Hanesh v. Lake States Mutual Insurance

Per Curiam.

Plaintiffs were involved in an automobile accident on November 1, 1978. Within one year after the accident, plaintiffs sought no-fault benefits from defendant. Defendant then evaluated this claim for over three years without denying liability. Defendant claimed that it was unable to determine whether it was the proper carrier liable for the payment of first-party benefits to plaintiffs. Plaintiffs, dissatisfied with the lack of defendant’s progress, filed this lawsuit on January 4, 1983. In its answer, defendant admitted that it was the proper carrier, but defendant then brought a motion for partial summary judgment seeking to bar plaintiffs from recovering no-fault benefits incurred prior to one year before plaintiffs’ complaint was filed. The trial court denied the defendant’s motion for partial accelerated judgment and granted summary judgment in favor of plaintiffs, finding that plaintiffs’ application for no-fault benefits tolled the one-year back rule. See MCL 500.3145; MSA 24.13145. The trial court stated:

"The court feels that Richards [v American Fellowship Mutual Ins Co, 84 Mich App 629; 270 NW2d 670 (1978), lv den 406 Mich 862 (1979)] decision in this particular case, though not on all fours, is similar because of the inaction of the insurance company as claimed by Mr. Gilhool, in investigating this matter for 40 months, and because they misled according to plaintiffs’ attorney, Mr. Murphy, who was the previous attorney, that they were going to settle this matter. The courts and the law encourage settlement of these matters. That was the reason for the no-fault changes that we are aware of. And the court feels that in this situation it is violative of that to allow the partial accelerated judgment claim by defendant.”

This Court granted defendant leave to file this interlocutory appeal.

MCL 500.3145(1); MSA 24.13145(1) provides as follows:

"(1) An action for recovery of personal protection insurance benefits payable under this chapter for accidental bodily injury may not be commenced later than one year after the date of the accident causing the injury unless written notice of injury was provided herein has been given to the insurer within one 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 one 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 one year before the date on which the action was commenced.”

The period of limitations provided in the statute is tolled from the time written notice is provided to the insurer until the time the insurer formally denies the no-fault claim. Joiner v Michigan Mutual Ins Co, 137 Mich App 464; 357 NW2d 875 (1984), Preferred Risk Mutual Ins Co v State Farm Mutual Automobile Ins Co, 123 Mich App 416; 333 NW2d 303 (1983), lv den 417 Mich 1100.9 (1983), Lansing General Hospital, Osteopathic v Gomez, 114 Mich App 814; 319 NW2d 683 (1982), and Richards v American Fellowship Mutual Ins Co, 84 Mich App 629; 270 NW2d 670 (1978), lv den 406 Mich 862 (1979). We recognize that other panels of this Court have rejected this position in favor of a literal reading of the statute.¹ We are persuaded, however, that the reasoning set forth in Preferred Risk and Richards is the better view.

In Welton v Carriers Ins Co, 421 Mich 571; 365 NW2d 170 (1984), the Supreme Court stated:

"Tolling the statute when the insured submits a claim for specific benefits would not appear to detract from the policies underlying the one-year limitation On recovery. By submitting a timely and specific claim, the insured serves the interest in preventing stale claims by allowing the insurer to assess its liability while the information supporting the claim is relatively fresh. A prompt denial of the claim would barely affect the running of limitation period, while a lengthy investigation would simply 'freeze’ the situation until the claim is eventually denied. In effect, the insured would be charged with the time spent reducing his losses to a claim for specific benefits plus the time spent deciding whether to sue after the claim is denied.” 421 Mich 578-579.

We feel that this analysis supports our decision to follow Richards. In this case, defendant readily concedes that it had adequate notice of the claim within one year after the accident. Defendant also admits that it investigated the claim for over three years to determine whether it was the proper carrier to pay no-fault benefits. When plaintiffs commenced this suit, defendant admitted that it was the proper carrier, but then sought the protection of the one-year back rule. We feel that the facts of this case illustrate why Richards presents the better approach.

The decision of the trial court is affirmed, and the case is hereby remanded for further proceedings.

1 Kransz v Meredith, 123 Mich App 454; 332 NW2d 571 (1983), English v The Home Ins Co, 112 Mich App 468; 316 NW2d 463 (1982), Allstate Ins Co v Frankenmuth Mutual Ins Co, 111 Mich App 617; 314 NW2d 711 (1981), lv den 414 Mich 917 (1982), and Aldrich v Auto-Owners Ins Co, 106 Mich App 83; 307 NW2d 736 (1981).