Michigan’s No-Fault Law and Health Insurance Liens
Michigan’s new No-Fault PIP law creates a choice for all Michigan drivers. Any auto insurance policy effective after July 1, 2020 (new or renewed) allows drivers a choice of six coverage levels – each with a different lien resolution impact:
- $0 / Allowable Expenses Exclusion – This opt-out of PIP requires all household members to be covered by Medicare Parts A & B
- $50,000 – requires all household members to be enrolled in Medicaid or Medicare Parts A & B
- $250,000 with PIP exclusion – requires health insurance that does not limit coverage in auto accidents (with a deductible of $6,000 or less per person)
These new limits mean that as of July 1, 2020, Bodily Injury (as well as Uninsured Motorist, and Under-insured Motorist) lawsuits may now include excess medical benefits. Previously, such lawsuits were statutorily not including medicals.
Medicare and Michigan’s New No-Fault Law
Medicare is a federally funded and federally run insurance program for people who are 65 or older, certain younger people with disabilities, diabetics, and people with End-Stage Renal Disease (permanent kidney failure). Until the new No-Fault law, Michigan had been the one and only state of fifty to maintain unlimited no-fault coverage. This solitary state meant that Medicare couldn’t quite figure out how to handle Michigan’s automobile lawsuits.
The process will be simpler for Medicare to understand, however, there are additional concerns the plaintiff needs to be aware of.
The government will now have a right to claim it’s Medicare Lien on both the 1st Party/No-Fault case and the 3rd Party/Bodily injury case. It may end up opening three files for each accident:
- Commercial Repayment Center (“CRC”)’s Medicare No-Fault file where the insurance carrier is the “debtor.” This is Medicare’s direct claim to the No-Fault carrier asking the carrier to repay it immediately.
- Benefits Coordination & Recovery Center (“BCRC”)’s Medicare No-Fault file where the injured person (a/k/a “the plaintiff” or “beneficiary”) is the debtor. This is Medicare’s claim for repayment where payment is due once the No-Fault carrier settles with and sends payment to the plaintiff.
- Benefits Coordination & Recovery Center (“BCRC”)’s Medicare Liability file where the injured person is the debtor. This is Medicare’s claim for repayment where payment is due once the 3rd Party carrier settles for the Bodily Injury or liability claim against another driver.
In both of #2 and #3 above, the plaintiff’s debt to Medicare only exists after a settlement payment is made.
This new system differs from the past because Medicare legally should not have collected from nearly any 3rd Party/Bodily Injury case because Michigan law prevented medical payments in those cases. While MASSIVE has had success completely removing all Medicare Liability liens for Michigan BI cases, beginning July 1, 2020, Medicare is likely to claim its right is now universal. It will be important to work with Medicare’s BCRC to shift all lien claims to its Medicare – No-Fault (BCRC) file.
Medicaid and Michigan’s New No-Fault Law
Michigan Medicaid is better situated to understand its home state’s No-Fault law. As a result, Medicaid Lien Resolution has been simpler than that for Medicare. The Michigan Department of Health and Human Services (“MDHHS”) has generally opened just one file for its Medicaid liens. It will likely continue to do the same; however, much like Medicare, it will want to be paid from any and all settlements.
MDHHS will argue that even if No-Fault is not exhausted, it must be paid from a BI case because there is no guarantee the remaining No-Fault will be paid to a plaintiff or MDHHS. Whether this is the final process is yet to be seen.
Other Health Insurance and Michigan’s New No-Fault Law
“Other Health Insurance” is a diverse category. It includes commercial health plans, ERISA health plans, TriCare (military) health, FEHBA, and more. These plans all play by different rules – some use federal law to preempt state laws. For example, even where Michigan’s No-Fault act has (prior to July 1, 2020) specifically limited medical claims to a plaintiff’s own insurance, the ERISA and FEHBA carriers have claimed nearly infinite rights to reimbursement.
The changes and new limitations to Michigan’s No-Fault law only strengthen those arguments. Attorneys’ needs to settle with liens in mind will apply to Bodily Injury cases just as much as PIP cases.