Michigan Supreme Court: No-fault auto insurance changes don’t impact prior services

Kyle Davidson (via Michigan Advance)

Rally against the new auto insurance law, Sept. 25, 2019 | Anna Liz Nichols

Changes to Michigan’s no-fault auto insurance law do not apply to individuals injured before the changes were issued, the Michigan Supreme Court ruled on Monday. 

When the Michigan Legislature amended the no-fault act in 2019, which was signed by Democratic Gov. Gretchen Whitmer, the new law included limits to family-provided attendant care reimbursement and established a fee schedule capping reimbursement for non-Medicare compensable services. 

In a 5-2 decision, the court held that the 2019 amendment would not apply to services and care that were already being provided, and were reimbursable before the changes took effect. 

Ellen M. Andary and Phillip Krueger each received traumatic injuries in automotive accidents before 2019 and were provided uncapped lifetime medical care, covered by personal protection insurance benefits under

insurance policies and the no-fault act in effect at the time of their injuries. 

In the case, Michael T. Andary, the guardian and conservator of Ellen M. Andary; Ronald Krueger, guardian of Phillip Krueger; and Moriah, Inc., doing business as the Eisenhower Center, brought a case against USAA Casualty Insurance Company and Citizens Insurance Company arguing the changes to the no-fault auto law could not be used to limit or change plaintiffs’ rights to benefits under had issued prior to the 2019 changes. 

They alleged that applying these changes retroactively was improper, and would violate the contracts clause of the Michigan Constitution as well as their due process and equal protection rights, according to the case syllabus. 

While the court ruled the no-fault amendment did not modify the benefits provided ahead of the changes, it dismissed the constitutional challenges due to lack of standing.

In the case syllabus, the holding reads: “It has long been the rule in Michigan that for insurance purposes the rights and obligations of the parties vest at the time of the accident. For purposes of a no-fault policy of insurance, this means that neither the insured nor the insurer can unilaterally change the terms of a policy after a covered accident occurs.”

“Andary’s and Krueger’s rights to [personal protection insurance] benefits under the applicable no-fault insurance policies vested, at the latest, when their injuries occurred and they first became eligible for [personal protection insurance] benefits,” the syllabus reads.

Justice David Viviano, who was nominated by Republicans, partially dissented with the majority opinion penned by Justice Elizabeth Welch, who was nominated by Democrats. “The majority’s decision today thwarts the will of the Legislature by concluding that application of the statutory amendments would be retroactive as to pre-reform accidents. This is not so,” Viviano wrote in his partial dissent. 

“Through an erroneous interpretation of the statute … the majority has impeded the Legislature’s effort to address an important issue in our state. As a result, the efforts of the Legislature and the Governor to reduce costs and make insurance more affordable for all the residents of our state will not come to fruition for many decades,” Viviano wrote. 

Justice Brian Zahra, who also was nominated by the GOP, joined Viviano in his dissent, but declined to address the validity of a legal framework used by both the majority opinion and dissenting opinions to reach their conclusions. 

The decision was cheered by organizations including the American Civil Liberties Union (ACLU) of Michigan and the Michigan Health and Hospital Association. 

“Applying the [2019] law retroactively has resulted in the withdrawal of critical care from people who are living with severe disabilities as a result of catastrophic injuries suffered in car accidents — care that allows them to continue living their lives and participate in society,” said Dan Korobkin, legal director for the ACLU of Michigan.

“Because of this ruling, it is our hope that thousands of Michiganders seriously injured in auto accidents, and receiving crucial care and resources through insurance coverage, won’t have their lives dangerously upended,” Korobkin said. 

In its statement, the Michigan Health and Hospital Association said it remains engaged with lawmakers to identify and support reforms to the auto no-fault law that improve access to care and support health care providers.

State Rep. Julie Rogers (D-Kalamazoo) also expressed support for the decision in a statement.

“Today’s ruling by the Michigan Supreme Court finding — that changes made by no-fault auto insurance legislation do not apply to those catastrophically injured before 2019 — is a welcome relief to crash survivors and their families,” Rogers said. 

“I am grateful the Supreme Court is righting this wrong, and I stand ready to work with my colleagues to address the deficiencies in the 2019 law which are not addressed by this ruling. Those injured after 2019 are still struggling with arbitrary caps and cuts in their care,” she said. 

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However, insurance representatives said the court’s decision striking down a medical fee schedule for those injured prior to the 2019 reforms removed a key component of the changes aimed at keeping medical costs and overcharging in check, while making auto insurance more affordable.

Erin McDonough, executive director of the Insurance Alliance of Michigan, said the court let Michigan consumers down and “opened the floodgates for overcharging for medical procedures and higher rates.”

“You can’t reasonably expect to save Michigan drivers money while obliterating a key cost control measure like the fee schedule,” McDonough said in a statement.

“While the court struck down the fee schedule for those injured prior to bipartisan reforms, fortunately, the decision preserves the fee schedule going forward after enactment and that will continue to provide relief to drivers saddled with some of the highest insurance costs in the nation. We urge the Michigan Legislature to protect that important cost control and consumer protection,” McDonough said.

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