'Fix the Damn' No-Fault Law

In May of 2019, Michigan lawmakers, with the support of the governor, hastily made sweeping changes to Michigan’s Automobile No-Fault Act (“Act”) that are now being felt by auto accident victims across the state.

The “reforms” have been rolled out over the past two years, concluding this past summer with the installment of “fee schedules” applicable to “products, services and accommodations” provided by medical care providers. Unfortunately, these fee schedules are wiping out an entire industry of “attendant” home healthcare agencies specializing in auto injury-related services. In addition to imposing significant limitations on the amount the agencies may charge, no-fault reform has also limited the number of hours family members may provide for similar services, leaving many catastrophically injured individuals with no choice but to be admitted into residential care facilities away from their homes and families.

One notable example of the devastating effects of no-fault reform came by way of a recent story in the Detroit Free Press related to former pro hockey player, Vladimir Konstantinov. Konstantinov, who suffered a catastrophic brain injury resulting from a limousine wreck in 1997, has been under 24/7 attendant care and physical therapy at his home in West Bloomfield. However, changes in the law have threatened his ability to continue with home healthcare, as his providers will be forced out unless state lawmakers revisit at least some of the provisions under the new statute.

Another example of the hardship the no-fault reforms have placed on victims of catastrophic automobile accidents involves a Genesee County man who was struck by a motorist on October 27, 2021, resulting in a spinal cord injury rendering him a quadriplegic. Following his discharge from the hospital, he was released into his daughter’s care. An agency was retained to provide essential in-home rehabilitative services. However, the auto carrier has refused to pay the healthcare costs, insisting on a dramatic reduction in the charges based upon the company’s billing records from January 2019.

Under the new law, a physician, hospital, clinic or other person that renders treatment or rehabilitative occupational training to an injured person for an injury is not eligible for payment to exceed 200% of the Medicare rate for treatment rendered after July 1, 2021 and before July 2, 2022. [MCL 500 3157(2)(a)] Moreover, if Medicare does not provide an amount payable for a particular treatment or rehabilitative therapy, the care provider is not eligible for payment or reimbursement at the Medicare rate. Under these circumstances, the law requires the care provider to produce a “charge description master,” or other similar documentation of charge history, in effect as of January 1, 2019, detailing billing rates at that time. Utilizing the charge history, the auto insurance company is then permitted to slash the rate of payment by 45%. For many agencies, internal operating and labor costs preclude continuing business operations and effectively foreclose them from the market, leaving auto accident victims with few in-home options.

To complicate care decisions further is the limitation on family provided support services. As of July 1, 2021, attendant care services provided by family (or friends) is capped at 56 hours per week. Moreover, while the hourly rate for family provided attendant care services is not linked to Medicare fee schedules or subject to the 45% statutory reduction, insurance carriers have been routinely paying family members slightly more than the state minimum wage rate ($9.87/hour) opting in some cases to pay as little as $9 an hour (far less than what is currently being paid in the fast-food industry). Insurance carriers claim that the rates are based on statistical government data predominantly dependent on the geographic area of where the services will take place, as opposed to the nature and level of care service.

Securing attendant care services is made even more difficult due to the timing of payments. Under the Act, an auto insurance carrier is required to make payment within 30 days of receiving “reasonable proof” of the fact and amount of medical service. [MCL 500.3142] In a perfect world, agencies and care providers could carry thousands of dollars of receivables for attendant care services for a 30-day period. However, from a practical perspective, it is unreasonable to expect an attendant care provider to subsume such debt and risk associated with the possibilities of delay in payment or denial of the benefit outright. In practice, the “lead time” on a new claim is typically 60-90 days or more. It is far more likely for an attendant care provider to perform services for several months before receiving a single payment — a scenario no person would expect in the typical employment context.

Simply stated, the system is broken. The legislature needs to act quickly to pass a new reform bill or victims of auto accidents will continue to suffer further immeasurable and irreparable harm.

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A. Vince Colella is a co-founder of personal injury and civil rights law firm Moss & Colella.