A. Vince Colella
Moss & Colella P.C.
Moss & Colella P.C.
A troubling gap in Michigan’s 2019 no-fault reform act has become increasingly apparent as auto insurance companies exploit provisions allowing family members to be excluded from coverage without their knowledge or consent.
In a recent Jackson County Circuit Court case, this oversight led to devastating consequences for a motorcyclist who suffered serious injuries in a freeway accident, including severe damage to his pelvis and wrist. The victim required extensive medical care, including surgery, inpatient hospitalization, and a comprehensive physical therapy and rehabilitation program, ultimately incurring medical expenses exceeding $100,000.
Unknown to the injured motorcyclist, his spouse had previously elected to exclude him from their Personal Injury Protection (PIP) medical coverage, exercising a provision within the no-fault statute that permits opting out when covered under a qualified health plan. The motorcyclist’s situation became dire when it was discovered that his qualified health plan contained an exclusion for medical expenses related to motor vehicle accidents—a critical detail his spouse likely overlooked when making the election.
Michigan’s transition to a cafeteria-style approach for auto insurance coverage has left drivers facing complex premium decisions and potentially devastating consequences when insurance carriers fail to explain nuances that could substantially impact post-accident coverage adequately.
The provision central to the Jackson County case, MCL 500.3107c, allows an applicant or named insured to select PIP coverage limits of $250,000 per individual per loss. Yet the coverage decisions extend beyond mere limit selection — under MCL 3017d, the applicant or named insured can exclude their spouse and any household relatives by simply indicating they have qualified health care plan coverage. While the Act requires insurers to provide a standardized form for excluding family members and mandates that these forms explain coverage limits and associated risks, it does not require applicants to prove their excluded family members have qualified healthcare coverage. This oversight creates a dangerous scenario where spouses and household members risk complete loss of PIP coverage for medical expenses following a severe accident. Most concerning is the apparent absence of any statutory duty requiring auto insurance companies to notify family members when they’ve been excluded from the policy by the named insured.
The Department of Insurance and Financial Services (DIFS) anticipated these coverage gaps when it amended its model form for PIP medical opt-outs. DIFS Bulletin 2023-11-INS, which contains the agency recommendations for all Michigan automobile insurance companies, explicitly requires “specific proof for Qualified Health Coverage purposes.” The amended form contains language mandating that an applicant or named insured “provide current updated documentation every year for … qualified health coverage.” The language appears to be more than a mere recommendation; rather, it imposes an implicit obligation on insurers to verify that any spouse or family member being excluded from PIP medical coverage maintains qualified healthcare coverage. The model form thus attempts to create a safeguard that the legislature failed to include in the statutory framework. However, without explicit statutory authority requiring insurers to follow DIFS’ guidance, the model form’s protective measures may prove toothless in practice.
The no-fault Act’s silence regarding protection against unauthorized coverage opt-outs creates a significant vulnerability for Michigan motorists. When challenged on these issues, auto insurance companies will likely seek refuge in principles of statutory construction that prevent courts from reading additional requirements into unambiguous statutes, as recently demonstrated in Bronson Health Care Group v Esurance, ___ Mich App ___ (2023) (Docket No. 363486). However, courts confronting these cases should balance strict constructionist approaches against compelling public policy considerations that have historically shaped Michigan’s no-fault system. Since its inception in 1972 until the 2019 reforms, Michigan’s no-fault system prioritized protecting motorists against catastrophic medical and financial losses following auto accidents. While recent reforms may signal a shift away from guaranteed unlimited medical coverage, the legislature’s inclusion of a qualified health coverage requirement for PIP opt-outs clearly indicates it did not intend to leave motorists completely exposed to devastating medical bills. This suggests courts should interpret the Act’s provisions to prevent family members from being stripped of coverage without their knowledge, consent, or proof of alternative coverage.
The evolving landscape of Michigan’s no-fault insurance system has created unforeseen gaps in coverage that can devastate families following serious accidents. While the legislature’s intent may have been to provide flexibility and cost savings through various coverage options, the lack of statutory safeguards has allowed insurance companies to exclude family members from coverage without their knowledge or consent. Until the legislature addresses these oversights, courts should interpret the Act’s provisions in a manner that promotes its historical purpose of protecting Michigan motorists from catastrophic losses. At a minimum, insurance carriers should be required to verify qualified health coverage for excluded individuals and provide notice to all affected household members.
Without these basic protections, more Michigan residents may face overwhelming medical bills despite believing they have adequate insurance coverage.
