What happens when two appellate panels issue opposing published opinions on the same issue? That’s the current state of the law in Encompass Healthcare, PLLC v Citizens Insurance and Spine Specialist of Michigan v Memberselect Insurance Company when the panels addressed the one year back rule and the new tolling provisions under the one year back rule.
On November 17, 2022, Court of Appeals Justices Gleicher, Servitto, and Yates issued their opinion on Encompass Healthcare, PLLC v Citizens Insurance, in which they ruled that tolling under 3145 could be applied retroactively to pre-reform claims if the complaint is filed after the reforms took place.
On the same date, Court of Appeals Justices Riordan, Boonstra, and Gadola issued their opinion on Spine Specialist of Michigan v Memberselect Insurance Company. This Court explicitly rules that the courts cannot apply tolling retroactively.
Both of these cases have now been published and have precedential effect. But which one do we follow?
In Encompass, the Court analyzed formal denials and tolling under amended provisions of MCL 500.3145.
Here, Plaintiff alleged that it provided treatment to claimant Ronald Mannor from June 2018 through October 2018. Plaintiff Encompass sought reimbursement from Mannor’s auto insurer, Citizens. Citizens paid a portion of the claim and issued an Explanation of Review (EOR) to Encompass explaining the reduction. In November of 2019, Encompass filed a lawsuit against Citizens seeking additional reimbursement. Citizens moved for summary disposition pursuant to the one-year-back rule under MCL 500.3145(2), which precludes the recovery of any claims incurred more than one year before the date the lawsuit was filed (i.e. any claims incurred prior to November 2018).
Encompass argued to the trial court that, even though the filing was more than one year after the dates of service, the new provisions of MCL 500.3145(3) permit tolling of the limitation from the date the claim is submitted until a formal denial is issued. Encompass argued that the EOR submitted by Citizens did not constitute a formal denial. The trial court rejected this argument, and found that that the EOR submitted by the carrier constituted a formal denial under MCL 500.3145(3), thereby ending any claimed tolling.
The Court of Appeals, however, reversed.
In a footnote, the Court noted that it would apply tolling retroactively for dates of service prior to the amended No-Fault Statute, June 11, 2019. The Court justified this on the basis that the complaint was filed after June 11, 2019. The Court cited George v. Allstate, a case that applied the former statutory provisions to a case filed prior to June 11, 2019, and used the inverse to hold that the new provisions apply if the case is filed after that date.
Without any actual analysis regarding the retroactive application, the Court then goes on to analyze the history of tolling under the Michigan No-Fault Act. Before the amendments to the statute, Devillers Auto Club Ins Ass’n, 473 Mich 562 (2005) removed tolling from the one-year-back rule and it became a hard rule without exceptions. Prior to that ruling, Lewis v Detroit Auto Inter-Ins Exch, 426 Mich 93 (1986) and Richards v American Fellowship Mut Ins. Co, 84 Mich App 629 (1978) were the leading precedent regarding tolling of the one-year-back rule. Lewis and Richards reasoned that the intent of the Legislature was to ensure that the injured parties were promptly compensated. The Court further reasoned that, without tolling and requiring the insurance carriers to formally deny, the Court would be discouraging carriers from responding to claims, and penalizing the insured if a carrier unduly delayed in denying claims.
The Court ruled that MCL 500.3145(3) supersedes the Devillers decision, and returns the state of the law to the Lewis decision and its progeny.
With the Court applying the reform provisions, as the Court went further and clarified what can be considered a formal denial. The Court ruled that a formal denial need not be in writing, but must be “sufficiently direct.” Further, the language of the denial must be “explicit and unequivocally impress upon the insured the need to pursue further relief in Court.” An insurer “may end the tolling period by explicitly indicating that the insurer is denying all liability in excess of what was paid.”
The Court found that Citizens EOR did not provide the explicit and unequivocal expression of finality sufficient to constitute a formal denial. The EOR merely stated the amounts allowed with little detail, and a general request for further information. It did not explicitly state that the insurer was denying liability for further payments. Therefore tolling applied to the charges and they were not time barred.
An EOR can still be used to formally deny benefits. However, this decision makes it clear that a written denial, through an EOR or otherwise, must contain explicit language that a claim is denied, or if partially paid, that any further reimbursement is denied. Boilerplate disclaimer language will not be sufficient to end tolling under MCL 500.3145(3).
Spine Specialist of Michigan
In Spine Specialist, Plaintiff alleged that it provided treatment to Jeremy Wood arising out of a January 21, 2017 motor vehicle accident. Plaintiff provided treatment starting on February 2, 2019, and ending on August 12, 2020. Defendant refused to pay the Plaintiff, and they filed their complaint against Defendant Memberselect Insurance on September 21, 2020.
Memberselect filed a motion for summary disposition pursuant to the one-year-back rule as to all dates of service. The trial court ruled that all dates of services from February 2, 2019 June 11, 2019 were dismissed pursuant to the pre-reform one-year-back rule and that tolling provisions did not apply to those claims. The trial court denied the motion as to the dates of service after June 11, 2019. Plaintiff appealed the ruling regarding all dates of service prior to June 11, 2019.
Plaintiff argued that the tolling provisions should apply because the claims were not denied until after June 11, 2019 and still viable. The Court disagreed and affirmed the trial court’s ruling, refusing to apply the new tolling provisions to the entire claim.
The Court noted that whether a statute applies depends upon the date on which the cause of action arose. Citing the ruling in Bronson Health Care Group v USAA Casualty Ins Co, the Court opined that each claim accrued when each expense was incurred and that was when Woods received that treatment. Simply put, when the treatment was rendered, the claims accrued.
Further, the Court cited the recent Andary v. USAA decision, which found that, unless the Legislature specifically states that an amended statute is meant to be applied retroactively, then it is presumed to be applied prospectively, only. Accordingly, the Court refused to apply tolling to dates of services prior to June 11, 2019.
Implications of Both Published Cases
The opposing rulings will cause discourse among the trial courts that are meant to use the Court of Appeals rulings as guidance and precedent.
Although Encompass relies on George v Allstate, but George relies on Johnson v Pastoriza. Both the George and Johnson decisions came to the same conclusion that amendments cannot be applied retroactivity if not explicitly expressed by the Legislature.
The Encompass Court appears to ignore this reasoning and applied the effect of the George decision in applying tolling retroactively because of the date of the filing of this action. The actual reasoning of the George decision would suggest a different outcome, one consistent with Spine Specialists.
Despite the scant analysis of the issue by the Court in Encompass, some trial courts may be persuaded to rely on that decision. However, the weight of the multiple rulings against retroactive application will continue to strengthen Spine Specialist, and creating a strong argument that tolling should be applied to dates of treatment and expense accrued only after June 11, 2019. This position may be strengthened depending on the Michigan Supreme Court’s ruling on the Andary case, coming in 2023. However, until the issue is resolved definitively, we can expect claimants to argue that pre-reform charges should be subject to tolling.
 George v. Allstate Ins. Co., 329 Mich. App. 448, 451 (2019)
 Bronson Health Care Grp. v. United Statesa Cas. Ins. Co., 335 Mich. App. 25, (Mich. Ct. App. 2020)
 Andary v. USAA Cas. Ins. Co., SC 164772, (Mich. Sep. 29, 2022)
 See also Buhl v. City of Oak Park, 507 Mich. 236, (Mich. 2021)