Wool pulled over your eyes. The golden goose. Smoke and mirrors. These are the kinds of catchy metaphors the insurance industry and its chief lobbying group, the Insurance Alliance of Michigan (IAM), are now using in the debate over Michigan’s auto insurance system. The industry loves the shiny object effect — the ability to use seemingly simple statements to shift the public’s attention away from insurance companies and onto others.
Insurers want the public to believe that blame for the high cost of auto insurance lies at the feet of patients, doctors and lawyers — everyone but the industry itself. But before you get too distracted by shiny objects, consider the following. These are three true stories about how auto insurance companies treated injured people — all of whom I personally represented and were seeking benefits after car accidents.
The first is a story about a woman we’ll call Allison. She was a scientist who worked at one of our state’s universities. Allison suffered a brain injury when she was rear-ended. Her brain injury prevented her from ever going back to work. But her insurance company refused to pay her the wage loss benefits required by Michigan law. Why? Because the insurance company said her claim was barred by a statute that did not exist. That’s right: the insurance adjuster literally made up a statute and denied Allison’s claim based on that fake statute. So in order for Allison to get benefits, she had to hire a lawyer, sue the insurance company and litigate her case.
The second story is about a man we’ll call Larry. Larry also suffered a brain injury in a car accident and could not return to work for months. The insurance company sent Larry to one of its hand-selected doctors and then stopped paying his wage loss benefits. So, Larry requested a copy of the insurance doctor’s report. Even though Michigan law requires insurance companies to turn over such reports, Larry’s insurer refused. Larry then had to hire a lawyer, litigate the case and subpoena the doctor’s report. Guess what? The insurance company doctor had agreed all along that Larry could not go back to work, and yet the insurance company still refused to pay benefits.
The third story is about a woman we’ll call Vanessa. She worked 40-50 hours per week as a nail technician. One day, she was driving to work when another driver crossed the center line, shattering Vanessa’s lumbar spine. Her insurance company refused to pay Vanessa various benefits, requiring that she too hire a lawyer. The following is actual testimony from the insurance adjuster in Vanessa’s case:
Q: (Would you agree that an adjuster should) make every effort to be fair?
A: Well, fairness isn't in the statute so I disagree with that.
Q: Would you agree that an adjuster should treat an insured the same way it treats an insurance company or no?
A: An adjuster should treat their insured as if they were a customer.
Q: Do you agree that they should treat them evenhandedly?
A: Well, again, fairness is not in the no-fault statute.
As troubling as this testimony is, the adjuster was actually right: Our no-fault law has no requirement that insurance companies treat people fairly. And that is precisely why lawyers like me end up representing people like Allison, Larry and Vanessa.
The insurance industry loves to talk about fraud. So let’s be clear about one thing: fraud of all kinds is unacceptable. I spent over three years as a criminal prosecutor in Minneapolis, where I prosecuted felony-level financial crimes. I worked with law enforcement to prosecute cases that resulted in some of the longest prison sentences in Minnesota state history for fraud of all kinds, including insurance fraud. So when it comes to eradicating fraud, I’ve walked the walk and talked the talk.
But I learned something else during my time as a civil trial lawyer in Minnesota: Everyday people need meaningful consumer protection laws. Over the last few decades in Michigan, we’ve gutted our consumer protection laws. We have no law against bad faith insurance practices. Thus, we have insurance companies that unapologetically state under oath that they do not treat people fairly.
So as we embark on a new legislative session, beware of shiny objects. Be skeptical when the insurance lobby throws out pithy phrases criticizing our no-fault law. Because what the industry really wants is very simple: legislation that takes away your benefits, promises no rate reduction and does not require that the industry look itself in the mirror.
Tom Sinas, of Sinas Dramis Law in Grand Rapids, is associate general counsel to the Coalition Protecting Auto No-Fault and a member of the Brain Injury Association of Michigan’s board of directors.