STATE OF MICHIGAN
IN THE SUPREME COURT
Appeal from the Michigan Court of Appeals
Markey, Presiding Judge
ELLEN M. ANDARY, a legally incapacitated
adult, by and through her Guardian and
Conservator, MICHAEL T. ANDARY, M.D.,
PHILIP KRUEGER, a legally incapacitated adult,
by and through his Guardian, RONALD
KREUGER, and MORIAH, INC., d/b/a
EISENHOWER CENTER, a Michigan
corporation,
Plaintiffs-Appellees,
v.
USAA CASUALTY INSURANCE
COMPANY, a foreign corporation, and
CITIZENS INSURANCE COMPANY
OF AMERICA, a Michigan corporation,
Defendants-Appellants.
Supreme Court No. 164772
Court of Appeals No. 356487
Ingham County Circuit Court
Case No. 19-738-CZ
APPENDIX TO JOINT AMICUS BRIEF FILED BY
THE INSURANCE ALLIANCE OF MICHIGAN AND THE NATIONAL ASSOCIATION
OF MUTUAL INSURANCE COMPANIES
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Table of Contents
Appendix Item
1
Detroit Free Press “Faults in No-Fault” Series by JC Reindl, including
the following articles:
Pages
Free Press report: Why does auto insurance in Detroit cost so much?,
published May 6, 2017, updated May 8, 2017
INS 3
How aggressive lawyers, costly lawsuits and runaway medical bills made
Detroit car insurance unaffordable, published May 6, 2017, updated May
8, 2017
INS 4-16
No-fault car insurance in Michigan: Here’s how it works, published May 6,
2017
INS 17-18
Detroit car insurance: 6 other factors behind the cost of auto insurance,
published May 6, 2017, updated May 7, 2017
INS 19-20
How Michigan got – and kept – no-fault auto insurance, published May 6,
2017, updated May 7, 2017
INS 21-24
To a paralyzed woman needing lifetime care, no-fault benefits are priceless,
published May 6, 2017, updated May 7, 2017
INS 25-28
Aggressive solicitation comes after auto accidents in Detroit, published
May 7, 2017, updated May 9, 2017
INS 29-36
Tired of no-fault fraud in Michigan, insurers turn to racketeering suits,
published May 7, 2017
INS 37-41
No-fault fixes? How other states reined in auto insurance costs, published
May 8, 2017, updated May 9, 2017
INS 42-48
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Free Press report: Why does auto insurance in Detroit
cost so much?
JC Reindl, Detroit Free Press Published 11:05 p.m. ET May 6, 2017 | Updated 10:48 p.m. ET May 8, 2017
Detroit drivers face the highest average insurance rates (http://www.insurancequotes.com/auto/most-
expensive-metropolitan-areas-for-car-insurance)for cars and other vehicles in the country, often more than
$3,000 a year for a single automobile. (/story/money/business/michigan/2014/11/23/detroit-auto-insurance-
rates-premiums/19411987/)
A Detroit Free Press investigation finds that runaway medical bills, disability benefits payouts and
lawsuits under Michigan’s one-of-a-kind, no-fault insurance system play a key role in driving up costs for
drivers.
Find out what's behind the high cost of auto insurance in Detroit -- and what steps could be taken to help fix the problem.
Day 1: The faults in no-fault
Day 2: 'Are you hurt?' The solicitation of accident victims
Day 3: Possible solutions for no-fault costs
Read or Share this story: https://on.freep.com/2pSEl1s
• How aggressive lawyers, costly lawsuits and runaway medical bills make Detroit car insurance unaffordable.
(/story/news/local/michigan/detroit/2017/05/06/no-fault-auto-insurance-detroit-michigan/100326640/)
• No-fault insurance in Michigan: Here's how it works. (/story/news/local/michigan/detroit/2017/05/06/no-fault-car-insurance-michigan-heres-
how-works/100668458/)
• 6 other factors behind the high cost of Detroit auto insurance. (/story/news/local/michigan/2017/05/06/detroit-car-insurance-6-other-factors-
behind-cost-auto-insurance/100992680/)
• Why Michigan has — and keeps — no-fault insurance. (/story/news/local/michigan/2017/05/06/michigan-nofault-insurance-history-
detroit/100301828/)
• To a paralyzed woman who needs lifetime care, no-fault benefits are priceless. (/story/news/local/michigan/2017/05/06/no-fault-lifetime-
medical-benefits-for-accident-victims/100301948/)
• How some lawyers and medical clinics snag their clients — and drive up auto insurance costs.
(/story/news/local/michigan/detroit/2017/05/08/detroit-car-insurance-lawyers-accidents-solicitation/100301782/)
• Fed up with no-fault fraud in Metro Detroit, insurers turn to racketeering lawsuits. (/story/news/local/michigan/2017/05/08/auto-insurance-
racketeering-lawsuits-michigan-fraud/100301902/)
• How can we make auto insurance in Detroit more affordable? (/story/news/local/michigan/2017/05/09/how-can-we-make-auto-insurance-
detroit-more-affordable/100018602/)
(Photo: Getty Images)
Page 1 of 2Why does car insurance in Detroit, MI cost so much?
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How aggressive lawyers, costly lawsuits and runaway
medical bills make Detroit car insurance unaffordable
JC Reindl, Detroit Free Press Published 11:04 p.m. ET May 6, 2017 | Updated 11:22 a.m. ET May 8, 2017
It seemed about as minor as auto accidents can get.
A car moving less than 5 m.p.h. bumped into a U-Haul van on a Detroit street. The driver of the car didn't even
bother to stop. And none of the three men in the truck initially voiced any complaints of injury, according to
deposition testimony.
One filed a police report to show U-Haul, and within days, callers claiming to be lawyers contacted all three
urging doctor visits and legal claims.
The U-Haul’s driver said he wasn’t hurt and hung up. A passenger also hung up on his caller, even after he
was offered $600-$800 to see the caller's doctor and file a claim.
But the second passenger got connected with a Southfield-based law firm and sued U-Haul’s insurance company, claiming more than $25,000 in medical
expenses under Michigan's no-fault auto insurance system. Those charges included $9,900 for MRIs and $3,200 for a transportation company to shuttle
him to appointments.
Busier roadways and more frequent crashes already add to the cost of car insurance in metropolitan areas. (Photo: Salwan Georges, Detroit Free Press)
A Wayne County judge dismissed the case last year, after the man didn't show up for independent medical examinations of his alleged injuries.
(Photo: Getty Images)
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-fault: How lawsuits, medical bills help drive up Detroit's auto insurance costs
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• How can we make Detroit auto
insurance affordable?
(http://www.freep.com/story/news/local/
m
can-we-make-auto-insurance-detroit-
more-affordable/100018602/)
• Aggressive solicitation comes after
auto accidents in Detroit
(http://www.freep.com/story/news/local/
m
car-insurance-lawyers-accidents-
solicitation/100301782/)
• Tired of no-fault fraud in Michigan,
insurers turn to racketeering suits
(http://www.freep.com/story/news/local/
m
insurance-racketeering-lawsuits-
michigan-fraud/100301902/)
• How aggressive lawyers, costly
lawsuits and runaway medical bills
make Detroit car insurance
unaffordable
(http://www.freep.com/story/news/local/
m
fault-auto-insurance-detroit-
michigan/100326640/)
• Why does auto insurance in Detroit
cost so much?
(http://www.freep.com/story/news/local/
m
car-insurance-expensive-
cost/101374948/)
• How Michigan got — and kept — no-
fault auto insurance
(http://www.freep.com/story/news/local/
m
nofault-insurance-history-
detroit/100301828/)
• To a paralyzed woman needing
lifetime care, no-fault benefits are
priceless
(http://www.freep.com/story/news/local/
m
fault-lifetime-medical-benefits-for-
accident-victims/100301948/)
• Detroit car insurance: 6 other factors
behind the cost of auto insurance
(http://www.freep.com/story/news/local/
m
car-insurance-6-other-factors-behind-
cost-auto-insurance/100992680/)
• No-fault car insurance in Michigan:
Here's how it works
(http://www.freep.com/story/news/local/
m
fault-car-insurance-michigan-heres-
how-works/100668458/)
But the lawsuit — and thousands like it filed each year in Wayne County Circuit Court, involving over tens of thousands of dollars in medical bills and in-
home benefits — helps explain why Detroit drivers face the highest average auto insurance rates in the country, often more than $3,000 a year for a
single vehicle.
Overall, Michigan residents pay the third-
highest car insurance rates nationwide,
according to the latest figures released by the
National Association of Insurance
Commissioners.
While carjackings, vehicle thefts, and even
racist "redlining" are commonly discussed
reasons for the high rates in Detroit, a Free
Press investigation finds that runaway medical
bills, disability benefits payouts and
lawsuits under Michigan’s one-of-a-kind, no-
fault insurance system play a key role in driving
up costs.
Michigan's system allows for unlimited lifetime
benefits. In the 11 other states that have no-
fault insurance, benefits are capped.
The Free Press investigation found:
THE
FAULTS
IN
NO
FAULT INSURANCE
• A SURGE IN LAWSUITS: The
number of lawsuits generally filed by
motorists and passengers in
accidents who are seeking benefits
from their own auto insurance
companies — called first-party
lawsuits — have nearly quadrupled
in Wayne County since 2004, even
as accidents have dropped. They
now comprise more than two-thirds
of the lawsuits in the state.
• HIGH MEDICAL BILLS: Some MRI
centers that appear frequently in no-
fault lawsuits in metro Detroit charge
as much as $5,300 for an MRI that
would cost less than $1,000 at other
facilities or about $500 under
Medicare. People involved in
accidents, who are often free to go
to any provider, sometimes get
steered to specific centers where
the billing is higher. Plaintiffs in
accidents will visit medical providers
for months on end to bolster
separate negligence lawsuits
against drivers of the other vehicle.
• PRICY PERSONAL CARE: Some doctors routinely declare people disabled for months after seemingly minor accidents, providing an
opportunity for relatives or friends to get paid hundreds of dollars a week for attendant care to help with basic needs such as meal
preparation and dressing. Medical transportation services routinely charge auto insurance companies $100 to almost $200 a day to shuttle
no-fault patients to and from a single medical appointment — even one just 2 miles away.
• SOLICITATION OF VICTIMS: It is illegal in Michigan to solicit people who have been in accidents for commercial purposes, such as legal
services or physical therapy, within 30 days of the car crash. But in a review of hundreds of lawsuits filed in Wayne County, the Free Press
found multiple examples of people being solicited within hours or days of an accident.
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Of course, residents of urban areas generally pay more for car insurance than those in less populated ones because of busier roadways, more frequent
crashes and high theft rates. Those circumstances all factor into the higher price of car insurance in Detroit. But it's the large expense of no-fault benefits
— on top of all the other factors — that make car insurance in Detroit so expensive.
“A whole lot of people are moving out of the neighborhoods because they can’t afford car insurance. It's almost as much as a housing payment," Detroit
Mayor Mike Duggan told Lansing lawmakers last month. “This is devastating for us.”
Driving up the costs is the aggressive and sometimes illegal solicitation of people involved in Detroit crashes by others directing them to lawyers or
medical clinics. The city also has seen an explosion of advertising on billboards, buses, TV and radio from personal-injury attorneys and referral services.
Plaintiffs get reeled in with promises of up-front cash, benefits to family members and friends for attendant-care services, and hopes of a much larger
payout in separate negligence lawsuits.
In the end, it is Detroiters who pay the price: Insurers pass on the high costs of no-fault claims to customers through higher premiums — specifically
using ZIP codes to place those costs in the geographic area where the individuals who generated the claims reside.
Fewer Wayne County car crashes (Photo: Martha Thierry/Detroit Free Press)
• NO FRAUD WATCHDOG: Michigan — unlike many other no-fault states — has no dedicated no-fault insurance fraud watchdog. Other
states such as Florida have contained medical costs by aggressively pursuing fraud in urban areas.
• THE PRICE TAG: 6 more reasons why Detroiters face such high auto insurance premiums
(/story/news/local/michigan/2017/05/01/dfp-new-auto-insurance-chunky-bits/100992680/)
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More lawsuits (Photo: Martha Thierry/Detroit Free Press)
Insurance companies blame lawyers;lawyers blame insurance companies
Lawyers insist they are forced to file lawsuits to make recalcitrant insurance companies pay what is due to victims.
Others say Michigan's no-fault law is ripe for scams that benefit lawyers and medical providers, but result in insurance premiums that are increasingly
unaffordable. That, in turn, becomes a factor in people's decision to move into or out of Detroit and affects the city's growth and future, business and civic
leaders say.
These lawsuits typically end with an insurance company settlement. Critics say auto insurers often settle bogus claims to avoid the bigger expense of
continued litigation. Oftentimes, the total settlement stays confidential. But among cases where at least part of a settlement was recorded, a Free Press
examination found insurers commonly paid out $12,000-$80,000, sometimes more.
Adding fuel to the frenzy is the common practice of accident attorneys taking a one-third cut of their client's medical billings and disability benefits payouts
after a first-party lawsuit is settled.
Frank Scafidi, spokesman for the Illinois-based National Insurance Crime Bureau, an insurance industry-supported organization that partners with law
enforcement to address fraud, called Michigan "the crown jewel for people who seek to game the system."
"Everybody is lined up at the trough," Scafidi said.
However, Joumana Kayrouz, one of metro Detroit's most visible personal-injury lawyers, said the real culprit is insurance companies who don't take care
of accident victims.
"I file lawsuits every single day because insurance companies don't do what they're supposed to do," she said.
Attorney George Sinas, general counsel for the Coalition Protecting Auto No-Fault, also blamed auto insurers for the spike in first-party lawsuits.
“They can deny with impunity thousands and thousands and thousands of claims,” he said in an interview Friday. “They force people to sue to get their
benefits, and when insurance companies do that they’re driving up the costs.”
Detroit drivers pay, on average, about $283 per month per vehicle for full coverage, or $3,396 a year, according to a survey by Duggan's office.
That's more than double the statewide average of $1,350 in 2014, which was the third-highest of the 50 states, just below Louisiana and New
Jersey, according to the most recent data of the National Association of Insurance Commissioners. The association put the national average at $982.
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Detroiters use their personal injury protection (PIP) benefits twice as often and for twice the average amount as policy holders in the suburbs — $60,000
in Detroit versus $32,000 in claims among suburban drivers, according to an actuarial study (http://www.scribd.com/doc/268181731/D-Insurance-
Feasibility-Study) commissioned by the City of Detroit and released in 2015 by Bloomington, Ill.-based Pinnacle Actuarial Resources. The largest
component of a typical Detroit auto insurance policy is the PIP — 44% of the cost, according to the study.
PIP includes benefits such as emergency room care, doctors visits, physical therapy, chiropractors, surgeries and medical transportation, as well as in-
home attendant care.
Of course, many Detroiters are on Medicaid or Medicare — or lack insurance completely. In those cases, no-fault insurance is the primary payer if they
get into an auto accident — forcing Detroit residents to rely more on their PIP benefits.
However, Matt Coffey, an attorney at Fordney and Coffey in Saginaw who represents insurance companies in lawsuits, said people who have been in
crashes often keep using their no-fault benefits to go to physical therapy and doctors appointments for months on end because of encouragement
from lawyers.
They tell clients -- that by generating more medical bills for auto insurance to pay -- they're demonstrating a severity of injury that will increase their odds
of winning a separate, negligence lawsuit against the other driver.
