DETROIT (AP/WOOD) — Major changes in Michigan car insurance law do not apply to people who were catastrophically injured before the summer of 2019, the state appeals court said Thursday, a victory for long-term victims of motor vehicle crashes and their care providers.
In a 2-1 opinion, the court said lawmakers “did not clearly demonstrate” that insurance payment cuts would be applied retroactively.
And even if those changes were intended to be retroactive, that step violates contract protections in the Michigan Constitution, Judge Douglas Shapiro wrote.
“Giving a windfall to insurance companies who received premiums for unlimited benefits is not a legitimate public purpose, nor a reasonable means to reform the system,” Shapiro said in a decision joined by Judge Sima Patel.
In an effort to lower Michigan’s insurance rates, which were among the highest in the U.S., the Republican-controlled Legislature and Democratic Gov. Gretchen Whitmer agreed to sweeping changes in 2019.
For decades, people injured in crashes were entitled to payment for “all reasonable charges” related to care and rehabilitation. But the new law sets a fee schedule and a cap on reimbursements not covered by Medicare.
It’s had drastic consequences for roughly 18,000 people needing long-term care after crashes that took place before June 11, 2019, and the providers of those services.
Hockey star Vladimir Konstantinov suffered severe brain damage when a drunken limousine driver crashed the car in 1997. Konstantinov, a passenger, was celebrating a championship by the NHL’s Detroit Red Wings.
By last spring, Arcadia Home Care & Staffing said it had lost $200,000 for Konstantinov’s care due to the 2019 law.
“Every month, I have to ask whether we’re good for another month,” said James Bellanca Jr., Konstantinov’s friend and lawyer.
“The decision is a godsend,” he said of the court ruling.
There won’t be immediate relief. Insurance companies still could ask the Michigan Supreme Court to take the case.
Separately, the Legislature could change the law, though there’s been no willingness by Republican leaders to act, despite protests on the Capitol steps.
The lawsuit was filed on behalf of two people who were permanently disabled after crashes. Ellen Andary requires 24-hour care at home, while Philip Krueger lives at Eisenhower Center in Ann Arbor.
In a dissent, appeals court Judge Jane Markey said the Legislature’s decision must be respected, though she was “not unsympathetic” to the injured motorists.
“I find nothing arbitrary or irrational about the Michigan Legislature taking steps to make no-fault insurance, which is mandatory for owners or registrants of motor vehicles, as affordable as possible for as many Michiganders as possible,” Markey said.
Tom Sinas, an attorney representing crash victims in the case, said the court also ruled in the decision regarding how the law was implemented.
“The legislature never intended to impose these limitations on care to people who were injured in auto accidents before the law changed,” Sinas said.
Organizations that assist people with disabilities say the decision will have a major impact, according to Margaret Kroese, the executive director of Hope Network.
“I’m thrilled to see the decision from the appeals court,” Kroese said. “We’ve seen a lot of home health particularly go out of business and you’ve seen providers of residential care like Hope Network really struggling in this past year because the reimbursement for people’s care was actually reduced to less than their cost of care.”
Erin McDonough, executive director of the Insurance Alliance of Michigan, described the ruling as disappointing in a Thursday statement.
“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,” McDonough said in the statement.
McDonough said the auto no-fault reforms are “critical” and keep medical providers from overcharging. She said the reforms have saved Michigan residents more than $5 billion over three years.
“While today’s court ruling is a setback for drivers, Michiganders have come too far to turn back to the days of unaffordable auto insurance, fraud and rampant medical overcharging,” McDonough said in the statement. “This case will be appealed to the Michigan Supreme Court.”
— News 8’s Kyle Mitchell reported from Grand Rapids.