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Lawyers’ Corner: One Year Back Rule in Henry Ford Macomb v Farmers Ins Co

One day doesn’t make that much difference to most people. But for attorneys, one day can cut your client off from thousands in recovery. When it comes to statutes of limitations or the no-fault “one year back rule”, every day counts.

How do you count one year back? That was the issue at the heart of a recent unpublished Michigan Court of Appeals case Henry Ford Macomb v Farmers Insurance Exchange. The case shows how something as simple as counting can become complex when a plaintiff’s recovery is on the line.

Henry Ford Macomb treated the driver of a serious auto accident from August 2, 2013 to August 5, 2013, for a total of more than $44,000. Because the driver was uninsured and there was no ascertainable no-fault insurance provider, the hospital filed a claim with the Michigan Assigned Claims Plan (MACP).

As the 1-year statute of limitations approached, the MACP had yet to assign a no-fault insurer to the claim. So on Monday, August 4, 2014, the hospital sued MACP directly. The named insurance company was added later as a defendant.

The Difference a Day Makes

August 2, 2014 fell on a Saturday. The delay from Saturday to Monday meant a world of difference to the plaintiffs and defendants, who ended up fighting an appeal on how the days were counted.

At issue were the two limitations set out in MCL 500.3145(1):

An action for recovery of personal protection insurance benefits payable under this chapter for accidental bodily injury may not be commenced later than 1 year after the date of the accident causing the injury unless written notice of injury as provided herein has been given to the insurer within 1 year after the accident or unless the insurer has previously made a payment of personal protection insurance benefits for the injury. If the notice has been given or a payment has been made, the action may be commenced at any time within 1 year after the most recent allowable expense, work loss or survivor’s loss has been incurred. However, the claimant may not recover benefits for any portion of the loss incurred more than 1 year before the date on which the action was commenced. The notice of injury required by this subsection may be given to the insurer or any of its authorized agents by a person claiming to be entitled to benefits therefor, or by someone in his behalf. The notice shall give the name and address of the claimant and indicate in ordinary language the name of the person injured and the time, place and nature of his injury.

The court broke the no-fault provision down into a statute of limitations with two exceptions, and a damages-limiting provision known as the one year back rule. But the statute didn’t provide any instructions on how to count those limits.

Counting Days for Statute of Limitations

The court turned to MCR 1.108 which says:

In computing a period of time prescribed or allowed by these rules, by court order, or by statute, the following rules apply:
(1) The day of the act, event, or default after which the designated period of time begins to run is not included. The last day of the period is included, unless it is a Saturday, Sunday, legal holiday, or day on which the court is closed pursuant to court order; in that event the period runs until the end of the next day that is not a Saturday, Sunday, legal holiday, or day on which the court is closed pursuant to court order.

The accident in this case happened on August 2, 2013, so one year from that date would be August 2, 2014. Since August 2 was a Saturday, MCR 1.108(1) extended the statute of limitations to Monday – the next day the court was open.

Counting Days for the One Year Back Rule

The defendant didn’t object to this extension of the statute of limitations. But it said that the one year back rule should be counted differently. It argued that because that portion of the statute was a limitation on damages, not a statute of limitations, MCR 1.108 didn’t apply. The court didn’t agree.

The opinion distinguished this instance from Cameron v Auto Club Ins Ass’nin which the court refused to toll the one year back rule for a minor plaintiff with mental incapacity. Cameron addressed MCL 600.5851(1), which puts a statute of limitations on hold where a plaintiff is mentally incompetent to bring suit. The Cameron court said that tolling did not also apply to the damages-limiting provisions of the Michigan No-Fault Act.

But this court said that Henry Ford Macomb’s case was different. MCR 1.108 doesn’t toll anything. Instead it directs how courts should interpret undefined spans of time in the various statutes they enforce. This applies more broadly than simply statutes of limitations. The court rule says “it should be consulted to compute ‘a period of time prescribed or allowed … by statute.”

Counting Days and Saving Thousands

The insurance company in this case used its interpretation of counting days to pay just $1,477.16 on the hospital’s $44,000 medical bill. That’s because most of the costs of treating the driver happened on August 2 and August 3, 2013, and the insurance company would only pay for services rendered on August 4 and August 5 – days it said were within the one year back rule.

By reading MCR 1.108 to extend both the statute of limitations and the one year back rule, the Michigan Court of Appeals preserved tens of thousands of dollars in the plaintiff’s medical billing. The court here did the right thing, preventing delays by the Michigan Assigned Claims Plan in naming an insurer from cutting of a medical provider’s no-fault benefits.

But the case also serves as a cautionary tale, warning medical provider attorneys to count their days carefully. Otherwise their clients could lose thousands of dollars to the one year back rule.

David Christensen is a medical provider attorney at Christensen Law in Southfield, Michigan. He represents doctors, hospitals, and treating professionals against the insurance companies. If your medical clients have outstanding receivables, contact Christensen Law for a referral today.