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Consumers’ Guide

Reform will generate lawsuits for ‘EXCESS’ medical benefits

When No-Fault reform proposals involve eliminating unlimited, lifetime No-Fault medical benefits – and replacing them with benefits caps – it is expected that once auto accident victims exceed the proposed No-Fault cap they will go to court and file a lawsuit against the at-fault drivers who caused their accidents in order collect their “excess” No-Fault medical benefits.

This expectation regarding “excess” No-Fault medical benefits was reflected in House Bill 4612 (the unsuccessful No-Fault reform plan in 2013), which provides that tort liability exists for “[d]amages for allowable expenses” – which includes medical benefits – “in excess of the personal protection insurance benefits provided” under HB 4612. (Page 43 of HB 4612)

Notably, two insurance industry leaders previously acknowledged this expectation when – in 2011 – House Bill 4936 was introduced, which proposed No-Fault medical benefits cap similar to the one proposed in HB 4612:

Pete Kuhnmuench, Executive Director of the Insurance Institute of Michigan: “Despite what some critics claim, this legislation would not leave people out in the cold. … [Auto accident victims with] accident-related medical claims [that exceed the new medical limits] … can … sue a responsible party for any excess medical losses.” (9/15/2011, Detroit Free Press, guest writer)

Gary Wolfram, President of Hillsdale Policy Group, Ltd.: “Accident victims can sue responsible parties for costs in excess of medical coverage.” (Gary Wolfram, 9/29/2011, “A Brief Analysis of the Anderson Economic Group report, Impact of Proposed ‘PIP Choice’ Law in Michigan)

Significantly, the idea that capping No-Fault medical benefits would lead to car accident victims filing lawsuits to collect “excess” medical coverage is hardly new.

More than 30 years ago, when the auto insurance industry first broached the issue of wanting to cap No-Fault medical benefits, former Michigan Insurance Commissioner Thomas C. Jones explained very plainly what would happen if the auto insurers got their way:

“[L]imiting first party benefits … would simply result in a renewed increase in tort cases as people were required to sue for benefits denied by a limitation on medical and rehabilitation expenses.” (“No-Fault Insurance In Michigan: Consumer Attitudes And Performance,” Thomas C. Jones, Michigan Insurance Commissioner, April 10, 1978, Pages 76-77)

 

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