Michigan Court of Appeals; Docket #251447; Unpublished
Judges Zahra, Murphy and Cavanagh; unanimous; per curiam
Official Michigan Reporter Citation: Not applicable, Link to Opinion 
STATUTORY INDEXING:
12% Interest on Overdue Benefits – Nature and Scope [3142(2)(3)]
One-Year Back Rule Limitation [3145(1)]
Requirement That Benefits Were Unreasonably Delayed or Denied [3148(1)]
TOPICAL INDEXING:
Not applicable
CASE SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals determined that plaintiff- hospital was improperly awarded $46,070 in no-fault benefits, no-fault attorney fees, and no-fault penalty interest because the action for benefits was untimely under the one-year back rule contained in MCL 500.3145(1). In this case, the injured person was hospitalized from April 12, 1999 through April 18, 1999. Plaintiff made a specific request for payment on April 19, 2000, in an attempt to toll the statute of limitations. On October 2, 2000, a billing clerk for plaintiff called defendant to inquire why the claim had not been paid. Defendant responded that it was untimely. Plaintiff then filed suit in November 2000. In finding that plaintiff was improperly awarded summary disposition, the court held that the defendant’s response was a formal denial even though it was not in writing. Therefore, the statute of limitations was no longer tolled and plaintiff’s November 2000 lawsuit was untimely. In this regard the court stated:
“Arguably, the notations on the EOB form may have constituted a formal denial of liability. However, even if reasonable minds could differ regarding whether defendant’s EOB notes were sufficiently explicit and unambiguous to constitute a formal denial, the parties’ phone conversation on October 2, 2000, conveyed an explicit formal denial as a matter of law. The parties stipulated that ‘on October 2nd, 2000, Titan received a phone call from Pam at Detroit Medical Center Billing Office, asking why Titan had only paid $727.00 for Mr. Papke’s bill, at which time Kathy Szczepanski indicated that the expenses incurred by Donald Papke from April 12th, 1999 through April 18th, 1999 were denied as being submitted untimely.’ This communication, as stipulated, was explicit and ‘sufficiently direct to qualify as formal without being put in writing.’ . . . Therefore, the October 2, 2000, conversation constituted a ‘formal denial,’ and the running of the one-year limitation period resumed. . . . As plaintiff did not commence this action until November 14, 2000, the one-year-back rule of MCL 500.3145 was not satisfied and, regardless of when the expenses were ‘incurred,’ the action was time barred. The trial court erred in entering summary disposition in favor of plaintiff and should have granted defendant’s motion for summary disposition pursuant to MCR 2.116(C)(7).”
The Court of Appeals also determined that plaintiff was improperly awarded attorney fees under MCL500.3148(1). In this regard, the court said:
“The decision whether to award attorney fees is not based on whether coverage was ultimately determined to exist, but rather, on whether the insurer’s initial refusal to pay was reasonable. . . . We hold that defendant’s refusal to make payment was not unreasonable because it was based on a legitimate question of statutory construction, namely, whether all [the injured person’s] medical expenses were ‘incurred’ within the one-year period before a specific claim for benefits was made.” Likewise, it held that plaintiff was improperly awarded no-fault penalty interest under MCL 500.3142(2). In so holding, the court stated: “Defendant did not pay [the injured person’s] benefits within thirty days of receiving the bill. But given our determination that defendant was not liable for payment of the disputed benefits because the limitation period lapsed, defendant cannot be liable for no-fault penalty interest. . . . Reversed and remanded for entry of judgment in favor of defendant.”
