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Now that Michigan’s Auto No-Fault (ANF) system is under attack by the insurance industry, it’s easy to forget just what an extraordinary legislative accomplishment this was in 1972. Enacted one year later, it eliminated the tort system’s high legal fees (30% to 50% of claims), reduced years of legal delay, and covered the catastrophically injured regardless of who was at fault.

Our ANF system still works as intended, but its cost to Michigan policy holders is making the system less attractive. It’s even worse for Detroiters, who on average pay twice the premium cost as suburbanites. No wonder people are rightly demanding cost reductions.

But instead of eliminating no-fault, or capping benefits at a level that wouldn’t cover a single month of hospitalization — let alone a lifetime of care for a catastrophically injured person — we should fix the flaws. That means:

1. Make the yearly no-fault fee calculation transparent. That fee is currently set at $160 — $170 as of June — by the Michigan Catastrophic Claims Association. The MCCA is comprised entirely of insurance executives, with one exception: Michigan’s Director of the Department of Insurance and Financial Services. No individual consumer or consumer group is represented. Worse, although a public body, the MCCA refuses to divulge how it calculates the annual fee given their $15 billion+ pool of available funds. It’s time to open the doors, MCCA.
2. Eliminate ANF fraud. Some consumers try to game the system by “staging” accidents or cheating on claims. They should be brought to justice. In many cases, though, unscrupulous lawyers encourage illegal behavior by “ambulance chasing,” sending patients to captive healthcare providers to jack up charges, and stationing “agents” at emergency rooms and in hospitals to solicit clients and then pressure them to claim exaggerated or non-existent injuries. These behaviors need to be eliminated, as should the behavior of insurance companies which deny or delay paying legitimate claims. Eliminating “bad faith” behavior on every side saves costly litigation and gets the right compensation to the right parties at the right time.
3. Equalize the medical cost structure for claims. The insurance industry says doctors and hospitals charge up to four times for ANF patient services what they accept for Medicare or Worker’s Comp treatments, but hospitals structure pricing on volume and negotiated discounts. In other words, the solution isn’t to engage in a “he said, she said” debate, but bring both parties to the table to agree on a reasonable rate schedule. This would not only help avoid litigation, but ensure prompt payment and financial stability – especially important for smaller providers.
4. Stop the redlining in Detroit. Redlining is illegal in most industries but it’s alive and well for auto insurance companies in Detroit – which fix rates based not on a driver’s actual record, but where he or she lives. When drivers are judged by how they drive instead of where they live, their auto insurance will reflect reality – instead of insurance price gouging.
5. Look at other high-cost parts of auto policies. Personal Injury Protection (PIP) is a big component of an auto policy’s cost, but collision insurance is almost 30 percent of a typical premium and it costs more in Michigan than anywhere else in the country! That’s why it makes good sense that collision should be part of any discussion on lowering auto insurance premiums.

Today, Michigan has the nation’s very best network of brain and spinal cord injury doctors, hospitals, therapists, rehabilitation facilities, and case managers. The lives of tens of thousands of survivors are owed to that network, and it was possible only because of auto no-fault. The sensible solution for Michigan consumers is to keep what’s best about no-fault while eliminating its costly flaws.

Tom Constand
President and CEO
The Brain Injury Association of Michigan

Tom Constand Testimony
Michigan House of Representatives
Traffic and Infrastructure Committee
May 30, 2017

Good morning, Mr. Chairman and distinguished committee members. My name is Tom Constand, president of the Brain Injury Association of Michigan, and I’m pleased to be representing the BIAMI membership and our brain injury survivor constituents in support of house bill 4466 introduced by Representative Howrylak.

While the motto of the Brain Injury Association of Michigan is to provide help, hope, and healing to survivors, particularly of traumatic brain injury, prevention is fundamental to our mission. Since auto accidents account for 30 percent of all brain injuries in Michigan – second only to falls – efforts to reduce the number and severity of such accidents deserve both our support and our gratitude.

Evidence suggests that the recent uptick in auto accidents in Michigan is due in large part to distracted driving. In fact, the national safety council has found that texting while driving is six times more likely to cause an accident than driving drunk. As I believe the committee is aware, texting while driving is particularly endemic to our youngest, least experienced, and in many ways most vulnerable drivers, the teens in our communities. According to the AAA, 94 percent of this cohort acknowledges the danger of texting while driving yet 35 percent admit to doing it anyway. One result is that of those teens involved in fatal accidents, 21 percent were distracted by their cell phones.

While the distractions of cell phones and texting while driving affect teenage drivers in particular, the problem is truly a societal one and thus requires a societal response. House bill 4466 does exactly that by establishing consequential penalties for distracted driving, penalties we believe will give pause to teens as well as adults and, as a result, save the lives of countless Michiganders.

I wholeheartedly urge this committee to support house bill 4466, which has received full support of the Brain Injury Association, our membership, and the 200,000 Michiganders living with brain injury.

Thank you for your time and courtesy.