Bundle of No-Fault Bills Passes Michigan Insurance Committee

Four pieces of legislation that install more exclusionary criteria into Michigan’s no-fault insurance law were recommended and passed out of a state House committee Thursday.

The measures—House bills 4993, 5587, 5588 and 5589—all propose prohibiting specific populations from eligibility for insurance payouts under personal injury protection (PIP) coverage, which compensates parties for injury-related expenses in traffic collisions regardless of who was at fault for the crash.

The proposals were considered in the state House Committee on Insurance on June 7, and amended versions of each received recommendations from committee members that sent them to the House floor for further consideration. Those amendments had not been made public as of press time.

A bulk of public testimony on the bills occurred in two May committee hearings, when members heard from trade groups and residents, most of whom protested the language in initial bills’ versions as overly broad. Lawmakers introducing the bills said they are needed to reform the state’s no-fault system, which has seen the number of expensive insurance claims rise, subsequently making it harder for the state’s residents to find affordable auto insurance.

Illegal Immigrants Targeted for PIP Exclusion

HB 4993, authored by Rep. Eileen Kowall (R-White Lake) proposes excluding illegal aliens from PIP eligibility by adding citizenship as a requirement to receive no-fault benefits. Kowall said her proposal stems from a 2006 decision from the U.S. Court of Appeals that ruled that illegal immigrants could get the benefits because state law governing no-fault payouts “did not specify citizenship as a requirement.”

“Everyone eligible to benefit from the Michigan Catastrophic Claims Association (MCCA) should be paying into it or at least legally reside here,” Kowall said in a statement, referring to the state fund that administers PIP payments and is supported by per-vehicle fees from every driver. “Reaping the benefits without being required to pay into the fund isn’t fair to other Michigan residents.”

In testimony before the House committee on May 24, Susan E. Reed, an attorney with the Michigan Immigrant Rights Center, said the bill would hurt all state residents even though it targets a specific population.

“How will insurance companies obtain information and make complex legal determinations about who does and who does not have legal immigration status?” she said. “Who will bear the cost of treatment, recovery and rehabilitation when personal injury protection benefits are denied based on lack of status?”

The language of the bill places much of the responsibility of determining a policyholders’ citizenship on insurers, according to Reed, who highlighted a conflict-of-interest that would leave many injured residents without compensation.

Insurers “will have no incentive to investigate or monitor status before collecting premiums, but will have tremendous incentive to seek opportunities to refuse payment and receive a windfall once an accident and injury has occurred,” she said. “They are not equipped to make accurate or disinterested technical determinations about who was legally present at the time of an accident.”

Criminal Drivers Excluded Under Proposal

Under HB 5587, drivers who crash vehicles in the course of committing a felony-grade crime are excluded from eligibility for PIP payments. The original version of the bill specifically excludes motorists who crash a car in “the commission of a crime that is punishable by imprisonment for more than one year.”

Scott Hummel, vice president for government affairs at the Michigan Association of Insurance Agents (MAIA) testified before committee members on May 24, saying that the proposal had “broad language” that demanded “more specifics as to what felonies would forfeit benefits.”

MAIA commented on three of the exclusionary bills, saying the aim of the pieces of legislation was to “address the policy question of ‘who is or is not eligibile for PIP benefits” by identifying “irresponsible behavior.”

“It is important to remember that someone will pay for an automobile injury claim no matter what behavior caused the claim,” said Hummel, adding that MAIA had not taken an official position on any of the bills. “The result of the legislation is a cost and responsibility shift to other entities whether they be the individual, other health insurers or Michigan taxpayers.”

Legislation Prohibits Drunk Drivers from PIP Payments

HB 5588 excludes motorists who crash their cars while intoxicated or under the influence of drugs from no-fault insurance payouts.

Lynn Brouwers, president of the Michigan Brain Injury Provider Council (MBIPC), told committee members on May 31 that she did not support the bill although she is a long-time advocate of drunk-driving prevention.

Because “having evidence of drugs in a person’s blood or urine samples does not correlate with intoxication,” Brouwers said, excluding intoxicated drivers from PIP eligibility would trigger a larger problem.

“Many medications prescribed by doctors fall into the category of controlled substances,” she said, citing legal drugs for conditions like attention deficit disorder and insomnia. “Medications can stay in our systems for days or weeks. This could prevent people from driving, for fear that they would be uninsured if they were injured.”

Bill Disqualifies Passengers in Stolen Vehicles

Under HB 5589, passengers in stolen vehicles would be excluded from no-fault benefits. Current law bars PIP payouts to criminals convicted of stealing a vehicle, according to the bill’s author, Rep. Ben Glardon (R-Owosso), but state courts have awarded no-fault insurance benefits to passengers in stolen vehicles before.

In a statement, Glardon called his proposal a “common sense” measure that “protects the integrity” of the state’s no-fault system.

John Cornack, president of the Coalition Protecting Auto No-Fault (CPAN), said in committee testimony on May 24 that language in the initial versions of HB 5589, 5588 and 5587 was too expansive.

Focusing on HB 5589, Cornack called the bill’s language “so broad” that it could lead to inadvertent exclusions from PIP eligibility, including joyriding minors.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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