STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6016

December 1, 1981

MOTOR VEHICLE INSURANCE:

No fault insurance--authority of Assigned Claims Facility to enter into repayment agreement with owner or registrant of uninsured motor vehicle

No fault insurance--computation of benefits for injured person

No fault insurance--litigation costs of insurers

MOTOR VEHICLES:

Suspension or revocation of operator's license and registration of owner or registrant of uninsured motor vehicle

WORDS AND PHRASES:

'Loss adjustment costs'

Maximum monthly benefit allowance for work loss of an injured person and the daily allowance for expenses incurred by such person in obtaining replacement services as the result of the negligence of an uninsured motor vehicle operator are to be computed separately under the no-fault automobile insurance act.

The Assigned Claims Facility may pay benefits for an injury, even though the claim was filed more than one year after the date of the accident, provided that notice of the injury has been filed within the one-year period or that payment of benefits has been received.

The statutory term 'loss adjustment cost incurred' by an insurer includes the costs incurred by an insurer in litigating a suit against the uninsured motorist.

Failure of the owner or registrant of an uninsured motor vehicle to make payment of a judgment within 30 days after its entry may result in suspension or revocation, without further hearing, of the license and registration of such owner or registrant.

The Assigned Claims Facility is without authority to enter into a repayment agreement with the uninsured motorist owner or registrant.

A nonresident passenger in an uninsured motor vehicle registered in this State and a nonresident pedestrian involved, respectively, in an accident within this state with an uninsured motor vehicle registered in this state may seek to recover benefits under the no-fault automobile insurance act.

Honorable Richard H. Austin

Secretary of State

Treasury Building

Lansing, Michigan

You have requested my opinion on several questions concerning the administration of the Assigned Claims Facility under the no-fault automobile insurance act, 1956 PA 218, ch 31, Sec. 3101 et seq, as added by 1972 PA 294; MCLA 500.3101 et seq; MSA 24.13101 et seq. Your questions will be answered seriatim.

1956 PA 218, ch 31, supra, Sec. 3107, relates to wage loss and expenses incurred by an injured person and in part, provides:

Your question is answered by the decision of the Michigan Court of Appeals in Pries v Travelers Insurance Co, 86 Mich App 221; 272 NW2d 247 (1978), aff'd without opinion, 408 Mich 870; 289 NW2d 717 (1980), where the defendant insurer attempted to include the $20 per day benefit for lost services within the maximum payment for work loss. The Court of Appeals denied the insurer's attempt for three reasons. First, the word 'and' appearing before the word 'expenses' in 1956 PA 218, ch 31, Sec. 3107, subsection (b), supra, relates back to the phrase 'benefits payable' rather than 'work loss.' Second, the sentence setting forth the $1,000 limit for work loss makes no mention of replacement services, whereas a $20 limit is set forth in the sentence concerned with replacement services. Third, the Supreme Court's opinion in Shavers v Attorney General, 402 Mich 554, 620; 267 NW2d 72 (1977), reh den, 403 Mich 958 (1978), specifically holds that personal injury protection insurance under the act provides for separate benefits payable for work loss and for replacement services, each within its own limit.

It is, therefore, my opinion that the maximum monthly benefit allowance ($1,000) for 'work loss' under 1956 PA 218, ch 31, Sec. 3107, subsection (b), supra, does not include the daily allowance ($20) for expenses incurred in obtaining replacement services and the daily benefit for lost services must be considered separately.

1956 PA 218, ch 31, supra, Sec. 3174, mandates that notice of claim through an assigned claims plan shall be given to the Assigned Claims Facility 'within the time that would have been allowed for filing an action for personal protection benefits if identifiable coverage applicable to the claim had been in effect.'

