Nearly 40 years ago, the people of the State of Michigan, represented by the state legislature, entered into an agreement with the automobile insurance industry. The No-Fault Act, which was passed in 1972 and took effect in 1973, represents a compromise: auto insurers agreed to pay lifetime medical benefits for auto-related injuries without regard to fault, while consumers gave up their right to sue at-fault drivers for non-economic damages (such as pain and suffering) unless their injuries met one of three thresholds (death, permanent serious disfigurement, or serious impairment of body function). As a result, injured accident victims would be able to get the care and treatment they needed (as long as they purchased auto insurance for the vehicle involved in the accident), while the amount of litigation was reduced.
With the support of the auto insurance industry, two bills have been introduced to effectively destroy this system. Senate Bills 293 and 294 would place fee schedules on medical benefits and allow auto insurers to offer capped medical benefits for (theoretically) reduced premiums. Currently, about two-thirds of Michigan residents oppose changing the system of unlimited lifetime medical benefits, but the insurance industry is trying to convince lawmakers that motorists can’t afford or don’t want this coverage.
These bills fly in the face of the agreement made in 1972. If auto insurers want to take back their promise to pay lifetime medical benefits for auto accident-related injuries, they must be willing to give up the threshold requirement for tort recovery against at-fault drivers. With the increasing cost of health care, lower medical benefits caps are sure to be exhausted quickly. This shifts much of the cost to at-fault drivers – a scary proposition in light of the fact that 1 in 7 motorists don’t have any auto insurance at all – and taxpayer-funded government benefits like Medicaid and Medicare. Under the current system, you can protect yourself against ruinous medical expenses by purchasing no-fault auto insurance (as required by law), even if the other driver doesn’t have any insurance.
Since 1973, Michigan’s No-Fault Act has protected car crash victims from overwhelming medical expenses. The auto insurance industry wants to break its promise to consumers: insurers want to avoid paying medical benefits and to avoid paying tort damages. This would leave injured victims out in the cold, without any legal recourse, while insurance companies pad their profits. The proposed bills are simply unfair and destroy the current balance of the system.
