Bill Text: MI SB0251 | 2013-2014 | 97th Legislature | Introduced

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Bill Title: Insurance; no-fault; personal protection insurance; establish a maximum for medical and hospital expenses. Amends secs. 3104, 3107 & 3163 of 1956 PA 218 (MCL 500.3104 et seq.).

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2013-03-07 - Referred To Committee On Insurance [SB0251 Detail]

Download: Michigan-2013-SB0251-Introduced.html

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SENATE BILL No. 251

 

 

March 7, 2013, Introduced by Senators SMITH and HUNE and referred to the Committee on Insurance.

 

 

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending sections 3104, 3107, and 3163 (MCL 500.3104, 500.3107,

 

and 500.3163), section 3104 as amended by 2002 PA 662, section 3107

 

as amended by 2012 PA 542, and section 3163 as amended by 2002 PA

 

697.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 3104. (1) An The catastrophic claims association is

 

created as an unincorporated, nonprofit association. to be known as

 

the catastrophic claims association, hereinafter referred to as the

 

association, is created. Each insurer engaged in writing insurance

 

coverages that provide the security required by section 3101(1)

 

within this state, as a condition of its authority to transact

 

insurance in this state, shall be a member of the association and

 

shall be is bound by the plan of operation of the association until

 

the association is dissolved under subsection (23). Each insurer

 

engaged in writing insurance coverages that provide the security

 

required by section 3103(1) within this state, as a condition of

 

its authority to transact insurance in this state, shall be

 

considered a member of the association until the association is

 

dissolved under subsection (23), but only for purposes of premiums

 

under subsection (7)(d). Except as expressly provided in this

 

section, the association is not subject to any laws of this state

 

with respect to insurers, but in all other respects the association

 

is subject to the laws of this state to the extent that the

 

association would be if it were an insurer organized and subsisting

 

under chapter 50.

 

     (2) The For loss occurrences for which the association has

 

liability under subsection (22), the association shall provide and

 

each member shall accept indemnification for 100% of the amount of

 

ultimate loss sustained under personal protection insurance

 

coverages in excess of the following amounts in each loss

 

occurrence:

 

     (a) For a motor vehicle accident policy issued or renewed

 

before July 1, 2002, $250,000.00.

 

     (b) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2002 to June 30, 2003, $300,000.00.

 

     (c) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2003 to June 30, 2004, $325,000.00.

 

     (d) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2004 to June 30, 2005, $350,000.00.

 

     (e) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2005 to June 30, 2006, $375,000.00.

 

     (f) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2006 to June 30, 2007, $400,000.00.

 

     (g) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2007 to June 30, 2008, $420,000.00.

 

     (h) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2008 to June 30, 2009, $440,000.00.

 

     (i) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2009 to June 30, 2010, $460,000.00.

 

     (j) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2010 to June 30, 2011, $480,000.00.

 

     (k) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2011 to June 30, 2013, the date on which

 

the association has paid its final liability as described in

 

subsection (23), $500,000.00. Beginning July 1, 2013, this

 

$500,000.00 amount shall be increased biennially on July 1 of each

 

odd-numbered year, for policies issued or renewed before July 1 of

 

the following odd-numbered year, by the lesser of 6% or the

 

consumer price index, and rounded to the nearest $5,000.00. This

 

biennial adjustment shall be calculated by the association by

 

January 1 of the year of its July 1 effective date.

 

     (3) An insurer may withdraw from the association only upon

 

ceasing to write insurance that provides the security required by

 

section 3101(1) in this state.

 

     (4) An insurer whose membership in the association has been

 

terminated by withdrawal shall continue to be bound by the plan of

 

operation, and upon withdrawal, all unpaid premiums that have been

 

charged to the withdrawing member are payable as of the effective

 

date of the withdrawal.

 

     (5) An unsatisfied net liability to the association of an

 

insolvent member shall be assumed by and apportioned among the

 

remaining members of the association as provided in the plan of

 

operation. The association has all rights allowed by law on behalf

 

of the remaining members against the estate or funds of the

 

insolvent member for sums money due the association.

 

     (6) If a member has been merged or consolidated into another

 

insurer or another insurer has reinsured a member's entire business

 

that provides the security required by section 3101(1) in this

 

state, the member and successors in interest of the member remain

 

liable for the member's obligations.

 

     (7) The association shall do all of the following on behalf of

 

the members of the association:

 

     (a) Assume 100% of all liability as provided in subsection

 

(2).

 

     (b) Establish procedures by which members shall promptly

 

report to the association each claim that, on the basis of the

 

injuries or damages sustained, may reasonably be anticipated to

 

involve the association if the member is ultimately held legally

 

liable for the injuries or damages. Solely for the purpose of

 

reporting claims, the member shall in all instances consider itself

 

legally liable for the injuries or damages. The member shall also

 

advise the association of subsequent developments likely to

 

materially affect the interest of the association in the claim.

