Insurance industry’s coup d’etat of the Michigan Assigned Claims Plan

Program providing No Fault insurance benefits to uninsured auto accident victims shifts to private auto insurance companies, and the changes aren’t in anyone’s best interests

Michigan auto insurance companies have successfully completed a coup, a putsch, an overthrow, a coup d’etat. They have now taken control the old Michigan Assigned Claims Plan. After this overthrow, in which they have taken over authority for running the program from the Secretary of State, they have created the brand-new Michigan Automobile Insurance Placement Facility (MAIPF). The entity previously known as the Michigan “Assigned Claims Plan” is no more.

But the changes this private group of insurers are making go far beyond the old regime.

The Michigan Assigned Claims Plan was the program that ensured Michigan No Fault insurance benefits would still be provided to uninsured and injured auto accident victims, provided those uninsured drivers were not the owner/operator of the car involved in the crash (in which case they now have no rights, and have even lost their 7^th Amendment Right under the U.S. Constitution to sue an at-fault driver who causes the car accident that injures them – later upheld by the Michigan Supreme Court).

The take-over of the Assigned Claims Fund by the Michigan insurance industry

Michigan law previously has entrusted the publicly elected Secretary of State with oversight authority over the program for the last 40 years (since the Michigan Assigned Claims Plan’s inception).

But that changed on January 1, 2013, the effective date of a 2012 amendment to Michigan’s No Fault Law. Under the change, control over the Michigan Assigned Claims Plan was taken away from the Secretary of State and given to a group of for-profit auto insurance companies called the “Michigan Automobile Insurance Placement Facility” (MAIPF).

There was almost no public notice for this. The transition was ignored by almost all media in the state of Michigan.

And now, as the changes made have become public, consumer advocates, accident lawyers, lawyers who help injured people with insurance claims, insurance industry watchdog groups and others are all wondering how this glaring conflict of interest occurred.

Here are two major changes that have taken place so far:

• The auto insurers at MAIPF replaced the old Assigned Claims Plan application for benefits with a new, exhaustive application for benefits. The scope exceeds the eligibility parameters articulated by the Michigan No Fault Law.
• The auto insurers at MAIPF have included unprecedented fraud warnings, which clearly border on intimidation, in both the MAIPF’s newly-drafted Assigned Claims Plan and its application for benefits.

For-profit auto insurance companies taking control – The coup is successful

Primary authority for running the Michigan Assigned Claims Plan lies with the MAIPF’s 11-member Board of Governors, which includes seven for-profit auto insurance companies (Allstate, Auto-Owners, Hastings Mutual, State Farm Mutual, Amerisure Mutual, Auto Club Insurance Association and Citizens Insurance of America), two insurance agent representatives and two public representatives.

The duties of MAIPF’s for-profit auto insurer members include adopting, implementing, maintaining and administering a new Assigned Claims Plan, which sets out the “procedures for disbursement” of No Fault benefits to uninsured auto accident victims. MAIPF’s plan is subject to review only by the Governor-appointed Commissioner of the Department of Insurance and Financial Regulation. (MCL 500.3171(2) and (3))

Additionally, the “initial determination” of an uninsured auto accident victim’s “eligibility for [No Fault] benefits under the assigned claims plan …” is made by the for-profit auto insurer-members of MAIPF. (MCL 500.3173a(1))

Eligibility for No Fault benefit “through the assigned claims plan” is determined exclusively by the factors set forth in MCL 500.3172(1).

Eligibility for Assigned Claims Plan

An injured auto accident victim may collect No Fault benefits through the Michigan Assigned Claims Plan, as administered by MAIPF, if he meets any of the “eligibility” criteria set out by MCL 500.3172(1) of the Michigan No Fault Law, including:

• “No personal protection insurance is applicable to the injury.”
• “No personal protection insurance applicable to the injury can be identified.”
• “The personal protection insurance applicable to the injury cannot be ascertained because of a dispute between two or more automobile insurers concerning their obligation to provide coverage or the equitable distribution of the loss.”
• “The only identifiable personal protection insurance applicable to the injury is, because of financial inability of one or more insurers to fulfill their obligations, inadequate to provide benefits up to the maximum prescribed.”

