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Michigan DIFS Must Protect Auto Policyholders’ Medical Coverage

July 13, 2021 by Steven M. Gursten

Michigan DIFS Must Protect Auto Policyholders’ Medical Coverage

Michigan DIFS must act now to protect auto policyholders’ rights to No-Fault medical coverage. Insurance companies are using the new auto No-Fault law to improperly deny attendant care for people catastrophically injured in car accidents before the new auto law took effect, denying vital No-Fault medical care and attendant care benefits.

As Michigan DIFS Director Anita Fox has acknowledged:

“The [Insurance] Code was enacted for the benefit of the public, and the Director must interpret it in favor of policyholders and the public.” (See Order 19-049-M, 9/24/2019)

Catastrophically injured car accident victims who paid for unlimited necessary No-Fault coverage are now being told by insurers that the new auto No-Fault law – which took effect AFTER their car accidents – can now be applied retroactively to stop and reduce desperately needed attendant care and their ability to get care.

Thousands of our most vulnerable and catastrophically injured citizens are at risk. Even now, these people are being deliberately taken advantage of by insurance companies that are cynically using a poorly drafted and worded law that is ambiguous on retroactive versus prospective application to essentially shake down the people who receive 24-hour attendant care in this state with threatening letters and phone calls. As I’ve previously written, this is clearly a misreading of the law.

This isn’t how our law works. These victims paid for unlimited No-Fault coverage to protect them. These premiums did not include a fee schedule or any limitation on the hours of attendant care coverage or a cap on rates for necessary attendant care. But insurance companies are bullying these accident victims out of benefits that both agreed to and that these people already paid the insurers for. Insurance companies do not get to keep these premiums and then go back and change the terms of the contractual bargain they made to protect these people for life, if necessary.

It is not histrionic nor is it an exaggeration to say that people will die as a result of this. In the context of the new 56-hours-per-week restriction on in-home, family-provided attendant care, I have previously written about how the new auto law typically prevents auto insurance companies from applying changes in the law to injuries and policies that predated the change in the law.

Very recently, I revisited this issue when I wrote about a recent Michigan Supreme Court ruling that may help catastrophically injured car crash victims protect their rights to continue receiving the same No-Fault medical coverage and 24 hour attendant care that they were receiving before No-Fault reform bill was passed in June of 2019. Given lawmakers’ failure to include a “grandfather clause” in their reform legislation, this case should prove significant for the accident victims.

Today I’m writing about a more efficient option that can end all of this uncertainty and suffering. With people’s health, welfare and lives literally hanging in the balance, it is now time for the Michigan DIFS to act.

It is time for Michigan DIFS through Director Anita Fox to make clear that the changes enacted by the new auto No-Fault law that was enacted in June of 2019 – especially the medical fee schedule in subsection (7) of MCL 500.3157 and the restrictions on coverage for in-home, family-provided attendant care – do not apply to catastrophically injured car crash victims who have been receiving attendant care benefits through policies that were in existence and in effect before the new No-Fault law’s effective date.

Nor would this be the first time that the Michigan DIFS director has had to beat back the insurance industry’s greed and overreaching attempts to improperly use the new auto No-Fault law. The Michigan DIFS has previously acted on rate filing, No-Fault medical coverage limits through the Michigan Assigned Claims Plan and auto insurers’ attempted early application of the 56-hours-per-week limitation on in-home, family-provided attendant care. Michigan DIFS has acted before to rein in auto insurers’ improper application of No-Fault reform changes, so why not now when hundreds of people are already getting letters from their insurance companies informing them that their 24-hour attendant care is being slashed to 56 hours a week?

To be clear, Michigan’s DIFS Director Anita Fox has both the power and the duty to take swift and decisive action NOW to stop this.

