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Andary v. USAA Michigan Court of Appeals ruling: No-Fault changes do not apply retroactively (Updated with New Legal Analysis)

August 25, 2022 by Steven M. Gursten

Michigan Court of appeals makes ruling in the Andary Vs. USAA Insurance case

The Andary v. USAA Michigan Court of Appeals ruling holds that the No-Fault fee schedule and attendant care limitations that were added to the No-Fault law in 2019 do not apply retroactively to car accident victims who were injured before the new laws’ effective date, June 11, 2019.

Specifically, the Michigan Court of Appeals ruling in Andary v. USAA recognized the following two very important legal principles:

  • The court concluded that the No-Fault fee schedule and 56-hours-per week limitation on in-home, family-provided attendant care which were enacted as part of changes to the No-Fault law in 2019 do not apply retroactively to “those injured before the effective date of the amendments” “because the Legislature did not clearly demonstrate an intent for the amendments to apply retroactively to persons injured in pre-amendment accidents.” (Page 1)
  • The court also concluded that “[e]ven if we were to conclude that the Legislature intended for” the No-Fault fee schedule and attendant care limitations “to apply retroactively to those injured before the amendments’ effective date,” “imposing the new limits would substantially impair no-fault insurance contracts entered into before the amendments’ effective date, and therefore would violate the Contracts Clause of the Michigan Constitution.” (Page 1 and 11)

This announcement from the ruling in Andary v. USAA case is long overdue, but through no fault of the Michigan Court of Appeals.

I have repeatedly called on lawmakers and DIFS Director Anita Fox to take action to stop Michigan auto insurance companies from misusing and distorting the new No-Fault law’s changes to deny vital medical care to crash survivors and their families.

I have pointed out that lawmakers’ failure to include a “grandfather clause” in the amendments to the No-Fault law “punishes car accident victims and medical providers by leaving them subject to restrictions they never agreed to such as coverage limitations and a medical fee schedule whose reductions on reimbursement rates will deny them access to necessary medical care and treatment.”

I have called on DIFS Director Fox to step up and protect auto insurance policyholders’ right to No-Fault medical coverage in the face of insurers’ use of “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.”

And I have pointed out that DIFS’s “retroactivity” arguments in its amicus curiae brief filed in the Andary v. USAA Michigan Court of Appeals ruling in the case were not only “dead wrong” but they were so wrong that if they were accepted by the Michigan Court of Appeals they would “exacerbate the real harms that the auto insurance companies have already unleashed on car accident victims with catastrophic injuries who depend on attendant care for their very survival.”

But my repeated calls-to-action – as well as those by survivors, their families and others within the legal community – have been ignored.

Hopefully, with the Andary v. USAA Michigan Court of Appeals ruling, justice will finally come to Michigan car crash survivors.

Our heartfelt sympathies go out to those for whom justice comes too late.

To learn more, we invite you to watch this video:

Andary v. USAA Michigan Court of Appeals ruling FAQs

If the Michigan Supreme Court agrees to hear the case, the Andary ruling will likely not be effective until the justices rule. The bad news is that if this unfolds in this manner, it could take up to a year and a half before the Andary Court of Appeals opinion takes effect.

What happens next? Auto insurance companies may or may not resume paying insurance benefits under pre-2019 rates. I’ve already heard from two insurance company claims adjusters who have said that they will still not pay under the old law rates before the new No-Fault law took effect in 2019.

The most important thing you can do if you are a crash survivor or provider is to keep submitting bills for payment.

Below is information about the questions that I am most frequently asked about the Andary v. USAA Michigan Court of Appeals ruling:

