LANSING, Mich. — The Michigan Court of Appeals issued an opinion Thursday morning saying that changes to Michigan's no-fault auto insurance law, which took effect in July 2021, should not apply retroactively to people who purchased policies and were injured prior to the law being signed in 2019.
The case was brought by crash survivors Ellen Andary of East Lansing, Philip Krueger of Ann Arbor and the Eisenhower Center, a brain injury rehabilitation clinic, against USAA Casualty Insurance.
Under the new law, which took effect on July 2, 2021, any medical service not already covered under our federal Medicare law, which includes in-home caregivers and transportation to medical services, will now only be reimbursed by insurance companies at 55% of what they were back in 2019. The law also caps the number of hours that family members can provide care to just 56 hours a week.
The main question in the case was whether or not those changes should apply to those who purchased no-fault insurance policies and were injured before it took effect.
"We conclude that they do not because the Legislature did not clearly demonstrate an intent for the amendments to apply retroactively to persons injured in pre-amendment accidents," their opinion reads.
"We further conclude that even if retroactive intent had been demonstrated, imposing the new limits would substantially impair no-fault insurance contracts entered into before the amendment's effective date, and therefore would violate the Contracts Clause of the Michigan Constitution."
This means that insurance companies must now revert to the previous medical fee schedules that were in place back in 2019 when Governor Gretchen Whitmer signed the law.
"The first thing that the Court held is that the legislature, in enacting the statute, did not intend for the limitations on care to be applied to those people who were injured before the law was changed," said attorney Tom Sinas, who worked on the Andary case.
"The second important holding is that the Court said... even if it had intended to do that, that would not be legal, because that would be an unconstitutional infringement of the Michigan's constitutions provision of the contract clause.”
Erin McDonough, the executive director of the Michigan Insurance Alliance, said Thursday that they will appeal the decision to the Michigan Supreme Court.
“Today’s ruling is truly a disappointment for Michigan families and small businesses because it threatens to roll back the progress we’ve made and to eradicate the savings drivers are experiencing since the 2019 bipartisan reforms took effect with the purpose of reducing the high cost of auto insurance," she said in a statement.
You can read their full statement HERE.
Impact of Changes to No-Fault Law
According to CPAN, a group focused on preserving our previous no fault auto system, there have been at least eight people who have died since the changes went into effect, because of losing access to some care.
There are roughly 18,000 Michiganders currently receiving medical benefits from their auto no-fault policies.
A report released at the beginning of August, conducted by the Michigan Public Health and commissioned by the Brain Injury Association of Michigan, found that 6,857 crash survivors have been discharged from local care providers, and 4,082 health care workers have lost their jobs.
They found that ten care companies have had to close their doors completely since the changes took effect, while 14 more companies expect to close in the next 12 months.