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Court of Appeals Determines that an Insurers Written Inquiry Requesting Verification of Active Policy Is Insufficient to Constitute “Written Notice” of Injury in Claim for Reimbursement

By Mark R. Richard

In Titan Ins. Co. v State Farm Mut. Auto. Ins. Co., No 321112 (Mich App August 11, 2015), the Michigan Court of Appeals reversed the lower court’s determination that State Farm’s claim for reimbursement was timely when it failed to provide requisite notice of the injury within one-year as required by MCL 500.3145(1). 

On June 30, 2010 Matthew Sterling suffered burns to his face while attempting to start an uninsured vehicle owned by Frank Ward.   Sterling denied owning an insured motor vehicle or residing in a household with an insured motor vehicle.  On August 23, 2010, Sterling’s claim for PIP benefits was assigned to Titan by the Michigan Assigned Claims Facility.  Titan paid benefits and continued to investigate whether a higher priority insurer existed. 

Titan subsequently discovered that State Farm issued a policy of insurance to Frank Ward covering another vehicle he owned.  In conducting its own investigation State Farm discovered that Affirmative Insurance Company had issued a policy to Matthew Sterling that was active on the date of loss.  After receiving a bill on from Oakwood Hospital on behalf of Sterling, Affirmative paid the bill in October 2011.  In March 2011, State Farm sent a letter to Affirmative that provided in relevant part: 

To whom it may concern:

Our records show that Matthew Sterling took out an automobile insurance policy with you with a policy term of 5/12/2010 through 11/12/2010 but it canceled around 7/12/2010.

We need verification that this automobile policy was active on the date of the accident 6/30/2010 as our records indicate he held an active automobile policy with you.

Please provide us the termination as to what date the policy terminated.


On August 23, 2012, Titan filed suit against State Farm seeking reimbursement for benefits paid as a result of the accident.  Subsequently, on March 27, 2013, State Farm filed a third-party complaint against Affirmative.  All parties filed motions for summary disposition with Affirmative arguing that State Farm’s cross-claim was barred by the one-year notice provision provided in MCL 500.3145(1). 

The trial court granted both Titan and State Farm summary disposition and denied Affirmative’s motion for summary by finding that the statute had not yet began to run since State Farm had not yet “incurred” any expenses. 

On appeal, the Court of Appeals noted that an insurer seeking reimbursement for No-Fault benefits that should have been paid by another insurer stands in the shoes of the claimant.  As such, the one-year statute of limitation contained in MCL 500.3145(1) applies to an insurer seeking reimbursement from another insurer unless written notice of the injury had been given to the other insurer within one-year of the accident or unless the insurer had previously made a payment.  In reversing the trial court, the Court of Appeals found that neither of the above exceptions and applied and granted summary disposition in favor of Affirmative. 

State Farm argued its March 2011, letter to Affirmative and Affirmative’s October 2011, medial payment triggered both exceptions.  The Court found State Farm’s letter to Affirmative fell “far short” of the requirements of providing notice contained in MCL 500.3145(1).  Notably the letter did not contain Sterling’s address and failed to provide any information regarding the place or nature of his injuries.  In relying on Jesperson v Auto Club Ins. Ass’n., 306 Mich App (2014)[1]the Court noted that because the October 2011, payment by Affirmative was made more than a year after the accident it did not relive State Farm of its duty to provide notice within of year of the accident. 

The Per Curiam opinion which was delivered by a panel of liberal leaning judges notes that MCL 500.3145 establishes “relatively short and inflexible time frames for seeking first-party benefits and for filing lawsuits.”  In reversing the trial court the panel held that the same strict standards must be applied to insurers seeking reimbursement. 

Practice Tip: If there is any indication that another insurer may be higher in priority, make sure to give that insurer written notice immediately to protect against one-year back defenses pursuant to MCL 500.3145.

[1] The Michigan Supreme Court is presently recently granted leave to appeal on the issue of whether a payment made more than one-year after the accident tolls the statute.  Jesperson v Auto Club Ins. Ass’n., 497 Mich 987 (2015).