Could the Legislature Be Ready to Revisit No Fault Auto Insurance?
"The energy and the desire … to take up the issue is there," said Rep. Brenda Carter (D-Pontiac), who chairs the House Insurance and Financial Services Committee . "After we get through these first six bills and the gun legislation bills, then auto no fault becomes the priority."
How fast those changes could take place also is complicated by current litigation over the implementation of the 2019 overhaul in the Michigan Supreme Court case, Andary v. USAA Casualty Insurance Company.
Changes were made to Michigan’s no-fault auto insurance in 2019 with the passage of bipartisan legislation that created multiple levels of personal injury protection coverage to make it more affordable. The multi-tiered PIP rate was created as an alternative to the mandatory lifetime health coverage. The legislation also mandated medical fee schedule that imposed a 45 percent provider rate cut and limited reimbursement for family-provided attendant care to 56 hours per week.
Current Senate Majority Leader Winnie Brinks (D-Grand Rapids) voted no on the auto insurance changes in 2019. Now House Speaker Joe Tate (D-Detroit) voted yes.
"The impact has been devastating," said Todd Judd, executive director of Michigan Brain Injury Provider Council, a trade association that serves providers in professions related to brain injury rehabilitation, and which has strongly objected to the reforms.
The fee schedule went into effect in July 2021, causing problems for the approximately 17,000 people receiving care under the prior no-fault law, which assured unlimited coverage for "all reasonable charges" needed to provide care for those catastrophically injured. Providers also said they could no longer afford to provide care for patients due to a lack of funds.
"We warned legislators about this before the fee-cap system was implemented in 2020, and everybody kind of took a wait and see approach," Mr. Judd said. "Well, we’ve seen the impact."
Erin McDonough, executive director of Insurance Alliance of Michigan, said that the reforms have benefited Michigan drivers.
"The goal of them was to drive down costs for Michigan’s 7.2 million drivers, and we think the reforms are working," she said.
The Department of Insurance and Financial Services released a report showing that as a result of the new law, the Michigan Catastrophic Claims Association deficit of approximately $2 billion had been eliminated and the associations assessment could be reduced by $1 billion. The MCCA also stated the changes resulted in an estimated $3.5 billion reduction in liabilities.
The report also said that, as of December 29, 2022, the department reviewed 47 percent of the personal auto insurance filings, and those filings reflected $106 million in savings passed on to consumers as the result of the application of the fee schedule provided by the no-fault reforms.
"They’ve kept costs in check by preventing overcharging and reducing incentives for medical providers to push harmful procedures and have established a reasonable reimbursement rate for medical services," Ms. McDonough said.
The state also developed a hotline to ensure that fees were being paid in a timely manner, Ms. McDonough said, and people who didn’t have care insurance before the reforms are now buying that protection.
"We have a choice," she said. "We have savings in the form of a fee schedule. We have accountability through programs like utilization review that allow third party disputes to be overseen by the department. We’ve had 60 new companies enter the market since the reforms passed."
Last month, the Coalition Protecting Auto No-Fault called into question the accuracy of the number of new insurance companies since the law changes.
The Michigan Supreme Court is currently hearing a case related to the fee schedule. The case, Andary v. USAA Casualty Insurance Company (MSC Docket No. 164772), will decide whether the 2019 changes apply retroactively.
Mr. Judd said that the decision of the Supreme Court won’t prevent the Legislature from addressing the reimbursement system.
"It’s a very narrow, small part of the law that really needs to be fixed so that people can get the care that they deserve and that they paid for," he said. "That’s a legislative caused problem, and the only solution has to come from the Legislature with an amendment to the law that makes sure that providers are getting paid a reasonable amount."
Ms. McDonough said that any discussions about no-fault reforms were dependent on the court case.
"We need to understand what decision the Supreme Court is going to make," she said. "It will determine constitutionally what the Legislature can and can’t do, and what’s at the heart of this is the medical fee schedule."
Ms. Carter said she is in ongoing discussions with House Speaker Joe Tate’s (D-Detroit) office about bringing the insurance industry and the provider industry to the table to develop solutions to auto no-fault insurance.
"I’m really optimistic, especially with the subject matter experts we have on the committee, that we will come to some kind of resolution where both sides of the industry wins," she said.
The biggest concerns to address are the fee schedule and the cut in fees paid to providers, Ms. Carter said.