Consequently, if an injured Michigan auto accident victim is determined to be eligible to collect No Fault benefits through the Assigned Claims Plan, then the MAIPF will assign the victim’s claim to a Michigan auto insurance company for payment of the victim’s No Fault benefits.

Dangerous and intimidating insurance application questions concerning ‘eligibility

Now that for-profit auto insurance companies have taken over control of the program responsible for providing No Fault benefits to uninsured auto accident victims, the application for benefits has doubled in size: Application For Personal Injury Protection Benefits

One reason is the presence of new questions that delve into the following issues which have nothing to do with the Assigned Claims Plan “eligibility” factors set forth in the No Fault Law:

• A “full description of how the accident occurred.” (#18)
• Whether the auto accident victim was “contacted by a doctor’s office or other person about this claim,” and, if so, the name, address and phone of the “doctor” or “other” person. (#22)
• The auto accident victim’s pre-existing or prior medical conditions (including medications) that existed before the auto accident and treatment history. (#26-28)
• Does the auto accident victim “have a primary care doctor?” If so, who? (#29)
• “How did [the accident victim] normally get to work prior to this accident? (#41)
• “Was there damage to the vehicle [the accident victim was] occupying or struck by?” If so, describe the damage. (#43)
• Was the damaged vehicle towed and/or repaired? If so, by whom? And, where is the damaged vehicle now? (#43, a, b, c)
• “Did [the accident victim] lease or have use of the involved vehicle at any time before the date of the accident? What was the frequency at which [the accident victim] used the vehicle?” (#43, d and e)
• Did the accident victim: Have his own set of keys to the vehicle? Have to ask permission to drive the vehicle? Get denied permission to use the vehicle? Ever put gas in the vehicle? Ever do any maintenance on the vehicle? (#43, f-j)
• Names, addresses, phone numbers and insurance status of the vehicle’s occupants. (#43, q)
• Names, addresses and phone numbers of witnesses to the accident. (#44)
• Whether the accident victim has “ever filed a claim for Personal Injury Protection Benefits,” and, if so, with what auto insurer and under what claim number? (#47)

I recognize in writing this that anyone who is not an insurance or No Fault lawyer in Michigan may not understand why these questions are so dangerous – but they have absolutely nothing to do with proper eligibility to recover No Fault insurance. Instead, many of these questions seem to have no other purpose than to later deny No Fault benefits, or to help an auto insurer in a later tort (pain and suffering) auto accident lawsuit.

Unprecedented fraud warnings: deliberately intimidating?

Until the for-profit auto insurance company members of the MAIPF took over the Michigan Assigned Claims Plan, neither the No Fault Law, the assigned claims plan nor the application for benefits warned uninsured auto accident victims about fraud or false statements.

No doubt the silence on those issues resulted from the fact that neither false statements nor fraud were causing problems for the assigned claims plan or the No Fault system.

But then control over the program shifts from the Secretary of State to the group of for-profit auto insurance companies and, suddenly, fraud and false-statement warnings abound.

Now the No Fault Law provides that a knowingly “false statement” made in support of a claim for No Fault benefits through the assigned claims plan is “a fraudulent insurance act,” which renders the claim “ineligible for payment or benefits under the assigned claims plan.” (MCL 500.3173a(2))

This same language is included in the MAIPF-created assigned claims plan and it is repeated twice on the last two pages of the MAIPF-created application.

Why are these fraud warnings significant? Two reasons:

1. The legislative history behind the warnings provide for no evidence to substantiate the need for enhanced vigilance against fraud.
2. The only consequences for a false statement and “a fraudulent insurance act,” in the No Fault Law and in the MAIPF-created assigned claims plan and application, is that a person’s claim for No Fault benefits will be deemed “ineligible for payment or benefits under the assigned claims plan.” Significantly, there is no declaration that offending claims (and/or the persons responsible for those claims) will be referred to the police for investigation, arrest and criminal charges.

It’s time to question why the fox is guarding the henhouse.