Encompass Healthcare v. Citizens Ins. Co.

998 N.W.2d 751

344 Mich.App. 248

ENCOMPASS HEALTHCARE, PLLC, Plaintiff-Appellant,

v.CITIZENS INSURANCE COMPANY, Defendant-Appellee.

No. 357225

Court of Appeals of Michigan.

Submitted November 10, 2022, at Detroit.

Decided November 17, 2022, at 9:05 a.m.

Oakland Circuit Court, LC No. 2019-177749-CZ, Nanci J. Grant, J.

Vandeveer Garzia, PC (by Michelle L. R. Everett, Dearborn, and Donald C. Brownell, Troy) for defendant.

Ihrie O’Brien, Saint Clair Shores (by Harold A. Perakis) for plaintiff.

Before; Gleicher, C.J., and Servitto and Yates, JJ.

Gleicher, C.J.

₂₅₀The goals of Michigan’s no-fault insurance system include promptly compensating victims of motor vehicle accidents for covered losses and reducing the need for litigation. When an insurer denies a claim, the one-year-back rule serves another goal: encouraging claimants to file suit when the evidence is fresh by limiting recovery for improperly denied claims to losses incurred during the year before the action is filed.

But when is a claim "denied," thereby triggering the one-year-back rule’s damage-limiting provision?

₂₅₁For decades, our courts equitably tolled the one-year damage-limiting provision from the date that the loss was reported until the date the insurer formally and explicitly denied liability. Our Supreme Court eradicated this judicial tolling of the one-year-back rule in Devillers v Auto Club Inn. Ass’n, 473 Mich. 562, 702 N.W.2d 539 (2005), holding that because the statute did not include a tolling mechanism, none could be engrafted. In 2019, however, the Legislature amended the no-fault act by adding a tolling provision. Now, the one-year-back period is tolled until the date of the insurer’s formal denial of a claim. Applying the new statutory language here, we hold that because Citizens Insurance Company never formally denied Encompass Healthcare PLLC’s requests for reimbursement, the application of the one-year-back rule remained tolled until this lawsuit was filed. We reverse the circuit court’s contrary finding and remand for further proceedings.

I. BACKGROUND

The facts are undisputed. In December 2017, Ronald Mannor was injured in a motor vehicle accident and required surgery to repair a cervical fracture. Mannor later developed a pressure sore. Encompass provided treatment for the pressure sore from June 2018 to October 2018. Encompass sought reimbursement from Citizens of $921,828.44, but Citizens paid only $177,655.25. In May 2019, Mannor assigned his rights to benefits and recovery to Encompass.

On November 4, 2019, Encompass filed a complaint in the Oakland Circuit Court, asserting breach of contract and seeking declaratory relief against Citizens₂₅₂ for unpaid no-fault benefits.¹ Encompass alleged that Citizens improperly refused to reimburse it for the reasonably necessary services it provided to Mannor. Encompass requested a declaration concerning Citizens’ obligation to pay and a judgment for the unpaid reimbursement claims, plus costs, interest, and fees.

Following initial discovery, Citizens moved for summary disposition under MCL 2.116(C)(7), (8), and (10). Citizens contended that the one-year-back rule of MCL 500.3145(2) abrogated any further obligation of payment because Encompass’s November 4, 2019 complaint was filed more than a year after the losses at issue were incurred, as Mannor’s treatment ended in October 2018. Citizens requested that the court grant its motion and either (1) dismiss Encompass’s complaint in its entirety with prejudice or (2) dismiss Encompass’s complaint with respect to any expenses incurred before November 4, 2018 (which would account for all of Encompass’s expenses).

Encompass conceded that its expenses were incurred more than a year before it initiated this action but argued that reimbursement was nevertheless warranted because of the recently adopted tolling provision within MCL 500.3145(3). According to Encompass, because Citizens had never formally denied its reimbursement claims, the one-year-back rule remained tolled and Encompass was not required to preserve its claims with an earlier complaint.

₂₅₃Citizens countered that MCL 500.3145(2) requires strict compliance and is not subject to tolling under MCL 500.3145(3), at least not under the circumstances here.

The circuit court partially granted Citizens’ motion as follows:

Pursuant to MCL 500.3145(2), "the claimant may not recover benefits for any portion of the loss incurred more than 1 year before the date on which the action was commenced," [Encompass’s] Complaint was filed on November 4, 2019. Therefore, [Citizens] argues that pursuant to the "one-year-back-rule," as set forth in MCL 500, 3145(2), supra, any portion of the loss incurred by [Encompass] before November 4, 2018 is not recoverable.

