RECENT CHANGES IN THE NO-FAULT LAW:
NO-FAULT DEDUCTIBLE NOW POTENTIALLY UNLIMITED
Perhaps the biggest change to our No-Fault law in many years occurred in late December 2012 with just about zero fanfare. No-Fault section 3109(3) was changed to remove any limitation on the No-Fault deductible that an insurer may charge. We are all familiar with the one time $300 deductible that insurers formerly were permitted to charge.
Section 3109(3) USED to read:
"An insurer providing personal protection insurance benefits may offer, at appropriately reduced premium rates, a deductible of a specified dollar amount which does not exceed $300.00 per accident."
Section 3109(3) NOW reads:
"An insurer providing personal protection insurance benefits under this chapter may offer, at appropriately reduced premium rates, a deductible of a specified dollar amount."
i.e., the $300 limitation has been removed.
This piece of legislation was signed by the governor on 12/20/12 and is effective as of 12/27/12. There has been much talk of a cap on No-Fault benefits and we expect a lot more discussion on this point in 2013. This new legislation is NOT a cap, but it acts to limit No-Fault coverage on the opposite end of No-Fault benefits. For example, nothing in this legislation prevents an insurer from offering a deductible of $10,000 or $25,000 or even $100,000. We expect that such deductibles would significantly lower the cost of No-Fault coverage, and therefore would be very tempting for consumers to take. If so, how will consumers be able to pay for the medical charges within that deductible if they sustain serious injury and medical expense in a motor vehicle accident?
Surely, this development renders caps even less necessary and even more damaging. We will be watching how this amendment plays out in the marketplace in the year to come.
CHANGES TO THE ASSIGNED CLAIMS FACILITY
Injured persons who are uninsured may still, under many circumstances, qualify for No-Fault insurance. Often, that insurance is provided through the Assigned Claims Plan. This Plan was administered through the Assigned Claims Facility (ACF), an agency of the State of Michigan Department of State. Upon proper application, the ACF would assign the claim to one of a number of No-Fault insurers that voluntarily participate with the Plan.
Effective December 17, 2012, management of the Plan has been transferred from the ACF to the Michigan Automobile Insurance Placement Facility (MAIPF). Click here to see the new Application form. Additional information can be obtained at the MAIPF webste at www.michacp.org or by calling or writing to:
Michigan Assigned Claims Plan
PO Box 532318
Livonia, MI 48153
You will note that the website and application contain a more aggressive posture than was the case in the past. We do NOT believe that all of the statements in the web site accurately describe the legal requirements of the No-Fault law. For example, page 4 of the Application form contains an attestation for service providers who complete the form: "If I am a medical provider and am submitting this application on behalf of the injured person, I attest that I have thoroughly investigated and verified all documented information." As a practical matter, medical providers are seldom able to "thoroughly investigate and verify" information submitted by their patients. We see nothing in the No-Fault law that would require providers to make this attestation. Accordingly, service providers would be well advised to take extreme caution in making this attestation.
Apart from the administrative change of responsible agencies, and some new language governing fraudulent claims, the essence of the No-Fault law governing the Assigned Claims Plan has not changed. Injured persons will still be able to qualify for the ACP just as they did previously.
THE FUTURE OF NO-FAULT IN MICHIGAN
Governor Snyder has signaled that No-Fault insurance will be a priority for 2013. The high cost of auto insurance is obviously a concern to all. But, as is typical with Republican approaches to No-Fault going back to the campaigns of 1992 and 1994, Governor Snyder seems intent on imposing caps and fee schedules as centerpieces of his "reform" effort. No mention has been made of true insurance reform, such as increasing transparency at the MCCA. Caps would essentially deprive the catastrophically injured of long term rehabilitation and custodial care services. We can anticipate the loss of thousands of jobs from the rehabilitation industry and the loss of essential services to the most vulnerable.
Accordingly, the battle that has been looming over the last couple of years appears to be front and center in Michigan politics this year. Our best efforts will be called upon to prevent or at least minimize this calamity. We will certainly keep you apprised as the battles progress.
ELEVATION OF OFIR TO A STATE AGENCY
Insurance companies are regulated in the State of Michigan by the Office of Financial and Insurance Regulation (OFIR). Though OFIR is not a part of the No-Fault law, it is the agency that regulates all insurers in the state, including No-Fault insurers. Previously, OFIR was an agency within the Department of Licensing and Regulatory Affairs. By Executive Order 2013-1, Governor Snyder changed OFIR into a separate department of state government: the Department of Insurance and Financial Services. Kevin Clinton was named as the new director. Mr. Clinton had previously served as the Commissioner of the Department of Licensing and Regulatory Affairs and has a strong background in insurance, having spent five years as president and CEO of MEEMIC Insurance, followed by six years as president and CEO of American Physicians Capital, Inc. Early comments from Mr. Clinton suggests that he has more of an interest in promoting rather than regulating the insurance industry.
WARNING: AGGRESSIVE SPECIAL INVESTIGATION UNIT (SIU) TACTICS: HOW DO YOU MAKE SURE A PAYMENT IS "FINAL"?
No-Fault insurers have been ever more aggressive in challenging claims. In addition to time honored claims procedures such as subjecting claimants to "Independent" Medical Exams, insurers have expanded the aggressive use of their Special Investigations Units (SIU) in recent years. To be sure, fraud exists and insurers have a special obligation to ferret out fraud. But the judicious use of the SIU process has expanded greatly and has, in some cases, effected a reign of terror. Sometimes, SIU units will simply recommend blanket non-payment of bills generated by a particular provider. However, far more troubling is the practice of some insurance SIU units to review charges that have already been paid, and then to aggressively seek reimbursement. Litigation over payments already made can be ruinous.
So the question is raised as to how to ensure that a payment, once made, is final and that the insurer would seek to take it back. Some common sense practices are strongly recommended. These include maintaining open communication with your No-Fault insurer; providing thorough documentation of charges; and being open and responsive to any insurer concerns. Make sure that the insurer initially commits to the services to be rendered, in advance of admission. We hasten to add that these measures do not ensure that the insurer will not attempt retroactive reimbursement tactics. But the first step in any preemptive plan is to be aware of the existence of the problem.