Devillers v. Auto Club Ins. Ass'n, Docket No. 126899. COA No. 7.

• Court: Supreme Court of Michigan
• Writing for the Court: YOUNG, J.
• Citation: 702 N.W.2d 539,473 Mich. 562
• Parties: Eva DEVILLERS, as Guardian and Conservator of Michael J. Devillers, Plaintiff-Appellee, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellant.
• Decision Date: 29 July 2005
• Docket Number: Docket No. 126899. COA No. 7.

702 N.W.2d 539
473 Mich. 562

Eva DEVILLERS, as Guardian and Conservator of Michael J. Devillers, Plaintiff-Appellee,
v.
AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellant

Docket No. 126899. COA No. 7.

Supreme Court of Michigan.

Argued April 12, 2005.

Decided July 29, 2005.

702 N.W.2d 541

Ihrie O'Brien (by Harold A. Perakis and Robert D. Ihrie), St. Clair Shores, MI, for the plaintiff

Gross, Nemeth & Silverman, P.L.C. (by James G. Gross), Detroit, MI, and Schoolmaster, Hom, Killeen, Siefer, Arene & Hoehn (by Gregory Van Tongeren), Mt. Clemens, MI, for the defendant.

Plunkett & Cooney, P.C. (by Mary Massaron Ross), Detroit, MI, for amici curiae the Insurance Institute of Michigan.

Sinas, Dramis, Brake, Boughton & McIntyre, P.C. (by George T. Sinas and Steven A. Hicks), Lansing, MI, for amici curiae the Coalition Protecting Auto No-Fault.

702 N.W.2d 542

YOUNG, J

In its bypass application for leave to appeal, defendant insurer asks that we overrule Lewis v. DAIIE¹ and apply as written the "one-year-back" limitation provided for in MCL 500.3145(1) for recovering no-fault personal protection insurance benefits. In Lewis, this Court adopted a judicial tolling doctrine under which the one-year statutory period is tolled from the time a specific claim for benefits is filed to the date the insurer formally denies liability. The trial court in this case relied on Lewis in rejecting defendant's assertion that plaintiff's claim was limited by the statutory one-year-back rule.

No member of this Court disputes that ? 3145(1) clearly and unambiguously states 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." Because the Lewis rule contravenes this plain statutory directive and ignores almost a century of contrary precedent, it is hereby overruled. Defendant is entitled to summary disposition to the extent that plaintiff seeks benefits for losses incurred more than one year prior to the date on which this action was commenced.

I. FACTS AND PROCEDURAL HISTORY

Michael Devillers was an insured under a policy of no-fault automobile insurance issued to his parents by defendant Auto Club Insurance Association. In September 2000, Michael, then age sixteen, was seriously injured in an automobile accident. His injuries included a traumatic brain injury. Michael's mother, plaintiff in this case, cared for him after he was discharged from the hospital.

Defendant paid plaintiff benefits for home health care for the period of October 20, 2000, to February 14, 2001. On February 14, 2001, defendant received a physician's prescription stating that Michael could function without close supervision. Defendant discontinued home health care payments effective February 15, 2001, based on the prescription indicating that Michael did not require supervision.² Plaintiff continued, without payment, to provide services for Michael, including driving him to and from school and the doctor's office. On October 7, 2002, defendant wrote a letter to plaintiff memorializing the February 2001 discontinuation of benefits.

Plaintiff filed a complaint on November 12, 2002, seeking payment for services allegedly rendered for which she did not receive payment. At issue in this case is the nine-month period beginning on February 16, 2001 (the day after defendant discontinued paying home health care benefits), and ending on November 12, 2001 (one year prior to the filing of the complaint). Defendant moved for partial summary disposition with respect to the benefits sought for that nine-month period, arguing that plaintiff was precluded from recovering benefits under the one-year-back rule of MCL 500.3145(1).

Plaintiff contested defendant's motion, arguing that, pursuant to Lewis, the one-year limitations period provided for in ? 3145(1) was tolled from February 15, 2001 (the date that defendant discontinued home health care benefits and attendant care benefits) to October 7, 2002 (the date of defendant's letter memorializing the termination).

702 N.W.2d 543

The trial court denied defendant's motion for partial summary disposition, citing Lewis. Defendant then filed an emergency application for leave to appeal in the Court of Appeals, arguing that the judicial tolling doctrine adopted in Lewis should be abrogated. Defendant additionally filed a bypass application for leave to appeal in this Court, noting that only this Court has the power to overrule Lewis.

