HomeUs NewsError-free revision does not apply to survivors of previous crashes
Error-free revision does not apply to survivors of previous crashes
August 25, 2022
A Michigan Court of Appeals panel ruled Thursday that new controls on medical expenses in the recent overhaul of Michigan’s auto insurance system are unconstitutional and do not apply retroactively to accident victims whose accidents occurred before the 2019 law amendment.
The 2-1 ruling, which lawyers say will appeal to the Michigan Supreme Court, is a victory for critics of the overhaul who argue that cost containment of unlimited, lifetime medical coverage for car accidents is too strict and some have forced patient rehabilitation centers to close and home health services to drop or threaten to drop patients.
The eventual outcome of the case could affect the size and frequency of any future refund checks issued to drivers statewide for surpluses in the Michigan Catastrophic Claims Association fund known as the MCCA. Drivers received $400 per vehicle refunds from auto insurers this spring due to an MCCA surplus generated largely by the new cost containment.
Under Michigan law, the ruling must have immediate precedent, meaning insurance companies must begin to reimburse medical and health care providers of victims of accidents with older injuries at the earlier, more generous rates — even before the state’s Supreme Court hears the case.
However, a lawyer for the losing party told the Free Press that they will request a postponement to prevent the ruling from taking effect immediately.
The appeals court sided with the two plaintiffs in the case. The lead prosecutor, Ellen Andary, 65, of East Lansing, was a passenger in a vehicle that was hit head-on by a drunken wrong-way driver in December 2014. She suffered permanent brain damage and lost the ability to walk.
Doctors prescribed Andary with 36 hours of daily home care, generally paid for $28 an hour, largely by her relatives and some two-person services, costing insurance more than $350,000 a year.
Under the cost containment of the new law, the reimbursement for that accompanying care would have been reduced by 45% if her car insurer had not postponed the cuts pending the outcome of the case.
Michigan no-fault overhaul lawsuit has an appeals court hearing: What’s at stake?
Medical care for patients like Andary is covered by the Michigan Catastrophic Claims Association, which reimburses auto insurance companies when a patient’s bills exceed a certain threshold, currently $600,000. As of June 30, 2021, there were 17,542 individuals with an outstanding MCCA claim. More recent data is not yet available.
However, the ruling would have the most impact on the approximately 6,600 seriously injured car accident victims in Michigan who receive some form of long-term care, usually in a care facility or their own homes.
Outside of Michigan, catastrophically injured accident victims often end up in Medicaid-funded nursing homes or may receive some home care through a Medicaid “waiver” program.
That’s generally the same fate in Michigan for those who suffer catastrophic injuries that didn’t occur in a car accident. No-fault insurance is unique in paying carers for 24-hour supervision and assistance.
“I have believed passionately from the time this lawsuit was filed that we were in the right position, both in terms of the law and in terms of fairness and fairness, and I believe that more than ever today,” attorney George Sinas of the Sinas Dramis Law Firm in Lansing, which represents the plaintiffs, said in a telephone interview.
“I don’t believe it’s legally appropriate to include patients like this who years ago had bought these auto insurance policies for medical benefits, paid hard earned money for that coverage, and that coverage at the time guaranteed them lifelong medical care with no limits. I don’t believe it’s appropriate to deprive them of those purchased benefits through a later passed law — and that’s exactly what the Court of Appeals ruled,” Sinas said.
An attorney for the two auto insurance suspects, USAA Casualty Insurance Co. and Citizens Insurance Co. of America, called the decision a loss for Michigan drivers, who would end up paying more for the insurance rate if the ruling were to hold.
“The court’s decision invalidates important bipartisan reforms that had begun to reduce costs that had made coverage unaffordable for many residents due to widespread fraud and abuse,” Lori McAllister of law firm Dykema said in a statement. “The defendants plan to appeal the decision and are confident that the two-pronged reforms to the no-fault system will eventually be upheld by the Michigan Supreme Court.”
