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A Better Partnership
September 18, 2014

COA Holds No-Fault Statute of Limitations Protects Insurers after One Year

In Jesperson v Auto Club Ins. Ass’n, No. 315942, the Michigan Court of Appeals held that a first-party no-fault suit must be filed within one year of the accident that caused the injury.  Further, if the plaintiff received benefits from the insurer prior to filing suit, the one-year statute of limitations will only extend if the benefits were received within one year of the accident.
Matthew Badelalla (“Badelalla”), an employee of Jet’s Pizza, struck Alan Jesperson’s (“Plaintiff”) motorcycle from behind while driving his mother’s car at a slow speed.  The accident caused $2,000 in damage to the motorcycle and the Plaintiff developed back pain, which resulted in shoulder, neck, and back surgeries.  More than a year after the accident Plaintiff filed a no-fault insurance claim, and Auto Club Insurance Association (“Defendant”), was provided notice that it was the highest priority no-fault insurer.  Defendant paid Plaintiff $21,714.87 in medical expenses under this claim; however, it ceased making payments when Plaintiff filed a negligence complaint in court against Badelalla, Jet’s Pizza, and Badelalla’s mother.  When Plaintiff learned that his payments were terminated, he amended his original complaint to add a first-party no-fault claim against Defendant.
MCL 500.3145(1), as a general rule, provides that an action for first-party personal protection insurance benefits may not be commenced later than one year after the date of the accident.  There are, however, two exceptions in the statute: 1) where there is written notice of injury given to the insurer within one year of the accident; and 2) where the insurer has previously paid personal protection insurance benefits for the injury.
Plaintiff first argued that his claim qualified under the second exception, because Defendant made payments on his insurance claim for medical expenses.  In the alternative, Plaintiff argued that Defendant waived its defense by failing to assert as an affirmative defense the statute of limitations in MCL 500.3145(1) it in its first responsive pleading. Defendant, on the other hand, argued that the suit was barred by the statute of limitations because the payments began more than one year after the accident, so exception (2) to MCL 500.3145(1) did not apply. Additionally, Defendant argued that by providing the statute in its pleading, the Plaintiff was on notice that it was asserting MCL 500.3145(1)’s statute of limitations as an affirmative defense.
Using statutory rules of construction and a dictionary, the court agreed with the Defendant and held that an action must be filed within one year of the accident.  Furthermore, an insurer’s benefit payments to a claimant that began more than one year after the accident will not toll the limitations period. The court also found that although the Defendant did not specifically mention the statute of limitations defense in MCL 500.3145(1), the Defendant did not waive its ability to use the defense. Because the trial court can permit amendments to pleadings in the interest of judicial efficiency, there was reason to believe that the trial court would permit such an amendment to include the affirmative defense. Thus, the Court of Appeals saw no need to remand the case for that determination, and ruled for Defendant on both issues. 

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