The 2-1 decision, which lawyers say they will appeal to the Michigan Supreme Court, is a victory for critics of the overhaul who argue that cost controls for unlimited, lifetime medical coverage for auto accidents are too strict and have forced some rehab centers to close patients and home care services to drop patients or threaten to drop patients. The eventual outcome of the case could affect the size and frequency of any future refund checks issued to drivers statewide for overages in the Michigan Catastrophic Claims Association fund, known as the MCCA. Drivers this spring received refunds of $400 per vehicle from auto insurers because of the MCCA surplus created in large part by the new cost controls. Under Michigan law, the ruling would be an immediate precedent, meaning insurance companies must begin compensating medical and care providers for accident victims with greater injuries at the previous, more generous rates — even before the Supreme Court of the state to hear the case. However, a lawyer for the losing side told the Free Press that they will seek a stay to prevent the ruling from taking effect immediately. The appeals court sided with the two plaintiffs in the case. The lead plaintiff, Ellen Adari, 65, of East Lansing, was a passenger in a vehicle that was hit head-on by a drunken wrong-way driver in December 2014. She suffered permanent brain injuries and lost the ability to walk. Doctors have prescribed Andary 36 hours of daily home care generally paid at $28 an hour, much of it provided by her family members and some two-person shifts, which costs insurance more than $350,000 a year. Under the new law’s cost controls, reimbursement for that attendant care would have been reduced by 45 percent if her auto insurer had not delayed enacting the cuts pending the outcome of the case. Medical care for patients like Andary is covered by the Michigan Catastrophic Claims Association, which reimburses auto insurance companies whenever a patient’s bills exceed a set threshold, currently $600,000. There were 17,542 people with an open MCCA claim as of June 30, 2021. More recent data is not yet available. But the decision will most affect the roughly 6,600 seriously injured auto accident victims in Michigan who receive some form of long-term care, generally in a nursing home or in their own homes. Outside of Michigan, catastrophically injured accident victims often end up in Medicaid-funded nursing homes or may receive some home care through a Medicaid “waiver” program. This is generally the same fate in Michigan for people who suffer catastrophic injuries that did not occur in a car accident. No-fault insurance is unique in that it pays caregivers for 24-hour supervision and assistance. “I believed passionately from the moment this lawsuit was filed that we were in the right position, both as a matter of law and as a matter of justice and fairness, and I believe that more than ever today,” said lawyer George Sinas of Sinas Dramis. The Lansing law firm representing the plaintiffs said in a telephone interview. “I don’t believe it’s legally appropriate to take patients like them, who years ago had purchased these no-fault medical benefits policies, paid hard money for this coverage, and that coverage at the time covered them for life medically without caps , I don’t think it’s appropriate to take away from those purchased benefits with a law enacted afterward — and that’s exactly what the Court of Appeals held,” Sinas said. An attorney for the two auto insurance defendants, USAA Casualty Insurance Co. and Citizens Insurance Co. of America, called the ruling a loss for Michigan drivers, who would end up paying more in insurance rate if the ruling stands. “The court’s ruling undoes important bipartisan reforms that had begun to lower the costs that had made coverage unaffordable for many residents due to widespread fraud and abuse,” said Lori McAllister of the law firm Dykema. “The defendants intend to appeal the decision and are confident that the bipartisan reforms to the no-fault system will ultimately be upheld by the Michigan Supreme Court.”
Less impact on other cost controls
The decision has less impact on a different set of medical cost controls in the law and which concerns a larger number of accident patients. These controls generally limit medical providers’ no-fault reimbursements to a maximum of 200% of Medicare charges. By comparison, the average commercial insurance reimbursement at Michigan hospitals in 2020 was 203% of Medicare rates, up from 190% in 2018, according to a Rand Corp. study. The services subject to the overhaul’s 45% cuts are only those that do not have an equivalent Medicare billing code, such as home attendant care and long-term stays in specialized addiction treatment centers. These types of services do not have Medicare codes because no-fault insurance covers more services than other forms of insurance. Anticipated savings from the new law’s cost controls was a major reason Michigan drivers this spring received their $400-per-vehicle MCCA refund checks. Those returns represented $3 billion of a $5 billion surplus in MCCA’s fund, which last reported $27 billion in total assets. Court of Appeals judges Douglas Shapiro and Sima Patel concluded that the state legislature did not “clearly demonstrate” an intent to apply the cost controls retroactively to people whose injuries occurred before the law took effect in June 2019. They also concluded that even if lawmakers intended the cost controls to be applied retroactively, the reimbursement cuts to patients’ medical providers violate the Contracts Clause of the Michigan Constitution because they “materially impair no-fault insurance contracts entered into before the effective date effect of the amendments.”
The PIP option still applies
Judge Jane Marke dissented from the majority opinion, affirming a November 2020 ruling in Ingham County Circuit Court that sided with the insurance company defendants. The ruling does not affect other aspects of the 2019 no-fault overhaul, such as allowing drivers to choose the level of medical benefits on their auto insurance policies, known as personal injury protection, or PIP. Before the overhaul, Michigan was the only state that required all auto policyholders to buy unlimited lifetime PIP — and no cost controls on medical coverage. Michigan was the most expensive state for auto insurance when Gov. Gretchen Whitmer signed the overhaul into law in 2019. However, cost controls didn’t begin until July 2021. Before cost controls, some doctors and chiropractors would prescribe months or even years of dubious services to accident victims that drove up costs, while even legitimate services were expensive due to surcharges.
An ‘active limit’ in care
The other plaintiff in the Andary case, Philip Krueger, was fatally injured in 1990 at age 18 while a passenger in a pickup truck. Unable to walk, talk or care for himself, he has lived since 1997 at the Eisenhower Center, a neurological addiction center in Ann Arbor. MCCA says he was paying $572 a day, or more than $208,000 a year, for his stay at the specialty center. The committee’s majority opinion on Thursday said the cost controls “immediately and severely limit the ability of car accident victims to continue to receive the care they need.” She also noted how some family members of survivors have given up jobs and careers to stay home and be compensated to care for an injured loved one. “To sum up, the unlimited lifetime benefits for which insurers have been paid will be severely impaired if the amendments are given retroactive effect,” the opinion said. “Defendants have not demonstrated that retroactive application of the amendments is necessary to achieve the goal of reducing no-fault premiums. Nor have defendants explained how applying the (cost controls) to those injured before (the law’s) effective date ․ is reasonable, especially considering that the relevant premiums have already been paid in full.” The decision also exempts victims of accidents that occurred before the enactment of a new rule that limits reimbursement for home attendant care provided by the patient’s family or friends to 56 hours per week. Patients can receive more than 56 hours of care, but the extra hours must come from a care agency or other third party. A similar 56-hour rule for disability workers’ compensation claims has existed for years. The Andary case, filed in 2019, is considered the “test case” in Michigan on whether the new law’s retroactive application to past accident victims is constitutional. District court judges in several counties last year issued temporary injunctions requiring insurance companies to pay past rates to certain car accident victims until the retroactive issue is resolved. Contact JC Reindl: 313-378-5460 or [email protected] Follow him on Twitter @jcreindl.
