JURIST Guest Columnist David Christensen of Christensen Law discusses the benefits of Michigan’s No-Fault Insurance Act and the need to protect it…

Michigan has the most comprehensive no-fault auto insurance laws in the nation, but a series of no-fault reform bills have threatened the law this legislative session. The efforts to cut motorists off from benefits and offer sub-par plans without any guarantee of lower premiums have caused protests across the state, and yet the proposals continue to pile up, each one doing more harm to a system that has protected Michigan motorists for decades.

Michigan’s No-Fault Insurance Act, first established in 1973, requires every motorist in the state to buy car insurance to cover any injuries resulting from an auto accident. Michigan is one of several states that have transitioned to the no-fault model, where each driver or passenger looks to their own insurance for benefits to cover medical expenses as the result of a car crash, rather than suing the at-fault driver. Passengers are covered by their own policies, if they have one, or by the driver’s policy if no one in their household has no-fault insurance. When all else fails, the Assigned Claims Facility delegates the case to one of the state’s licensed auto insurers. One way or another, every Michigan resident can be covered for their injuries.

In exchange for this certainty, Michigan drivers are very limited in their ability to sue at-fault drivers for their non-economic damages, like disability, loss of support, pain and suffering. There is no monetary threshold, like there are in other no-fault states, but unless drivers or passengers have suffered death, disability, or a “serious impairment of a body function” they will be limited to the benefits described in the Michigan No-Fault Insurance Act. Before an injured motorist can sue the other driver, he or she will have to show that they have an “objectively manifested impairment to an important body function that has affected your general ability to lead your normal life.”

What sets Michigan apart from the other states that allow no-fault insurance, however, is that the medical benefits provided under the Michigan No-Fault Insurance Act are unlimited. Most states place per person and per accident limits on medical benefits. In Michigan, though, as long as a treatment is medically necessary to treat an injury that was the result of an auto accident, it is covered. Claims continue as long as treatment is necessary. This can take years, particularly in the most serious cases, where brain injuries or disabilities affect the patients’ abilities for life.

The law is interpreted broadly, ensuring injured motorists have access to doctors and surgeons, diagnostic and assessment tests, physical and occupational therapy, crutches, wheelchairs, prosthetic devices and other medical equipment. It even covers modifications to the injured party’s home or vehicle to accommodate an accident-related disability. It covers home health care and attendant services too, as long as they are prescribed by a doctor.

Injured motorists are also entitled to lost wages for any time they were off work as a result of their injuries. Drivers can receive 85 percent of their salaries for up to three years of unemployment. This helps to make sure that an injured motorist never has to choose between their treatments and their mortgage or child support payments.

To keep insurance companies from having to pay out all of this all-inclusive coverage, the Michigan No-Fault Insurance Act created the Michigan Catastrophic Claims Association [PDF] (MCCA) — a non-profit organization made up of all the insurance providers licensed to sell car insurance in the state. The MCCA reimburses any auto insurer required to pay more than $530,000 in medical expenses as the result of a catastrophic motor vehicle accident. Its fund is made up of a relatively small fee ($150 in 2014) charged to every driver attached to their auto insurance bill.

Opponents of the current system have been trying to convince Michigan legislators to modify the law for years. They argue that the high cost of Michigan’s no-fault auto insurance is a burden on residents and causes too many people to drive uninsured. The 2014 and 2015 legislative sessions have seen the strongest push yet for no-fault reform.

Last year, Republican and Democratic lawmakers each put forward a pack of bills to change the way auto accident law was practiced in Michigan. The GOP reforms focused on limiting auto insurance providers’ liability, including caps on benefits for necessary medical care. They also eliminated an injured motorist’s right to a jury and made it harder for plaintiffs to pursue their cases. The Democrats’ no-fault reform instead placed limits on industry practices and attempted to bolster consumer protections. Neither set of bills managed to survive the legislative session.

This year, the proposed reforms have once again tried to cut off Michigan’s catastrophically injured motorists. The reforms, which sped through the Michigan Senate in less than 48 hours, would close out the Michigan Catastrophic Claims Association, replacing it with a new organization that cuts off insurance providers’ liability at $500,000 and puts the burden of any additional claims directly in injured motorists. The bill would also put strict limits on attendant care benefits and create a Automobile Insurance Fraud Authority to allow insurance providers to pursue consumers and doctors filing false claims for injuries.

After this no-fault reform bill stalled out in the Michigan House of Representatives, the Democratic mayor of Detroit raised a new proposal, this one designed to reduce the cost of car insurance for the residents of Detroit (which are substantially higher than anywhere else in the state). He proposed a “qualified benefits plan” that would ask residents of cities where over half the residents are uninsured to give up on Michigan’s high-quality no-fault auto insurance policies. Instead, they could only receive $250,000 in critical care and $25,000 in continuing care per accident. The qualified benefits recipients would also be excluded from benefits from the Michigan Catastrophic Claims Association. The bill wasn’t clear on whether plan participants would be able to sue at-fault drivers to help make up the difference, so once they have used up their benefits Detroit residence could have to cover all the rest of their medical expenses themselves.

All of the no-fault reforms proposed in 2015 have been based on the idea that Michigan’s insurance policies are too expensive for motorists. But none of the proposals require insurance providers to cut costs or lower premiums. In fact, there are no protections for drivers at all. Even though proponents of the reforms claim that the benefit limits will result in reduced premiums, they could just as easily support increased industry profits. That’s why the Coalition Protecting Auto No-Fault and other consumer advocates have been vocally opposed to the reforms. The debate has attracted national attention and has raised the question of what the purpose of all the reforms really are.

Michigan’s no-fault auto insurance laws are designed to make sure that no one faces financial ruin because of an auto accident. After decades of successful coverage, opponents are pushing to cut critically injured motorists off when they need help the most, all without any guarantee of short-term financial benefit. The Michigan No-Fault Insurance Act isn’t perfect, but any reform needs to protect the motorists the insurance is designed to benefit, not just the companies that make a profit on their premiums.

David Christensen is an experienced personal injury attorney with Christensen Law in Southfield, Michigan. He specializes in helping victims with traumatic brain injury from motor vehicle accidents.

Suggested citation: David Christensen, Protecting Michigan’s No-Fault Insurance, JURIST – Professional Commentary, July 18, 2015, http://jurist.org/hotline/2015/07/david-christensen-no-fault.php