Short on Reform

Changes to Michigan’s no-fault auto insurance in 2019, the first key policy legislation approved and signed by Gov. Gretchen Whitmer, is negatively impacting the recovery of severely injured auto accident victims. // Illustrations by James Yang

Auto Insurance 1

On a Thursday afternoon in May 2019, on the porch of the Grand Hotel on Mackinac Island, Gov. Gretchen Whitmer, flanked by leaders of the Michigan House and Senate, signed what she touted as “historic” legislation, decades in the making, that would finally curb the state’s notoriously high auto insurance rates.

Fast-forward 30 months later and critics — including motorists, medical providers, and their lawyers — say the ballyhooed effort at reform has missed its mark, and could harm the recovery of severely injured auto accident victims, and all without significantly reducing insurance costs.

Michigan motorists continue to pay some of the highest premium costs in the country, while the state’s most vulnerable residents — severely injured auto accident victims — are threatened with losing life-long benefits they enjoyed under the old no-fault insurance system.

“There hasn’t been a substantial reduction of premiums, and most of the people I talk to, their premiums are the same, or insignificantly reduced, or the premiums are greatly increased,” says Arthur Liss, a principal at Liss Seder Andrews, a law firm in Bloomfield Hills that handles cases for quadriplegic and brain injury auto accident victims. “The reason they’re increased is because one of the changes in the law also allows for personal injury lawsuits with higher limits.

“A person who is collectable, who wants to have protection in case there’s a catastrophic accident, would have to get higher limits (of personal injury protection coverage) — and higher limits cost more money. So a lot of people are getting higher limits at a greater cost. Businesses that have drivers that can get into accidents have the same liability; consequently, business insurance costs more because they need higher limits.”

At the time the governor signed the reform insurance package, she stressed that by giving motorists a choice in the level of coverage and premiums they can afford, their rates would go down. “It guarantees lower rates for every Michigan driver for eight years, it protects people’s ability to make a choice and pick their insurance level, their coverage options, including the choice of unlimited coverage,” Whitmer said.

This fall, however, at the most recent Mackinaw Policy Conference, where she had signed the reform law, the governor — aware of blowback from severely injured accident victims and their caregivers — said the new insurance law needs more work and urged legislative leaders to make needed changes she could support.

Under the old law, Michigan motorists were required to have $20,000 in liability coverage for the injury or death of one person in any accident, and $40,000 in coverage for the injury or death of two or more people in an accident.

The choices the governor spoke of allow drivers to choose minimum liability coverage at $250,000 for one death or $500,000 for two deaths in an accident. Motorists and family members who have health care coverage under Medicaid can request and receive reduced liability coverage of $50,000 to $100,000.

The old no-fault auto insurance provisions dictated that each driver’s auto insurer cover certain costs related to vehicle damage, medical treatment, and lost earnings, regardless of which driver was at fault. An at-fault driver could be sued when someone involved in the accident suffered “death, serious impairment of body function, or permanent serious disfigurement.”

That provision still stands under the new law, but with Michigan motorists no longer required to purchase auto policies with unlimited medical coverage, the recovery of those costs can be sought by suing the at-fault driver.

The crux of the change in the law that took effect July 1 is capped, and they’re costs auto accident providers can now bill, allowing the insurance industry to slash reimbursements for specialized care by nearly half.

Insurance companies can now cap their payout to medical providers at 55 percent of what the providers — doctors, therapists, nursing or group homes — charged for non-Medicare-comparable services on Jan. 1, 2019. For services with a Medicare code, fees are capped at 200 percent of the Medicare rate. For home care providers such as family members, their pay is limited to 56 hours per week.

Proponents of the new law say savings from these reduced payments will be returned to motorists in lower premiums.

“The truth is — and this is merely anecdotal — in other settings, certain things didn’t cost as much as they did in no-fault,” says John W. Whitman, an attorney who practices insurance defense law at Garan Lucow Miller in Ann Arbor. “You might find a particular form of therapy, whether it’s medication, or physical therapy, or chiropractic, and in different settings those (treatments) don’t cost as much as (they did) under no-fault. That was part of what they were trying to do, contain costs. Many things were overpriced under the no-fault statute because there wasn’t a cap.”

Whitman stated a cap on costs was needed to correct abuses and overreach by some providers under the no-fault system.

“We have cases where vans have picked people up at their home, unsolicited, and away they go, and they’re directed to care, so we’ve seen a real abuse of that system,” Whitman maintains.