Less impact on other cost controls
The ruling has less effect on another set of medical cost control in the law, which concerns a larger number of accident patients.
Those controls generally limit medical providers’ reimbursements to a maximum of 200% of Medicare rates. In comparison, the average commercial insurance reimbursement to hospitals in Michigan in 2020 was 203% of Medicare rates, up from 190% in 2018, according to a survey by the Rand Corp.
The services subject to the 45% cuts from the overhaul are only those without an equivalent Medicare billing code, such as home care and long-term residency in specialized rehabilitation centers. These types of services lack Medicare codes because error-free insurance covers more services than other forms of insurance.
The expected savings from cost containment from the new law was a major reason Michigan drivers received the $400 per vehicle MCCA refund checks this spring. Those repayments represented $3 billion of a $5 billion surplus in the MCCA’s fund, which last reported $27 billion in total assets.
Appeals Court judges Douglas Shapiro and Sima Patel concluded that the state legislature has not “clearly demonstrated” that cost containment would apply retroactively to people whose injuries occurred before the law went into effect in June 2019.
They also concluded that, even if lawmakers intended that cost containment measures would apply retroactively, reimbursements to patients’ medical providers violate the contract clause of the Michigan Constitution because they “significantly harm no-fault insurance contracts that are entered into before the effective date of the changes.”
PIP choice still stands
Judge Jane Marke disagreed with the majority opinion and upheld a November 2020 ruling in the Ingham County Circuit Court that sided with the insurance company defendants.
The ruling will not affect other aspects of the 2019 flawless overhaul, such as allowing drivers to choose the level of medical benefits in their auto insurance policies, known as personal injury protection or PIP.
Prior to the overhaul, Michigan was the only state to require all auto policyholders to purchase unlimited, lifetime PIP — and with no cost control over medical coverage. Michigan was the most expensive state for auto insurance when Governor Gretchen Whitmer signed the revision into law in 2019. However, cost containment didn’t begin until July 2021.
Before cost containment, some doctors and chiropractors prescribed months or even years of questionable services to accident victims, driving up costs, and even legitimate services were expensive due to high bills.
A ‘drastic limit’ to healthcare
The other plaintiff in the Andary case, Philip Krueger, was catastrophically injured in 1990 at the age of 18 while sitting as a passenger in a pickup truck. Unable to walk, talk, or take care of himself, he has resided at the Eisenhower Center, a neurological rehabilitation center in Ann Arbor, since 1997.
The MCCA says it paid $572 a day, or more than $208,000 a year, for his stay at the specialty center.
The panel’s majority opinion said Thursday that cost containment “directly and drastically limits the ability of motor vehicle accident victims to continue to receive the care they need.” It also noted how relatives of some survivors have given up their jobs and careers to stay at home and be compensated for caring for an injured loved one.
“In summary, the lifetime unlimited benefits paid by insurers will be seriously affected if the changes are made retroactive,” the advisory said. Defendants have not demonstrated that retroactive application of the amendments is necessary to achieve the objective of reducing no-fault policy premiums. Nor have defendants explained how it is reasonable to apply the (cost control) to the injured before the effective date of the (law) whereas the relevant premiums have already been paid in full.”
The ruling also exempts victims of accidents that occurred before the law from a new rule that limits reimbursement for home care provided by a patient’s family or friends to 56 hours per week. Patients can receive more than 56 hours of care, but the extra hours must come from a healthcare facility or other third party.
A similar 56-hour rule for disability claims has been around for years.
The Andary case, filed in 2019, is considered the “test case” in Michigan for whether it is constitutional to retroactively apply the new law to past accident victims.
Circuit Court judges in several counties have issued temporary injunctions over the past year requiring insurance companies to pay the prior rates to specific car accident victims until the issue is retroactively resolved.
Contact JC Reindl: 313-378-5460 or [email protected] Follow him on Twitter @jcreindl.