MCL 500.3145 sets forth a period of limitations for bringing a claim for PIP benefits, as well as a limitation upon the PIP benefits that may be sought. These two statutory limitations are often referred to together as the “One-Year Back Rule.” The One-Year Back Rule is one of the first things that I think about when I review a file. I check to see when the accident occurred, when the Complaint was filed, and when the claims were incurred. It is often the most direct way to limit a claim to a period of time and bar portions of claims that aren’t timely. Prior to the No-Fault Reform, the law provided the following:
a. Notice: without notice within a year of the accident, actions for No-Fault benefits are barred
b. If notice is given, an action can be filed within one year of the most recent incurred expense
c. The claimant may not make claims for any benefits that were incurred more than a year before the filing of the Complaint
To some extent, this framework has been kept. But, the statute has been amended to add a major wrinkle – tolling:
a. The period of limitations, after notice has been received, is now tolled from the time a specific claim for PIP benefits is made until the insurer formally denies the claim
b. This tolling is not applicable if the person claiming the benefits “fails to pursue the claim with reasonable diligence”
As a practical matter, this means that the clock for the One-Year-Back Rule stops running when a specific claim for payment of an incurred charge is made, and does not start running again until there is a formal denial of that claim. This creates an incentive for the insurer to formally, and timely deny claims to avoid losing the statute’s protection. This also means that analysis and application of the One-Year-Back Rule will be more involved. This is because it will require consideration not only of when an accident happened or a particular charge was incurred, but also of when (and if) specific claim for payment was made, and when (and if) a formal denial of benefits was made. And, of course, insurers must keep in mind that a failure to formally deny a claim will jeopardize the insurer’s entitlement to the statute’s limitation protections.
There is, unfortunately, not yet any guidance as to the meaning of “reasonable diligence” when it comes to the enforcement of this provision. It would seem to indicate that these claims cannot languish forever but it is not clear what the Court’s will deem to be “reasonable diligence.” As motions are filed based on the statute over the next few years we will gather a better understanding of how the courts will interpret this aspect of the statute.