"That’s the 800-pound gorilla in the room for both sides," she said. "We’ve watched this law since 2019-20, and we see that there’s been a reduction in claims and a reduction in price, however the provider industry is being disproportionately impacted."
Mr. Judd said that when the no-fault auto insurance laws were originally passed, stakeholders like the Michigan Brain Injury Provider Council would have liked an opportunity to discuss what the fee schedule looked like and different strategies to reasonably lower costs in the system.
"We did not get that opportunity," he said. "We need to see a change to the reimbursement level for post-acute services. Those services that have had their reimbursement rate slashed by 50 percent. That’s not sustainable…We’re not looking to touch any other aspect of the law except for this one very narrow solution that looks for justice and fairness in terms of making sure that people who are injured have care providers that are getting paid at reasonable rates."
Mr. Judd said he’s cautiously optimistic about the chance of reform.
"We think that we have champions at key points in the Legislature, within leadership and within both parties who have been championing for a change, and the new legislators coming into this session have really shown some great insight into this issue, and they recognize the need," he said. "We know that over the past few years, Governor Whitmer has said she wants to see some solutions to her desk, and so we’re very hopeful and optimistic now that she has her party with the majority that a solution will get to her desk."
Ms. McDonough said that the medical fee schedule is helping keep costs in check because it allowed providers to charge people with no-fault insurance more for procedures than they charged people without no-fault insurance.
"Loading costs into the system makes rates go up, and when you have choice, unchecked medical costs can prevent people from getting the value of their policy," she said. "Think about it: You could only afford a $50,000 policy. Why should you have to by a $5,000 MRI when it costs everybody else $500?"
Ms. Carter also said that the Legislature was not prevented from making adjustments going forward, regardless of the Supreme Court decision.
"We will still have to look at how the law impact pricing going forward," she said. "The obligations that the provider industry will have to meet going forward. And that, once again, is a discussion between the two sides."
Sen. Mark Huizenga (R-Walker) was less confident about the ability of the Legislature to do anything prior to the Supreme Court’s decision. Mr. Huizenga is the minority vice chair of the Senate Insurance and Finance Committee.
"In general, any time you have major policy change like that, it’s never perfect, and it’s not that uncommon to see technical fixes, legislative adjustments and modifications after the fact," he said. "But I think that’s all on hold now, just because of litigation."
Mr. Huizenga said that his office still regularly is contacted by people with concerns about auto no-fault. Still, he said he couldn’t speculate on whether the Senate committee would take it up as an issue or what kind of changes could be considered.
"I don’t think it’d be fair for anyone to speculate as to what changes might or might not occur because of the litigation," he said.
The Republican caucus largely supports the 2019 law because many members feel that the changes made the state more competitive by lowering prices and made Michigan safer. The biggest priority is making sure that people are getting their medically necessary care.
There hasn’t been much discussion at the committee level on no-fault auto reform, but Ms. Carter said she was confident that there would be a bipartisan effort.
"With the implementation of the law, there were a lot of eruptions around it," she said. "That doesn’t mean that they may not occur once (auto no-fault) starts surfacing as an issue again, but as of right now, it seems like both sides are willing to come to some type of agreement."
Mackinac Center Considering Legal Challenge on Temporary Tax Cut
This week, Attorney General Dana Nessel said when the trigger for an income tax cut under the 2015 roads plan is reached, it only reduces the income tax for one year before the rate goes back up to the original 4.25 percent to be reevaluated annually.
Treasurer Rachael Eubanks then announced – as had been expected for months – that the trigger had been reached in the 2021-22 fiscal year, so the income tax rate for the 2023 tax year is reduced to 4.05 percent. The department, bound by the attorney general’s opinion, said the cut would be for one year.
Although attorney general opinions are binding on state agencies, they can be challenged in court. The conservative Mackinac Center, which is no stranger to challenging state government in court, is considering its legal options.
It is unclear when a legal challenge could be brought. The rate is currently 4.05 percent and likely would not increase back to 4.25 percent until 2024.
"The statute clearly calls for a permanent reduction to the personal income tax rate," Holly Wetzel, director of public relations for the Mackinac Center, said in a statement. "This is the latest attempt to thwart long-term tax relief that the people of Michigan were promised."
Ms. Nessel’s opinion argues that the temporary nature of the income tax rollback is supported by the text of PA 180 of 2015 and by the nature of the triggering event itself.