 

     (c) Maintain relevant loss and expense data relative to all

 

liabilities of the association and require each member to furnish

 

statistics, in connection with liabilities of the association, at

 

the times and in the form and detail as may be required by the plan

 

of operation.

 

     (d) In a manner provided for in the plan of operation,

 

calculate and charge to members of the association a total premium

 

sufficient to cover the expected losses and expenses of the

 

association that the association will likely incur during the

 

period for which the premium is applicable. The premium shall

 

include an amount to cover incurred but not reported losses for the

 

period and may be adjusted for any excess or deficient premiums

 

from previous periods. Excesses or deficiencies from previous

 

periods may be fully adjusted in a single period or may be adjusted

 

over several periods in a manner provided for in the plan of

 

operation. Each member shall be charged an amount equal to that

 

member's total written car years of insurance providing the

 

security required by section 3101(1) or 3103(1), or both, written

 

in this state during the period to which the premium applies,

 

multiplied by the average premium per car. The average premium per

 

car shall be the total premium calculated divided by the total

 

written car years of insurance providing the security required by

 

section 3101(1) or 3103(1) written in this state of all members

 

during the period to which the premium applies. A member shall be

 

charged a premium for a historic vehicle that is insured with the

 

member of 20% of the premium charged for a car insured with the

 

member. As used in this subdivision:

 

     (i) "Car" includes a motorcycle but does not include a historic

 

vehicle.

 

     (ii) "Historic vehicle" means a vehicle that is a registered

 

historic vehicle under section 803a or 803p of the Michigan vehicle

 

code, 1949 PA 300, MCL 257.803a and 257.803p.

 

     (e) Require and accept the payment of premiums from members of

 

the association as provided for in the plan of operation. The

 

association shall do either of the following:

 

     (i) Require payment of the premium in full within 45 days after

 

the premium charge.

 

     (ii) Require payment of the premiums to be made periodically to

 

cover the actual cash obligations of the association.

 

     (f) Receive and distribute all sums money required by the

 

operation of the association.

 

     (g) Establish procedures for reviewing claims procedures and

 

practices of members of the association. If the claims procedures

 

or practices of a member are considered inadequate to properly

 

service the liabilities of the association, the association may

 

undertake or may contract with another person, including another

 

member, to adjust or assist in the adjustment of claims for the

 

member on claims that create a potential liability to the

 

association and may charge the cost of the adjustment to the

 

member.

 

     (8) In addition to other powers granted to it by this section,

 

the association may do all of the following:

 

     (a) Sue and be sued in the name of the association. A judgment

 

against the association shall not create any direct liability

 

against the individual members of the association. The association

 

may provide for the indemnification of its members, members of the

 

board of directors of the association, and officers, employees, and

 

other persons lawfully acting on behalf of the association.

 

     (b) Reinsure all or any portion of its potential liability

 

with reinsurers licensed to transact insurance in this state or

 

approved by the commissioner.

 

     (c) Provide for appropriate housing, equipment, and personnel

 

as may be necessary to assure the efficient operation of the

 

association.

 

     (d) Pursuant to the plan of operation, adopt reasonable rules

 

for the administration of the association, enforce those rules, and

 

delegate authority, as the board considers necessary to assure the

 

proper administration and operation of the association consistent

 

with the plan of operation.

 

     (e) Contract for goods and services, including independent

 

claims management, actuarial, investment, and legal services, from

 

others within or without this state to assure the efficient

 

operation of the association.

 

     (f) Hear and determine complaints of a company or other

 

interested party concerning the operation of the association.

 

     (g) Perform other acts not specifically enumerated in this

 

section that are necessary or proper to accomplish the purposes of

 

the association and that are not inconsistent with this section or

 

the plan of operation.

 

     (9) A board of directors is created , hereinafter referred to

 

as the board, which shall be responsible for the operation of and

 

shall operate the association consistent with the plan of operation

 

and this section.

 

     (10) The plan of operation shall provide for all of the

 

following:

 

     (a) The establishment of necessary facilities.

 

     (b) The management and operation of the association.

 

     (c) Procedures to be utilized in charging premiums, including

 

adjustments from excess or deficient premiums from prior periods.

 

     (d) Procedures governing the actual payment of premiums to the

 

association.

 

     (e) Reimbursement of each member of the board by the

 

association for actual and necessary expenses incurred on

 

association business.

 

     (f) The investment policy of the association.

 

     (g) Any other matters required by or necessary to effectively

 

implement this section.

 

     (11) Each board shall include members that would contribute a

 

total of not less than 40% of the total premium calculated pursuant

 

to subsection (7)(d). Each director shall be is entitled to 1 vote.

 

The initial term of office of a director shall be is 2 years.

