LM Gen. Ins. Co. v. Hartford Ins. Co.

LM GENERAL INSURANCE COMPANY, Plaintiff-Appellant, v. HARTFORD INSURANCE COMPANY, Defendant, and TRUMBULL INSURANCE COMPANY, Defendant-Appellee.

No. 353697

Court of Appeals of Michigan

December 16, 2021

UNPUBLISHED

Wayne Circuit Court LC No. 19-006793-CZ

Before: Gleicher, P.J., and Cavanagh and Letica, JJ.

PER CURIAM.

This is the second chapter of an ongoing dispute between two insurance companies. The first chapter arose from a lawsuit brought by a claimant seeking payment of first-party no-fault benefits. The claimant identified two potential sources of no-fault coverage: LM General Insurance Company and the Hartford Insurance Company, known here as Trumbull Insurance Company. The claimant sued both insurance companies, and LM General paid the benefits under protest. The only dispute in that case was which of the two insurance companies was first in priority for payment.

Trumbull admitted liability after LM General filed a motion for summary disposition to which Trumbull did not respond. Trumbull then agreed to an order, and the case was dismissed. But Trumbull never reimbursed LM General.

LM General filed this lawsuit seeking reimbursement from Trumbull. The circuit court granted summary disposition to Trumbull based on the one-year-back rule, MCL 500.3145(1) which at the time provided, in relevant part, that a "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."

The one-year-back rule does not apply for two reasons. LM General is not a "claimant" under the no-fault act, and this is not an action seeking the "payment" of no-fault benefits. Further, the underlying claim brought by the claimant was timely under the one-year-back rule eliminating that defense even if the one-year-back rule does apply. We reverse and remand for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

Fectoria Hana sustained injuries in a 2016 car accident. Trumbull insured a vehicle owned by Hana's husband. Hana was a named insured on the policy for that vehicle, but her first name was misspelled as Victoria. And although she had retained her unmarried name, the policy identified her as having her husband's last name (Azir). When Trumbull refused to pay first-party no-fault benefits on her behalf, she sued Trumbull and LM General, which insured the car in which she was riding when the accident occurred. Meanwhile, LM General had stepped up and paid $210, 321.59 on Hana's behalf. According to information filed by Trumbull in the circuit court, LM General's last payment of first-party benefits was made in June 2019, and the first in September 2016.

The two insurance company defendants were able to resolve Hana's first-party no-fault action rather expeditiously. After the confusion about Hana's name was cleared up, LM General sought summary disposition, presumably relying on MCL 500.3114(1).^[1] On the day before the hearing, Trumbull's lawyer sent an email to counsel for LM General stating: "Regarding your MSD set for tomorrow afternoon, I have reviewed the issue and had discussions with the adjuster and we agree that we are in priority over Liberty. Therefore, to avoid you having to go to court and argue the motion, please send over an order for our review." An order was sent and approved, and the case was dismissed with prejudice. In retrospect, LM General should have demanded entry of a judgment. But LM General's lawyer probably assumed that Trumbull's counsel's word was good. Unfortunately, that turned out to have been a misplaced assumption.

Time went by (approximately six months) and Trumbull did not reimburse LM General for the $210, 321.59 in benefits that LM General had paid on Hana's behalf. LM General brought this action in May 2019, and as we have noted, the circuit court determined that under the one-year-back rule, LM General was out of luck. LM General now appeals that ruling.

II. ANALYSIS

This case involves statutory interpretation, so our review is de novo. Fuller v GEICO Indemnity Co, 309 Mich.App. 495, 498; 872 N.W.2d 504 (2015). In construing the statute at issue, we begin with the plain language. Pirgu v United Servs Auto Ass'n, 499 Mich. 269, 278; 884 N.W.2d 257 (2016).

There are several reasons that the one-year-back rule is inapplicable to this second chapter of the insurance companies' current quarrel.

