Bill Text: MI HB5854 | 2013-2014 | 97th Legislature | Introduced

---

Bill Title: Insurance; no-fault; assigned claims; modify various provisions relating to. Amends secs. 102, 3101a, 3171, 3172, 3173, 3173a, 3174, 3175, 3177 & 3178 of 1956 PA 218 (MCL 500.102 et seq.).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2014-12-04 - Placed On Third Reading [HB5854 Detail]

Download: Michigan-2013-HB5854-Introduced.html

---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE BILL No. 5854

 

September 23, 2014, Introduced by Rep. Lund and referred to the Committee on Insurance.

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending sections 102, 3101a, 3171, 3172, 3173, 3173a, 3174,

 

3175, 3177, and 3178 (MCL 500.102, 500.3101a, 500.3171, 500.3172,

 

500.3173, 500.3173a, 500.3174, 500.3175, 500.3177, and 500.3178),

 

section 102 as amended by 2000 PA 252, section 3101a as amended by

 

2011 PA 91, sections 3171, 3172, 3173a, 3174, and 3175 as amended

 

and section 3178 as added by 2012 PA 204, and section 3177 as

 

amended by 1984 PA 426.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 102. (1) As used in this act:

 

     (a) "Commissioner" as used in this act means the commissioner

 

of the office of financial and insurance services. director.

 

     (b) (2) "Department" as used in this act means the office

 

department of financial and insurance and financial services.

 

     (c) "Director" means the director of the department.

 

     Sec. 3101a. (1) Except as otherwise provided in this section,

 

an insurer, in conjunction with the issuance of an automobile

 

insurance policy, as defined in section 3303, shall provide 2

 

certificates of insurance for each insured vehicle. The insurer

 

shall mark 1 of the certificates as the secretary of state's copy,

 

which copy, except as otherwise provided in this section, shall be

 

filed with the secretary of state by the policyholder upon

 

application for a vehicle registration. The secretary of state

 

shall not maintain the certificate of insurance received under this

 

subsection on file.

 

      (1) (2) Beginning December 30, 2011, an An insurer, in

 

conjunction with the issuance of an automobile insurance policy,

 

shall provide to the insured 1 certificate of insurance for each

 

insured vehicle, and for private passenger nonfleet automobiles

 

listed on the policy shall supply to the secretary of state , in

 

the format and timeline as required by the secretary of state,

 

which shall not be required more frequently than every 14 days, the

 

automobile insurer's name, the name of the named insured, the named

 

insured's address, the vehicle identification number for each such

 

private passenger nonfleet vehicle listed on the policy, and the

 

policy number. The insurer shall supply the information required

 

under this subsection in the format and on a timeline as required

 

by the secretary of state. The secretary of state shall not require

 

the submission of information under this subsection more frequently

 

than every 14 days. In determining the format under this

 

subsection, the secretary of state shall consult with insurers. As

 

used in this subsection, "private passenger nonfleet automobile"

 

means that term as defined in section 3303.

 

     (2) The secretary of state shall provide policy information

 

received under subsection (1) to the Michigan automobile insurance

 

placement facility as required for the Michigan automobile

 

insurance placement facility to comply with this act.

 

     (3) Until December 31, 2014, the secretary of state shall

 

provide policy information received under this subsection (1) to

 

the department of community health as required for the department

 

of community health to comply with 2006 PA 593, MCL 550.281 to

 

550.289. In determining the format under this subsection, the

 

secretary of state shall consult with insurers. As used in this

 

subsection, "private passenger nonfleet automobile" means that term

 

as defined in section 3303.

 

     (4) (3) The secretary of state shall accept as proof of

 

vehicle insurance a transmission of the insured vehicle's vehicle

 

identification number. Policy information submitted by an insurer

 

and received by the secretary of state under this section is

 

confidential, is not subject to the freedom of information act,

 

1976 PA 442, MCL 15.231 to 15.246, and shall not be disclosed to

 

any person except the department of community health for purposes

 

of 2006 PA 593, MCL 550.281 to 550.289, or pursuant to an order by

 

a court of competent jurisdiction in connection with a claim or

 

fraud investigation or prosecution. The transmission to the

 

secretary of state of a vehicle identification number is proof of

 

insurance to the secretary of state for motor vehicle registration

 

purposes only and is not evidence that a policy of insurance

 

actually exists between an insurer and an individual.

