No-fault reform would cut high rates, but beneficiaries fear losing quality of life
While legislators again consider putting new restrictions on Michigan's no-fault auto insurance benefits, Cliff Copeland feels like he's already taken a hit on the coverage he needs.
Copeland, 48, paralyzed from the chest down from a 1996 pedestrian accident, relies on a van with a wheelchair lift to attend church and other social activities in his rural community 50 miles north of Grand Rapids. With electrical and suspension problems, the Ford Econoline van is 11 years old and breaking down.
But a 2013 Michigan Supreme Court ruling said insurance companies are no longer required to fund the full cost of a vehicle for accident victims – just the mobility equipment that comes with it.
In February, according to Copeland, his insurance company said it would pay to modify a new van. It would not pay for the vehicle itself. He said he and his wife, Denise, cannot afford that expense. “To me, it's basically like sentencing someone to jail in their own house,” he said.
“Part of my rehabilitation is being able to go out and communicate with family and friends and stuff like that. They are not just taking my van away, they are taking away my life.”
Advocates for impaired accident victims say the little-noticed court decision could leave hundreds of severely injured Michigan residents in a similar bind. Insurers say they are simply following guidelines set down in the court ruling. “It's already having an effect,” said Tom Constand, vice president of the Brain Injury Association of Michigan, a Brighton-based nonprofit advocacy organization.
“This is a quality-of-life issue. It strips away dignity. To take that away is devastating for individuals and their families.”
Fallout from the case known as Admire v. Auto-Owners Insurance Co. foreshadows a larger battle over cost versus benefit, as legislators weigh reform of the state's landmark 1973 no-fault insurance law. It is the only standard in the nation that offers unlimited medical and rehabilitation benefits for auto-related injuries.
Critics say those benefits drive up Michigan's auto insurance rates, which ranked second highest in the nation in 2013, according to Insure.com, an independent insurance consumer website.
A proposal unveiled in February by GOP state House speaker Jase Bolger would cap lifetime benefits at $10 million and require that insurance companies guarantee 10 percent savings on premiums for two years. It also proposes a low-cost insurance plan with a cap of $50,000 of coverage for low-income residents. A 2013 proposal to revamp the no-fault law with a $1 million cap stalled for lack of support.
Necessity or ‘lifestyle’
The court's recent ruling arose from a dispute between Kenneth Admire, who was seriously injured in a 1987 motorcycle crash, and Auto-Owners Insurance Company. The insurer previously had bought three vans equipped with wheelchair lifts for Admire following his accident. But in 2007 it told Admire that it would pay only the cost of modifying a new van.
Auto-Owners asserted that the state's no-fault law obligated it to pay just those expenses because Admire would have incurred transportation expenses whether he was injured or not. The state Supreme Court court agreed, stating in its 4-1 ruling last May that the purchase price of the van was not “for the claimant's care, recovery or rehabilitation” as specified under the statute.
Michigan’s no-fault insurance law is the only one in the nation that offers unlimited medical and rehabilitation benefits for auto-related injuries. Critics say those benefits drive up Michigan's auto insurance rates.
Pete Kuhnmuench, executive director of the Insurance Institute of Michigan, supports the court's decision. “There is nothing in the statute that says you have to provide transportation services. The statute wasn't designed to insure an individual's lifestyle.”
Justice Michael F. Cavanagh dissented, arguing that a “van is the only mode of personal transportation available that will accommodate plaintiff’s severe injuries resulting from the motor vehicle accident.”
Given the number of mobility-impairing accidents each year, the potential impact of the ruling appears considerable.
The Michigan Catastrophic Claims Association, a funding pool set up under the no-fault law to pay claims above $530,000, reported more than 14,000 active claims as of June 2013. For the year ended June 30, 3012, it reported 2,354 claimants.
The Spinal Cord Injury Statistical Center estimates there are more than 5,000 U.S. spinal cord injuries each year from vehicle crashes, which would equate by population to about 150 a year in Michigan. According to the Centers for Disease Control, an estimated 340,000 Americans suffer traumatic brain injury each year in vehicle accidents. That equates to some 10,000 in Michigan.
Experts believe repeal of Michigan's universal motorcycle helmet law in 2012 could add to those totals, as serious brain and spinal injuries mount. The average medical claim in motorcycle accidents climbed by 22 percent to $7,257 in the wake of the change, according to study by the Highway Loss Data Institute.
Wayne County resident Sandra Miskell, 62, suffered a closed head injury in a 2002 Oakland County accident that left her in a coma for several weeks. She is unable to drive.
Until a few months ago, her insurance company paid cab fare for Miskell to attend church and volunteer at a local animal shelter and senior citizen center. She got a letter in December from State Farm Insurance informing her they would no longer pay for those trips.
“These are activities that are not for your care, recovery or rehabilitation but are for activities uninjured people do as well,” it stated.
Calls to State Farm asking for comment were not returned.
Miskell says she can't readily afford those transportation expenses. “Those things are important to me,” Miskell said.
“I've always been an outgoing person and a doer. Now I feel like I am under the gun because of the insurance company. They didn't consult me on any of that.”
John Cornack, president of the Eisenhower Center, a brain injury rehabilitation facility in Ann Arbor, says those kind of activities are critical to rehabilitation from serious injury. He is also president of the Coalition Protecting Auto No-Fault, a group opposed to proposed changes to the no- fault law.
“Quality of life is very important to rehabilitation. Without that, you lose your hope of becoming part of a community. The cycle of depression starts. They think, 'I can't do anything. I can't see anybody.'”
Michael Harris, president of the Michigan Chapter of Paralyzed Veterans of America, got a denial letter in December from his insurance company on his request for a new wheelchair-equipped van. He was left a paraplegic from a 1986 auto accident.
Harris estimates that about 200 paralyzed veterans in his organization were injured in vehicle accidents. He wonders how many will get adequate transportation in the wake of the court decision.
“We get calls all the time from people with transportation issues. We really have no public transportation system in place. So there's no other choice for people.”
Ari Adler, a spokesman for Bolger, said he would leave interpretation of current no-fault law to the courts.
But Adler said Bolger considers the reform proposal a winner for both consumers and those with serious injuries from auto accidents. “It was very important to us to find that balance,” Adler said.
Adler said the $10 million cap would cover “99.9 percent” of catastrophic claims in Michigan. At the same time, he said, it will drive down rates by requiring that medical providers can only charge 125 percent of the rate charged for workers compensation claims. “Insurance in Michigan is too expensive,” Adler said.
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