The July 2021 changes in the No-Fault law make it difficult to express joy as we approach the holiday season. Nevertheless, we remain hopeful that the harshest effects of the new law can still be minimized through legislative and judicial action. Here are some reasons for hope:
COURT DECISIONS ON THE RETROACTIVITY OF THE NEW LAW
It is understood among many (including many of the legislators involved in passing the law) that the changes in the No-Fault law do not apply to injuries that occurred before the effective date of the new law (June 11, 2019). That is, the changes are not retroactive; those who were injured before June 11, 2019 should be “grandfathered” into the new law with all their rights under the old.
The prospective only nature of the new law makes sense for a number of reasons. One of the main rationales is the sanctity of contract. Those who paid for their contracts under the old law should have those contractual rights confirmed and vested. They cannot be taken away by a later law.
Insurers of course don’t agree. Rather, they have argued that the changes are retroactive, governing all cases new and old.
We are very early in the legal process to determine who is right on the retroactivity issue. But we already have a few trial court decisions holding that the new law is not retroactive. This gives us much hope. But we won’t have a final answer on this issue until the Michigan Supreme Court decides. This is probably 2 years away at this point. So we must be patient as the process works its way through.
DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES (DIFS) OPINIONS
Separate from judicial action are the actions of DIFS. DIFS is the state agency in charge of regulating the insurance industry. DIFS often issues bulletins that reflect its opinions on the law. DIFS opinions do not have the same precedential power as decisions of the Supreme Court or Courts of Appeal. However, these bulletins are often considered persuasive in court disputes unless and until overruled by the courts.
DIFS has recently issued some bulletins that are very helpful to injured persons and their service providers. First, on October 5, 2021, DIFS issued Bulletin 2021-36-INS. It can be found at: https://www.michigan.gov/documents/difs/Bulletin_2021-36-INS_737573_7.pdf. This Bulletin cautions insurers against obstructing payment based on disputes over billing formats and coding:
“The Department is aware that some insurers have been refusing to pay provider bills on the basis that the bill is not in the insurer’s preferred format or on the insurer’s preferred form. The Insurance Code does not mandate that a provider use a particular form to be entitled to reimbursement, and a provider’s failure to use 1 MCL 500.3142(3) further states that, if a bill is not submitted to an insurer within 90 days of the date of service, the insurer has an additional 60 days to pay before benefits are overdue. the insurer’s preferred billing format is not, itself, failure to provide “reasonable proof of loss.”
“While some insurers may have a preferred billing form (e.g., the CMS-1500 or CMS-1450 / UB-04), a provider who uses a different form or an invoice to submit a bill that is otherwise payable is nonetheless entitled to timely payment. Similarly, a provider who submits a bill for services that is otherwise payable but is not on the insurer’s preferred billing form must be reimbursed within the time frames set forth in MCL 500.3142, and an insurer will be liable for interest if the bill is not paid timely.”
No-Fault insurers have been “slow walking” claims since the new fee caps went into effect on July 2, 2021. This Bulletin reminds No-Fault insurers that they must comply with the law and not “raise the bar” to require proofs beyond that which is required under the law.
“Examples of products, services, and accommodations not subject to MCL 500.3157 but subject to MCL 500.3107(1)(a) include but are not limited to: services related to guardianship or conservatorship; vehicle modifications; home modifications; computer equipment and supplies; generators; non-emergency medical transportation; non-prescription drugs and over-the-counter medical supplies; and certain case management services.”
The Bulletin also suggests that case management services are not subject to the 55% fee cap, i.e., that they are either subject to payment under Medicare, or under the “reasonable charge” standard of §3107(1)(a). As of this writing, it appears that No-Fault insurers are generally honoring traditional case manager rates as they were before the new law. This is because Medicare pays “chronic case management” at rates commensurate with those traditional rates. So this Bulletin is extremely helpful in limiting the breadth of this devastating fee cap.
OTHER EXCEPTIONS TO THE 55% FEE CAP
Unfortunately, insurers continue to apply the 55% fee cap to custodial care services at residential facilities and in the home. We continue to plead for legislation action to resolve this tragic situation. However, the terms of the legislation are limited to providers that were in operation as of January 1, 2019. That is because the 55% is measured against the providers’ chargemasters or average charges as of that date. Stated another way, if the provider was not in business as of January 1, 2019, and therefore had no chargemaster or average charge as of that date, then the law does not apply. Instead, it would seem that the applicable law on charges is the basic reasonable charge law of §3107(1)(a) and §3157(1).
