Deadlines to Sue
One of the many "reform" decisions issued recently by the Michigan Supreme Court addressed the issue of how long an injured person, or people providing services to the person, can delay before filing suit against an auto insurer for PIP benefits [PIP benefits are medical expenses and three years of lost wages or domestic services, payable normally by the injured person's own insurance]. From the 1970s when Michigan's No Fault Act was adopted, the Supreme Court had consistently held that the injured person, or a service provider, could delay suit until the auto insurer actually denied the benefit claim in writing. This approach made sense, since it encouraged the parties to negotiate claims without litigation and it allowed unsophisticated consumers the opportunity to manage claims themselves, without fear of inadvertently losing the right to enforce their rights.
The arch conservative Michigan Supreme Court majority decided to overturn this rule, however, and reversed 19 years of law that had appeared to be expressly resolved and stable. It held that the injured person, or persons providing services to the injured person, must sue within one year of incurring the original expense, or lose their claim. It also held that insurers who negotiate through this deadline are not estopped to raise the deadline to deny the claimant the right to sue. It also applied this deadline to infants and incompetent persons, and denied them the protections of extended deadlines that the Legislature had previously established in the Revised Judicature Act. In other words, it took away all the established exceptions and protections and instituted a hard-line one year statute of limitations protecting auto insurers from PIP lawsuits. Unfortunately, most citizens are unaware of this one-year deadline, or of the fact that if a provider's bill is not paid by the first anniversary, and no suit is filed, the billing may become an obligation of the family.
Since this change in interpretation came as a surprise to most claimants and medical providers, it caught many flat-footed, holding claims that were legitimate but had not been placed in suit while the parties were negotiating compromises. Under the existing rules, the claimants and their service providers would have enjoyed the right to exhaust negotiations and then sue within a year if no satisfactory compromise could be reached. The Supreme Court overturned that right and also made its decision retroactive, so that people who had patiently attempted to negotiate without rushing to Court were punished by the complete denial of their [now stale] claims. We can't imagine how many millions of dollars this dropped in to the laps of auto insurers in Michigan, in one fell swoop.
While conservative "reformers" have paid lip service to reducing the amount of litigation and the need for families to aggressively protect their rights by hiring lawyers and involving the courts, this decision helps to demonstrate the real goal of "insurance reform": preserving and enhancing the profit margin of Michigan's insurers. No wonder they were willing to contribute heavily to the Justices' re-election campaigns.
The message for families with a severely injured loved one is also clear: consult with a knowledgeable person to confirm your rights and don't trust or rely upon an insurance representative. While some insurance adjusters and case managers are honest, dedicated and decent, many are not; and families have too much at risk to rely upon their [conflicted] advice exclusively. Most experienced attorneys will consult with a family for free, and capable attorneys can be hired on an hourly or contingent fee basis, depending on what is best for the family, to provide knowledge and guidance.