The “One-Year-Back Rule”
In Michigan, the “one-year-back rule” plays a significant role in determining the timeframe within which a claimant can seek reimbursement for no-fault benefits. Under this rule, a claimant must initiate legal action within one year from the date the expense was incurred or within one year from the last date of allowable expense, whichever is later. The purpose of the rule is to impose a time limit on the recovery of no-fault benefits, preventing claimants from seeking reimbursement for expenses that occurred too far in the past.
The one-year-back rule acts as a safeguard for insurance companies by limiting their potential liability for claims that are not filed within the prescribed timeframe. It provides insurers with certainty and allows them to easily manage their financial obligations; by imposing a strict deadline, the rule helps prevent situations where insurers might face unexpected claims that are difficult to evaluate and settle fairly.
Conversely, the one-year-back rule imposes a strict deadline on claimants to seek reimbursement for medical expenses and other benefits, and failing to initiate legal action within this timeframe can result in the forfeiture of their rights to compensation. This rule can negatively affect claimants who may be unaware of the deadline (or have no control in initiating an action), face challenges in gathering documentation, or need more time to assess the full extent of their injuries. This time constraint creates pressure that may lead to rushed evaluations, potentially resulting in inadequate compensation. Overall, the rule places burdens on claimants and limits their ability to pursue rightful reimbursement for their expenses.
Wallace Holding Targets Assignments
Assignments refer to the legal process in which an individual transfers their entitlement to receive certain benefits or compensation from a third party, such as an insurance company, to their medical providers. In the context of personal injury cases, including No-Fault claims, a claimant may choose to assign their rights to medical providers to streamline the payment process and alleviate the burden of handling reimbursement themselves.
Recently, the Michigan Court of Appeals reviewed a case involving the Suburban Mobility Authority for Regional Transportation (SMART) and Plaintiff Parie Wallace where she had assigned her rights to recovery for No-Fault claims to her medical providers. The holding by the Court of Appeals specifically targeted the right of plaintiffs to assign their rights to medical providers in personal injury cases, with the Court determining that Plaintiff was not a real party interest at the time of filing the lawsuit.
The Court’s ruling highlighted the significance of assignments in personal injury litigation and their impact on a plaintiff’s standing to sue. It affirmed that when a plaintiff assigns their rights to medical providers, those providers become the rightful parties to seek recovery for unpaid medical bills. Moreover, this ruling served to protect the interests of insurers by limiting who can bring a claim against them. By limiting the plaintiff’s standing to sue, the court’s decision introduced the principle that plaintiffs cannot assign their rights and subsequently reclaim them retroactively through revocations.
This approach aimed to promote clarity and consistency in the assignment process and ensure that defendants are dealing with the proper parties in litigation. Yet, in practice it reduces a Plaintiffs ability to recover damages and makes them entirely reliant on their medical providers to file properly if they do attempt to assign their rights. Overall, the case underscores the importance of understanding the legal implications of assigning rights to medical providers in personal injury cases and the potential limitations it may impose on the plaintiff’s ability to pursue their claims.
What Does All Of This Mean For Me?
Imagine that you were seriously injured in an auto accident. Pursing a legal claim or lawsuit can be time-consuming and complex, so you assigned your rights to recovery to your medical providers, giving them the responsibility of pursuing your claim. The plan was to relieve yourself of the burden of navigating the legal process and dealing with paperwork, negotiations, and potential litigation – all while trying to recover from your catastrophic injuries. However, due to Michigan’s “one-year-back rule”, your medical providers have only a year to file an action to recover for the accident; and unfortunately for you, a whole year passes and those providers neglect to file before your claims expire.
Under the Wallace holding, once you have assigned your rights to pursue No-Fault benefits to medical providers, you no longer have standing to pursue any claims. In other words, you have relinquished your ability to personally pursue legal action for those specific benefits, unless the rights are assigned back to you from your doctors. Moreover, if the medical providers fail to properly or timely pursue those assigned rights the claims are most likely lost in their entirety.
Even if you try to file a claim before the one-year-back rule expires, anticipating that your medical providers will counter-assign your claims back to you, the Wallace court considers this improper. While you and your medical providers are at liberty to mutually decide to revoke the assignments, these assignments must be revoked or counter-assigned before any claims are filed to ensure you have standing.
