No No-fault – Michigan Revamps its Auto Insurance Rules

On June 19, 2019

By: Andrew Silverio, Esq.

Recently, the Michigan Senate passed sweeping legislation in an effort to get their auto insurance rates, which are the highest in the nation, under control.  The main way Michigan aims to accomplish this is by eliminating their requirement that auto insurance policies carry unlimited “Personal Protection Insurance” (commonly referred to elsewhere as “Personal Injury Protection” or “PIP” coverage), which is no-fault first party medical coverage.  Under the old system, with exposure to the carrier being quite literally unlimited, premiums predictably climbed to unsustainable levels.

The new law will require that carriers offer PPI options with $500,000 and $250,000 limits, as well as an unlimited option.  It also allows for a $50,000 limit for policyholders on Medicaid only, and importantly, allows policyholders to waive PPI coverage completely if they have Medicare coverage or “other health or accident coverage” which provides benefits for accident claims.

So, why are we talking about changes to auto insurance laws?  Because policies carrying these new limits will shift liability onto health plans.  In light of the previous availability of unlimited PPI coverage, many self-funded Michigan health plans already exclude charges resulting from auto accidents completely.  Under the new law, this should exclude an individual from waiving PPI, however it’s probably unreasonable to expect individuals to be educated enough or review applicable requirements in enough detail to understand these requirements, or for carriers offering these policies to do the legwork to determine whether an applicant’s health plan actually covers auto accident claims.  So, the end result may be that individuals are left with no coverage at all for auto accident claims.  This means that in addition to making sure that plan language is tight, it’s crucial for employers to educate their employees about health coverage and their responsibility to have other coverage available via auto insurance.

This could also impact how plans who don’t exclude auto claims completely – the approach of quickly paying everything up front without question with the understanding that unlimited PPI coverage is available for reimbursement after the fact is no longer such an appealing option.  No matter what the existing approach to these claims, now is the right time for Michigan employers to reexamine how they handle auto accident claims and coordinate with PPI coverage.

Even the best Plans can backfire!

On February 7, 2018

By: Chris Aguiar, Esq.

As we saw last week, you cannot add the Patriots’ winning the Super Bowl to the list of absolutes in life (despite what my New England brethren might tell you).  After death and taxes, few things are a given.  Something similar can be said, that success is not a given, in the world of subrogation/reimbursement. 

Last week, I had the pleasure of traveling to Kansas City, Kansas to testify on behalf of a client in a Preliminary Injunction Hearing in Federal District Court as we attempted to obtain a Temporary Restraining Order, a court proceeding to officially freeze the ability of an attorney or his client from spending money to which the Plan asserts an equitable lien by agreement.   We spent weeks preparing, researching, committing facts to memory, and rehearsing examinations so that we could put our client in the best position to succeed.  Unfortunately, the Judge had other Plans.  Despite having witnesses from Kansas and beyond ready to testify – the Judge did not allow any testimony to be heard.

In the end, we were ultimately able to secure everything we needed for our client, but it's notable that something as simple (and typically predicable) as the procedure that a hearing will follow was entirely up to the discretion of the Judge that day.  The Judge seemed to have an agenda, and there would be no deviating from it.  We ended up on the right side of that agenda, but what if the alternative had been true –a significant risk given that Kansas qualifies as an anti-subrogation state.  It’s very important in subrogation cases to consider all options.  In many cases there is no doubt that the Plan’s rights are strong, but enforcement often comes at a significant cost.  Unfortunately, in the world of Health Subrogation where Plan expenses appear to be limitless while tort reform and other factors allow auto policies to be limited to, in many cases, less than $100,000.00, the cost of enforcing the rights of the Plan in full can leave the Plan worse off than it started.   That can even be true when things go exactly right – imagine when a Judge decides to throw a wrench into “the Plan”!

California Senate Approves Reference Based Pricing

On September 8, 2016
MyHealthGuide Source: Ana B. Ibarra, 8/30/2016, California Healthline and Senate Bill AB-72

Article referred by Bill Rusteberg, RiskManagers.us

A measure to protect California consumers from surprise medical bills — among the longest-debated issues to be considered by state lawmakers — moved closer than it’s ever been to becoming law when the Senate approved it Monday with a 35-1 vote.


The bill would relieve patients from having to pay surprise medical bills out of pocket by requiring insurers to reimburse out-of-network doctors and other health providers a “fair amount” and doctors to accept the payments, said its author, Assemblyman Rob Bonta (D-Oakland).

That rate would be 125 percent of the amount Medicare pays for the same service or the insurer’s average contracted rate for the service, whichever is greater.

The bill still faces additional review before Wednesday, the deadline for passage by the legislature, but its supporters expect it to be sent to the governor for signature.