Once again, insurers do not agree with this and will be fighting this. So once again, we must await Supreme Court determination on this issue.
DIFS UTILIZATION REVIEW (UR) UPDATE
One of the interesting features of the new law is the DIFS UR appeals process. This permits providers to appeal to DIFS an insurance denial or underpayment. This has the advantage of being quicker and less expensive than litigation generally turns out to be. Unfortunately, DIFS promulgated rules that tend to support the process by which insurers reach their decisions. As a result, the early statistics (the process has been open since December 2020) have been discouraging. We have seen DIFS support the insurance decision over 80% of the time in the early going.
TACTICAL ADVICE: CONTINUED NEED FOR ASSIGNMENTS OF BENEFITS
One of the few bright spots of the new No-Fault law was the creation of a right of direct action for service providers:
“A health care provider listed in section 3157 may make a claim and assert a direct cause of action against an insurer, or under the assigned claims plan under sections 3171 to 3175, to recover overdue benefits payable for charges for products, services, or accommodations provided to an injured person.” MCL 500.3112
This has caused some providers to conclude that Assignments of Benefits (AOBs) are no longer needed. To the contrary, we believe that AOBs should continue to be obtained and used.
For one, note the word “overdue” in the statute above; i.e., the provider’s right to assert a direct action is limited by this word. We are not sure what this means as it has not been litigated yet. Consider the following example. The provider renders services on January 1, 2021. But the provider doesn’t submit the clinical and billing records until December 25, 2021. The provider files suit on December 30, 2021. Clearly the suit is “timely” as it is filed within 1 year of the date of service. But the bill cannot be “overdue” at the time of suit, since it was just submitted 5 days earlier. It would be hard to believe that a court could dismiss the providers lawsuit on that basis. But to protect against any such argument, it remains prudent to obtain AOBs from the patient, and sue on that basis as well as the right of direct action.
Another reason for using AOBs is that it protects the provider from the attempts of the patient to settle the provider’s claim without their knowledge. We have now had several recent cases that confirm that an AOB, if it had been used, would have protected the provider’s charge from disposition by the patient. These include Physiatry and Rehab Associates et al v Alhalemi et al, __ Mich App __ (2020), Physiatry and Rehab Associates v State Farm, Ct App #350826 (April 1, 2021) and Advance Pain Care PLLC v Trumbull Ins Co, Ct App #353991 (May 13, 2021), all going to the point that providers should submit AOBs along with their bills. Otherwise, a patient who settles their case may preempt the ability of the provider to act on the AOB and pursue its own charges.
SB28: $25 MILLION SERVICE POST-ACUTE AUTO INJURY PROVIDER RELIEF FUND
In response to the obvious devastation caused by the draconian fee caps in the new No-Fault law, the Legislature passed SB28. The supposed purpose of the new law is to decrease the hardship caused by the new law. SB28 is just as defective as the new No-Fault law. Thoughts:
First, the law provides a limited fund, totaling $25 million. However, provider losses resulting from the No-Fault changes far exceed this little gesture. Once this fund is exhausted, no further relief is available.
Second, the law limits providers to an annual limit of $500,000.
Third, the law imposes ridiculously onerous proof requirements (it would have been nice if the legislature sought to get this kind of detail before passing the 55% fee cap. :
“....a provider must submit all of the following to the department with the provider’s application:
(a) The total number of patients treated by the provider and the entities billed for each patient.
(b) A full list of charges and payments received in response to those charges and supporting invoices for all charges that were charged to and paid by auto insurers for motor-vehicle-accident-related care in 2019.
(c) A full list of charges and payments received in response to those charges and supporting invoices for all charges that were charged to and paid by other forms of insurance or other entities for non-motor-vehicle-accident related care in 2019.
(d) Evidence to demonstrate that the provider attempted to bill for a service that does not have a Medicare code, has not been paid at the charged rate or otherwise reimbursed, and that adjustment has been upheld by the department during the utilization review process under the utilization review rules, R 500.61 to R 500.69 of the Michigan Administrative Code, promulgated by the department under section 3157a of the insurance code of 1956, 1956 PA 218, MCL 500.3157a.
(e) Documentation indicating a good-faith effort to alter business practices to adhere to section 3157 of the insurance code of 1956, 1956 PA 218, MCL 500.3157. The department may determine further requirements to achieve compliance with this subdivision.
