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Free Press report outlines coordinated effort to defraud state’s auto no-fault system

A report by the Detroit Free Press outlining an elaborate auto no-fault scam by medical providers speaks to the urgent need to reform Michigan’s broken, outdated auto no-fault system. The report stems from a lawsuit filed by Allstate against six medical providers, an MRI center and a transportation company in the Metro Detroit who pocketed millions of dollars by allegedly defrauding insurance companies.


“This report adds to the mounting evidence that Michigan’s auto no-fault system is broken and outdated, which has made our state a welcome mat for fraud,” said Tricia Kinley, executive director of the Insurance Alliance of Michigan. “Medical providers and trial attorneys have profited from the misfortune of others for far too long, and it’s time the Legislature enact real reforms to lower the cost of auto insurance for drivers across the state.”


According to Insure.com, Michigan has the unfortunate distinction of having the most expensive auto insurance premiums in the nation for the sixth year in a row. The state’s mandate that every driver purchase unlimited, lifetime medical benefits is a primary cause of the high cost of auto insurance. Michigan is the only state in the nation that requires this costly coverage.


“One procedure involved small behind-the-ear pain relief devices called P-STIMs that typically take about 15 minutes to apply and which cost less than $300 a piece wholesale, yet some clinics billed insurance $8,600 for the full procedures — even $56,272 at times when a surgical suite was used,” the Free Press reported. “Some clinics frequently gave patients lumbar back braces that sell for less than $100 at Walmart but for which they billed Allstate $1,400. The braces were handed out regardless of patients' medical need for them, the lawsuit claims.”


In order to lower the cost of auto insurance for drivers across Michigan, the Insurance Alliance of Michigan is urging the Legislature to enact real reforms, which include:

  • Cracking down on fraud and abuse, like what is outlined in the Detroit Free Press report

  • Stopping medical providers from dramatically overcharging for medical procedures

  • Giving consumers a choice in their level of medical coverage

Read the full report.

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