To determine the time within which notice of claim must be given to the facility, reference to 1956 PA 218, ch 31, supra, Sec. 3145(1), which relates to claims against insurers where an applicable policy exists, is required. This subsection provides:

Since a person claiming, through an assigned claims plan, has as much time to notify the facility of his claim as he would have had to file an action for benefits if applicable coverage had been in effect, 1956 PA 218, Sec. 3174, supra, the time limitations created by 1956 PA 218, Sec. 3145(1), supra, on actions against insurers will also apply to the time allowed for filing notice of claims with the Assigned Claims Facility.

The general time limitation on commencement of an action against an insurer under 1956 PA 218, ch 31, supra, is one year from the date of the accident causing the injury. Davis v Farmers Insurance Group, 86 Mich App 45; 272 NW2d 334 (1978), lv den, 406 Mich 868 (1979); 1956 PA 218, ch 31, Sec. 3145(1), supra.

A different time limitation exists, however, as provided by the Legislature in 1956 PA 218, Sec. 3145(1), supra, if statutory notice of injury has been given to an insurer or if the insurer has paid benefits for the injury. The length of time allowed for filing an action against the insurer where notice of injury has been given or where benefits for the injury have been received is presently a subject of disagreement within the Michigan Court of Appeals.

In Richards v American Fellowship Mutual Insurance Co, 84 Mich App 629; 270 NW2d 670 (1978), lv den, 406 Mich 862 (1979), a panel of the Court of Appeals construed 1956 PA 218, ch 31, Sec. 3145(1), supra, as permitting the insured one year after incurring a particular expense in which to bring an action against the insurer for payment of that expense item, if timely notice of injury was given or payment of benefits was received from the insurer for the injuries. The issue confronting the panel of the court was whether the Legislature intended to preclude the insured's recovery of expenses incurred more than one year before the date on which the action was commenced when the insurer had taken no action to inform the insured that his claim had been denied until after the period had almost run. The court regarded the language of 1956 PA 218, ch 31, Sec. 3145(1), supra, as unclear, thereby compelling a determination of the intended meaning in light of the general purpose of the act.

Citing Shavers v Attorney General, supra, the court determined the purpose of 1956 PA 218, ch 31, supra, to be that persons injured in automobile accidents be promptly and adequately compensated for their losses arising out of the accident. To preclude recovery of expenses due to insurer delay in denying the claim would run counter to the intention and purpose of the Legislature. Thus, 1956 PA 218, ch 31, Sec. 3145(1), supra, implicitly provides that the running of the one-year statute of limitation for bringing an action for the recovery of expenses is tolled from the date the insured gives notice of the particular loss to the insurer until a formal denial of liability is received.

A different panel of the Court of Appeals found the reasoning of Richards unpersuasive. The court in Aldrich v Auto-Owners Insurance Co, 106 Mich App 83; 307 NW2d 736 (1981), viewed the statutory language of 1956 PA 218, ch 31, Sec. 3145(1), supra, as clear and unambiguous, requiring a literal reading. A claimant, the court held, is allowed exactly one year after incurring a particular expense or loss in which to bring an action against the insurer for payment of that expense or loss, without regard to insurer delay in processing a claim and with no possibility of tolling the running of that one-year limitation. In support of its literal reading of 1956 PA 218, ch 31, Sec. 3145(1), supra, the court recognized the purpose of the section as being 'to encourage claimants to commence their actions in a timely fashion.' Aldrich v Auto-Owners Insurance Co, supra, 106 Mich App 83, 87; 307 NW2d 736, 739, relying upon Burns v Auto-Owners Insurance Co, 88 Mich App 663, 666; 279 NW2d 43, 44 (1979).

To determine the correct time limitation on the commencement of an action by a claimant against an insurer where notice of injury has been given or payment of benefits has been received, it must be resolved whether 1956 PA 218, ch 31, Sec. 3145(1), supra, is plain and unambiguous, thereby requiring a literal reading. Metropolitan Council No 23, AFSCME v Oakland County Prosecutor, 409 Mich 299, 318; 294 NW2d 578 (1980), provides guidance in assessing the clarity of a statute:

When read in reference to 1972 PA 294 as a whole, the amendatory act creating 1956 PA 218, ch 31, supra, and the purpose of that act as cited in Shavers, supra, the meaning of 1956 PA 218, ch 31, Sec. 3145(1), supra, is not entirely clear.

