By Alethia Kasben
Gongwer News Service
An individual opting out of personal injury protection benefits for a reduction in auto insurance costs is ineffective if they leave off a resident relative who isn’t covered by another policy and doesn’t have qualified health care, the Michigan Court of Appeals ruled.
Under current law, individuals that meet certain criteria, namely qualified health care, can opt out of PIP coverage on auto insurance policies for a reduction in cost. The law also stipulates if the opt out is ineffective, then the insurer must provide unlimited benefits.
In Northland Radiology, Inc. v. Allstate Fire and Casualty Insurance Company (COA Docket No. 374214), Jacqueline Springer, who has qualified health care through Medicare, opted out of PIP coverage. Springer did not list Dwight Turner, her son, on her policy. Turner is considered a resident relative and under state law. Springer’s opt out applied to both individuals.
However, Turner did not meet the criteria to qualify for an opt-out of PIP benefits. The pair were involved in an auto accident where Turner sustained injuries and was treated by Northland Radiology for three days.
Northland sought payment from Allstate, arguing Springer’s opt out was ineffective because Turner did not qualify for the opt out.
The lower court ruled for the insurance company, but the Court of Appeals reversed. Judge Sima Patel, writing for the court, said the law outlines that an auto insurance policy will provide unlimited medical coverage if an applicant does not make an effective election to opt out of coverage.
Patel, Judge Philip Mariani and Judge Brock Swartzle – who wrote a separate concurrence – reversed the lower court and ruled Allstate’s policy should be considered to provide unlimited PIP benefits.
Swartzle, writing separately, said the auto insurance law “appears to create some odd incentives.”
He wrote under the law, a person can elect to forgo PIP benefits – though it can be determined ineffective – and then after an accident a medical provider can sue the insurer for the cost of PIP-related services, argue the insured’s election to forgo coverage was ineffective because a resident relative did not meet the criteria to forgo PIP and the law outlines that the resident relative is then entitled to unlimited PIP.
“The insured gets the benefit of the reduced premium, and the resident relative and medical provider get the benefit of full PIP coverage because of MCL 500.3107d(4),” Swartzle wrote.
“Even if the no-fault policy is later rescinded as to the insured, it is an open question whether the insurer might still be required to cover the PIP costs related to the resident relative.”
Swartzle wrote it is up to the Legislature to determine if the “odd incentives” are worth an amendment to the no-fault law.
“The insured has an incentive to save some money by being less-than-candid in making or updating an election under MCL 500.3107d. A resident relative has an incentive to save some money by not maintaining qualified health coverage,” he wrote. “And an insurer now has an incentive to spend some money (maybe a great deal) by engaging in an extensive, ongoing investigation to ensure that an insured who opts out of PIP coverage does so effectively.”
Gongwer News Service
An individual opting out of personal injury protection benefits for a reduction in auto insurance costs is ineffective if they leave off a resident relative who isn’t covered by another policy and doesn’t have qualified health care, the Michigan Court of Appeals ruled.
Under current law, individuals that meet certain criteria, namely qualified health care, can opt out of PIP coverage on auto insurance policies for a reduction in cost. The law also stipulates if the opt out is ineffective, then the insurer must provide unlimited benefits.
In Northland Radiology, Inc. v. Allstate Fire and Casualty Insurance Company (COA Docket No. 374214), Jacqueline Springer, who has qualified health care through Medicare, opted out of PIP coverage. Springer did not list Dwight Turner, her son, on her policy. Turner is considered a resident relative and under state law. Springer’s opt out applied to both individuals.
However, Turner did not meet the criteria to qualify for an opt-out of PIP benefits. The pair were involved in an auto accident where Turner sustained injuries and was treated by Northland Radiology for three days.
Northland sought payment from Allstate, arguing Springer’s opt out was ineffective because Turner did not qualify for the opt out.
The lower court ruled for the insurance company, but the Court of Appeals reversed. Judge Sima Patel, writing for the court, said the law outlines that an auto insurance policy will provide unlimited medical coverage if an applicant does not make an effective election to opt out of coverage.
Patel, Judge Philip Mariani and Judge Brock Swartzle – who wrote a separate concurrence – reversed the lower court and ruled Allstate’s policy should be considered to provide unlimited PIP benefits.
Swartzle, writing separately, said the auto insurance law “appears to create some odd incentives.”
He wrote under the law, a person can elect to forgo PIP benefits – though it can be determined ineffective – and then after an accident a medical provider can sue the insurer for the cost of PIP-related services, argue the insured’s election to forgo coverage was ineffective because a resident relative did not meet the criteria to forgo PIP and the law outlines that the resident relative is then entitled to unlimited PIP.
“The insured gets the benefit of the reduced premium, and the resident relative and medical provider get the benefit of full PIP coverage because of MCL 500.3107d(4),” Swartzle wrote.
“Even if the no-fault policy is later rescinded as to the insured, it is an open question whether the insurer might still be required to cover the PIP costs related to the resident relative.”
Swartzle wrote it is up to the Legislature to determine if the “odd incentives” are worth an amendment to the no-fault law.
“The insured has an incentive to save some money by being less-than-candid in making or updating an election under MCL 500.3107d. A resident relative has an incentive to save some money by not maintaining qualified health coverage,” he wrote. “And an insurer now has an incentive to spend some money (maybe a great deal) by engaging in an extensive, ongoing investigation to ensure that an insured who opts out of PIP coverage does so effectively.”
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