“Some lawyers will say to these people, 'Look, the longer you treat, the more money I’m going to be able to get to you,'" said Coffey, who is a lecturer on
insurance at Central Michigan University. "The majority of plaintiffs lawyers don’t do that. But you see some less-reputable attorneys that are doing that."
Auto accident attorney Steven Gursten of MichiganAutoLaw, takes a phone call in his Farmington Hills office Thursday, April 20, 2017. (Photo: Mandi Wright, Detroit Free
Press)
Steve Gursten, head of the Michigan Auto Law firm in Farmington Hills, called the exploitation of no-fault benefits a "Grand Canyon-sized loophole in our
no-fault system.
"All of the other lawyers now see the incredible amounts of money that some bad actors are making, and it's an incentive for more people to jump on the
bandwagon with ever more billboards and ever more radio commercials.
"They're making all of their money because that person with that very minor whiplash is now going to get eight months of medical treatment and have
$100,000 in bills," said Gursten, who has been outspoken on his blog (http://www.michiganautolaw.com/blog/), about abuses that he believes imperil the
no-fault system for injured people who need it.
In response to rising costs, Connecticut, Georgia, Colorado and other states abandoned no-fault altogether.
For this investigation, the Free Press reviewed 1,500 first-party lawsuits filed in Wayne County Circuit Court in early 2015. The cases were far enough
back for most to already be adjudicated with outcomes available. The Free Press also interviewed dozens of insurance experts and attorneys who
represent accident victims, medical providers and insurers.
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In Wayne County, the number of such lawsuits have nearly quadrupled since 2004, reaching 6,327 last year, according to data by the State Court
Administrative Office. That figure also includes cases filed by the motorist's medical care providers seeking payment for bills the person generated.
These cases have also been on the rise statewide and surpassed negligence lawsuits in volume for the first time in 2012. There were 9,077 first-party
cases in the state last year, compared with 7,822 negligence cases.
These first-party lawsuits are different from the negligence lawsuits in which one driver sues another after a crash. No-fault insurance, enacted in
1973, was designed to reduce negligence suits and make it easier for car crash victims to get medical care.
By the numbers: A Detroit quote (Photo: Martha Thierry/Detroit Free Press)
Accident victims pitted against their own insurance companies
To be sure, some vehicle crashes are serious and those injured need expensive medical care, sometimes for the rest of their lives.
Ashley Hogan, 26, of Midland, who was paralyzed from the waist down in a 2013 auto accident, is able to live more or less independently, thanks to
unlimited no-fault benefits, including in-home care and household assistance.
"Without it, I don’t know where I would be, probably in a nursing home somewhere living off the state," she said.
Some of the most visible personal-injury attorneys in Detroit, including Kayrouz and Carl Collins III, told the Free Press that their firms provide a valuable
service that keeps insurance companies honest about paying justified medical bills and no-fault benefits.
"I believe if the insurance companies would pay and do their job, then there would not be the increasing number of lawsuits there are," Collins said.
Charlie Parkhill, an owner of the Recovery Project, a metro Detroit rehabilitation center (http://therecoveryproject.net/newscenter/after-accident-man-
turns-his-intense-rehab-into-a-business-opportunity/) that treats many accident patients, said he hasn't yet had to sue insurers for payment on bills but
"the general feeling among providers is they are making it more and more difficult all the time.”
"We do, from time to time, have to get an attorney involved to make it happen," he said.
However, attorney Coffey, who regularly represents insurance companies in first-party lawsuits, said there are good reasons why auto insurers often
resist paying the big medical bills that some patients ring up.
“The reason insurance companies are cutting people off — and this is true in metro Detroit and it’s true anywhere — is you see these long periods of
treatment for soft-tissue injuries, and the people aren’t getting better, and they keep going back and back and back" to the same medical providers, he
said.
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"That, of course, flips a red-light switch on for the insurance company — 'Why is this person not getting better?’ — and the response of the person is,
'Well, I don’t have to get any better. There’s no requirement that you have to get any better. You’re supposed to treat me as long as it’s reasonable and
necessary,’ and so they send them to a (independent medical examination) and they cut them off, and that immediately starts a lawsuit."
Critics say having an auto policy in Michigan is essentially paying for health insurance twice. That is because regular health insurance would still be there
to cover auto accident injuries if Michigan wasn't a no-fault state.
Supporters of no-fault note how the system offers more comprehensive coverage after accidents than private health insurance — including in-home
nursing care, long-term physical therapy and lost wages — and call it a godsend for people who are catastrophically injured.
"No-fault is a protection for all citizens against being injured by an uninsured motorist in a catastrophic accident, and frankly, it’s a model for the country,"
said Oakland County Executive L. Brooks Paterson, who was severely injured in a 2012 car accident.
Detroit Mayor Mike Duggan on Detroit's auto insurance costs: "So the insurance companies are doing fine, the lawyers are doing fine, the hospitals are doing fine, and all
of us are paying the bill.” (Photo: Matt Helms/Detroit Free Press)
Duggan says a reform option he proposed two years ago, called D-Insurance, could reduce average premiums for Detroit drivers by $600 to more than
$2,000 a yearby giving Detroiters an option to purchase car insurance policies with a monetary cap on medical benefits. His plan, which required
legislative approval, was vigorously opposed by the hospital lobby and many plaintiffs attorneys. It ultimately stalled in Lansing.
The mayor, a former Wayne County prosecutor and Detroit hospital executive, said in his State of the City Address in February that “the system is
completely out of control. ... And we know what the problems are. The hospitals and the medical community are charging triple what they’re getting from
Blue Cross."
"Lawyers are taking … a good chunk of the medical bills and they’re taking them in legal fees — driving the costs up more,” Duggan said. “And of course,
the insurance companies pass all of this on with a profit. So the insurance companies are doing fine, the lawyers are doing fine, the hospitals are doing
fine, and all of us are paying the bill.”
Police have estimated that 60% of people in Detroit lack insurance but still drive. It's a firm rule that motorists in Michigan who drive without insurance are
ineligible for no-fault benefits. But injured pedestrians and passengers in uninsured vehicles are still entitled to them, often through a program called the
Michigan Assigned Claims Plan.
The program’s existence helps to explain why Detroiters are filing frequent no-fault claims, even though many in the city can’t afford Detroit’s high car
insurance rates.
Wayne County residents filed for 49% of the record $248 million in assigned claims in the state in 2015, even though the county represents about 18% of
Michigan's population, according to Terri Miller, who recently retired as executive director of the Michigan Assigned Claims Plan.
• SAFETY-NET: How no-fault insurance helped paralyzed woman rebuild here life. (/story/news/local/michigan/2017/05/07/no-fault-
lifetime-medical-benefits-for-accident-victims/100301948/)
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$5,000 for a single MRI?
Exorbitantly priced MRI scans are Exhibit A of how medical bills are overwhelming the no-fault system.
The Free Press found commonly utilized MRI centers just outside Detroit that charge more than $5,000 per MRI to Detroit patients' auto insurance
companies.
These prices exceed what area hospitals charge — typically about $1,900 to $2,600 per MRI, according to hospital representatives and bills reviewed by
the Free Press. Medicare recently paid about $500 per image in the region, and some metro Detroit MRI centers now offer $250-$350 cash rates for
cost-conscious consumers.
Of course, health insurers such as Blue Cross Blue Shield ordinarily negotiate significant discounts off the full list prices of medical services.
However, auto insurers — compelled by the complex economics of health care billing and the fine print of Michigan's no-fault law — often pay much
higher charges than private health insurers. Many no-fault medical providers are in standalone clinics, unaffiliated with major hospital systems, and
don't participate in billing networks that can give negotiated discounts.
Peter Kuhnmuench, executive director of the Insurance Alliance of Michigan, an industry group, noted how the no-fault law requires
(http://www.legislature.mi.gov/(S(kvx2vpaj3zyxlwpxrgrfiyn2))/mileg.aspx?page=getObject&objectName=mcl-500-3107) auto insurers to pay "reasonable
charges" for services that were "reasonably necessary." Courts have defined "reasonable charges" as what a hospital or clinic would bill a patient without
insurance, typically the medical provider's "charge-master" rates, which are list prices for services that in health care typically reflect big markups.
"There is no agreement on what is a 'reasonable charge' for a medical service," said Gursten, the attorney with Michigan Auto Law. "What that has done
is create an entire industry of provider lawyers and provider lawsuits where, unfortunately, with certain doctors and certain medical providers, there is an
incentive to pad bills."
Even medical charges that courts deemed reasonable can still seem exorbitant. A jury in Ann Arbor's 15th District Court in 2015 found it reasonable for
an MRI Center in Southfield called Silver Pine Imaging to bill and collect $5,300 per MRI from an auto insurance company. Lawyers in Wayne County
lawsuits have cited that decision as precedent for auto insurers to pay large MRI bills in full.
Silver Pine Imaging, a MRI center in Southfield. (Photo: JC Reindl, Detroit Free Press)
Situated in a light-brown building on 10 Mile in Southfield near Lawrence Tech, Silver Pine Imaging was among the highest per-image MRI billers in the
1,500 no-fault lawsuits the Free Press reviewed. In one case, Silver Pine demanded payment from Travelers Insurance in 2015 for six MRIs at $5,300
each that were performed on a Detroit car crash victim. The bill for those six MRIs totaled $31,800 — enough to buy a well-equipped car.
Similar rates have been charged at what was Horizon Imaging LLC — $5,300 per MRI — and Southfield-based Affiliated Diagnostics of Oakland, which
billed $4,950-$5,250 per MRI and was the most frequently visited MRI center by patients in the first-party lawsuits the Free Press reviewed.
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Those charges far exceeded what some of the MRI centers initially told state regulators they anticipated charging.
When applying for a state "certificate of need," Silver Pine in 2011 estimated that it would charge $700 per MRI, and Affiliated Diagnostics estimated in
2010 it would bill between $425 and $512 per scan, according to the Michigan Department of Health and Human Services. Horizon Imaging's former
price estimates are no longer on file with the department.
In fairness, department spokesman Bob Wheaton emphasized that MRI price estimates are not legally binding. Those figures are generally used just to
evaluate the financial sustainability of a medical provider's business model and are not for regulating charges, he said.
Repeated calls seeking comment from Silver Pine's office and its attorney were not returned. A representative for Affiliated Diagnostics did not return
multiple messages left by phone and in person at the Southfield office.
A woman who answered the phone at the number used by Horizon Imaging said the MRI center was now Gravity Imaging and that no one was available
to discuss Horizon's past MRI billings.
There are some MRI centers in metro Detroit that charge far lower prices to consumers who aren't paying with auto insurance. For instance, Central
Medical Imaging in Royal Oak charges $350 for cash-only patients and Basha Diagnostics offers $250 cash specials on Sundays for certain body areas.
Basha Diagnostics' owner, Dr. Yahya Basha, said his high patient volume allows him to keep modest prices and still turn a profit while using top-of-the-
line MRI equipment. Although his $250 specials are for cash-only patients, Basha said his MRI charges to insurance companies — amounts he declined
to specify — are half what area hospitals charge.
Basha said his rates are popular with patients whose health insurance carries a high deductible and who are compelled to look around for deals.
In years past, patients rarely bothered to research the costs of medical services because they only had to worry about co-pays — their insurance would
pick up the remaining cost, whatever it was. But those days are ending because more health insurance plans carry significant deductibles that patients
must pay before coverage kicks in, commonly about $1,500 to $3,000 for an individual.
Michigan's no-fault auto insurance, however, still offers patients all-you-can-use medical coverage — no co-pays and generally a $300, or sometimes
$500, deductible.
“Blue Cross used to be like a credit card — no co-pay, no deductible,
or very little if any," Basha said. "So the patients had no sensitivity to the cost of
health care and what the facility charges. Now, the people are sensitive to prices, and that's the reason we get called every day."
$100 for a short ride to the doctor
Big bills for shuttling patients to and from therapy and doctors appointments are another contributor to the high cost of auto insurance in Detroit.
These rides are a no-fault benefit for patients who have been deemed unfit to drive by a doctor or sometimes a chiropractor. Local medical transportation
companies — some independent, some run by clinics — specialize in shuttling patients.
The cost of these rides — typically in minivans — is charged to auto insurance and is free for the patient. Because patients commonly have three or more
rehab and doctors appointments scheduled each week for a period of months, transportation bills add up quickly and routinely hit thousands of dollars.
A common flat rate in metro Detroit for no-fault insurance patients is $100 per round-trip for short distances, such as 12 miles. For longer rides,
companies might calculate their bill using pickup fees, drop-off fees and per-mile charges. Some companies charge $45 for pickups, $45 for drop-offs
and $3.50 per mile.
These rates are well beyond what consumers in general pay for cabs or the popular Uber ride-hailing service. A metro Detroit Uber ride this month cost
$3.15 for base fares, then 70 cents per mile (plus 15 cents per minute).
Getwell Medical Transport in Southfield was a commonly utilized transportation company in the lawsuits the Free Press reviewed.
Getwell once charged State Farm Insurance a $100 fee each time it shuttled a Ferndale man to and from his house to a chiropractic clinic less than 2
miles away, according to court records and the patient's bills. Getwell's total billings for the patient over many months came to $3,500.
Meanwhile, the severity of the young man's accident injuries from the 2013 accident came into question after he was observed on surveillance video
catching buses and walking around Ferndale on his own.
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The man initially became eligible for the transportation rides based on a doctor's diagnosis. However, another doctor who performed an independent
medical examination for the insurance company said the man wasn't that hurt and shouldn't have been prescribed the transportation. Getwell only
provided the man's rides and had no involvement in his diagnosis or treatment regimen.
An attorney for Getwell Medical Transport said the company's charges are reasonable and below those of other medical transportation firms. The
attorney, Gary Blumberg, emphasized that medical transportation is an unpredictable business in which insurance companies routinely delay payment or
pay less than is owed.
“They wait sometimes years to get paid," he said. "Sometimes they don’t get paid at all.”
Tender Care Transportation in Dearborn Heights routinely charged $191 each time it shuttled a Detroit no-fault patient to and from a chiropractic clinic in
Southfield, a 42-mile round trip in the van, court records show. The female patient's auto insurer at first paid these ride bills, but stopped once it became
skeptical of the woman's need to continue chiropractic treatment. Tender Care then sued Farmers Insurance for the outstanding $6,909 transportation
balance.
Tender Care co-owner Matt Shwehdi said in a 2015 deposition that his company provides a lot of rides to people recovering from auto accidents. His
standard rates at the time were $45 for pickups, $45 for drop offs and $3.50 per mile. Asked whether he ever accepts less from an insurance company
than what was billed, Shwehdi said he sues if an insurer fails to pay in full.
Tender Care ultimately didn't get its bill paid in this case. A judge in Royal Oak's 44th District Court ruled last year in favor of Farmers Insurance and its
argument that because the woman's ongoing chiropractic treatments weren't medically necessary, neither were her van rides to the Southfield clinic.
Tender Care had no role in the patient's diagnosis or treatment.
Attorney Wayne Miller of Farmington Hills-based Miller & Tischler, who often represents medical providers in first-party lawsuits for payment from auto
insurers, said hospitals and clinics routinely see their bills cut in settlements.
He said insurance companies sometimes invite such litigation as a cost-control strategy by paying just part of a bill, then waiting to see whether the
provider accepts the reduced amount or goes to court for the full amount.
