U.S. District Court for the Eastern District of Michigan; Docket No. 99-CV-72889;
Honorable Avern Cohn; Published
Official Federal Reporter Citation: 82 F. Supp. 2d 717; Link to Opinion
Coordination with Other Health and Accident Medical Insurance [§3109a]
Coordination with ERISA Plans [§3109a]
Health Insurance Liens Regarding Auto Tort Claims [§3116]
ERISA Liens Regarding Auto Tort Claims [§3116]
In this memorandum Opinion and Order, Judge Cohn held that because an ERISA medical plan was not self-funded, but rather was insured, Michigan law was not preempted by the ERISA statute, and state law determined that where the no-fault policy and an ERISA plan had competing coordination of benefits clauses, the ERISA plan was primarily liable for the automobile accident victim's medical expenses under section 3109a. Judge Cohn noted that ERISA contains a broad preemption clause, a broad savings clause, and a narrow deemer clause. The deemer clause states that an employee benefit plan is not "deemed to be an insurance company" engaged in the business of insurance for purposes of any law of any state purporting to regulate insurance companies.
Judge Cohn rejected the plan's argument that ERISA preempts state law regardless of whether the ERISA plan is self-funded or insured. He rejected the argument that there is "no difference between self-funded and insured plans for purposes of preemption analysis." Based upon the United States Supreme Court's decision in FMC Corp v Holiday, 498 US 52 (1990), that court did differentiate between self-funded and insured plans in the context of ERISA preemption. That court held that an insurance company administering an ERISA plan may still be subject to state insurance law. Under state law, specifically the Federal Kemper decision, State Farm is secondarily liable for the benefits in this case.
Judge Cohn also addressed an argument by the plan that it had a right to reimbursement under the plan from any recovery that the insured may receive as a result of his arbitration claim against State Farm for PIP benefits and which also may have included a claim for uninsured motorist benefits.
Judge Cohn held that under the authority of Great Lakes American Life Insurance v Citizens Insurance Company, 191 Mich App S89 (1991), the insurer's contractual reimbursement rights were subject to the limitations of the No-Fault Act, section 3116, regardless of the language of the contractual reimbursement provision. Section 3116 covers situations involving (1) accidents occurring outside the state, (2) actions against uninsured owners or operators, or (3) intentional torts. That statute further "expressly prohibits reimbursement where the monies recovered were for noneconomic damages or for PIP benefits in excess of the amount paid by the insurer." Therefore, the ERISA plan's reimbursement rights are dictated by Michigan's no-fault law, not the contractual reimbursement provision. Reimbursement is limited to the situations where the accident occurred out of state, or involved either an uninsured motorist or an intentional tort. Further, the plan may also "not recover monies that were recovered to compensate for noneconomic damages."