Michigan Supreme Court Reviews Auto Insurance "One-Year-Back" Limits

Prompt action in the aftermath of a car accident or truck accident is important for a variety of reasons. First and foremost, personal injury victims often need compensation as soon as possible to help them avoid the financial distress caused by medical bills, lost income and other damages.

Just as important, when disputes as to liability or the extent of medical harm arise, an injury victim wants to compile evidence in support of his or her case as soon as possible. Nonetheless, whether they were not immediately aware of a medical problem or did not fully understand their legal rights, plaintiffs may need to file an action months or even years later than would otherwise have happened.

A recent Michigan car accident case, Joseph v. Auto Club Insurance Association, involved a woman who was only 17 when she suffered a traumatic brain injury (TBI) and paraplegia in 1977. While she had received benefits from a personal injury protection (PIP) insurance policy since the accident, she filed a complaint in 2009 alleging certain unpaid health care management services that her family had provided.

How Long Does a Car Accident Victim Have to File a Claim for Benefits?

Generally, Michigan auto insurance law requires that an action to recover PIP benefits must be commenced within a year of the motor vehicle accident that caused injury. The law provides exceptions if the insurer has received notice of the injury or has already paid benefits due to the injured person.

In that case, the injured person must act within one year after the most recent loss or allowable expense was incurred. However, a further limitation on damages states that the recovery of losses from an insurance company cannot date back more than a year from the date when the action commenced. This is known as the "one-year-back" rule.

In the Joseph case, the plaintiff argued that these limits did not apply because a more general provision in Michigan law provides that people who are minors or insane at the time the loss occurs have one year to file from the time when that disability is removed. In light of existing case law, the trial court agreed that a factual issue existed regarding her sanity. The insurance company appealed when its motion for summary judgment was denied.

The Supreme Court agreed to hear the case without Court of Appeals review, and resolved that previous opinions regarding the timing of an insurance claim had been incorrect. The court held that, because the one-year-back rule is intended to limit damages and not to limit when a suit can be brought, it was not affected by the minority/insanity provision. Therefore, even if the plaintiff demonstrated that she had been unable to assert her legal rights due to insanity for a decade, any attempt to collect unpaid PIP benefits would still be limited to losses that occurred one year before she overcame that disability.

Protecting Client Interests by Exploring All Legal Options

The ability of a personal injury victim or wrongful death survivor to recover no-fault benefits plays a role in many car accident cases. Basic auto liability coverage, health insurance and other policies can fall short of meeting the long-term needs of a person who needs constant medical care, multiple surgeries or ongoing therapy.

While the Joseph decision may present challenges for some plaintiffs with legitimate needs that were wrongly ignored, the case also underscores the importance of seeking compensation from all likely sources. For instance, people injured in an accident with a semi may have a claim against the trucking company based on the driver's negligence, but also the warehouse that created an unbalanced load that caused a loss of control in an evasive maneuver.

A detailed review of the accident scene, witness reports and other evidence can help a car accident attorney identify a client's full range of legal options. When the court's interpretation of existing law changes, a lawyer can help an injury victim assess the effect on plaintiff's rights and the prospects for recovery of damages.