"It is the norm for service providers to take significant discounts off of the stated charges," said Miller, an adjunct law professor at Wayne State University
who teaches classes on no-
fault insurance.
Attendant care ripe for abuse
In-home nursing services, known as "attendant care," can be a valuable although costly no-fault insurance benefit, as hourly billings extend over days,
weeks, months or years.
The Free Press investigation found the benefit is also ripe for abuse.
Doctors routinely find people too injured for physical activities after seemingly minor accidents, providing an opportunity for relatives or friends to get paid
roughly $11-$22 an hour to provide the in-home care.
“The big brass ring is the attendant care,” said Miller, the former director of the Michigan Assigned Claims Plan. “There’s where there’s really a ton of
fraud and abuse.”
In one case, Geico agreed to pay a Southfield mother and her friend to provide 24-hour attendant care to the mother's son, who was catastrophically
injured in 2013 when he was hit by a vehicle while crossing a street. He sustained traumatic brain injury, required a tracheostomy and now uses a
wheeled walker to get around.
Both women were licensed nurses. They took turns working 12-hour shifts and initially were paid $20 per hour and $16 an hour, respectively, according
to court documents.
But once the mother incorporated her own attendant-care business, Rapha Care & Rehabilitation Corp., to provide care in August 2014, she began
demanding payment rates of $75 per hour for herself and $70 per hour for her friend. The daily bill for the young man's care surged to $1,740, or
$635,100 per year.
The mother also incorporated her own transportation company, which charged to drive her son to medical appointments, including $149 for every round-
trip to a rehab center less than 12 miles away, according to court documents and billing statements.
The auto insurer balked at paying the new rates.
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“It is unfathomable how incorporating, yet working out of the home, warrants an hourly rate of $75 per hour and $70 per hour," Geico's lawyers wrote in
court documents.
Geico also hired a private investigation service to conduct surveillance on the home. The company, Advantage Investigations, reported that the women
weren't always there with the son during the hours billed. The case ended this year with a $750,000 insurance settlement for past attendant-care bills;
future attendant care will be paid at a to-be-determined rate.
Miller said she has encountered similar situations in which a single family member will be paid to provide 24-hour attendant care for an injured relative.
“Can a person really provide attendant care 24 hours a day? The answer to that is no,” Miller said. “But what we’re told in court is, ‘Well, I have to sleep
with one eye open and be on call if they call out in the middle of the night,’ and literally we lose (the case).”
In another first-party lawsuit, a Southfield-based company called Caring Heart Attendant Care sued the insurer American International Group, known as
AIG, over nonpayment of attendant-care bills for a woman hurt in a September 2012 crash. But the company's case began to unravel as details emerged
about its business and the purported severity of the woman's injuries.
Caring Heart billed for providing 24-hour attendant care to the woman during the month of July 2014. However, undercover surveillance found the woman
outside her residence and unattended during some of those hours as she drove a vehicle, went grocery shopping and lifted objects by herself, according
to court documents.
It was revealed that AIG had paid out more than $100,000 to Caring Heart, but the company paid just $14,400 of that money to the three home health
aides who actually provided the care.
When Caring Heart's owner, Jarrett Beavers, was asked where the rest of the money went, he replied, "The overhead of the company" and did not offer
specifics, according to his deposition testimony.
A judge dismissed the lawsuit last year. Beavers did not return multiple phone messages seeking comment, and the lawyer who represented his
business, Michael Fergestrom of the Dollar Law Firm, also didn't respond.
'Hanging out the welcome mat'for fraud
Even as it offers the most lucrative benefits, Michigan is one of the few no-fault states without any dedicated auto insurance fraud watchdog.
"The fact that Michigan doesn't have a fraud authority is like hanging out a welcome mat for unscrupulous individuals," said Lori Conarton,
communications director at the Insurance Alliance of Michigan.
Andrea Bitely, a spokeswoman for the Michigan Attorney General's Office, was unaware of any state-level investigations into no-fault fraud.
“There isn't a dedicated unit that is looking at that directly, but our criminal division would be responsible for prosecuting fraud that is brought to
the Attorney General's Office," she said.
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Jane Boudreau is the CEO and president of Jane Doe Investigations. She is inside a surveillance van at her office in Commerce Township on Friday, April 21,
2017. (Photo: Eric Seals, Detroit Free Press)
Jane Boudreau, a former Oakland County Sheriff's sergeant, is CEO of Jane Doe Investigations, a private company that regularly investigates no-fault
claims for auto insurance companies.
Boudreau said her Commerce Township-based firm has encountered scores of questionable injury claims across the state in which a person professes to
be seriously injured from a car accident but doesn't look very injured at all. Many of these cases involve substantial monetary claims for in-home care and
months of $20-per-day for help with household chores.
One of the most egregious cases involved a man who was claiming attendant care and other no-fault benefits for his supposedly serious car crash
injuries, but who was caught participating in a mixed-martial arts cage fight in Traverse City.
She recalled her surprise at discovering how auto insurers regularly agree to monetary settlements in first-party lawsuits, even when evidence of
exaggerated injuries or fraud seems overwhelming. Boudreau said a high-ranking official at a major insurance company explained that the cost of settling
these cases is often less than fighting them.
“They are giving away free money," Boudreau said of auto insurers. "I hate to say that. But the big picture is, do you want your insurance company to go
to trial and spend $60,000 to $70,000 on all the depositions and all the motions, or do you just hand them (the plaintiff) $8,000?”
'When did you get hurt?'
In the case involving the rented U-haul, Southfield-based law firm Wigod & Falzon initially represented the U-Haul passenger, Johnathan Cabil, in his
first-party lawsuit for more than $25,000 in no-fault benefits.
Managing partner Lawrence Falzon told the Free Press that his firm had nothing to do with the mystery callers who urged the men in the U-Haul to see
doctors and file claims. Falzon said his firm received Cabil’s case from a different law firm that he would not name.
Court documents say Wigod & Falzon dropped Cabil as a client following a "breakdown in the attorney-client relationship."
“I get all of my cases through other law firms,” Falzon said. “I don’t advertise; I don’t solicit; I don’t do any of that stuff.”
But Antoine Wilcox — who was driving the U-Haul and is Cabil's uncle — was incredulous to learn his nephew claimed to be injured after what
Wilcox considered a minor accident, according to his deposition testimony in Cabil's first-party lawsuit for no-fault benefits.
"I said, ‘Johnathan, when did you get hurt?’" Wilcox said in his deposition. "'Well, Uncle Tony, they said come down there ‘cause it’s an injury that I won’t
know until (I) come in.’”
"I told him, ‘Johnathan, whoever that was, you should have just told them you wasn’t hurt.’ And he said, 'Well, Uncle Tony, I need the money.'"
A Wayne County Circuit judge last year dismissed Cabil's lawsuit. Cabil could not be reached for comment and didn't return several messages that were
left through Wilcox.
In a phone interview last month, Wilcox said he is still surprised that the solicitors obtained his contact information and details of the U-Haul incident so
quickly. “It wasn’t even 24 hours before they called me," he said.
The precise outcome of the case's medical bills situation isn't clear from court filings. However, lawyers say that medical providers almost always write off
their unpaid no-fault bills should litigation against an insurance company fail or the settlement amount fall short. Patients are rarely, if ever,
forced to personally pay outstanding balances in no-fault cases.
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What makes up the typical cost of car insurance in Detroit? (Photo: Martha Thierry/Detroit Free Press)
And it's Detroiters who pay the price
For many Detroiters, such as Darryl Pesti, 26, a maintenance worker and single father of two young girls, car insurance rates in the city are nearly
unbearable. He said he pays $260 a month to insure his 2007 Chevy Cobalt and has a cousin in Arizona who pays only $140 a month for two newer
cars.
"It's just completely outrageous how much they're charging people in Detroit versus somewhere else," he said.
On months when his budget has been especially tight, Pesti said he has had to drop his car insurance and hope he doesn't get pulled over.
"I have been pulled over for it," he said. "The tickets are easier to pay than the insurance."
Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @JCReindl (https://twitter.com/JCReindl).
PART 2 (Coming Monday): "Are you hurt?" The aggressive solicitation after accidents in Detroit
Read or Share this story: https://on.freep.com/2pi5Qxn
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No-fault car insurance in Michigan: Here's how it works
JC Reindl, Detroit Free Press Published 11:04 p.m. ET May 6, 2017
• How can we make Detroit auto
insurance affordable?
(http://www.freep.com/story/news/loc
a
can-we-make-auto-insurance-detroit-
more-affordable/100018602/)
• Aggressive solicitation comes after
auto accidents in Detroit
(http://www.freep.com/story/news/loc
a
car-insurance-lawyers-accidents-
solicitation/100301782/)
• Tired of no-fault fraud in Michigan,
insurers turn to racketeering suits
(http://www.freep.com/story/news/loc
a
insurance-racketeering-lawsuits-
michigan-fraud/100301902/)
• How aggressive lawyers, costly
lawsuits and runaway medical bills
make Detroit car insurance
unaffordable
(http://www.freep.com/story/news/loc
a
fault-auto-insurance-detroit-
michigan/100326640/)
• Why does auto insurance in Detroit
cost so much?
Detroit drivers face the highest average insurance rates for cars and other vehicles in the country. Motorists in
Detroit can often be quoted more than $3,000 a year to insure a single automobile.
A Detroit Free Press investigation (/story/news/local/michigan/detroit/2017/05/07/no-fault-auto-insurance-
detroit-michigan/100326640/) finds that runaway medical bills, disability benefits payouts and lawsuits under
Michigan’s one-of-a-kind, no-fault insurance system play a key role in driving up costs for drivers.
What is no-fault car insurance?
No-fault auto insurance will pay for all of a car crash victim's necessary medical bills for as long as that person's injury or disability persists, potentially for
life.
Unlike many private health insurance plans, no-fault car insurance also pays for in-home nursing care — known as "attendant care" — to help a person
with tasks such as dressing, showering and preparing meals. This care can be provided by a relative, friend or agency. No-fault pays lost wages for up to
three years, and $20 a day for someone to do the injured person's household chores. There is also money to pay for funeral expenses and the cost to
modify a vehicle or home to be accessible to people with disabilities.
How long do I have
to file a no-fault
insurance claim?
People generally have up to a year from the
date of the accident to file a no-fault insurance
claim.
What if I have health
insurance? What
happens to my no-
fault benefits?
Motorists with private health insurance who are
not on Medicaid or Medicare can opt to
coordinate their coverages and have their
health insurer be the primary payer for car
crash injuries, in exchange for a discount on
their auto insurance premiums.
THE
FAULTS
IN
NO
FAULT INSURANCE
(Photo: Getty Images)
Page 1 of 3Car insurance in Michigan: How n
o
-fault insurance works
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(http://www.freep.com/story/news/local/
m
car-insurance-expensive-
cost/101374948/)
• How Michigan got — and kept — no-
fault auto insurance
(http://www.freep.com/story/news/local/
m
nofault-insurance-history-
detroit/100301828/)
• To a paralyzed woman needing
lifetime care, no-fault benefits are
priceless
(http://www.freep.com/story/news/local/
m
fault-lifetime-medical-benefits-for-
accident-victims/100301948/)
• Detroit car insurance: 6 other factors
behind the cost of auto insurance
(http://www.freep.com/story/news/local/
m
car-insurance-6-other-factors-behind-
cost-auto-insurance/100992680/)
• No-fault car insurance in Michigan:
Here's how it works
(http://www.freep.com/story/news/local/
m
fault-car-insurance-michigan-heres-
how-works/100668458/)
Under this scenario, no-fault auto insurance
stays in the background but kicks in for certain
crash-related expenses or benefits that aren't
provided by private health insurance, such as
long-term physical therapy or replacement for
lost wages.
Those with coordinated coverage must follow
the cost-containing guidelines of their primary
health insurance policy, such as staying within
a network of providers. That requirement can
preclude them from visiting certain doctors,
MRI centers and stand-alone clinics that aren't
affiliated with major hospital systems or
insurance billing networks and that specialize
in treating patients who pay with no-fault
insurance. These providers may bill for their
services at higher-than-typical rates.
What makes up the typical cost of car insurance in Detroit? (Photo: Martha Thierry/Detroit Free Press)
Page 2 of 3Car insurance in Michigan: How n
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-fault insurance works
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Detroit car insurance: 6 other factors behind the cost of
auto insurance
JC Reindl, Detroit Free Press Published 11:05 p.m. ET May 6, 2017 | Updated 12:17 a.m. ET May 7, 2017
• How can we make Detroit auto
insurance affordable?
(http://www.freep.com/story/news/loc
a
can-we-make-auto-insurance-detroit-
more-affordable/100018602/)
• Aggressive solicitation comes after
auto accidents in Detroit
(http://www.freep.com/story/news/loc
a
car-insurance-lawyers-accidents-
solicitation/100301782/)
• Tired of no-fault fraud in Michigan,
insurers turn to racketeering suits
(http://www.freep.com/story/news/loc
a
insurance-racketeering-lawsuits-
michigan-fraud/100301902/)
• How aggressive lawyers, costly
lawsuits and runaway medical bills
make Detroit car insurance
ff d bl
Detroit drivers face the highest average insurance rates (http://www.insurancequotes.com/auto/most-
expensive-metropolitan-areas-for-car-insurance)for cars and other vehicles in the country, often more
than $3,000 a year for a single automobile. (/story/money/business/michigan/2014/11/23/detroit-auto-
insurance-rates-premiums/19411987/)
A Detroit Free Press investigation finds that runaway medical bills, disability benefits payouts and
lawsuits under Michigan’s one-of-a-kind, no-fault insurance system play a key role in driving up costs for
drivers. (/story/news/local/michigan/detroit/2017/05/07/no-fault-auto-insurance-detroit-michigan/100326640/)
Find out what's behind the high cost of auto insurance in Detroit (/story/detroit/2017/05/06/why-is-detroit-car-insurance-expensive-costs-so-
much/101374948/) -- and what steps could be taken to help fix the problem.
While no-fault lawsuits, large medical bills and benefits payouts are major factors in why Detroit residents pay higher auto insurance premiums than
others in Michigan, they aren't the sole explanations. Here are additional factors.
Motor-vehicle theft: Detroit led Michigan with 5,113 incidents of vehicle theft in 2015, which was 35% of all such incidents that year
statewide, according to Michigan State Police data. Figures for 2016 were not yet available.
Carjackings: Carjackings have been on the decline but remain a problem. Detroit Police reported 382 carjackings last year, down from 532 in 2015 and
782 in 2013.
Crashes/congested roadways: Because of
higher traffic volumes, Detroit has more
accidents on its highways and roads than other
Michigan cities and rural areas. Detroit had
22,833 crashes in 2015, about 8% of all
reported crashes in Michigan, according to the
Michigan Traffic Crash Facts database.
Credit scores: Auto insurance companies use
a variation of a motorist's credit score when
setting rates. That controversial practice hurts
residents of cities with high poverty rates, such
as Detroit.
Lack of private health insurance: Detroit
residents are more likely to use the medical-
benefits portion ofno-fault auto insurance
policies than residents in many suburbs. That
THE
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IN
NO
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(Photo: Getty Images)
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(http://www.freep.com/story/news/local/
m
fault-auto-insurance-detroit-
michigan/100326640/)
• Why does auto insurance in Detroit
cost so much?
