26 May 2022

Exhausted No Fault Medical Benefits! Not So Much

For Michigan no fault policies sold or renewed after July 1, 2020 consumers may select a PIP medical benefit coverage level that works best for their situation.  Generally, the options are $50,000, if the person is enrolled in Medicaid, $250,000.00, $500,000.00 or traditional unlimited.  But purchasing a capped medical no fault policy is an important decision.  The law recognizes this and requires insurers to specifically document the consumer’s coverage level selection.  But what happens if the insured’s selection isn’t clear?  Or if the insurer’s process or documentation is inadequate under the law?  The short answer is that the law errs on the side of caution.  No fault policies with ineffective coverage level selections will default to provide unlimited lifetime benefits.  So when an insurer denies a medical provider claim because the insured’s PIP medical benefits are exhausted – that may not actually be the case.  Carefully analyze the carrier’s selection documentation.  And the insurer’s process with the consumer at point of sale.  Non-compliance in the documentation, or in process, will inure to the benefit of the insured – and by extension – to his or her medical provider.  Here are the rules:

The Form

Insurers must use a form that advises consumers of the risks and benefits associated with each coverage level and requires the insured to mark the desired coverage level, and sign the form.  Most insurers utilize the form that the Michigan Department of Insurance and Financial Services (“DIFS”) created for this purpose.  But beware of customized forms.  The law requires specific content and DIFS approval before an insurer may use a custom form.

The Process

Insurers are required to deliver an approved coverage selection form to the applicant by personal delivery, first class mail, or through electronic means in accordance with Michigan’s Uniform Electronic Transactions Act (“UETA”).  And the applicant must select the medical benefit level by marking and signing the form – with pen and ink, or with an electronic signature as provided in the UETA.  Alternatively, an insured may give verbal instructions, in person or telephonically, that the form be marked and signed on their behalf.  But the insurer must make and maintain a recording of the verbal instructions given.  And in the event of a dispute over the effectiveness of the selection, the law presumes that the selection was not effective unless the insurer can rebut that presumption with the recording.

At bottom – it is just not okay for an insurer to cut corners in this space.  There is too much at stake.  So make sure to check the insurer’s work before accepting the position that the insured’s benefits are exhausted.  If you have any questions about this or any other medical recovery issue, please contact me or any of our medical provider reimbursement counsel.