Author(s): Edward Freeland

Volume XX, No. 1 January 4, 2008


In an unpublished decision issued on December 18, 2007, the Michigan Court of Appeals affirmed a holding by the Kent County Circuit Court which applied “equitable powers” to prohibit the application of the “one year back” provision of the Michigan No Fault Act, MCL 500.3145(1), on Plaintiff’s claim for personal protection insurance (PIP) benefits. In Douse v Farm Bureau General Ins Co, COA No. 274230, plaintiff, Steven Douse sustained injuries as a consequence of a July 12, 2003 motor vehicle accident. Mr. Douse filed an Application for Benefits with his insurer, the Farm Bureau General Insurance Company, on July 19, 2003. Thereafter, on February 9, 2004, Farm Bureau sent Mr. Douse correspondence stating in relevant part:

“As of the date of this letter we have not been able to obtain documentation to support [that the] injuries claimed are related to the above date of loss.

Farm Bureau is in the process of investigating this claim. As part of our investigation we are requesting that you provided [sic] the

1 Mr. Freeland is a shareholder in the Firm’s Troy office and can be reached at (248) 641-7600 or at


Garan Lucow Miller, P.C. 1111 West Long Lake Road, Suite 300 Troy, Michigan 48098 248.641.7600

From the Co-Editors James L. Borin & Simeon R. Orlowski

Edward Freeland1 – Contributor

complete names and addresses of all medical facilities you have treated with in [sic] the last three years.

Based on the above we have no alternative but to deny personal injury benefits in relationship to this claim until our investigation has been completed. Once we have completed our investigation we will notify you of our position.”

Subsequent to his submission of the requested documentation, Farm Bureau, on April 11, 2005, corresponded with Mr. Douse indicating that “the one year statute for submission has expired” and, therefore, Farm Bureau has “no alternative but to maintain [its] previous denial” of Mr. Douse’s claims for PIP benefits. Mr. Douse then filed suit on July 28, 2005. Thereafter, Farm Bureau moved for summary disposition on that portion of Mr. Douse’s claim for PIP benefits incurred prior to July 28, 2004, premised upon the “one year back rule” as set forth in MCL 500.3145(1).2 The Trial Court, invoking its “equitable powers”, estopped Farm Bureau from asserting the one year back rule finding that Farm Bureau’s February 9, 2004 correspondence had induced Mr. Douse to refrain from filing suit in a timely manner. Thereafter, the Trial Court granted Mr. Douse’s motion for summary disposition and entered judgment in favor of Mr. Douse.

In rendering its decision, the Court of Appeals acknowledged the Supreme Court’s holding in Devillers v Auto Club Ins Assoc, 473 Mich 562 (2005), which over ruled Lewis v DAIIE, 426 Mich 93 (1986). Lewis had held that the one year back limitation period found in MCL 500.3145(1) was to be tolled from the time an insured made a claim for PIP benefits until the insurer formally denied the claim. The Court of Appeals noted that although Devillers held that the “one year back rule” must be enforced as written and without a blanket judicial tolling doctrine, the Devillers opinion also acknowledged that “courts undoubtedly possess equitable powers” to prevent the application of a limitations period where warranted. However, such powers have “traditionally been reserved for ‘unusual circumstances’ such as fraud or mutual mistake” and “are not an unrestricted license of the court to engage in wholesale policy making”. The Devillers Court further cautioned that courts should be reluctant to apply equitable estoppel “absent intentional or negligent conduct designed to induce a plaintiff [to refrain] from bringing a timely action”.

The Court of Appeals agreed with the Trial Court’s conclusion that the effect of Farm Bureau’s February 9, 2004 correspondence requesting additional information and promising to advise Mr. Douse when Farm Bureau reached a decision on his claim induced Mr. Douse to refrain from filing suit until after Farm Bureau unequivocally rejected his claim by way of its April 11, 2005 correspondence. In support of this conclusion, the Court of Appeals noted that while Mr. Douse had contacted Farm Bureau repeatedly regarding the status of his claim before the February 9, 2004 correspondence was received, he stopped contacting Farm Bureau following receipt of that correspondence. Therefore, the Court of Appeals concluded that the Trial Court did not err in

2 In relevant part MCL 500.3145(1) provides: “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”.


invoking its equitable powers to estop Farm Bureau from applying the “one year back rule” to bar that portion of Mr. Douse’s claim incurred prior to July 28, 2004.

The Court of Appeals also reversed the Trial Court’s grant of summary disposition in favor of Mr. Douse holding that Mr. Douse had not supplied evidence to support the nature and amount of his claim for PIP benefits and, therefore, Mr. Douse had not established his right to PIP benefits as a matter of law.


In order to avoid a holding that “equitable estoppel” prevents the application of the “one year back rule”, a carrier’s communication with a claimant must unequivocally deny the claim for personal protection insurance benefits. Moreover, even silence would have avoided the application of “equitable estoppel” (the Court of Appeals acknowledged that the portion of Mr. Douse’s claim incurred prior to July 28, 2004 would have been barred had Farm Bureau simply taken no action at all with respect to plaintiff’s claim). However, correspondence to a claimant which is either ambiguous or equivocal may subject a carrier to the argument it may not rely upon the application of the “one year back rule” due to “equitable estoppel” where the claimant maintains that he/she was induced not to file suit until the claim was unequivocally denied.

If you would like a copy of this decision or if you have questions regarding the application of equitable tolling or the application of either the statute of limitations or “one year back rule”, please contact Edward Freeland at (800) 875-7600 or at