(http://www.freep.com/story/news/local/
m
car-insurance-expensive-
cost/101374948/)
• How Michigan got — and kept — no-
fault auto insurance
(http://www.freep.com/story/news/local/
m
nofault-insurance-history-
detroit/100301828/)
• To a paralyzed woman needing
lifetime care, no-fault benefits are
priceless
(http://www.freep.com/story/news/local/
m
fault-lifetime-medical-benefits-for-
accident-victims/100301948/)
• Detroit car insurance: 6 other factors
behind the cost of auto insurance
(http://www.freep.com/story/news/local/
m
car-insurance-6-other-factors-behind-
cost-auto-insurance/100992680/)
• No-fault car insurance in Michigan:
Here's how it works
(http://www.freep.com/story/news/local/
m
fault-car-insurance-michigan-heres-
how-works/100668458/)
is because no-fault becomes the primary payer
for crash-related medical bills for residents who
use Medicaid or Medicare — and it's the only
payer for those who lack health insurance
completely. An estimated 56% of Detroiters in
2015 were on Medicaid or Medicare, and 10%
lacked any health insurance, according to the
U.S. Census Bureau's American Community
Survey.
ZIP codes: Auto insurers use residential ZIP
codes when setting rates, to contain the costs
of claims to the areas where people who
generated claims live.
What makes up the typical cost of car insurance in Detroit? (Photo: Martha Thierry/Detroit Free Press)
Read or Share this story: https://on.freep.com/2pic3JD
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How Michigan got — and kept — no-fault auto insurance
JC Reindl, Detroit Free Press Published 11:04 p.m. ET May 6, 2017 | Updated 8:02 p.m. ET May 7, 2017
• How can we make Detroit auto
insurance affordable?
(http://www.freep.com/story/news/loc
a
can-we-make-auto-insurance-detroit-
more-affordable/100018602/)
• Aggressive solicitation comes after
auto accidents in Detroit
(http://www.freep.com/story/news/loc
a
car-insurance-lawyers-accidents-
solicitation/100301782/)
• Tired of no-fault fraud in Michigan,
insurers turn to racketeering suits
(http://www.freep.com/story/news/loc
a
insurance-racketeering-lawsuits-
michigan-fraud/100301902/)
• How aggressive lawyers, costly
lawsuits and runaway medical bills
make Detroit car insurance
unaffordable
(http://www.freep.com/story/news/loc
a
fault-auto-insurance-detroit-
michigan/100326640/)
• Why does auto insurance in Detroit
cost so much?
(http://www.freep.com/story/news/loc
a
Detroit drivers face the highest average insurance rates (http://www.insurancequotes.com/auto/most-
expensive-metropolitan-areas-for-car-insurance)for cars and other vehicles in the country, often more
than $3,000 a year for a single automobile. (/story/money/business/michigan/2014/11/23/detroit-auto-
insurance-rates-premiums/19411987/)
A Detroit Free Press investigation finds that runaway medical bills, disability benefits payouts and
lawsuits under Michigan’s one-of-a-kind, no-fault insurance system play a key role in driving up costs for
drivers. (/story/news/local/michigan/detroit/2017/05/07/no-fault-auto-insurance-detroit-michigan/100326640/)
Find out what's behind the high cost of auto insurance in Detroit (/story/detroit/2017/05/06/why-is-detroit-car-insurance-expensive-costs-so-
much/101374948/) — and what steps could be taken to help fix the problem.
Started in 1973, Michigan's no-fault insurance system was designed to lower costs and speed up payments to doctors by eliminating the need for
accident victims to sue the other driver after a crash to get payment for injuries. Under no-fault, drivers make claims against their own insurance
company, regardless of who is at fault in the crash.
Previously, motorists weren't required to buy
insurance if they paid $45 a year into a fund for
uninsured people. Michigan had been seeing
tens of thousands of auto-related lawsuits a
year — and one-third of every dollar spent on
insurance premiums went to legal expenses,
according to state government reports.
Because lawmakers saw little need for people
to go to court under the new system, they set
high thresholds for negligence lawsuits.
Negligence cases against the other driver in a
crash now succeed only if someone is killed or
suffers a serious bodily impairment.
No-fault insurance was a small nationwide
trend in the early 1970s, and many predicted
that the system would lower car insurance
premiums — but the opposite ultimately
occurred.
The Michigan Supreme Court in 1978 upheld
the no-fault law but said that if car insurance is
mandatory, it must be available at "fair and
THE
FAULTS
IN
NO
FAULT INSURANCE
(Photo: Getty Images)
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o
-fault car insurance?
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car-insurance-expensive-
cost/101374948/)
• How Michigan got — and kept — no-
fault auto insurance
(http://www.freep.com/story/news/local/
m
nofault-insurance-history-
detroit/100301828/)
• To a paralyzed woman needing
lifetime care, no-fault benefits are
priceless
(http://www.freep.com/story/news/local/
m
fault-lifetime-medical-benefits-for-
accident-victims/100301948/)
• Detroit car insurance: 6 other factors
behind the cost of auto insurance
(http://www.freep.com/story/news/local/
m
car-insurance-6-other-factors-behind-
cost-auto-insurance/100992680/)
• No-fault car insurance in Michigan:
Here's how it works
(http://www.freep.com/story/news/local/
m
fault-car-insurance-michigan-heres-
how-works/100668458/)
equitable" prices. That ruling led to a territorial
system that forbade insurers from charging
rates that were less than 45% of the highest
territory and imposed tighter rules for adjacent
territories. But insurers argued the
system forced non-city dwellers to pay higher
rates to subsidize artificially low premiums in
Detroit, where theft was higher.
Busier roadways and more frequent crashes already add to the cost of car insurance in metropolitan areas. (Photo: Salwan Georges, Detroit Free Press)
The Michigan Catastrophic Claims Association was started in 1978 to pay for the most serious and expensive auto injuries through an annual per-vehicle
fee that auto insurers pass on to consumers, currently $160 a year. The association pays insurance companies out of a fund once expenses
surpass $545,000 for an injured person.
Nearly every effort since the 1980s to make far-reaching changes to the no-fault system has come up empty and often pitted insurance companies
against the trial-lawyers bar.
In 1992 and 1994, voters statewide rejected ballot issues that would have limited no-fault's medical coverage.
Then-Gov. John Engler ended the territorial rating system in 1996. Once those restrictions lifted, insurers began assigning ratings by ZIP code, a practice
upheld by the state Supreme Court.
Detroit attorney Michael Cafferty said the type of lawsuit known as a first-party suit, in which plaintiffs sue their own insurance company for
benefits, was relatively uncommon in the 1980s when he started practicing law.
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But as various tort reform efforts and state Supreme Court decisions made personal-injury cases harder to win in Michigan, lawyers gave first-party auto
lawsuits a closer look, he said.
.
"As these other things fell by the wayside, lawyers started thinking, 'Well, the PIP is fairly easy. You don't have to prove any threshold or prove fault — all
you have to prove is (that) the person was hurt in an auto accident and needed care and treatment,'" Cafferty said, using the PIP acronym for the
"personal injury protection" medical, wage-replacement and in-home benefits available under no-fault insurance.
Lawyers in first-party cases can get 33% of the medical billings and benefits payouts in the settlements with insurers. Lawyers who regularly represent
medical providers in such cases may agree to lower amounts, such as 20% of what a clinic or hospital recovers.
What makes up the typical cost of car insurance in Detroit? (Photo: Martha Thierry/Detroit Free Press)
Efforts at no-fault reform fall short
Efforts in the state Legislature to make changes to no-fault insurance have come up short. Recurring proposals have set maximum fees that medical
providers can charge and allowed policyholders to chose among different levels of no-fault coverage besides unlimited.
Defenders of the current system include the powerful Coalition Protecting Auto No-Fault, made up of trial lawyers, medical clinics, disability advocates
and, until recently, the state's hospital lobby. Committee hearings on no-fault bills are often packed with people in wheelchairs who were catastrophically
injured in car crashes and rely on no-fault benefits.
State Sen. Steve Bieda, D-Warren, who supports keeping unlimited benefits, said he thinks that past legislative pushes to rein in the no-fault
system's costs failed because they attempted too many big changes at once. A better approach might be tackling specific issues, such as the absence of
a no-fault fraud authority, he said.
“I think one of the biggest problems is we saw attempts that, instead of going for incremental savings and reforms, they always seem to be this massive
overhaul," Bieda said.
Another reason reform proposals usually fail is because people generally like having full no-fault coverage in their auto insurance, although they want
to pay less for it.
"That just seems to be a common human thing," Bieda said. "I want to pay less, but don’t cut my coverage.”
House speaker Tom Leonard, R-Dewitt, said last month that costly auto insurance is one of the biggest issues facing Michigan and attributed the problem
to high no-fault insurance reimbursement going to hospitals and other medical providers. He said members of the House Insurance Committee are
working on legislation to address that underlying problem. Their proposal could emerge in the coming weeks.
Page 3 of 4Why does Michigan still have n
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-fault car insurance?
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“The reimbursement rates are so high, that is what we have to tackle," he said.
State Sen. Morris Hood III, D-Detroit, who favors keeping unlimited no-fault benefits, introduced legislation this spring that would streamline the factors
auto insurers can use for calculating premiums. His bill would allow insurers to base rates only on potential vehicle repair costs and the driver's history of
insurance claims and civil infractions.
"Under the current law, insurance companies can base their rates on many subjective criteria that yield unfair outcomes," Hood said.
Read or Share this story: https://on.freep.com/2pSnZ8T
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-fault car insurance?
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To a paralyzed woman needing lifetime care, no-fault
benefits are priceless
JC Reindl, Detroit Free Press Published 11:04 p.m. ET May 6, 2017 | Updated 12:13 a.m. ET May 7, 2017
A crash survivor's wheelchair-accessible house in Midland was partly financed by auto insurance -- an example
of Michigan's unique, one-of-a-kind benefits
After a horrific car crash left Ashley Hogan paralyzed from the waist down at age 22, she thought she would be
living with her parents for the rest of her life, relying on them for everything.
But thanks to Michigan's no-fault system and its unlimited lifetime benefits, today she has her own wheelchair-
accessible house in Midland, about eight hours of daily attendant care and has been able to return to work.
"It’s a great program. Without it, I don’t know where I would be, probably in a nursing home somewhere living
off the state," said Hogan, now 26, who broke her back and severed her spine in the September 2013 Jeep
accident. “I never thought that I’d be able to take care of myself the way I've been able to."
Hogan's story underscores the challenge in finding a balance in efforts to rein in the excessive costs that have made car insurance premiums in Michigan
some of the nation's highest, without shredding a valuable safety net for people who are injured. Her benefits would not have been possible with a strict
monetary cap on no-fault payouts.
Her ranch house, partly financed by her auto insurance company, was designed to help her live as independently as possible, with features
like lowered kitchen countertops and a dishwasher she can use from her wheelchair.
• FREE PRESS SPECIAL REPORT: How aggressive lawyers, costly lawsuits and runaway medical bills make Detroit car insurance
unaffordable. (/story/news/local/michigan/2017/05/05/no-fault-auto-insurance-detroit-michigan/100326640/)
(Photo: Getty Images)
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-fault benefits are priceless
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-fault-lifetim
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• How can we make Detroit auto
insurance affordable?
(http://www.freep.com/story/news/loc
a
can-we-make-auto-insurance-detroit-
more-affordable/100018602/)
• Aggressive solicitation comes after
auto accidents in Detroit
(http://www.freep.com/story/news/loc
a
car-insurance-lawyers-accidents-
solicitation/100301782/)
• Tired of no-fault fraud in Michigan,
insurers turn to racketeering suits
(http://www.freep.com/story/news/loc
a
insurance-racketeering-lawsuits-
michigan-fraud/100301902/)
• How aggressive lawyers, costly
lawsuits and runaway medical bills
make Detroit car insurance
unaffordable
(http://www.freep.com/story/news/loc
a
fault-auto-insurance-detroit-
michigan/100326640/)
• Why does auto insurance in Detroit
cost so much?
(http://www.freep.com/story/news/loc
a
car-insurance-expensive-
cost/101374948/)
• How Michigan got — and kept — no-
fault auto insurance
(http://www.freep.com/story/news/loc
a
nofault-insurance-history-
detroit/100301828/)
Ashley Hogan of Midland poses for a photo in her home on Thurs., March 9, 2017. (Photo: Elaine Cromie, Detroit Free Press)
The home also has wider doorways, a wheelchair-ready shower and a lift that connects to the finished basement, where Hogan exercises on a
stationary hand-cycle.
"So it is completely accessible for me," said Hogan, who after years of rehabilitation was able to go back to work as a school district secretary. "I’m
probably as recovered as I’m going to be. You can always work on arm strength or core strength, but as far as walking and that stuff, I’m probably as far
as I’ll get."
Hogan was a passenger in a Jeep that had a
rollover accident in Gladwin County after its
driver lost control. She sued the driver for
driving recklessly.
Her house was built between fall 2015 and
spring 2016 with about $275,000 worth
of materials, paid for by Hogan's no-fault auto
insurer, Auto-Owners Insurance. The
construction labor was donated through
a program involving the City of Midland,
building trades students at Midland High
School and Dow High School, and a nonprofit
group for those with disabilities called the ARC
of Midland.
Auto-Owners agreed that in Hogan's situation,
a specially accessible home was an
eligible expense for her long-term care.
And building a new home was cheaper than
trying to modify her parents' existing one.
Hogan contributed nearly $50,000 to the
project, including the purchase of the property,
from proceeds of a $100,000 settlement from a
negligence lawsuit filed against the Jeep driver
on her behalf by the Sam Bernstein Law Firm.
The firm took a standard one-third cut of that
settlement after costs were deducted as
its contingency fee.
THE
FAULTS
IN
NO
FAULT INSURANCE
Page 2 of 4To a paralyzed woman needing lifetime care, n
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-fault benefits are priceless
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-fault-lifetim
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• To a paralyzed woman needing
lifetime care, no-fault benefits are
priceless
(http://www.freep.com/story/news/local/
m
fault-lifetime-medical-benefits-for-
accident-victims/100301948/)
• Detroit car insurance: 6 other factors
behind the cost of auto insurance
(http://www.freep.com/story/news/local/
m
car-insurance-6-other-factors-behind-
cost-auto-insurance/100992680/)
• No-fault car insurance in Michigan:
Here's how it works
(http://www.freep.com/story/news/local/
m
fault-car-insurance-michigan-heres-
how-works/100668458/)
The home of Ashley Hogan of Midland is seen on Thursday, March 9, 2017. (Photo: Elaine Cromie, Detroit Free Press)
Auto insurance companies in Michigan are not legally compelled to buy a new house for a catastrophically injured person. This stems from a May 2013
Michigan Supreme Court decision — Admire v. Auto-Owners Insurance — that found if people are injured in crashes, no-fault insurers aren't required to
buy all-new vehicles that are accessible for people with disabilities; they only have to pay for modifications to make a person's existing
vehicle more accessible. Even though that ruling was specifically about vehicles, lawyers say it has come to apply to accessible houses, as well.
"They won’t make you any better than you would have been before" the accident, said Beth Klein of the Bernstein law firm.
But Auto-Owners voluntarily agreed to pay for the new house's construction materials because the total cost of the project, including the volunteer labor,
was cheaper than building modifications to Hogan's parents' house, where she otherwise would have lived.
“It would not have been able to happen after that Supreme Court ruling if not for this partnership, so that was pretty cool," said Jan
Lampman, executive director of the Arc of Midland.
