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.

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State Bar’s force report goes before House Judiciary Committee

Members of the state House Judiciary Committee appeared to be business-oriented Thursday when Janet Welch, executive director of the State Bar of Michigan, made a presentation on the Bar’s recently released Judicial Crossroads Task Force Report.

The report offers suggestions on what can be done to fix the state’s justice system during a massive state budget crisis, such as the state being responsible for funding an indigent defense system; making e-filing statewide; and a shared jurisdiction system that would reduce the number of judges.

Though the Legislature can only push for such legislation as court consolidation and indigent defense, the idea of a business docket perked the most interest.

Rep. Ken Horn, R-Frankenmuth, and Rep. Phil Cavanagh, D-Redford Twp., said they were intrigued by the three-year pilot program, which would be based in Oakland and Wayne counties, the state’s most active court systems. It would involve two or three judges solely dedicated to business-to-business disputes.

When asked whether it would involve additional costs, Welch said once it’s up and running, it would be a means of saving costs. She added that the business impact committee, which drafted the pilot idea, found that such a model would not take any resources away from each county’s existing court system.

But actual cost numbers were what some committee members most hoped to review.

While Rep. Kurt Heise, R-Plymouth, called the report a “great first step,” he added that he shared the same views as Rep. Bob Constan, D-Dearborn Heights, in that the two would have liked to see more specific recommendations with respect to court consolidations, pay cuts for judges and staffs, especially in southeast Michigan.

Essentially, “how we can see the kind of sacrifices of the judicial branch that, frankly, the rest of us are having to make, and, as we’ll learn by the end of the day [following Gov. Rick Snyder’s budget proposal presentation], that we’re going to have to make even more of.”

Welch said that there will be more specific numbers as concurrent jurisdiction plans go forward.

After the meeting, Rep. Mark Meadows, D-East Lansing, mentioned that there are bills ready to be introduced for indigent defense funding, and that stronger efforts would be made following last year’s legislative collapse. In addition, Committee Chair Rep. John Walsh, R-Livonia, said that there would be a committee made up specifically for it.

Because of time restraints, Welch was invited to return to the next committee meeting for further questions on the report.

The report, which was written for members of the Legislature, the governor and the Michigan Supreme Court to review with the intent that they will consider making changes, can be found at http://www.michbar.org/judicialcrossroads.

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