by George T. Sinas
In the last several years, a new trend has developed in the way Michigan no-fault auto insurance companies process claims for no-fault benefits in cases involving serious auto accident injuries. With increasing frequency, auto insurance companies are unilaterally hiring case managers to become directly involved in the day-to-day medical care of the patient. Typically, the auto insurance company announces it has hired a case manager, notifies the patient and the medical care providers of this decision and expects everyone to proceed accordingly.
Most of the time, the patient never questions the decision to hire a case manager, the specific case manager selected by the insurance company, or the role that case manager intends to play in the patient’s insurance claim. Moreover, patients assume that the case manager is there to protect the patient’s interests and to advocate for the patient’s needs. In the same respect, physicians and other medical care providers assume the case manager will ensure that all medical recommendations and treatment plans are fully implemented.
These assumptions are not always well founded, however. Recent experiences have demonstrated that sometimes case managers hired by no-fault insurance companies are primarily interested in protecting the interests of the insurance companies who hired them. In those situations, case management can be a very frustrating experience for auto accident patients, their families, and medical providers. This is indeed unfortunate, as experience has also taught that, depending upon the facts of each case and the willingness of the case manager to put the interests of the patient first and foremost, case management can be a positive experience that enhances the overall care, treatment, and rehabilitation of catastrophically injured auto accident victims.
In order to ensure that case management will be a constructive process, it has become very important for those professionals who regularly work with severely injured auto accident patients (doctors, therapists, psychologists, rehabilitation counselors, and attorneys) to have a clear understanding of the Michigan no-fault automobile insurance law and the legal principles affecting the use of case managers. It is only with a full understanding of these matters that those involved in the care of auto accident patients will fully appreciate the role case managers can properly play in the Michigan no-fault auto insurance reparation system. This article is dedicated to that objective.
THE MICHIGAN NO-FAULT LAW IS NOT A MANAGED CARE SYSTEM
At the outset, the most important principle to emphasize is that, in enacting the Michigan no-fault automobile insurance law in 1973, the Michigan Legislature did not draft a statute that utilizes managed care concepts, as did other states that adopted a no-fault scheme. On the contrary, the Michigan no-fault law is purely a fee-for-services plan. Under the Michigan no-fault system, an insurance company is required to pay personal protection insurance benefits (commonly called PIP benefits) on behalf of persons sustaining a motor vehicular injury, regardless of who was at fault.
The most important component of PIP coverage is the benefit for “allowable expenses,” which are payable for all reasonable charges that are incurred for reasonably necessary products, services, and accommodations for an injured person’s care, recovery, or rehabilitation. These “allowable expense” benefits have been broadly defined by the courts to cover a wide variety of services, including hospital and physician care; physical, occupational and speech therapy; vocational rehabilitation; in-home attendant and nursing care; home remodeling, construction, or purchase; and special vehicle and medical transportation expenses. Additional PIP benefits are available under the No-Fault Act for work loss and domestic services.
The Michigan no-fault statute does not, however, specifically grant auto insurance companies the authority to utilize case managers, to invoke principles of managed care, to require pre-authorization before allowable expenses are incurred, or to act as “gate keepers” regarding a patient’s medical and rehabilitation treatment plan. Moreover, case law has established that, with certain exceptions, most auto accident patients have a legally protected right to choose their own care providers.
The no-fault insurance company’s legal responsibility is clearly set forth in § 3105(1) and § 3107(1)(a) (MCLA 500.3105 and 3107) of the statute, wherein the Legislature, in two broad, sweeping sentences, decisively confirms that the Michigan no-fault plan is a fee-for-services system that guarantees unlimited, lifetime medical and rehabilitation care. These two sections of the statute state in pertinent part:
“Sec. 3105. (1) Under personal protection insurance an insurer is liable to pay benefits for accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle, subject to the provisions of this chapter.
Sec. 3107. (1)…personal protection insurance benefits are payable for the following:
(a) Allowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation….”
On the basis of the foregoing statutory sections, there are three important legal principles that apply to the payment of allowable expense benefits. These principles are as follows.
The Expenses Must Be “Reasonably Necessary”
It is important to note that neither the statute nor case law uses the phrases “medically necessary” or “reasonable and customary.” Rather, the requirement is one of reasonable necessity. However, the term “reasonably necessary” is not defined in the statute or in any appellate court decision.