 

     (12) As part of the plan of operation, the board shall adopt

 

rules providing for the composition and term of successor boards to

 

the initial board, consistent with the membership composition

 

requirements in subsections (11) and (13). Terms of the directors

 

shall be staggered so that the terms of all the directors do not

 

expire at the same time and so that a director does not serve a

 

term of more than 4 years.

 

     (13) The board shall consist of 5 directors, and the

 

commissioner shall be an ex officio member of the board without

 

vote.

 

     (14) Each director shall be appointed by the commissioner and

 

shall serve until that member's successor is selected and

 

qualified. The chairperson of the board shall be elected by the

 

board. A vacancy on the board shall be filled by the commissioner

 

consistent with the plan of operation.

 

     (15) After the board is appointed, the The board shall meet as

 

often as the chairperson, the commissioner, or the plan of

 

operation shall require, requires, or at the request of any 3

 

members of the board. The chairperson shall retain the right to may

 

vote on all issues. Four members of the board constitute a quorum.

 

     (16) An annual report of the operations of the association in

 

a form and detail as may be determined by the board shall be

 

furnished to each member.

 

     (17) Not more than 60 days after the initial organizational

 

meeting of the board, the board shall submit to the commissioner

 

for approval a proposed plan of operation consistent with the

 

objectives and provisions of this section, which shall provide for

 

the economical, fair, and nondiscriminatory administration of the

 

association and for the prompt and efficient provision of

 

indemnity. If a plan is not submitted within this 60-day period,

 

then the commissioner, after consultation with the board, shall

 

formulate and place into effect a plan consistent with this

 

section.

 

     (18) The plan of operation, unless approved sooner in writing,

 

shall be considered to meet the requirements of this section if it

 

is not disapproved by written order of the commissioner within 30

 

days after the date of its submission. Before disapproval of all or

 

any part of the proposed plan of operation, the commissioner shall

 

notify the board in what respect the plan of operation fails to

 

meet the requirements and objectives of this section. If the board

 

fails to submit a revised plan of operation that meets the

 

requirements and objectives of this section within the 30-day

 

period, the commissioner shall enter an order accordingly and shall

 

immediately formulate and place into effect a plan consistent with

 

the requirements and objectives of this section.

 

     (17) (19) The proposed plan of operation or Any amendments to

 

the plan of operation of the association are subject to majority

 

approval by the board, ratified ratification by a majority of the

 

membership having a vote, with voting rights being apportioned

 

according to the premiums charged in subsection (7)(d), and are

 

subject to approval by the commissioner.

 

     (18) (20) Upon approval by the commissioner and ratification

 

by the members of the plan submitted, or upon the promulgation of a

 

plan by the commissioner, each An insurer authorized to write

 

insurance providing the security required by section 3101(1) in

 

this state, as provided in this section, is bound by and shall

 

formally subscribe to and participate in the plan approved of

 

operation as a condition of maintaining its authority to transact

 

insurance in this state.

 

     (19) (21) The association is subject to all the reporting,

 

loss reserve, and investment requirements of the commissioner to

 

the same extent as would a member are the members of the

 

association.

 

     (20) (22) Premiums charged members by the association shall be

 

recognized in the rate-making procedures for insurance rates in the

 

same manner that expenses and premium taxes are recognized.

 

     (21) (23) The commissioner or an authorized representative of

 

the commissioner may visit the association at any time and examine

 

any and all of the association's affairs.

 

     (22) (24) The association does not have liability for losses

 

occurring before July 1, 1978 or for losses under motor vehicle

 

accident policies issued or renewed after December 31, 2013.

 

     (23) The association shall continue in existence until all

 

liabilities due to loss occurrences for which it has liability

 

under subsection (22) are paid. On payment of the final liability,

 

the board shall notify the commissioner, wind up the affairs of the

 

association, transmit any remaining money held by the association

 

to its members in a manner provided for in the plan of operation,

 

and dissolve the association.

 

     (24) (25) As used in this section:

 

     (a) "Consumer price index" means the percentage of change in

 

the consumer price index for all urban consumers in the United

 

States city average for all items for the 24 months prior to

 

October 1 of the year prior to the July 1 effective date of the

 

biennial adjustment under subsection (2)(k) as reported by the

 

United States department of labor, bureau of labor statistics, and

 

as certified by the commissioner.

 

     (a) "Association" means the catastrophic claims association

 

created in subsection (1).

 

     (b) "Board" means the board of directors of the association

 

created in subsection (9).

 

     (c) (b) "Motor vehicle accident policy" means a policy

 

providing the coverages required under section 3101(1).

 

     (d) (c) "Ultimate loss" means the actual loss amounts that a

 

member is obligated to pay and that are paid or payable by the

 

member, and do not include claim expenses. An ultimate loss is

 

incurred by the association on the date that the loss occurs.

