Michigan Supreme Court hearing on auto no-fault reform: What to know

• Crash survivors say 2019 changes to state’s auto no-fault policy shouldn’t impact their preexisting insurance contracts
• Insurers counter that the reforms were intended to bring down auto insurance costs, and won’t work unless all are bound by them 
• The Michigan Supreme Court heard arguments this week 

A case pending before the Michigan Supreme Court will likely have sweeping implications for the state’s 2019 auto no-fault insurance overhaul and whether crash survivors injured before the reforms took effect are bound by the more restrictive medical benefits now in place. 

The court on Thursday heard oral arguments regarding a state Court of Appeals decision, Andary v. USAA, which determined legislative changes to health care reimbursements for accident victims can’t be applied retroactively to past injuries. 

If that decision is upheld by the Supreme Court, it would be a major win for roughly 17,000 people with severe and long-term injuries from auto accidents, who have long argued a 45-percent cut to the amount health care providers could reimburse on services not covered under Medicare hindered their access to high-quality care. 

Related:

• No-fault insurance reform may be in play as Democrats take power in Michigan
• Court: Past crash survivors not subject to Michigan auto no-fault limits

But insurance providers and other backers of the 2019 changes argue that that interpretation of the reform law would have a huge impact on the law’s ability to reduce Michigan’s high auto insurance costs. 

“No-fault reform is sort of like a sweater — you pull one thread on it and the whole thing is going to collapse,” Lori McAllister, an attorney representing USAA, told the justices Thursday.

The case

In 2019, the Republican-majority Legislature and Gov. Gretchen Whitmer approved legislation overhauling the state’s auto no-fault insurance law. Prior to 2020, Michigan was the only state where drivers were required to pay for full personal injury protection insurance. It raised costs but offered catastrophically injured crash survivors unlimited medical benefits.  

That became optional when the new law took effect, and drivers are now allowed to pick from varying levels of coverage. The trade-off: The ability to pay less for auto insurance in return for more limited benefits for those suffering catastrophic injury, including a 45-percent cut in the amount health care providers could reimburse on services not covered under Medicare, which took effect in summer 2021. 

The changes were intended to lower the state’s highest-in-the-nation auto insurance costs, which they did: decreasing average premiums to $2,639 in 2021 from $3,096 in 2019.

The two plaintiffs before the Supreme Court, Ellen Andary and Phillip Krueger, sustained traumatic brain injuries in auto accidents prior to 2019 and now require round-the-clock care. 

They claim the new health care limitations shouldn’t apply to them because their policies took effect prior to the law’s enactment, and that capping reimbursements for their care violates the terms of their insurance contracts at the time they signed them.

Their insurance providers argue that regardless of when the injuries happened, insurers and medical providers are subject to the new cost limitations outlined in the 2019 law. 

The Court of Appeals majority opinion sided with Andary and Krueger, and the case was appealed to the Michigan Supreme Court.

The retroactivity question 

At the core of arguments presented to the court Thursday was whether lawmakers intended the law be applied retroactively to past auto accident victims already receiving more generous medical coverage prior to the 2019 reforms. 

Mark Granzotto, Andary’s attorney, argued that because the 2019 law “says nothing” about applying retroactively to individuals catastrophically injured in auto crashes prior to the legislation’s passage, it doesn’t apply. 

McAllister, the insurance lawyer, argued the law’s language never explicitly ruled out retroactive effect, either. 

In February, a group of current and former lawmakers led by Rep. Julie Brixie, D-Meridian Township, and former Rep. Gary Howell, R-North Branch, filed a brief with the court supporting Andary’s case, stating they don’t believe the law was intended to apply retroactively and deprive injured victims of care they’d been getting. 

McAllister discounted that brief in court arguments Thursday, arguing the majority of those who signed on to the brief didn't support the reform legislation and thus aren't the best judges of its original intent. 

In a Twitter post Thursday, Brixie challenged that claim, noting that only 12 House lawmakers voted against the reforms and more than 95 lawmakers signed onto the brief.

The Insurance Alliance of Michigan, an industry group representing insurance providers, contends the lower fee schedule for medical providers provided in the reform law has been a crucial part of reining in costs and saving drivers billions of dollars in auto insurance fees. 

The court’s decision will ultimately impact whether future auto insurance rates across the state go up or down, Erin McDonough, the group's executive director, said in a statement.

“We’re hopeful the Michigan Supreme Court will overturn the Andary decision and Michigan drivers can continue to save money as the Legislature intended,” she said.

Back to the drawing board?

Auto crash survivors and their health care providers say upholding the Court of Appeals decision would ease some of the suffering that’s been caused by retroactive application of the 2019 law.

But advocates say they also want to do away with or modify the fee schedule to ensure future accident victims don’t bump up against the same issues. Republican leadership last session rebuffed efforts to dive back in, but they could have a better chance in the Democratic-majority legislature this term. So too, a majority of the justices on the Michigan Supreme Court were nominated by the Democratic Party. 

“While people injured before the enactment of the 2019 law may receive some level of justice through the Supreme Court’s decision, there are hundreds of people that have been injured since and thousands more that will be injured in the future,” Tom Judd, president of the Michigan Brain Injury Provider Council, said in a statement. 

“They too deserve to have access to quality rehabilitation and the level of care they paid for through their auto insurance policy,” he continued. 

Republicans and Democrats alike have introduced various proposals to tweak the policy since 2021. Gov. Gretchen Whitmer recently told Bridge Michigan she’s open to adjusting the law. 

“There’s work to be done here to ensure that people that are injured can have the supports that they paid for,” Whitmer told Bridge. “I’m interested in pursuing that.”

Rep. Julie Rogers, D-Kalamazoo, previously told Bridge that adjusting the fee schedule outlined in the 2019 law is “life and death” and should be a top priority. 

Although she believes the main focus should be on the needs of accident victims and providers, Rogers said she is open to revisiting the rest of the law as well, noting that the intended goal of lowering costs for everyone “didn’t really come into effect” as drivers in Detroit still pay far higher insurance costs than drivers statewide.