As the Michigan DIFS Director and, thus, the Insurance Commissioner for the state, Anita Fox has the responsibility to faithfully oversee the proper execution of the insurance laws of this state. (MCL 500.200) The Department of Insurance and Financial Services has legal authority to issue orders to oversee and carry out the legislative purpose of the Insurance Code. (MCL 500.205) And, as the quote above demonstrates, the Department of Insurance and Financial Services has the responsibility to act for the protection of policyholders and the public.

Michigan DIFS has already said that No-Fault reform changes do not apply to policies already in effect

The Michigan DIFS “New Auto Insurance Page” makes clear that: (1) No-Fault reform changes apply to policies issued or renewed after 7/1/2020; (2) No-Fault benefits received for a pre-reform accident will continue; and (3) coverage for a pre-reform crash is determined by terms of the policy at time of the crash.

Specifically, here is what the Department of Insurance and Financial Service’s “Michigan New Auto Insurance Page” states:

  • The “changes” in the “new auto insurance law” will “apply to policies issued or renewed after July 1, 2020.” (DIFS “Michigan’s New Auto Insurance Page,” FAQs, “Information on Purchasing Auto Insurance,” “Notice”)
  • “The new law applies to auto insurance policies issued or renewed after July 1, 2020. If you are already receiving benefits from your auto insurance policy due to injuries from an auto accident prior to the new law’s effective date, you will continue to receive those benefits regardless of the choice you make.” (DIFS “Michigan’s New Auto Insurance Page,” FAQs, “Information on Purchasing Auto Insurance,” “When does the new law take effect?”)
  • [Y]our care [for “ongoing health issues from a crash that occurred before the law went into effect”] will still be covered. Your coverage for this accident continues under the terms of your policy at the time of the accident and will continue regardless of any future PIP medical option.” (DIFS “Michigan’s New Auto Insurance Page,” FAQs, “Information on Purchasing Auto Insurance,” “I have ongoing health issues from a crash that occurred before the law went into effect. Will I still get care under the new law?”)

Michigan DIFS has ordered that No-Fault reform changes cannot apply to pre-reform policies

In Order 19-048-M (September 20, 2019), Michigan DIFS Director Anita Fox ordered that auto insurance companies could not apply No-Fault reform’s “amended provisions” to “claims made under existing, in-force policies” that had not been revised and approved by the Insurance Commissioner to reflect the amended No-Fault provisions.

By logical extension, that means that No-Fault reform’s changes – such as the new medical fee schedule and the 56-hours-per week limitation on in-home, family-provided attendant care – cannot be applied to policies that were in effect before June 2019 because those policies could not have been revised to include the No-Fault reform changes. The changes did not exist at the time the pre-reform contract was made.

Michigan DIFS Director Fox explained the reasoning for her conclusion in Order 19-048-M as follows:

  • “Regardless of their effective date, amended provisions that affect the scope of coverage required to be provided under automobile policies may not be implemented until automobile insurers have submitted revised forms and rates for the Director’s review and approval.” (Page 1 of 4)
  • “[A]ny attempt to implement the amended provisions that affect the scope of coverage required to be provided under an insurance policy without submitting revised policy forms and rates to the Department of Insurance and Financial Services for review and approval would violate” the Insurance Code. (Page 1 of 4)
  • “Insurers that implement the amended provisions [enacted by Public Acts 21 and 22 of 2019] that affect the scope of coverage required to be provided under automobile insurance policies without first revising their forms or rates are violation of” the Insurance Code. (Page 2 of 4)
  • “Implementation of statutory amendments that affect the scope of coverage required to be provided under an insurance policy without first revising insurance policy forms and rates to account for coverage reductions and then submitting such forms and rates to the Department of Insurance and Financial Services for review and approval would violate” the Insurance Code. (Pages 2-3 of 4)
  • Any automobile insurer that has processed claims in accordance with the statutory amendments [in Public Acts 21 and 22 of 2019] that affect the scope of coverage required to be provided under an insurance policy without first submitting revised forms and rates for the Department of Insurance and Financial Service’s review and approval shall immediately re-process those claims in accordance with the terms and conditions of the existing policy form.” (Page 3 of 4)

Michigan DIFS must protect victims from reductions in coverage they did not contemplate

The new medical fee schedule and restrictions on attendant enacted by the 2019 No-Fault reform have drastically reduced crash victims’ ability to access to necessary medical care.

