For over the past week, this blog has focused on reviewing the various No-Fault reform bills announced by the House Democratic Caucus on May 1. Previous posts have covered transparency, rate increases, repair facilities, and consumer protection. This last of the series will cover protections for “whistle-blowers” – employees of the insurance companies that bring unfair practices to light.
Michigan already has a Whistle-blowers’ Protection Act, which protects employees who truthfully disclose unlawful practices of their industry from employment consequences. But HB 5526 makes explicitly clear that an employee of an insurance company that reports unfair or deceptive acts by his or her company is covered too. This prevents the insurers from claiming the practices were not per se illegal, and punishing employees looking out for their customers’ best interests.
And the bill would go further. If the information provided is instrumental to exposing or ending the unfair practice, the whistle-blower may receive a cash payment from an Insurance Whistle-Blower Protection Fund established by HB 5527. This fund is created for two purposes:
- To give rewards to employees and customers of insurance providers who report unfair practices; and
- To educate the public about their rights to consumer protection under the bills.
Where will this money come from? HB 5518 would require each insurer found to violate the consumer protection bills (discussed previously) 2 or more times to pay a fine of $1,000,000.00 for each subsequent violation. That money goes directly into the Whistle-blowers’ Protection Fund for rewards and education.
The Whistle-blower protection bills, HB 5526, HB 5527, and HB 5518, are essential companions to the Democrats’ proposed consumer protection bills. Without them it will be very difficult for customers of the insurance industry to ferret out deceptive practices and unfair acts. Together with the other bills, these proposals will increase transparency and empower customers to fight back against the insurance companies who, until this point held all the cards. If you believe the insurance company should be more closely regulated, contact your state representative and tell him or her to support these bills.