No Fault Reform: Why Care About the MCCA?

heading divider

Buried among the changes in the no fault reform bills in the Michigan House of Representatives, is a provision that could hand the auto insurance industry $20 billion in fees collected from drivers over the years. But you would never know it from just reading the bills.

Over the past two weeks, the Michigan legislature has been considering a no fault reform bill that is designed first and foremost to increase the auto insurance providers’ profits. Whether by limiting attendant care benefitscutting medical providers’ reimbursement, or creating a fraud authority that only targets individuals, the bill is custom made to benefit insurers, not consumers. All of this “cost cutting” is happening without any guarantee that motorists’ auto insurance payment will be meaningfully reduced. The current proposal trades in priceless lifetime benefits for catastrophically injured drive for a mere $100 for two years in reduced rates.

No Fault Bill Ends the Mcca

Beneath all the changes readers can see in Senate Bill 248, there is another insidious change that could hand auto insurers nearly $20 billion dollars for nothing. That money is controlled by the Michigan Catastrophic Claims Association (MCCA) and covers the medical expenses of motorists whose treatments cost more than $530,000. The MCCA has collected money over the years through fees charged to insurance providers and passed on to their clients.

Under the no fault reform bill, the MCCA will continue to pay for past catastrophic injuries, but no new cases would be added. The bill doesn’t say what will happen to the MCCA’s money after the last case is resolved. Since the member companies of the MCCA are all auto insurance providers, they will probably be allowed to divide the spoils among themselves. That means that companies like State Farm and AAA will be allowed to hold on to billions of dollars of their clients’ money.

Introducing the MCCC

In place of the MCCA, the no fault reform bill creates a new, unfunded non-profit agency called the Michigan Catastrophic Claims Corporation (MCCC) to handle all the new cases. The MCCC will have a board of directors made up of insurance professionals, and will be allowed to charge motorists directly for access to its services.

SB 248 cuts the safety net out from under catastrophically injured motorists. The MCCA has plenty of money, but if it were ever to fall short, it would be up to the insurance providers to cover their customers’ unpaid medical expenses. The bill changes that, explicitly limiting providers’ obligation to $500,000. Anything more is transferred over to the MCCC. If the MCCC funds fall short, the medical expenses will be on injured consumers’ shoulders, rather than the insurance companies.

By retiring the MCCA, the Michigan no fault reform bill protects insurance companies at the expense of the state’s most critically injured motorists. It also has the potential to award auto insurers billions of dollars that is earmarked for catastrophically injured drivers. This is nothing but a money-grab by the insurance industry and it is up to the Michigan House of Representatives to stop it. CALL YOUR REPRESENTATIVE NOW and ask them to vote no on SB 248 and 249.

David Christensen is an auto accident attorney at Christensen Law in Southfield, Michigan. He represents injured motorists against the insurance companies and help them get the benefits they deserve. If you or someone you know have been seriously injured in a car crash, contact Christensen Law today for a free consultation.