Auto-Owners Insurance is preparing to sue the state of Michigan over the state’s insistence on the continued enforcement of parts of the 2019 no-fault auto insurance reform to drivers who were injured before the passage of the law.
The Lansing-based auto insurance company, in a notice of intent to sue filed Monday, said the state’s Department of Insurance and Financial Services is mandating the continued application of certain portions of a fee schedule that apply to reimbursement rates for hospitals, rehabilitation clinics or physicians — despite a Michigan Supreme Court opinion that the company argues bars the enforcement of those reduced rates.
The state agency argues the Michigan Supreme Court’s July 2023 decision blocked the application of a cap on paid family-provided care and a 55% cap on reimbursement for certain services, according to the court filing. But the state has maintained the decision did not affect other parts of the fee schedule, such as 200% caps on reimbursements for medical services covered by Medicare.
Auto-Owners argued the high court decision applied to the entire fee schedule and said the company could be taken to court if it attempted to apply the Medicare-based fees as the state maintained it should. Several appellate court and trial court decisions have affirmed the insurance company’s position, the filing said, but the state served Auto-Owners with notice when it failed to show it had applied the other sections of the fee schedule.
“If claimants choose to comply with DIFS’ position, they could be exposed to litigation by claimants and their medical providers for improper payment of no-fault benefits,” Auto-Owners wrote in the filing.
The filing comes nearly a year after the Michigan Supreme Court ruled that a key provision of the 2019 law reforming Michigan no-fault auto insurance did not apply to drivers who were injured prior to the law’s passage because it was not meant to apply retroactively.
Instead, the justices found those injured prior to 2019 have both contractual and statutory protections that vested when they were injured and should be shielded from fee cuts that are considered key to the law’s effectiveness.
The June 2019 law retroactively capped reimbursable family care to 56 hours a week and limited payments to home health care companies at 55% of what they charged in January 2019, causing many of those providers to cease in-home care for badly injured motorists. The 55% cap applied to services where there was no Medicare code that could otherwise be applied; where the service would be covered by Medicare, the fee was capped in most cases at 200% of the Medicare charge.
Hundreds of complaints followed the July 2021 implementation of the provisions related to fee cuts and reimbursable hours. Some care provider companies closed, multiple catastrophically injured patients were discharged, and months of delayed and disputed billing debates followed.