Still, he acknowledges that the no-fault system was a wonderful life-saver, and not just for those with catastrophic injuries.

“I don’t ever want to be critical of that. Those cases cost a lot, and even within those cases you see overreach,” he says.       

AutoInsurance2Under no-fault, every motorist in the state had to pay around $180 annually in their premiums for unlimited benefits protection. That fee is now $80, with an option for dropping unlimited coverage altogether and not paying the $80. Three years ago, the fee was $220, with the money going into a Michigan Catastrophic Claims Association (MCAA) fund to pay for lifetime care for the severely injured.   

“But what are you really getting?” Liss asks. “You get lower coverage (today), but you don’t get as much protection. If you save anything it’s because you get lower limits, less coverage, and less benefits if you’re involved in an accident. So even the people that had unlimited before (the reform) and those that have unlimited now, the new unlimited doesn’t pay all of their bills; it’s paying bills at a cap, where all providers in certain circumstances would only get 55 percent of what medical providers like a nursing agency charge for home care.”

While these cuts are taking effect, the elephant in the room remains the giant MCAA fund created by the state Legislature in 1978 to reimburse insurance companies for amounts they pay in accident victims’ benefits over $555,000.

According to the MCAA’s latest reporting to state authorities last year, the fund had $23.5 billion in its accounts. The independent association, its fund, and its investments are overseen by a handful of representatives of major insurance companies and the director of the Michigan Department of Insurance and Financial Services.

The fund isn’t subject to state Freedom of Information laws, and an audit requested by Whitmer more than a year ago is still not completed.

With the repeal of the no-fault insurance and the stiff reductions in reimbursements to providers for patient care, Liss and others are demanding to know what the future holds for those billions of dollars that grew out of motorists’ contributions.

“My question is, where the heck is all that money that’s in the catastrophic fund? That’s not supposed to be private insurance money,” says Ven Johnson, principal shareholder of Johnson Law in Detroit. “Where did it go? Where’s (Waldo)? It’s like a slush fund for the insurance industry. This is something they set up, with AAA at the helm, back in the 1980s, and they’re the ones that wanted to change our auto system to no-fault. And now, years later, they want to switch back. Sorry, that’s falling on deaf ears here.”

A recent study of auto insurance rates around the country by an insurance industry website,, states the new law in Michigan prompted a 27 percent reduction in premiums, dropping the state from its perennial No. 1 ranking for most expensive insurance to second in the nation. The average cost of insurance premiums in Michigan is now $2,112. That amount is still 48 percent higher than the national average. When the cost of unlimited coverage was factored in, the number jumped up to $2,840, the website found. Maine had the lowest rate, at $858 per year.

A similar study by the insurance resource site The Zebra pegged Michigan’s average rate at $2,610 annually.    

Liss and others in the long-term provider care network say the cap on charges for benefits for catastrophic care will drive providers out of business, and it’s forcing doctors to shy away from taking on auto accident victims as patients.

“What I’ve seen, which breaks my heart, is that an overwhelmingly large number of my auto-related clients tell me that when they go to their doctor of choice, that doctor is doing one of two things. He says, ‘I’m not treating you because of the auto-related accident. I’m not playing these new games where they don’t pay my bills and I’m getting a crappy reimbursement,’ ” Johnson says.

“Or (the doctor) says, ‘I’ll treat you, but because of this crappy reimbursement rate of the new laws, you have to sign this paper that says in your case against the negligent driver that hurt you, you’ll pay me above and beyond what the no-fault care paid me.’ ”

Johnson says he has catastrophically injured clients crying on the phone because they’re being kicked out of their in-patient facilities, or their nursing home, and are being told, “Sorry, we’re not doing auto cases anymore because they don’t pay enough.”

Across the state, some of the 18,000 severely injured auto accident patients are facing reduced care that could, in some cases, mean life or death.

One of those who could face that choice is a Liss client, James Goins, who was left barely alive one early morning in August 2007 after his car swerved off Telegraph Road near the Ohio border, went airborne, and wrapped itself around a tree.

Goins was 18 years old at the time. He was proud of his demanding job, working 10 hours-a-day, seven-days-a week as a master welder following graduation from high school.

“It was about four in the morning, and he might have fallen asleep,” says his mother, Marshala Goins of Newport, in Monroe County, just north of Monroe. She says when rescue units arrived on the scene, they found her son with the left side of his head shattered, his scalp peeled back, and spinal fluid and brain matter seeping out of him. He suffered broken ribs, broken bones in his face, arm injuries, and damage to his spinal cord. He was airlifted to a hospital in Toledo.

