United States Court of Appeals for the Sixth Circuit; Docket No. 05-1037; Published
Judges Clay, Cook, and Oliver; 2-1 (Judge Cook concurring)
Official Reporter Citation: Forthcoming, Link to Opinion 
STATUTORY INDEXING:
Coordination with Other Health and Accident Medical Insurance
Coordination with ERISA Plans
TOPICAL INDEXING:
Employee Retirement Income Security Act
CASE SUMMARY:
In this 2-1 published opinion, the United States Court of Appeals, 6th Circuit, affirmed summary judgment in plaintiff’s favor, finding that even though she had a coordinated no-fault insurance policy, her no-fault insurer was required to reimburse her for amounts she was required to repay her health-insurer out of her auto tort settlement. In so holding, the 6th Circuit rejected the Michigan Court of Appeals’ holding in Dunn v DAIIE [RB #2346], where the court held that a plaintiff who is required to reimburse an ERISA health plan out of a purely non-economic loss tort recovery cannot obtain reimbursement from the plaintiff’s coordinated no-fault insurer because the insurer could not be found liable for a risk that it did not assume. Instead, the 6th Circuit followed the Michigan Supreme Court’s earlier decision in Sibley v DAIIE [RB #1146], where the Supreme Court held that a plaintiff’s no-fault insurer could not claim a set-off for federal workers compensation benefits where the plaintiff was required, by federal law, to repay the federal workers compensation carrier out of a non-economic loss recovery for those expenses.
The plaintiff in this case was covered under her mother’s coordinated motor vehicle insurance policy with State Farm as well as her mother’s ERISA benefit plan through her employer, the Government Employees Hospital Association (GEHA). GEHA paid plaintiff’s medical expenses but sought reimbursement out of plaintiff’s tort settlement for pain and suffering. Plaintiff in turn sought reimbursement from State Farm. State Farm refused payment, arguing that because the policy was coordinated, only GEHA was responsible for payment of plaintiff’s medical expenses. The district court found for plaintiff and State Farm appealed.
In affirming, the 6th Circuit chose to follow the Michigan Supreme Court’s holding in Sibley, rather than the Michigan Court of Appeals holding in Dunn, declaring that the decision in Dunn was not good law. In this regard, the court stated:
“In this case, the insured received payment to cover medical expenses, that, pursuant to federal law, she is required to repay from the proceeds of her tort recovery for pain and suffering damages. Because federal law preempts state law, Michigan cannot stop GEHA from requiring reimbursement. Consequently, here, as in Sibley, the insured is being forced to pay her own medical expenses out of her tort damages for pain and suffering. This contravenes the expressed intent of the Michigan legislature as embodied in the MNFIA [Michigan No-Fault Insurance Act], which requires all car owners to maintain insurance coverage for medical expenses and prohibits no-fault insurers from seeking reimbursement from tort settlements. . . . Furthermore, the Michigan legislature mandated coordinated benefits plans to avoid duplicative coverage, not to deny insured persons coverage altogether. . . . Thus, the fact that the State Farm Policy is coordinated with GEHA’s policy is irrelevant. The insured maintains an insurance policy for medical expenses and should not be required to pay her medical expenses without help from her insurance carrier.
Defendant, however, asks this Court to apply the Michigan Court of Appeals decision is Dunn, as opposed to the Michigan Supreme Court’s decision in Sibley. . . . The Dunn court took the position that Sibley did not control the interpretation of a coordinated benefits plan. . . . While this Court recognizes that Dunn is more analogous to the instant case than Sibley because the instant case involves the interpretation of a coordinated benefits plan and not the language of the MNFIA, we decline to apply Dunn to this case. First, MCL §3109 and MCL §109a, mandating coordinated benefit plans, were enacted for identical purposes. Both seek to eradicate duplicative insurance coverage – one by allowing subtraction of benefits provided pursuant to law, and the other by mandating policies that provide coverage only from damages not covered by other policies. . . . Second, the Dunn court’s primary rationale conflicts with Sibley. The Michigan Court of Appeals based its holding in Dunn on the theory that the insured would receive duplicative benefits if allowed to keep his or her tort recovery and to receive no-fault insurance coverage. . . . Sibley expressly holds, however, that such coverage is not duplicative because the tort recovery was for pain and suffering, whereas the insurance coverage was for medical benefits and lost income. . . . Finally, and perhaps most importantly, the Dunn decision essentially allowed a no-fault insurer to receive reimbursement from tort damages. . . . 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.”