Michigan Supreme Court hearing on the State’s automobile no-fault reform

Michigan Supreme Court hearing on automobile no-fault reform: What to know,” Bridge Michigan,

In reading this, I can almost guarantee, the citizens of the state of Michigan had not given any thought to

the screwing over of those who suffered catastrophic injury due to automobile accidents. Indeed, it was business interests who set the pace for the repeal of No-Fault Auto Insurance. Michigan residents lived with the higher insurance costs. It was business which objected to it because they had difficulty attracting candidates to work at their facilities in Detroit. At least it was a convenient excuse to make at the time.

How This All Started

“Detroit businessman Dan Gilbert’s team on a Thursday, May 2019 filed paperwork for a potential petition drive to reform the state’s no-fault auto insurance law. Polling amongst citizens was showing strong support for reforms decreasing Auto Insurance rates ranking among the highest in the nation. Citizens for Lower Auto Insurance Rates.”

More than 91% of respondents said Michigan rates are too high and 74.3% said premiums here are much more expensive than in other states.

Eighty-two percent voiced support for moving to an auto insurance system like other no-fault states allowing drivers to choose their level of medical coverage, which would end M unique guarantee of uncapped lifetime coverage. Gilbert creates auto insurance petition drive committee, releases poll,” (detroitnews.com)

The paperwork filing came as Democratic Gov. Gretchen Whitmer and Republican legislative leaders were negotiating potential reforms. The threat of a petition served as a backup option should talks fail. The threat of such was enough to push then Governor Whitmer to sign off on it when it came to her desk. there was little negotiating to be done. It also left a loophole which the powerful insurance lobby used.

Welcome Relief

Did people get relief from the costs of “no fault” automobile insurance. Yes, we did in the form of checks almost immediately, refunding much of our premiums. Did we (Michigan citizen then) get an opportunity to choose what insurance level we wanted. Yes, we did. We (ourselves) went with a higher cost policy because of the costs of healthcare. Many did not. Later on, we also received additional refund checks.

Everybody was happy for lower automobile insurance rates including Dan Gilbert’s Detroit based Quicken Loans. The high auto insurance rates were less likely to be an excuse for not hiring on with companies. It did seem to make sense. Now those who could not afford insurance were finding they could afford it.

One positive aspect of Michigan’s automotive insurance was the long-term disability part of it. It generously covered disabilities resulting from automotive accidents. People had lifetime coverage. The only negative to this being nondisclosure of the pool of funds by insurance companies. Insurance companies were refusing to disclose fund amounts.

Issues Popped Up

One other thing happened. No fault automotive insurance had lifetime coverage for those incurring catastrophic injuries. Once the law changing No Fault Insurance was passed, insurance companies cut payments to those suffering lifetime injuries. The cut was in the realm of 45%.

The other issue was the automotive insurance companies applied the initiative cuts retroactively. Crash survivors say 2019 changes to state’s auto no-fault policy should not impact preexisting insurance contracts. Insurers counter the reforms were intended to bring down auto insurance costs, and will not work unless all are bound by them. 

The argument being the 2019 law “says nothing” about applying retroactively to individuals catastrophically injured in auto crashes prior to the legislation’s passage. The opposition argument being the law’s language never explicitly ruled out retroactive effect, either. 

What did happen after passage was an immediate and disastrous effect on the catastrophically injured people already claiming benefits through the system. An analysis shared with The News was showing Medical providers suffering financial harm.

The Michigan Courts

The Michigan State COA ruled 2-1 (August 2022) the cuts to catastrophic coverage could not be applied retroactively.

The 2-1 ruling, which lawyers say they will appeal to the Michigan Supreme Court, is a win for critics of the overhaul who contend the cost controls on no-fault’s unlimited, lifetime medical coverage for auto accidents are too stringent and have forced some rehabilitation centers for patients to close and in-home attendant care services to drop patients or threaten to drop patients.

In the Michigan Supreme Court

“Insurance providers and other backers of the 2019 changes argue that that interpretation of the reform law would have a huge impact on the law’s ability to reduce Michigan’s high auto insurance costs.” “Historic Changes To MI No-Fault Law Effective July 1, 2020,” mwl-law.com

The court is hearing the argument of what was the intent? Application to cases going forward or application forward and retroactively.