Insurance Industry Pushes Reform of Minnesota’s No-Fault System

By Steve Murphy, NewsRadio 830 WCCO

MINNEAPOLIS (WCCO) — Legislation that would reform Minnesota’s “no fault” car insurance system is under consideration at the capitol. And the industry thinks the effort has traction this time around.

“Really, no-fault doesn’t work the way it was intended to work,” says Mark Kulda of the Insurance Federation of Minnesota. “So Minnesota consumers are kind of overpaying for their auto insurance.”

NewsRadio 830 WCCO’s Steve Murphy Reports

Kulda argues that no-fault opens the door to fraud by aggressive chiropractors and other providers.

“The fraud situation in Minnesota is out of control,” he said.

The federation said the average Minnesota driver pays $720 a year for no-fault coverage while Iowans pay $520 for traditional insurance.

The insurance industry is hopeful the new Republican majority in both houses will look favorably on reform.

Among those wanting to keep no-fault in Minnesota are not only trial lawyers but also hospitals, who like knowing who’s going to pay the medical bills.

  • The Watcher

    I’m sure in the end it works out more for the Insurance company not the consumer…..when ever did an industry push for something that wasn’t good for them? Mark Kulda….what a puppet!

    • Anne

      I have worked within the no-fault system and have seen first hand how people with insurance are taken advantage of by chiropractors,massage therapists etc who send perfectly healthy people for MRI’s which expose people to unnecessary radiation when there is nothing seriously wrong, the doctor just want to worry the patient & inflate the claim to hopefully involve an attorney or to get the patient to continue treatment for 2-3 more months. I have seen attorneys who have used runners/ambulance chasers when the law prohibits that sort of thing. The more fraud committed within the no-fault system the more innocent people who pay to make up the difference. For example if you get 4 people within the car who do not have insurance and dont live with someone who has car insurance they go to the car they were in and therefore those with insurance are paying for those individuals who do not get insurance but still use the no-fault system the rest of us pay for. I am not saying do away with it, I am simply saying it needs fixing.

      • Nana

        I was rear ended while stopped for a light. I left the scene in an ambulance and have been under an MD’s care ever since last summer. I still don’t have full use of my limbs and my insurance company is “investigating” me and refusing to pay my medical bills. I have had the same auto insurance for 36 years, have no accidents, and have paid my premiums in full and on time. The problem with auto insurance is that they take your money and then don’t pay for your care. The insurance company can investigate any part of your life — all of your medical history, education, where you worked, and even your finances. You have no rights to privacy and they can turn around and release the information they collect on you to anyone they choose without your consent. You have to cooperate (it’s in every policy). Then they get to decide whether or not they will pay your bills. At the same time, they have got the legislature to create a statute of limitations on what they are responsible for. If you aren’t under an MD’s care for a period of 24 months, they no longer have to cover your expenses. They are not even required to inform you of this time limit. Also, while they are “investigating” you, they don’t have to pay for your meds, replacement services, or your mileage. In the meantime, you go broke trying to pay for all of your expenses out of your pocket and destroy your credit trying to get well. My recommendation — tighter legislation on auto insurance, not less AND…… careful if you decide to stop for a red light. You can being doing absolutely the right thing and lose everything you’ve worked for. And, as for medical insurance paying — I have medical coverage and they are not paying my medical. The bills are just hanging over my head.

    • Jon

      I agree. we are getting one side of it here.

    • Clyde

      You are absolutely right. I deal with medicla billing, and I have learned the simple fact: the insurance companies have one task, make darn sure the patients pay their premiums on time, and keep that money by whatever means possible for as long as possible. I understand the business reasons for this, but you KNOW they will come out far better than the patient with any reforms.

  • SB

    Please get read of no-fault. The only 2 car accidents I have been in some one else hit me! It was there fault yet my insurance went up and I had to pay to get my car fixed. Not fair; you hit me, you pay!

    • no fault

      SB you arent referring to what no fault even covers here. Why comment when you aren’t even informed? You paid for your own property damage, you must not have had collision coverage and it was your fault.

  • Victim Du Jour

    Lawyers will always figure out how to ruin things that make sense. No fault started out as a good idea, but over the years they just figured out how to exploit it.

  • JohnF

    Insurance companies need to start insuring drivers, not cars. It’s just a money maker for insurance companies to charge the same or nearly the same premium for each car you own. You can only drive one at a time.
    ALso, insurance companies need to be banned from using credit reports to determine premiums or deny coverage. Coverage should be based on teh driver’s record alone.

    • GH

      Its a proven fact that if you can’t pay your other bills you won’t pay your insurance. People with low credit are also at a higher risk of causing an accident to get money from claims.

      • Irritated

        This is not a fact. I was a victim of identity theft and had a great credit score before it happened and now am picking up the pieces after the fact and my credit score is now down the tubes. I probably couldn’t even get a loan for a $0.50 piece of gum right now, but I still pay all of my bills on time. Just saying that your credit score should not identify you.

      • Amanda

        Sure, just because I have a low credit score I am going to go and start hitting everyone on my sight so I can collect money… come on, grow up and stop using the credit report for everything else but what it is for!

        • GH

          I’ve seen it first hand. So it’s not some childish response, it really does happen. Even more so with home insurance. Your credit say a lot about who you are and how you live your life. People don’t realize how much credit matters.

          • Amanda

            I do understand that… but problem here is that I don’t believe that crashing my car will solve my monetary problems, I have seen people that has very, but very good credit, planing some fishy things to get out of a loan or something so it will not affect their credits, others just can’t make their payments and they deal with that, what that has to do with my insurance and my driving habits??? I do not see the conections

            • Chrissy

              @ Amanda – you may not think that crashing your car will solve money problems but sadly WAY more people do than one would think. Having worked in the industry, there is a LOT of fraud. In fact, some people fake accidents with each other and split the settlement. They don’t “crash” per se – it’s mostly a fender bender where someone suddenly has a bad case of whiplash and can’t work. And then there are crooked practitioners who will say these people are injured and need lots of treatments, etc.

              Believe me, it exists and more so than people outside the industry would think.

  • B

    No fault does not work, it is not the insurance industy, look at the trial lawyers exploiting this. A traditional insurance program is much better. And John, the No fault insurance does insure the person, the other provisions of the policy cover the car only. No fault only is if you suffer an injury, and this only gives lawyers traction not the insurance industry. If no fault is done away with then the consumer will be paying less premium, I think it is a win to get rid of it.

    • Pat

      How no fault works, is that any injuries that you incur are paid for by YOUR insurance, who then will turn around and sue the at-fault parties insurance to recoup their costs. This way the consumer does NOT have to pay for medical expenses out of pocket (which many of us cannot afford) while waiting for a law suit to go to court. Before no fault in Minnesota, if you were injured in a car accident and needed medical treatment YOU had to pay those expenses out of your own pocket, even if the accident was 100% the other parties fault. The other party would only pay you AFTER you won a lawsuit against the at-fault party. If you couldn’t pay your medical bills while waiting for your accident law suit to run its course, the hospital would be suing you in order to get you to pay your bills, they would not wait for you accident law suit to complete. With No-Fault, the hospital and doctors get paid, you don’t have to worry about the medical bills and the only law suits are between two insurance companies fighting out who ultimately has to cover the cost of medical expenses.

      The insurance industry wants to go back to making the consumer bear the burden of paying all medical bills and having to wait for the completion of a law suit in order to get the compensation they deserve.

      This change in law will be a great benefit to the insurance industry and a huge burden on consumers. This bill should be voted down.

      • Mark Kulda

        Actually, Pat, you didn’t have to pay out of your own pocket. Your medical insurer paid and then once they determined who was at fault, the medical insurer would file a subrogation claim against the at fault driver’s insurance. The driver never had to pay (unless they didn’t have medical insurance).

        • Ralph

          No fault payments cannot be subrogated in MN.

      • Alan

        Good post and a reminder of how short memories are. Any clue as to how man of the legislators are attorneys?

  • lisa

    How about you tell us what the alternatives in the proposal might be? How many other states use no-fault? How would the re-structuring affect the average driver? More information please. Take the time.

    • Mark Kulda

      At the height of its popularity in the 1970s there were 24 No-Fault states. Today there’s only 9. Most states realized it was a mistake because it does not cut down on costs. Instead it increases them. The latest to repeal No-Fault was Colorado in 2004. Premiums there went down 27% when they dropped No-Fault. Minnesota’s premiums would likely go down about 20% if it was repealed and a little less if it gets reformed. The average driver would notice no difference at all because all medical bills from an auto accident would be paid by their medical insurer who would eventually get paid back by the at fault driver’s liablity coverage.

  • Chiros

    I actually did get into a car accident and the Chiro was taking advantage of every person in his practice who was in a similar situation. Fake patient plans and billing, the worst case scenario. In the end he lost his license when an investigation was started and is one of the few to ever lose it here in MN. He simply moved to another state. He always used to brag about his house, toys, cars etc and it was sweet justice to see him get caught.

  • 1whoknows

    There can be no fault reform without totally abolishing the law. There is corruption and fraud by some health care providers, mainly chiropractors, who milk the system and encourage excessive treaatment and co dependence with the injured person. However, no fault law doesn’t help attorneys win cases at all because attorneys do not get paid from any no fault payments. Reform the system by limiting the number of chiropracter, neurologist and ortho visits a person can have without getting approval from an independent panel or some such idea. That way people who are seriously injured, ie broken bones, head injuries, etc, have their bills paid and wages continued. Don’t punish everyone for the few greedy plaintiffs and their chiropractors by throwing out a system that has a lot of merit.

    Also, for your $200 per year premium savings your health insurance coverage, assuming you have it, will go up exponentially because it will be your health carrier that will have to foot the bill for accident injuries if no fault is abolished.

    • Mark Kulda

      1whoknows….actually your health insurance premiums would not go up very much at all. No Fault’s system does not have the tools to get a discount, so your auto insurer has to pay full sticker price for all medical care from an accident. But your health insurer gets big negotiated discounts for the same care from the same provider. So while helath insurance costs would go up, they’d go up only slightly. The No Fault system is a $300-million a year system in Minnesota. The health insurance system is a $16-billion a year system. So the health system is much better at dealing with the medical costs than No-Fault is. It’s why our auto system is so broken here. No cost controls and no way to eliminate the fraud.

  • No Fault my foot!

    I just want to know why they call it insurance any way? It should really be called “Just in Case” because it doesn’t insure anything. I also don’t like when someone hits you, it’s partly your fault too just because you were on the road, as if we’re supposed to be driving somewhere else.

  • B

    The attorneys sure do get the benefit from the PIP(no fault) payment, it reduces the amount of pament that is owed while still obtaining the same benefit for pain and suffering. Huge benefit, reduces the amount that goes against potential low limits carried by some drivers. Attys sure milk this system just as much as chiros and providers. It is not regulated like your health care, no contracted amounts to pay to providers, no in or out of network cut offs, etc. It is just a huge burden on the consumer.

    • Ralph

      Additionally, it allows attorneys to double dip. They get the PIP benefit then they get the BI liability benefit from the at fault party. A higher cap on when the plaintiff attorneys can make a bodily injury claim on the at fault party would be good and helpful if PIP is kept around. No fault was introduced to pay medical bills regardless of fault, this is happening and working great. What is not working great is the plaintiff attorneys litigating claims where pain and suffering is alleged. PIP was supposed to alleviate this and it hasn’t. PIP is so old it needs to be reformed so that the litigious plaintiff attorneys get out of the way.

  • Kevin

    I have to laugh at how may people complain that attorneys somehow have some blame here.

    Attorneys REPRESENT clients. They WORK FOR clients. It is the CLIENTS who have some blame here. And who are those CLIENTS? None other than the American People, whom, as I have said many times before, want government and everyone else to do everything for them from cradle to grave.

    • Ralph

      Kevin you must not have worked for an insurance company before. Attorneys inflate, empower, and put this notion in injured parties heads that there is this lottery that you just won. They have their own chiropractors that treat for them and inflate the bills. PIP would work just fine if they got out of the way, and if the only thing that mattered was getting the injured party better. Plaintiff attorneys make it about money and ultimately the lawsuits come back to the consumers in the form of higher premiums. Get back to going to the doctor to get yourself better, instead of going to the doctor to inflate treatment. No fault is only helps attorneys do this.

      • Kevin


        I have not worked for an insurance company before, but I have been on the other side of one. And I can attest that they will do everything in their power to avoid paying a claim, even if its legitimate.

        As I said, everybody has their hands in the cookie jar. Everybody wants to get a little something from someone else. Nobody wants to give up anything, not even after they realize that what they think they are getting is actually costing them way more than they thought in the long run.

  • WOW inaccurate

    Are you kidding me? As long as a medical doctor can prescribe, they will always be way more than a Chiropractor. Yet, the courts side with the drug dealing doctors, and fight the chiriopractors on everything. I wouldn’t go to an md if I was dying, they won’t make another dime off me. I work for an insurance co, and have providers in my family if you want stats, to get the “ACCURATE” message out.

  • Kevin

    Moreover, where did this notion of forced insurance come from? When insurance was first invented, so to speak, it was offered to people so that they could control their own risk of loss.

    Now, the state comes in and forces everyone to control risk.

    Once again, the american people going to the government and making the government meddle in the private affairs of people.

    • 350zea.....

      Because if we ALL didn’t have insurance……the people with no money driving their $300 HOOPTY would run into my $45,000 sports car and say…oops…and walk away! Even with “forced” insurance…there are ALL KINDS of people driving around without it……
      I think there SHOULD be laws for having insurance…..and I do NOT work for an insurance co…..

    • Ralph

      Good discussion, yes everybody does have their hand in the cookie jar. But who is most protected? Not the consumer obviously. However I do think forced insurance is good idea because if it was not forced and somebody hit you and caused catastrophic injuries to you then you would not be compensated, and this pro bono medical treatment that the unisured receives only comes back to those who pay for insurance in higher premiums, increased cost. I like the forced insurance.

  • Redneck Tea

    No fault is for welfare recipients that don’t have when they hit you with the car they stole they say “Ain’t my fault’s stupid” and walks away from it with YOU paying the bill…..
    MAN….this stinks…..
    I need to paint my trailer…..

  • injured passenger

    Did you know that the primary reason to keep no fault insurance is so that you who have this insurance have extra coverage to pay your medical bills and wage loss, even if you drove drunk and ran into a tree? Or if some uninsured person hits you? Who is going to pay your lost income then? Did you also know that insurance companies have entire departments devoted only to no fault claims, that if you submit a claim for neck or back injuries the company will send you to a doctor they choose who will examine you and 99% of the time say you’re fine so your benefits are cut off? I would like to see statistics showinng just how much of a loss leader no fault is to the insurance companies that sell auto insurance. I don’t think those statistics exist or we would have heard about them by now.



  • Jake

    No Fault, which I call “Yo-Fault” because if you are in a crash and not at fault, your insurance company still has to pay, is a JOKE. One of the reasons it was put in place was to eliminate traffic court, and judges didn’t want to deal with such cases to determine who was at fault in a crash. I’m tired of it. In those states that have gotten rid of No Fault, not only did insurance rates go down, crash rates went down significantly as well. No Fault protects bad drivers and drivers without insurance, and it costs the rest of the good drivers a lot. Time to end this welfare system. Make the penalties for driving without insurance much more severe, and put an insurance verification system in place like they have in N. Carolina. If you cancel your insurance there, you have 30 days to either prove you have a new policy or turn your plates in. If you don’t turn your plates in, a warrant for your arrest gets issued.

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