Michigan no-fault, post-2019 reform.

For more than four decades, Michigan operated the most generous no-fault auto regime in the United States. The 1973 No-Fault Act guaranteed every injured motorist unlimited, lifetime medical and rehabilitation benefits, funded by an industry-wide reinsurance pool — the Michigan Catastrophic Claims Association (MCCA) — and supplemented by an annual per-vehicle assessment that reached roughly $220 by 2019. The system covered everything from acute trauma care to in-home attendant care provided by family members for the catastrophically injured.

That generosity came at a price. Michigan consistently posted the highest average auto premiums in the country, and Detroit drivers in particular faced rates that often exceeded a thousand dollars annually for basic coverage. Insurers, hospital systems, and Republican legislators argued the regime had become untenable; trial lawyers, brain-injury rehabilitation providers, and disability advocates argued the high costs reflected genuinely catastrophic care that no other state offered.

After more than a decade of failed reform attempts, Governor Whitmer and a Republican legislature reached a compromise in May 2019. Public Acts 21 and 22 created tiered PIP coverage, imposed a hard medical fee schedule, capped family-provided attendant care, and changed how the MCCA could refund surplus. The reforms took staged effect through July 2020 (consumer-facing tier choice) and July 2021 (fee schedule). The political fight has continued in the courts — most prominently in Andary v USAA Casualty Insurance Co., where the Michigan Supreme Court in 2023 held the fee schedule could not be applied retroactively to pre-reform claimants.

Before reform: the 1973 Act

The original Michigan No-Fault Act, MCL 500.3101 et seq., guaranteed every insured motorist three core Personal Injury Protection (PIP) benefits regardless of fault: unlimited lifetime medical and rehabilitation, wage-loss replacement at 85% of gross income for up to three years, and replacement services up to a daily statutory amount. In exchange, the right to sue for non-economic damages was restricted to claimants meeting the threshold in MCL 500.3135.

The unlimited PIP entitlement was the system's defining feature — and the source of Michigan's premium problem. Catastrophically injured claimants (severe TBI, high-cervical spinal cord injury, multi-limb amputation) frequently generated lifetime claim costs in the multi-million-dollar range. Long-term attendant care, residential rehabilitation, and home modifications were paid in full, indefinitely. The MCCA reinsured insurers for the portion of any one claim exceeding a retention level that rose over time from $250,000 in the 1980s to $580,000 by 2019.

The 2019 statutory framework

Public Acts 21 and 22 of 2019 amended the No-Fault Act in three principal ways. First, they replaced mandatory unlimited PIP with a tiered choice. Second, they imposed a fee schedule on medical providers and a 56-hour weekly cap on family- provided attendant care. Third, they restructured MCCA assessments and authorised refunds of surplus reserves — a $400-per-vehicle refund went out in 2022.

Critically, the reforms preserved the MCL 500.3135 tort threshold framework. They did not enlarge the right to sue; they simply reduced the first-party benefits that would otherwise displace tort recovery. For claimants whose first-party coverage proves inadequate, the practical incentive to pursue tort claims has increased.

PIP coverage tiers

Tier selection is made annually at policy renewal and must be acknowledged in writing. A claimant injured under a $250,000 tier who exhausts that cap has no further first-party medical coverage from the auto insurer; remaining costs fall on health insurance, Medicare, Medicaid, or out-of-pocket payment, with potential tort recovery from the at-fault driver.

The medical fee schedule

For services rendered on or after 1 July 2021, MCL 500.3157 caps provider reimbursement at percentages of Medicare. Most physicians are limited to 200% of Medicare; certain specialty rehabilitation services and facilities below a Medicaid utilization threshold receive up to 250%. Services for which Medicare has no comparable code default to 55% of the provider's 2019 charge — the so-called “55% cut” that has driven specialty post-acute brain-injury clinics out of business across the state.

Attendant careprovided by a family member or someone living in the injured person's household is capped at 56 hours per week, regardless of medical necessity. Hours beyond that must be provided by a licensed agency, which charges agency rates and is subject to the fee schedule.

The tort threshold (MCL 500.3135)

A claimant may sue an at-fault driver for non-economic damages only if the injury constitutes death, permanent serious disfigurement, or a serious impairment of body function. The latter is the operative concept in most cases and is governed by McCormick v Carrier, 487 Mich 180 (2010), which restored a totality-of-the-circumstances test after the more restrictive Kreiner v Fischer framework was overruled.

Under McCormick, a serious impairment requires (i) an objectively manifested impairment, (ii) of an important body function, that (iii) affects the person's general ability to lead their normal life. There is no minimum duration and no requirement that the impairment be permanent. Excess economic loss above PIP caps and damages for excess wage loss beyond three years are also recoverable in tort against the at-fault driver under MCL 500.3135(3)(c).

The MCCA and catastrophic claims

The Michigan Catastrophic Claims Association is a private non-profit unincorporated association created by statute. Every auto insurer writing in Michigan is a member, and every PIP-covered vehicle pays an annual assessment (the “MCCA fee”) which is passed through to consumers. The MCCA reimburses member insurers for PIP losses on any one claim exceeding a statutory retention — currently in the mid six figures and rising biennially.

The 2019 reform did not abolish the MCCA but allowed surplus reserves to be refunded to policyholders. After post-reform actuarial revaluation, the MCCA refunded $400 per vehicle in 2022. Going forward, MCCA assessments apply only to policies that elected unlimited or $500K PIP — drivers in lower tiers neither pay the MCCA fee nor receive its catastrophic backstop.

Litigation and Andary

The reforms have generated extensive litigation. The most important decision to date is Andary v USAA Casualty Insurance Co., 512 Mich 207 (2023). The Michigan Supreme Court held that the fee schedule and the 56-hour family attendant-care cap cannot be applied to claimants whose injuries occurred before 11 June 2019 — the date PA 21 was signed. The decision preserved the contractual expectations of pre-reform catastrophic claimants but did not disturb the fee schedule prospectively.

Comparison to other jurisdictions

Among US no-fault states, Michigan post-reform sits roughly in the middle: more generous than New York's $50,000 PIP minimum, but much less generous than its pre-2019 self. The structural model — first-party benefits paired with a verbal-equivalent tort threshold — resembles Florida and New Jersey more than true add-on states.

Internationally, Michigan's post-reform PIP cap structure converges with Ontario's SABS regime — a defined-benefits scheme with optional buy-up to higher catastrophic limits — and contrasts sharply with British Columbia's ICBC Enhanced Care model, which retained unlimited medical but largely abolished the right to sue.

Related reading

• Comparative no-fault schemes
• Ontario SABS explained
• BC ICBC Enhanced Care
• Michigan personal injury overview

Frequently asked questions

Sources

• Michigan Public Acts 21 and 22 of 2019 — No-Fault Reform
• MCL 500.3101 et seq. — Michigan No-Fault Act
• MCL 500.3107 — PIP benefits
• MCL 500.3135 — threshold for tort recovery
• MCL 500.3157 — medical fee schedule
• McCormick v Carrier, 487 Mich 180 (2010)
• Andary v USAA Casualty Insurance Co., 512 Mich 207 (2023)
• Michigan Catastrophic Claims Association — annual reports and assessment history