Michigan case highlights importance of documentation by car crash victims

Bruce Shutan

One of Michigan’s leading experts on the state’s no-fault auto insurance system thinks a recent decision in a federal court case serves as a reminder about the importance of car crash victims keeping comprehensive records regarding home health care that they receive. What’s so unusual about this lawsuit is that there aren’t any guidelines for documenting such expenses, nor is there a lifetime cap on medical services – the only state where that’s the case.

In an April 2012 decision, federal appeals Judge Richard Allen Griffin wrote that “the burden rests with the insured to demonstrate by a preponderance of the evidence that each expense was actually incurred.” Previously, a jury had decided that Pamela Armisted and the guardians of five other severely brain-injured families did not provide “reasonable proof” concerning the value or actual use of home care services. The plaintiffs had sought additional money from car insurer State Farm to pay for around-the-clock care.

Burden of proof

At issue in this case was State Farm’s reduction of rates that patients had requested for home health care services after being unable to verify whether the plaintiffs had “received the type of care that would justify paying higher rates,” according to court documents.

None of the half-dozen plaintiffs had racked up “allowable expenses,” according to court documents. Why? They failed to document critical details, such as the times and types of care provided at home. The six plaintiffs were unable to convince jurors that testimony and doctor’s letters would be sufficient.

Auto insurers typically are required to pay for physician-recommended treatment and rehabilitation for people hurt in a crash if the care is deemed “reasonable and necessary.” Pete Kuhnmuench, executive director of the Insurance Institute of Michigan, says he was surprised by the plaintiffs’ unwillingness in the Armisted case “to provide any documentation to substantiate that expenses were incurred or at least services were provided.”

No-fault laws

A look at Michigan’s no-fault auto insurance system may offer some insight into the plaintiffs’ thinking. The law has been considered a national model since 1973, says Mike Dabbs, president of the Brain Injury Association of Michigan. Under the law, there’s no lifetime cap on crash-related treatment costs. Dabbs believes the rights of insurers and consumers are “perfectly balanced” under the no-fault law.

“Michigan probably has the most developed continuum of care that there is for people with brain injuries in the U.S.,” Dabbs says.

A dozen states and Puerto Rico have no-fault auto insurance laws. In three of those states, Kentucky, New Jersey and Pennsylvania, motorists are able to “reject the lawsuit threshold and retain the right to sue for any auto-related injury,” says Michael Barry, a spokesman for the nonprofit Insurance Information Institute.

Michigan attorney George Sinas, who wasn’t involved in the Armisted case but does represent other victims of car crashes, says his state’s “no-fault statue is absolutely silent about what kind of documentation somebody has to produce” to be reimbursed for home health care. He says the only reference to this issue in the law directs insurers to pay within 30 days of receiving “reasonable” proof that such care was provided, as well as the amount of the related medical bills.

“We really don’t have a statute that requires anything specific in terms of medical verification in terms of what services specifically were rendered and when were they rendered,” Sinas says.

Sinas speculates that Michigan lawmakers didn’t want to saddle car crash victims with burdensome requirements for documentation of home health care. He says insurance companies have used this gap as a way to dispute whether charges for someone’s recovery or rehabilitation were reasonable.

Reaction to the decision

Willem Rijksen, a spokesman for the American Insurance Association trade group, describes the state’s unlimited lifetime personal injury protection benefits as “enabling ever-escalating costs” and “out of step with the rest of the nation.” He hopes Michigan legislators adopt the “reasonable” no-fault reforms now under consideration.

Reacting to the decision in the Armisted case, State Farm spokeswoman Angie Rinock says in a statement: “We are pleased the (federal appeals court) has recognized the need for an insurer to receive sufficient information to be certain the charges for services were incurred.” She declines to comment further because “some aspects of this litigation are ongoing.”

Nick Andrews is an attorney with Michigan law firm Liss Seder & Andrews PC, which represented all six plaintiffs in the State Farm case. He declines to comment.