Court decision likely to bring changes for patients, medical providers and no-fault insurers

No-fault insurance is a requirement here in Michigan, and every driver is required to carry minimum coverage amounts. Drivers may, of course, purchase higher coverage amounts and additional options for coverage. An essential aspect of any no-fault policy, though, is personal injury protection, which obligates insurance companies to pay all of their insured’s medical costs.

Under Michigan law, automobile insurers have the obligation to pay valid claims and medical bills within 30 days or they face penalty interest payments. Accidents victims who aren’t covered properly have the right to sue their insurance company for no-fault benefits under the terms of their policy. Often, though, it is medical providers who file these lawsuits. 

Medical providers usually file these claims when insurance companies refuse to pay claims or terminate coverage for those insured under no-fault policies. Not surprisingly, insurance companies have spread these costs to insured in the form of higher premiums. Last month, however, the Michigan Supreme Court ruled that hospitals, clinics and other medical providers do not have the right to sue insurance companies for payment on bills of patients using no-fault insurance. The decision could have a number of possible effects, though exactly how things will play out remains to be seen.

Opponents of the decision say it will force patients to see to it that their insurers pay their medical providers after accidents, and would likely result in an increase in consumer litigation against insurers. Auto insurance providers and other proponents say, however, that the decision could actually reduce costs for consumer if medical providers lower prices to ensure full payment in the event insurance denies coverage.

Both medical providers and the insurance industry, stand to lose something as a result of the decision, though: medical providers may have to start writing off more bills not picked up by no-fault insurance, and both patients and insurers may end up picking up the costs under ordinary health insurance plans.

Another possible outcome is that medical providers may increasingly turn to assignment of benefits arrangements. We’ll say more about this topic in a future post, and the role experienced legal counsel can play in helping insurance companies handle these matters. 

Source: Michigan Department of Insurance and Financial Services, Consumer Counselor: Insurance Information for Michigan Consumers, June 2017