Michigan Supreme Court ruling in Jesperson v. Auto Club Insurance Association applies ‘previously made a payment’ exception to one-year statute of limitations for lawsuits regarding unpaid auto No Fault insurance benefits
Lawyers in Michigan have been telling clients for years that there’s almost no way around the very strict one year statute of limitations for No Fault PIP (Personal Injury Protection) benefits. While that remains true, one clear exception to the first-party No Fault statute of limitations remains intact.
Recently, the Michigan Supreme Court has ruled that, under the “previous payment” exception to the statute of limitations, once Auto Club Insurance Association (ACIA) started paying a Michigan auto accident victim’s No Fault auto insurance benefits, the auto insurer couldn’t just stop. Specifically, in Jesperson v. Auto Club Insurance Association, the Supreme Court ruled:
“We hold that the [“payment exception to the one-year statute of limitations in § 3145(1)”] allows for an action for no-fault benefits to be filed more than one year after the date of the accident causing the injury if the insurer has … made a payment of no-fault benefits for the injury at any time before the action is commenced.”
The high court’s ruling in Jesperson v. Auto Insurance Club Association is an important victory for Michigan auto accident victims because it provides essential protection in those circumstances when a No Fault auto insurer starts off doing the right thing, but then, stops. In my experience, this is often because a claims adjuster is overworked and just “checks out,” ignoring overdue bills or paying wage loss on a claims file.
But it could also apply to situations where there’s a question about the timing of when an automobile accident victim filed for No Fault PIP benefits, as by the No Fault law, a car accident victim has up to one year to file for No Fault insurance benefits.
‘Previously’ paid auto No Fault insurance benefits
More than one year after Alan Jesperson was injured in a Michigan auto accident, ACIA began paying his No Fault insurance benefits. These insurance benefits under Michigan’s No Fault law includes all reasonably necessary medical bills for life that relate to injuries suffered in a motor vehicle accident, wage loss, replacement services, mileage, and if the injury from a car accident is serious enough, nursing attendant care.
When the auto insurer subsequently changed its mind and wanted to stop paying benefits, ACIA claimed it didn’t have to pay because Mr. Jesperson hadn’t complied with the statute of limitations, which requires auto accident victims to either sue or serve “written notice of injury” on an auto insurer within one year of an auto accident.
A two-judge majority on the Michigan Court of Appeals agreed with ACIA.
But thankfully, the Supreme Court unanimously rejected ACIA’s ridiculous legal argument. While acknowledging that Jesperson neither filed a No Fault lawsuit nor filed a “written notice” within a year of his auto accident, the justices unanimously agreed that his first-party No Fault lawsuit could still proceed under the “previously paid” exception to the one-year statute of limitations for No Fault lawsuits.
Of the exception which provides that “[a]n action for recovery” of No Fault benefits can be “commenced later than one year after the date of the accident” if the auto “insurer has previously made a payment” of No Fault benefits, the Jesperson court concluded:
“[T]he payment exception to the one-year statute of limitations in § 3145(1) applies when the insurer makes a payment prior to the commencement of an action for no-fault benefits. Because such a payment was made in this case, the exception applies …”
Statute of limitations for No Fault lawsuits under Michigan law
Again, under Michigan’s No Fault Law, a Michigan auto accident victim has “1 year after the date” of an auto accident to sue an auto insurance company “for recovery of personal protection insurance benefits,” i.e., No Fault benefits. (MCL 500.3145(1)).
However, there are two exceptions to the one-year rule. An auto accident victim can sue for unpaid No Fault benefits more than one year after an auto accident if either of the following events have taken place:
- The auto accident victim provided “written notice of injury” to his or her No Fault auto insurance company “within 1 year after the accident”; or,
- “[T]he insurer has previously made a payment of personal protection insurance benefits for the injury.”