The Expenses Must Be “Reasonable Charges”
Neither the no-fault statute nor any appellate court decision defines “reasonable charges” nor explains how this determination should be made. The Michigan appellate courts have specifically prohibited the use of “fee schedules” to determine the reasonability of charges. See Munson Medical Center v ACIA, 218 Mich App 375 (1996) and Mercy Mt. Clemens Hospital v ACIA, 219 Mich App 46 (1996). Therefore, many insurance companies use “medical audits” or “medical reviews” to determine the reasonableness of medical bills. This procedure is not, however, specifically authorized in the no-fault statute, nor has it been specifically sanctioned by any appellate court decision as of this date.
The Injury Necessitating Treatment Must Be One “Arising Out of” Motor Vehicle Involvement
Appellate court decisions have held that an auto accident need not be the sole cause of an injury nor the sole reason for medical treatment in order for PIP benefits to be payable. See Shinabarger v Citizens Insurance Co, 90 Mich App 307 (1979). Moreover, prior existing conditions that are aggravated by automobile accidents qualify for no-fault PIP coverage.
Other than the three legal principles set forth above, there are no other statutory conditions or qualifications that limit an insurance company’s obligation other than § 3157 of the Act. This section simply codifies the principle that a medical provider treating auto accident patients may not charge more than the provider “customarily charges for like products, services and accommodations in cases not involving insurance.” Therefore, a medical provider cannot discriminate against no-fault patients by charging them more than the provider charges patients who do not have any insurance coverage.
The Michigan no-fault system is in stark contrast with other states that have enacted no-fault statutes with specific statutory provisions for managed care. These states include Colorado, Florida, Hawaii, and New York. A review of the no-fault statutes in each of these four states reveals the existence of a specific statutory scheme of managed care for motor vehicle accident victims. These managed care systems were adopted in these states after extensive legislative debate and analysis. Although similar systems have been proposed in other states, as of the date of this article, no other no-fault jurisdictions have adopted managed care concepts for auto accident patients.
Of even greater significance is the fact that Michigan citizens resoundingly rejected a legislative referendum that would have specifically adopted a system of managed care for Michigan no-fault auto insurance claims. This was one of the concepts contained in Proposal C (HB 4156), which was decisively defeated by Michigan voters by a margin of 60 percent to 40 percent in the November 1994 election. The Proposal C referendum, if successful, would have added § 3104b to the Michigan no-fault automobile insurance law.
This new section would have permitted, and in some cases required, an insurance company to use “clinical care management” in the processing of no-fault insurance claims. Clinical care management would have been mandated in every claim where no-fault PIP benefits were expected to exceed the Catastrophic Claims Association (CAT) fund indemnification level of $250,000. Clinical care management would have been permitted, but not mandated, in those no-fault claims where PIP benefits were not expected to exceed the CAT fund threshold.
Under the proposed clinical care management provisions of § 3104b, a no-fault insurance company could select a “clinical care manager” who would prepare a six-month clinical care management plan. This plan would set forth details of the care and treatment that was to be provided an auto accident victim. The clinical care management plan was to be reviewed every 60 days in order to determine whether it should be modified.
The intent of the clinical care management plan envisioned by § 3104b was to give auto no-fault insurance companies direct control, through their appointed clinical care managers, over the patient’s medical treatment and rehabilitation. Proposal C also included other managed care concepts, such as provisions for capping PIP benefits, provisions for the utilization of medical fee schedules to further limit and define the amount a medical provider could charge for certain services, and provisions for limitations on the duration of vocational rehabilitation and psychological therapy. All of these proposals were rejected by Michigan voters when they defeated Proposal C.
The defeat of Proposal C made a particularly powerful political statement. It occurred two years after a similar ballot proposal, Proposal D, was decisively defeated in the November 1992 election by an almost identical margin of 60 percent to 40 percent. Proposal D also would have imposed caps on PIP benefits, adopted medical fee schedules, and limited coverage for certain kinds of care and treatment.