(f) Documentation, including full financial statements, indicating a systematic deficit caused by changes to charges, as required by section 3157 of the insurance code of 1956, 1956 PA 218, MCL 500.3157, and payments received in response to those charges. The department may determine further requirements to achieve compliance with this subdivision.
(g) Any other information that the department considers to be necessary to determine whether distribution of money from the fund to a provider is appropriate. The department may determine further requirements to achieve compliance with this subdivision.”
Fourth, there is a “claw back” provision, where DIFS may seek to retrieve any distributed money that is later determined to have been distributed as a result of fraudulent conditions or as a result of fraudulent information. Insurers often make baseless claims of fraud now. This language leaves no confidence that DIFS may not also make such baseless claims and seek to retrieve money already paid by pursuing baseless fraud claims.
Fifth, it is not at all clear what triggers payment. Under section 7(h): “(h) The department shall not consider lost profits alone as a criterion for awarding money to a provider from the fund. The provider must demonstrate that the provider is experiencing a systematic deficit with respect to services offered to persons injured in motor vehicle accidents.” What is a systematic deficit? Does it apply to those who are already out of business?
Perhaps worst of all is section (11): “A provider that avails itself of the fund and to which funds are distributed does so as their exclusive remedy and forgoes all other forms of recovery for the charges for which reimbursement is sought under this section.” This appears to foreclose any other challenges to the law.
MILLER & TISCHLER SETTLEMENTS AND VERDICTS
AUTO NEGLIGENCE: CENTER LINE CROSSING WRONGFUL DEATH CASE. Wayne Miller settled a wrongful death case for all the insurance that was available, $200,000. The challenge to the case was the sheriff’s accident reconstructionist found that our client had crossed the center line. There were no eye witnesses. The solution was to conduct our own accident reconstruction. Our expert opinion exposed the shoddy methodology of the sheriff and convinced the insurers to pay their full limits.
AUTO NEGLIGENCE: MOPED COLLISION WITH CITY BUS. Wayne Miller settled another case also for $200,000 for a moped operator who suffered a severe ankle fracture when a city bus ran a stop sign. Once again, accident reconstruction testimony coupled with eye witness testimony was the key to overcoming another poor accident reconstruction opinion retained by the Defendant.
MEDICAL PROVIDER vs MACP INSURER: PAYS BILLS PLUS NO-FAULT PENALTIES OWED. Maureen Kinsella recently settled a case for a medical service provider client against an MACP insurer where the entirety of the one year old medical bills plus considerable No-Fault penalties were paid: $974,000.
AUTO NEGLIGENCE: ADMITTED LIABILITY REAR-END CRASH. Milea Vislosky obtained a $500,000 settlement for pain and suffering on behalf of our client who suffered severe orthopedic injuries and a mild traumatic brain injury. The defense highly disputed the nature and extent of the injuries, as well as damages. Our client was retired and had significant medical history and pre-existing conditions. Aggressive handling of the case, doctor depositions and extensive knowledge of the medical were the keys to obtaining this great result for our client!
__________________________________________________________
1 It should be understood that the 200% base rate will vary for some hospitals, going from 200% to 250%. The rate for each hospital will decline over the first three years. For example, the base 200% rate will decline to 195% in the second year and 190% in the third year.
M&T ABOUT TOWN
Wayne Miller spoke at the annual Brain Injury Association of Michigan seminar in September 2021.
Wayne, Maureen Kinsella, and Andrew Horne all spoke at the 18th Annual MAJ No-Fault Institute on October 7th and 8th in Novi. Wayne again served as co-moderator.
Wayne will be appearing on a panel discussion on the new no-fault law at the Wayne County Bench/Bar conference on November 30th.
IMPORTANT ANNOUNCEMENTS
Miller & Tischler welcomes attorney Simone R. Sprague. Simone received her Bachelor of Science in Mathematics from the Lee Honors College at Western Michigan University, where she graduated cum laude. Simone attributes her path to becoming a lawyer to her mother’s example – a woman she describes as “never turning down a person in need.” Simone was admitted to the Michigan State Bar in 2018 and previously practiced in the areas of social security disability, general practice, and family law. Outside of the office, Simone enjoys volunteering in the community. She is particularly passionate about causes supporting children, animals, and the elderly.”
On October 12th, we were blessed with a new addition to our family. Emily Winagar joins big brother Ben and mom and dad, Amanda and Michael. The Winagar family is doing great!