A statute should be construed to give effect to the intention of the Legislature and the general purpose of the act taken as a whole. Metropolitan Council No 23, supra, 319; Ballinger v Smith, 328 Mich 23; 43 NW2d 49 (1950). The holding by the panel of the Court of Appeals in Richards does this. In interpreting 1956 PA 218, ch 31, Sec. 3145(1), supra, as containing a tolling provision, the court gave effect to the purpose of the act as a whole.

While adopting a construction consistent with the purpose of the Act, the Richards court did not compromise the operation of 1956 PA 218, ch 31, Sec. 3145(1), supra, itself. The claimant is still prevented from bringing stale claims against the insurer. Yet the insurer, the primary beneficiary of the reasonable limitation contained in 1956 PA 218, ch 31, Sec. 3145(1), supra, is subjected to possible litigation beyond one year from the date the expense is incurred, for a period equal to the time during which it has the undenied claim in its possession. If the insurer acts expeditiously, the additional period will be minimal. The one-year limitation will be substantially increased only if the insurer is dilatory.

Thus, under 1956 PA 218, ch 31, Sec. 3145(1), supra, a claimant may bring an action against an insurer within one year from the date of accident, unless notice of injury has been given to the insurer or payment of benefits for the injury has been made by the insurer. If notice of injury has been given or payment of benefits has been received, then a claimant has one year from the date that the particular expense was incurred in which to commence an action against the insurer, plus whatever period of delay incurred on the part of the insurer in denying liability.

Similarly, a person claiming under an assigned claims plan must give notice of claim to the Assigned Claims Facility within the time which would have been allowed for filing an action for personal protection benefits if identifiable coverage applicable to the claim had been in effect. 1956 PA 218, ch 31, Sec. 3175, supra.

In answer to your second question, it is my opinion that a person claiming under an assigned claims plan must file notice of claim within one year from the date of accident unless he or she has filed a timely notice of injury with a private insurer or the facility or has received payment of benefits for the injury. It is further my opinion that if notice of injury has been given or payment of benefits received, then the person has one year from the date the claimed expense is incurred, plus the amount of time that an insurer or the facility has that particular claim in possession before giving notice of formal denial of liability in which to file a notice of claim. If the person files such notice of claim within the time limitations specified above, it is my further opinion that the Assigned Claims Facility must pay benefits for such claim, even though more than one year has elapsed from the date of injury.

In order to answer this question, we must first determine the meaning of the phrase 'loss adjustment cost.' The statute is silent on the meaning of the phrase 'loss adjustment cost,' but it is noted that the same or similar phrase appears twice in those sections of the no-fault automobile insurance act relating to the assigned claims facility. 1956 PA 218, ch 31, supra, Sec. 3175, provides:

The phrase also appears in 1956 PA 218, ch 31, supra, Sec. 3177, which reads, in part:

Elementary rules of statutory construction include:

(a) reaching and implementing the legislative intent, Northville Coach Line, Inc v Detroit, 379 Mich 317; 150 NW2d 772 (1967);

(b) applying rules of common sense, Bay Trust Co v Agricultural Life Ins Co, 279 Mich 248; 271 NW 749 (1937); and

(c) drawing inferences as gathered from the overall provisions of an act, Municipal Investors Ass'n v Birmingham, 298 Mich 314; 299 NW 90 (1941), aff'd, 316 US 153; 62 S Ct 975; 86 L Ed 1341 (1942).

Thus, the Legislature intended that the costs of handling assigned claims be borne by all the insurance carriers doing business in this state in relation to the volume of automobile liability and personal protection insurance policies written by them.

