Breaking News (10/5/2022): DIFS Bulletin tells auto insurers to apply Andary v. USAA Michigan Court of Appeals ruling NOW
In Bulletin 2022-17-INS, issued on October 5, 2022, the DIFS Director announced that No-Fault fee schedule and limitation on in-home, family-provided attendant which were passed in 2019 “may not be applied to claims related to persons injured in accidents prior to June 11, 2019.”
The DIFS Bulletin emphasized the urgency of the situation by noting that the Andary v. USAA Michigan Court of Appeals ruling has precedential effect because it is a published opinion, and that on “September 29, 2022, the Michigan Supreme Court denied the Andary defendants’ motion to stay the precedential effect of the Court of Appeals opinion.”
Click here to read the DIFS Bulletin.
The DIFS Director has finally recognized the obvious, namely, that the fee schedule in MCL 500.3157(7) and the attendant care limitation in MCL 500.3157(10) cannot be applied retroactively to car crash victims whose accidents occurred before June 11, 2019, which was the effective date of those changes to the No-Fault law.
Tragically, the inexplicable delay by DIFS to issue this Bulletin until just today has caused real harm and needless suffering for hundreds of Michigan car accident victims. This delay has also caused many essential medical caregivers to be driven out of business. Sadly, it took more than a year, and a Michigan Court of Appeals ruling first, before DIFS finally issued this bulletin.
Today’s Bulletin is important because DIFS is acknowledging that the important Andary v. USAA ruling in the Michigan Court of Appeals is the law and must be followed, unless and until the Michigan Supreme Court says otherwise in the future.
This bulletin should stop much of the game-playing by insurance companies who have been threatening our most vulnerable with drastic cuts to attendant care and medical treatment (although we will still see game-playing by insurers when it comes to now determining how much they will pay under the “reasonable amount” standard).
Hopefully, when future insurer misconduct does occur, DIFS will have learned from the mistakes they made on the retroactivity issue that delay has real consequences and will cause real harm. I hope DIFS will learn from its past mistakes and be more likely to take swift and decisive corrective action in the future.
Andary v. USAA Michigan Court of Appeals ruling blocks retroactive application of No-Fault changes
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
Even though the Michigan Supreme Court has agreed to hear the case, it could take up to a year and a half before the Andary Court of Appeals opinion is ruled on by the high court justices. However, the justices have denied the insurance companies’ motion to stay the precedential effect of the Andary v. USAA Michigan Court of Appeals ruling. (Updated: September 29, 2022)
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? (Updated: September 29, 2022) On September 7, 2022, the insurance companies who are the defendants in Andary v. USSA filed their application for leave to appeal to the Michigan Supreme Court, which is the legal way of asking the high court to hear the case. On September 29, 2022, the Michigan Supreme Court issued an order granting the application for leave to appeal, i.e., the justices agreed to hear the case and review the Andary v. USSA Michigan Court of Appeals ruling. The Michigan Supreme Court ordered that the parties “address whether the Court of Appeals erred when it: (1) held that claimants injured before the effective date of 2019 PA 21 are not subject to the limitations on benefits set forth in MCL 500.3157(7) and (10); (2) held that application of the amended statute to such claimants would violate the Contracts Clause of the Michigan Constitution, Const 1963, art 1, § 10; and (3) remanded the case to the circuit court for discovery to determine whether the no-fault amendments, even when applied only prospectively, pass constitutional muster.”
- What if the insurance companies ask to stay the precedential effect of the Andary ruling? (Updated: September 29, 2022) On September 7, 2022, the insurance company filed a motion in the Michigan Supreme Court, asking the high court to stay the precedential effect of the published Andary v. USAA Michigan Court of Appeals ruling. Under MCR 7.215(C)(2), a “published opinion of the Court of Appeals has precedential effect under the rule of stare decisis.” On September 29, 2022, the high court issued an order denying the insurance company’s motion to stay the precedential effect of the Court of Appeals’ published decision in Andary.
- How long could it take for the Michigan Supreme Court to rule? (Updated: September 29, 2022) I expect it will be approximately a year and a half before we get a decision. In the Michigan Supreme Court’s September 29, 2022, order agreeing to hear the case, the justices directed the Clerk of the Court to “place this case on the March 2023 session calendar for argument and submission.”
- 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 v. USAA 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 v. USAA 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 uphold 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.
- 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 v. USAA 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)
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