However, the Court finds that MCL 500.3145(3) acts to toll the limitations period in [MCL] 500.3145(2) for any losses which were not formally denied by [Citizens] prior to November 4, 2018. The Court finds that [Citizens’] "Explanations of Review" [EORs] serve as formal denials within the purview of MCL 500.3145(3) because [Citizens] denied portions of [Encompass’s] claims. TheCourt finds that summary disposition is appropriate regarding all claims that were denied via an [EOR] prior to November 4, 2018. However, summary disposition is inappropriate as to any claims that were denied via an [EOR] dated on or after November 4, 2018.

The court later clarified this ruling at Encompass’s request, stating:

The Court’s May 14, 2020 Opinion & Order was clear. All claims which were denied by an [EOR] prior to November 4, 2018 are barred by the limitations period in MCL 500.3145(2). The Court’s ruling made it clear that an [EOR] serves as a formal denial within the purview of MCL 500.3145(3). Therefore, the limitations period in MCL 500.3145(2) began [for each reimbursement claim] upon the issuance of the first [EOR] denying the claim in whole or in part.

₂₅₄On April 30, 2021, the circuit court entered a stipulated order dismissing Encompass’s complaint without prejudice so that Encompass could file the instant appeal challenging the court’s May 14, 2020 and January 8, 2021 orders.

II. STANDARD OF REVIEW

[1] We review de novo a trial court’s ruling on a motion for summary disposition. El-Khalil v Oakwood Healthcare, Inc, 504 Mich. 152, 159, 934 N.W.2d 665 (2019). We also review issues of statutory interpretation de novo. People v Zajaczkawski, 493 Mich. 6, 12, 825 N.W.2d 554 (2012).

[2–6] Under MCR 2.116(C)(7), summary disposition is warranted when a claim is barred by the applicable statute of limitations. Al-Shimmari v Detroit Med Ctr, 477 Mich 280, 288, 731 NW2d 29 (2007). Additional documentary evidence beyond the pleadings may be submitted by the parties but is not required; if provided, such evidence must be considered. Maiden v Rozwood, 461 Mich. 109, 119, 597 N.W.2d 817 (1999). Whether a statute of limitations applies in a case is a question of law we review de novo. Femdale v Florence Cement Co, 269 Mich App 452, 457, 712 N.W.2d 522 (2006). In contrast, motions under MCR 2.116(C)(8) "test[] the legal sufficiency of a claim based on the factual allegations in the complaint." El-Khalil, 504 Mich. at 159, 934 N.W.2d 665. "When considering such a motion, a trial court must accept all factual allegations as true, deciding the motion on the pleadings alone."² Id. at 160, 934 N.W.2d 665.

₂₅₅MCR 2.116(0(10) provides that summary disposition is appropriate when, "[e]xcept as to the amount of damages, there is no genuine issue as to any material fact, and the moving party is entitled to judgment or partial judgment as a matter of law." A motion brought under MCR 2.116(0(10) tests the factual support for a party’s action. Pioneer State Mut Ins Co v Dells, 301 Mich App 368, 377, 836 NW2d 257 (2013).

III. ANALYSIS

[7] "The primary goal of statutory interpretation is to identify and give effect to the intent of the Legislature. We first look to the specific language of the statute in determining the intent of the Legislature." Port Sheldon Beach Ass’n v Dep’t of Environmental Quality, 318 Mich App 300, 308, 896 N.W.2d 496 (2016) (citation omitted). "We accord to every word or phrase of a statute its plain and ordinary meaning, unless a term has a special, technical meaning or is defined in the statute."

Guardian Environmental Servs, Inc v Bureau of Constr Codes & Fire Safety, 279 Mich App 1, 6, 755 NW2d 556 (2008). Relevant here, Michigan courts have recognized that statutory amendments directed at a particular judicial decision can be remedial in nature by "reinstat[ing] the state of the law as it existed prior to the judicial decision[.]" Buhl v Oak Park, 329 Mich App 486, 505-506, 942 N.W.2d 667 (2019), rev’d on other grounds, 507 Mich. 236, 968 N.W.2d 348 (2021).

Encompass contends that the circuit court committed reversible error by partially granting Citizens’ motion for summary disposition regarding any reimbursement claims that were "denied" by its provision of EORs to Encompass before November 4, 2018. Specifically, Encompass argues that the court erroneously ₂₅₆determined that the EORs constituted "formal denial[s]" as contemplated under MCL 500.3145(3).

Encompass particularly faults the circuit court for "effectively reading into the amended statute language that did not exist and ignoring longstanding case law that clearly explained an insurance company’s obligation when formally denying a claim." Relying on various cases, Encompass asserts that "formal denial" is a legal term of art which demands that such expressions be explicit and unequivocal and that these requirements were lacking in the EORs (or at least that there was a question of fact whether these requirements were satisfied by the EORs). Encompass also notes that Citizens’ practices in responding to the claims allowed for reevaluation of particular expenses even after the initially stated "Approved Date" in each EOR.

Encompass argues further that because Citizens never formally denied...