 

     (5) (4) A person who supplies false information to the

 

secretary of state under this section or who issues or uses an

 

altered, fraudulent, or counterfeit certificate of insurance is

 

guilty of a misdemeanor punishable by imprisonment for not more

 

than 1 year or a fine of not more than $1,000.00, or both.

 

     (5) The department of community health shall report to the

 

senate and house of representatives appropriations committees and

 

standing committees concerning insurance issues on the number of

 

claims and total dollar amount recovered from automobile insurers

 

pursuant to 2006 PA 593, MCL 550.281 to 550.289. The reports

 

required by this subsection shall be given to the appropriations

 

committees and standing committees concerning insurance issues by

 

December 30, 2012 and December 30, 2013 and shall cover the

 

immediately preceding 12-month period.

 

     Sec. 3171. (1) Until an assigned claims plan is approved under

 

subsection (3), the secretary of state shall organize and maintain

 

an assigned claims facility and plan. A self-insurer and insurer

 

writing insurance as provided by this chapter in this state shall

 

participate in the assigned claims plan. Costs incurred in the

 

operation of the facility and the plan shall be allocated fairly

 

among insurers and self-insurers. The secretary of state shall

 

promulgate rules to implement the facility and plan in accordance

 

with and subject to the administrative procedures act of 1969, 1969

 

PA 306, MCL 24.201 to 24.328. After an assigned claims plan is

 

approved under subsection (3), the secretary of state shall

 

continue to maintain the assigned claims facility and plan

 

organized under this subsection as required by the plan approved

 

under subsection (3).

 

     (1) (2) The Michigan automobile insurance placement facility

 

shall adopt and maintain an assigned claims plan. A self-insurer or

 

insurer writing insurance as provided by this chapter in this state

 

shall participate in the assigned claims plan. Costs incurred in

 

the administration of the assigned claims plan shall be allocated

 

fairly among insurers and self-insurers. On approval under

 

subsection (3), the Michigan automobile insurance placement

 

facility shall implement the assigned claims plan.

 

     (2) (3) By August 1, 2012, the The Michigan automobile

 

insurance placement facility board of governors shall adopt an any

 

necessary amendment to the assigned claims plan by majority vote

 

and shall submit it to the commissioner director for his or her

 

approval. The commissioner director shall review the plan amendment

 

within 30 days and respond in writing as provided in this

 

subsection. If the commissioner director finds that the plan

 

amendment meets the requirements of this chapter, he or she shall

 

approve it. If the commissioner director finds that the plan

 

amendment fails to meet the requirements of this chapter, he or she

 

shall state in what respects the plan amendment is deficient and

 

shall afford the Michigan automobile insurance placement facility

 

board of governors 10 days within which to correct the deficiency.

 

If the commissioner director and the Michigan automobile insurance

 

placement facility board of governors fail to agree that the plan

 

amendment submitted, with any corrections, meets the requirements

 

of this chapter, either party to the controversy may submit the

 

issue to the circuit court for Ingham county for a determination.

 

If the commissioner director fails to render a written decision on

 

an amendment to the assigned claims plan within 30 days after

 

receipt of the plan, amendment, the plan shall be amendment is

 

considered approved. The Michigan automobile insurance placement

 

facility shall forward a plan an amendment approved under this

 

subsection to the secretary of state. The plan amendment takes

 

effect on approval by the commissioner. director.

 

     (4) Amendments to the assigned claims plan approved under

 

subsection (3) shall be adopted by the board of governors and

 

approved by the commissioner as provided in subsection (3). Until

 

the date established in the plan under subsection (5)(c), the board

 

of governors shall give the secretary of state advance notice of

 

any proposed amendments to the plan.

 

     (5) The plan adopted under subsection (3) shall include all of

 

the following:

 

     (a) The date on and after which all claims for benefits

 

through the assigned claims plan under section 3172 shall be filed

 

with the Michigan automobile insurance placement facility.

 

     (b) The date by which existing claims that have been assigned

 

under the plan maintained by the secretary of state under

 

subsection (1) will be transferred to the Michigan automobile

 

insurance placement facility to be included in and administered

 

under the adopted plan.

