Michigan’s no-fault auto insurance system went into effect in 1973 and was created to achieve three primary purposes:
- Help injured persons make a maximum recovery;
- Ensure prompt reimbursement for auto accident victims; and
- Reduce legal and administrative expenses by avoiding time-consuming and unnecessary lawsuits.
To secure these benefits, drivers gave up the right to sue the at-fault driver except in cases involving death or severe injury. Michigan drivers also pay some of the highest rates in the country for automobile insurance.
Under a new reform package, signed into law on May 27, motorists can begin opting out of unlimited personal injury protection medical coverage in their auto insurance plans starting on July 1, 2020. Insurers will reduce premiums for eight years, and motorists will have a choice between coverage options of an unlimited plan, $500,000 of PIP, $250,000 of PIP, or $50,000 for particular Medicaid recipients.
The economic implications of these changes are hotly debated. Hospitals face uncertainty regarding private health insurance plans reimbursing for treatment of patients critically injured in a vehicle or motorcycle accident who opted out of personal injury protection coverage on their auto insurance. The effect on individuals could involve higher copays, but also large bills unpaid by their insurance companies.
These reforms may present a couple of challenges in the professional liability environment. First, it may lead to more claims of medical malpractice. Physicians and providers treating car accident victims may have their care scrutinized to a higher degree. Facing prospects of expensive and lengthy treatment may create an economic incentive to allege improper medical care contributed to or exacerbated the patient’s injuries. These allegations of medical malpractice could be a way to seek additional money.
The second challenge the new law may pose to professional liability is an increased damages assessment in cases due to increased costs of long-term care and treatment. Life care plans are already the most significant component of many plaintiff demands. Decreased remuneration for treatment and rehabilitation facilities that provided care of catastrophically injured individuals will radically alter the availability and likely the costs associated with long-term care. Any increased costs along these lines will factor in professional liability claims involving long-term treatment.
Key Lessons
- Ensure vigilance when caring for auto accident victims, especially those with significant injuries.
- Ensure thorough documentation of the care provided and any handoff.
- Ensure discharge instructions are thorough.
- Prepare for payment/billing related challenges.