In their opinions: We know it’s a double dip but that’s the law

This is a case in which plaintiff chose not to purchase any automobile insurance and, yet, remarkably, the majority rules that plaintiff properly has and will continue to make a profit every time he is treated by a doctor.

– Court of Appeals Judge Henry Saad, dissenting, in Lee v. Farmers Ins. Exchange (unpublished per curiam).

In 1978, Antoine Lee was a passenger in a car. A traffic accident left him seriously injured. He had no insurance and there was no other no-fault coverage available to him. Farmers Insurance Exchange got Lee’s case from the Assigned Claims Facility and paid no-fault PIP benefits.

But Lee also received Medicare coverage to pay of his medical expenses. These dual payments apparently were made for almost 30 years before Farmers balked at paying expenses already covered by Medicare.

Lee sued. Farmers took the position that Lee was double-dipping from both the assigned claims facility and Medicare. Lee argued that the medical expenses were allowable no-fault expenses that Farmers was obligated to pay, even though Medicare had already paid them.

The trial court found for Lee but stayed execution of the $155,000 judgment until Farmers was through with its appeal.

The COA affirmed on a 2-1 vote. The majority opinion noted that a combination of circumstances required judgment for Lee:

  • [T]he Legislature has … specifically permitted recipients of assigned-claims no-fault benefits to receive duplicative compensation from Medicare by making the assigned-claims payment structure partially uncoordinated as to Medicare. Whether or not that is a wise policy choice, the trial court correctly ruled that defendant may not set off the Medicare payments.
  • Because plaintiff’s accident occurred in 1978, it preceded the congressional enactment of the Medicare Secondary Payer provision of the Omnibus Budget Reconciliation Act of 1980, 42 USC 1395y(b)(2)(a), which prevents Medicare from acting as the primary payer for auto accident injuries. The statute only applies to accidents that occurred after December 5, 1980. …
  • We need not address whether any offset would be appropriate under MCL 500.3109(1), however, because that statute, and the case law addressing that statute, contemplates a payee receiving benefits pursuant to some kind of purchased no-fault insurance policy. …
  • [I]t is impossible for MCL 500.3109a to have any bearing: no insurer could have offered plaintiff a coordinated policy because plaintiff had no insurance at all. …
  • MCL 500.3172(2) states that PIP benefits paid by the assigned claims facility “shall be reduced to the extent that benefits covering the same loss are available from other sources,” but further states that Medicare is not one of those “benefit sources.”

The majority acknowledged Saad’s and Farmers’ frustration with the outcome, but explained that “[h]owever anomalous the situation might seem, our Supreme Court has repeatedly instructed that our Court must enforce legislation as written rather than weigh its wisdom.”

The case is Lee v. Farmers Insurance Exchange. (majority opinion) (dissent)

Advertisements

MSC: The last word on one-year-back and sewage liability

It’s the end of the appellate road for the parties in two Michigan Supreme Court cases decided last month.

The MSC, on a 4-3 vote, with Justices Michael Cavanagh, Marilyn Kelly and Diane Hathaway dissenting, has denied rehearing (Rehearing No. 582) of Joseph v. Auto Club Ins. Ass’n.

Joseph was the latest answer to the frequently asked question of whether the minority/insanity tolling provision in MCL 600.5851(1) tolls the no-fault act’s damage-limiting one-year-back rule, MCL 500.3145(1).

It doesn’t, a divided MSC ruled last month.

Joseph overruled University of Michigan Regents v. Titan Ins. Co., a 2010 decision in which a divided MSC ruled that the minority/insanity tolling provision did indeed toll the one-year-back rule.

Regents, in turn, had overruled Cameron v. Auto Club Ins. Co., the 2006 MSC case that the Joseph Court reinstated last month.

The Court has also put to bed an issue that produced decidedly less appellate fireworks by unanimously denying rehearing (Rehearing No. 584) in Department of Environmental Quality v. Township of Worth.

