Michigan Court of Appeals; Docket #314836; Unpublished
Judges Boonstra, Meter, and Servitto; 2-1 (with Judge Servitto concurring in part and dissenting in part); Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
Link to Dissent
The Michigan Supreme Court denied leave to appeal this decision on July 1, 2015; Link to Order
STATUTORY INDEXING:
One-Year Back Rule Limitation [§3145(1)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this 2-1 unpublished per curiam Opinion (with Judge Servitto concurring and dissenting in part) involving whether the one-year-back rule in MCL 500.3145(1) barred or limited an insurer’s cross-claim on which it had mistakenly paid benefits, the Court of Appeals held the one-year-back rule is an affirmative defense that may be waived if it is not raised in the first responsive pleading. However, the Court of Appeals went on to find that Defendant Progressive did not waive the one-year-back rule as an affirmative defense in this case, because the defense was asserted in Progressive’s original answer and also in a motion for summary disposition that it had filed.
QBE alleged it mistakenly paid plaintiff more than $240,000 in PIP benefits and that Progressive was instead responsible for payment. Progressive filed a motion for summary disposition, asserting the one-year-back rule limited QBE’s recovery to damages incurred to the one year preceding the date that QBE filed its claim. QBE argued the one-year-back rule did not apply and that it should recover under a common-law right of reimbursement because it paid benefits based on a mistake of fact. The trial court granted summary disposition for QBE.
Reversing the trial court’s decision, the Court of Appeals noted that Progressive argued the case was really a subrogation claim and the trial court wrongly ruled the one-year-back rule did not apply. QBE, however, argued its claim was a common-law right of reimbursement, not subrogation, and was therefore not subject to the one-year-back rule. Addressing these arguments, the Court of Appeals said:
“We conclude that the trial court correctly determined the nature of claim, but incorrectly determined that the one-year-back rule did not apply. QBE’s claim for recovery of mistakenly-paid PIP benefits from Progressive, even to the extent labeled a common-law claim for reimbursement for mistaken payments, is subject to the one-year-back rule. Titan [Ins v North Pointe Ins, 270 Mich App 339 (2006)] definitively resolves this issue in favor of Progressive. … Further, regardless of whether the claim is labeled as one of subrogation, we would conclude that MCL 500.3145(1) would apply. Our Supreme Court has held that the one-year-back rule of MCL 500.3145(1) must be enforced by the courts as written. … Given that any claim by QBE, even brought directly against Progressive without relying on subrogation, is a claim for recovery of PIP benefits, that claim for recovery would fall within the purview of MCL 500.3145(1), and the one-year-back rule would apply. Accordingly, the trial court erred when it did not apply the one-year-back rule to QBE’s cross-claim for recovery of PIP benefits from Progressive.”
The Court of Appeals explained the Michigan Supreme Court has said the one-year-back rule is a limitation on damages and that there is a legislative distinction between statutes of limitations and provisions that limit damages. Therefore, the appeals court said, the one-year-back rule “is not considered a statute of limitations, as listed under MCR 2.111(F)(3)(a).”
According to the Court of Appeals, although the one-year-back rule is not listed in MCR 2.111(F)(3)(a) as an affirmative defense, it is not precluded from being raised as an affirmative defense. The court stated:
“We conclude that the applicability of the one-year-back rule constitutes an affirmative defense. The denial of relief to a plaintiff under the one-year-back rule does not depend on that plaintiff’s failure to establish a prima facie case. Although QBE may have a valid claim and is able to establish a prima facie case for recovery of PIP benefits paid to or on behalf of plaintiff, Progressive, as an affirmative matter, may nevertheless establish that QBE is not entitled to prevail on any claim for PIP benefits on the bases of the one-year-back limitation. … Therefore, the one-year-back rule is an affirmative defense.”
Regarding the argument that the one-year-back rule must be raised as a defense in the first responsive pleading, the Court of Appeals rejected QBE’s claim that Progressive waived the defense. Noting there was no published authority on this issue, the court said:
“Progressive did assert that the one-year-back rule barred or limited plaintiff’s damages in its answers to [the] complaints. QBE itself asserted the one-year-back rule as a defense against plaintiff, and Progressive made this same assertion against plaintiff in its answer to the amended complaint. Progressive later brought a motion for partial summary disposition against plaintiff based on this rule. Although Progressive did not raise the one-year-back rule specifically in relation to QBE’s cross-claim … until approximately one year after the filing of its answer to the cross-claim, QBE was well aware that application of the one-year-back rule was at issue in the instant case, and was not unfairly surprised by Progressive’s assertion and was given sufficient time to take a responsive position. … For these reasons, and particularly given that QBE is plaintiff’s subrogee and stands in plaintiff’s shoes, and that Progressive timely pled the one-year-back rule as an affirmative defense to plaintiff’s complaint, we find that Progressive did not waive the affirmative defense as to QBE, even though it failed to raise the one-year-back rule specifically in relation to QBE’s cross-claim until its motion for summary disposition.”
In a separate concurring and dissenting opinion, Judge Servitto agreed the one-year-back rule is an affirmative defense, but said Progressive waived it in this case.
