Saving Auto No-Fault Insurance In Michigan

Last evening, February 2, 2012, a town hall meeting was held in Traverse City, Michigan, about saving auto no-fault insurance in Michigan.  The town hall meeting was sponsored by the Coalition Protecting Auto No-fault (CPAN) and was well attended by members of the greater northern Michigan community, including many health care providers (e.g. , Munson Healthcare, Great Lakes Orthopedics (B. Scott Groseclose, M.D., Trauma Specialist), The Lighthouse Neurological Rehabilitation Center, Community Links, Alaris Case Management, HealthPartners and the Eisenhower Center, just to name a few).  In equal attendance were many families with survivors of catastrophic brain and spinal injuries who attested first hand that but-for our no-fault system (which has been in place since 1973), their recovery and rehabilitation would not have been possible.  Finally and importantly, also in attendance was Michigan House of Representative, Wayne Schmidt, of the 104th district, representing Grand Traverse and Kalkaska Counties.  Local northern Michigan media outlets, TV 7&4 News and TV9&10/Fox53 reported on the event.

As you have read from our law firm's previous posts on this subject (See, also, Smith & Johnson Attorneys, P.C., partner, Tim Smith's commentary, Parts 1, 2 and 3), the Michigan Legislature is currently evaluating the auto no-fault insurance industry's assertion that reforms to the no-fault act are necessary in order to sustain the Michigan Catastrophic Claims Association (MCCA) (this proposed overhaul of the no-fault act is self-contained in HB 4936).  At the town hall meeting last night, Dr. Groseclose helped explain how the proposed changes would adversely impact the availability of healthcare for catastrophically injured auto accident victims, should such changes occur.

The MCCA was created by the Michigan Legislature in 1978, under section 3104 of the no-fault act.  The MCCA was created as a reinsurance program to protect the catastrophically injured.  To facilitate and fund the investment of this program, each auto-insured Michigan resident contributes an annual premium (currently $145) to the fund.  The funds are then invested and managed by members of the insurance industry; they essentially act as fiduciaries of our investment.  Many of us may recall back in 1988, that the MCCA did such a tremendous job in managing the fund that it prompted then Governor John Engler, to request and sign into law a generous refund to Michigan's auto insureds.

Coincidentally, that same year (1988) the Michigan Legislature also amended section 134 (4) and (6)(c) of the general insurance code which protected and excluded the MCCA's business of managing Michigan auto insured's trust funds from full public disclosure under the Freedom of Information Act (FOIA), MCL 15.243.  As an important aside, Article IV, Section 25 of the Michigan Constitution mandates that "No law shall be revised, altered or amended by reference to its title only.  The section or sections of the act altered or amended shall be re-enacted and published at length."   Putting this constitutional mandate in context, recall that in 1978 the Michigan Legislature created the MCCA and it specifically did so by adding section 3104 to the no-fault act itself.  In other words, the Michigan Legislature adhered to the constitutional mandate and placed the amendment within the act it was amending.  Conversely, in 1988 when the Michigan Legislature added the MCCA FOIA exemption, it did so to section 134 (4) and (6)(c) of the general insurance code, as opposed to section 3104 of the no-fault act itself.  In other words, the Michigan Legislature did not adhere to the constitutional mandate under Article IV, Section 25.

Fast forward to 2012: at the core of the auto insurance industry's claim that no-fault reforms are necessary is its assertion that the MCCA cannot maintain its solvency at its current funding levels.  Fortunately for Michigan auto insureds and our catastrophically injured auto accident victims, courageous leaders like Representative Wayne Schmidt demand full disclosure from the MCCA so that the citizens of Michigan (and their elected legislators) may make a full and complete informed decision about whether such reforms are actually necessary.  The MCCA, however, refuses to fully release its data that allegedly supports the auto-insurers' claim that the fund will not continue to be solvent unless reforms are enacted.  The MCCA refuses to publicly disclose this important data by shielding itself behind the 1988 FOIA exemption/amendment.  Therefore, CPAN has initiated important and necessary legal proceedings requesting our Third  Branch of Government in Michigan, the Judiciary, to weigh in and decide (1) whether the 1988 MCCA FOIA exemption/amendment was constitutional; and if not, (2) to compel the MCCA to produce its data so that the citizens of  Michigan can confirm that what the auto insurance industry is claiming, is factually accurate.  Until then, as Representative Schmidt inferred at the town hall meeting last night, there will be no rush by the Michigan Legislature to push HB 4936 through until full disclosure by the MCCA occurs.  Fortunately for Michigan citizens, a majority of House of Representatives agree with Representative Schmidt's wisdom and leadership.

Needless to say, this topic is of great importance to Michiganders.   Please return to our website Blog for future developments.

You can read 7&4 News' coverage of last night here.  And, you can see 9&10 News' coverage here.

Authored by L. Page Graves