State Senate Approves Changes to Michigan No-Fault Law
On April 16, 2015, Michigan Senators approved a new bill that would make changes to Michigan’s no-fault auto insurance law. Under Michigan no-fault, as it currently stands, all drivers are required to purchase auto insurance and each driver pays an annual fee of $186 per vehicle, which goes to the Michigan Catastrophic Claims Association (MCCA). If a person is severely injured in a car accident and their medical and rehabilitation bills reach over $530,000, the MCCA reimburses the person’s auto insurance company for those expenses. There is no limit to the amount of benefits a severely injured person receives; if their injuries require lifelong medical attention and home assistance, they will be covered for the rest of their life.
Unlike previous no-fault reform efforts, the new bill does not try to cap the amount of benefits a severely injured person can receive. However, it would mandate that medical providers be compensated at the same rate they are for worker’s compensation cases and limit nurses, family members, and other home caregivers to being paid $15.00 per hour (adjusted to the Consumer Price Index) for up to 56 hours per week. It would also create an anti-fraud authority and turn the existing MCCA into a separate organization that handles legacy cases and form a new group to assess vehicles and handle no-fault claims.
There have been other attempts to reform Michigan’s no-fault law over the past few years and each attempt has been met with controversy. In this case, the biggest point of contention came from Senators who felt the bill was being rushed through without allowing enough time for the bill to be reviewed carefully. Critics also worry that limiting how much doctors, nurses, and caregivers are allowed to be paid per hour is unfair to highly skilled workers and will negatively impact the quality of care injured parties will receive.
Michigan residents pay some of the highest rates for auto insurance in the entire country and Michigan is the only state to provide unlimited lifetime healthcare benefits for people who have been catastrophically injured in car accidents. Because of this, many people believe reforming Michigan’s no-fault law will help to bring down the cost of car insurance. Each time legislators have attempted to change the no-fault law, critics have pointed out that unlimited no-fault benefits aren’t what’s driving up the cost of insurance; it’s the costs of collision coverage that makes it so expensive. They say the proposed changes to the no-fault law would compromise the quality of care for injured people while doing little to bring down the cost of insurance for consumers. With the most recent bill, amendments directly addressing reducing the cost of insurance were introduced, but were rejected.
The bill is now headed to the Michigan House of Representatives.