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Senate Bill 1: All talk on auto No-Fault

January 17, 2019 by Steven M. Gursten

Instead of providing specifics, Senate Republicans use Senate Bill 1 to grandstand on auto No-Fault reform

Senate Bill 1 - Politicians grandstanding on No-Fault reform

Update:  A version of Senate Bill 1 was voted on May 7th and passed the Senate 24 to 14. Click here for more information.

Senate Bill 1 was introduced by Sen. Aric Nesbitt (R-Lawton) on Tuesday.

But in reality Senate Bill 1 is nothing more than a CliffsNotes version of the same auto No-Fault wish list that the insurance-industry has been pushing Michigan Republicans to enact for them for years.

However, in some ways, it is even worse than the many failed auto No-Fault insurance reform bills that have preceded it over the last several years.

Why worse?

It’s devoid of all specifics and actual details. It offers no actual plans or concrete proposals.

It’s politicians grandstanding for the insurance companies who contribute to their political campaigns.  Senate Bill 1 reads more like a press release than an actual piece of legislation.

But grandstanding can be dangerous. Even without specifics, there is much in Senate Bill  1 that will be very bad for car crash victims and Michigan drivers if it becomes law.

It starts off well enough.

I even found myself nodding my head in agreement as I read the beginning goals of Senate Bill 1:

  • Providing “rate relief for consumers” through “savings on his or her automobile insurance premium . . .” (SB 1, page 1)
  • “[R]educing the number of uninsured drivers in this state . . .” (SB 1, page 1)
  • “[R]educ[ing] fraud and conflicts of interest in the No-Fault system . . .” (SB 1, page 4)

All of these goals are important and I’ve discussed ways to accomplish each of these on the pages of this auto law blog.

But in SB 1, the only means that lawmakers have chosen to try to accomplish these ends are the same old insurance-industry-boondoggles of eliminating No-Fault insurance protections that car crash injury victims desperately depend upon to survive.

Due to the absence of any details and specifics of a No-Fault reform plan in SB 1, I, like everyone else, will have to wait and see whether lawmakers actually take action on this insurance industry wish list, or whether SB 1 is all just talk. It certainly does not take a balanced approach to reforming auto insurance. For example, even though insurance industry profit margins are widely believed to be significantly higher than the national average in Michigan (a nice benefit of selling a product that the law makes compulsory to purchase), there is nothing in the bill about insurance industry profits, or widespread fraud and denial of claims, or redlining and credit scoring, or gender discrimination against women.

Senate Bill 1: eliminating unlimited necessary catastrophic injury coverage

SB 1 says it would be the “intent of the legislature” to create caps on auto No-Fault insurance benefits and, thus, eliminate the unlimited, catastrophic injury coverage that the law currently guarantees to severely injured car crash victims.

Also, SB 1 would allow drivers to “choose an amount of personal injury protection coverage that suits the individual’s needs, lifestyle” and, thus, “enjoy a corresponding savings on his or her automobile insurance premium that corresponds with the chosen benefit level.” (SB 1, page 2)

As I explained in my recent blog post, “House Bill 4024 eliminates No-Fault benefits,” this is in reality a horrible idea:

“[C]apping auto No-Fault insurance benefits carries with it serious, harmful consequences (none of which are acknowledged by the insurance-industry-beholden politicians who push them) . . . .”

In that blog post, I go into great detail about the consequences of capping auto No-Fault in Michigan.

Senate Bill 1 supports utilization review to make No-Fault even more like a managed care health system

There are plenty of misleading billboards we see on the highways that talk about the inflated charges for things like MRIs in Michigan. What the billboards don’t show is what the insurance companies actually PAY for these medical charges, which is very different from the charge. Auto insurers only have to pay the reasonable and customary charge.

In practical terms, that involves aggressive auditing of every bill by insurers already. Each bill or charge for service is reviewed, often slashed, and then paid.

If you like getting your health care and treatment through a managed care system, such as an HMO, then you’ll love SB 1’s proposal for implementing an even more aggressive utilization review process for medical providers that bill No-Fault insurers for services they provide to car crash victims.

Specifically, Senate Bill 1 would:

Require “an annual utilization review” to “reduce overutilization of medical treatments, products, and services related to No-Fault insurance claims.” This would consist of having “an independent party . . . identify utilization above the usual range for the treatment based on medically accepted standards, with consequences for providers that knowingly provide false or misleading information.” (SB 1, page 3)

Translation: The same company bean counters who micromanage every charge will now be replacing all medical service charge audits with even more aggressive auditing protocols, aggressive medical fee schedules, and a one-size-fits-all payment approach for every bill they receive.

My own guess is that somewhere along the line (in the not-too-distant future) the results of the new aggressive utilization review will give rise to the inevitable resurrection of past proposals that No-Fault should include an HMO-type of pre-approval and doctor network similar to what Detroit Mayor Mike Duggan wanted with his disastrous D-Insurance.

The insurance industry will say it’s necessary because innocent car accident victims must be prohibited from using a doctor of their choice because a doctor who puts the patient first is more expensive than a doctor who puts the insurance company first. Caring for a patient and following a Hippocratic oath results in physicians who “overutilize” medical care. Who would know this better than the auto insurance companies?

Talk about letting the foxes guard the henhouse!

Senate Bill 1 supports eliminating No-Fault benefits for older drivers

Medicare is no substitute for No-Fault when it comes to providing medical care and treatment to a car crash victim who has been seriously injured.

That’s why I’ve been opposed to proposals to encourage drivers (of Medicare-eligible age) to drop their auto No-Fault coverage and rely on Medicare in the event that tragedy strikes.

The consequences can be disastrous. As I explained last year when a bill to push senior drivers off auto No-Fault insurance and onto Medicare was introduced:

“Excluding seniors from No Fault insurance would actually work to take away vital legal protections that senior citizens currently have, and it will increase Michigan taxpayers’ Medicare burdens … Seniors who are seriously hurt in automobile accidents will lose everything. Any senior who is seriously injured in an auto accident will quite literally be driven into financial ruin if this proposed legislation becomes law.”

Nevertheless, this is precisely what Senate Bill 1 wants:

“Allow seniors and other individuals over 62 years of age with lifetime health care benefits” (presumably through Medicare) to save money by allowing them to opt out of No-Fault PIP coverage. (SB 1, page 2)

Buyer beware, I assume?

Seniors who get warehoused in Medicare facilities for catastrophic injuries in pure tort states would have some important words of advice and wisdom for Michigan drivers who are willing to give up the broad access to superior medical care that is available to seniors in Michigan who are seriously injured in car crashes.

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