The Senate Consumer Protection Committee yesterday unveiled its much-anticipated plan, which would produce most of its savings by making prepaid health plans the basis for medical benefits in auto accidents.
The bill also would eliminate the $13,900 medical threshold that people have to reach before suing. Instead, the bill would replace it with what's known as a "verbal threshold" which allows accident victims to sue for pain and suffering only in cases of serious or permanent injuries.
A verbal threshold, which is in place in Michigan, aims to lower litigation costs.
"I feel confident this allows the consumer to win. There's no doubt in my mind," said Sen. David Ige, Consumer Protection Committee co-chairman. "(Drivers) get lower premiums, the system is more stable, there's cost containment, we try to get rid of nuisance lawsuits driving up the costs but allow people to sue when their really seriously hurt."
The Senate plan was unveiled a day after the state House passed a plan that would repeal the state's 23-year-old no-fault system and replace it with a tort-based system in which accident victims could sue at-fault drivers for damages.
The House bill, which aims to cut rates between 25 percent and 35 percent, also shifts much of the medical costs for accident victims to the state's prepaid health care system. Business leaders and some legislators have said the shift could hurt employers since medical insurance rates will rise.
The Senate measure would cut out the 3.2 percent medical-cost shift to employers that may come under the House bill, Ige said. The bill also provides ways to settle small claims quickly and require binding arbitration for claims under $5,000 to help reduce the cost of tort claims, he said.
"We think consumers want quick adjudication of the small claims, so our hope is that it be relatively painless to go settle that without going to court," Ige said.
The Senate will hold a public hearing on its proposal Thursday. The Senate and House will meet later in the session to finalize a compromise bill.