—————
A.Vince Colella is a founding partner of personal injury and civil rights law firm Moss & Colella.
In a recent Jackson County Circuit Court case, this oversight led to devastating consequences for a motorcyclist who suffered serious injuries in a freeway accident, including severe damage to his pelvis and wrist. The victim required extensive medical care, including surgery, inpatient hospitalization, and a comprehensive physical therapy and rehabilitation program, ultimately incurring medical expenses exceeding $100,000.
Unknown to the injured motorcyclist, his spouse had previously elected to exclude him from their Personal Injury Protection (PIP) medical coverage, exercising a provision within the no-fault statute that permits opting out when covered under a qualified health plan. The motorcyclist’s situation became dire when it was discovered that his qualified health plan contained an exclusion for medical expenses related to motor vehicle accidents—a critical detail his spouse likely overlooked when making the election.
Michigan’s transition to a cafeteria-style approach for auto insurance coverage has left drivers facing complex premium decisions and potentially devastating consequences when insurance carriers fail to explain nuances that could substantially impact post-accident coverage adequately.
The provision central to the Jackson County case, MCL 500.3107c, allows an applicant or named insured to select PIP coverage limits of $250,000 per individual per loss. Yet the coverage decisions extend beyond mere limit selection — under MCL 3017d, the applicant or named insured can exclude their spouse and any household relatives by simply indicating they have qualified health care plan coverage. While the Act requires insurers to provide a standardized form for excluding family members and mandates that these forms explain coverage limits and associated risks, it does not require applicants to prove their excluded family members have qualified healthcare coverage. This oversight creates a dangerous scenario where spouses and household members risk complete loss of PIP coverage for medical expenses following a severe accident. Most concerning is the apparent absence of any statutory duty requiring auto insurance companies to notify family members when they’ve been excluded from the policy by the named insured.
The Department of Insurance and Financial Services (DIFS) anticipated these coverage gaps when it amended its model form for PIP medical opt-outs. DIFS Bulletin 2023-11-INS, which contains the agency recommendations for all Michigan automobile insurance companies, explicitly requires “specific proof for Qualified Health Coverage purposes.” The amended form contains language mandating that an applicant or named insured “provide current updated documentation every year for … qualified health coverage.” The language appears to be more than a mere recommendation; rather, it imposes an implicit obligation on insurers to verify that any spouse or family member being excluded from PIP medical coverage maintains qualified healthcare coverage. The model form thus attempts to create a safeguard that the legislature failed to include in the statutory framework. However, without explicit statutory authority requiring insurers to follow DIFS’ guidance, the model form’s protective measures may prove toothless in practice.
The no-fault Act’s silence regarding protection against unauthorized coverage opt-outs creates a significant vulnerability for Michigan motorists. When challenged on these issues, auto insurance companies will likely seek refuge in principles of statutory construction that prevent courts from reading additional requirements into unambiguous statutes, as recently demonstrated in Bronson Health Care Group v Esurance, ___ Mich App ___ (2023) (Docket No. 363486). However, courts confronting these cases should balance strict constructionist approaches against compelling public policy considerations that have historically shaped Michigan’s no-fault system. Since its inception in 1972 until the 2019 reforms, Michigan’s no-fault system prioritized protecting motorists against catastrophic medical and financial losses following auto accidents. While recent reforms may signal a shift away from guaranteed unlimited medical coverage, the legislature’s inclusion of a qualified health coverage requirement for PIP opt-outs clearly indicates it did not intend to leave motorists completely exposed to devastating medical bills. This suggests courts should interpret the Act’s provisions to prevent family members from being stripped of coverage without their knowledge, consent, or proof of alternative coverage.
The evolving landscape of Michigan’s no-fault insurance system has created unforeseen gaps in coverage that can devastate families following serious accidents. While the legislature’s intent may have been to provide flexibility and cost savings through various coverage options, the lack of statutory safeguards has allowed insurance companies to exclude family members from coverage without their knowledge or consent. Until the legislature addresses these oversights, courts should interpret the Act’s provisions in a manner that promotes its historical purpose of protecting Michigan motorists from catastrophic losses. At a minimum, insurance carriers should be required to verify qualified health coverage for excluded individuals and provide notice to all affected household members.
Without these basic protections, more Michigan residents may face overwhelming medical bills despite believing they have adequate insurance coverage.
—————
A.Vince Colella is a founding partner of personal injury and civil rights law firm Moss & Colella.
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