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A primer on the MCCA

The Michigan Catastrophic Claims Association (MCCA) has been in the news. The MCCA has been fighting Freedom of Information Act requests that become important as part of the larger No Fault “reform” debate happening now in Michigan. But it wasn’t until I was recently interviewed on the MCCA by Lester Graham from National Public Radio that it occurred to me that very few people actually understand what the MCCA is, and how it works.

This issue has enormous consequences for everyone in Michigan, not just catastrophically injured auto accident victims. So today I want to take a step back and explain the MCCA.

The MCCA is a private, nonprofit association that covers the most serious auto accident victims' medical expenses after they exceed $500,000.

The MCCA is funded by Michigan drivers, who pay a fee that is included in their auto insurance. The fee is around $175 per year, and it was recently increased by 21%.

The timing of this staggering increase of 21%, combined with efforts by the MCCA to fight public disclosure and Freedom of Information Act requests, and new proposed legislation to disband the MCCA (and return its reserves to the insurance companies, instead of to the Michigan drivers who have paid these assessments) have put the MCCA squarely in the news cycle.

A five-person board (comprised mostly from the insurance industry) manages the MCCA fund. Insurance attorneys and lawyers who litigate catastrophic No Fault injury claims in Michigan have long complained that there are conflicts of interest in how the MCCA operates. Efforts by the MCCA to fight public disclosure, combined with the substantial rate increase last year in the MCCA assessment in the midst of a major push by the insurance industry to enact changes to Michigan’s No Fault insurance system have added to this view.

Generally, it is the most catastrophically injured auto accident victims who rely upon the MCCA. This includes people with traumatic brain injury and spinal cord injuries.

How the MCCA works

For seriously injured Michigan auto accident victims, Michigan’s unique No Fault Law guarantees them all lifetime medical care and treatment that is related and necessary to a victim’s accident-related care, recovery and/or rehabilitation.

Generally, the cost for a victim’s No Fault benefits are paid by the victim’s No Fault insurer.

However, when the cost of a victim’s No Fault benefits exceed $500,000, the victim’s claim becomes known as a “catastrophic” claim, and, at that point, the MCCA gets involved.

For all medical benefit costs paid by the victim’s No Fault insurer that exceed $500,000, the MCCA reimburses the insurer 100% of what the insurer paid.

The MCCA pays the reimbursement regardless of how high the claims cost rise to or how long the claim remains open, hence the “unlimited, lifetime” nature of the No Fault’s medical benefits guarantee.

As noted above, the funds used by the MCCA to pay for reimbursements come from annual per vehicle assessments that the MCCA imposes on all of the insurance companies authorized to sell auto insurance in Michigan.

Also, as noted above, the assessments that the MCCA charges to No Fault insurers “are generally passed on to auto insurance policyholders” and “are reflected in the auto premiums all Michigan policyholders pay.”

Related information:

Is the MCCA committing fraud upon us?

Bills push for transparency regarding MCCA rate calculation

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