The debate over Michigan’s no-fault insurance law.

May 3, 2015

The Mitten Memo. A blog by Nick Krieger.

In Michigan, all drivers must maintain no-fault automobile insurance to cover both property damage and personal injury.  Unlike other states, Michigan provides lifetime medical benefits for those who are catastrophically injured in automobile accidents.  Individual insurance companies are only required to pay personal injury benefits up to $530,000; the Michigan Catastrophic Claims Association (MCCA) pays all personal injury benefits over and above that amount.

Since 1979, there have been approximately 31,000 claims submitted to the MCCA.  These claims will cost the MCCA an estimated $79 billion over the lifetimes of the claimants.  Of course, the MCCA’s liabilities constantly fluctuate as existing claimants die and new catastrophic claims arise.

It is believed that the MCCA has a current fund balance of almost $20 billion.  However, because the MCCA is exempt from records-disclosure laws, we do not know for certain.  We do know that each Michigan driver will pay an assessment of $186 per automobile to support the MCCA in 2015.  This annual assessment will drop to $150 per automobile in 2016.

Most states cap the liability of automobile insurers without maintaining a centralized catastrophic-claims fund to pay excess medical benefits.  In these states, all medical expenses over and above the cap are paid from other sources, such as private health insurance, Medicaid, or Medicare.

The people of Michigan concluded long ago that it was in their best interest to ensure that excess medical expenses would be paid from a centralized fund.  This was intended to ensure certainty and predictability, and was seen as a humane way of providing for the most unfortunate and seriously injured among us.

But some observers have argued that it is time to reevaluate this decision, noting that fewer than 0.5 percent of Michigan’s motorists ever suffer a catastrophic injury and questioning whether all Michigan drivers should be forced to contribute toward the payment of lifetime medical expenses for so few.  Many of these observers question why lifetime medical benefits for the catastrophically injured should not be the responsibility of private insurance, Medicaid, and Medicare as in other states.  Some also question why individuals who are catastrophically injured in automobile accidents should be treated differently than those who are seriously injured on the job or in other types of accidents.

Senate Bill 248, the automobile-insurance-reform bill that is currently pending in the Michigan Legislature, would leave untouched the payment of lifetime medical benefits from a centralized catastrophic-claims fund.  But it would make several other changes to Michigan’s no-fault automobile insurance law.

Make no mistake:  Some of these proposed changes would be beneficial.  For instance, the bill would place a reasonable cap on the amount that family members could charge for in-home attendant care—an issue that has caused substantial litigation in recent years.  The legislation would also create a temporary state agency to crack down on automobile insurance fraud and would purport to outlaw “excessive” and “unfairly discriminatory” insurance rates.

At the same time, however, the bill would phase out the present MCCA and replace it with a brand new nonprofit corporation that would collect annual catastrophic-claims assessments and oversee lifetime medical payments going forward.  The legislation would leave the precise structure of this new corporation to the will of the insurance companies, and would allow the new entity to set many of its own rules and procedures.

Why, exactly, do our legislators believe that the MCCA should be replaced with a brand new organization?  The answer is not entirely clear.  But it is safe to assume that the $20 billion contained in the catastrophic claims fund has not escaped the notice of lawmakers or insurance companies.  If the new nonprofit corporation has fewer statutory constraints than the MCCA, and is free to make its own rules and procedures, who’s to say that it will continue the MCCA’s current practices?  How can we know that it will not divert certain catastrophic-claims funds to other purposes?  Who will ensure that it safeguards the revenue raised through catastrophic-claims assessments for the benefit of critically injured motorists?  These questions remained unanswered.

I am even more concerned by the speed with which Senate Bill 248 was pushed through the Michigan Senate.  The bill was reported out of committee, amended by way of three different substitutes, and finally passed within the space of 24 hours.

It is an extraordinarily common practice to substitute new language in place of an existing bill, keeping the original bill number, title, and certain text, but making substantial alterations to the bill’s remaining language.  This practice typically results in the enactment of a “substitute” instead of the bill that was originally introduced.

The Michigan Constitution provides that “[n]o bill shall be passed or become a law at any regular session of the legislature until it has been printed or reproduced and in the possession of each house for at least five days.”  The Constitution also states that “[n]o bill shall be altered or amended on its passage through either house so as to change its original purpose as determined by its total content and not alone by its title.”  The Michigan Supreme Court has held that these two clauses operate in tandem “to preclude last-minute, hasty legislation and to provide notice to the public of legislation under consideration irrespective of legislative merit.”

Can it truly be said that a substitute, introduced mere hours before final passage, has been in the possession of the Senate “for at least five days”?  I think not.  Many senators have stated that they were expected to vote on the substitutes to Senate Bill 248 without having had time to even read them.  This certainly cannot be what the people who ratified the Michigan Constitution had in mind.  Such last-minute, hasty revision of pending legislation renders the aforementioned constitutional protections completely meaningless.

Senate Bill 248 is now pending before the Michigan House of Representatives.  The bill is neither all good nor all bad.  Automobile insurance is too expensive in Michigan and we can all agree that common-sense reforms are needed.  However, when legislation is rushed through the Legislature, leaving little or no opportunity to express opposing viewpoints, we should all be skeptical.  This practice undercuts our system of representative democracy.  It is also wholly inconsistent with the idea of good government.

Nick Krieger is a graduate of Ludington High School, earned a bachelor’s degree from Michigan State University, and holds a law degree and master’s degree from Wayne State University Law School.  Nick works as an attorney for the Michigan Court of Appeals and owns a home in Ludington. The viewpoints expressed in The Mitten Memo are Nick’s own, and do not reflect the views of the Michigan Court of Appeals or Media Group 31, LLC and its affiliates: Mason County Press, Manistee County Press and Oceana County Press.  Contact Nick via e-mail at or follow him on Twitter at @nckrieger.


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