In that case, a 6-1 majority, with Chief Justice Robert Young Jr. dissenting, ruled that townships can be held responsible when private parties discharge raw sewage.

No-fault mini-tort limit increased

At-fault drivers face increased liability in small claims court for damages not covered by the other driver’s no-fault insurance policy.

The no-fault act’s so-called mini-tort limit will increase from $500 to $1,000 under PA 158 of 2012, MCL 500. 3135(3)(e), signed into law yesterday by Gov. Rick Snyder.

The law also provides that mini-tort damages cannot be assessed if the damaged vehicle was being operated without the required insurance coverage.

Under MCL 500.3135(4), in a mini-tort action for damages:

(a) Damages shall be assessed on the basis of comparative fault, except that damages shall not be assessed in favor of a party who is more than 50% at fault.

(b) Liability is not a component of residual liability, as prescribed in section 3131, for which maintenance of security is required by this act.

(c) The action shall be commenced, whenever legally possible, in the small claims division of the district court or the municipal court. If the defendant or plaintiff removes the action to a higher court and does not prevail, the judge may assess costs.

(d) A decision of the court is not res judicata in any proceeding to determine any other liability arising from the same circumstances that gave rise to the action.

(e) Damages shall not be assessed if the damaged motor vehicle was being operated at the time of the damage without the security required by section 3101.

No-fault one-year-back rule unaffected by tolling provision

A no-fault plaintiff who invoked the statutory minority/insanity tolling provision to seek additional benefits many years after her accident is subject to the no-fault act’s one-year-back rule, a divided Michigan Supreme Court has ruled.

The Court overruled University of Michigan Regents v. Titan Ins. Co., 487 Mich. 289 (2010), which held that the minority/insanity tolling provision, MCL 600.5851(1), also tolled the one-year-back rule, MCL 500.3145(1).

The rule limits recovery of no-fault benefits to those losses occurring no more than one year before suit is filed.

The Court’s latest pronouncement on the issue, the third in six years, came in Joseph v. Auto Club Ins. Ass’n (Lawyers Weekly No. 06-78514, 26 pages).

The Joseph decision reinstated Cameron v. Auto Club Ins. Ass’n, 476 Mich. 55 (2006).

“We once again hold that the minority/insanity tolling provision, which addresses only when an action may be brought, does not preclude the application of the one-year-back rule, which separately limits the amount of benefits that can be recovered, ” said Justice Mary Beth Kelly, writing for the Joseph majority.

“These distinctions were recognized in Michigan law both in Cameron as well as several decisions of this Court that predate Cameron.

“Yet this Court’s decision in Regents conflated these distinct concepts in order to effectuate what the Regents majority believed was a broader social good served by expanding the right to recover benefits beyond those allowed by law,” Kelly continued.

Mary Beth Kelly was joined by Chief Justice Robert Young Jr. and Justices Stephen Markman and Brian Zahra.

Justice Marilyn Kelly, joined by Justices Michael Cavanagh and Diane Hathaway, dissented.

Marilyn Kelly, who authored the majority opinion in Regents, noted, “That the Legislature wanted to grant a minor or insane person the right to prove his or her damages in a court of law while lacking any opportunity to be awarded them defies common sense.”

Marilyn Kelly continued, “Yet under the Cameron regime restored today, many claims supposedly ‘saved’ by MCL 600.5851(1) will be disposed of in precisely that fashion.”

Emergency manager for MCCA?

Rep. Phil Cavanagh, D-Redford, said he is frustrated that he can’t get the Michigan House Insurance Committee to take up bills that would require a higher level of public disclosure from the Michigan Catastrophic Claims Association (MCCA). This comes at a time when the MCCA has announced that it will impose a 21 percent increase in annual fees to ensure that the fund remains solvent.

Cavanagh said that today he’s going to introduce a house resolution to implore the state treasurer to start a financial review of MCCA, in order to explore the appointment of an emergency financial manager. So far, he’s garnered support from 25 representatives — all Democrats, though he is not ruling out some Republican support.

