Michigan Court of Appeals decision threatens savings for millions of Michigan drivers, several briefs argue in appeal to Supreme Court

LANSING – The Insurance Alliance of Michigan (IAM), along with the National Association of Mutual Insurance Commissioners (NAMIC), the City of Detroit, the Michigan Catastrophic Claims Association (MCCA) and the American Property Casualty Insurance Association (APCIA) have filed amicus briefs urging the Michigan Supreme Court to reverse the Michigan Court of Appeals’ (COA) decision in Andary v USAA Casualty Insurance Co.

The briefs argue the COA’s decision last year threatens to roll back auto insurance savings realized over the last several years for millions of Michigan drivers. The Michigan Supreme Court will hear oral argument on Thursday, March 2.

The medical fee schedule created by the bipartisan legislative reforms reined in costs by preventing overcharging by hospitals and other medical providers and cracked down on fraud by putting a limit on how much providers can charge for medical procedures.

The amicus brief filed by the City of Detroit supported the overturning of the COA decision and states, “The high-cost of auto insurance in Michigan has been driven in large part by grossly inflated rates of medical billing and over-treatment, abuses that benefit well-off stakeholders and that are effectively and disproportionately subsidized by high rate-paying drivers like those in Detroit.”

The APCIA argued the majority COA opinion threatens insolvency and chaos in Michigan’s no-fault insurance market and misinterprets the Legislature’s intent at the behest of a small group of individuals.

In its amicus filing, the MCCA said independent actuaries confirmed that if the Michigan Supreme Court does not overturn the ruling, then the MCCA’s current estimated deficit will remain at approximately $3.6 billion, which reflects the ruling. Drivers will have to pay more, as the MCCA recoups this deficit.

The Insurance Alliance of Michigan and NAMIC show proof that the reforms were already working, even though they were only in place for a few years. Michigan’s average no-fault rates dropped by 27% in 2020, and Michigan no longer had the most expensive auto insurance premiums in the country. New companies are entering the market, offering consumers unprecedented choices.

The joint IAM and NAMIC brief also notes the benefits for an injured person’s care have not changed as a result of the 2019 reforms, however providers’ rights to unchecked charges have changed.

The brief states that both before and after the 2019 no-fault reforms, insurers have remained liable to pay personal protection insurance benefits for reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation. The Legislature, through its adoption of the medical fee schedules, established what providers may recover from insurers for scheduled services – not what services insureds may receive. 

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IAM is a government affairs and public information association that represents auto, home and business insurance companies and related organizations operating in Michigan. Learn more about IAM and its members on Facebook, Twitter or at www.insurancealliancemichigan.org.