Hill v Citizens Ins Co of America; (COA-UNP, 10/2/12; RB #3289)


Court of Appeals; Docket No. 304700; Unpublished; Unanimous; per curiam 
Judges Jansen, Borrello, and Beckering
Official Federal Court Citation:  Not Applicable; Link to Opinioncourthouse graphic


Coordination with Other Health and Accident Medical Insurance
Coordination with ERISA Plans
No Lien As to Noneconomic or Excess Economic Loss [§3116(4)]
ERISA Liens Regarding Auto Tort Claims

Employee Retirement Income Security Act (ERISA – 29 USC Section 1001, Et Seq.)


In this unanimous per curiam unpublished decision by Judges Jansen, Borrello, and Beckering, the Court of Appeals upheld the trial court ruling that Citizens Insurance Company, as plaintiff’s coordinated benefits policy insurer, was not obligated to reimburse it’s insured for medical expenses that were paid by his employee health plan provider under an ERISA health plan, which required that he re-pay medical expense benefits it had paid pursuant to the plan’s containing subrogation rights.

Plaintiff Hill was injured in a 2009 motor vehicle accident with an uninsured at-fault driver.  Plaintiff incurred numerous hospital and medical expenses which were paid pursuant to his employee health and welfare benefits (ERISA) plan.  The ERISA plan contains non-duplication of medical benefits provisions and a right of recovery (subrogation) in the event that benefits are paid under the plan.  The right of recovery under the plan entitled the health plan to recover over $375,000 in medical benefits paid on plaintiff’s behalf pursuant to subrogation rights that extended to plaintiff’s recovery from a third-party claim of damages arising out of the accident. 

Plaintiff’s Citizens policy was a coordinated benefits policy pursuant to MCL 500.3109a.  The Citizens no-fault policy provided that the ERISA plan was primary for purposes of priority of coverage.  Plaintiff received a recovery of $500,000 of uninsured motorist benefits from Citizens for his noneconomic damages.  The ERISA health provider sought recovery of its medical expense payments from plaintiff’s uninsured motorist benefits claim.  Plaintiff filed this action seeking an order from the court determining that Citizens was required to reimburse the plaintiff for any amount of the uninsured motorist benefits that plaintiff uses to reimburse his ERISA health benefit plan.  

The Court of Appeals held that under Dunn v Detroit Auto Ins Exchange, 254 Mich App 256 (2002), Citizens is not required to reimburse plaintiff for any amount of the uninsured/motorist benefits that plaintiff uses to reimburse his employer for its payment of medical benefits.  In Dunn, the Court of Appeals held that the plaintiff when electing to coordinate benefits pocketed savings by doing so and that it would be illogical to hold the no-fault insurer responsible for providing coverage “exactly equivalent to what would have been appropriate had it not received a reduced premium.”  In the instant case, the Court of Appeals held that the Dunn decision applies and under MCR 7.215(J)(1), the Court of Appeals was obligated to follow Dunn.  Under Dunn, Citizens is not required to reimburse plaintiff.  “Plaintiff in this case elected to receive only excess benefits from Citizens by coordinating his benefits; plaintiff cannot now hold Citizens liable for a risk it did not assume.”

Although holding in favor of Citizens, the Court of Appeals’ panel in this case stated that it found the analysis of the United States Court of Appeals for the 6th Circuit in Shields v Government Employees Hosp Ass’n Inc., 450 F 3rd 543 (CA 6, 2006) convincing, and urged the Michigan Supreme Court to evaluate the issue in this case if plaintiff files leave to appeal.

In Shields, the U.S. Court of Appeals discussed the Court of Appeals’ opinion in Dunn, and found that it’s primary rationale conflicts with the Michigan Supreme Court decision in Sibley v Detroit Auto Ins Exchange, 431 Mich 164 (1988), a case in which the Michigan Supreme Court held that the no-fault insurer was required to reimburse the plaintiff for medical benefits paid under the Federal Employees Compensation Act (FECA), because under § 3109(1) of the No-Fault Act, such benefits could not be deemed to have been “provided” when under federal law they were required to be reimbursed to the Federal Government from plaintiff’s tort claim.  In urging the Supreme Court to consider this issue, the Court of Appeals in the instant case quoted from the decision in Shields and stated:

As the Michigan Supreme Court noted in Sibley, by requiring an insured to pay for his or her own medical expenses from his or her tort recovery, the insurance company is saved from covering medical expenses and the tort victim thereby loses her tort recovery.  Thus, in essence, the insurance company is receiving reimbursement from the tort recovery as surely as if its policy required such reimbursement.  This is expressly prohibited by Michigan law, MCL 500.3116.”

Accordingly, based upon the previously discussed opinion in Dunn, the Court of Appeals affirmed the trial court’s grant of summary disposition in favor of Citizens.