Not only is the Michigan no-fault system an unlimited, lifetime, fee-for-services system, the Michigan appellate courts have also clearly recognized the concept that patients who are entitled to benefits under this system have a legally protected freedom of choice in selecting the medical providers involved in their care and treatment. This concept of freedom of choice was recognized by the Michigan Supreme Court in Morgan v Citizens Insurance Co, 432 Mich 640 (1989), where the Supreme Court addressed the issue of whether a U.S. military serviceman was entitled to be compensated by his no-fault insurance company for medical services rendered to him in a nonmilitary facility. In holding that the serviceman was entitled to choose his physicians, Justice Levin, writing for the majority, stated:
The no-fault act preserves to the injured person a choice of medical service providers. Section 3109(1) does not deprive an injured person, who may be eligible to obtain service in kind in a military hospital, of such choice of medical service providers. [Morgan at 643]
The Morgan decision was qualified somewhat in the subsequent Supreme Court opinion, Tousignant v Allstate, 444 Mich 301 (1993), wherein the Court held that an accident victim who is insured under a coordinated no-fault policy and also covered by an HMO, must first turn to the services available through the HMO before being treated elsewhere, unless the services available through the HMO are not the same in quality or character as those available outside the HMO system.
These and other legal principles regarding the Michigan no-fault automobile insurance law must be clearly kept in mind when addressing the more specific issue of the proper role of case managers within the no-fault system. This will be discussed in greater detail in the section below.
CASE MANAGERS: WHAT ARE THE RULES AND WHAT ARE THEIR ROLES
The Patient Holds the Power
The no-fault law is silent regarding the involvement of case managers in the handling of no-fault PIP claims. Moreover, there are no reported Michigan appellate court decisions dealing with the use of case managers in the no-fault context. There is nothing, therefore, in either statute or case law that does any of the following: (1) authorizes a no-fault insurance company to insist on the use of case managers as a precondition to payment of benefits, (2) obligates a no-fault claimant to work with a case manager as a precondition to receiving no-fault benefits, or (3) requires a medical provider to deal with a case manager as a precondition to receiving payment for medical services rendered.
Even though there is no legal authority under the Michigan no-fault law regarding the use of case managers, some no-fault insurance companies are leading patients to believe that they must cooperate with a case manager selected by the insurance company or run the risk of jeopardizing their claim for PIP benefits. Insurers who create this impression are misleading patients regarding their rights and obligations under the Michigan no-fault law.
More disturbing, however, is the fact that auto insurance companies are, with increasing frequency, using case managers as “gatekeepers,” through whom pre-authorization for treatment must be obtained. Any insurance adjuster or case manager who represents that they have the responsibility or authority to require pre-authorization in order for treatment to be compensable under the no-fault statute, is engaging in conduct that is blatantly illegal.
There is nothing in the Michigan no-fault statute or case law that authorizes a no-fault insurance company to require that medical treatment be pre-authorized by adjusters or case managers. Pre-authorization is simply not a part of the Michigan no-fault fee-for-services reparations system and, therefore, patients and providers should understand that no-fault adjusters and case managers do not have legal authority to require pre-authorization for anything.
Regardless of whether pre-authorization has been sought or given, Michigan no-fault insurance companies are legally obligated to pay for all “reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery or rehabilitation.” See § 3107(1)(a). If a medical or rehabilitation provider believes that certain services are “reasonably necessary” for the patient’s care, recovery, or rehabilitation, then the provider should proceed to render those services and submit the bill to the no-fault insurance company for payment.
The lack of pre-authorization, even when demanded by an insurance company is irrelevant under the language of the no-fault statute. If patients and providers are not aware of this fact, they will be intimidated or otherwise discouraged from seeking reasonably necessary products, services, and accommodations that are legally compensable under the no-fault law.
Some insurance companies may argue that they have the right to insist on pre-authorization or even to restrict payment of benefits only to those services rendered by physicians who have been approved by the no-fault insurer because these limitations are set forth in an amendment to the patient’s insurance policy that was submitted to and approved by the Michigan insurance commissioner. It is clear, however, that the Michigan Legislature and the Michigan appellate courts have never authorized such a “preferred provider” procedure. Under Michigan law, the insurance commissioner cannot alter the meaning and scope of the Michigan no-fault automobile insurance law. As long as the Legislature continues the current statutory fee-for-services system, managed care concepts that are inconsistent with that statutory scheme have no legal force and effect, regardless of whether they are blessed by the insurance commissioner.
