Michigan Court of Appeals; Docket No. 142581; Unpublished
Judges Weaver, Shepherd, and Johnston; _________; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
In this unpublished per curiam Opinion, the Court of Appeals addressed conflicting coordination of benefits clauses contained in a no-fault automobile insurance policy and an employment health plan.
Aetna's insureds were injured in an automobile accident and Aetna provided no-fault first party coverage. The insureds also had health coverage under an employment benefit plan issued to a family member. Aetna brought suit against the employee welfare benefit plan as subrogees of its insureds.
There was no dispute that the health coverage provided pursuant to the benefit plan qualified under the Employee Retirement Income Security Act of 1974 (ERISA). The benefit plan contained a provision that coverage under the plan for expenses arising out of motor vehicle accidents was limited to a maximum of $300. The no-fault carrier contended that the health coverage was primary for the automobile expenses under §3109a of the No-Fault Act, notwithstanding the coordination clause contained in the health plan.
The Court of Appeals upheld the trial court's ruling that the application of the no-fault insurer's coordination clause pursuant to §3109a was preempted by the coordination clause contained in the employment benefit plan under ERISA, relying on the United States Supreme Court's decision in the case of FMC Corp v Holliday, 498 US 52 (1990) which held that the application of state law to a self-funded employee benefit plan is preempted under ERISA. Plaintiff argued in this case that the ERISA preemption should not apply because the self-funded employee benefit plan at issue had obtained stop loss insurance coverage. However, the Court of Appeals rejected this position, relying on the Michigan Supreme Court's decision in ACIA v Frederick & Herrud, 443 Mich 358 (1993) (Item No. 1643), which held that the procurement of stop loss insurance for a self-funded employee benefit plan does not take the matter out of the scope of ERISA preemption.
Plaintiff also argued that the benefit plan at issue was part of a "multiple employer welfare arrangement" which remained subject to limited state regulation under ERISA. However, the court found that state regulation of such plans is permissible only to the extent "not inconsistent" with other provisions of ERISA. The court, relying on ACIA v Frederick & Herrud, found that the coordination provisions of §3109a must be deemed inconsistent with ERISA, because to hold otherwise would "undermine the stability" of self-funded employee benefit plans.
Finally, plaintiff argued that even if ERISA preempted the application of §3109a in this case, the employment benefit plan would still be liable for at least partial reimbursement on a pro-rata basis. However, the court found that since preemption did apply, the "clear meaning" of the benefit plan coordination clause was to be given full application. Therefore, the defendant benefit plan was liable only for $300 in benefits as a result of the accident