One-Year Back Deadline? Not So Fast: Formal Denial Of Claims Required Before The Clock Starts Ticking.

On November 17, 2022, the Michigan Court of Appeals issued a decision in Encompass Healthcare, PLLC, v. Citizens Insurance Company, which clarified the tolling provision of the no-fault act and the timelines that medical providers have to file a lawsuit to recover their unpaid charges.

For nearly two decades it has been the law, under the no-fault act, that a medical provider must file a lawsuit within one-year of the outstanding date of service. This is known as the “One Year Back Rule.” However, in 2019 as part of the amendment to the no-fault act, the Legislature added a tolling provision to the act. Now, the one-year back deadline is tolled, or stopped, until the date of the no-fault insurer’s formal denial of a claim.  See https://millerjohnson.com/publication/no-faults-1-year-timing-rules-and-tolling/ for more detail.

The Encompass court has now reaffirmed these statutory principles and given providers guidance on “what constitutes a formal denial?” In the Encompass case the no-fault insurer issued multiple explanations of review (EOR) that did not contain any language which clearly stated the claim was denied. The court explained that a formal denial must be “explicit and direct.” If the denial is not, the tolling provision of the no-fault act remains in effect and the deadline to file a lawsuit is put on hold.

Although medical providers should not rely on the tolling provision to recover their charges, if a medical provider timely bills a no-fault insurer and the no-fault insurer fails to issue a formal denial that is explicit and direct, the one-year back deadline may be tolled.

If you have any questions regarding billing and denial, please contact Ryan Duffy or any of the attorneys in Miller Johnson’s Medical Recovery Group at mjmedrecovery.com.