Over the weekend, the Detroit Free Press exploited attorneys who represent injured citizens in Michigan’s no-fault auto insurance system in an article titled “How aggressive lawyers, costly lawsuits and runaway medical bills make Detroit car insurance unaffordable.” In a follow-up article the next day, the Free Press said that insurers are now turning to racketeering lawsuits to stop what they believe is no-fault fraud. State Farm lawyers even said the cases are “a textbook example on the evils of ambulance chasing.”
Here’s the truth: The only so-called “insurance fraud” that exists in Michigan is an insurance industry conspiratorial scheme to delay, deny and refuse benefits to seriously injured people who pay large premiums in exchange for the right to receive benefits when they are hurt. It astounds me that when the word “fraud” is introduced in any discussion about insurance premiums and benefits, none of our elected officials ever take insurance companies to the proverbial woodshed.
Here is a little history:
Prior to 1973, a person involved in an auto accident in Michigan would file a lawsuit against the at-fault driver. Damages would include medical bills, collision damage, lost wages, and pain and suffering. The insurance companies argued that the “fault” system was deficient because too much time and money was spent on attorney fees and court cases arguing over who was at fault. Additionally, they said that medical bill payments and wages were delayed too long. They argued that the courts were clogged by all the litigation and that some people who did not get an attorney would settle their cases for less than appropriate compensation.
These problems were caused by the insurance industry itself, but the industry claimed that the system needed a change for the better and a no fault system was the answer.
In 1973, at the urging of the insurance industry, our current “no-fault” system was put in place. Under the law, if you are seriously injured in an auto accident and need medical treatment, your insurance company must, by law, pay 100% of your medical bills for as long as necessary, even for life. Most states have very limited medical benefits available and the bulk of the medical expense must be paid by the at fault party’s insurance company up to that person’s policy limits. Since the average person is underinsured, the old system left many seriously injured people under compensated. For example, assume you were injured in an auto accident under the pre-1973 “old” system, and rendered a paraplegic because of the other driver’s negligence. Assume further that the at-fault party had a $50,000 liability insurance policy. Your pain and suffering, wage loss and medical award would be limited to the at fault party’s policy limit ($50,000), unless the at-fault party was otherwise collectable. If you were at fault in the accident, you would receive nothing.
Post 1973, under the Michigan no-fault system, you would collect the $50,000 limit from the at-fault party ($0, if you were at fault) but you would be entitled to unlimited medical expenses (hospital bills, medical tests, physical therapy, prescriptions, wheelchairs, home modifications, etc.), for life, regardless of fault. If your injuries were minor, you would receive medical, wage loss and other “no-fault” benefits but no recovery for pain and suffering.
The Free Press (FREEP) articles read like they were written by an unscrupulous insurance company. The articles seek to make you believe that the fault with a no-fault system (no pun intended) is that lawyers will scheme and manipulate claims to their advantage. The articles suggest that the system needs to be modified and dismantled. This is nonsense. The Michigan no-fault statute created the finest pro-citizen system in the United States.
Under the Michigan system, all insured people, regardless of fault, who are seriously injured and need medical treatment, get it. Period. And they get it for as long as they need it, even for life. In exchange, our premiums might be a bit higher than they are in other states. Like Obamacare, that is the price we pay for insuring more people and providing the best benefits in the country. So, we citizens must ask ourselves: If we have the best system in the country, why do insurance companies and politicians want to change or dismantle it? Why are they screaming “fraud” and blaming the lawyers?
The answer should be obvious. We have a pro-citizen system, one in which lawyers who represent injured people can actually take on Goliath insurance companies and hold them fully accountable for the benefits their clients’ premiums paid for. Because the insurance companies never want to pay their own insureds the benefits that their premium dollars pay for, they demonize the lawyers, call them ‘ambulance chasers’ and their own policy holders “frauds”.
Michigan prohibits “ambulance chasing”; Michigan lawyers are forbidden, by law, from directly soliciting legal business from an auto accident victim or family member during the first 30 days after an auto accident. If they are caught doing so, they face fines up to $60,000 and serious jail time. And, it is fraud to inflate an insurance claim; both client and attorney would face serious charges and, again, jail time, for doing so. Contrast that with insurance companies. The FREEP articles don’t mention that insurance companies are the largest abusers of the no-fault system. The articles don’t mention that insurance companies perpetrate fraud without risk of serious penalty. As usual, these corporate interests lie or hide the truth to the detriment of the public interest.
Why doesn’t the FREEP rail against fraudulent claim handling by insurance adjusters, wrongful denials of desperately needed benefits, or dishonest medical evaluations performed by physicians on behalf of insurance companies, issuing medical opinions that their benefactors (insurance companies) have bought and paid for? Millions of dollars that could go to injured people are, instead, paid to doctors who will say whatever the insurance companies want them to say, in direct violation of their “do no harm” oaths.
Insurers like State Farm and Allstate circulate misinformation and propaganda of an “insurance fraud crisis” or “no-fault fraud”, arguing that this is costing Michiganders hundreds of millions of dollars each year. While I am certainly not suggesting that there are no inflated or fraudulent claims, I am, absolutely, suggesting that the vast majority of claims are underpaid because of fraudulent and phony claims handling by insurance adjusters designed to make claim filers think twice about pursuing the full value of their claims. Fraudulent claims practices and underpayments to seriously injured people far exceed any minuscule number of people or lawyers who receive fraudulent overpayments. This in undeniable.
