.” [Emphasis added]

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