With No-Fault Reform Act, Michigan Legislature Takes One Step Forward and Two Steps Back
On June 11, 2019, Governor Whitmer signed House Bill 4397 – the No-Fault Reform Act (“NFRA”). While the bill has its strengths, it has its drawbacks as well. It is not surprising that after years of failed attempts to “reform” the Act, the legislature’s King Solomon approach to rising auto insurance premiums is fraught with negotiated provisions that will undoubtedly lead to more litigation (a cost that Michigan lawmakers desperately wanted to avoid.) An example of the political tug of war can be found in two aspects of the statute: tolling of the one-year-back rule and restrictions on family provided attendant care. (Note: tolling is the pausing or delaying of a statute of limitations allowing for a lawsuit to be filed after the statute has run.)
Prior to the NFRA, a car accident victim who failed to file a lawsuit on an unpaid medical expense within one year of the date of service was barred from making the claim. This strict deadline led many Plaintiff attorneys to file claims against insurance companies even before the claims were contested. Why? Because failure to file the claim would force the car accident victim to pay their own medical bills out of pocket and time bar the claims, precluding any further argument.
The new Act softens this deadline by implementing a conditional tolling approach. It provides that the one-year deadline 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.” Essentially, this new amendment gives Plaintiffs an opportunity to submit claims before diving headfirst into costly and unnecessary litigation. While the Michigan legislature’s motive behind this change is well intentioned, its ambiguous language could create even more problems. For example, the bill retracts its initial stern language by stating that tolling “does not apply if the person claiming the benefits fails to pursue the claim with reasonable diligence.” Thus, the language used in the No-Fault Reform Act regarding tolling creates two glaring issues:
- What constitutes a “formal denial” on behalf of the insurance companies? Must it be in writing and must it be specific to the bills claimed? Or, can it be a denial of all treatment after a set date?
- What constitutes “reasonable diligence” on behalf of the Plaintiff? Does the reasonableness depend on the size of the billing and the complexity of the billing procedures? Does it require submission of clear billing or billing and medical proofs?
While Plaintiffs see a potential grey area – rest assured, insurance companies see loopholes! The law should be amended (yet again) to require insurance companies to explicitly state in their Explanation of Benefits whether or not their response to a medical bill is indicative of a formal denial. Merely stating that the medical bill is “under review” or “under investigation” may constitute an insufficient categorization. Furthermore, the legislature should remove the reasonable diligence requirement as it is vague and likely to be misinterpreted to the detriment of Michigan citizens.
Michigan has long recognized the value in having a friend or family member provide home health care. Under Michigan’s No-Fault law, basic needs such as bathing, eating, or getting dressed may be rendered by persons close to them as opposed to strangers (i.e. home health aides). Prior to the enactment of the NFRA, insurers were responsible to pay for attendant care in full and, if needed, for 24 hours a day. Whether the caregiver worked for an agency or was a family member was irrelevant.
Unfortunately, lawmakers sought fit to place limits on family care. Under the NFRA, in-home, family-provided attendant care is restricted to 56 hours per week. This change comes at the behest of many auto insurers who have long loathed the idea of paying family members to perform attendant care on their loved ones overnight. The 56-hours-per-week limitation applies only to attendant care provided to a car crash injury victim if the care is provided: (1) in the victim’s home and (2) by a “family member.” (Note: per the statute, a family member is anyone related to the injured person, domiciled in the household of the injured person, or anyone with whom the injured person had a business or social relationship prior to the injury.)
Despite the hourly restriction, the statute permits auto insurers to pay benefits for attendant care for more than the hourly limitation if they so choose. Unfortunately, this gives insurance companies even more leverage to squeeze the family into accepting a de minimis attendant care hourly wage. It remains to be seen how this will play out in practice. However, it is not farfetched to suggest that insurance companies will still contract for family-provided care over and above 56 hours per week provided that it is financially advantageous.
One issue not specifically addressed in the No-Fault Reform Act is the potential for a family member to take basic medical training in order to work on behalf of the commercial agency. Such action would create the following positive effects: (1) insurance companies would obtain skilled care they claim family members lack, (2) commercial attendant care agencies would remain in the market, and (3) families of accident victims would receive just compensation for their care and not be forced to have a stranger quartered in their home overnight.
As you can see, the No-Fault Reform Act is far from a perfect solution. However, a few minor changes would make a major impact on the overarching goal: fairness for Michigan citizens.
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