Here is what I am talking about: A policy holder files a no-fault claim or an injury victim files a tort claim. The insurer hires its own doctors, which the company calls “Independent Medical Examiners” (IME-although they are hardly “independent”-they are bought and paid for by the carrier) to perform an examination of the plaintiff and review medical records and tests. The IME doctor will also testify at trial, if necessary. The insurers retain the services of the same doctors, over and over, year after year, in communities all across the country, and instruct them to perform “cursory” evaluations of injury victims, typically lasting no more than 15 minutes to a half hour. These doctors are rarely in current practice (often retired); they do only defense exams, and are paid millions of dollars a year by the insurance companies to produce negative results and write negative reports.
Millions of dollars are added to the cost of litigation (that could be used to fairly compensate victims) to pay doctors for hire, with the singular purpose of generating test results and testimony that plaintiffs have not suffered injuries or that the accidents at issue did not cause their health problems. These tactics gives insurers “cover” when they deny claims and force litigation. A “win at all cost” mentality exists, even if it means mistreating or defrauding their own policy holders. Aside from being a despicable practice that insurance companies use against their own customers, this practice saves them millions in benefit pay-outs and spawns needless litigation.
Drastic changes to Michigan’s No-Fault system would not only financially devastate critically injured auto accident victims, but would shift the burden to the taxpayers in the form of Medicaid. Don’t believe me? Ask Republican Oakland County Executive, L. Brooks Patterson who was critically injured in an auto accident in August 2012. Here is an excerpt from an “open letter” he wrote two years ago:
“A perception has been cast that there is a need to change Michigan’s Auto No-fault insurance system despite the fact that citizens of this great state have already voted twice to maintain the country’s best coverage for auto accident victims… the system is working as it was originally intended and any attempt to change the current law without having independent third party financial information is reckless and would result in damage to Michigan’s economy, shift millions of dollars of cost from private insurance to Medicaid and destroy the livelihood of Michigan’s catastrophically injured auto accident victims.”
Here are some other key points of his letter:
- Making changes to our current auto no-fault system without any real and validated data that substantiates the existence of a real problem is reckless and jeopardizes the balance of our entire statewide health care system.
- The changes pander to the insurance industry, while ignoring basic consumer safeguards that ought to be part of any reform effort.
- Over time, the kind of reform being contemplated could shift billions of dollars in medical costs from insurance companies to taxpayers. The result would be a massive shift to Medicaid.
It is sad that Mr. Patterson (and his catastrophically injured driver) had to suffer serious injuries to find and state the truth. Establishing a “one-sided” insurance authority to investigate and crack down on fraud and abuse doesn’t provide any oversight for insurance companies who are far guiltier of fraud and abuse and have been since the advent of insurance. The proposed board to crackdown on “fraud”, you ask? You guessed it, it would be comprised of insurance company appointees. The fox guards the henhouse. The bill would put price controls on healthcare providers, but where does it provide corresponding benefit to seriously injured people or force insurance companies to pay valid claims? Where is corresponding economic relief (discounted premiums) to insurance customers? These are nowhere to be found.
Tactics and terms like “fraud lawsuit” are designed to send the message that cases are “frivolous” or claims are “fraudulent” or “inflated.” Insurance companies would rather spend profits on phony “lawsuit abuse” campaigns than pay seriously injured accident victims fair compensation. They have made manipulating our civil justice system an art form; they have raked injury victims and their own policy holders out billions of dollars, first through denying, delaying, and defending legitimate lawsuits, then by low-balling victims who are now financially desperate as a direct result of insurers’ tactics. The reality is that claim avoidance tactics by insurance companies are far more costly to the litigation process than anything done on the claimant side.
The cracks that form today undermine the system forever. Insurance carriers, their lobbyists, and pro-insurance company politicians are using the FREEP to circulate “fake news”. They want to gut an important pro-citizen auto no-fault system and restrict, limit, or cap currently unrestricted, unlimited and uncapped benefits (subject to proving a need for them), leaving injured victims with limited benefits or nothing at all. Medicaid, you the Michigan taxpayer, will be left paying the bill, holding the bag.
The wool is being pulled over your eyes and the FREEP is an under-educated, under-informed patsy in the process of enriching already wealthy insurance interests at the expense of injured and disabled people. Access to simple justice is being denied all over this country and the insurance companies are driving the conversation with its anti-citizen narrative. Citizens: Stand up to Goliath. Fight for your rights!
Mark Bello has practiced law for 40 years. He is currently the CEO and General Counsel of Lawsuit Financial Corporation, a pro-justice lawsuit funding company, and the author of the legal thriller “Betrayal of Faith” available on major online book store sites.
Attorney, certified civil mediator, and award-winning author of the Zachary Blake Betrayal Series—Mark Bello is also the CEO of Lawsuit Financial and the country’s leading expert in providing non-recourse lawsuit funding to plaintiffs involved in pending litigation. He is also a member of the State Bar of Michigan, a sustaining member of the Michigan Association for Justice, and a member of the American Association for Justice.