As you have most likely heard by now, Michigan No-Fault Law changes are soon approaching. The Michigan Legislature in a 94 to 15 House of Representative vote and a 34 to 4 vote in the Senate passed the No-Fault reform plan in Senate Bill No. 1. Democratic Governor Gretchen Whitmer is expected to sign the bill into law.
Below are some of the important changes coming your way in the 120 page reform bill:
- Benefit Coverage Choices for No-Fault PIP: The mandatory purchase of unlimited No-Fault Michigan PIP benefits is over. Drivers may now choose from the following No-Fault medical benefit coverage levels: $50,000 (if a driver is enrolled in Medicaid); $250,000; $500,000; or “no limit.” MCL 500.3107(c) and (d). Note: wage loss benefits, replacement service expenses and survivor loss benefits are not affected by the new allowable expense limits and they remain benefits that expire after 3 years.
- Opt-Out: Drivers with Medicare may “elect to not maintain coverage” for No-Fault PIP medical benefits. MCL 500.3107(d).
- Potential Premium Savings:For policies effective after July 1, 2020 and before July 1, 2028, the reform promises 45% savings for drivers who opt for the $50,000 cap on No-Fault PIP medical benefits; 35% savings for drivers who opt for the $250,000 cap; 20% savings for drivers who choose the $500,000 cap; and 10% savings for drivers who wish to have “no limit” and maintain their unlimited No-Fault medical benefits. Meanwhile, for drivers who opt-out of No-Fault PIP medical benefits altogether, they will see 100% savings on the No-Fault PIP medical portion of their auto insurance bill.
- Michigan Catastrophic Claims Association: The MCCAwould continue to be liable for catastrophic injury benefits payable under policies issued or renewed before July 2, 2020 and for policies after July 1, 2020 where drivers have opted to maintain unlimited No-Fault PIP medical benefits. Drivers who decide to cap their No-Fault benefits or opt-out altogether will still be required to pay annual MCCA assessments to cover deficits.
- Medical-Provider Fee Schedule: A No-Fault fee schedule based on the Medicare fee schedule would be created and it would govern charges from medical providers who cares for and treats car accident victims. Reimbursement will range from 190% to 250% of the amount payable under Medicare.
- Changes to Considerations in Setting Premium Rates:Insurers cannot consider the following in setting base premium rates: sex, marital status, home ownership, education level attained, occupation, the postal zone in which the insured resides and credit score.
- Mini Tort:The Mini tort law’s maximum recovery limit will increase from $1,000 to $3,000.
- One-Year-Back Rule is Tolled: Under our existing No-Fault law, when a car accident victim has been denied or cut-off from No-Fault benefits and sues to recover for unpaid and overdue benefits, he or she “may not recover benefits for any portion of the loss incurred more than 1 year before the date on which the action was commenced.” (MCL 500.3145(1)) The new Michigan No-Fault law provides that this “limitation . . . is tolled from the date the person claiming the benefits makes a specific claim for the benefits until the date the insurer formally denies the claim.” However, the bill cautions that tolling “does not apply if the person claiming the benefits fails to pursue the claim with reasonable diligence.”
- Independent Medical Examinations: The new reforms impose rules for IMEs of car accident victims by insurance company-hired IME doctors: (1) The IME doctors must be licensed in Michigan; (2) The examining IME doctor must be a licensed, board certified, or board eligible physician qualified to practice in the area of medicine appropriate to treat the car accident victim’s condition; (3) During the year before an IME, the IME doctor must have devoted a majority of professional time to clinical practice of medicine/specialty or teaching in an accredited medical school. MCL 500.3151.
- Attendant Care:Auto insurers are not required to pay for more than 56 hours per week of No-Fault in-home, family-provided attendant care.
- Anti-Fraud Unit: The new Michigan No-Fault law will create an Anti-Fraud Unit to investigate all “criminal and fraudulent activities in the insurance market.”
- Big Change for Bodily Injury Claims: Under the new Michigan No-Fault law, a person injured in a car accident can sue for excess medical costs and economic expenses, i.e., those medical costs and expenses that will exceed the dollar amount of the No-Fault PIP cap amount they have selected.
- Higher Liability Limits Due to Shift in Benefits to Third Party Claims: Before the reform, drivers were required to carry liability bodily injury insurance with mandatory minimum limits of $20,000 for bodily injury or death to one person in one car crash or $40,000 for two or more persons in one car crash. The new Michigan No-Fault law would increase those minimum limits to $50,000 and $100,000 respectively. A new “default” residual bodily injury limit of $250,000 and $500,000 will be offered to drivers, with drivers able to elect more or less liability coverage should they so choose, but not less than the new mandatory minimums of $50,000/$100,000.
- Serious Impairment of Body Function Threshold for Pain and Suffering Compensation: Under the new Michigan No-Fault law, a car accident victim will be required to satisfy the new definition of a “serious impairment of body function” in order to be able to sue for pain and suffering compensation. Specifically, the new Michigan No-Fault law defines a “serious impairment of body function” as an “impairment” that: “is objectively manifested, meaning it is observable or perceivable from actual symptoms or conditions by someone other than the injured person”; “is an impairment of an important body function, which is a body function of great value, significance or consequence to the injured person”; “affects the injured person’s general ability to lead his or her normal life, meaning it has had an influence on some of the person’s capacity to live in his or her normal manner of living. Although temporal considerations may be relevant, there is no temporal requirement for how long an impairment must last. This examination is inherently fact and circumstance specific to each injured person, must be conducted on a case-by-case basis, and requires comparison of the injured person’s life before and after the incident.”