Judge Gives Home Health Care Providers Win Over “Unconstitutional” Bill

A circuit court judge in Michigan has ordered State Farm Insurance Co. to continue paying the home health care bills for a paralyzed Ann Arbor man. And though it’s a single case, it could be influential on a wider scale.

Judge Archie Brown ruled that a 2019 auto insurance reform law that slashed payments to medical providers is “unconstitutional.”

The judge’s ruling is at least the fourth restraining order issued in Michigan over the past seven months, as dozens of provider organizations in the state have gone out of business due to the state legislature’s decision to cut the rates of home care and residential caregivers by 45 %.

Barry Cargill, the president and CEO of the Michigan HomeCare & Hospice Association, told Home Health Care News in an email Friday that the judge’s ruling was unique. Unlike the previous three rulings, Brown specifically called out the 2019 piece of legislation and said it needs to change.

“Just as with our other three court victories, the case will be appealed and dragged out for months,” Cargill said. “While the Supreme Court will likely agree with the lower courts, it still drags out a solution for months and possibly years.”

For about 40 years, Michigan had a different auto insurance policy than just about every other state. It offered people unlimited personal injury protection if they were involved in a serious automobile accident, which often involved home-based care providers.

In 2019, the legislature passed a bill that gave insured drivers a choice to select an amount of personal injury protection as a way to lower auto insurance.

Because Michigan had an unlimited coverage plan, it also had a claims fund to pay for injuries that exceeded catastrophic levels, or about $600,000.

However, the legislation had a ripple effect in the home health industry, cutting reimbursement services by 45%. That caused reimbursement to be below the cost needed to sustain an employee to provide care.

There is overwhelming bipartisan support in the Michigan legislature to fix these issues, Darby Anderson, chief strategy officer for Addus HomeCare Corporation (Nasdaq: ADUS), told HHCN in an email Friday. However, Republican leadership has refused to allow proposals to be heard, Anderson said.

“The ruling case shows there is a legal solution to the problem, but this requires individual clients to sue to receive care which is not optimal and time consuming,” Anderson said. “I hope they take note of this ruling and save patients the cost and time from having to sue simply to get the care they need, paid at a reasonable rate.”

Addus provides home health, hospice and home care services to about 45,000 consumers through 211 locations across 22 states.

Cargill echoed those same thoughts when asked about the possibility of a solution.

“The solution is as simple as passing legislation to implement a reasonable home care fee schedule,” he said. “When legislators are finally allowed to vote on the fix, an overwhelming majority of legislators will support passage, and our governor will sign it. Two people are holding up the vote: Senate Majority Leader Mike Shirkey and Speaker of the House Jason Wentworth. This is not a partisan issue, it’s a very unnecessary patient crisis with an obvious legislative solution needed.”

In March, House Speaker Jason Wentworth said he would not consider changes to the law’s cost-controls, which are tied to $400-per-vehicle refund checks drivers are receiving this spring.

“I am hopeful the legislature will consider this ruling and do the right thing to pass a fix to the egregious error in cutting these rates and not require all patients to file a lawsuit,” Anderson said.

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