Insurance Alliance of Michigan responds to action taken by Michigan Catastrophic Claims Association since Andary ruling

LANSING — The Insurance Alliance of Michigan released the following statement in response to the Michigan Catastrophic Claims Association (MCCA) changing its assessment on all Michigan drivers starting July 1, 2023, because of an anticipated deficit.

All Michigan drivers will have to begin paying back $48 of the $400 per-vehicle refund issued by the MCCA earlier this year because of the recent Michigan Court of Appeals ruling prohibiting the use of a medical fee schedule to control the future medical costs of individuals injured prior to June 11, 2019. This is the first time the MCCA assessment has increased since a bipartisan group of lawmakers passed, and the governor signed into law, reforms in 2019.

This fee is likely to continue for multiple years as the MCCA works to fill a deficit created by the loss of the reasonable medical fee schedule under the case, Andary v USAA and Citizens Insurance, which kept medical claims cost in check and made auto insurance more affordable in Michigan.

Interestingly, because the Court of Appeals ruling left the medical fee schedule intact for future medical costs of individuals injured after the law changed in 2019, the MCCA also announced a reduction in the pure premium from $86 to $74 paid only by Michigan drivers who purchase unlimited Personal Injury Protection (PIP) levels on their auto policies. Because all Michigan drivers are subject to deficit recoupment, unlimited PIP policy owners will now be paying a total of $122.

“If you pull the string on part of the medical fee schedule, the sweater unravels quickly,” said Erin McDonough, executive director of the Insurance Alliance of Michigan. “Everyone who got $400 per-vehicle refunds this past spring is going to be sending $48 of it back to the MCCA because of the disruption caused by the Court of Appeals’ decision. Both before and after the 2019 reforms, insurers have remained liable to pay reasonable and medically necessary care for those injured in auto accidents in Michigan. The issue is not about access to care, but about medical providers demanding an unchecked level of compensation, which the Court of Appeals has said should be no-holds-bared for those injured prior to when the auto no-fault reform law was changed in 2019, even though we’re talking about medical services that will occur in the future. With Andary appealed, we are waiting for the Michigan Supreme Court to make a final decision.”

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IAM is a government affairs and public information association that represents auto, home and business insurance companies and related organizations operating in Michigan. Learn more about IAM and its members on Facebook, Twitter or at www.insurancealliancemichigan.org.