 

     Sec. 3107. (1) Except as otherwise provided in subsection (2),

 

this section, personal protection insurance benefits are payable

 

for the following:

 

     (a) Allowable For loss occurrences under motor vehicle

 

accident policies issued or renewed before January 1, 2014,

 

allowable expenses consisting of all reasonable charges incurred

 

for reasonably necessary products, services and accommodations for

 

an injured person's care, recovery, or rehabilitation. For loss

 

occurrences under motor vehicle accident policies issued or renewed

 

after December 31, 2013, personal protection benefits are payable

 

for allowable expenses consisting of all reasonable charges

 

incurred up to a maximum of $50,000.00 for reasonably necessary

 

products, services, and accommodations for an injured person's

 

care, recovery, or rehabilitation. Allowable expenses within

 

personal protection insurance coverage shall do not include either

 

of the following:

 

     (i) Charges for a hospital room in excess of a reasonable and

 

customary charge for semiprivate accommodations except if unless

 

the injured person requires special or intensive care.

 

     (ii) Funeral and burial expenses in excess of the amount set

 

forth in the policy, which shall not be less than $1,750.00 or more

 

than $5,000.00.

 

     (b) Work loss consisting of loss of income from work an

 

injured person would have performed during the first 3 years after

 

the date of the accident if he or she had not been injured. Work

 

loss does not include any loss after the date on which the injured

 

person dies. Because the benefits received from personal protection

 

insurance for loss of income are not taxable income, the benefits

 

payable for such loss of income shall be reduced 15% unless the

 

claimant presents to the insurer in support of his or her claim

 

reasonable proof of a lower value of the income tax advantage in

 

his or her case, in which case the lower value shall apply. For the

 

period beginning October 1, 2012 through September 30, 2013, the

 

benefits payable for work loss sustained in a single 30-day period

 

and the income earned by an injured person for work during the same

 

period together shall not exceed $5,189.00, which maximum shall

 

apply pro rata to any lesser period of work loss. Beginning October

 

1, 2013, the maximum shall be adjusted annually to reflect changes

 

in the cost of living under rules prescribed by the commissioner

 

but any change in the maximum shall apply only to benefits arising

 

out of accidents occurring subsequent to the date of change in the

 

maximum.

 

     (c) Expenses not exceeding $20.00 per day, reasonably incurred

 

in obtaining ordinary and necessary services in lieu of those that,

 

if he or she had not been injured, an injured person would have

 

performed during the first 3 years after the date of the accident,

 

not for income but for the benefit of himself or herself or of his

 

or her dependent.

 

     (2) Both of the following apply to personal protection

 

insurance benefits payable under subsection (1):

 

     (a) A person who is 60 years of age or older and in the event

 

of an accidental bodily injury would not be eligible to receive

 

work loss benefits under subsection (1)(b) may waive coverage for

 

work loss benefits by signing a waiver on a form provided by the

 

insurer. An insurer shall offer a reduced premium rate to a person

 

who waives coverage under this subsection for work loss benefits.

 

Waiver of coverage for work loss benefits applies only to work loss

 

benefits payable to the person or persons who have signed the

 

waiver form.

 

     (b) An insurer shall not be required to provide coverage for

 

the medical use of marihuana or for expenses related to the medical

 

use of marihuana.

 

     Sec. 3163. (1) An insurer authorized to transact automobile

 

liability insurance and personal and property protection insurance

 

in this state shall file and maintain a written certification that

 

any accidental bodily injury or property damage occurring in this

 

state arising from the ownership, operation, maintenance, or use of

 

a motor vehicle as a motor vehicle by an out-of-state resident who

 

is insured under its automobile liability insurance policies, is

 

subject to the personal and property protection insurance system

 

under this act.

 

     (2) A nonadmitted insurer may voluntarily file the

 

certification described in subsection (1).

 

     (3) Except as otherwise provided in subsection (4), if a

 

certification filed under subsection (1) or (2) applies to

 

accidental bodily injury or property damage, the insurer and its

 

insureds with respect to that injury or damage have the rights and

 

immunities under this act for personal and property protection

 

insureds, and claimants have the rights and benefits of personal

 

and property protection insurance claimants, including the right to

 

receive benefits from the electing insurer as if it were an insurer

 

of personal and property protection insurance applicable to the

 

accidental bodily injury or property damage.

 

     (4) If an insurer of an out-of-state resident is required to

 

provide benefits under subsections (1) to (3) to that out-of-state

 

resident for accidental bodily injury for an accident in which the

 

out-of-state resident was not an occupant of a motor vehicle

 

registered in this state, the insurer is only liable for the amount

 

of ultimate loss sustained up to $500,000.00. $50,000.00. Benefits

 

under this subsection are not recoverable 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.