U.S. District Court for the Eastern District of Michigan; Docket No. 99-70776;
Honorable Nancy G. Edmunds; Unpublished
Official Federal Reporter Citation: Not Applicable; Link to Opinion
In this memorandum Opinion and Order, Judge Edmunds held that in a priority dispute between an insured employee health benefit plan under ERISA and the injured employee's no-fault automobile insurer, the insured employee health benefit plan was obligated to pay the medical expenses resulting from the insured's automobile accident.
Judge Edmunds held that section 3109a of the No-Fault Act addresses coordination of insurance benefits under Michigan's no-fault law, and that section of the state statute escapes preemption under ERISA's saving clause, 29 USC § 1144(b)(2)(A). Accordingly, Michigan law, not federal law, governs whether the insured ERISA plan is primarily responsible for the medical expenses.
Judge Edmunds held that the "distinction between insured and uninsured ERISA plans is a crucial factor when considering application of ERISA's preemption, saving and deemer clauses." State laws that regulate insurance companies will indirectly regulate insured ERISA plans. Those same state laws regulating insurance, although "saved" from ERISA preemption, will not have any effect on uninsured or self-funded ERISA plans, because those plans are "deemed" under ERISA's deemer clause not to be insurance companies.
In this case, because it was an insured plan, state law controls. Since both the no-fault policy and the insured ERISA plan contained competing coordination of benefits clauses, state law controls, and under the authority of Federal Kemper Insurance Company v Health Insurance Administration, 424 Mich 537 (1986), where no-fault coverage and health coverage are coordinated, the health insurer is primarily liable for the insured's medical expenses. Therefore, the ERISA plan at issue here, is primarily liable for the benefits.
In a related issue, Judge Edmunds denied the claim by Progressive for recovery of $5,487 of benefits that it paid based upon a "mistake of law." After the ERISA plan had initially paid this sum for medical expenses to the insured, it sought repayment of those sums from Progressive. Progressive issued a check in this amount to the ERISA plan under a "mistake of law" as to its obligation to reimburse the ERISA plan. Judge Edmunds ruled that Progressive was not entitled to recovery of this sum from the ERISA plan because:
"The rule is well settled that, where money has been voluntarily paid with full knowledge of the facts, it cannot be recovered on the ground that the payment was made under a misapprehension of the legal rights and obligations of the person paying."
Judge Edmunds also rejected the argument of the ERISA plan that Progressive must first exhaust the administrative remedies available under the insured ERISA plan before seeking recoupment Under the recent authority of Prudential Property and Casualty Insurance v Belfield Company Group Health Plan, 187 F3d 637 (1999), the Sixth Circuit decided a priority dispute between a no-fault insurer and a self-funded ERISA plan. The court there rejected the argument that the no-fault insurer seeking recoupment was obligated to exhaust administrative remedies under the plan, and held that because the no-fault insurer was not a participant or beneficiary under the plan, it was not obligated to exhaust administrative remedies under the plan.