“They’ve got $14 billion in assets and claim they can’t pay” on future claims without a $30 per vehicle annual increase in fees, Cavanagh said in a phone interview with Michigan Lawyers Weekly.

Cavanagh introduced his “sunshine bills” last year because he was concerned about proposed reforms to no-fault insurance. He said he was particularly worried about the notion of capping lifetime benefits for people injured in car crashes, and with the proposal to allow drivers to purchase as little as $250,000 in personal protection insurance, or PIP benefits.

Without having enough information about individual claims — for example, how much is paid to care for someone with a brain injury or a back injury that requires chronic care — it’s impossible to know whether or not a cap on benefits would hurt injured people.

He said he’s just not buying the idea that the MCCA is in danger of becoming insolvent without such a cap on benefits, or the additional fee, or the idea that the MCCA can keep their claims data secret.

“The MCCA is funded by the public’s money and yet rates are set behind closed doors. They hire their own auditors whose conclusions are favorable to the MCCA at the expense of motorists,” Cavanagh said in a press release soon after the MCCA announced the fee increase. “We are forced to pay this charge. We need to shine a light and open up this agency now that they are about to charge their highest ever annual assessment. All drivers deserve to know where their hard earned money is going.”

He noted that MCCA has paid out $9 billion in total claims in its 33 years of existence. And according to the association’s annual reports, MCCA’s reserves are almost $14 billion. Cavanagh calls that a serious financial discrepancy that doesn’t jive with fee increases.

The sunshine bills would subject MCCA to the Open Meetings Act; would make claims data subject to Freedom of Information Act; and would require an independent annual audit of MCCA. Those bills are 4785 and 4786. Cavanagh expects to introduce the financial manager House resolution at 1:30 today.

CPAN sues MCCA

The Coalition to Protect Auto No-Fault (CPAN) filed suit in Ingham County today to get accident and health information from the Michigan Catastrophic Claims Association (MCCA).

From The Detroit News:

On the receiving end of the lawsuit is the Michigan Catastrophic Claims Association, a nonprofit association created by the state Legislature more than three decades ago. The association collects an annual assessment from auto policy holders — $145 per vehicle in 2011-12 — to help fund the lifetime payments.

Since Michigan drivers are required to pay that fee, CPAN officials believe the data kept by MCCA is in the public domain.

CPAN said in a statement that the group wants the information so that it can inform lawmakers who are considering proposed bills that would drastically reduce benefits to people injured in automobile accidents. Specifically, House Bill 4936 and Senate Bill 649 would end lifetime medical benefits.

According to CPAN, the organization tried to use the Freedom of Information Act to get records from the MCCA, which reimburses Michigan auto insurance companies for personal injury claims that exceed $500,000. But MCCA said it is not required to provide that information because it’s exempt from FOIA.

From CPAN:

CPAN’s lawsuit claims this 1988 “secrecy bill” is unlawful because the state Constitution prohibits lawmakers from amending laws by reference. Article 4, Section 25 of the Michigan Constitution states that laws “altered or amended shall be re-enacted and published at length.” …

During House Insurance Committee hearings, several legislators asked for more data to help inform their opinion about the proposed auto insurance changes. State Insurance Commissioner Kevin Clinton testified in defense of the MCCA’s secrecy and said that even if the data was available, legislators and the public “wouldn’t understand.”

CPAN is holding a press roundtable this afternoon at 1:30 in Lansing at the Boji Tower.

The basic math behind PIP reform

The anticipated upshot of proposed changes to personal injury protection in no-fault auto insurance is up for debate. Some say that if the Michigan Legislature passes House Bill 4936, it will bring down insurance costs and keep no-fault sustainable. Critics of the bill say it would only limit the amount of care injured drivers can get.

Michigan Public Radio’s Lester Graham did an excellent analysis of the costs and benefits of Michigan no-fault.

Read it here. Graham estimates that savings would be about $11 per month if a driver chose to buy less PIP coverage. He asks the question: is it worth it?