The one-year-back rule, MCL 500.3145, "is not a statute of limitations, but a damages-limiting provision." Joseph v Auto Club Ins Ass'n, 491 Mich. 200, 212; 815 N.W.2d 412 (2012). At the time of the events underlying this suit, the statute provided:

(1)An action for recovery of personal protection insurance benefits payable under this chapter for accidental bodily injury may not be commenced later than 1 year after the date of the accident causing the injury unless written notice of injury as provided herein has been given to the insurer within 1 year after the accident or unless the insurer has previously made a payment of personal protection insurance benefits for the injury. If the notice has been given or a payment has been made, the action may be commenced at any time within 1 year after the most recent allowable expense, work loss or survivor's loss has been incurred. However, 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. The notice of injury required by this subsection may be given to the insurer or any of its authorized agents by a person claiming to be entitled to benefits therefor, or by someone in his behalf. The notice shall give the name and address of the claimant and indicate in ordinary language the name of the person injured and the time, place and nature of his injury.

(2)An action for recovery of property protection insurance benefits shall not be commenced later than 1 year after the accident. [MCL 500.3145, as enacted by 1972 PA 294 (emphasis added).^[2]

LM General is not a "claimant" as that term was used in § 3145(1). A "claimant" is someone who has a right to payment of PIP benefits from a no-fault insurer. Usually (but not always), the claimant is the insured. Under the circumstances presented in this case, LM General, an insurance company, is not a "claimant."

In Allstate Ins Co v State Farm Mut Auto Ins Co, 321 Mich.App. 543, 555; 909 N.W.2d 495 (2017), we noted that the no-fault act does not define the term "claimant." Injured people may be claimants, we observed, but whether medical providers could also qualify as "claimants" was cast in doubt by the Supreme Court's decision in Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 500 Mich. 191; 895 N.W.2d 490 (2017). Allstate, 321 Mich.App. at 555-556. We summarized:

Although a healthcare provider may request and receive payment from a no-fault insurer for services furnished to an injured person, MCL 500.3112; Covenant Med Ctr, 500 Mich. at 195, 208-209, that does not mean that the provider is a "claimant" entitled to receive no-fault benefits. Rather, it is the injured person who is the claimant that receives PIP benefits, in the form of the insurer paying the healthcare providers. [Id. at 558 (emphasis added).]

Allstate is analogous to the case before us. There, the claimant was a pedestrian struck by a car. Id. at 546. The Michigan Assigned Claims Plan (MACP) assigned Allstate to pay the injured claimant's no-fault benefits, and Allstate did so. Id. at 546-547. Allstate later learned that the driver responsible for the accident was insured by State Farm. Allstate sued State Farm to recoup the no-fault benefits it had paid on the claimant's behalf. Id. at 547. To avoid repaying Allstate, State Farm invoked a limitations provision pertaining to MACP claimants that is somewhat similar to MCL 500.3145(1). Allstate, 321 Mich.App. at 547-548. The MACP-related statute, MCL 500.3175(3), stated in part:" '[a]n action to enforce rights to indemnity or reimbursement against a third party shall not be commenced after the later of 2 years after the assignment of the claim to the insurer or 1 year after the date of the last payment to the claimant.'" Allstate, 321 Mich. Ap at 548.

This Court explained that MCL 500.3175(3) did not preclude Allstate from recovering against State Farm despite that Allstate named State Farm as a defendant more than two years after Allstate had been assigned the claim. The injured party was the claimant, we highlighted, "because she had a right to PIP benefits from [Allstate]." Allstate, 321 Mich.App. at 559. And since Allstate had made two payments on the claimant's behalf within one year of naming State Farm as a party defendant, we found that the payments satisfied the limitations period applicable to the MACP. Id. at 560-561.

Hana was the claimant in the 2017 action, and her claim for benefits was timely under the one-year-back rule. Because LM General is not a "claimant" under the no-fault act and made payments to Hana in a timely fashion Allstate counsels that the one-year-back rule does not apply, despite that some of LM General's timely payments to the claimant (Hana) were made more than a year before it was forced to file this suit.^[3] Trumbull resists this interpretation of the one-year-back rule, insisting that as Hana's "subrogee," LM General acquired only the same rights as Hana would have had. Hana could not have recovered no-fault benefits had she filed suit in 2019 when LM General did, Trumbull reasons, because more than a year had elapsed since her last loss was incurred.^[4] Whether LM General is actually Hana's "subrogee" is not entirely straightforward. A subrogee is "one who is substituted for another in having a right, duty, or claim." Harris v Auto Club Ins Ass'n, 494 Mich. 462, 472 n 29; ...