U.S. District Court for the Western District of Michigan; Docket No. I:96-CV-866;
Honorable Robert Holmes Bell; Published
Official Federal Reporter Citation; 7 F. Supp 2d 927 ; Link to Opinion 
STATUTORY INDEXING:
ERISA Liens Regarding Auto Tort Claims [§3116]
TOPICAL INDEXING:
Employee Retirement Income Security Act (ERISA – 29 USC Section 1001, et seq.)
CASE SUMMARY:
In this important Opinion authored by Judge Bell, the court considered the issue of whether an ERISA health plan that provided coverage for accident-related injuries was entitled to full reimbursement from the injured person's tort settlement, without paying its pro rata share of attorney fees. Based upon the language of this particular ERISA health plan that provided coverage for automobile accident injuries, the court held that its right to reimbursement was to be reduced by a proportionate amount attributable to the injured person's attorney fees incurred in obtaining the settlement.
The plaintiff was injured in an automobile accident, and incurred medical expenses in the amount of $101,526.56. Because the plaintiff had allowed her automobile insurance to lapse, she was not entitled to no-fault first-party coverage for her medical expenses. However, her medical expenses were paid by defendant health plan, which was provided pursuant to her employer's ERISA benefit plan. The plaintiff filed a third-party tort claim, which was joined by her husband seeking loss of consortium. The plaintiff and her husband settled both their claims for the sum of $200,000. The court had held in a previous opinion that the plan had a right to obtain reimbursement from these settlement proceeds.
The first issue before the court was an apportionment of the settlement amount of $200,000 between the claim of the plaintiff for her injuries and her husband's claim for loss of consortium. Because the plaintiff wife sustained serious injuries from which the husband's claims derived, the court found that the amount of the 5200,000 settlement to be apportioned to the wife's claim was at least as much as the S101,526.56 claimed by the defendant health plan.
The next issue before the court was whether the plan was entitled to the full amount of its claim or whether that amount should have been reduced to reflect the attorney fees and costs incurred by the plaintiff. The plaintiff claimed that since the injured person incurred attorney fees in obtaining the settlement, the plan would be unjustly enriched if it was not required to share in those costs. In deciding this issue, the court found that the case turned upon the language of the plan which stated that it had "the right to recover benefits. . .to the extent of. . .any payments resulting from a judgment or a settlement." The court found this language to establish the plan's general entitlement to be reimbursed, but did not specify unambiguously the extent of the reimbursement. The court held:
"Where the plan is silent on the issue of attorney fees and is ambiguous on the extent of reimbursement required, the court is required to construe the clause in accordance with federal common law principles, including the principles of unjust enrichment. *** [If] the plan were construed to allow for recovery of the benefits paid without regard to attorney fees, it could lead to the result that the plaintiff would be liable to the plan for more than plaintiff actually recovered. * * * This would lead to an absurd result, and it is not a result contemplated by the plan language."
The court distinguished this case from decisions of other federal circuits under health plans which provided that the reimbursement from tort recoveries would be for "100% of all amounts paid." Accordingly, the court held that the plan's reimbursement was to be reduced by its proportional share of the attorney fees incurred by plaintiff.