 

     (c) A date by which all functions of the assigned claims plan

 

maintained by the secretary of state, with the exception of driver

 

license and vehicle sanctions, will be transferred to the Michigan

 

automobile insurance placement facility.

 

     (d) Requirements for the transfer of records relating to

 

assigned claims from the secretary of state to the Michigan

 

automobile insurance placement facility and the disposition by the

 

secretary of state of records relating to assigned claims.

 

     (3) (e) Reimbursement Except as provided in section 3177(4),

 

the assigned claims plan must provide for reimbursement of the

 

secretary of state by the Michigan automobile insurance placement

 

facility for all of the following:

 

     (i) Expenses of developing the plan under subsection (6).

 

     (ii)Expenses of transferring operations from the assigned

 

claims facility to the Michigan automobile insurance placement

 

facility.

 

     (iii) Expenses expenses incurred by the secretary of state after

 

the transfer of operations from the assigned claims facility to the

 

Michigan automobile insurance placement facility for operations

 

performed by the secretary of state on behalf of the Michigan

 

automobile insurance placement facility.

 

     (6) The secretary of state and the Michigan automobile

 

insurance placement facility shall cooperate and mutually develop

 

the aspects of the plan to be adopted under subsection (3) that are

 

required under subsection (5).

 

     (7) The secretary of state shall provide the Michigan

 

automobile insurance placement facility with all information

 

necessary for the operation of the assigned claims fund.

 

     (8) One year after the date established under subsection

 

(5)(c), the commissioner shall report in writing to the senate and

 

house of representatives standing committees on insurance issues on

 

the cost of the transfer of the assigned claims plan to the

 

Michigan automobile insurance placement facility and the

 

effectiveness of operations under the new plan.

 

     (4) (9) As used in this section and sections 3172 to 3178:

 

     (a) "Michigan automobile insurance placement facility" means

 

the Michigan automobile insurance placement facility created under

 

chapter 33.

 

     (b) "Michigan automobile insurance placement facility board of

 

governors" means the board of governors created under section 3310.

 

     Sec. 3172. (1) A person entitled to claim because of

 

accidental bodily injury arising out of the ownership, operation,

 

maintenance, or use of a motor vehicle as a motor vehicle in this

 

state may obtain personal protection insurance benefits through the

 

assigned claims plan if no the person can demonstrate, after

 

exercising due diligence, that any of the following apply:

 

     (a) No personal protection insurance is applicable to the

 

injury , no personal protection insurance applicable to the injury

 

can be identified., the

 

     (b) The personal protection insurance applicable to the injury

 

cannot be ascertained because of a dispute between 2 or more

 

automobile insurers concerning their obligation to provide coverage

 

or the equitable distribution of the loss., or the

 

     (c) The only identifiable personal protection insurance

 

applicable to the injury is, because of financial inability of 1 or

 

more insurers to fulfill their obligations, inadequate to provide

 

benefits up to the maximum prescribed. In that case, unpaid

 

     (2) Unpaid benefits due or coming due as described in

 

subsection (1) may be collected under the assigned claims plan, and

 

the Michigan automobile insurance placement facility and the

 

insurer to which the claim is assigned is are entitled to

 

reimbursement from the defaulting responsible insurers to the

 

extent of their financial responsibility, . including reimbursement

 

for all of the following:

 

     (a) Benefits paid.

 

     (b) Incurred loss adjustment costs.

 

     (c) Incurred attorney fees.

 

     (3) A person entitled to claim benefits through the assigned

 

claims plan as provided in subsection (1) shall file a completed

 

application on a claim form provided by the Michigan automobile

 

insurance placement facility and provide a satisfactory proof of

 

loss to the Michigan automobile insurance placement facility. The

 

Michigan automobile insurance placement facility shall provide a

 

form for the submission of claims that allows the Michigan

 

automobile insurance placement facility to handle the submission of

 

claims in an efficient and reasonable manner. The assigned claims

 

plan must define the requirements for a satisfactory proof of loss.

