DETROIT — Key provisions of Michigan's no-fault auto insurance reform passed in 2019 do not apply retroactively to individuals previously injured in car crashes, a Michigan Court of Appeals panel ruled Thursday.
The 2-1 order will have wide-ranging consequences for the state's efforts to decrease Michigan's highest-in-the-nation auto insurance costs by reversing a key provision of the law that required a 45% fee cut for medical providers serving victims of crashes that occurred prior to the 2019 law change.
Judges Douglas Shapiro and Sima Patel ruled the Legislature "did not clearly demonstrate an intent for the amendments to apply retroactively" when they passed the law in May 2019.
And even if lawmakers did have that intent, the judges said, to do so would "substantially impair no-fault insurance contracts" that were entered into before the effective date of the law, constituting a violation of the contracts clause in the Michigan Constitution.
The 45% cut in payments to home health care providers went into effect July 2, 2021 and capped payments at 55% of what those companies charged insurers on Jan. 1, 2019, about five months before Gov. Gretchen Whitmer signed the bill into law at the Mackinac Policy Conference.
The judges remanded the case to Ingham County Circuit Court, but the order is likely to be appealed to the Michigan Supreme Court.
Court of Appeals Judge Jane Markey dissented in the decision, affirming a lower court ruling that found the Legislature's changes to the law do apply retroactively to individuals injured before the 2019 law change.
The judges in June heard arguments for roughly an hour on whether the 2019 law was retroactively applied, if that retroactivity was the intent of the Legislature and whether the retroactivity violates the constitutional contractual protections of catastrophic crash survivors.
The debate over the law comes as about 17,000 individuals who were injured in a car crash prior to 2019 had their services scaled back because of two specific changes in the reform: Limits on the time family members can be reimbursed for caring for a patient and a cut to the fees medical providers can charge insurance companies for caring for an injured motorist.
Car crash survivors have pinned their hopes on the lawsuit being successful after House Speaker Jason Wentworth, R-Farwell, said in March there are no plans to change the 2019 law, which allowed drivers to forgo carrying unlimited medical coverage to save money.
The fee cuts, medical providers and their clients have argued, are too steep to sustain service at past levels or to continue service at all.
A medical provider survey released earlier this month estimated about 4,082 health care worker jobs have been lost since the fee cut went into place and 6,857 patients discharged, meaning their medical providers discontinued service.
The insurance industry has been skeptical of those numbers and argued the law does nothing more than qualify what constitutes a "reasonable" cost for services as 55% of what the medical providers were charging. In some cases, insurers are paying above the 55% rate cap in order to maintain home care for catastrophically injured drivers.
Proponents of the law have argued there isn't enough data or time to judge the effect on medical care or the potential for the market to balance out. They've instead touted some savings on auto insurance rates, a $400 per-vehicle rebate distributed earlier this year, more insurance companies entering Michigan's marketplace and more individuals securing auto insurance.
Shapiro and Patel argued in their majority opinion that the law provides no language referring to the retroactive application of the fee cuts or limits on family care.
"Had the Legislature wished to overcome the presumption against retroactivity, it surely could have expressed its intent plainly, directly and unequivocally, but it did not do so," the judges wrote.
Those insured prior to the law change "had a legitimate expectation that should they be injured in a motor vehicle accident, they would receive unlimited lifetime benefits, so long as the charges were reasonable and the care reasonably necessary," the order said.
The number of individuals affected by the changes is "by no means de minimis," the judges said, but insurers would get a "windfall" despite already having "collected premiums in an amount sufficient to provide unlimited benefits."
"...to release (insurers) from that responsibility would substantially diminish their well-settled obligations under the pre-amendment no-fault scheme," the judges wrote.
The appellate judges also said the contracts clause of the state constitution prohibits an "ex post facto law" from impairing the obligations in a contract such as those entered into between a driver and auto insurer prior to the 2019 law change.
But the 2019 law, the judges said, wholly removes "numerous duties to be performed by one party to the contract after the other party has fully performed their duties under the contract."
In her dissent, Markey argued the law wasn't being applied retroactively since it applied to the payment of benefits moving forward and wasn't applied to "previously-received treatment."
Setting that aside, Markey argued that the Legislature's requirement that insurance companies report savings from services provided to individuals injured before July 2021 was an acknowledgment that the law applied retroactively to those individuals.
The language of the law "clearly, directly, and unequivocally demonstrates legislative intent to reach accidents and injuries occurring before June 11, 2019," Markey wrote, referencing the date the law took effect.
As for the contract clause, Markey argued the Legislature's imposition of fee schedules and other limits "was a reasonable" check on the contracts those individuals retained with their insurers.
"I note that I am not unsympathetic to plaintiffs' plight, but in this case the Legislature's action must be honored without interference by the judiciary," Markey wrote.
