LANSING – Two weeks ago, the House Judiciary Committee voted out a bill that targets only one Michigan citizen. House Bill 5558, which prevents insurance companies from being held accountable for fraudulent activities they commit before 2001, passed nearly down party lines. The only Republican holdout was Rep. Martin Howrylak.

“HB 5558 is a cruel piece of legislation,” said Representative Jeff Irwin (D-Ann Arbor). “The insurance companies lost a case in court and now they’re coming to the Capitol to change the rules retroactively so they don’t have to pay what they owe.”

In 1984, Tina Dell, a member of the National Guard, three days away from beginning her active duty with the U.S. Army, was severely injured when she was hit by a pickup truck. The injuries she sustained in the accident left her unable to take care of herself. Her mother, Paula Chambers, has been taking care of her daughter for the past 30 years. Under Michigan’s Auto No-Fault Law, Paula is entitled to compensation for the daily care of her daughter. However, Citizens Insurance deceived the Dells, illegally denying the benefits due to Mr. Dell.

Last year, a court ruled that Citizens Insurance was wrong to lie about and deny those benefits and awarded Paula Chambers $2 million dollars for the money she had been wrongfully denied in back pay. Now, the insurance companies are changing the law to make is so that Paula Chambers will not get her money.

A 2001 law gave special protection to insurance companies beyond what is given to other regulated entities like banks and credit unions. However, the courts have allowed cases like Chambers’ to proceed under the Consumer Protection Act when based on continued long-term unfair or dishonest practices that started before the 2001 change in the law.

HB 5558 would bar current and future claims based on these long-time frauds against seriously injured people, extending insurance industries’ protection from consumer complaints to a point that far exceeds the protections provided to any other industry in the state.

The only remaining recourse to citizens cheated by their insurance company will be legal actions that are limited to one years’ worth of loss or to petition the insurance commissioner, a former insurance executive.

It is worth noting that the insurance commissioner has no authority to make an insured whole for losses resulting from an insurer lying about what was owed. A refund for overcharges might be allowed, but not for benefits that were wrongfully denied.

“Insurance companies shouldn’t be allowed to deceive their customers. When they deposit our premiums in their bank accounts they should be required to deal in good faith.” Iwrin said.
HB 5558 will go to the House floor early next week and includes a retroactivity provision that would wipe out any cases against insurance companies currently being pursued under the Consumer Protection Act, including the Chambers’ case.