Can an insurer (accidentally) breathe life into a long-dead PIP claim by making a payment?


Statutes of limitation are great, or terrible, depending on which side of the “v” you’re on. They exist to prevent stale lawsuits. They basically say, “You can’t wait forever to sue someone.” But in Jesperson v Auto Club Insurance Association, the Court of Appeals had to decide whether a single payment of an insurance benefit would revive a claim that the statute of limitation had long-since killed off. Was the payment a one-time philanthropic venture? Or was it a crack in the dam that would lead to a flood of future benefits?
The plaintiff, Alan Jesperson, was injured in a motor vehicle accident on May 1, 2009. But he didn’t submit an insurance claim for personal protection insurance or PIP benefits to the defendant, Auto Club Insurance Association, until June 2, 2010. Auto Club paid PIP benefits in July 2010, but then stopped. Jesperson sued the person who hit him and added Auto Club as a defendant after it stopped paying his PIP benefits. Auto Club argued that Jesperson’s claim was barred by the statute of limitation for PIP claims. Both the trial court and Court of Appeals agreed that Jesperson’s claim was barred by the statute of limitation.

Oddly enough, the argument in Jesperson centered on the meaning of the word “previously.” The statute of limitation for PIP claims sets a general rule: “An action for recovery of [PIP] benefits … may not be commenced later than 1 year after the date of the accident …” That’s simple enough. Jesperson’s accident happened on May 1, 2009. So, unless there was an exception, his lawsuit died a silent death on May 1, 2010.

Jesperson thought he found an exception in the rest of the statute, which says that the general rule applies “unless written notice of injury … has been given to the insurer within 1 year after the accident or unless the insurer has previously made a payment of [PIP] benefits for the injury.” Jesperson didn’t notify Auto Club until June 2, 2010, so the first part was no help. But Auto Club did make a payment, so the second part, he argued, had potential.

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