U.S. District Court for the Western District of Michigan, Southern Division; Docket No. 5:97-CV-191;
Honorable Richard Alan Enslen;
Official Michigan Reporter Citation: _______; Link to Opinion
In this written Opinion, Judge Enslen held that an ERISA health care plan was liable to pay for plaintiff’s medical expenses arising from a motor vehicle accident, in spite of an "excess insurance provision" and a "coordination of benefits" provision, both of which would purport to make the health care plan secondary to any other available insurance for such claims. The court held the excess insurance provisions to be superfluous and interpreted arbitrarily and capriciously by the plan administrator. When interpreting the coordination of benefits provisions pursuant to the rules of interpretation in the plan, the court found that the plan rules required the conclusion that the plan was the primary insurer with respect to medical expenses arising from the motor vehicle accident.
The accident in this case occurred in 1995. The injured person was an employee of Morton Buildings and in June 1994, became eligible to participate in the Morton Buildings Employee Health and Welfare Plan, an ERISA health care plan. Subsequently, on June 13,1994, the injured person was issued a no-fault insurance policy. The accident occurred in August 1995.
When claims for medical expenses were submitted to the ERISA plan, the plan denied these claims, finding that the plan provides only excess coverage, because coverage is also available under the no-fault policy. The excess insurance provision in the plan stated that the plan applied only as "excess insurance coverage over such other sources of indemnification," including expenses incurred as the result of injury when a covered person is injured in the course of operating a motor vehicle.
The plan's coordination of benefits provision stated that where there is coverage for benefits from other plans such as a no-fault automobile insurance policy, then the plan rules provide a procedure for determining which of the plans is primary and which is secondary.
Judge Enslen held that the interpretation of the plan and its excess coverage provisions was arbitrary and capricious and that reading the plan's coordination of benefits provisions and the rules of interpretation requires the conclusion that the plan is the primary provider of benefits. Judge Enslen held that “reading the excess insurance and the coordination of benefits provisions together, the excess insurance provision must be understood to indicate that the plan provides only excess coverage to an insured when, after processing the insured's claim, [the plan] determines, under the coordination of benefits provision, that it is not the primary insurer." The court held that it could not rely on the excess insurance provision alone to determine whether the plan was primary or secondary, but must also consider the plan's coordination of benefits provision. That provision is interpreted in accordance with established rules in the plan. The determinative rule in the plan provides that if none of the other rules apply, a plan would be primary if it has covered the individual for the longer period of time, and secondary if it has covered the individual for the shorter period of time. In this case, the ERISA plan had provided coverage for the injured employee for a longer period of time than the no-fault policy, and therefore, the ERISA plan was primary.