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.