 

     (4) (2) Except as otherwise provided in this subsection,

 

personal protection insurance benefits, including benefits arising

 

from accidents occurring before March 29, 1985, payable through the

 

assigned claims plan shall be reduced to the extent that benefits

 

covering the same loss are available from other sources, regardless

 

of the nature or number of benefit sources available and regardless

 

of the nature or form of the benefits, to a person claiming

 

personal protection insurance benefits through the assigned claims

 

plan. This subsection only applies if the personal protection

 

insurance benefits are payable through the assigned claims plan

 

because no personal protection insurance is applicable to the

 

injury, no personal protection insurance applicable to the injury

 

can be identified, or the only identifiable personal protection

 

insurance applicable to the injury is, because of financial

 

inability of 1 or more insurers to fulfill their obligations,

 

inadequate to provide benefits up to the maximum prescribed. under

 

subsection (1)(a) or (c). As used in this subsection, "sources" and

 

"benefit sources" do not include the program for medical assistance

 

for the medically indigent under the social welfare act, 1939 PA

 

280, MCL 400.1 to 400.119b, or insurance under the health insurance

 

for the aged act, title and disabled under subchapter XVIII of the

 

social security act, 42 USC 1395 to 1395kkk-1.

 

     (5) (3) If the obligation to provide personal protection

 

insurance benefits cannot be ascertained because of a dispute

 

between 2 or more automobile insurers concerning their obligation

 

to provide coverage or the equitable distribution of the loss, and

 

if a method of voluntary payment of benefits cannot be agreed upon

 

among or between the disputing insurers, all of the following

 

apply:

 

     (a) The insurers who are parties to the dispute shall, or the

 

claimant may, immediately notify the Michigan automobile insurance

 

placement facility of their inability to determine their statutory

 

obligations.

 

     (b) The claim shall be assigned by the Michigan automobile

 

insurance placement facility shall assign the claim to an insurer

 

and the insurer shall immediately provide personal protection

 

insurance benefits to the claimant or claimants entitled to

 

benefits.

 

     (c) An action The insurer to whom the claim is assigned shall

 

be immediately commenced commence an action on behalf of the

 

Michigan automobile insurance placement facility by the insurer to

 

whom the claim is assigned in circuit court to declare the rights

 

and duties of any interested party.

 

     (d) The insurer to whom the claim is assigned shall join as

 

parties defendant to the action commenced under subdivision (c)

 

each insurer disputing either the obligation to provide personal

 

protection insurance benefits or the equitable distribution of the

 

loss among the insurers.

 

     (e) The circuit court shall declare the rights and duties of

 

any interested party whether or not other relief is sought or could

 

be granted.

 

     (f) After hearing the action, the circuit court shall

 

determine the insurer or insurers, if any, obligated to provide the

 

applicable personal protection insurance benefits and the equitable

 

distribution, if any, among the insurers obligated, and shall order

 

reimbursement to the Michigan automobile insurance placement

 

facility from the insurer or insurers to the extent of the

 

responsibility as determined by the court. The reimbursement

 

ordered under this subdivision shall must include all benefits and

 

costs paid or incurred by the Michigan automobile insurance

 

placement facility and all benefits and costs paid or incurred by

 

insurers determined not to be obligated to provide applicable

 

personal protection insurance benefits, including reasonable,

 

actually incurred attorney fees and interest at the rate prescribed

 

in section 3175 as of applicable on December 31 of the year

 

preceding the determination of the circuit court.

 

     Sec. 3173. (1) A person who because of a limitation or

 

exclusion in sections 3105 to 3116 is disqualified from receiving

 

personal protection insurance benefits under a policy otherwise

 

applying to his or her accidental bodily injury, or a person who

 

because of a limitation or exclusion under a policy of automobile

 

insurance otherwise applying to his or her accidental bodily injury

 

is disqualified from receiving personal protection insurance

 

benefits, is also disqualified from receiving benefits under the

 

assigned claims plan.

 

     (2) A person who is eligible to receive benefits for his or

 

her accidental bodily injury through the Michigan property and

 

casualty guaranty association maintained under chapter 79 is

 

disqualified from receiving benefits under the assigned claims

 

plan.