“The home is going to last Ashley her entire life and it is completely accessible to her. It’s going to cost the citizens of the world less mone
y
to support Ashley in the future because she has this barrier-free home."
The no-fault benefits also paid for Hogan's wheelchair, a standing frame chair and her hand-cycle, which she also can ride outside on the roads.
Additionally, the insurance company continues to pay for about eight hours of daily in-home attendant care provided by a home health agency. Insurance
also paid a lost-wages benefit before Hogan was able to return to work.
Page 3 of 4To a paralyzed woman needing lifetime care, n
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-fault benefits are priceless
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Hogan said she is extremely thankful for Michigan's no-fault system. In no other state would auto insurance have provided so many benefits and helped
build her house.
"I really thought I was going to have to go back and live with my parents for the rest of my life at 22, and that was a grim thought, too, because who wants
to live with their parents the rest of their lives?" Hogan said. "It was nice to have something there so I was taken care of."
Ashley Hogan, left, of Midland works on preparing dinner at her home on Thurs., March 9, 2017 as her friend Kayla Neibert of Sanford and her daughter Scarlett visit.
(Photo: Elaine Cromie, Detroit Free Press)
Hogan's ongoing benefits from the accident, such as attendant care, are now reimbursed through no-fault's Michigan Catastrophic Claims Association
program. The association pays auto insurance companies once expenses surpass $545,000 for an injured individual.
The association currently assesses auto insurers an annual $160 per-vehicle fee for the program, which gets passed on to motorists.
Klein said that Michigan's uncapped no-fault benefits have helped Hogan and many of her other clients regain dignity in their lives and a measure of
independence following devastating accidents.
"If it wasn’t for the no-fault, they wouldn’t be able to have the self-esteem and the confidence and the wherewithal," Klein said.
Read or Share this story: https://on.freep.com/2pibS11
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-fault benefits are priceless
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Aggressive solicitation comes after auto accidents in
Detroit
JC Reindl, Detroit Free Press Published 11:24 p.m. ET May 7, 2017 | Updated 11:10 a.m. ET May 9, 2017
How lawyers and medical clinics snag their clients and drive up auto insurance costs for all Detroiters
Detroit drivers face the highest average insurance rates (http://www.insurancequotes.com/auto/most-
expensive-metropolitan-areas-for-car-insurance)for cars and other vehicles in the country, often more
than $3,000 a year for a single automobile. (/story/money/business/michigan/2014/11/23/detroit-auto-
insurance-rates-premiums/19411987/)
A Free Press investigation finds that runaway medical bills, disability benefits payouts and lawsuits under
Michigan’s one-of-a-kind, no-fault insurance system play a key role in driving up costs for drivers.
(/story/news/local/michigan/detroit/2017/05/07/no-fault-auto-insurance-detroit-michigan/100326640/)
Find out what's behind the high cost of auto insurance in Detroit (/story/detroit/2017/05/06/why-is-detroit-car-
insurance-expensive-costs-so-much/101374948/) — and what steps could be taken to help fix the problem.
No one wants to be in an auto accident. But people who've just been in accidents are a target audience for those in the business of representing or
treating no-fault insurance patients.
There has been an explosion in recent years in and around Detroit of billboard, TV and radio ads for personal-injury lawyers and some accident-victim
referral services that urge people to call up a lawyer after nearly any accident to snag no-fault benefits and money.
Referral services work by directing people who have been in crashes to specific medical providers or law firms. In exchange for that referral, the services
can get a 40% or even 50% cut of the plaintiff lawyer's contingency fee, according to court documents and contracts reviewed by the Free Press.
Some of the more provocative ads in recent years have been for a referral service called Motor City Accident Attorneys that uses the 800-411-PAIN
hotline. One of their 2015 radio ads featured Detroit rapper Trick-Trick. "Somebody might owe you some money; this is the number you call to get it, even
the money that you got to pay your babysitter," Trick-Trick rhymed in the ad.
"Now I can count. And I can count real high. But I can’t count to unlimited," a different announcer said in another ad, this one
airing on WJLB-FM (97.9), a hip-hop and R&B station. "Unlimited money for house cleaning, unlimited money for child care, unlimited
money for somebody to do your dishes. ... But first, you need to call the Motor City Accident Attorneys at 1-800-411-PAIN."
Motor City Accident Attorneys also paid more than $40,000 a month in 2015 to have its logo and the pink 411 PAIN logo wrapped around Detroit city
buses, a city spokesman said.
Yet despite its local-sounding name, Motor City Accident Attorneys' corporate members were listed in state records as three personal-injury lawyers with
offices in Florida. Repeated messages left for the lawyers weren't returned.
(Photo: Kathleen Galligan, Detroit
Free Press)
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A Free Press investigation has found that among the major culprits for Detroit's highest-in-the-nation auto insurance rates are runaway medical
bills, disability benefits and a surge in lawsuits under Michigan’s no-fault insurance system, the only one of its kind that allows for unlimited benefits.
Detroiters, on average, pay more than $3,000 a year in premiums.
First-party lawsuits, in which a person who was in an accident sues his or her auto insurance company for no-fault benefits, have quadrupled in Wayne
County since 2004, even as the number of accidents has fallen. Lawyers can ultimately get a one-third cut of the client's medical billings and
insurance benefits payouts in these lawsuits.
Critics contend that such ads can be particularly effective with lower-income individuals, who, by their circumstances, are more likely to be lured by the
hope of a payout. This would apply in Detroit, where more than a third of residents live in poverty.
"The best people for plaintiff attorneys to take are people that will sue and put their name on a dotted line for anything that will result in them possibly
making money," said Eric Poe, chief operating officer of CURE Auto Insurance, a New Jersey-based nonprofit auto insurance company. Poe was an
unpaid adviser for a proposal to reduce car insurance premiums in Detroit, known as D-Insurance.
"So typically, the not-so-high income individuals are more likely to sue because the pot at the end of the rainbow is greater," he said.
Carl Collins III is among the personal injury attorneys who have advertised on billboards. (Photo: JC Reindl, Detroit Free Press)
Rather than advertise and wait for clients or patients to call, some solicitors will reach out to people who have been in an auto accident to steer them
to lawyers, doctors or rehab clinics.
Known as "ambulance chasing," this illicit practice of approaching or cold calling those who were just in a crash is common in Detroit.
Many personal-injury attorneys recall hearing stories from clients who encountered a deluge of phone calls from unknown callers in the days or hours
after their accident. Some clients say they were even slipped information about lawyers or treatment centers while still in the hospital for their injuries.
"Some of my clients, when they call me, their phone is ringing with other attorneys who are calling, and attorneys are knocking on their doors, chasing
them," said Southfield-based personal-injury attorney Carl Collins III.
Those who solicit an accident victim in Michigan for commercial purposes within 30 days of a car crash face a misdemeanor charge and, for a repeat
offense, possible jail time and $60,000 fine. It has been illegal since January 2014 to access or buy police reports of crashes for solicitation purposes
during that first month. And medical bills or attorney fees that are linked to accident-victim solicitation can be tossed out.
But authorities have yet to charge anyone in Wayne County since new state laws against ambulance chasing went into effect three years ago. A
spokesman for the Wayne County prosecutor said he was unaware of any solicitation cases reaching their office.
• THE PRICE TAG: 6 more reasons why Detroiters face such high auto insurance premiums
(/story/news/local/michigan/2017/05/01/dfp-new-auto-insurance-chunky-bits/100992680/)
Page 2 of 8Aggressive solicitation comes after auto accidents in Detroit
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• How can we make Detroit auto
insurance affordable?
(http://www.freep.com/story/news/loc
a
can-we-make-auto-insurance-detroit-
more-affordable/100018602/)
Detroit resident Shira Kresch, 24, said she received a flurry of phone calls and text messages on the morning after her car crash from mystery callers, at
least two of whom attempted to solicit her.
Kresch was involved in an accident about 9 p.m. March 22, near New Center in Detroit, at the Lodge and West Grand Boulevard. Kresch said her vehicle
hit another vehicle whose driver didn't see the traffic light and failed to stop. No one was injured, and the damage to both vehicles appeared relatively
modest, she said. Police officers arrived and wrote up an incident report.
Her cell phone received the first call at 7:30 a.m. the next day, followed minutes later by a second call from a different number with the 313 area code.
Kresch said she didn't answer those initial calls because she ordinarily doesn't take calls from unknown numbers. However, she did answer the third
mystery call that morning, at 7:50 a.m. from an unknown number with a 248 area code to figure out what was happening.
The male caller identified himself as an "accident consultant" and knew her name and that she had just been in an accident. Kresch told the man she was
heading to work and too busy to talk. "He said, 'Well, I just have one quick question for you: Are you hurt, or would you like to speak to an attorney?' So I
told him I wasn't hurt, and that was it.”
Around this time, Kresch received a text message from a number with a 313 area code from a "Miss Johnson" who introduced herself as Kresch's
"benefit coordinator" and dangled a cash offer. The text said: "You have been pre-approved for a monthly check of $600 plus medical benefits at no cost
to you. Contact Miss Johnson ASAP to activate your $600 monthly benefit plus medical benefits. To prevent fraud from your account and speaking to an
illegal telemarketer only discuss this accident with this office."
Kresch said she didn't reply to the text or pursue any medical treatment or legal services for her accident. A Free Press reporter later called the 248
number and the number on the text, and after identifying himself as a reporter investigating no-fault solicitation, he was told he had the wrong numbers.
It's unclear how solicitors obtained details of Kresch's accident and her contact information. Although police reports of crashes are available to the public
through Freedom of Information requests, it's unlikely the callers could have obtained the documents overnight.
Detroit Police Sgt. Michael Woody said the department has received several reports of similar solicitations in recent months.
“We’re going to continue to work the investigatio
ns until we figure out where this information is be
ing captured from and who it is being sent to," Woody
said. “They should not have to face these kinds of issues once they get into an accident.”
Coming 'out of nowhere'
Davon Hicks was in a rented pickup that lost control and hit a utility pole in Detroit in late January 2014.
In deposition testimony for his first-party lawsuit against Avis Budget Car Rental, Hicks recalled how after the accident, a man he thought was
named "Chad" from a place called "Legal Genius" showed up at his sister's house and told him that he could get benefits. "He just came out of nowhere.
It was like three of them that called me. They was like, 'Can I meet up with you?' I'm like, 'Yeah, I guess so.'
"I didn't understand what was going on, to be honest with you," Hicks said in the deposition. "So he was running it down, my sister was sitting there. She
was like, 'Well, I know about some stuff and it sound pretty much right. He going to find you a lawyer — this and this and that. They'll make a percentage
off that. ... All I have to do is sign some papers."
Hicks said that Chad then "connected" him with the Southfield-based Wigod & Falzon law firm. Wigod & Falzon allegedly referred him to a doctor who, in
turn, referred him to a Southfield-based MRI center, Affiliated Diagnostics of Oakland, which billed $20,100 for taking four MRIs that were charged
between $4,950 and $5,250 per image, according to court documents and a transcript of Hicks' deposition testimony.
Wigod & Falzon ultimately withdrew from representing Hicks because, according to Hicks, the law firm was also representing the other person in the
rental car, whom Hicks had considered suing.
On his own, Hicks found a new attorney, Terry Cochran of Cochran, Kroll & Associates in Livonia, and ultimately won a $30,000 insurance settlement for
no-fault benefits in his first-party lawsuit.
But when it came time to apportion the
proceeds of the settlement between Hicks'
medical providers, Cochran asked the Wayne
County Circuit judge to toss out the $20,100 bill
from Affiliated Diagnostics of Oakland.
THE
FAULTS
IN
NO
FAULT INSURANCE
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• Aggressive solicitation comes after
auto accidents in Detroit
(http://www.freep.com/story/news/local/
m
car-insurance-lawyers-accidents-
solicitation/100301782/)
• Tired of no-fault fraud in Michigan,
insurers turn to racketeering suits
(http://www.freep.com/story/news/local/
m
insurance-racketeering-lawsuits-
michigan-fraud/100301902/)
• How aggressive lawyers, costly
lawsuits and runaway medical bills
make Detroit car insurance
unaffordable
(http://www.freep.com/story/news/local/
m
fault-auto-insurance-detroit-
michigan/100326640/)
• Why does auto insurance in Detroit
cost so much?
(http://www.freep.com/story/news/local/
m
car-insurance-expensive-
cost/101374948/)
• How Michigan got — and kept — no-
fault auto insurance
(http://www.freep.com/story/news/local/
m
nofault-insurance-history-
detroit/100301828/)
• To a paralyzed woman needing
lifetime care, no-fault benefits are
priceless
(http://www.freep.com/story/news/local/
m
fault-lifetime-medical-benefits-for-
accident-victims/100301948/)
• Detroit car insurance: 6 other factors
behind the cost of auto insurance
(http://www.freep.com/story/news/local/
m
car-insurance-6-other-factors-behind-
cost-auto-insurance/100992680/)
• No-fault car insurance in Michigan:
Here's how it works
(http://www.freep.com/story/news/local/
m
fault-car-insurance-michigan-heres-
how-works/100668458/)
Cochran said the bill was void because it was
linked to what was said to be the solicitation of
Hicks, who had his MRIs done there following
a chain of referrals that began after Hicks was
contacted by Chad from Legal Genius and had
signed up with the Wigod & Falzon law firm.
"Plaintiff and defendant strongly believe that
their actions in this matter constitute
solicitation," Cochran wrote in a legal brief.
In a phone interview, attorney Lawrence
Falzon told the Free Press that Wigod &
Falzon had no connection to the alleged
solicitation and received Hicks' case as a
referral from another law firm. He declined to
identify the firm.
“It wasn’t my law firm that had anything to do
with signing him initially," Falzon said, adding
that his firm has no referral relationships with
MRI facilities.
LegalGenius is a Southfield-based personal-
injury law firm. A lawyer representing the firm
said LegalGenius had no involvement in Hicks'
case, and that people who do solicit accident
victims have falsely presented themselves as
being with the firm.
"There were other law firms that solicit people
using the name of 'LegalGenius' when, in fact,
they had no association with LegalGenius,"
said attorney Ben Gonek.
Representatives of Affiliated Diagnostics did
not return repeated messages seeking
comment for this report that were left by phone
and in person with their front-desk staff.
Cochran said his client, ultimately, did not have to share any of his insurance settlement with the MRI center.
They 'handle everything'
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The vacant office space in Dearborn of a now-closed medical clinic, Executive Plaza Medical, that treated car crash patients. Photo taken January 2017 (Photo: JC Reindl,
Detroit Free Press)
Two patients have described being solicited at their home following a car accident and later referred to a now-closed medical clinic in Dearborn that was
linked to an out-of-state celebrity plastic surgeon.
The clinic, Executive Plaza Medical, was inside an office complex at 17000 Executive Plaza Drive.
State records show it was incorporated in February 2014 by Dr. Joseph K. Bivens, a plastic surgeon who ordinarily practices in California and Florida and
has appeared on "The Real Housewives of Orange County" TV show. The records also show Bivens' name as the clinic's president.
It's unclear what attracted the famed surgeon to Michigan for a clinic that treated car crash patients. The website for Bivens’ plastic surgery practice lists
his specialties as including facelifts, brow lifts, liposuction and breast and butt augmentations.
Dr. Richard Ochs, once a head doctor at Executive Plaza, told the Free Press that Bivens' signature was on his paychecks and, as far as he knows,
Bivens was the clinic's owner, although the plastic surgeon did not personally practice at the clinic.
