Published in Economic Development

Hope Network to close Coldwater care center as a result of 2019 no-fault insurance reforms

BY Thursday, June 10, 2021 05:04pm

COLDWATER — Hope Network will close a long-term housing center in Coldwater for people with severe disabilities as a new fee schedule is set to take effect under recent automotive no-fault insurance reforms.

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The 2019 no-fault reform law imposes a 45 percent reduction in reimbursement payments from auto insurance carriers to facilities that care for people who were traumatically injured in crashes and require ongoing care. The change is set to take effect on July 1.

Margaret Kroese COURTESY PHOTO

In issuing a 30-day notice of the closing, the Grand Rapids-based Hope Network said that 10 of the 12 residents at the Coldwater care home are crash survivors. The pending reimbursement cut makes operating the center financially unsustainable, according to Hope Network officials.

“We are devastated that it has come to this. Many of our residents and staff have been with us for a decade or more. They are like family,” Hope Network Executive Vice President Margaret Kroese said in an announcement on the planned closing. “Unfortunately, a small program like Coldwater cannot absorb such a large funding decrease and still maintain the level of quality our clients deserve and need to survive. We will be doing everything we can to help them find alternative options that can meet their complex needs.”

Care providers have been warning about the consequences of closing facilities after the deep cut in reimbursement payments under the fee schedule imposed by the no-fault reform law.

Separate bills introduced this spring in the state House and Senate would address the issue, but the bills have sat idle. Advocates for the bills rallied earlier this week in Lansing.


Backers of the no-fault auto reform law argue that care providers for years routinely overcharged auto insurance carriers to care for people severely injured in crashes. The Insurance Alliance of Michigan in March harshly criticized the sponsor of one of the bills, Rep. Doug Wozniak, R-Shelby Township.

“It’s unfortunate Rep. Wozniak chose to side with special interests instead of his constituents and drivers across the state who have been clamoring for relief from paying the highest auto insurance premiums in the country,” Insurance Alliance of Michigan Executive Director Erin McDonough said in a new release, adding that the proposed bills would enable the “same unscrupulous overcharging they have done for decades under the state’s broken, outdated auto no-fault system.”

“Instead of kowtowing to special interests, we urge lawmakers in both parties to give this new law time to work and push back on efforts to turn the clock back on these historic reforms by allowing certain medical providers to gouge Michigan families at a time they can least afford it,” McDonough said.

In a May 27 open letter, Hope Network President and CEO Phil Weaver accused insurance industry executives of “abandoning people disabled in automobile crashes” who bought auto policies with unlimited lifetime medical benefits.

“The families and guardians of the people affected will struggle to find alternative care providers that can manage their complex care needs at drastically reduced reimbursements,” Weaver wrote. “These families purchased full coverage insurance policies so their injuries could be treated when needed. These contracts are not being honored by the insurance industry as a whole, even though the industry brands itself as being there for customers in life’s ups and downs.”

Since the no-fault reform law took effect in July 2020, allowing consumers to choose how much in medical coverage to buy with auto policies, rates in Michigan have declined 27 percent, according to a recent report by Insure.com.

Still, Michigan ranked as the second-most expensive state in the nation for auto insurance after seven straight years at the top, according to Insure.com. Auto insurance premiums this year average $2,112 in Michigan. That’s $684, or 48 percent, higher than the nationwide average.

“The Insure.com report adds to the mounting evidence that no-fault reforms are working and saving Michigan drivers money,” McDonough said. “There are still plenty of Michiganders who haven’t renewed their auto insurance since the new law took effect, which means Michigan’s rates could be even lower by this time next year.”

Read 7823 times Last modified on Friday, 11 June 2021 16:42