The Court of Appeals denied leave to appeal. This Court entered an order staying trial, and we subsequently entered an order granting defendant's application for leave to appeal. Because we believe that the Lewis Court exceeded its constitutional authority by engrafting onto the statutory one-year period a judicial tolling mechanism, we overrule Lewis. Moreover, because this case does not fall into that limited category of decisions in which prospective application is justified, we give our decision retroactive effect for this and pending cases in which a Lewis challenge has been preserved. Accordingly, we remand to the trial court with directions to enter partial summary disposition in favor of defendant with respect to the benefits sought for the period from February 16 to November 12, 2001.

II. STANDARD OF REVIEW

Issues of statutory construction and other questions of law are subject to review de novo by this Court.³ Similarly, we review de novo a trial court's decision whether to grant summary disposition.⁴

III. ANALYSIS

A. BACKGROUND: JUDICIAL TOLLING AS APPLIED TO PRIVATE INSURANCE CONTRACTS AND STATUTORY FORM INSURANCE POLICIES

The germination of the idea that a judicial tolling doctrine should be applied to ? 3145(1) can be traced to this Court's 1976 decision in Tom Thomas Organization, Inc. v. Reliance Ins. Co.⁵ Rather than a statutory provision, Tom Thomas concerned a contractual provision in an inland marine policy of insurance limiting the time for bringing suit under the policy to twelve months "after discovery by the insured of the occurrence which gives rise to the claim." Noting that this Court had long enforced such policy limitations as written,⁶ the Tom Thomas Court nevertheless

702 N.W.2d 544

rejected this prevailing rule in favor of the judicial tolling approach taken by the New Jersey Supreme Court in Peloso v. Hartford Fire Ins. Co.,⁷ which held that the twelve-month limitation of actions provision in a statutory form insurance policy⁸ was tolled from the time an insured gave notice of loss until the insurer formally denied liability. The Peloso court, opining that statutory proof of loss and payment of claim provisions operated to shorten the time for bringing suit, stated that tolling the limitations period would ensure that the insured was "not penalized for the time consumed by the company while it pursues its contractual and statutory rights to have a proof of loss, call the insured in for examination, and consider what amount to pay ...."⁹

In adopting wholesale the approach of the Peloso court, this Court in Tom Thomas stated that doing so was necessary in order to reconcile the twelve-month policy limitation with other policy provisions that incorporated "[s]ubstantial delays"¹⁰ into the claim process:

The insured is generally allowed 60 to 90 days to file proof of loss. The insurer is generally given another 60 days to pay or settle the claim.

Notwithstanding diligence by both parties at all stages of the claim procedure, considerable time often elapses before the insured learns whether the insurer will pay. Even if the insured promptly reports a loss to his insurance agent, discussions concerning resolution of the claim may take weeks. Additional time often passes before the insurance company provides a form for filing proof of loss. Even then the insured does not know whether it will be necessary to start an action; under the policy in this case, payment is not required until 60 days after "acceptance" by the insurer of the proof of loss. No time limit for acceptance is imposed.¹¹

Thus, the Tom Thomas Court held that the insured's action, which was filed more than twelve months after the date of the loss, but less than twelve months after the insurer denied liability, was not barred by the twelve-month policy limitation.¹²

In In re Certified Question (Ford Motor Co. v. Lumbermens Mut. Cas. Co.),¹³ this Court extended the Peloso/Tom Thomas tolling doctrine to Michigan's statutory standard form fire insurance policy, former MCL 500.2832, which then provided that

[n]o suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss.

702 N.W.2d 545

Noting that ? 2832 contained proof-of-loss and claim payment provisions identical to those contained in the New Jersey statutory policy form at issue in Peloso,¹⁴ this Court held that

[l]ogic requires that we apply the same analysis when faced with Michigan's statutory policy provisions which are identical to the provisions reconciled in Peloso. By permitting the limitation period to be tolled, we reconcile the apparently identical incongruity between the statutory proof-of-loss and payment provisions, and the limitation clause.¹⁵

The Ford Court rejected the defendants' argument that our 1913 decision in Dahrooge v. Rochester German Ins. Co.¹⁶ was controlling and had expressly repudiated judicial revision of the terms of the statute. In Dahrooge, this Court had refused to engraft onto the terms of the statutory standard fire insurance policy then in effect¹⁷ a judicial tolling provision that would have tolled the commencement of the twelve-month limitations period until sixty days after the filing of the proof of loss:

Standard policies similar to that before us have been adopted, and their use made compulsory by

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