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Judge set to decide legal challenge to Michigan's new auto no-fault law

Beth LeBlanc
The Detroit News

An Ingham County circuit judge will decide the fate of a lawsuit challenging Michigan's new no-fault auto reform law after hearing arguments Wednesday regarding the suit's legitimacy.

The state and two insurance companies asked Judge Wanda Stokes in a Zoom hearing to dismiss the case filed by two individuals challenging the law's changes to medical fee schedules and reimbursement for in-home attendant care. The more than hour-long hearing was interrupted or Zoom-bombed early in the proceeding by explicit video and language. 

Stokes said she would issue an opinion in the next 20 days, but said she suspects her decision likely will be appealed to a higher court. 

Michigan Gov. Gretchen Whitmer signs historic no-fault auto insurance reform legislation.

"It affects not only the two plaintiffs that we have in this case," she said. "I think it has implications for all of our insurers throughout the state.”

The law, passed in May 2019, changes the reimbursement schedule for family members providing attendant care and imposes a fee schedule governing how much auto insurance companies can reimburse medical providers.

Critics have argued the changes were rushed through the Legislature and would compromise the state's catastrophic crash benefits in an effort to lower the state's highest-in-the-nation auto insurance rates. 

The lawsuit arose from claims filed on behalf of Ellen Andary, who was injured by a drunken driver in 2014, and Phillip Krueger, who was injured in a pickup truck crash in 1990. Andary receives 24-hour care provided by family members while Krueger has received services since 1997 through the Ann Arbor-based Eisenhower Center, a brain injury rehabilitation clinic party to the suit and challenging the fee schedule limitations.

The lawsuit seeks to upend the entire law, based on the two provisions, which they call unconstitutional and a violation of Andary and Krueger's due process, equal protection and contract rights. 

There is no constitutional right to in-home attendant care, said Lori McCalliser, a lawyer representing USAA Casualty Insurance Company and Citizens Insurance Company of America. The new law simply put "meat on the bones" of what's considered reasonable care within existing contracts between insurers and the insured; it didn't change the existing contracts, she said. 

"Whether you agree with what they did or don’t agree — whether you think they should have taken two years or one month — is constitutionally not relevant," McCallister said.

The plaintiffs have not yet sustained any substantial injury from the new law and therefore lack standing to bring the case since the attendant care provisions don't go into effect until 2021, said Christopher Kerr, a lawyer for the Michigan Department of Insurance and Financial Services. 

Insurance companies could decide by 2021 to provide reimbursement for more than the minimum 56 hours of attendant care, he said. 

Mark Granzotto, a lawyer for individuals bringing the case, urged Stokes to allow the case to proceed, maintaining there was still a lot that needed to be uncovered to see if the Legislature had a rational basis for changing the law.  

"All of this stuff that they did in 2019 — changed the law, changed the contracts — was designed to lower the automobile insurance rates," Granzotto said. But the question remains whether the law will lower rates and what types of contractual infringements it made in the process, he said.  

"My clients are not getting the benefits that they have been receiving over the years simply because of the no fault act," he said. "This why the contract clause is implicated. The contractual relationship between my client and the defendant is being affected."

Granzotto argued that, because of a last-minute amendment to the new law in 2019, the language and implications of the law were not given due process. But that consideration could come through litigation. 

"This is a case that should proceed, it should proceed to have an analysis, an analysis which regrettably was not forthcoming from the Michigan Legislature," he said.