  • Can the ruling be appealed? It is expected that the insurance companies who are the defendants in Andary will ask the Michigan Supreme Court to hear the case and to issue a stay until the high court has issued a decision. Although the insurers have the right to file an application for leave to appeal to the MSC, the high court is in no way obligated to take the case.
  • How long could it take for the Michigan Supreme Court to rule? If the justices agree to hear the case, then I expect it will be approximately a year and a half before we get a decision.
  • Can crash survivors who were injured before June 11, 2019 use the Andary v. USAA Michigan Court of Appeals ruling to stop auto insurance companies from applying the fee schedule and attendant care limitations to their claims? Because the Michigan Court of Appeals did not order that its opinion must be given immediate effect, the Andary ruling will not become effective until either the 42 days for filing an application for leave to appeal to the Michigan Supreme Court expires without the application being filed or the Supreme Court rules on or otherwise disposes of the case.
  • Does that mean that the Andary ruling will do nothing (at least for the time being) to change insurers’ behavior? No. I would at least hope that the majority of insurers will now begin to pay reasonable pre-2019 charges immediately or they will face a motion for injunctive relief as there is now a published appellate case directly on point that resolves the issue of retroactive versus prospective application of the new 2019 No-Fault law changes. Additionally, by continuing to refuse to pay No-Fault benefits based on the charges and hourly rates that existed before June 11, 2019, auto insurance companies are setting themselves up to get hit with having to pay survivors’ attorney fees and penalty interest in the probable event the Michigan Supreme Court affirms the Michigan Court of Appeals.
  • Is there reason to be optimistic that the Michigan Supreme Court will upheld the Andary v. USAA Court of Appeals ruling? I’ve previously written extensively on the substantial body of case law that supports the Court of Appeals opinion. To me, this was not ever a close legal call. Unless you have judges who are completely willing to overlook a substantial body of precedent and stare decisis in favor of a clearly politically motivated decision based on partisan political outcome-determinative reasoning (as sadly reflected in the dissenting opinion of Andary v. USAA, which despite the absence of any legislative language regarding retroactive application, was still willing to “legislate from the bench” and make the giant leap of mind-reading the will of the legislature by reading retroactive application into the new law )). I continue to believe the Andary Court of Appeals opinion will be upheld by the Michigan Supreme Court, assuming leave is even granted.
  • What can car accident survivors do now to protect themselves while they wait to see what happens with the Andary v. USAA Michigan Court of Appeals ruling? Crash survivors need to take action now to ensure that their right to No-Fault benefits are preserved in the event that the Court of Appeals ruling stands or the Michigan Supreme Court affirms the appeals court. Specifically, crash survivors, their families and their providers need to continue submit their medical bills and attendant care statements to the No-Fault insurance companies and they need to make sure those bills reflect the charges and hourly rates that existed before the June 11, 2019, effective date of the changes to the No-Fault law that created the fee schedule and the attendant care limitations. This way they are preserving their rights to sue for unpaid, overdue No-Fault benefits in the future if the Andary ruling is upheld. By continuing to submit these medical bills and attendant care statements, auto accident victims will also be able to pursue recovery for penalty interest and attorney fees due to the insurance companies’ unreasonable denial or delay of benefits.
  • Are there other ways that insurers are showing their bad faith in applying the 2019 changes to the No-Fault law? Yes. Before the 2019 changes, the reasonableness of medical bills and attendant care charges were determined by assessing and analyzing the existing rates in the market at the time and in the market where the services were being provided to crash survivors. Since then, insurers have refused to acknowledge this evidence-based approach to determining the “reasonableness” of medical charges. Instead, because the No-Fault fee schedule that was passed in 2019 is based on Medicare rates, insurers are now arbitrarily insisting that the Medicare rates are the only measure of “reasonableness” for medical bills.

Andary v. USAA Michigan Court of Appeals ruling says No-Fault changes were not meant to apply retroactively

In response to the claim that the Legislature clearly intended the new No-Fault fee schedule and attendant care limitations “to apply to those injured before their effective date,” i.e., June 11, 2019, the Andary v. USAA Michigan Court of Appeals ruling recognized that there was not “any language within chapter 31 of the Michigan Insurance Code, i.e., the no-fault act, so indicating, either explicitly or by implication. Indeed, 2019 PA 21 provided an effective date of June 11, 2019, and it contains no language referring to retroactive application.” (Page 4)

Additionally, the court noted that “retroactive application would alter the injured plaintiffs’ settled rights and expectations under the pre-amendment no-fault act, which were obtained in exchange for premiums based on defendants’ obligation to pay all reasonable charges not subject to fee schedules or caps.” (Page 11)

Andary v. USAA Michigan Court of Appeals ruling says retroactive application of No-Fault changes would violate the Contracts Clause of the Michigan Constitution

When the Andary v. USSA Michigan Court of Appeals ruling concluded that “retroactively applying the [No-Fault fee schedule and attendant care limitations] violates the Contracts Clause of the Michigan Constitution,” the court explained:

“[T]he lifetime unlimited benefits that the insurers were paid for will be severely impaired if the amendments are given retroactive effect. Defendants have not shown that retroactive application of the amendments is necessary to accomplish the goal of lowering no-fault policy premiums. Nor have defendants explained how applying the amendments to those injured before the amendments’ effective date is reasonable, especially considering that the relevant premiums have already been paid in full.” (Page 13)

DIFS knew No-Fault changes could not be applied retroactively, but did nothing

The Andary v. USAA Michigan Court of Appeals ruling and the anguish that car crash survivors and their families have suffered as a result of the new No-Fault fee schedule and attendant care limitations could have been avoided if the DIFS Director had acted on what she knew and stated to be true: that the No-Fault law changes that were passed in 2019 cannot be applied retroactively to crash victims who were injured before the effective date of the new changes.

In public statements, the DIFS Director has acknowledged that No-Fault medical benefits coverage for a crash survivor are determined by the terms of his or her policy at the time of the car accident and, thus, are unaffected by the 2019 changes to the No-Fault law.

For example, the FAQs section on the DIFS “Michigan New Auto Insurance Law” 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?”)
  • Medical 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?”)

Similarly, the Andary v. USAA Michigan Court of Appeals ruling observed that when asked about No-Fault benefits for a crash survivor whose accident occurred before the 2019 No-Fault changes, the DIFS Director answered:

“With auto insurance it vests or becomes fixed at the benefit on the day of your accident. So your sister having lifetime medical under that policy, will forever have unlimited coverage for the medical costs associated with that accident as long as she needs them. So you’re under the old law, and under the current law, it’s the date of the accident and the coverage that was in place [on that date] that matters for what kind of coverage you have.” (Page 5, footnote 6)

Injured in a Michigan car accident? Contact a Michigan Auto Law attorney now

If you or a loved one has suffered serious injuries after being injured in a car accident and you have questions about your legal rights to pain and suffering compensation, economic damages and auto No-Fault insurance 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 auto accident attorney by visiting our contact page or you can use the chat feature on our website.

Andary v. USAA Michigan Court of Appeals ruling: No-Fault changes do not apply retroactively (Updated with New Legal Analysis)

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