1956 PA 218, ch 31, Sec. 3175, supra, also requires that the servicing insurers 'preserve and enforce rights to indemnity or reimbursement against third parties,' and the Legislature obviously intended that litigation should be commenced against the owner or registrant of an uninsured motor vehicle. Of course, additional costs are thus incurred by such servicing insurers. To reimburse such insurers only for actual costs plus other appropriate loss adjustment costs but not for the expense of such required litigation would impose an undue burden upon them. Hence, the legislative intent to assure a fair distribution of the entire cost would not be achieved. Such litigation costs are directly attributable to specific claims and as such may be considered allocable expenses.

It is my opinion, therefore, that the cost of such required litigation and additionally incurred expenses are to be included in the phrase 'loss adjustment costs.'

Your next two questions are related and will be answered together.

1956 PA 218, ch 31, supra, Sec. 3177, provides for suspension or revocation of registration and/or operator's license for failure of the owner or registrant of an uninsured motor vehicle to make payment of benefits paid and appropriate loss adjustment costs incurred by the insurer.

These questions may best be answered by consideration of the procedure for suspension under the Motor Vehicle Accident Claims Act, 1965 PA 198, as amended; MCLA 257.1101 et seq; MSA 9.2081 et seq, and the financial responsibility provisions of the Motor Vehicle Code, 1949 PA 300, as amended; MCLA 257.511 et seq; MSA 9.2211 et seq.

Preliminarily, it should be noted that the Administrative Procedures Act of 1969, by its express terms, has no application to suspensions of automobile registrations and operator's licenses. 1969 PA 306, Sec. 5; MCLA 24.205; MSA 3.560(105).

The Motor Vehicle Accident Claims Act, supra, has provisions for suspension of an operator's license with or without judgment. 1965 PA 198, Secs. 6 and 10, supra. In both instances, due process is satisfied because the operator of an uninsured motor vehicle has had an opportunity to contest liability.

In a case of suspension without judgment, a person injured by an uninsured may apply to the Secretary of State for payment from the motor vehicle accident claims fund. The Secretary of State is required by 1965 PA 198, Sec. 6(2), supra, to give notice of such application to the uninsured operator or owner of the uninsured motor vehicle. The uninsured person is then afforded twenty days to dispute liability by sending a written reply to the Secretary of State. If the uninsured person does not reply and the Secretary makes payment to a victim, the uninsured owner's or registrant's license and registration will be suspended until the uninsured fully reimburses the fund or enters into a repayment agreement to do so by installments. License suspension without judgment flowing from such an uninsured person's inaction after twenty (20) days notice satisfies due process. Hurt v Secretary of State, 42 Mich App 554; 202 NW2d 554 (1972).

Provision is also made in the Motor Vehicle Accident Claims Act, supra, for suspension after a judgment has been rendered against the operator or owner of the uninsured motor vehicle and paid by the Secretary of State. 1965 PA 198, Sec. 10, supra. Like any other litigant, such person has an opportunity to appear, answer, or otherwise defend the action. Hence, due process is afforded. Napuche v Liquor Control Commission, 336 Mich 398; 58 NW2d 118 (1953).

Whereas suspension may proceed either with or without judgment under the Motor Vehicle Accident Claims Act, 1956 PA 218, ch 31, supra, Sec. 3177, is not as explicit. In it, the Legislature has provided that an insurer, obligated to pay no fault benefits to the victim of an uninsured vehicle accident, 'may recover such benefits paid . . . from the owner or registrant of the uninsured motor vehicle or from his estate.' Failure of the owner or registrant to make payment within thirty days is a ground for suspension or revocation of his operator's license and registration.

