MCCA Appeals Ruling as Senator Pushes to Open Up Meetings

The Michigan Catastrophic Claims Association (MCCA) is facing several efforts to make its operations more transparent, with a Michigan senator recently proposing to make the nonprofit’s meetings and records public and a December court ruling seeking to open its claims and financial documents for public inspection.

The MCCA charges a $175 per-vehicle fee to insurance companies to help insurers cover the state’s most expensive injury claims. Million-dollar claims are more commonplace in Michigan because it is the only state in the U.S. to offer uncapped medical benefits over an injured driver’s lifetime.

MCCA Files Appeal Against Court Case

The MCCA recently filed a court appeal in which the association says it is not subject to open records rules.

The appeal objects to a ruling made late last December in which a judge said that the MCCA’s records were subject to requests from the Coalition Protecting Auto No-Fault (CPAN) and the Brain Injury Association of Michigan (BIAMI) that the association open its claims and financial records. The requests spurred a lawsuit from the groups, which said such data should be available to the public under the Freedom of Information Act.

According to the MCCA’s appeal, its records are protected from FOIA because it is an “unincorporated, nonprofit, private association.”

The MCCA is “neither subject to disclosure under FOIA nor are they subject to a common law right to access public records,” according to the appeal.

The MCCA highlighted amendments made to state insurance laws in 1988 that do not categorize the association as a state agency and stated that “the money of an association or facility is not state money.”

“The Legislature, recognizing that the MCCA is a nonprofit, private association, wanted to ensure that the MCCA and like associations and facilities would not be treated as state agencies or public bodies for many purposes, including FOIA,” according to the appeal.

Funding Mechanism’s Nature a Central Argument

A central argument between the parties is whether the fees collected by the MCCA are public monies or not.

Those seeking MCCA reforms say the mechanism by which fees indirectly get charged to policyholders solidifies their rights over access to the association’s records and data.

According to a guide from the Office of Financial and Insurance Regulation (OFIR) on the MCCA: “On an auto insurance policy, the insurer will typically pass [the cost of MCCA fees] on to its policyholder, either as part of the PIP premium or as a separate MCCA recoupment fee.”

In his decision, Ingham County Circuit Court Judge Clinton Canady III said that the public has a vested interest in the MCCA because of that mechanism.

“Because the MCCA rate charged to insurers is passed on to the insured individuals as part of the premium they pay, it is reasonable to conclude that citizens essentially fund the MCCA reserves by paying that premium,” Canady’s decision read. “Thus, individual citizens have a financial interest in the rate calculation process and how it is conducted.”

However, the MCCA said in its appeal that the per-vehicle fee is initially charged to insurance providers, backing its argument that it is a private entity “funded by private insurers that make up its membership.”

“The MCCA does not collect monies from policyholders; it collects assessments from member insurers,” according to the MCCA, which added that, “Policyholders do not pay the MCCA’s assessments, the insurers do.”

Recoupment and assessment fees levied against drivers after that initial per-vehicle charge do not make such charges “‘a pass through’ to Michigan citizens,” according to the appeal.

To bolster its argument, the MCCA cited a 2007 bulletin from the OFIR that stated: “Recoupment of assessments are not pass-throughs as some insurers claim.”

Bills Would Make MCCA Meetings, Records Public

Sen. Glenn Anderson (D-Westland) reintroduced two of his bills late last month that would expand the insurance commissioner’s oversight of the MCCA and open the association’s meetings and records to the public.

SB 102 places more regulatory powers in the hands of the insurance commissioner, empowering the role with a voting seat on the MCCA’s board of directors and requiring that an independent, commissioner-appointed accountant conduct an annual audit of the association.

SB 103 would categorize the MCCA as a “public body,” making it subject to open meeting rules that would make such meetings public.

Anderson has pursued such efforts for years. In 2009, Anderson introduced a bill with similar provisions, saying they were necessary to “shine a light on these closed door meetings.” Both SB 103 and SB 102 are currently in a Senate committee.

Last year, when the MCCA announced that it was increasing its per-vehicle fee charged to insurers, Anderson told fellow senators on the chamber floor that reform of the association would be crucial to controlling auto insurance costs in the state.

“It’s past time for Michigan to enact meaningful reforms to our auto insurance system,” Anderson said. “Insurance company CEOs should not have free reign to hike MCCA assessments without proving they’re justified.”

Part of SB 102 expands the board of directors to include a “member representing the general public,” signifying Anderson’s push to open director membership past its current makeup of industry representatives.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

No comments yet.

Comment on this article