As soon as the Court of Appeals issued its much anticipated decision last month in Andary v USAA Cas Ins Co, __ Mich App __ (No. 356487, rel’d August 25, 2022), Michigan’s no-fault insurers immediately began confronting the massive logistical undertaking (and the coming financial hit) generated by having to implement the Court’s holding. Following the passage of the June 2019 amendments, insurers spent two years analyzing and planning implementation of the “fee schedule” provisions by adjusting underwriting and rating projections in time for the provisions to take effect on July 2, 2021. Now, after processing thousands of claims for 14 months in accord with the amendments, the Court of Appeals’ decision effectively mandates an immediate rewriting of recent history and compels insurers again to recalibrate their claims processing—only this time to do so instantaneously.
Thus the defendant insurers in Andary, in conjunction with their promptly filed application for leave to appeal, moved the Supreme Court to stay the precedential effect of the intermediate appellate court’s decision – in other words, to maintain the pre-decision status quo unless and until the Supreme Court concludes the case with an affirmance of the Court of Appeals’ decision. The no-fault insurance world eagerly awaited the outcome of that motion.
It was decided September 29, 2022. In two orders issued on that date the Supreme Court granted the defendant insurers’ application for leave to appeal, but it denied the motion to stay the precedential effect of the Court of Appeals’ decision. Unavoidably, this means that no-fault insurers must now do the impossible. Because Andary is a published opinion of the Court of Appeals (and its precedential effect is not suspended), it is “the law of the land” unless and until it is overturned. This effectively means that there is no longer a legitimate basis for refusing to pay pre-amendment rates on claims that arose out of pre-amendment accidents.
The ruling would appear to require insurers, facing claims of underpayment—those already existing and a wave of new such claims—to go back and reprocess the claims to bring them up to pre-cap rates. This will be necessary for all claims that existed prior to June 11, 2019, particularly with respect to family/friend-provided attendant care (section 3157(10)), and claims falling under section 3157(7) (the provision mandating reduction of provider charges to 55% or less of pre-amendment rates). There may be a viable argument that payments made under the fee cap provisions that utilize a percentage of Medicare rates are defensible as reasonable.
The Supreme Court’s order granting leave to appeal includes a directive that the case be scheduled for hearing in March 2023. This means that a decision might not be issued before the end of July 2023. Accordingly, were an insurer to hold off issuing overdue supplemental payments in order to see whether the Supreme Court ultimately upholds the Court of Appeals’ decision, it could be waiting a long time and face a substantial no-fault interest penalty (not to mention the significant exposure to attorney fees in the case of litigated claims). Immediate communications with the MCCA are recommended to obtain clarification, if possible, as to whether reimbursement claims will be quickly processed for the many supplemental payments needing to be issued since they will now be regarded as past due.
This sudden and dramatic change in the legal landscape of no-fault PIP coverage will undoubtedly drive a significant volume of litigation. We at GLM stand ready to provide the support and assistance you may need in addressing these unprecedented challenges.
