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Auto No-Fault “Reform” Again a Top Agenda Item in the Legislature

By: Carl Alden | MAC Government Relations Director

MAC and CPAN Oppose Duggan-Leonard Plan, Support “Fair and Affordable No-Fault Reform Plan”

In late September, two competing auto insurance reform proposals were announced in Lansing. While both proposals have some level of bipartisan support and both seek to address fraud and rising medical costs to treat accident victims, there are some significant differences that will drastically impact auto accident victims and the health care professionals who provide their care.

The Duggan-Leonard Plan

On September 26, Detroit Mayor Mike Duggan joined House Speaker Tom Leonard (R-DeWitt) and House Insurance Committee Chair Lana Theis (R-Brighton) to announce a plan that has as its key feature a cap on personal injury protection (PIP) coverage. This plan, House Bill 5013, proposes to allow drivers the choice of either keeping the lifetime PIP coverage they have today or to buy lower PIP policies of either $250,000 or $500,000. 

At least that is how the legislation was announced. 

CPAN LogoIn reality, the bill language shows that the majority of the $250,000 coverage is for “an emergency medical condition and related emergency care only.” That coverage will get a driver through an emergency, but once the real recovery starts the lifetime PIP cap is only $25,000, nowhere near enough to cover the lengthy rehabilitation therapy, and possibly years of care needed after a catastrophic accident. What’s worse is that the $25,000 cap would also include wage loss, replacement service, and survivor’s loss benefits. 

After the bill was announced, John Cornack, the President of the Coalition Protecting Auto No-Fault (CPAN), said: “All stakeholders in the no-fault debate are working on creating a better auto insurance system, but what was proposed today cuts costs on the backs of some of Michigan’s most vulnerable people… And to make matters worse, the costs of caring for these accident victims will ultimately result in a cost increase for Michigan taxpayers.”

This is borne out by an analysis of HB 5013 performed by the non-partisan House Fiscal Agency (HFA) states: 

“The Medicaid program costs would increase to the extent that the bill would shift health care costs from private automobile insurers to Medicaid. Preliminary estimates indicate this bill would increase state costs by $10.0 million in the first year and would steadily grow to approximately $150.0 million in annual state costs within 10 years. The primary Medicaid cost driver from the bill would be the added cost as more individuals receive Medicaid-funded long-term care services instead of private automobile insurance-funded long-term care services.” [Emphasis added] 

HFA also notes that Medicaid would be responsible for chronic nursing home and attendant care costs for both Medicaid beneficiaries who selected a capped PIP limit, and individuals who selected a capped PIP limit and have both exhausted any long-term care benefits provided through commercial insurance or Medicare, and have spent down their financial resources to become Medicaid eligible. 

The Fair and Affordable No-Fault Reform Plan

The MAC and the Coalition Protecting Auto No-Fault (CPAN) support the bipartisan “Fair and Affordable No-Fault Reform Plan” (House Bills 5101-5111). Led by Republican state Rep. Ben Frederick (R-Owosso) (see profile on page 15) and Democrat Rep. Donna Lasinski (D-Scio Township), and supported by a group of 15 House members from both sides of the political aisle, this proposal aims to reduce costs for drivers, while also preserving lifetime injury coverage and adding consumer protections to Michigan’s auto insurance system. Key features of this plan include:

  • A medical fee schedule set at 185 percent of the Workers’ Compensation rate
  • A ban on insurers using non-driving factors like credit score or gender from unfairly impacting rates
  • The creation of a Fraud Prevention Authority that prevents insurers from wrongly and knowingly denying legitimate claims
  • Fixes for adverse Michigan court decisions that restrict the rights and benefits of auto accident victims across the state 

Other bills in the package expected to be introduced soon include:

  • A Covenant Fix – This legislation will resolve issues created by the problematic ruling in Covenant Medical Center vs. State Farm, by restoring medical providers’ legal right to sue insurance companies who fail to pay for a patient’s care and related expenses
  • A solution to allow senior citizens to lower their rates by ensuring Medicare and auto insurance are not providing duplicate coverage for an auto accident

“These bills provide a great framework for making lasting improvements to Michigan’s no-fault auto insurance system. While we are still analyzing the language of the recently introduced bills, we believe this package offers the best opportunity to make auto insurance more fair and affordable for every single driver across the state,” said Cornack. “There are many factors driving Michigan’s high auto insurance rates, including fraud, unfair insurance company pricing practices, increasing medical costs and inefficient billing practices. These bills go a long way toward addressing each of those issues.”

What’s Next?

Hearings on the Duggan-Leonard plan, House Bill 5013, began October 3 in the House Insurance Committee. As of this writing, no hearings have been scheduled on the Fair and Affordable No-Fault Reform Plan. 

The MAC and CPAN are working daily to educate members of the committee and the Michigan House of Representatives in general regarding the issues we have with the Duggan-Leonard plan and why the Fair and Affordable No-Fault Reform Plan is a better option for the state. Stay tuned for more information on this important issue as it develops. 

Text of House Bill 5013, as introduced September 26, 2013, by state Rep. Lana Theis (R-Brighton)
House Fiscal Agency Analysis of HB 5013, October 3, 2017
CPAN “Summary Analysis of HB 5013: The End of No-Fault As We Know It,” October 2, 2017
CPAN Press Release, “CPAN Praises ‘Fair and Affordable’ Auto Insurance Reform Legislation,” September 14, 2017,
CPAN Press Release, “House Bills 5101-5111 Include Medical Cost-Containment Requirements, Bans on Unfair Auto Insurance Rating Practices and Fraud Prevention Measures,” October 17, 2017,



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