Mt. Carmel Mercy Hosp. v. Allstate Ins. Co., Docket No. 119978

• Decision Date: 06 July 1992
• Docket Number: Docket No. 119978
• Citation: 194 Mich.App. 580,487 N.W.2d 849
• Parties: MT. CARMEL MERCY HOSPITAL, Plaintiff-Appellant, Cross-Appellee, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee, and State Farm Mutual Automobile Insurance Company and Hani Nafso, Defendants, and Hanne Nafso and Naima Nafso, Defendants-Appellees, Cross-Appellants.
• Court: Court of Appeal of Michigan — District of US

Page 849

487 N.W.2d 849

194 Mich.App. 580

MT. CARMEL MERCY HOSPITAL, Plaintiff-Appellant Cross-Appellee, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee and State Farm Mutual Automobile Insurance Company and Hani Nafso, Defendants and Hanne Nafso and Naima Nafso, Defendants-Appellees Cross-Appellants.

Docket No. 119978.

Court of Appeals of Michigan.

Submitted Jan. 9, 1992, at Detroit.

Decided July 6, 1992, at 9:25 a.m.

Released For Publication Aug. 28, 1992.

Warren M. Heiter, Birmingham, for Mt. Carmel Mercy Hosp.

Mitchell & Leon by Christina B. Bailey, Detroit (Cheatham & Acker, P.C. by James G. Gross and Mary T. Nemeth, West Bloomfield, of counsel), for Allstate Ins. Co.

Robert E. Berg, Jr., Grosse Pointe Woods, for Hanne Nafso and Naima Nafso.

Before MICHAEL J. KELLY, P.J., and JANSEN and LESINSKI, ^* JJ.

LESINSKI, Judge.

Plaintiff Mt. Carmel Mercy Hospital and defendants Hanne and Naima Nafso appeal as of right two orders of the Oakland Circuit Court granting summary disposition in favor of defendant-appellee Allstate Insurance Company pursuant to MCR 2.116(C)(10) in an action brought to collect no-fault personal injury benefits. At issue is whether the one-year statute of limitations applicable to claims for personal injury protection (PIP) benefits bars Mt. Carmel, as Naima Nafso's assignee, from collecting from Allstate its costs of treating her. We reverse the trial court's grant of summary disposition for Allstate.

This dispute centers on nonpayment for medical services rendered by Mt. Carmel to Naima Nafso after she was injured in an automobile accident that occurred in August 1986. Between August 17, 1986, and December 5, 1986, Mt. Carmel rendered care, accommodation, and services to Naima, for which it sought a total of $64,160.16.

Allstate insured Hani Nafso, son of defendants Nafso, at the time of the accident. Hani Nafso was driving the automobile in which his mother, Naima, was riding when she was injured. Hani Nafso did not reside in the same household as Naima. Naima Nafso filed an application for no-fault benefits with Allstate under Hani's no-fault automobile insurance policy on November 15, 1987. Naima assigned her insurance claim to Mt. Carmel in return for the services rendered. Pursuant to the assignment, Mt. Carmel submitted a reimbursement claim for $64,160.16 to Allstate.

Gloria Lewis, a claims adjuster for Allstate, handled the claims. On October 21, 1986, Lewis spoke with Amer Nafso, another son of the Nafsos, for the purpose of determining whether there were any insured motorists living in Naima's household. Lewis characterized Amer's answer as "vague," and she thus contacted a "commercial lookup" approximately two weeks later to determine the existence of insureds in Naima's household. Lewis was informed that Amer's address was 19214 Bauman, Detroit, which is also Naima's residence. Having discovered the existence of another insured residing in Naima's household, specifically Amer, who was insured by State Farm, Lewis and Allstate allegedly informed the Nafsos' attorney that Allstate was not obligated to pay Naima's PIP benefits.

A person injured in an automobile accident is entitled to PIP benefits from that person's own policy if one exists, from the policy of a spouse, or from the policy of a relative if domiciled in the same household. See M.C.L. Sec. 500.3114(1); M.S.A. Sec. 24.13114(1). Lewis sent a letter to this effect to Naima Nafso on February 24, 1987. In her affidavit, Lewis also stated that she denied Mt. Carmel's request for authorization for Naima's hospitalization over the telephone and that she referred Mt. Carmel's employee to the Nafsos' attorney on April 6, 1987.

Apparently, Mt. Carmel assigned its claim against Allstate to World Credit, Inc. The record contains a letter dated November 16, 1987, from Lewis referring World Credit back to the Nafsos' attorney on the basis that Allstate would not pay the claims until it received notice of payment or denial of benefits by Union Banker pursuant to a coordinated benefits clause in its policy with Hani. The letter also informed World Credit that Allstate had already informed the Nafsos' attorney that Naima's bills must be forwarded to State Farm for payment under Amer's policy.

