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Auto Club Insurance Association v Art Van Furniture Inc Employee Health Benefit Plan; (COA-UNP, 2/3/1994; RB # 1698)


Michigan Court of Appeals; Docket No. 143367; Unpublished 
Judges Sawyer, Corrigan, and Brown; Unanimous; Per Curiam  
Official Michigan Reporter Citation:  Not Applicable; Link to Opinion alt   

Coordination with Other Health and Accident Medical Insurance [§3109a]  
Coordination with ERISA Plans [§3109a]

Employee Retirement Income Security Act (ERISA – 29 USC Section 1001, et seq.)   

In this unanimous per curiam unpublished Opinion, the Court of Appeals held that where the no-fault insurer (Auto Club) and a self-funded ERISA employee benefit plan had conflicting coordination of benefits clauses, federal law preempted state law, and therefore, Art Van's Employee Health Benefit Plan was not obligated to pay Auto Club's insured's medical expense benefits. 

Two beneficiaries of Art Van's ERISA health plan were involved in separate automobile accidents covered under insurance issued by Auto Club. Auto Club had a coordination of benefits provision in its no-fault insurance policy. Art Van's plan contained a limitation on coverage for motor vehicle accident injuries limiting coverage to a maximum of $300, the statutory maximum deductible allowed under section 3109a of the no-fault act. Art Van's Employee Health Benefit Plan filed a motion for summary disposition on the grounds mat the trial court lacked subject matter jurisdiction over the ERISA plan. The trial court denied this motion on the grounds that there was an issue of fact as to whether the plan was an "insured" plan because of its purchase of a "stop loss" policy.

On appeal, the Court of Appeals first noted that the trial court confused federal jurisdiction, subject matter jurisdiction and federal preemption of state law. The ERISA law allows for concurrent jurisdiction, thereby allowing the action to be brought in either federal or state court. Therefore, the circuit court unquestionably had subject matter jurisdiction.  

With regard to whether the plan was self-insured or insured because of the purchase of "stop loss" coverage, the court held that the decision in Auto Club Insurance Association v Frederick & Herrud, 443 Mich 358 (1993) is dispositive, having held that the existence of stop loss insurance is irrelevant to determining whether a plan is self-funded for purposes of ERISA preemption. The court also noted that a no-fault carrier has no direct claim against the stop loss insurer of an ERISA plan; Auto Club Insurance Association v Safeco Life Insurance Company, 833 F Supp 637 (WD Mich 1993). 

The court also rejected plaintiff’s argument that even if ERISA preempts state law, the Court of Appeals should remand the matter for a decision under federal common law. The Court of Appeals disagreed, holding that federal decisions interpreting conflicting coordination of benefits clauses under federal common law have held that the plain language, strictly construed, of the ERISA plan, and not the intent of state legislature in statutory regulating insurance must prevail. Lincoln Mutual Casualty Company v Lectron Products Inc, 823 F Supp 138S (ED Mich 1993).  

The court therefore held that defendant's ERISA plan was not obligated to pay plaintiffs insured's medical expenses.  

Lansing car accident lawyer Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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