Ochs, who is now semi-retired, said Bivens was rarely on-site at the Dearborn clinic, and day-to-day operations were handled by a local management
group. "He was like an absentee owner — he was rarely there," Ochs said.
One Detroit woman's eventual journey to Executive Plaza began the day after her July 21, 2014, auto accident when, out of the blue, a caller who
identified herself as "Monica" phoned her, according to the woman's deposition testimony in her first-party lawsuit against Progressive.
Monica explained how, "We're going to take care of you. You have nothing to worry about. We're going to send someone to your house. They're going to
have you sign some papers so we can basically handle everything for you," the woman, Raquel Miller, recalled in the deposition.
Two hours later, a young man showed up at the house where she was staying and handed her paperwork to sign and a card that said "Legal Genius,"
Miller testified. She subsequently signed up with the Reifman Law Firm in Southfield, which she thought was linked to the man who showed up at the
house.
When contacted for comment, a Reifman Law representative told the Free Press that his firm does not solicit clients or accept clients who have been
solicited by others. The representative, who only identified himself as "Peter," said Miller may have briefly signed up with his law firm, but it didn't take the
case. "We turned it back shortly after," said the Reifman Law representative, who refused to give his full name.
Detroit accident victims "get called all the time by everybody," the representative said. "I don’t know anything about it, and I can’t comment on it.”
Gonek, the attorney for LegalGenius, said LegalGenius did not have any involvement in the case or the house visit.
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Days after receiving the strange call and visit, Miller said she was sent to her first of several visits with Ochs. She testified how Monica set up the
appointments and arranged for a medical transportation company to take her there and to physical therapy appointments at Advanced Care Rehab in
Detroit.
The company typically charged no-fault insurance $35 for each pickup, $35 for drop-offs, plus $2.99 for each mile, records show.
A month after the auto accident, Miller said she was able to return to work yet continued physical therapy and seeing Ochs at Executive Plaza. She
said she signed up with a different law firm after hearing through Ochs' office that Reifman Law "had released me," according to her deposition testimony.
By then, Miller was driving herself to work every day and felt she was capable of driving herself to medical appointments, as well. However, various
people who were working her case "insisted" that she use a transportation company's minivans to get to those therapy appointments and Ochs' office,
she said in the deposition. Progressive insurance was billed nearly $3,000 for all the rides, according to testimony and court documents.
Messages seeking comment from Advanced Care Rehab and its lawyer for this report were not returned.
Another Detroiter was allegedly sent to see Ochs at Executive Plaza following a June 2014 car accident. Sherman Mobley said that people began calling
him shortly after his accident, and that he signed up with the Reifman law firm, according to deposition testimony.
He then met with a person whom he thought to be an attorney and was referred by a woman in that office to begin treatment with Ochs, the man said in
the deposition.
Ochs then saw the patient for his accident-related neck, back and knee pain, and sent him for MRIs at Affiliated Diagnostics of Oakland and for therapy at
Advanced Care Rehab. Mobley said he continued treatment with Ochs for about nine months, until he was told the doctor had stopped seeing patients,
and the clinic closed soon after.
Mobley had signed up with a different law firm by the time he filed a first-party lawsuit against Farmers Insurance. The insurance company settled the
case last year for $43,500, including $10,000 for medical bills at Advanced Care Rehab and $4,500 for Affiliated Diagnostics.
Reifman Law's representative told the Free Press that Mobley was also a "turn-back" and that the firm did not solicit him or take his case.
Reached by phone, Ochs, who now lives in California, said that he didn’t know how the patien
t
s he saw at Executive Plaza found their way to him. Ochs
said he also didn't know about any alleged links to solicitation involving Executive Plaza Medical, and had he known of such claims, he would have
stopped working there. Executive Plaza closed its doors in late April 2015, he said.
"That is the last thing in the world I'd want to be involved in," Ochs said. “In terms of how they (patients) got to me, I don’t know. This is the first time
someone has brought it to my attention that someone came to their door unsolicited."
In a phone interview, a woman who described herself as a publicist for Dr. Bivens emphasized that Bivens never practiced at the Dearborn clinic and said
he had nothing to do with the alleged solicitation. The publicist, Marina Kufa, said the doctor was not available to answer questions.
"Dr. Bivens is a celebrity plastic surgeon. He doesn’t talk to anyone," Kufa said.
Staff at Bivens' California office referred all comment about the Michigan clinic to David Poces, a Florida-based chiropractor whose name was once listed
in Michigan incorporation records as Executive Plaza’s resident agent. Reached by phone, he told the Free Press he didn't know anything about Bivens’
involvement in the clinic and quickly hung up.
Solicited in the ER?
Some metro Detroit accident victims have described solicitation schemes that are supposedly occurring on the streets and even inside hospitals.
A Detroit woman said that while visiting Henry Ford Hospital's emergency room following her April 2014 car accident, someone slipped her a card or note
to begin treatment at a medical clinic called Vital Community Care in Southfield that is unaffiliated with the hospital system.
“While I was there, one of the doctors told me to — he gave me a card or write it down to go to Vital," the woman, Binnie Boatner, said in a deposition for
her first-party lawsuit against State Farm. Asked whether she was certain that it was a doctor who handed the card, she replied, “It’s hard for me to know
because so many people came around. I figured they (were) all doctors."
The woman proceeded to seek treatment at Vital Community Care. From there, she said she was referred to a physical therapy business, a nearby
pharmacy and a transportation service that shuttled her to appointments.
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The transportation service, GetWell Medical Transport, a commonly utilized medical transportation firm in metro Detroit, ultimately sought $7,950 from the
woman's State Farm auto insurance for her rides to medical appointments over a period of months, including charges between $90 and $100 for regular
appointments and $250 for trips to get X-rays, MRIs or a CAT scan, according to State Farm's claims in court documents.
It's unclear from court records how much of the transportation bills State Farm ultimately paid. Still, the woman testified that she would not have taken the
rides if she — and not the auto insurance company — had to pay those charges. "No, I wouldn’t. I’d catch a cab first," she said.
There was no allegation that GetWell had knowledge of or involvement in the alleged solicitation.
An attorney for GetWell said the company's charges are reasonable and actually below those of other medical transport firms. The attorney, Gary
Blumberg, emphasized that medical transportation is an unpredictable business where insurance companies routinely delay payment or pay less than is
owed.
“They wait sometimes years to get paid," he said. "Sometimes they don’t get paid at all.”
A manager at Vital Community Care, who would only give her name as "Mia," said in a brief phone interview that no one solicits patients for the clinic or
works outside the clinic in any hospitals.
A Henry Ford Health System spokeswoman said the hospital system has no affiliations with Vital Community Care and forbids employees or third parties
from soliciting patients.
Accosted on streets?
A Russian immigrant in Hamtramck said that following his June 2014 auto accident, he was approached on a Hamtramck street by a man who handed
him a business card for a clinic in Warren called EZ Rest Re-Hab Center, purportedly telling him, "You should treat with us."
Prior to this encounter, the Hamtramck man had been diagnosed after the crash by a doctor with chronic back pain, and MRIs reportedly showed only
degenerative changes to his back, according to court documents. Yet saying he felt lower back pain from the crash, the man went to visit the Warren
clinic.
After just five months, he had generated a no-fault insurance bill of more than $20,000 at EZ Rest, including charges for the clinic's door-to-door
transportation service, court records say. Asked why he used the ride service rather than driving himself to appointments, he said in a deposition, "Why
should I when they will come and pick me up?"
The man later underwent an independent medical examination for the insurance company by a Beaumont Hospital-affiliated doctor who found no basis
for the man's pain symptoms. The examiner "also felt that all of this physical therapy for over a year was excessive for the objective injuries that were
demonstrated early on," according to case summary documents in the man's first-party lawsuit.
EZ Rest joined the man's lawsuit against the Main Street America Protection Insurance, demanding payment of its outstanding bills. The lawsuit was
settled last summer for an undisclosed amount.
An EZ Rest representative who would only give her name as "Michelle C." told the Free Press that the man's claim of being approached on the street and
directed to the clinic is untrue. The clinic also no longer treats auto accident patients, she said.
According to court documents, EZ Rest's medical records reportedly say the Hamtramck man was referred to them by a Sterling Heights doctor.
Lawyer's legal fight
Some prominent personal-injury law firms have in the past contacted potential clients at home through
targeted letters sent to their address. This marketing practice is allowed under Michigan law and rules of
professional lawyer conduct, as the letters contain information intended for individuals who are facing a legal
issue and may benefit from representation.
Attorney Mike Morse, owner of the Southfield-based Mike Morse Law Firm, was among the metro Detroit law
firms that once purchased police reports of car crashes and then sent informational letters to people
in accidents. This occurred before a state law against accessing or purchasing police reports of recent car crash
victims took effect in January 2014.
One such flyer — since discontinued by Morse's firm — declared "WE HAVE YOUR POLICE REPORT!" in bold
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A billboard for attorney Mike
Morse can be seen on Woodward
Avenue at Eight Mile in October
2015. (Photo: Kathleen Galligan,
Detroit Free Press)
letters and informed recipients that they could call 855-MIKE-WINS for a free consultation.
The flyer came with a two-page form letter signed by Morse that said that even if the accident was the person's
fault, he or she was still entitled to Michigan no-fault benefits. "This could be hundreds of thousands of dollars a
year worth of benefits in your pocket!" the letter stated in bold, underlined italics.
In a 2015 interview with the Free Press, Morse noted how such flyers were permitted and once common and said his firm stopped sending the letters
before the new law that mandates a 30-day waiting period for using police reports to contact people who were in auto accidents.
"When it was permissible, we would buy police reports and send out a letter with those police reports, and that was done by a dozen law firms in the city,"
Morse said. "What I do hear, which is illegal and unfortunate, is there are still law firms or people posing as law firms calling (accident victims), which is
reprehensible and despicable and should not be happening."
Few attorneys in metro Detroit have been formally accused of soliciting clients or reprimanded. However, Morse has been fighting allegations
(/story/money/business/2017/01/30/attorney-mike-morse-faces-grievance-hearing-over-misconduct-claim/97108584/) that he was involved in
the solicitation of a car crash victim at Sinai-Grace Hospital in Detroit in November 2010.
The Michigan Attorney Grievance Commission, which investigates allegations of attorney misconduct, filed a complaint last June claiming that Morse, as
owner of the Mike Morse Law Firm, was personally liable for the alleged solicitation of the woman, who became a client of his firm after signing a retainer
agreement handed to her by a stranger in her hospital room.
Last month, the Grievance Commission agreed to dismiss its solicitation allegations against Morse, a stipulation that is still subject to approval by a three-
person panel of the Attorney Discipline Board that is scheduled to meet on Thursday.
The grievance complaint also claimed that Morse's firm took an improperly large cut of the woman's no-fault insurance benefits during the six-month
period when an auto insurer was voluntarily paying her benefits, but no lawsuit had been filed. During that time, the case was in Morse's "pre-suit
department."
The State Bar of Michigan says it is generally OK for lawyers to charge pre-lawsuit fees. However, the size of Morse's 33% fee on attendant care and
20% on wage-loss benefits before any lawsuit was actually filed was "disproportionate to the nature and extent of the legal services provided," the
grievance complaint said.
Morse has denied all of the allegations in the grievance complaint concerning solicitation and disproportionate fees.
"Michael Morse expects the complaint to be dismissed because he did nothing wrong," Kenneth Mogill, an attorney representing Morse in the grievance
case, said earlier this year. "The Grievance Administrator admits that he (Morse) had no personal involvement in the 2010 events that are at issue, and
his law firm fully complied with all its ethical obligations."
Grievance Administrator Alan Gershel declined through an assistant last week to comment about the potential dismissal of the solicitation
allegations. Morse's attorney offered no additional comment.
The original complaint said that a nonlawyer private investigator who had a business relationship with Morse appeared in the doorway of the crash
victim's room at Sinai-Grace Hospital in Detroit and carried an unsigned Mike Morse Law retainer agreement. The investigator told the woman he was
there to offer information about the no-fault law at the request of one of the woman's coworkers, the complaint says, but the injured woman said she
never told any coworkers she wanted such information.
Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @JCReindl (https://twitter.com/JCReindl).
Read or Share this story: https://on.freep.com/2pl9dUr
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Tired of no-fault fraud in Michigan, insurers turn to
racketeering suits
JC Reindl, Detroit Free Press Published 11:24 p.m. ET May 7, 2017
Detroit drivers face the highest average insurance rates (http://www.insurancequotes.com/auto/most-
expensive-metropolitan-areas-for-car-insurance)for cars and other vehicles in the country, often more
than $3,000 a year for a single automobile. (/story/money/business/michigan/2014/11/23/detroit-auto-
insurance-rates-premiums/19411987/)
A Free Press investigation finds that runaway medical bills, disability benefits payouts and lawsuits under
Michigan’s one-of-a-kind, no-fault insurance system play a key role in driving up costs for drivers.
(/story/news/local/michigan/detroit/2017/05/07/no-fault-auto-insurance-detroit-michigan/100326640/)
Find out what's behind the high cost of auto insurance in Detroit (/story/detroit/2017/05/06/why-is-detroit-car-
insurance-expensive-costs-so-much/101374948/) — and what steps could be taken to help fix the problem.
Fed up with no-fault fraud, auto insurance giants Allstate and State Farm have, in recent years, brought racketeering lawsuits against a handful of metro
Detroit medical clinics, MRI centers and doctors.
These lawsuits — in federal court against a half-dozen or so businesses — have alleged sham treatments, excessive billing, accident-victim solicitation
and even under-the-table cash payments made to encourage patients to keep coming in.
Some clinics closed under the weight of these lawsuits, even as they professed innocence. Other cases ended in confidential settlements or are still
pending.
State Farm filed a 2014 racketeering lawsuit in U.S. District Court in Detroit against Detroit-based Warren Chiropractic & Rehab Clinic, accusing the clinic
and its ownership and staff of ordering unnecessary tests and treatments to maximize their insurance reimbursements and inflate the value of legal
claims for accident lawyers.
State Farm's lawyers called the clinic's dealings "a textbook example on the evils of ambulance chasing."
The insurance company accused Warren Chiropractic of giving disability certificates to nearly every patient, regardless of actual injuries, making patients
eligible for an array of no-fault benefits: attendant care, lost-wages replacement, $20 a day for household chores and transportation to and from the clinic.
About 40% of the patients given disability certificates received rides to the clinic from a company that was owned by the clinic owner's brother, the lawsuit
claimed. The transportation firm then billed high rates, including $178 for a round trip of about 30 miles, the lawsuit said.
The lawsuit also accused the clinic of steering patients to MRI centers that charged as much as $7,000 per spinal-region image. And it alleged that
Warren Chiropractic used independent contractors, known as "runners" or "chasers," to find and solicit people who had been in accidents so they would
get treated at the clinic and sign up with law firms.
The Warren clinic and its owner, chiropractor John Mousa Mufarreh, denied State Farm's allegations, and the lawsuit ended with a confidential settlement
last summer.
(Photo: JC Reindl, Detroit Free
Press)
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Mufarreh referred all comment on the matter to his attorney, Ben Gonek, who didn’t respond to Free Press questions about the case.
A Free Press Special Report: The faults in no-fault (Photo: Getty Images)
In court documents, Gonek wrote that State Farm's allegations against Warren Chiropractic were "entirely without merit" and "nothing more than an
attempt to backdoor the Michigan Legislature's no-fault system.