Surprise medical bills can happen when patients at a hospital or other facility considered in-network by their insurance receive care from a provider who does not contract with the insurer and is considered out-of-network. Since the doctors have no contract with the insurers, they can bill the patients for the full cost of the care. These surprise bills commonly come from radiologists, anesthesiologists or pathologists, specialists likely not chosen by the patient or ones the patient may not even realize has been involved in the care.

Some doctors have chosen to not contract with insurers to allow themselves to command their own higher rates. However, if this legislation passes, providers will be forced to cooperate with insurers and agree upon rates, said Andrea Caballero, program director of the San Francisco nonprofit Catalyst for Payment Reform.

“Because contracted rates are usually higher than Medicare rates, it is hard to say whether the Medicare benchmark will kick in,” Caballero said.

A similar bill last year required that out-of-network providers be reimbursed 100 percent of the amount Medicare pays for a service, but it stalled in the Assembly.

This bill represents a more balanced approach, said Sen. Ed Hernandez (D-West Covina), another of the bill’s sponsors. “This is a more generous payment standard for non-contracting providers.”

But “more generous” depends on whom you ask. Sen. Joel Anderson (R-Alpine), who voted against the bill, said compensation to out-of-network providers could be improved.

“This bill is much closer to a true balance,” Anderson said, “but my problem is, if we don’t compensate [doctors] for all their effort, they won’t do the job. No one is going to work for free.”

Similar measures are being looked at in several other states. Florida recently passed a law exempting patients from having to pay the surprise bills.

Bonta’s bill specifically addresses medical bills only for non-emergency services. Billing patients for emergency care costs that insurers don’t cover is prohibited under state law.

The fight against surprise medical bills has been going on for 16 years, Hernandez said. This bill is the most promising solution thus far, he said.

The bill would also establish an independent dispute process in which doctors can make their case for higher payment.

The bill is significant because it takes the patient out of the middle of the payment dispute between doctors and insurers, consumer advocates say.

“This bill will give consumers some of the strongest protections against surprise out-of-network medical bills in the nation, while ensuring providers are paid fairly,” said Anthony Wright, executive director at Health Access, a Sacramento-based health care advocacy group. “Patients who go to in-network hospitals would only be responsible for in-network cost sharing for all the care they receive.”

To read the text of the legislation:   Assembly Bill No. 72

Court Nixes Health Plan’s Subrogation Claim

On December 23, 2015
Posted December 22, 2015, 3:11 P.M. ET
By Carmen Castro-Pagan
A health plan isn’t entitled to reimbursement of $48,000 in medical expenses it paid on behalf of a minor beneficiary who was injured in an all-terrain vehicle accident, the U.S. District Court for the District of Arizona ruled.


In granting the beneficiary’s motion to dismiss, Judge Diane J. Humetewa ruled Dec. 17 that the plan’s reimbursement clause was unenforceable because it wasn’t included in the formal plan document, but instead was part of the summary plan description. The court further held that in light of the conflict between the plan and the SPD, the terms of the master plan controlled.
The case is Apollo Educ. Grp. Inc. v. Henry, 2015 BL 419831, D. Ariz., No. 2:15-cv-00143-DJH, 12/17/15

The Supreme Court Seeks Solutions to the Latest Challenges to Subrogation Rights in Montanile Case

On December 4, 2015
By Catherine Dowie

The facts of the latest healthcare subrogation challenge on the SupremeCourt’s docket (Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan) will be familiar to many. As you may recall from the June 2015 article,“TheRoad to Recovery: Subrogation Gets Its Day in Court… Again,” following a motor vehicle accident, Robert Montanile’s health plan paid over $120,000 on his behalf, subject to all plan terms, including a subrogation and reimbursement provision.
Read more…

FEHBA Preempts Kansas Anti-Subrogation Regulation

On November 3, 2015
By Carmen Castro-Pagan
The Federal Employees Health Benefits Act preempts a Kansas administrative regulation prohibiting subrogation and reimbursement clauses in health insurance contracts of federal government employees, the U.S. Court of Appeals for the Tenth Circuit ruled .
The appeals court, in the Oct. 29 opinion, joining other federal courts in ruling that FEHBA preempts state laws limiting subrogation and reimbursement clauses. The decision confirmed the lower court’s ruling that a federal employee must reimburse her insurer because federal common law also displaced Kansas regulation.
The case is Helfrich v. Blue Cross & Blue Shield Ass’n, 2015 BL 356222, 10th Cir., No. 14-3179, 10/29/15 

The Domestic Partnership Benefits and Obligations Act of 2013 Seeks to Amend Federal Law

On October 14, 2013
AMICUS UPDATE
United States Senate Bill 1529, the Domestic Partnership Benefits and Obligations Act of 2013, seeks to amend federal law to provide insurance benefits for federal employees in a same-sex domestic partnership and their domestic partners. The Act’s purpose is to offer the same benefits to employees in a same-sex domestic partnership, as statutorily provided for married federal employees and their spouses. Interestingly, the introduction of the bill presented an opportunity to add provisions to Section 402, “Health Insurance”, which attempts to modify Federal Employee Health Benefit (FEHB) laws and address recovery, preemption and jurisdictional issues faced by federal employee health plans seeking to enforce subrogation and reimbursement rights.