This decision makes recovering No-Fault insurance benefits even more difficult for people injured in auto accidents and serves as a warning for injured people interested in assigning their claims.
For the Lawyers: A Legal Analysis of Wallace
In May of 2020, Plaintiff Parie Wallace filed suit against Suburban Mobility Authority for Regional Transportation (SMART), seeking recovery under the No-Fault Act for medical bills related to her injuries that resulted from an automobile accident. However, before Plaintiff initiated this litigation, she assigned her rights to recover PIP benefits to several of her medical providers. SMART eventually moved for partial summary disposition pursuant to MCR 2.116(C)(7), (8), and (10), arguing that Plaintiff had no standing to pursue a cause of action to recover claims that she had already assigned to her medical providers.
Plaintiff opposed the motion, arguing she had the right to pursue claims for benefits against SMART, notwithstanding the assignments. Moreover, in January 2022, Plaintiff obtained revocations of the assignments for her medical providers. However, SMART filed a supplemental brief arguing the revocations of the assignments were improper because the claims assigned to the providers were barred under the one-year-back rule.
The trial court denied in part SMART’s motion for partial summary disposition on the basis of the revocations. The trial court stated that the medical providers, as assignees, had the right to give back plaintiff’s claims in order to pursue them and that SMART had notice that those claims were at issue. Thus, because there was consideration exchanged for the revocations and because granting plaintiff’s motion would “leave Plaintiff on the hook,” the court denied SMART’s motion as to the assigned claims.
As a result of this decision, SMART filed this appeal.
The Holding: Revocations cannot retroactively restore claims to plaintiffs after the expiration of the one-year-back period
The Michigan Court of Appeals reversed the trial court’s decision, holding that the court erred in denying Defendant’s motion for summary disposition because Plaintiff was not a real party in interest at the time she filed the lawsuit. The court recognized that when the assignments were initially executed, the medical providers became the only parties entitled to pursue the claims for PIP benefits. By transferring her rights to collect insurance benefits to the providers, Plaintiff relinquished control and vested the providers with the authority to seek reimbursement for the medical services rendered. Therefore, the transfer of interest established the providers as the real parties in interest.
Moreover, the subsequent revocations by the medical providers, which occurred after the expiration of the one-year period, were deemed ineffective in reinstating valid claims for the Plaintiff. The court reasoned that the one-year-back rule had extinguished the providers’ rights to pursue the claims and the revocations could not retroactively restore those claims to the plaintiff. Relying on the principle that a retroactive revocation could not remedy a factual problem that existed at the time the lawsuit was initiated, the court concluded that the revocations did not have the save the claims for PIP benefits and upheld SMART’s argument that the motion for summary disposition should have been granted.
Wallace Court’s Reliance on Robinson v Szczotka
The Appeals Court drew support from the analogous case of Robinson v Szczotka to bolster its decision. In Robinson, the court had ruled that retroactive revocations of assignments could not rectify a factual issue that had existed at the time the lawsuit was commenced. In the present case, the court found that the principle established in Robinson was applicable; emphasizing that once the assignments were executed, the medical providers became the legitimate parties with the right to pursue the claims for benefits. The subsequent revocations, occurring after SMART had denied the claims and the one-year-back rule had elapsed, did not transfer back timely claims to the plaintiff. The court held that the trial court had erred in denying SMART’s motion for summary disposition concerning the assigned claims and thus proceeded to reverse that portion of the order.
By relying on the precedent set forth in Robinson, the Appeals Court found importance in considering the timing and legal implications of assignments and revocations. The court’s decision adhered to the principle that a retroactive revocation cannot remedy an existing factual problem and they concluded that the revocations in the present case did not salvage the claims for PIP benefits assigned to the medical providers before Plaintiff filed her complaint.
A Warning for Claimants
Overall, this case serves as a cautionary reminder for injured individuals considering assigning their claims. It underscores the need to fully understand the legal implications, potential limitations, and timing requirements associated with assigning rights to medical providers. It also highlights the significance of compliance with the one-year back rule to preserve a claimant’s ability to seek rightful reimbursement. Ultimately, this ruling impacts claimants by limiting their options and increasing their reliance on medical providers for pursuing their claims, while protecting the interests of insurers and maintaining clarity in the assignment process.