"State Farm and its counterparts in the insurance industry have notoriously filed scores of similar lawsuits and claims against hundreds of other
defendants as part of a manifest effort to suppress medical providers' rights to reimbursement under Michigan's No-Fault Act," Gonek wrote. "State Farm
attempts in this case to achieve through litigation what it has not been able to accomplish through legislative change."
In the lawsuit, a former Warren Chiropractic patient who is identified only as "L.R." said in a deposition that within days of her car crash, she received a
call from a woman who suggested — falsely — that she worked for State Farm. The woman allegedly told L.R. that an appointment had been made for
her at Warren Chiropractic and that a van would pick her up the next day.
When L.R. arrived at the clinic, she was taken into a conference room and met with a private investigator, a retired Detroit police officer, who purportedly
said he had found her a lawyer and that she would likely get between $25,000 and $50,000 from filing a lawsuit, according to the woman’s deposition.
The patient, who testified to being actually injured from her car crash, said staff at the clinic told her that "if anybody asked, that I say I got their number
out of the Yellow Pages, don't admit that they called me. ... I asked why. And he said because State Farm doesn't want to pay the benefits."
The woman also said the private investigator provided a sheet of paper with advice on what to say or not say if she were questioned by State Farm
representatives. The paper suggested that she keep details of her accident to a minimum, she recalled, and because the insurance company might have
her under surveillance, she should "be careful when I'm outside, walk a little bit slower than I have to even if I don't want to," according to the woman's
deposition.
Mufarreh, the clinic's owner, denied the allegations in deposition testimony last year and said Warren Chiropractic does not solicit patients or use runners.
He said the clinic's best marketing strategy for patients was mailing and distributing business flyers, including flyers that he paid the private investigator to
put in Detroit groceries, gas stations and liquor stores.
Mufarreh described how solicitation of people in accidents in general has become an epidemic.
"I can tell you right now as I sit here, every patient that walks into my door has told me they got a call from somebody, at least 15 to 20 calls or 10 calls,"
Mufarreh said in the February 2016 deposition. "Everybody is calling everybody. It's just horr
ible."
Dearborn Heights-based Summit Physicians Group was hit with a racketeering lawsuit last October by Allstate Insurance, which accused the clinic and
some of its doctors of running a "comprehensive scheme to defraud" the insurance company by generating excessive bills for unnecessary treatments.
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Fewer Wayne County car crashes (Photo: Martha Thierry/Detroit Free Press)
More lawsuits (Photo: Martha Thierry/Detroit Free Press)
The lawsuit also names an MRI business, Summit Diagnostic Services, that it says is owned by Summit Physicians Group.
"The defendants organized around a highly aggressive business model where the overarching theme was to do as much treatment as possible as quickly
as possible," claims the pending lawsuit in U.S. District Court in Detroit.
Gary Blumberg, an attorney defending Summit, denied Allstate’s allegations in court documents and accused the insurance company of clogging the
court system with racketeering lawsuits “to declare war against Michigan's physicians, chiropractors and other medical treatment providers.”
“Allstate’s naked assertion of fraud is based on (false) allegations, is devoid of factual support and should be dismissed,” Blumberg and another attorney
wrote in defense of the clinic and doctors.
Blumberg didn't respond to requests for comment on the case.
Summit Physicians Group was one of the most frequently visited clinics among plaintiffs in the 1,500 first-party lawsuits examined by the Free Press.
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• How can we make Detroit auto
insurance affordable?
(http://www.freep.com/story/news/loc
a
can-we-make-auto-insurance-detroit-
more-affordable/100018602/)
• Aggressive solicitation comes after
auto accidents in Detroit
(http://www.freep.com/story/news/loc
a
car-insurance-lawyers-accidents-
solicitation/100301782/)
• Tired of no-fault fraud in Michigan,
insurers turn to racketeering suits
(http://www.freep.com/story/news/loc
a
insurance-racketeering-lawsuits-
michigan-fraud/100301902/)
Allstate alleges in the lawsuit that the clinic's doctors used predetermined protocols for treating patients who had been in car crashes, and exaggerated
the severity of accidents and injuries involving patients whose earlier emergency room reports weren't so bad.
Phrases such as "hit hard and fast," "jarred" and "patient was thrown around the vehicle" pop up in the clinic's patient records more often than is
plausible, the lawsuit claims.
Summit Physicians Group is also where Dr. Laran Lerner, 61, of Northville had practiced before his indictment in June 2015 for Medicare fraud and
where he held an ownership interest, the suit says.
Lerner pleaded guilty to one count of health care fraud and one count of structuring cash transactions to avoid bank reporting requirements. He admitted
to luring patients to his own separate clinic with prescriptions for unnecessary drugs and then billing Medicare for unnecessary tests and appointments to
make the office visits look legitimate.
He was sentenced in March 2016 to 45 months in prison and ordered to pay $2.7 million in restitution.
Allstate's lawsuit named Lerner and claims he saw a male patient at Summit Physicians Group who allegedly was solicited by a stranger following a
March 2015 auto accident. The patient, identified only as L.A., said a woman first approached him as he was leaving Henry Ford Hospital in Detroit
following treatment for the crash.
The woman called the patient the following week and visited him at home, the lawsuit claims, and based on her referral the man visited Summit
Physicians Group and met with Lerner.
The patient, who is deaf and mute, testified that he repeatedly asked Lerner for an interpreter but said Lerner replied he couldn't afford one. Yet medical
records from Lerner's examination say the patient's "history was taken through an interpreter” and that he reported being “hit hard and fast” in the
accident, according to the lawsuit.
The lawsuit claims Lerner exaggerated the patient's injuries and billed Allstate for providing medical equipment — a heating pad, back brace and cervical
collar — that the patient testified he never received.
Federal records show Lerner is in a minimum-security prison in West Virginia. Allstate settled with Lerner in March, and Lerner was dismissed from the
still-pending racketeering lawsuit.
Reached for comment, Lerner's attorney, Richard Segal of West Bloomfield, wouldn't say whether there was any truth to the insurance company's
allegations concerning Lerner.
"All I can tell you is the case (against Lerner) has been dismissed," Segal said.
'They give people money'
State Farm filed another racketeering lawsuit in U.S District Court against Detroit clinic Physiomatrix and a Dearborn clinic called Genex, claiming
they billed no-fault insurance for the same four or five physical therapy services — hot/cold packs, electrical stimulation, ultrasound, therapeutic exercise
and massage — to all patients on every visit, regardless of the patients' actual physical condition.
The therapy services continued until patients either stopped coming or the auto insurer cut off the patient from treatment, the lawsuit claimed.
Doctors were allegedly in on a scheme
to fraudulently diagnose the clinics' patients
and prescribe expensive therapy, deeming
patients as disabled to qualify them for van
transportation to the clinics that was free
for the patients, but billed to the auto insurer,
the suit says.
State Farm's case included depositions from
three Genex patients who said they were
given cash on their van trips to or from the
clinic that was provided by a separate
transportation company.
THE
FAULTS
IN
NO
FAULT INSURANCE
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• How aggressive lawyers, costly
lawsuits and runaway medical bills
make Detroit car insurance
unaffordable
(http://www.freep.com/story/news/local/
m
fault-auto-insurance-detroit-
michigan/100326640/)
• Why does auto insurance in Detroit
cost so much?
(http://www.freep.com/story/news/local/
m
car-insurance-expensive-
cost/101374948/)
• How Michigan got — and kept — no-
fault auto insurance
(http://www.freep.com/story/news/local/
m
nofault-insurance-history-
detroit/100301828/)
• To a paralyzed woman needing
lifetime care, no-fault benefits are
priceless
(http://www.freep.com/story/news/local/
m
fault-lifetime-medical-benefits-for-
accident-victims/100301948/)
• Detroit car insurance: 6 other factors
behind the cost of auto insurance
(http://www.freep.com/story/news/local/
m
car-insurance-6-other-factors-behind-
cost-auto-insurance/100992680/)
• No-fault car insurance in Michigan:
Here's how it works
(http://www.freep.com/story/news/local/
m
fault-car-insurance-michigan-heres-
how-works/100668458/)
"They said that's what they do, they give
people money. And it seems like sometimes,
people gets upset because some people
get more money than others," said
one unnamed Detroit patient who testified to
receiving $200-$300 from staff at the
transportation company that picked her up for
therapy appointments. "I used the money for
my kids. I had to pay child support."
Several Genex and Physiomatrix patients
testified to receiving surprise phone calls at
home by people who urged them to go get
treatment at one of the clinics. These solicitors
sometimes called less than 24 hours after
the crash.
State Farm's lawsuit against Genex and
Physiomatrix ended in 2014 in a settlement
with confidential terms. Blumberg, who also
represented both of the clinics in this
case, said State Farm's allegations were
entirely unproven.
Genex and Physiomatrix have since closed for
business because they were overwhelmed by
litigation expenses from the insurance
company's lawsuit, he said.
"There is no proof whatsoever that treatment
which was billed for was not rendered,"
Blumberg said. "In the end, the settlement was favorable to my client."
In a separate first-party lawsuit involving Physiomatrix that State Farm's lawyers cited in their racketeering case, a Wayne County Circuit judge showed
exasperation at the clinic's alleged practices.
"I'm appalled by what happened in this case," Robert Colombo Jr., now the court's chief judge, said during the 2013 hearing, according to a
transcript. "What we have is a situation involving (patient 1) and (patient 2) who were apparently involved in an automobile collision. And they had a
treating physician, and we know that the treating physician never referred them for physical therapy at Physiomatrix.
"My inference is that Physiomatrix got a hold of the accident report in this case and solicited these people. And what they do is they get them to come into
their office and they have this (doctor) there and he does a perfunctory examination and then starts writing prescriptions for physical therapy. And so, that
happened, and we run up a 75, 80, $85,000 — or Physiomatrix does — physical therapy bill.
"I personally think that this is fraud that's going on," the judge said.
Blumberg told the Free Press that Colombo was mistaken in his belief that Physiomatrix was involved in any patient solicitation. The judge last week
declined to comment.
Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @JCReindl (https://twitter.com/JCReindl)
.
Read or Share this story: https://on.freep.com/2plca7s
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No-fault fixes? How other states reined in auto insurance
costs
JC Reindl, Detroit Free Press Published 10:46 p.m. ET May 8, 2017 | Updated 10:54 a.m. ET May 9, 2017
The Free Press examined strategies that other no-fault states have used to rein-in medical costs and combat
fraud.
Detroit drivers face the highest average insurance rates (http://www.insurancequotes.com/auto/most-
expensive-metropolitan-areas-for-car-insurance)for cars and other vehicles in the country, often more
than $3,000 a year for a single automobile. (/story/money/business/michigan/2014/11/23/detroit-auto-
insurance-rates-premiums/19411987/)
A Detroit Free Press investigation finds that runaway medical bills, disability benefits payouts and
lawsuits under Michigan’s one-of-a-kind, no-fault insurance system play a key role in driving up costs for
drivers. (/story/news/local/michigan/detroit/2017/05/07/no-fault-auto-insurance-detroit-michigan/100326640/)
Find out what's behind the high cost of auto insurance in Detroit (/story/detroit/2017/05/06/why-is-detroit-car-
insurance-expensive-costs-so-much/101374948/) — and what steps could be taken to help fix the problem.
Critics and even many supporters of Michigan's no-fault system agree that changes to it are needed to help lower Detroit's highest-in-the-nation
auto insurance premiums.
But reform is a thorny task. While costs are high across Michigan, auto insurance is much more expensive in Detroit. Motorists often see their
premiums cut in half if they move across 8 Mile and leave the city.
Related:
In Detroit, hundreds cram meeting on Michigan's no-fault system
(http://www.freep.com/story/news/local/michigan/detroit/2017/05/08/hundreds-
cram-meeting-detroits-no-fault-insurance-problem/101452860/)
So policy changes aimed at fixing Detroit's insurance issues by reducing benefits at the statewide level can be a tough political sell.
"Don’t throw out the baby with the bathwater and get rid of no-fault," said Oakland County Executive L. Brooks Patterson, a vocal defender of the current
no-fault system.
The challenge is finding a strategy that can rein in the runaway medical bills and benefits costs that are ballooning car insurance premiums in Detroit —
and exerting pressure on rates across the state — while inflicting minimal harm on accident victims who truly need the system's benefits.
"The tragic truth is that no-fault was a noble experiment with the best intentions to help accident victims and to reduce lawsuits, and it has gone off the
rails," said Mark Bernstein, president and managing partner at the Sam Bernstein Law Firm, one of Michigan's most visible personal injury firms, who
favors some reform ideas.
"How do we eliminate bad actors and still protect the legitimate interests of injured people? It’s a very difficult balancing act," he said.
(Photo: Mandi Wright, Detroit Free
Press)
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-fault fixes? How other states reined in auto insurance costs
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• How can we make Detroit auto
insurance affordable?
(http://www.freep.com/story/news/loc
a
can-we-make-auto-insurance-detroit-
more-affordable/100018602/)
• Aggressive solicitation comes after
auto accidents in Detroit
(http://www.freep.com/story/news/loc
a
car-insurance-lawyers-accidents-
solicitation/100301782/)
• Tired of no-fault fraud in Michigan,
insurers turn to racketeering suits
(http://www.freep.com/story/news/loc
a
insurance-racketeering-lawsuits-
michigan-fraud/100301902/)
• How aggressive lawyers, costly
lawsuits and runaway medical bills
make Detroit car insurance
unaffordable
(http://www.freep.com/story/news/loc
a
fault-auto-insurance-detroit-
michigan/100326640/)
• Why does auto insurance in Detroit
cost so much?
(http://www.freep.com/story/news/loc
a
car-insurance-expensive-
cost/101374948/)
• How Michigan got — and kept — no-
fault auto insurance
(http://www.freep.com/story/news/loc
a
nofault-insurance-history-
detroit/100301828/)
• To a paralyzed woman needing
lif i f l b fi
The Free Press looked at past reform strategies in several of the nation's 11 other no-fault states, particularly New Jersey and Florida, that have achieved
results.
These strategies included:
Since the 1970s, no state has switched to a system with unlimited no-fault benefits like Michigan's. No-fault reform efforts have generally
added restrictions or lowered caps on benefits.
Nevada, Georgia, Connecticut and Colorado completely dropped no-fault in response to rising costs. With the possible exception of Nevada, where little
rate information is readily available from their 1980 repeal, these former no-fault states all saw significant drops in average car insurance
premiums following repeal, according to a report by the RAND Corp. public policy think tank.
D-insurance plan
Detroit Mayor Mike Duggan presented his proposed solution to the city's rates problem two years ago. His D-Insurance plan initially called for allowing
just Detroit residents the option to buy cheaper no-fault policies with $250,000 caps on medical benefits for critical care (emergency room procedures)
and a $25,000 limit for post-acute coverage, such as physical therapy, in-home care and follow-up surgeries.
Under a D-Insurance plan, if a crash patient
exhausts the benefit limits, then his or her
regular health insurance — including Medicare
or Medicaid — would take over. That is how
things generally work in the other 11 no-
fault states with caps on benefits.
Of course, regular health insurance doesn't
offer the same safety net and array of benefits
that no-fault does, such as lost wages, in-home
attendant care, long-term physical therapy and
coverage for making a vehicle or home
accessible.
Duggan stressed that D-Insurance would
simply give Detroiters another option for car
insurance; no one would be forced to buy it.
Those who preferred to keep full no-fault
coverage could still do so.
