LANSING, Mich. — The Michigan Court of Appeals issued an opinion Thursday morning saying that changes to Michigan's no-fault auto insurance law, which took effect in July 2021, should not apply retroactively to people who purchased policies and were injured prior to the law being signed in 2019.
The case was brought by crash survivors Ellen Andary of East Lansing, Philip Krueger of Ann Arbor, and the Eisenhower Center, a brain injury rehabilitation clinic, against USAA Casualty Insurance.
Under the new law, which took effect on July 2, 2021, any medical service not already covered under our federal Medicare law, which includes in-home caregivers and transportation to medical services, will now only be reimbursed by insurance companies at 55% of what they were back in 2019. The law also caps the number of hours that family members can provide care to just 56 hours a week.
The main question in the case was whether or not those changes should apply to those who purchased no-fault insurance policies and were injured before it took effect.
"We conclude that they do not because the Legislature did not clearly demonstrate an intent for the amendments to apply retroactively to persons injured in pre-amendment accidents," their opinion reads.
"We further conclude that even if retroactive intent had been demonstrated, imposing the new limits would substantially impair no-fault insurance contracts entered into before the amendments’ effective date, and therefore would violate the Contracts Clause of the Michigan Constitution."
Impact of Changes to No-Fault Law
According to CPAN, a group focused on preserving our previous no fault auto system, there have been at least eight people who have died since the changes went into effect, because of losing access to some care.
There are roughly 18,000 Michiganders currently receiving medical benefits from their auto no-fault policies.
A report released at the beginning of August, conducted by the Michigan Public Health and commissioned by the Brain Injury Association of Michigan, found that 6,857 crash survivors have been discharged from local care providers, and 4,082 health care workers have lost their jobs.
They found that 10 care companies have had to close their doors completely since the changes took effect, while 14 more companies expect to close in the next 12 months.
Insurance Alliance of Michigan Exectutive Director Erin McDonough released the following statement, saying the ruling is a disappointment for families and businesses in Michigan:
“Today’s ruling is truly a disappointment for Michigan families and small businesses because it threatens to roll back the progress we’ve made and to eradicate the savings drivers are experiencing since the 2019 bipartisan reforms took effect with the purpose of reducing the high cost of auto insurance.
"The medical fee schedule established by these bipartisan auto no-fault reforms is absolutely critical because it reins in overcharging by medical providers and brings fairness, common sense and transparency to the costs of medical care. Reforms have lowered costs and saved Michiganders more than $5 billion over the past three years through reductions in the Michigan Catastrophic Claims Association fees and a $400 per-vehicle refund, in addition to the mandatory reductions in the personal injury protection (PIP) portion of insurance policies.
"While today’s court ruling is a setback for drivers, Michiganders have come too far to turn back to the days of unaffordable auto insurance, fraud and rampant medical overcharging. This case will be appealed to the Michigan Supreme Court.”
We Can't Wait issued the following statement:
"Thank you for your continuing support and all that you have done for us in the past. The We Can’t Wait Facebook Advocacy Group is overjoyed with the ruling in the Court of Appeals Andary Case saying the auto no-fault reform does not apply retroactively. However, we are hesitant to uncork the champaign [sic] until we learn more from our legal counsel. We believe this is a positive first step in fixing PA21 but are worried it won’t happen automatically.
"However, we are concerned that our members are interpreting this as being effective immediately and applies to everyone who was injured prior to the law reform. We can only hope that this [is] the case, but we are being cautious in our conclusions and awaiting more information.
"We will continue our strong efforts to right the law completely for all Michigan citizens. More information will be released as it becomes available to us."
Brain Injury Association of Michigan President and CEO Tom Constand issued the statement below, saying the ruling is a "step forward" in restoring justice to thousands of Michiganders.
“By far the most heinous aspect of Michigan’s 2019 auto no-fault reforms was the retroactive application of the 45% cut in catastrophic care and the significant limitations placed on the right for survivors to receive reimbursement for in-home attendant care services provided by family members. This has resulted in an active and well-documented crisis of care for these survivors. Providers have been driven out of business. Families are exhausted and suffering. Some victims have even died.
"These survivors bought and paid for insurance policies that allowed them to be reimbursed for all reasonably necessary attendant care services and all reasonably necessary medical treatment regardless of any government-imposed fee schedule. The premiums for these policies were priced and sold based on that contractual obligation, which has been ripped away in the most reprehensible fashion since July 2021.
"Today represents an enormous step forward in the restoration of justice for 18,000 of Michigan’s most vulnerable residents. After years of stonewalling by legislative leadership, the Court of Appeals has stepped in to rule on the side of fairness and basic human decency, and we thank them for it.”
Read the full Court of Appeals opinion:
Read the judge's dissent: