Supreme Court Holds One-Year-Back Rule Unaffected by Minority/Insanity Tolling Provision

Kimberly K. Seibert

The Michigan Supreme Court recently ruled that all no-fault insurance benefits are subject to the one-year-back rule, reversing its own previous ruling to the contrary.

On May 15, the Supreme Court issued its opinion in Joseph v ACIA, and held that no-fault PIP claims are subject to the one-year-back rule set forth in MCL 500.3154(1), regardless of whether the claimant is a minor, incompetent or state entity.

The one-year-back rule limits the amount of benefits recoverable under the No-Fault Act to those losses occurring no more than one year before an action is filed. Prior to 2006, the law in Michigan was that the minority/insanity tolling provision set forth in MCL 600.5851(1) preserved a claim by a minor, incompetent or state entity for PIP benefits, even though it would otherwise be barred by the one-year-back rule.

Therefore, a minor, as long as a lawsuit for PIP benefits was brought before his or her 19th birthday, was able to claim payment for all incurred no-fault benefits from the date of the accident to the time of the filing of the lawsuit, without regard to how many years had passed since the injury. Furthermore, a state entity, such as University of Michigan Hospital, was able to claim payment for services rendered to a no-fault claimant without regard to when the services were incurred. See Geiger v DAIIE, 114 Mich App 283 (1982) (noting that “[a] contrary rule would severely limit the utility of the minority savings provision and could deprive a person of benefits to which he would otherwise be rightfully entitled.”).

In 2006, the Supreme Court in Cameron v ACIA, 476 Mich 55 (2006), overruled Geiger, and held that MCL 600.5851(1) did not remove a plaintiff’s claim from application of the one-year-back rule. The court reasoned, by a plain reading of the statute, that MCL 600.5851(1) did not pertain to damages once an action had been brought and, therefore, was irrelevant to the damages-limiting one-year-back provision of MCL 500.3145(1). That rule prevailed until July 31, 2010, when the court overruled Cameron in Regents of University of Michigan v Titan Ins Co, 487 Mich 289 (2010). Specifically, the court held that state entities, minors and incompetent no-fault claimants could seek payment for incurred no-fault benefits without regard to the one-year-back rule. 

The Regents court ruled that since MCL 600.5851(1) must be read together with MCL 500.3145(1), the one-year-back rule was a statute of limitations, not a damage limitation provision. As a result, the one-year-back rule could be tolled in cases involving minors, persons deemed to be “insane” or state entities. 

On May 20, 2011, the new Supreme Court majority granted leave to appeal in Joseph v ACIA, to consider whether its own decision in Regents was correctly decided.  The order provided:

“The parties shall include among the issues to be briefed: (1) whether the minority/insanity tolling provision of the Revised Judicature Act, MCL 600.5851(1), applies to toll the ‘one-year-back rule’ in MCL 500.3145(1) of the No-Fault Automobile Insurance Act; and (2) whether Regents of the University of Michigan v Titan Ins Co, 487 Mich 289 (2010) was correctly decided.”

In Joseph, the plaintiff sought to recover benefits for losses dating back 32 years before she filed her action. In denying ACIA’s motion for partial summary disposition, the circuit court relied on Regents to hold that the minority/insanity tolling provision applied to toll the one-year-back rule.

In an opinion authored by Justice Mary Beth Kelly, the Joseph majority overruled Regents and re-affirmed its 2006 holding in Cameron, stating, “We once again hold that the minority/insanity tolling provision, which addresses only when an action may be brought, does not preclude the application of the one-year-back rule, which separately limits the amount of benefits that can be recovered.” The court explained that its decision in Regents “conflated these distinct concepts in order to effectuate what the Regents majority believed was a broader social good served by expanding the right to recover benefits beyond those allowed by law.” The court ultimately decided to overrule Regents and reinstate Cameron.

Given the court’s decision in Joseph, all claims for no-fault benefits are subject to the one-year-back rule set forth in MCL 500.3145(1).  No-fault benefits incurred more than one year prior to the filing of the lawsuit are no longer payable pursuant to the one-year-back rule.

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