Flaws and false promises of Duggan-Leonard No Fault reform plan exposed
This Wednesday, I was a guest on the Nolan Finley Show on Detroit’s WFDF-AM (910). I was asked to come onto the show as a Michigan auto accident attorney and as a representative of the Michigan Association of Justice to help explain why House Bill 5013, also known as the Driver’s Choice Insurance Reform plan, falls far short of the promises being made.
You can watch the video above, or view a full transcription of my segment here.
Who benefits from the Michigan car insurance reform plan?
As I explained to Nolan Finley, the $250,000 cap that they are using to try to sell this bill is deliberately disingenuous:
The political reality is, they’re calling it $250,000. It’s really $25,000 for people, for individuals. The remaining $225,000 is really just a kickback, it’s a bribe the hospitals to try and get them to go along with this bill, and it’s limited only to acute emergency room care. So it doesn’t cover you as soon as you leave the emergency room. That’s $25,000 that has to cover everything else.
That $25,000 also comes at a steep price to taxpayers and employers who provide insurance to their employees.
That’s because once the $25,000 cap runs out, an injured car crash victims who does not have insurance or has insurance that doesn’t cover auto accidents, loses everything. They lose their life savings, they end up being forced to declare personal bankruptcy because of medical debt, and they will be pushed onto Medicaid.
It’s not a rate relief bill. It’s certainly not a consumer bill. It’s not a civil rights bill. It’s an insurance company-written bill, and it’s really, really good for the auto insurance companies. But for you and I as taxpayers, all that money that the insurance companies aren’t going to pay if there’s a $25,000 cap for people, where does that go? It gets shifted onto us as taxpayers in the form of paying off her Medicaid. And as you heard yesterday, about $150 million more will be shifted onto the taxpayers. As a small business owner, the other part is we’re going to have higher health care costs. Health care is going to cost a lot more for employers, especially in places like Detroit.
Car insurance in Detroit will remain more expensive because the Duggan-Leonard No Fault reform plan does not stop credit scoring, redlining, use of ZIP codes and incomes in pricing auto insurance
Speaking of Detroit, Mayor Duggan is the Mayor of Detroit, but is deliberately sticking his head in the sand when it comes to the factors that punish Detroiters. Mayor Duggan called this a “civil rights bill” in his press conference, but the non-driving related factors like redlining, credit scoring and ZIP codes can still be used by insurance companies to jack up prices of auto insurance for Detroiters — something a caller to Finley’s show also pointed out:
“Why can’t they correct the redlining that’s really going on? Let’s get to the root of the evil … people’s ZIP codes and credit scores, and the list goes on.”
Detroit’s still going to be paying so much more than everybody else in the country. And if you took Detroit out of the picture entirely, Michigan drops from the most expensive, to now about 12 or 14 in the nation as the most expensive. So why is Detroit so much more expensive? And the reason is, in Michigan the insurance companies are allowed to use a lot of factors like ZIP codes. Totally non-driving-related factors — income, redlining — that they can’t use in other states. So people in Detroit are penalized. And if you want to lower the price dramatically in places like Detroit, we should have the same laws that they have in places like California.
HB 5013 is an insurance company written bill
At least two aspects of the Duggan-Leonard Michigan insurance reform plan have the potential to make a positive difference to the state’s No Fault system.
The first is a fraud authority, which Michigan needs.
But this bill deliberately excludes fraud committed by the insurance companies and claims adjusters. That makes no sense.
But you know what? It should be a fraud authority that looks at fraud by the insurance companies also, not just fraud by claimants. All I’m saying is it should be both sides, not just one.
Second, the bill has a medical fee schedule. While I am in favor of a more reasonable fee schedule than the one in HB 5013, I’ve said for years that a fair medical fee schedule would immediately slash costs and stop fraud in our Michigan auto No Fault system:
[T]he reality is, a fee schedule overnight wipes out a lot of the fraud, it wipes out a lot of the ambulance chasing and solicitation that disgusts me as an attorney. It really forces the bad actors on the medical provider part … they can’t price gouge. They don’t have to hire lawyers now, they don’t have to bring lawsuits, it eliminates the clog of lawsuits in the courts.