Michigan Supreme Court; Docket #150332; Published
Chief Justice Young, Justices Markman, Zahra, McCormack, Viviano, Bernstein, and Larsen; Unanimous; Opinion by Justice McCormack
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
One-Year Notice Rule Limitation [§3145(1)]
Effect of Payment on Notice Requirement [§3145(1)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous per curiam Opinion written by Justice McCormack, the Michigan Supreme Court held that “the first sentence of MCL 500.3145(1) allows for an action for no-fault benefits to be filed more than one year after the date of the accident causing the injury if the insurer has either received notice of the injury within one year of the accident or has made a payment of no-fault benefits for the injury at any time before the action is commenced.”
Applying this interpretation of §3145(1), the Supreme Court concluded that plaintiff’s suit was erroneously dismissed even though his claim was filed more than one year after the accident, because the defendant insurer had paid some benefits before plaintiff’s lawsuit was commenced.
Plaintiff was in an auto accident on May 12, 2009. Even though the accident was reported to defendant Auto Club Insurance Association (ACIA) more than one year after it occurred, ACIA began paying PIP benefits to plaintiff on July 23, 2010. When ACIA notified plaintiff it was terminating benefits, plaintiff added ACIA as a defendant in a lawsuit he had already filed against the other driver, claiming that ACIA wrongly refused benefits. ACIA moved for summary disposition, arguing that plaintiff’s claim was barred by the one-year statute of limitations in §3145(1). The trial court granted summary disposition for ACIA. The Court of Appeals affirmed, finding the exception in §3145(1) when an insurer has made a payment applies only if the insurer made payment within one year of the accident, which was not the situation in this case.
The Supreme Court reversed, finding that ACIA’s benefit payment more than one year after plaintiff’s accident precluded the application of the one-year statute of limitations defense in §3145(1).
Reaching this result, the Supreme Court considered the language of §3145(1), which says:
“An action for recovery of personal protection insurance benefits payable under this chapter for accidental bodily injury may not be commenced later than 1 year after the date of the accident causing the injury unless written notice of injury as provided herein has been given to the insurer within 1 year after the accident or unless the insurer has previously made a payment of personal protection insurance benefits for the injury.”
The definition of “previously,” as used in §3145(1), was critical to the outcome of the case, the Supreme Court explained. Plaintiff argued that “previously” meant prior to the filing of the action, while ACIA claimed that “previously” meant before the expiration of one year after the date of the accident. In this regard, the Court said:
“We conclude that the statute’s plain language supports the plaintiff’s reading of the statute. First, the Legislature used the word ‘or’ to separate the notice exception and the payment exception. ‘Or’ is … a disjunctive [term], used to indicate a disunion, a separation, an alternative.’… Thus, the word ‘or’ here indicates that the notice and payment exceptions should be treated as independent alternatives. Second, the Legislature chose to use the phrase ‘within 1 year after the accident’ in the notice exception and the word ‘previously’ in the payment exception. … ‘Previous’ means ‘coming or occurring before something else; prior[.] … We conclude that ‘previously’ must mean something different from ‘within 1 year after the accident.’ Third, the Legislature’s word choice in the second sentence of §3145(1) supports the plaintiff’s reading of the payment exception that the exception is satisfied by any prior payment. The second sentence provides: ‘If the notice has been given or a payment has been made, the action may be commenced at any time within 1 year after the most recent allowable expense, work loss or survivor’s loss has been incurred.’ … While the second sentence of
§3145(1) refers to ‘the notice,’ it also refers to ‘a payment,’ suggesting that while the Legislature was referring to a specific notice — the notice given to the insurer within 1 year after the accident — it was not referring to a specific payment made at any particular time but rather to any payment previously made.”
Based on the foregoing, the Supreme Court said that ACIA’s proposed reading of §3145(1) would “undermine” the significance of the exception:
“For an insurer to make a benefits payment for an injury from an accident, the insurer must have received notice that the accident occurred. That is, if an insurer makes a payment within one year after an accident, the insurer would in all likelihood have already received the required notice of the accident. In other words, if the payment exception only operates if payment has been made within one year after an accident, this exception operates only if the notice exception would also in all likelihood apply. To give full effect to the Legislature’s intention, we must avoid an interpretation that renders the payment exception all but surplusage.”
In conclusion, the Supreme Court held the §3145(1) payment exception applied in this case because ACIA made a benefit payment prior to the commencement of plaintiff’s action.
