Insurer bit by consequences of judicial activism

Several years ago, the Michigan Supreme Court was dominated by a group of Justices hand-selected by Governor Engler for their fidelity to the Chamber of Commerce and the insurance industry.  In a 4-3 decision, these Justices reversed a 19-year old precedent and re-interpreted the no-fault law to limit PIP actions by a one-year statute of limitations. This week, their decision cost an insurer thousands of dollars in reimbursement.

For two decades, the Supreme Court had held that a person seeking PIP no fault benefits could wait until there was an actual "denial" by the carrier before filing suit:  the denial would initiate the running of the one-year statute of limitations. This policy proved particularly useful in the payment of medical expenses, since it frequently took most of a calendar year for the provider, the underlying health insurer and the auto insurer to resolve their differences over the cost of care. 

The so-called Engler majority (or as Justice Weaver termed them, the "Gang of Four") reversed this holding and threw out all cases that were not filed within one year of the PIP expense being incurred.  They also made the decision retroactive, immediately handing the state's auto insurers millions of dollars in profit on disputed, but now stale, unpaid obligations.  They also prompted a new "rush to the courthouse" on the part of providers and injury victims who could no longer negotiate their claims outside the legal system.  In handing down this decision, the Engler Majority also ruled that the initial notice to the insurer must be a notice of a specific claim, and could not be a generic notice of the collision and injuries.

This week, the Court of Appeals ruled that the same decision resulted in one insurer's inability to re-claim from another insurer PIP benefits that the latter insurer should have paid.  The Michigan Municipal Risk insurer mistakenly paid medical and wages for a municipal employee who was pinned between two vehicles while he was standing on the bumper of his truck.  Since he was not an "occupant" of the vehicle, his PIP benefits should have been paid by his own insurer AutoOwners/HomeOwners.  He made a claim, within the year, for Uninsured Motorist (UM) benefits, however, neither he nor the MMRMA insurer gave AutoOwners specific notice of a claim for PIP benefits.

The Court of Appeals ruled that the notice of accident and injury filed for UM benefits was not specific enough to enable MMRMA to collect from AutoOwners the PIP benefits it had paid.  The Court opinion did not indicate whether either insurer will have to pay for continuing medical expenses incurred by the injured employee.  We simply cannot believe that justice is served when a layperson is required to make a highly technical distinction among the priority of insurers, and file a complicated notice, in order to collect benefits which all drivers must purchase, and which defined by law and intended to be paid without the involvement of lawyers.  The fallout of this activist decision by anti-consumer justices serves no public policy and simply allows insurers to evade legal obligations on a loophole.  The current case is Macias v. Citizens Insurance and Home-Owners Insurance Company, et al.  Dont ask how Citizens ended up in the caption.