• Placing monetary caps on no-fault benefits. (Michigan has no cap.)
• Establishing "fee schedules" of maximum prices that doctors and clinics can charge for no-fault procedures and services. (Michigan already
has a fee schedule for workers' compensation.)
• Moving routine disputes between medical providers and insurance companies over reimbursement out of court to speedier and less-
costly arbitration.
• Restraining lawyer compensation in legal disputes over bills with insurance companies.
• Introducing deductibles and co-pays for no-fault medical benefits.
• Shortening the time limit for starting treatment after an accident. (Michigan generally allows one year.)
• Aggressively pursuing fraud.
THE
FAULTS
IN
NO
FAULT INSURANCE
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-fault fixes? How other states reined in auto insurance costs
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priceless
(http://www.freep.com/story/news/local/
m
fault-lifetime-medical-benefits-for-
accident-victims/100301948/)
• Detroit car insurance: 6 other factors
behind the cost of auto insurance
(http://www.freep.com/story/news/local/
m
car-insurance-6-other-factors-behind-
cost-auto-insurance/100992680/)
• No-fault car insurance in Michigan:
Here's how it works
(http://www.freep.com/story/news/local/
m
fault-car-insurance-michigan-heres-
how-works/100668458/)
A D-Insurance plan could save Detroit drivers
about $600 to more than $2,000 a year
(/story/news/local/michigan/detroit/2015/06/09/d-insurance-savings/28751043/) compared to their current no-fault policies, according to projections by
Pinnacle Actuarial Resources that were commissioned by the city. That would significantly cut the $3,400 price of the typical Detroit yearly premium.
But D-Insurance required state legislation to be enacted and it ultimately stalled in Lansing.
A version of the bill that did pass the Senate's Insurance Committee would have opened D-Insurance beyond Detroit to any Michigan city where at least
35% of drivers are uninsured. It also would have allowed insurance companies offering D-Insurance plans to restrict patients to provider networks of
specific hospitals and clinics for post-acute care — a common cost-containment strategy — and require pre-approval for treatment procedures.
The general concept behind D-Insurance of offering motorists a choice in levels of no-fault coverage is supported by the conservative Mackinac Center
for Public Policy think tank.
"If you think it’s really important to have unlimited medical benefits because you are very concerned about being in an auto accident and needing those
benefits, that’s fine," said Michael Van Beek, the Mackinac Center's director of research. "But don’t force everybody else to pay for that."
D-Insurance's critics — including now-former state Rep. Brian Banks, D-Harper Woods, and the powerful lobby of medical providers, accident attorneys
and disability advocates known as the Coalition Protecting Auto No-Fault — argued the plan would coerce Detroiters into buying "second-class"
insurance that would prove insufficient after a serious accident.
Steve Gursten of Michigan Auto Law was among the personal injury attorneys who voiced opposition to D-Insurance
(http://www.michiganautolaw.com/blog/2017/02/20/detroit-drivers-deserve-better-than-d-auto-insurance-plan/). In an interview after the bill's introduction,
he warned that those who buy such policies but lack good commercial health insurance and get into a bad crash "are going to be trapped in that same
really vicious downward spiral of people in pure tort states," he said.
Auto accident attorney Steven Gursten of MichiganAutoLaw, poses in his Farmington Hills office Thursday April 20, 2017. (Photo: Mandi Wright, Detroit Free Press)
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"They're going to blow through their personal savings, they're going to get pushed onto Medicaid, and they're probably going to end up declaring personal
bankruptcy because of incredible medical debt," Gursten said. "Is that the system that we want?"
Jersey caps no-fault
New Jersey has made many changes to its no-fault system that have had significant effects. Attorney John Sakson has been representing accident
victims in the Garden State since the 1970s, back when New Jersey, like Michigan today, mandated that everyone purchase unlimited no-fault benefits
with their car insurance.
But in response to escalating insurance premiums, New Jersey lawmakers put a $250,000 cap on no-fault benefits in 1990. They made more changes in
1998 and set the minimum purchase level for no-fault's personal injury benefits at $15,000 while giving the option to buy higher levels of coverage.
All New Jersey policies, however, must still offer a minimum $250,000 in emergency room coverage for significant auto accident injuries.
Sakson said those who exhaust their no-fault benefits can fall back on their regular health insurance — provided their health plan covers auto accidents.
They also can try a negligence lawsuit against the other driver if their injuries were severe.
Still, there are instances in New Jersey where a catastrophically injured person uses up his or her no-fault benefits and then burns through their personal
assets paying for in-home care and assistance. These individuals can end up in Medicare nursing homes, he said.
"That’s always been an issue in Jersey since they put the cap on PIP," said Sakson of Stark & Stark Attorneys at Law, referring to no-fault's personal
injury protection (PIP) benefits. "There is no provision for catastrophic. I wouldn’t call that the biggest problem in our system personally, but when it
happens — it’s bad.”
New Jersey's 1990s reforms also introduced patient deductibles for no-fault medical coverage and added a 20% co-pay for expenses between the
deductible and $5,000.
And to rein in medical service prices, New Jersey started a fee-schedule system of maximum charges that providers can bill no-fault insurance for
various procedures. Emergency room trauma services are exempt from the fee schedule.
The fee schedule rates are set by state government and vary by region. Under the fee schedule
(http://www.state.nj.us/dobi/proposed/prn11_163.pdf), the cost of a single MRI in an outpatient center in the more expensive northern region of New
Jersey ranges from about $664 to $846 to $1,033, depending on body area.
Michigan already has a similar fee schedule system for workers compensation, which state officials say pays medical providers about 130% of Medicare
rates for each service or procedure.
Andrew Blair, a New Jersey attorney who represents medical providers in disputes with auto insurers, recalled how before New Jersey started its fee
schedule system, insurance companies had to pay whatever price for services or procedures that was deemed "usual and customary."
"When I first start doing this, it was the Wild West," Blair said. "We used to just show proofs of what our usual and customary was. And doctors were
charging $20,000 for an injection, where now, with the New Jersey fee schedule, they get $1,200, and some of them are even less.
"So they really reined a lot of the costs in by fee scheduling almost everything. The only thing that doesn't have a fee schedule on it is emergency room
treatment in a hospital."
Yet even with these restraints, New Jersey drivers still pay some of the highest auto insurance premiums in the country: an average of $1,379 a year in
2014, according to the latest National Association of Insurance Commissioners data . That was slightly more than Michigan's $1,350 average,
although well below the typical Detroit rates around $3,400. Idaho drivers enjoy the cheapest insurance at $673 a year.
New Jersey officials attribute their high insurance premiums to their state being one of the most densely populated with a lot of busy roadways and
accidents.
In Michigan, no-fault legislation with variations of the fee schedule idea have been voted out of committees but never passed the House and Senate.
A much-discussed 2015 bill (/story/opinion/2015/04/25/fault-insurance-bill/26370293/) would have tied reimbursement rates for auto accident patients to
150% of Medicare rates.
Health care providers and accident victims came out against that bill, contending that fee schedules are a bad idea because accident victims often need
specialized, intensive care that is expensive. Although Michigan hospitals often profitably treat Medicare patients, the bill's opponents said payments at
150% of Medicare would be insufficient (http://michiganradio.org/post/crash-victims-families-doctors-say-no-no-fault-auto-changes).
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Efforts to rein in no-fault's costs are often seen as threats to medical providers' bottom lines. The higher insurance reimbursement rates that providers get
from no-fault patients, among other things, help to subsidize the lower rates they receive treating Detroit's many low-income Medicaid patients.
Hospitals often lose money on procedures under Medicaid, which reimburses below Medicare rates.
End of first-party lawsuits
The New Jersey reforms more or less brought an end in that state to first-party accident lawsuits, the type of lawsuit now clogging court dockets in
Wayne County in which a motorist or the motorist's medical providers sue an auto insurer for no-fault benefits.
These type of disputes haven't disappeared, but now go to arbitration. New Jersey attorneys say the arbitration process resolves disputes faster than
going to court and typically takes just over six months start to finish.
Crucially, arbitrations allow medical providers to keep all money they collect from insurance companies for unpaid bills without the need to share a cut
with lawyers.
Insurance companies in New Jersey are now responsible for picking up lawyer fees for the doctors or clinics that prevail in arbitration cases. These fees
are determined by each case's arbitrator, who is to consider the complexity and size of the case, among other factors.
The average no-fault arbitration award in New Jersey was $5,420 in the fourth quarter of last year: $4,581 for no-fault benefits and $839 for attorney fees,
or 15% of the total award, according to the New Jersey Department of Banking and Insurance.
In Michigan, attorneys who file first-party lawsuits against auto insurers can get a full 33% cut of the insurance settlements paid out for medical providers'
billings and patients' benefits.
"We don't get paid a lot, but it's kind of a volume-based business," said Blair, who was the first New Jersey attorney to start filing no-fault arbitration
cases.
There are nearly 50,000 no-fault arbitration cases a year in New Jersey and roughly 90% of them are initiated by medical providers, rather than people
who were in accidents, according to state data and practicing attorneys.
"Everybody has kind of gotten very comfortable with the arbitration mechanism," said Joseph Di Donato, vice president of the No-Fault Personal Injury
Protection Program in New Jersey with Forthright Solutions, a company that administers the arbitration program for the state. "What we've found in New
Jersey is the doctors prefer arbitration anyway. So right now there are hardly any (no-fault) cases at court."
Florida tackles fraud
Even as it offers the most expansive no-fault benefits, Michigan is one of the few no-fault states without a dedicated watchdog for auto insurance fraud.
The Michigan Department of Insurance and Financial Services is not tasked with rooting out auto insurance claim fraud and the Michigan Attorney
General's Office hasn't undertaken any recent state-level prosecutions.
Michigan's own Wild West now prevails in the no-fault treatment business — possibly even worse than that in Florida before lawmakers there added
restrictions in 2012 to address fraud and unnecessary medical costs.
Florida's reform did not change the state's $10,000 cap on no-fault benefits, but specified that those benefits could only be available if a doctor
verified that the person in the accident had an emergency condition. Otherwise, only $2,500 is available. And massage and acupuncture are no longer
reimbursable under no-fault at all. (Massage and acupuncture are covered under Michigan no-fault.)
Florida accident victims are now required to seek medical treatment within 14 days of their crash to be eligible for no-fault benefits. In Michigan, people
generally have up to a year to seek treatment.
Another key strategy was assigning teams of dedicated no-fault fraud investigators and prosecutors to the state's major metro areas, according to Lynne
McChristian, a Florida representative for the Insurance Information Institute.
Bill Newton, deputy director of the Florida Consumer Action Network, said his group generally prefers to see law enforcement go after fraudsters, as they
did in Miami, Orlando and Tampa, rather than have lawmakers add restrictions on no-fault to achieve the same goal.
"Our position as a consumer group is that consumers shouldn't lose benefits to criminals, but rather the criminals should be put out of business," he said
in an e-mail.
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Newton noted how there is currently movement among some Florida lawmakers to repeal no-fault completely amid lingering concerns of fraud and high
costs. Florida's average premium was $1,208 in 2014, according to the National Association of Insurance Commissioners.
"Trial lawyers, accused of wanting the fraud, now want to do away with (no-fault) too, and favor the 'everybody sues' bodily injury paradigm," Newton
said. "I'm not so sure about that. I'm concerned that we're giving in to criminals and it may lead to higher health insurance premiums and less funds for
indigent care."
No watchdogin Michigan
Why there is no dedicated no-fault fraud watchdog in Michigan is a matter of debate.
The auto insurance industry blames the Coalition Protecting Auto No-Fault lobby. For its part, the coalition has said it supports rooting out fraud but
wants any watchdog to also scrutinize the adversarial and sometimes fraudulent behaviors of insurance companies.
George Sinas, the coalition's legal counsel, said something must be done about auto insurers that seek to reject legitimate claims through bad-faith use
of physicians who do "independent medical examinations" of no-fault patients. Accident lawyers commonly refer to these types of physicians as "cut-off
doctors."
Some of these doctors have admitted in depositions to making more than $500,000 a year seeing patients on behalf of auto insurance companies,
according to Sinas, who said he thinks Michigan needs a standardized vetting system for these examiners to ensure impartiality.
"These doctors routinely give the insurance companies exactly what they want to hear," he said last week.
Sinas emphasized that he believes no-fault fraud should be aggressively pursued. But the existence of no-fault fraud isn't a reason to ditch no-fault.
"There are a lot of doctors in big cities who have been found guilty of Medicare fraud, but you don't hear Congress talking about cutting Medicare
because some doctors are committing fraud," Sinas said.
Peter Kuhnmuench, executive director of the Insurance Alliance of Michigan, said insurers use these medical examinations to provide unbiased
evaluations and contain unnecessary costs.
"Insurance companies owe it to their customers to make sure that they are paying reasonable, necessary and legitimate claims," Kuhnmuench said.
Credit scores and rates
Proponents of keeping no-fault's unlimited medical benefits, such as the newly formed Detroit Alliance for Fair Auto Insurance
(/story/news/local/michigan/detroit/2017/03/27/new-alliance-demands-cheaper-detroit-car-insurance-same-benefits/99695748/), place significant blame
for Detroit's high insurance rates on the insurance industry practice of using a version of motorists' credit scores to help set rates.
But credit scoring isn't the underlying problem as even Detroiters with high credit scores and low points on their driver's license are saddled with
exorbitant rates, such as $300 or more a month to insure a vehicle.
Insurance companies contend that credit scoring is fair because a person's history of paying bills on time is relevant to safe driving and a predictor of their
likelihood of filing claims.
Insurers also use ZIP codes when setting rates to contain the costs of benefits, thefts and crashes to the geographic areas where those who generated
the claims live. Before they used ZIP codes, insurers had a territorial rating system that essentially forced some non-city dwellers to pay higher rates to
subsidize artificially lower Detroit rates.
Bernstein callsfor reform
Attorney Mark Bernstein said he sees a need for legislative changes in Lansing that can preserve no-fault's safety net for accident victims while reining in
the system's high costs.
He said a proposal containing “reasonable fee schedules” and “reasonable limitations" on in-home attendant care might be something that his family's
law firm could support.
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-fault fixes? How other states reined in auto insurance costs
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"This has put us at odds with many trial lawyers. But we believe this is the right course," said Bernstein, who is also chairman of the University of
Michigan Board of Regents. "The rhetoric about how this would destroy medicine in Michigan is simply untrue. There are 49 other states, most of which
do not have no-fault, where there are hospital systems that are thriving."
Bernstein said the fact that car insurance is unaffordable to so many in Detroit means there are fewer eligible plaintiffs for the negligence lawsuits that his
firm specializes in. That is because uninsured drivers aren't allowed to sue, even if they were seriously injured in a crash that wasn't their fault.
"Making no-fault more sustainable and affordable is in everyone’s best interest," Bernstein said.
MINIMUM PURCHASE REQUIREMENT FOR PERSONAL INJURY PROTECTION (MEDICAL) IN THE 12 NO-FAULT STATES
Michigan: unlimited medical
New York: $50,000
Minnesota: $40,000
North Dakota: $30,000
New Jersey: $15,000 * (All plans must have $250,000 for emergency room care)
Florida: $10,000
Hawaii: $10,000
Kentucky: (optional no-fault) $10,000
Massachusetts: $8,000
Pennsylvania: $5,000
Kansas: $4,500
Utah: $3,000
Read or Share this story: https://on.freep.com/2ppf6Qp
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