OAI: Michigan Auto Insurance Bills Focus on No-Fault Reform

A group of Michigan bills that all exclude specific populations from eligibility for payments under the state's no-fault law passed a House committee Thursday, highlighting legislative efforts to reform an insurance system that compensates the injured for crash-related expenses regardless of who was at fault, according to Online Auto Insurance.

Supporters behind the bills say that the size and number of personal injury protection (PIP) payouts have shot up over the past decade, making it hard to locate low cost car insurance for everyone in the state and requiring reform efforts that implement more exclusionary standards into the no-fault law.

The four pieces of legislation, House bills 4993, 5587, 5588 and 5589, were recommended as amended versions and passed out of the House Committee on Insurance. They currently reside in the state House for further consideration.

The average cost of a PIP claim in the state rose from $6,674 to $19,523 from 2002 to 2011, according to Ben Glardon (R-Owosso), who sponsored HB 5589, which would exclude passengers in stolen vehicles from eligibility for no-fault benefits.

"Anyone who is involved in committing a crime should never be able to collect benefits if they get into a car accident in the process," Glardon said in a statement.

Public testimony was delivered to committee members during two May hearings, where several advocacy groups said language in the bills defining exclusionary criteria was too broad.

Such overreach would have unintended consequences, according to Lynn Brouwers, president of the Michigan Brain Injury Provider Council (MBIPC), who said in her May 31 testimony that she was against HB 5588, which would exclude intoxicated drivers who crash their vehicles from PIP compensation.

Since there is a "big problem with drug testing" that is largely unable to pinpoint periods of intoxication and being under the influence, the legislation's exclusion of intoxicated motorists could victimize those who are prescribed legal medications, according to Brouwers.

"Productive people with chronic conditions would be rendered unproductive" for fear of being injured in a crash and labeled ineligible for coverage, she said.

Language within HB 5587, which excludes drivers who crash a vehicle in the commission of a felony, also would yield unintentional consequences, according to John Cornack, president of the Coalition Protecting Auto No-Fault (CPAN), who offered his testimony on May 24. Under the bill, the exclusion is applied to those who crash a car "in the commission of or flight from the commission of a crime that is punishable by imprisonment for more than one year."

Using the length of imprisonment as a standard is "overly broad," Cornack said.

"Would a person be disqualified from PIP benefits if they were injured on the way home from the post office after mailing a payment on a bill with a check written on insufficient funds?" he asked.

In a legislative analysis of the bills, experts said the fiscal impact would shift the financial burden from the Michigan Catastrophic Claims Association, the state fund that administers PIP payouts.

"Any necessary rehabilitation and/or long-term care costs that would have been supported by specified drivers' PIP coverage or through the MCCA would, eventually, be supported through the state Medicaid and/or federal Medicare programs if drivers (or their passengers) lacked supplemental insurance and had expended their personal resources," according to the analysis.

SOURCE: http://www.legislature.mi.gov/documents/2011-2012/billanalysis/House/htm/2011-HLA-5587-1.htm

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