Senate Panel OKs Changes to Michigan Auto Insurance Law

A legislative panel on Wednesday quickly approved changes to Michigan’s auto insurance law, voting to reduce how much insurers pay for medical care, establish an anti-fraud authority and create a new entity to cover expenses for people catastrophically hurt in car crashes.

The Senate Insurance Committee’s 5-3 vote set the stage for a potential vote in the Republican-controlled Senate as early as Thursday. Lawmakers are hoping for progress on an issue that has typically stalled under resistance from the medical community and injured motorists whose bills over $530,000 are covered by the Michigan Catastrophic Claims Association.

Michigan is the only state to require that drivers have coverage for unlimited medical benefits for injuries and rehabilitation. The MCCA’s annual per-vehicle assessment is $186 and will drop to $150 starting this summer.

Auto insurers complain that they are charged more by hospitals and providers than are health insurers, and those expenses are passed on to drivers. The legislation, supported by Gov. Rick Snyder’s administration, would create a fee schedule similar to what exists for workers’ compensation injuries.

Kurt Gallinger, vice president and counsel for Farmington Hills-based Amerisure Insurance and vice chairman of the Michigan Insurance Coalition, said auto insurers must pay $2,200 to $3,000 for a shoulder surgery while workers’ comp pays $940.

“This is the evidence of the cost being passed along to consumers in a hidden tax on no-fault drivers,” he said.

Opponents including hospitals and patients said it was irresponsible for the committee, holding its first meeting this year, to rush a vote on major bills without allowing more time for review. They were first introduced March 26, the last day before lawmakers took a spring break before returning this week.

John Cornack, president of the Coalition Protecting Auto No-Fault, raised questions about creating a new motorist-funded entity to replace the MCCA, which would be called the Michigan Legacy Claims Association and dissolve once existing liabilities are paid.

“We really have to take a long time figuring out how that will work the best. … This bill attempts to make significant changes to the auto no-fault system which has been in place for 43 years and affects thousands of injured folks,” said Cornack, president of the Eisenhower Center, which provides residential rehabilitation services in Ann Arbor to people with traumatic brain injuries.

The MCCA paid out $1 billion in 2014, mostly for brain and spinal cord injuries, multiple fractures, and back and neck injuries.

The new incorporated association would be responsible for medical claims in excess of $530,000-$545,000 for newly issued policies. The seven-member board would be appointed by the governor, and the group would be subject to public records and open meetings laws, an attempt to address criticism that the MCCA is not subject to public accountability.

Insurance Committee Chairman Joe Hune, a Republican from Livingston County’s Hamburg Township and the legislation’s sponsor, characterized the transition from the MCCA to a new entity as an accounting move to relieve insurers’ books of liabilities that are hurting their financial ratings.

The legislation also would limit family members who provide attendant care in the home to being paid $15 an hour and restrict the hours for payment.

Insurance officials said the bills are “common sense reforms” to control costs, which would bring down motorists’ premiums. Patients at the hearing brought up concerns with a provision establishing $200 monthly copays for attendant care not provided by a relative, and Democrats questioned why there is no mandatory rate rollback in the bills.

“The patients will see absolutely no change because of this,” Hune said.

Four Republicans and one Democrat voted for the bills; two Democrats and one Republican opposed them.