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Michigan Supreme Court strikes down 2019 auto insurance reform provisions

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​​(The Center Square) – In a 5-2 decision, the Michigan Supreme Court ruled provisions of Michigan’s 2019 auto insurance reform doesn’t apply to about 17,000 people injured before the amended law’s passage.

The state’s highest court ruled those injured before the 2019 reform should be protected from fee cuts lawmakers originally heralded as a way to spare Michigan drivers from highest-in-the-nation auto insurance costs.

Before the 2019 reforms, all Michigan drivers had to buy unlimited, lifetime medical benefits with their auto insurance. Now, they can choose a level of protection.

The decision might eat away some savings provided to Michigan consumers via more insurance options, according to one insurance group.

Lower monthly premiums relative to before 2019 were derived from fee cuts and service limitations of those injured in car accidents. The reform significantly reduced reimbursable family-provided attendant care hours and reimbursement rates for services not covered by Medicare for those injured by traumatic car crashes.

The plaintiffs were Michael T. Andary, guardian of Ellen M. Andary, and Ronald Krueger, guardian of Philip Krueger. Both suffered traumatic auto injuries before 2019. The lawsuit in the Ingham Circuit Court targeted USAA Casualty Insurance Co. and Citizens Insurance Co. of America, and specifically an amendment capping a provider’s reimbursement for services not covered by Medicare to 55% of the fees charged as of Jan. 1, 2019, as well as limited reimbursable hours of family-provided attendant care to 56 hours per week.

Andary sought a judgment that placing new limitations on in-home family-provided attendant care and the non-Medicare fee schedule couldn’t limit or change plaintiffs’ rights to benefits under the insurance policies predating the 2019 change.

Before 2019, the two injured people had been provided uncapped lifetime medical care covered by personal protection insurance benefits under insurance policies in effect at the time of their injuries.

Michigan Supreme Justice Elizabeth Welsh wrote the majority opinion and was joined by Elizabeth Clement, Richard Bernstein, Megan Cavanagh, and Kyra Bolden.

“Andary’s and Krueger’s rights to the PIP benefits at issue in this case were both contractual and statutory in nature, and the 2019 no-fault amendments did not retroactively modify their vested contractual rights,” the opinion says. “Plaintiffs’ constitutional challenges to prospective application of the amended statutes were dismissed.”

Compounding decisions have chipped away at consumer savings for auto insurance.

In 2021, Gov. Gretchen Whitmer called on the Michigan Catastrophic Claims Association to issue refund checks to consumers from its projected $5 billion surplus the MCCA then voted unanimously to issue $400-per-car rebates. The MCAA had a $5 billion surplus in 2021, but coupled with stock market losses, $3 billion in rebates, and a $3.7 billion loss from a 2022 court case, the fund has a deficit.

On July 1, 2023, the MCCA raised annual per-vehicle assessments on all auto insurance policies.

Brian Peters, CEO of The Michigan Health & Hospital Association, welcomed the ruling.

“The MHA, on behalf of our member hospitals and health systems, are pleased with the Michigan Supreme Court decision that will provide greater access to care for auto accident survivors,” Peters said in a statement. “It will make a positive impact on the lives of those survivors seriously injured prior to the recent changes to Michigan’s auto no-fault law who continue to have significant ongoing care needs.”

But Erin McDonough, director of the Insurance Alliance of Michigan, said the ruling strikes down reform that “reins in rampant overcharging by medical providers…” and saved Michiganders more than $5 billion through lower costs.

McDonough said the court struck down the fee schedule for those injured before reforms, but the decision preserves the fee schedule going forward after enactment.

“Today, the court let down consumers across Michigan and opened the floodgates for overcharging for medical procedures and higher rates,” McDonough said in a statement. “You can’t reasonably expect to save Michigan drivers money while obliterating a key cost control measure like the fee schedule.”

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