Because he kept his wallet with his identification in a console in the car and not in his pocket, no one knew who he was for hours after the accident.     

“He was living on his own and we didn’t know what happened until much later that day, when someone came knocking on our door and said James was in a terrible accident,” his mother recalls. “We’re calling all over Ohio, trying to find him. By the time we got to the hospital, he already had gone through surgery and was in the traumatic brain surgery intensive care unit.”

Today, Goins’ full-time care is a family affair, she says. His sisters, Elizabeth and Jamesha, and Elizabeth’s husband, Charles Kirksey, team up with his mother to look after him 24 hours a day.

Since 2014, he has lived in a special-equipped handicap-accessible home built for him through his no-fault insurance. Each of the family members, who Marshala Goins says live close to her son’s home, work 48-hour shifts to provide the round-the-clock care. “I don’t consider this a job because I’m taking care of my son. But for my son-in-law and my two daughters, that’s their job,” Marshala says. “What money they get for helping to take care of their brother pays their bills.”

AutoInsurance3His condition is anything but ideal. A pump sewn into his side dispenses medicine so he doesn’t get seizures. He needs oxygen at night and has to be monitored. He’s fed intravenously, and he breathes on a ventilator. 

“He’s never had a bed sore. He never lies in bed; he’s up every day, as we make sure of that.  There’s no nursing home that could take care of him like that,” Marshala says. “They’re not equipped to do that. The last time he was in a nursing home we went to pick him up after two days and he was sitting there, he wasn’t showered, he had drool all over his face. He never went back.”

Goins says she dreads the thought of having to care for James with only 56 hours paid to the family. “I would have to stay here 24/7 and the others would have to go find jobs. He would have to go into a nursing home or something. We’re not making money off taking care of him. They want to send other people in here, but there are agencies with clients like my son that have to shut down. There’s nobody we could find to take the remaining hours after the 56 hours they’re allowing us.”

On the day of an interview, one therapist after another followed each other into the home to work with James. His physical therapist worked with him on a fitness table, and the second, a communications specialist, provided computer therapy where he communicates through a com screen. “He would lose all of that,” his mother says of the cuts the new law dictates. “They’re still sending the attendant care checks every month and I can only say, ‘Thank you, Jesus,’ and thanks to Arthur (Liss).”

Liss says the family has a six-year contract with their insurer that has expired. “If they put him in an institution, he would die. This is a life or death situation,” he says.

Probably the most famous of the 18,000 severely injured Michigan motorists who depend on payments from the state’s catastrophic injury fund is former Detroit Red Wing defenseman Vladimir Konstantinov, who in 1997 helped propel the team to the first of four Stanley Cup championships since 1955.

The Russian All-Star player and a team masseur, Sergei Mnatsokonov, suffered severe head and other life-changing injuries when the limousine in which they were riding as they celebrated the championship crashed on a median along Woodward Avenue in downtown Birmingham.

Vlady, as the rugged Konstantinov is referred to by fans and teammates, emerged from a two-month coma to life in a wheelchair and now requires 24-hour attendant care.

His case and the 45 percent cut in reimbursement for his care that went into effect July 1 were highlighted in a September broadcast on WXYZ television in Detroit.

Darby Andersen, executive vice president and chief strategy officer of Arcadia Home Care, the company providing Konstantinov’s care, said in a statement on the broadcast that Arcadia has not been paid since the fee caps went into effect in July.

“We’ve changed the codes under which the claims are billed and are waiting to see what reimbursement rate we’re paid. In addition to the delays in payment, we’re fearful we’ll be paid at a rate that won’t sustain our business,” he said.

Tammy Hannah, president and CEO of the nonprofit Origami Brain Injury Rehabilitation Center in Mason, southwest of Lansing, shares Andersen’s concern. She also fears for the future of her facility. The center has 22 full-time resident patients and offers outpatient care for another 80 people to 90 people weekly.

“This change in the law is having such a profound impact on our community. We’ve given discharge notices to two of our residents, and we’re discussing others we’ll be forced to discharge,” Hannah says. “These are people who have been living and relying on Origami for a very long time.”

Hannah says since the fee cap of 55 percent payment of the 2019 rates went into effect in July, Origami has been paid for only three of 22 residents. “We don’t understand going from getting recurring payments to nothing. Under the reform, it was supposed to be 55 percent,” she says.

As a result, Hannah says she’s been forced to reduce her staff from 133 employees to 98 workers.

“We’re an outpatient facility, as well, so it’s not just residential patients