Michigan Court of Appeals; Docket Nos. 239113 and 239559; Published
Judges Donofrio, Bandstra, and O’Connell; unanimous
Official Michigan Reporter Citation: 258 Mich. App. 149, Link to Opinion 
STATUTORY INDEXING:
Not applicable
TOPICAL INDEXING:
Employee Retirement Income Security Act
CASE SUMMARY:
In this unanimous published opinion by Judge O’Connell, the Court of Appeals held that the Daimler-Chrysler Health Plan, a self-funded employee health benefit plan, was not entitled to enforce subrogation language in its plan to obtain reimbursement of medical expenses it had paid from plaintiff’s third-party negligence action damages.
Plaintiff was injured in an automobile accident in January, 2000. She was covered under a medical insurance plan issued by Daimler-Chrysler Health Plan (DCHP), a self-funded employee health plan created and administered pursuant to the Employee Retirement Income Security Act (ERISA). DCHP paid $14,319.79 in medical expenses on behalf of plaintiff as a result of injuries she sustained in the accident. Plaintiff brought a third-party action against the driver and owner of the other vehicle involved in the accident and settled for $50,000. DCHP sought to recover its medical expense payments from plaintiff’s third-party negligence action recovery based upon subrogation provisions contained in its administrative manual.
The plan language provided:
“In the event that an enrollee receives services that are paid by the program, or is eligible to receive future services under the program, the program shall be subrogated to the enrollee’s rights of recovery against, and is entitled to receive all sums recovered from, any third party who is or may be liable to the enrollee, whether by suit, settlement, or otherwise.”
The Court of Appeals held that the subrogation language in the plan did not entitle DCHP to recover its medical expenses from plaintiff’s third-party damage claim, because recovery of medical expenses from third-party tortfeasors is not allowed under MCL 500.3135. Since plaintiff’s settlement proceeds did not include compensation for medical expenses, DCHP could not use its subrogation language to obtain recovery of its expenses from plaintiff’s third-party damage claim. A subrogee cannot acquire greater rights than the subrogor.
The Court of Appeals held that the subrogation language in the plan was clear and unambiguous and that the language referring to entitlement to “receive all sums recovered from any third party” is in the same sentence as the language granting DCHP the right to be “subrogated to the enrollee’s rights of subrogation.” Further, all of the language is under the subrogation heading of the plan. Consequently, DCHP only has subrogation rights and is not entitled to reimbursement from plaintiff’s settlement, because the plan does not provide DCHP with a right to reimbursement. As subrogee, DCHP is only entitled to recover what plaintiff is entitled to recover–because plaintiff cannot recover medical expenses, DCHP cannot recover such expenses.