 

     Sec. 3173a. (1) The Michigan automobile insurance placement

 

facility shall make an initial determination of a claimant's

 

eligibility for benefits under the assigned claims plan based on

 

the submission by the claimant of a completed claim form and a

 

satisfactory proof of loss under section 3172(3) and shall deny an

 

obviously ineligible claim. A claimant shall cooperate in the

 

investigation of eligibility and the settlement or defense of any

 

claim or lawsuit, including, but not limited to, examinations under

 

oath and examinations by physicians selected by the Michigan

 

automobile insurance placement facility or by the insurer assigned

 

the claim by the Michigan automobile insurance placement facility.

 

The Michigan automobile insurance placement facility shall notify

 

the claimant shall be notified promptly in writing of the a denial

 

and the reasons for the denial.

 

     (2) A person who presents or causes to be presented an oral or

 

written statement, including computer-generated information, as

 

part of or in support of a claim to the Michigan automobile

 

insurance placement facility or to the insurer assigned the claim

 

by the Michigan automobile insurance placement facility for payment

 

or another benefit knowing that the statement contains false

 

information concerning a fact or thing material to the claim

 

commits a fraudulent insurance act under section 4503 that is

 

subject to the penalties imposed under section 4511. A claim that

 

contains or is supported by a fraudulent insurance act as described

 

in this subsection is ineligible for payment or of benefits under

 

the assigned claims plan.

 

     Sec. 3174. A person claiming through the assigned claims plan

 

shall notify the Michigan automobile insurance placement facility

 

of his or her claim within the time that would have been allowed

 

for filing an action for personal protection insurance benefits if

 

identifiable coverage applicable to the claim had been in effect.

 

The 1 year after the date of the accident. On an initial

 

determination of a claimant's eligibility for benefits through the

 

assigned claims plan, the Michigan automobile insurance placement

 

facility shall promptly assign the claim in accordance with the

 

plan and notify the claimant of the identity and address of the

 

insurer to which the claim is assigned. An action by the a claimant

 

shall not be commenced more than 30 days after receipt of notice of

 

the assignment or the last date on which the action could have been

 

commenced against an insurer of identifiable coverage applicable to

 

the claim, whichever is later. must be commenced as provided in

 

section 3145.

 

     Sec. 3175. (1) The assignment of claims under the assigned

 

claims plan shall be made according to procedures established in

 

the assigned claims plan that assure fair allocation of the burden

 

of assigned claims among insurers doing business in this state on a

 

basis reasonably related to the volume of automobile liability and

 

personal protection insurance they write on motor vehicles or the

 

number of self-insured motor vehicles. An insurer to whom claims

 

have been assigned shall make prompt payment of loss in accordance

 

with this act. An insurer is entitled to reimbursement by the

 

Michigan automobile insurance placement facility for the payments,

 

the established loss adjustment cost, and an amount determined by

 

use of the average annual 90-day United States treasury bill yield

 

rate, as reported by the council of economic advisers as of

 

December 31 of the year for which reimbursement is sought, as

 

follows:

 

     (a) For the calendar year in which claims are paid by the

 

insurer, the amount shall be determined by applying the specified

 

annual yield rate specified in this subsection to 1/2 of the total

 

claims payments and loss adjustment costs.

 

     (b) For the period from the end of the calendar year in which

 

claims are paid by the insurer to the date payments for the

 

operation of the assigned claims plan are due, the amount shall be

 

determined by applying the annual yield rate specified in this

 

subsection to the total claims payments and loss adjustment costs

 

multiplied by a fraction, the denominator of which is 365 and the

 

numerator of which is equal to the number of days that have elapsed

 

between the end of the calendar year and the date payments for the

 

operation of the assigned claims plan are due.

 

     (2) The An insurer assigned a claim by the Michigan automobile

 

insurance placement facility under the assigned claims plan may

 

bring an action for reimbursement and indemnification of the claim

 

on behalf of the Michigan automobile insurance placement facility.

 

The insurer to whom claims have the claim has been assigned shall

 

preserve and enforce rights to indemnity or reimbursement against

 

third parties and account to the Michigan automobile insurance

 

placement facility for the rights and shall assign the rights to

 

the Michigan automobile insurance placement facility on

 

reimbursement by the Michigan automobile insurance placement

 

facility. This section does not preclude an insurer from entering

 

into reasonable compromises and settlements with third parties

 

against whom rights to indemnity or reimbursement exist. The

 

insurer shall account to the Michigan automobile insurance

 

placement facility for any compromises and settlements. The

 

procedures established under the assigned claims plan shall must

 

establish reasonable standards for enforcing rights to indemnity or

 

reimbursement against third parties, including a standard

 

establishing an amount below which actions to preserve and enforce

 

the rights need not be pursued.