Regarding recovery, the bill states that a contract between the federal government and a federal employee plan carrier may require the carrier to make subrogation or reimbursement recoveries for benefits provided to federal employees.

The preemption provision currently found in federal statutes would be modified to express that not only the provisions of a federal employee plan contract but, also the federal statute (5 U.S.C. 8902), preempt state and local laws and regulations which relate to health insurance or any plan.
Finally, a new section would be added to the federal statutes to specifically state that federal district courts have exclusive jurisdiction over civil actions and claims arising under the FEHB statutes, except civil actions and claims against the United States within the exclusive jurisdiction of the U.S. Court of Federal Claims.

The recovery and preemption sections would take effect in the calendar year following the end of a six (6) month period beginning on the date of the enactment of the bill. It would appear that 2015 would be the earliest plan year those sections would apply. The jurisdiction section would take effect immediately upon enactment and would apply to all civil actions pending or filed on or after the date of enactment, regardless of when the injury or illness occurred.

United States House Resolution 3121, the American Health Care Reform Act of 2013, would repeal the Affordable Care Act, make changes to various health insurance laws, and most importantly for NASP members, modify medical liability laws. The bill creates a federal statute of limitations for medical lawsuits, limits damages and attorney fees, addresses punitive and future damages and specifically applies to subrogation claims arising out of a health care liability claim. A health care liability claim is defined as a claim against a “health care provider, health care organization or the manufacturer, distributor, supplier, marketer, promoter or seller of a medical product.”

The statute of limitations in the bill is the sooner of one (1) year after the claimant discovers, or through reasonable diligence should have discovered, the injury or three (3) years after the date of manifestation of the injury. The statute of limitations shall be tolled for the following: (1) fraud, (2) intentional concealment or (3) the presence of a foreign body not having any therapeutic or diagnostic purpose in the claimant. The bill also provides for specific tolling rules for minor claimants.

The bill would limit the amount of noneconomic damages to $250,000 and limit contingent attorney fees to 40% of the first $50,000, 33/13% of the next $50,000, 25% of the next $500,000 and 15% of any amount above $600,000.
Also, the bill would generally preempt any conflicting state law but also specifically supersede state laws providing for a greater amount of damages or contingency fees, a longer statute of limitations or reduced applicability or scope of periodic payments of future damages, as well as a state law which “prohibits the introduction of evidence regarding collateral source benefits or mandates or permits subrogation or a lien on collateral source benefits”. However, the bill does not preempt a state law which provides health care providers or organizations with greater protections from liability, loss or damages than those set forth in the bill. And, the bill does not preempt a state law which specifies a particular amount of compensatory or punitive damages that may be awarded in a health care lawsuit or any defense available to a party in a health care lawsuit.

District of Columbia Bill 339, which was enacted earlier in 2013, modifies the District’s workers’ compensation law. Previously, an injured private sector worker had 6 months from the date of injury in which to file suit against a third party who caused the employee’s injury. If the employee failed to file suit within 6 months, the right to file suit against the third party passed to the employer and its insurer. Bill 339 states that if the employer or its insurer does not file suit against the third party within the six (6) month period, the right to file suit reverts to the employee for the remainder of a 3 year statute of limitations.
Missouri House Bill 339 was enacted effective August 28, 2013. The bill prohibits an uninsured motorist from pursuing noneconomic damages against an at fault driver who is in compliance with the state’s financial responsibility laws.
However, the prohibition does not apply:
• If the at fault driver is proved to be under the influence of drugs or alcohol or is convicted of involuntary manslaughter or second degree assault; or
• If the uninsured motorist’s policy was terminated for failure to pay the premium and the uninsured motorist was not given notice of termination for failure to pay the premium at least 6 months prior to the time of the accident.

Also, in a lawsuit against an at fault driver who is in compliance with the state’s financial responsibility laws by an uninsured motorist, any aware to the uninsured motorist shall be reduced by the amount of the award designated for noneconomic damages and the trier of fact shall not be informed of the inability of the uninsured motorist to pursue or collect noneconomic damages. Finally, passengers in the uninsured motor vehicle are not subject to the recovery limitation.

Special thanks to Adrienne Johnson, CSRP and Senior Subrogation Strategist with Insurance Subrogation Group, for alerting the Amicus Committee to the Missouri Bill.

Kammy Poff, Amicus Chair

Joseph Willis, III, Legislative Affairs Chair