NewsLocal News

Actions

Latest Senate committee hearing on no-fault reform focuses on fraud and costly claims system

Posted: 7:40 PM, Mar 20, 2019
Updated: 2019-03-20 19:40:39-04
MSP celebrates centennial at Capitol

LANSING, Mich. — The former head of the Michigan Auto Insurance Placement Facility and representatives fromState Farm Insurance testified before the Michigan Senate Insurance and Banking Committee today on how the current no-fault system provides extraordinary benefits, even for people who do not pay into the system, and how far medical providers will go to profit from Michigan’s broken, outdated auto no-fault system.

“Michigan is spending approximately $270 million a year to cover the cost of medical care for people who never purchased an insurance policy.” Terri Miller, former executive director of the Michigan Auto Insurance Placement Facility, testified. “An insurance policy requires someone injured in a car accident to show proof of loss like a police report, however there is not a similar requirement for the Assigned Claims Plan, creating an avenue for fraud and abuse.”

Michigan is the only state in the country that requires drivers purchase unlimited, lifetime medical benefits with their auto insurance policy. The expensive mandate is one of the biggest factors in Michigan’s highest-in-the-nation auto insurance premiums and makes the state a welcome mat for fraud.

“People injured in automobile accidents in Michigan are victimized and used as pawns by unscrupulous individuals and medical providers who treat them not as individual patients requiring specialized care, but rather as a billing opportunity,” Mike Ouding, a claims manager with State Farm Insurance, told the committee. “Many times these individuals provide unnecessary, unreasonable and totally inappropriate medical treatment and other services simply because they can bill and receive payment.”

“We applaud Terri Miller and Mike Ouding for shining an important light on the out-of-control spending as well as the fraud and abuse taking place within Michigan’s auto no-fault system on a daily basis,” said Tricia Kinley, executive director of the Insurance Alliance of Michigan. “We urge lawmakers in the Michigan Senate and Michigan House to continue exploring ways to lower the cost of car insurance for drivers across the state, which should include cracking down on fraud and abuse, stopping dramatic overcharging by medical providers and giving consumers a choice in the level of medical coverage included with their car insurance.”