Issued and entered October 23, 1992 by David J. Dykhouse, Commissioner
Section 3107(1)(a) of the Insurance Code of 1956, MCLA 500.3107(1)(a);
MSA 24:3107(1)(a), establishes the responsibilities of no-fault
auto insurers with respect to economic losses other than wage
loss under personal protection insurance benefits:
Sec. 3107.(1) Except as provided in subsection (2), 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.
Allowable expenses within personal protection insurance coverage
shall not include charges for a hospital room in excess of
a reasonable and customary charge for semiprivate accommodations
except if the injured person requires special or intensive
care, or for funeral and burial expenses in the amount set
forth in the policy which shall not be less than $1750.00
or more than $5,000.00.
The Insurance Bureau has received reports that no-fault insurers
have questioned the reasonableness of some of the charges billed
by health care providers for services rendered to their insureds
and claimants following a motor vehicle accident. In some instances
where the insurer and the provider have been engaged in such
a dispute, the health care provider has billed the patient for
the disputed amount and has vigorously pursued collection from
the insureds or claimant directly.
The purpose of this bulletin is to remind no-fault insurers
that they are required to provide insureds and claimants with
complete protection from economic loss for benefits provided
under personal protection insurance. Auto insurers must act
at all times to assure that the insured or claimant is not exposed
to harassment, dunning, disparagement of credit, or lawsuit
as a result of a dispute between the health care provider and
When such a dispute arises, an insurer will meet its statutory
obligations by adhering to the following procedures. First,
the insurance company must assume its statutory responsibility
for complete protection of the insured. To do so, the insurer
should notify the provider that the insurer is responsible for
paying any reasonable charges, not the insured or claimant.
Second, the insurer must also assure the policyholder or claimant
of its responsibility. Insureds and claimants should be given
directions on how to handle any bills or collection notices
they receive. Third, the insurer should notify collection agencies
and credit reporting agencies to disregard medical providers'
claims against the insured for services covered under personal
injury protection benefits. And finally, health care providers
should be warned that the insurer will defend the insured or
claimant against any attempt to collect, and may also consider
any other appropriate action to prevent its policyholder from
being pursued for collection.
A dispute between a medical provider and the insurer as to
the reasonableness of the charge for services does not void
the insurer's obligation to its insureds and claimants to pay
the amount ultimately determined to be reasonable. The insurer
also has an obligation to protect its insureds and claimants
from any consequences of such a dispute.