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Auto Owners Insurance Company v Thorn Apple Valley, Inc.; (6th Cir-PUB, 8/1/1994; RB #1730)


United States Court of Appeals for the Sixth Circuit; Docket No. 93-1606; Published  
Judges Norris, Daughtrey, and Gilmore; Unanimous; Opinion by Judge Norris  
Official Federal Reporter Citation:  31 F 3d 371; 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 important written Opinion by Judge Norris, the United States Sixth Circuit Court of Appeals resolved the longstanding priority dispute existing between no-fault coordinated insurers and ERISA plans with coordination clauses making the plan secondary to no-fault. The trial court in this case rendered an opinion prior to the Michigan Supreme Court's opinion in Auto Club Insurance Association v Frederick & Herrud, 443 Mich 358 (1993), wherein the trial court held that where a conflict exists between two unambiguous coordinated policies, one an ERISA plan and the other a coordinated no-fault plan, the coverage responsibility must be apportioned between the insureds on a pro rata basis. However, subsequent to the trial court's decision, the Michigan Supreme Court issued its opinion in Auto Club v Frederick & Herrud, wherein the Supreme Court held that a no-fault insurer could not seek payment from an ERISA plan despite a coordination of benefits clause that purported to make the no-fault insurer secondarily liable.  

The Sixth Circuit Court of Appeals, on the basis of federal common law, ruled that the coordination language in the ERISA plan must be given full effect, thereby rendering the coordinated no-fault insurer primarily liable without pro rata recoupment.The court held:

"We conclude that when a traditional insurance policy and a qualified ERISA plan contain conflicting coordination of benefits clauses, the terms of the ERISA plan, including its COB clause, must be given full effect. . . . 

While we agree that both COB clauses at issue are facially valid, we cannot accept the Seventh Circuit's conclusion that a 'solomonic apportionment of liability' is appropriate. Such a result may be... 'eminently fair,' but it accords insufficient weight to the policy considerations behind the enactment of ERISA. Our situation is unlike the one where the competition is between COB clauses in non-qualifying private insurance policies. There, the playing field is level; here it is not, since the Thorn Apple Valley clause is bolstered by the preemptive effect of ERISA.

Accordingly, we conclude that the terms of the Thorn Apple Valley plan, including its coordination of benefits clause, must be given full effect in order to comply with a primary goal of ERISA, which is to safeguard the financial integrity of qualified plans by shielding them from unanticipated claims."

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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