Michigan’s No-Fault Insurance
Byline: Stephanie Arndt, Appellate Specialist
For decades, Michigan was one of the only states that provided victims of automobile accidents with comprehensive, lifetime benefits if they were injured in a motor vehicle accident. For individuals who sustained catastrophic or permanent injuries, this was an important benefit. It provided them with lifetime allowable expenses for medical care as well as attendant care benefits.
Attendant care benefits provided them with the nursing and home health care that they needed in order to have the greatest possible quality of life given their injuries. In many instances, family members would provide these attendant care services for things such as grooming, transferring, hygiene, and other activities of daily living. This allowed many victims with the ability to remain in their home with their families.
Governor Whitmer’s 2019 No-Fault Insurance Reforms
On June 11, 2019, Governor Whitmer passed significant reforms to the No-Fault Act. These reforms were aimed at allowing citizens to choose what options of insurance they wanted, increasing liability coverage limits, and reducing overall insurance costs. While some reforms went into effect immediately, others were gradually implemented in 2020 and 2021.
One of the most significant changes that was implemented by the 2019 No-Fault Reform was in how allowable expenses were paid. Medical expenses would now be subject to a fee schedule based on what Medicare paid for the same service. For services that Medicare did not pay for, such as attendant care, a rate was established by applying a mathematical formula to what the provider charged on January 1, 2019. For those who received attendant care services provided by family members, there was also a 56-hour a week limitation placed on the care they could be paid for. These changes went into effect on July 1, 2021.
Implementation of the attendant care law in 2021 caused significant hardships throughout the state. Several home care businesses closed because they were no longer being paid a fair rate for the services that they provided. Several victims also lost their caregivers because they could not afford to pay them separate from what auto insurance was reimbursing. Several victims ended up hospitalized or in a nursing home because they could no longer get the care that they needed at home. Significant hardships were experienced by many catastrophically injured persons who had, until then, been promised lifetime medical care without limitation, as long as it was reasonable and necessary to their accident-related injuries.
Two victims who were injured prior to 2019 filed a lawsuit in Ingham County Circuit Court asking for a ruling that these changes did not apply to them. They argued that the insurance policies and laws that were in place at the time of their injuries guaranteed them lifelong benefits without limitation. It was their position that these reforms violated several of their constitutional rights. The trial court sided with the insurance industry, but these victims appealed to the Michigan Court of Appeals.
The Michigan Court of Appeals, in a 2-1 decision, agreed with the victims. Looking to the insurance policies and the language that lawmakers used in implementing the reforms, the Court held that it was not intended to apply to persons injured before June 11, 2019. This was a tremendous victory for victims, however, as was expected, the insurance industry immediately appealed that decision.
Michigan Supreme Court’s Ruling
On July 31, 2023, the Michigan Supreme Court issued a majority decision upholding the Court of Appeals. The Justices held that the reforms implemented in 2019 could not be applied to limit the rights of individuals who were injured before the law passed. This ruling impacted several different aspects of how the law was being applied. For persons injured before June 11, 2019, there was no longer a time-limit on family-provided attendant care. There was also no longer a reduction of the attendant care benefits by the formula. Once again, caregivers would be reimbursed reasonable costs. The fee schedules that have been implemented for the medical care that they receive, which is tied to Medicare, also no longer apply to these claimants. Their benefits were restored to what existed through their insurance policies and the law as it existed at the time they were injured.
Implications of the Supreme Court’s Ruling
- Recognizes a Rights to Benefits Lost: Through their decision, the Supreme Court confirmed that individuals injured prior to June 11, 2019, are entitled to reasonable and necessary allowable expenses for their care, recovery, and rehabilitation without limitations, unless those limitations were stated in their insurance policy. This would include payment of attendant care expenses for nursing care, hi-tech aides, home health aides, and family-provided attendant care. Insurance companies can no longer use the new law to attempt to limit the care they receive.
- Eliminates Uncertainty: One significant benefit that this decision provided to many victims is a sense of certainty in the care that they will receive. For years, this case has been pending in the court system. Originally, the insurance industry was victorious in their position. However, the Court of Appeals decision last year provided hope for many families. Yet they knew nothing was final until the Michigan Supreme Court ruled. This ruling provides victims and families with the certainty that they have not had for years.
- Restores Care: For victims who have been ‘getting by’ for years without receiving the full care that they need, this decision will allow them to restore their care. Also, for the many victims that had to leave their homes and move to hospitals or nursing homes after their care providers quit, this will allow them to return home.
- Increases Business in Michigan: These reforms had a significant impact on Michigan’s home-health industry. Many companies closed. Several other companies that provided in-home nursing and caregivers experienced significant financial cutbacks when these reforms went into effect. Their reimbursement rates in some cases were cut as much as 45%. Now, with this decision, they can once again begin providing care for automobile accident victims without fear of not being adequately reimbursed. Also, for the many businesses that closed their doors, it is our hope that they will reopen and be able to again help automobile accident victims.
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If you or a family member were injured in an accident prior to June 11, 2019 and have questions about your insurance coverage and how this decision may affect you, please reach out to us. We’d be happy to discuss the matter with you, at no cost.
As ever, engaging the services of the experienced personal injury attorneys here at Christensen Law is critical in navigating the complexities and maximizing the potential compensation of an injury lawsuit. Please give us a call for a free consultation or contact us.