On August 24, 1988, Mt. Carmel filed this lawsuit, seeking payment of its bill from Allstate, State Farm, and the Nafsos. State Farm was dismissed from the proceedings pursuant to court order. Subsequently, Allstate brought a motion for summary disposition on the ground that Mt. Carmel and the Nafsos failed to file a complaint within one year of Allstate's denial of coverage for Naima's PIP claim. The trial court granted Allstate's motion. In a related order, the trial court granted Mt. Carmel's motion for summary disposition, establishing the liability of the Nafsos and dismissing the case. Mt. Carmel appeals the grant of summary disposition for Allstate and the final dismissal of the case. The Nafsos cross appeal on the same grounds, seeking an order obligating Allstate to pay Mt. Carmel's bill.

In its opinion and order filed on July 3, 1989, the trial court provided the following reasons for granting Allstate's motion for summary disposition:

2. A letter from Allstate to counsel for the Nafsos, dated February 24, 1987, refers to a conversation between those parties and further gives written notice that State Farm insures Akram Najir and Amer Nafso.

3. The same letter further gives written notice that State Farm is the proper party with whom a PIP claim for the injured party, Naima, should be filed.

4. While the letter does not specifically indicate a denial of claim, the Court finds, based on counsel's presumed expertise in the field of No-Fault Insurance, that the letter did constitute a sufficient denial.

5. Finally, it would appear that as the statute of limitations was no longer tolled as of the date of Allstate's letter, the statute expired prior to the filing of the complaint and recovery is barred.

Mt. Carmel and the Nafsos contend that they were never properly informed of Allstate's purported denial of Naima's claim. According to them, Allstate's letter dated February 24, 1987, was not a formal denial. In the alternative, Mt. Carmel and the Nafsos argue that the purported denial was ambiguous and, therefore, the question whether they understood the letter to be a denial was one of fact that should survive a motion for summary disposition. Finally, they assert that Allstate should be estopped from denying coverage because it acknowledged that it would process the claim before the statute of limitations period ran out.

A trial court presented with a motion for summary disposition under MCR 2.116(C)(10) must give the benefit of reasonable doubt to the nonmovant and must determine whether a record might be developed that would leave open an issue upon which reasonable minds could differ. Arbelius v. Poletti, 188 Mich.App. 14, 18, 469 N.W.2d 436 (1991). All inferences are to be drawn in favor of the nonmovant. Id. Before summary disposition may be granted, the court must be satisfied that it is impossible for the claim asserted to be supported by evidence at trial. Id.

The applicable statute of limitations for PIP claims is found at M.C.L. Sec. 500.3145(1); M.S.A. Sec. 24.13145(1). It provides:

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 .... [Emphasis added.]

It is undisputed that Naima gave Allstate notice of her claim within one year of the accident. It is also undisputed that the period of limitation was tolled by the filing of Naima's claim. See Lewis v. Detroit Automobile Inter-Ins. Exchange, 426 Mich. 93, 101-103, 393 N.W.2d 167 (1986) (notification of a claim for PIP benefits within the statutory period of one year tolls the running of the period of limitation until such time as the insurance company issues a formal denial); Johnson v. State Farm Mutual Auto Ins. Co., 183 Mich.App. 752, 765, 455 N.W.2d 420 (1990). Rather, the parties dispute whether Allstate "formally" denied coverage for Naima's PIP claim, which would cause the period of limitation to begin running again.

The one-year-back provision found in M.C.L. Sec. 500.3145(1); M.S.A. Sec. 24.13145(1) is tolled for any period after notice of the claim is given to the insurance company but before a formal denial of the claim is issued. See Lewis, supra; Johnson, supra. In this case, Naima incurred expenses related to her injury between August and November 1986. She provided notice to Allstate on November 15, 1986. Therefore, the one-year period of limitation was tolled.

On the other hand, Allstate sent a letter to Naima's attorney on February 24, 1987, in which it allegedly denied Naima's PIP claim. Mt. Carmel, the assignee of Naima's PIP claim, filed this action on August 24, 1988. If Allstate's letter of February 24, 1987, was a formal denial of coverage as Allstate alleges, then the one-year-back provision of M.C.L. Sec. 500.3145(1); M.S.A. Sec. 24.13145(1) has not been satisfied and summary disposition was appropriate.

Resolution of this controversy depends on whether the contents of Allstate's February 24, 1987, letter constitutes a "formal" denial of Naima's PIP claim. The letter provides as...