In doing so, reform has exposed car crash victims to “potentially catastrophic . . . liability” for their own medical costs and expenses. Prior to No-Fault reform, victims’ unlimited medical coverage would have paid through the coverage in their No-Fault auto insurance policies.

As a result of this new liability “which was not contemplated by the policyholder at the time of entry into the existing insurance contract,” application of No-Fault reform’s changes to a “pre-amendment” auto insurance policy “contravenes the Code’s long-standing legislative purpose of policyholder protection.” (See Order 19-049-M, Page 2 of 3)

The Department of Insurance and Financial Services must protect policyholders’ No-Fault contract rights

Under LaFontaine v. Chrysler (Michigan Supreme Court, #146722, June 10, 2014), No-Fault reform’s new medical fee schedule and limitation on in-home, family-provided attendant care cannot be applied retroactively to claims based on accidents and policies that existed before No-Fault reform because the No-Fault reform amendments: (1) “contain[] no language suggesting retroactivity”; and (2) “applying the amendment retroactively would alter the parties’ existing contract rights” by (a) subjecting one party “to greater burdens than those in place” under the law when the contract “went into effect” and (b) by granting the other party “greater substantive rights than the . . . agreement.”

No-Fault reform, especially the provisions concerning the medical fee schedule and limitation on in-home, family-provided attendant care, does not state that it applies retroactively. If lawmakers had intended to do, they would have included language to the effect of: The “amendments to this act that added this section apply to agreements in existence on the effective date of this section and to agreements entered into or renewed after the effective date of this section.” Or in the medical fee schedule and attendant care provisions, lawmakers might have said that the changes apply to “all motor vehicle accident policies issued or renewed before” and “after” a specific date.

Catastrophically injured car accident victims face “greater burdens” under the No-Fault reform’s fee schedule and attendant care restrictions than they did under the terms of their policies that were in effect at the time of their pre-reform accident because they have their ability to access necessary medical care and treatment. Providers will not provide services under the restrictions of the fee schedule, leaving victims to go without care or to pay out-of-pocket.

Auto insurance companies have “greater substantive rights” to deny, restrict and limit No-Fault medical coverage than they did under the victims’ policies that were existing and in-force at the time of the victims’ accidents.

Complain to Michigan DIFS if your auto insurance company is applying No-Fault reform retroactively to your claim

If you were injured in a car accident that occurred before No-Fault reform and if you have been receiving No-Fault medical benefits under an auto insurance that was existing and in-force before No-Fault reform’s effective date, you should consider filing a complaint with the Michigan DIFS if your auto insurance company is trying to apply No-Fault reform (including the fee schedule and attendant care restrictions) to your claim.

As Michigan DIFS states on the “File a Complaint” section of its “Michigan’s New Auto Insurance Page”:

“If you are concerned your auto insurance company is unfairly delaying or denying your claim, charging you the wrong premium, or otherwise is not performing as required under the law, the Department of Insurance and Financial Service’s is here to help. The Michigan DIFS encourages you to first attempt to resolve your complaint directly with your licensed agent or auto insurance company. If a resolution cannot be reached, you may file a complaint with the Department of Insurance and Financial Service’s by clicking on the button below. Your complaint will be reviewed based on the documents you submit, so please be sure to include all pertinent information.”

Injured in an automobile accident? Call the auto attorneys at Michigan Auto Law

If you were injured in an automobile accident and have questions about your legal rights to pain and suffering compensation, economic damages and No-Fault benefits, you can speak to an experienced auto accident lawyer at (800) 777-0028 for a free consultation. You can also get help from an experienced accident attorney by visiting our contact page or you can use the chat feature on our website.

Michigan DIFS Must Protect Auto Policyholders’ Medical Coverage

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