Michigan Auto Insurance Reform 2019

Here we go again. The Michigan Legislature has introduced auto insurance reform legislation to “correct” the inadequacies of Michigan’s existing auto insurance laws. While insurance reform is needed in Michigan, I see several problematic issues in the current legislation (Senate Bill 0001) as passed by the Michigan Senate Republicans on May 7.  Governor Whitmer has threatened to veto the legislation as it’s written, but I’ll offer my insights before that happens.

• Lifting the mandate on PIP coverage where drivers are insured under a primary health care policy will not reduce the number of uninsured drivers; rather, it will increase it.  Like other provisions in the bill, there is a lack of specificity as to how the state will verify that a driver is insured under a health insurance plan.   Plans lapse, coverages expire, people change jobs, etc.   It is inconceivable as to how the state could monitor the insured status of its drivers.  It is more likely that drivers will falsely declare that they are insured under a health care plan to avoid paying for No-Fault medical coverage.

• There is no evidence or statistics I have seen that the transitioning of auto insurance to a cafeteria-style approach will amount to the "estimated savings" discussed. However, if drivers were required to purchase a minimum of $250,000.00 in primary auto coverage with excess expenses being paid by their health insurance company or Medicare, this would obviate the need for the Michigan Catastrophic Claims Association (MCCA), producing immediate savings to drivers.

• While I do believe that fee schedules should be adopted to restrict the amount a physician or hospital may bill for a medical service, the workers compensation fee schedule is far too restrictive. Should the fee schedules resemble the workers compensation model, I would anticipate that many medical facilities would simply opt out of providing care to auto accident victims thereby limiting access and medical alternatives to those who have been seriously injured.  A fee schedule like the reimbursement rates of Blue Cross Blue Shield and Medicare would presumably be more palatable to health care providers.

Vince Colella is a personal injury and civil rights attorney and managing partner at Southfield, Michigan-based Moss & Colella.