Hello friends. We are glad to close the book on 2019. The disastrous changes to the no-fault law have occurred and it is our job now to understand those changes and move forward. This newsletter will summarize some of the developments as we come to terms with the new law. Though the worst parts of the law (capped benefits, fee schedules, utilization review, managed care) are here to stay, there are some rays of hope.
First, as destructive as the new law will be as to service provider claims (capped benefits, utilization review and draconian fee schedules among them), the new law does make it easier for providers to bring claims. The terrible Supreme Court decision in Covenant v State Farm (2017), holding that service providers have no right of direct action against no-fault insurers, is overruled under the new law. Coupled with court decisions that uphold the validity of assignments (and the invalidity of anti-assignment clauses), and the ability to intervene into existing cases, service providers are now better able to present their claims in litigation.
Second, among the worst of the destructive features of the new law is the 55% fee schedule for non-Medicare services. This fee schedule will quite simply destroy whole industries such as the long term residential TBI rehabilitation industry. At present, we are cautiously optimistic that there is a legislative willingness to review this disastrous part of the law.
Third, the Department of Insurance and Financial Services (DIFS) has thus far shown energy and intelligence in discharging its many obligations under the new law. For example, DIFS Order #49 suspended the change that would cap claims of uninsured passengers and non-occupants at $250,000. Though this is being challenged in the courts, there are many people who are now getting full/unlimited no-fault coverage due to the courage of DIFS in issuing this Order. DIFS has also issued disclosure forms that will go into effect in July 2020 as people will then be required to make choices as to PIP and Liability coverages. The forms were difficult to draft. But we believe that DIFS final product is fair and reasonable.
Fourth, PIP Choice warnings. As referenced in the previous paragraph and as most know by now, PIP "Choice" goes into effect in July 2020. People will have the ability to buy limits lower than the unlimited/catastrophic coverage that has been required since 1973. Friends and relatives need to be educated on these changes, and urged to buy the highest limits that they can. A poorly understood aspect of "Choice" is that people who choose less than unlimited coverage will now have the ability to sue the at-fault driver for medical bills beyond the limits of their coverage. Example: if a person buys $500,000 in no-fault coverage but then is catastrophically injured in a motor vehicle accident, that person may sue the at-fault driver for medical bills beyond the $500,000. Thus, the new law takes away our tort immunity from such claims. Everyone is therefore urged to buy much higher liability limits to protect against higher medical claims that will no longer be covered by no-fault insurance. This is one of the areas where costs will go up and will thereby act against the promise of lower auto insurance costs.
Fifth, utilization review. Another of the less publicized areas of the new is that of utilization review. Under ยง3157a of the new law, DIFS is authorized to:
"... promulgate rules...to do both of the following:
(a) Establish criteria or standards for utilization review that identify utilization of treatment, products, services, or accommodations under this chapter above the usual range of utilization for the treatment products, services, or accommodations based on medically accepted standards.
(b) Provide procedures related to utilization review, including procedures for all of the following:
(i) Acquiring necessary records, medical bills, and other information concerning the treatment, products, services, or accommodations provided.
(ii) Allowing an insurer to request an explanation for and requiring a physician, hospital, clinic, or other person to explain the necessity or indication for treatment, products, services, or accommodations provided.
(iii) Appealing determinations."
In brief, it appears that the new law potentially creates a whole new apparatus to empower no-fault insurers to delay and obstruct payment. The danger of this provision should not be underestimated while we confront the more well-known dangers of PIP caps and fee schedules. In our opinion, this provision is completely unnecessary as insurers have long had more than adequate tools to assess the claims of providers. This new apparatus will serve simply to make the provision of health care more difficult and expensive (at the same time that charges are subject to draconian regulation). As DIFS is still in the rule making phase, all stakeholders are urged to be on high alert. We will of course keep you posted.
II. CASE LAW DEVELOPMENTS: SEMI-SUPERVISED APARTMENT PROGRAMS
Both the old and the new no-fault law require that services be "lawfully rendered" before insurers may reimburse. If a service requires a license, the failure to have a license will render the services unlawfully rendered, and therefore not reimbursable.
Frequently litigated in the last couple of years is the area of Adult Foster Care (AFC) facilities. A license is required for AFC facilities. Several cases have held that the failure to have an AFC license will render the AFC services unlawfully rendered and not reimbursable.
The law defines AFC facilities as including "... foster care family homes for adults who are aged, mentally ill, developmentally disabled, or physically disabled who require supervision on an ongoing basis but who do not require continuous nursing care." Foster care is defined as: "...the provision of supervision, personal care, and protection in addition to room and board, for 24 hours a day, 5 or more days a week, and for 2 or more consecutive weeks for compensation provided at a single address."
Insurance efforts to police AFC licensure has resulted in an overly broad effort to target facilities that are clearly not AFC facilities. In particular, insurers have targeted semi-supervised apartment programs for the traumatically brain injured. Semi-supervised programs have developed in recent years to fill a gap in the care continuum between long term residential care facilities and complete independence in the community. Many survivors of TBI no longer need residential care, but also cannot live independently. Semi-supervised apartment programs allow persons to live as independently as possible but with a degree of intermittent monitoring. A very recent case considered whether a semi-supervised apartment program qualified as an AFC facility and required licensure. In Life Skills Village et al v Nationwide Mut Fire Ins Co, Ct App #345237 (December 17, 2019), the Court of Appeals found that the facility at issue was not required to be licensed as an adult foster care facility. The case turned on whether plaintiff provided "personal care" to its resident. "Personal care" is in turned defined as:
"...personal assistance provided by a licensee or an agent or employee of a licensee to a resident who requires assistance with dressing, personal hygiene, grooming maintenance of a medication schedule as directed and supervised by the resident's physician, or the development of those personal and social skills required to live in the least restrictive environment." MCL 400.706(1).
The Court of Appeals found that plaintiff "...did not personally assist its residents with the above listed activities; it merely reminded or prompted the residents to complete those tasks." This is an important case that should provide some much-needed guidance to providers and insurers alike. It should also provide a level of reassurance to those concerned that unlicensed semi-supervised apartment programs would not satisfy the "lawfully rendered" requirement of the no-fault law.
We are excited to announced the launching of our new website. Please visit us at
www.millertischler.com
. Let us know what you think!