 

     (3) An action to enforce rights to indemnity or reimbursement

 

against a third party shall may not be commenced after the later of

 

2 years after the assignment of the claim to the insurer or 1 year

 

after the date of the last payment to the claimant. made.

 

     (4) Payments for the operation of the assigned claims plan not

 

paid by the due date shall bear interest at the rate of 20% per

 

annum.

 

     (5) The Michigan automobile insurance placement facility may

 

enter into a written agreement with the debtor permitting the

 

payment of the judgment or acknowledgment of debt in installments

 

payable to the Michigan automobile insurance placement facility. A

 

default in payment of installments under a judgment as agreed

 

subjects the debtor to suspension or revocation of his or her motor

 

vehicle license or registration in the same manner as for the

 

failure by an uninsured motorist to pay a judgment by installments

 

under section 3177, including responsibility for expenses as

 

provided in section 3177(4).

 

     Sec. 3177. (1) An The insurer obligated to pay personal

 

protection insurance benefits for accidental bodily injury to a

 

person arising out of the ownership, maintenance, or use of an

 

uninsured motor vehicle as a motor vehicle may recover such all

 

benefits paid, and appropriate incurred loss adjustment costs, and

 

incurred attorney fees from the owner or registrant of the

 

uninsured motor vehicle or from his or her estate. Failure of such

 

a person the owner or registrant to make payment within 30 days

 

after a judgment is entered in an action for recovery under this

 

subsection is a ground for suspension or revocation of his or her

 

motor vehicle registration and license as defined in section 25 of

 

the Michigan vehicle code, Act No. 300 of the Public Acts of 1949,

 

being section 257.25 of the Michigan Compiled Laws. An 1949 PA 300,

 

MCL 257.25. For purposes of this section, an uninsured motor

 

vehicle for the purpose of this section is a motor vehicle with

 

respect to which security is as required by sections 3101 and 3102

 

is not in effect at the time of the accident.

 

     (2) The Michigan automobile insurance placement facility may

 

make a written agreement with the owner or registrant of an

 

uninsured vehicle or his or her estate permitting the payment of a

 

judgment described in subsection (1) in installments payable to the

 

Michigan automobile insurance placement facility. The motor vehicle

 

registration and license of an owner or registrant who makes a

 

written agreement under this subsection shall not be suspended or

 

revoked and, the motor vehicle registration and license if already

 

suspended or revoked under subsection (1), shall be restored if the

 

debtor enters into a written agreement with the secretary of state

 

permitting the payment of the judgment in installments, if the

 

payment of any installments is not in default.

 

     (3) The secretary of state upon receipt of a certified

 

abstract of court record of a judgment described in subsection (1)

 

or notice from the an insurer or the Michigan automobile insurance

 

placement facility or its designee of an acknowledgment of a debt

 

described in subsection (1) shall notify the owner or registrant of

 

an uninsured vehicle of the provisions of subsection (1) at that

 

person's the owner or registrant's last recorded address recorded

 

with the secretary of state and inform that person the owner or

 

registrant of the right to enter into a written agreement with the

 

secretary of state Michigan automobile insurance placement facility

 

or its designee for the payment of the judgment or debt in

 

installments.

 

     (4) Expenses for the suspension, revocation, or reinstatement

 

of a motor vehicle registration or license under this section are

 

the responsibility of the owner or registrant or of his or her

 

estate.

 

     Sec. 3178. After an assigned claims plan is approved under

 

section 3171(3), the The Michigan automobile insurance placement

 

facility board of governors shall report annually to the

 

commissioner director and the commissioner director shall report to

 

the standing committees of the senate and house of representatives

 

with primary jurisdiction over insurance matters on the

 

effectiveness of the assigned claims plan, including detailed

 

demographic information on the individuals who are submitting

 

claims and whose claims are being assigned.