Auto insurer hits ‘brick wall’ in attempt to exploit legal technicality that would skirt otherwise undisputed obligation to pay for victim’s hospital No-Fault medical care
Michigan auto insurance companies frequently complain they get a “bum rap” for being too focused on profits and too indifferent to the plight of their insured customers who have been seriously injured in auto accidents. Our No-Fault insurance lawyers frequently blog about this topic. The real reason your auto insurance rates in Michigan keep going up is a perfect example of insurance companies’ spin tactics in light of the outrageous profits they rake in each year.
If Michigan’s No-Fault insurers are serious about polishing up their image and “setting the record straight,” then they would do well to make sure greed does not completely obliterate their good judgment — as Farmers did with Jones, et al., v. Farmers Insurance Exchange, et al., a recent Michigan Court of Appeals case.
Farmers Insurance Exchange, a Michigan insurance company, did not dispute that it was obligated to pay approximately $15,300 for Victoria Jones’ hospital care after she was seriously injured in a car accident.
But Farmers Insurance Exchange did not want to pay.
So the auto insurer fished around for a legal technicality that might shirk its obligation.
What Farmers Insurance Exchange found was the so-called “one-year back rule,” which limits recovery of No-Fault medical expenses to only those expenses incurred during the year immediately preceding the lawsuit that was filed to collect unpaid medical expenses (For more about how insurance companies abuse the “one-year-back rule,” please check out “New auto insurance company delay tactic“).
Notably, Farmers Insurance Exchange did not invoke the “one-year back rule” against Jones, personally, to avoid having to give her the money to pay the hospital.
Such an uncompromising attitude would have been futile. It was obvious — even to Farmers Insurance Exchange — that the “one-year-back rule” would have been useless to the insurer in its quest to avoid its obligation, because Jones’s hospital care expenses were incurred on May 9, 2007, the day after the car accident, and less than a year before Jones filed her lawsuit on April 25, 2008.
How Farmers Insurance Exchange tried to get around the one-year back rule
Instead, Farmers Insurance Exchange went after the hospital that provided Ms. Jones with her valuable and necessary post-auto accident medical care.
In a shameful display of unmitigated, unconscionable greed, the insurer insisted the hospital should not receive the money it was rightfully owed, because the hospital did not make its claim sooner.
Farmers Insurance Exchange argued that the “one-year back rule” barred Henry Ford Health System’s claim because the hospital did not make its claim until April 2009 — when the court allowed it to join Ms. Jones’ lawsuit — which was more than one year after it provided services to Ms. Jones.
Fortunately for Ms. Jones and Henry Ford Health System, the trial judge and three Michigan Court of Appeals judges saw Farmers Insurance Exchange’s argument for what it was: Bunk.
The Michigan Court of Appeals wisely concluded that the hospital’s claim was not precluded by the “one-year back rule” because the one-year period was measured from the time the lawsuit was filed — not from the time the hospital joined the lawsuit as Farmers Insurance Exchange was contending:
“Because [Henry Ford Health System] sought payment for medical services rendered [less than one year before the lawsuit was filed by Ms. Jones], [the hospital’s] intervening claim was not barred by the one-year back rule.”
Accordingly, I think the lesson for auto insurance companies to take from Farmers Insurance Exchange’s reprehensible behavior in the Jones case is that if they do not want to get a “bum rap” for their “greed is good” mentality, then they should put their greed in check and stop acting like bums.
– Steven M. Gursten is recognized as one of the nation’s top lawyers in serious car and truck accident injury cases and automobile insurance No-Fault litigation. He routinely writes about insurance company abuse and the No-Fault laws in Michigan, and is available for comment.
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