Analogy to Worker’s Compensation Law
Even though there are no Michigan appellate court cases that specifically address the use of case managers in the context of no-fault automobile insurance claims, there is an important decision by the Michigan Court of Appeals regarding the selection and use of case managers in connection with worker’s compensation claims. In Dolenga v Aetna, 185 Mich App 620 (1990), the Court of Appeals considered the relationship between a worker’s compensation insurer, a case manager appointed by that insurer, the patient’s treating physician, and a rehabilitation vendor recommended by the patient’s treating physician and approved by the patient.
It appears that the rehabilitation vendor involved in this case was a company offering case management type services on behalf of injured workers. The worker’s physician referred the worker to this particular rehabilitation vendor for vocational rehabilitation services. When the case manager for the worker’s compensation insurer learned of this, she wrote a letter to the rehabilitation vendor advising the vendor that authority to work with the patient was being denied. The case manager also stated that the worker’s treating physician had no authority to make referrals for vocational rehabilitation and that the worker’s compensation insurer would make other arrangements for rehabilitation, presumably with a different vendor.
The Court of Appeals, in Dolenga, disapproved of unilateral insurer control over case managers and held that the worker should be the one who selects the rehabilitation vendor (case manager), with the worker’s compensation insurer retaining the right to petition the Worker’s Compensation Bureau for the resolution of any dispute regarding this process if the insurer objected. The Court of Appeals stated in Dolenga:
It does, however, seem reasonable to conclude that the person receiving the services, the claimant, should normally be the person who selects the vendor. If, at that point, the employer or carrier is dissatisfied with the employee’s choice of vendor, it can petition the bureau for a resolution of the dispute under MCL 418.319(2)….Both defendant Aetna and defendant Shankin (the case manager) misapprehend the role and authority of the compensation carrier in providing these benefits. That role is to pay for the treatment, not provide it. Ultimately, since it is the claimant who receives the medical treatment or rehabilitation services, it ought normally to be the claimant who chooses the provider of those services, subject to the dispute resolution procedures under the act if the claimant’s choice is objectively unreasonable. Plaintiffs are correct to the extent that they point out that § 315 at least implicitly recognizes that it is the worker’s choice of whom to utilize for the providing of services, not that of the employer or carrier….
For the above reasons, we conclude that neither an employer nor a compensation carrier has the right to unilaterally reject a claimant’s choice of a rehabilitation services vendor and insist upon its own choice by way of denying authorization to the vendor selected by the claimant and referring the claimant to the carrier’s own vendor. [Dolenga at 623, 624]
Even though the Dolenga decision is a worker’s compensation case, Michigan appellate courts have indicated on previous occasions that Michigan judges are permitted to analogize to the worker’s compensation statute and applicable case law for guidance and assistance regarding issues dealing with the meaning and interpretation of the Michigan No-Fault Automobile Insurance Act. See Visconti v DAIIE, 90 Mich App 477 (1979).
The Dolenga decision is important for two reasons. First, it clearly suggests that the process of selecting a case manager is not something that should be controlled by the unilateral decision of a no-fault insurance company, particularly where the patient objects to the insurer’s selection. Therefore, if a patient agrees to case management but objects to the involvement of a particular case manager, the patient should have the right to require the selection of a different case manager.
Second, if a patient can show that case management services are otherwise reasonably necessary under § 3107(1)(a) of the No-Fault Act, then the patient should have the legal right to personally hire a case manager and submit the expenses of this case manager to the no-fault insurance company for payment as an “allowable expense” under this specific statutory section. The patient would have this right even if the no-fault insurance company unilaterally appointed a case manager of its own. Having already hired a case manager, a no-fault insurer would be hard pressed to disagree with the patient’s contention that case management services are “reasonably necessary.”
The conclusion that patients have the right to select and hire case managers and recover the costs is supported by the language of § 3107(1)(a) and the decisions in Dolenga and Morgan. Further support for this proposition is suggested by the Court of Appeals decision in McKelvie v Auto Club, 208 Mich App 331 (1994). This is a no-fault case wherein the Court of Appeals upheld an award of penalty attorney fees for the failure of a no-fault insurer to pay for certain rehabilitation services that appeared to be in the nature of “case manager services” and which were provided by Professional Rehabilitation Associates, the same vendor involved in the Dolenga case. Moreover, it should be remembered that Michigan appellate courts have, on several occasions, expressed the principle that the No-Fault Act “is remedial in nature and must be liberally construed in favor of persons intended to benefit thereby.” See Reed v Citizens, 198 Mich App 443, 451 (1993).
