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Expect more denials and delays under Duggan No Fault plan

October 26, 2017 by Steven M. Gursten

Duggan-Leonard-Theis reform plan, HB 5013, gives auto insurers more “excuses” for insurance companies to deny, defend, delay No Fault benefits to hurt car crash victims

Insurance Denials

Car insurance companies’ denials and cut-offs of No Fault benefits to Michigan car crash victims have increased at breakneck speed over recent years, spiking 236% so that the number of denials in 2016 is nearly 4½ times what it was in 2002.

But that spike in insurance denials is nothing compared to what Michigan consumers can expect if the Duggan-Leonard-Theis No Fault insurance reform plan in House Bill 5013 becomes law.

The myriad of new “excuses” for claims adjusters and insurance companies to dodge their legal obligations will make it even easier than it is today to deny, delay, defend and cut off desperately needed PIP benefits to injured auto accident victims.

Specifically, under HB 5013 — which is the handiwork of Detroit Mayor Mike Duggan, House Speaker Tom Leonard (R-DeWitt) and House Insurance Committee Chair Lana Theis (R-Brighton) — Michigan car insurance companies will have at their disposal the following new, ready-made, statutorily enshrined excuses for using denials and cut-offs to dodge having to pay No Fault benefits:

  • The claimed “charge” for medical services or treatment “is not related to or necessitated by the injury covered by the personal protection benefits,” i.e., No Fault. (HB 5013, Page 29)
  • The claimed “charge” is “more than” the “amount payable” under the fee schedule. (HB 5013, Pages 50-51)
  • The car victim’s doctor/medical providers did not “timely submit” to the auto insurer the required “information” in support of the victim’s claim for No Fault benefits. (HB 5013, Page 51)
  • The car victim’s doctor/medical providers did not submit “all” of the required “information” to the auto insurer in support of the victim’s claim for No Fault benefits, “including, but not limited to, all of the following: (a) Diagnoses. (b) Scans and x-rays. (c) Notes of physicians, nurses, and other providers. (d) Progress, psychiatric, or other notes. (e) Patient history and physical reports. (f) Reports and records relating to consultations, autopsies, operations, laboratory work, surgeries, recovery room activities, and electroencephalograms. (g) Incident, triage, and pharmacy reports and records. (h) Documentation relating to therapy, including, but not limited to, intravenous therapy, occupational or physical therapy, respiratory therapy, and speech therapy. (i) Documents relating to billing and forms and documents relating to the computation of charges and billing, including, but not limited to, Form CMS-1450, Form CMS-1500, and Form UB-04. (j) A determination of an emergency medical condition or related emergency care.” (HB 5013, Pages 51-52)
  • The claim for No Fault medical benefits “is based on the use of false or misleading records or information.” (HB 5013, Pages 52-53)
  • The claim for No Fault medical benefits involves “a treatment, training, product, service, or accommodation that is not usually associated with, is materially longer in duration than, is materially more frequent than, or extends over a materially greater number of days than that treatment, training, product, service, or accommodation usually required for a patient with the diagnosis or condition of the” car accident victim AND there is “no specific written justification of the medical necessity of that treatment, training, product, service, or accommodation is included in the patient record for the injured person.” (HB 5013, Pages 53 and 56)
  • The claim for No Fault medical benefits involves “a treatment as to which evidence provided to” the car crash victim’s doctor/medical provider “indicates that the treatment, product, service or accommodation was not medically necessary given the physical capabilities of the injured person,” i.e., auto accident victim. (HB 5013, Page 53)

These proposals spell disaster for innocent and injured Michigan auto accident victims seeking owed and overdue No Fault benefits.

For every one illegitimate claim they claim to weed out, we can expect to see a hundred more legitimate and overdue claim that will be stonewalled, denied and delayed. The bill includes many new ways to make it significantly harder for auto accident lawyers in Michigan to recover promised and overdue, unpaid No Fault PIP benefits.

Because of the broad, vague and open-ended language used and the vast, largely unchecked discretion bestowed on insurers, HB 5013’s new “excuses” for denying No Fault liability will set the stage for auto insurance companies to either vastly increase their already troubling trend of insurance denials and cut-offs or tie up the victim’s claim in costly litigation for years and years, with no guarantee of the outcome.

Or both.

How do auto insurers currently try to justify insurance denials?

Under existing law, the two main reasons that auto insurers rely on for their denials/cut-offs of benefits are:

  • The claimed benefits are not “reasonably necessary” for the car crash victim’s “care, recovery, or rehabilitation.” (MCL 500.3107(1)(a))
  • The charges for the medical care or treatment for which No Fault coverage is sought are not “reasonable.” (MCL 500.3107(1)(a))

I know. For non-auto accident lawyers who aren’t in the trenches, those two bullet points probably don’t seem like much.

But they are formidable indeed: They’re what’s fueled auto insurers’ 236% spike in denials and cut-offs.

Now, imagine how much more damage auto insurers will be able to do with the new “dodges” proposed by HB 5013.

I’ve called this an anti-consumer and insurance company-written bill. I’ve said it’s a travesty that Detroit Mayor Mike Duggan has thrown his support behind it. I understand he’s a politician and he’s cynically decided that being able to say he’s done “something” to reduce auto insurance — even if whatever savings will be paltry, easy for insurers to wiggle out of, and last for only 5 years — is more important than actually protecting Detroit residents who are seriously injured in auto accident cases. Ironically, it’s Detroiters who will be hurt the most under Duggan’s plan. With only a $25,000 No Fault cap for the lowest tier, the people without great health insurance will be the ones who lose the most.

But this grab-bag of goodies for the insurance industry and their lobbyists that is also in HB 5013 is going to be a scary surprise for just about everyone in this state if this badly flawed bill becomes law.

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