No-fault auto insurance hits home in Southwest Michigan

ST. JOSEPH — Michigan's no-fault auto reform is working great for the auto insurance companies, but not for those catastrophically injured in automobile accidents, said Sarah Rhein, registered nurse manager for Private Duty Home Healthcare of St. Joseph.

Rhein spoke during a community conversation held at her office Thursday about how the first year of auto reform has gone.

"It's working very well for (the auto insurance industry) because they're saving a boat-load of money," said Sarah Rhein, registered nurse manager for Private Duty Home Healthcare of St. Joseph.

The law was passed in 2019, but she said the part that is hurting catastrophically injured people didn't kick in until July 1, 2021. That is when auto insurance companies were required to start reimbursing providers at 55 percent of what they were paying in 2019 for services not covered by Medicare, which includes most home health care. That rate dropped to 54 percent this July and will drop to 52.5 percent after July 1, 2023.

Rhein said no one can afford to continue working at 55 percent of what they were paid in 2019.

"We have the option of abandoning a vulnerable, disabled person who, in some cases, may die if we discharge them, or we can provide services at a loss indefinitely, which isn't possible," Rhein said.

She said the benefits to all catastrophically injured people were cut because no one was "grandfathered" in.

Theresa Ruedisueli, regional director for Arcadia Home Care, which includes an office in Benton Harbor, said her company was caring for 30 patients injured in automobile accidents when the changes kicked in.

"We have about 15 now that we've been able to continue care for," she said, adding that she's unsure how long those 15 will be able to pay for 45 percent of their care out of their own pockets.

Ruedisueli said her company has $2 million in unpaid bills on the books due to the reduced payments auto insurance companies are making.

"It isn't sustainable," she said. "It's impossible to keep continuing this level of coverage with no resolution in sight."

In addition, Rhein said at least five people have died around the state after losing their home health care coverage due to the changes in the law.

Before the law was changed, drivers were required to have unlimited personal injury protection (PIP) coverage, meaning Michigan drivers had among the most expensive auto insurance in the nation.

Rhein said the state's auto insurance is still among the highest.

"You should care because you are paying close to what you were (paying) pre-reform for drastically reduced coverage," she said.

Rhein said there are 18,000 people in the state who were catastrophically injured in an automobile accident. Another 1,000 people are expected to be injured every year.

In 1978, the Michigan Legislature created the Michigan Catastrophic Claims Association (MCCA), a private nonprofit entity that sets how much the PIP benefits will cost per vehicle, which is passed on to drivers through their auto insurance companies.

Rhein said the MCCA has $23 billion in excess PIP money that could be used to continue to provide care to catastrophically injured people.

She said that is private money people paid to their auto insurance companies, not tax money. Before the new law, she said the insurance companies told the MCCA how much coverage an injured person needed.

"Now, the MCCA can tell your insurance company, 'We're not going to reimburse you if you pay for this care,'" Rhein said. "You have a contract with your insurance company. You don't have a contract with the MCCA, but they're calling the shots as to what you can get."

Ruedisueli said when she tells people about the changes and the devastating consequences they are having on catastrophically injured people, they are astonished and want to know how they can help.

She said people can find more information on the Facebook page "We Can't Wait."

Rhein said she was disheartened no local elected officials attended the community conversation Thursday. She said she was told they would be available after the August primary election, which was last week.