I have seen cases where competent, conscientious case management has made a significant difference in the overall care, recovery, and rehabilitation of seriously injured auto accident victims. Clearly, depending upon the circumstances of each case, good case management can make a difference. However, I have also seen circumstances where case management was nothing more than an unabashed attempt by an insurance company to justify paying as little as possible on a particular claim.
When case managers are used by insurance companies in no-fault auto accident claims, the following propositions clearly apply:
- The claimant does not have any legal obligation to work with a case manager.
- If a patient agrees to work with a case manager but disapproves of the case manager selected by the insurer, a new case manager should be appointed that is acceptable to the patient.
- If case management services are “reasonably necessary” for a patient’s care, recovery, or rehabilitation, the patient should have the right to personally hire a case manager and submit the costs to the no-fault insurance company as an allowable expense under § 3107(1)(a).
- A claimant has a right to refuse to permit a case manager to have ex parte communications with the patient’s physicians or other service providers.
- A patient has a right to refuse the request of a case manager to accompany a patient to medical examinations.
- A case manager can access and disclose the contents of only those medical records that a patient specifically consents to release.
- A case manager has an ethical obligation to put the interests of the patient first, to advocate for the patient, and to resolve all conflicts between the interests of the patient and the interests of the insurance company in a manner that benefits the patient.
More important than these “rules,” however, is the overriding principle that the most effective way to serve the needs of the seriously injured automobile accident victim is to foster a spirit of teamwork and dedication to ethics among all parties involved in rendering care and services to these patients—medical providers, case managers, insurance claim representatives, and attorneys. These principles of teamwork and ethics are indispensable if the patient’s interests are to be properly protected.
In order to create a true spirit of teamwork, at least four categories of participants must come together and work cooperatively to achieve the common objective of doing what is best for the patient. These individuals, working harmoniously, create a patient’s team, consisting of the following members:
•The patient and the patient’s family—Obviously, the most important members of the team are the patient and the patient’s family. A patient will not achieve maximum recovery and rehabilitation unless the patient makes the effort and believes to be playing a major role in the formulation and implementation of the treatment plan. The patient’s family members must also be involved in the process so that they can provide indispensable support and encouragement.
•The patient’s physicians and medical providers—The patient’s medical providers bear the ultimate responsibility for formulating a comprehensive medical and rehabilitation plan that they must advocate and defend as “reasonably necessary” for the patient’s care, recovery, and rehabilitation.
•The case manager—Where appropriate, the case manager can be very helpful coordinating medical care, assisting the injured person in accessing community resources, and making arrangements regarding the logistics of daily living. The case manager can also facilitate communication with the no-fault insurance claim representatives so that prompt payment of benefits occurs. At all times, the case manager must act as an advocate for the best interests of the patient and as a facilitator for the implementation of the patient’s medical and rehabilitation treatment plan.
•The patient’s attorney—An often overlooked, but indispensable, participant in the “team approach” to servicing seriously injured auto accident patients is the patient’s attorney. Legal counsel with expertise in no-fault related matters will be able to provide invaluable information to all members of the team regarding the scope and extent of benefits available under the no-fault law and assist in obtaining necessary funding. It is clear that better treatment results can be achieved when medical providers are fully aware of the vast coverages available to no-fault claimants.
There is no doubt that the Michigan No-Fault Automobile Insurance Act is a complicated piece of legislation. It has been in effect for 25 years. During that time, there have been more than 1,000 appellate court decisions interpreting various issues arising under this statute. It has become one of the fastest growing areas of jurisprudence in the state of Michigan. More important, however, is the fact that an auto accident patient has substantial rights and benefits available under the Act. These rights and benefits can play a critically important role in determining whether the objectives of the medical and rehabilitation treatment team will be achieved. Hopefully, when all of these professions join together in a common effort, the best interests of the patient truly will be well served.George T. Sinas is a member of the Lansing law firm of Sinas, Dramis, Brake, Boughton & McIntyre, P.C. He is a former president of the Michigan Trial Lawyers Association and a former chairperson of the State Bar Negligence Law Section. He is an adjunct faculty member at the Michigan State University–Detroit College of Law where he teaches a course on the Michigan no-fault law. He is also a current member of the Michigan Supreme Court Standard Civil Jury Instructions Committee. He litigates, writes, and lectures extensively in matters dealing with auto no-fault law. His practice is limited to representing injured persons.