Legislators Grab Michigan Catastrophic Claims Association Funds for Roads

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Michigan legislatures are scrambling to pay for necessary road repairs by any means necessary. Their latest money grab threatens Michigan’s most vulnerable motorists by taking $1 million from the Michigan Catastrophic Claims Association.

Michigan legislators have shown that they have no love for the Michigan Catastrophic Claims Association. The MCCA provides fall-back coverage for Michigan’s most seriously injured motorists, picking up any the medical expenses above $530,000. The money to pay these claims comes from a per-car fee paid by drivers through their auto insurance company.

Earlier in 2015, Republicans proposed a bill to take new catastrophic claims away from the Association. But the bill didn’t provide for what would happen to the nearly $20 billion in collected fees the MCCA has already collected.

Now it seems GOP lawmakers want to use this money – earmarked for catastrophically injured motorists – as state money. A new proposal, House Bill 4560, would take $1 million in driver fees to help pay for Michigan roads.

And they don’t plan to pay it back either. Instead, the Association is directed to reimburse drivers’ money from the interest from its own accounts.

The plan is not only a bad idea, Department of Insurance and Financial Services (DIFS) Director Patrick McPharlin believes it may be unconstitutional:

“The MCCA was created in 1978 to provide the reinsurance needed to support the unlimited medical benefits in our no-fault system — reinsurance that was not available in the marketplace. It is a private, nonprofit association that exists for the sole purpose of ensuring that the medical bills of Michigan’s catastrophically injured auto accident victims can continue to be paid.”

The funds are there “to assure that all claims, current and future, can be paid. This unprecedented taking of funds held by a private association would likely be unconstitutional, and could jeopardize the ability of injured claimants to collect benefits under their insurance contracts.”

The funds held by the MCCA are for the benefit of Michigan’s most seriously injured motorists. They are not state money. While everyone agrees that the roads need to be repaired, the money should not, and legally cannot come from the pockets of our most vulnerable citizens.

David Christensen is an auto accident attorney with Christensen Law in Southfield, Michigan. He and his team fight for seriously injured motorists, making sure their medical needs are met. If you or someone you know has been seriously injured in a motor vehicle accident, contact Christensen Law today for a free consultation.