"In particular, the triggering event is based on temporary, impermanent, circumstances that change, and are reviewed, every year. Essentially, the Legislature has determined that if a situation exists where a percentage increase in state revenue in the immediately preceding fiscal year is greater than the rate of inflation for the same year, and the inflation rate is positive, then the state can afford to provide relief to taxpayers," the opinion said. "But because that situation is only temporary, it makes sense that, rather than provide a permanent tax reduction based on the (perhaps unusual) economic circumstances of a single fiscal year, the Legislature intended the relief to taxpayers to be only temporary as well."
Republicans have balked. Former Governor Rick Snyder, who signed the bill and opposed income tax rollbacks while in office, said it was intended to be permanent relief.
"The income tax trigger was intended to be a permanent reduction activated when state government had a large surplus," Mr. Snyder said. "Our taxpayers worked hard to earn those dollars and government should not keep them when there are not critical expenses to pay for. The attorney general’s opinion today is an unreasonable overreach of what was agreed upon. Michigan taxpayers deserve the surplus dollars now and into the future."
Earlier this year, Patrick Wright, vice president of legal affairs for the Mackinac Center, said the legislative history on the law was clear.
"The tax rate decrease was meant to be permanent," he said.
Guardianship Bills To Be Introduced When Senate Returns
On Thursday, Sen. Ruth Johnson (R-Groveland Township) announced in a release that she and three other senators plan to introduce the bills, similar to legislation that was reported by a House committee last year but never was taken up in the full chamber.
Under the proposed legislation, courts would be required to obtain a physician or mental health professional’s assessment of an individual before appointing a guardian.
Further, judges would be required to explain their reasoning on the record in court for the appointment of a professional guardian who is not a family member to oversee the person’s care.
"This should not be happening in America, but it is happening every day in Michigan," Ms. Johnson said of elder abuse and exploitation of vulnerable persons. "Our current system is ripe for abuse, and there is not enough accountability or oversight. We’ve heard from too many victims and family members that reforms are badly needed."
Ms. Johnson said the bills include recommendations from Attorney General Dana Nessel’s Elder Abuse Task Force and from information reported by The Detroit News on problems with the existing guardianship system.
"Michigan’s guardianship process is broken, and real people are being exploited and hurt," Sen. Jim Runestad (R-White Lake) said in a statement. "The wishes of seniors placed under guardianship are too often ignored and uncertified guardians can proceed to sell off a senior’s home and property, and even deny access to them by their family. That’s just unacceptable."
Similar House bills were reported by the House Judiciary Committee in June 2022, but no votes before the full chamber were taken prior to the end of session.
"Guardians play a vital role in providing safe and rewarding lives for people who can no longer make critical decisions alone," Sen. Jeff Irwin (D-Ann Arbor) said in a statement. "But we need to make sure there are safeguards in place – to protect people’s rights and property – because we know there are bad actors that exploit people in vulnerable situations."
Certification requirements would be put in place for guardians under the package along with limits on the number of people a guardian can have in their care.
An individual who has been removed as a public administrator by the attorney general for cause would be banned from being appointed as a professional guardian or conservator. Courts would also be required to make video recordings of public court proceedings available to the public.
"There is currently not enough oversight of guardians or conservators who manage the care and finances of thousands of Michigan seniors and other residents who might need some additional help, and we’ve seen multiple reports and heard directly from victims that the current system isn’t always working to protect them," Sen. Paul Wojno (D-Warren) said in a statement.
The bills are expected to be formally introduced after the Senate returns in April, with them being referred to the Senate Civil Rights, Judiciary and Public Safety Committee .
DCD OUT AND ABOUT:
DCD Lobbyist Jake German and Michigan Green Industry Association (MGIA) Executive Director Michelle Atkinson were happy to be part of the Michigan Nursery & Landscape Association Issue Advocacy Day on March 22, where representatives from eight state organizations of green industry professionals visited all members of the State House and Senate.
Left: Jake German and State Representative Donni Steele were happy to attend the annual Patrick Henry Awards Dinner, honoring Patriot of the Year, Mr. Sam Kassab.
Right: Jake German, Heather Rae, CEO of Common Ground, Christine Burk, Chief of Staff at Oakland Community Health Network (OCHN), and Common Ground Board Member Fred Fechheimer hosted Rep. Regina Weiss for a tour of the Common Ground Resource & Crises Center in Pontiac.
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