1956 PA 218, ch 31, Sec. 3177, supra, does not specify any method for preserving or enforcing the right of a servicing insurer to recover the benefits paid from the owner or registrant of the uninsured vehicle. However, the language of 1956 PA 218, ch 31, Sec. 3177, supra, implies that the same method utilized by a typical creditor, i.e. a court judgment against the debtor must be obtained by a servicing insurer in order to enforce reimbursement. Therefore, 1956 PA 218, ch 31, Sec. 3177, supra, must be so read as to provide that a license and vehicle registration may be suspended or revoked for failure of such person to make payment within thirty days after judgment. Inasmuch as the rights to indemnity against the uninsured owner or registrant may be enforced only after a judgment is entered against the uninsured owner or registrant, such suspension or revocation may be based only upon his or her failure to pay that judgment.

If such uninsured owner or registrant fails to pay the judgment within thirty days, an abstract of the judgment may be obtained from the court having jurisdiction over the parties, whereupon the financial responsibility act, 1949 PA 300, supra, Sec. 512, requires the suspension of such operator's license and registration.

It is my opinion, therefore, that if the judgment has not been satisfied within thirty days, the Secretary of State is authorized under 1956 PA 218, ch 31, Sec. 3177, supra, to suspend both the operator's license and registration of such uninsured owner or registrant without further hearing.

The Motor Vehicle Accident Claims Act, 1965 PA 198, supra, Sec. 6, authorizes such a contractual obligation to be entered into with the Secretary of State. Unlike that act, however, no such provision is contained in 1956 PA 218, ch 31, Sec. 3177, supra. Moreover, the plan or facility is not a legal entity and, thus, is not capable of suing or being sued. It is, in effect, an adjunct operation of the Secretary of State.

It is my opinion, therefore, that absent any specific statutory authority, the Assigned Claims Facility may not enter into repayment agreements with the uninsured owner or registrant under 1956 PA 218, ch 31, Sec. 3177, supra.

Your last two questions are related and will be considered together.

Although the questions do not state the locale of the accident, it must be presumed that your inquiry is restricted to accidents occurring in the State of Michigan involving a nonresident passenger in an uninsured Michigan registered vehicle or a nonresident pedestrian.

1956 PA 218, ch 31, supra, Sec. 3113, excludes, inter alia, nonresidents who are occupants of a motor vehicle not registered in Michigan when the vehicle is not insured by an insurer that has filed a certificate in compliance with 1956 PA 218, ch 31, supra, Sec. 3163. It is noted in Section 3173 that the exclusions appearing in 1956 PA 218, ch 31, supra, Secs. 3105-3116, also apply to the assigned claims plan.

Since 1956 PA 218, ch 31, Sec. 3113, supra, specifically excludes only personal insurance benefits for injuries sustained by a nonresident occupant in a vehicle not registered in this state, a nonresident person injured while a passenger in a motor vehicle registered in this State or a pedestrian injured by an uninsured motor vehicle registered in this state are not excluded from personal protection insurance benefits. Courts may not read into a statute limitations which the Legislature has not included. Alexander v Employment Security Commission, 4 Mich App 378; 144 NW2d 850 (1966), lv den, 379 Mich 751 (1967); Ford Motor Co v Unemployment Compensation Commission, 316 Mich 468; 25 NW2d 586 (1947).

1956 PA 218, ch 31, Sec. 3101, supra, was adopted to provide personal protection insurance benefits to the named insured and certain other persons injured in or by a motor vehicle without regard to fault. The assigned claims plan was intended to provide no fault benefits to persons not otherwise required to have insurance.

A careful analysis of the statute fails to reveal a legislative intent to exclude the persons described in your last two questions. I am not unmindful that the Supreme Court, in Shavers v Attorney General, supra, was unable to make any determination with respect to nonresidents because of an inadequate trial record. Upon remand, that issue was not thereafter pursued. Whether such claimant should or should not qualify is a question of a policy for the Legislature.

It is my opinion, in answer to your last two questions, that a nonresident pedestrian and a nonresident occupant of a motor vehicle registered in this state, are not excluded from benefits under 1956 PA 218, ch 31, Sec. 3101, supra.

Frank J. Kelley

Attorney General