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Auto Owners Insurance Company v Fairview Medical Care Facility Employee Benefit Plan; (USD-UNP, 10/18/1994; RB #1754)


United States District Court, Western District of Michigan; Docket No. 1:94-CV-102;  
Judge Robert Holmes Bell; Unpublished  
Official Michigan Reporter Citation:  Not Applicable; Link to Opinion alt   

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

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

In this case, the United States District Court, Judge Bell, determined that there was no federal court jurisdiction over this dispute because the Fairview Medical Care Facility employee benefit plan was a governmental plan exempt from ERISA under the Governmental Plan Exemption, 29 USC §1003 (b)(1), and therefore, the issues pertaining to competing coordination of benefits clauses were state law questions.  

Plaintiff Auto Owners' insured was involved in an automobile accident in July 1993'. At the time of the accident, Auto Owners insured the injured party for no-fault benefits. The injured party also had health care coverage through an employee provided health care plan through the Fairview Medical Care Facility Employee Benefit Plan. Auto Owners contended that where the health care plan and the no-fault policy had competing coordination of benefits provisions, each policy should be responsible for payment of the injured parry's expenses on a SO/SO pro rata basis.  

Fairview contended that it was not an ERISA plan, and therefore, the federal court did not have jurisdiction over this case. Alternatively, Fairview contended that under the recent decision in Auto Owners Insurance Company v Thornapple Valley, Inc., 31 F 3d 371 (CA 6,1994), Auto Owners' contention for pro rata relief had been rejected.  

In finding that the federal court had no jurisdiction, the court noted that the provisions of the ERISA do not apply to any employee benefit plan if such plan is a "governmental" plan. 29 USC § 1003(b)(1).  

The court in the instant case determined that the Fairview Medical Care Facility was a state licensed intermediate care facility operated by St Joseph County and accordingly, a governmental plan falling within the exemption from ERISA. Plans established by state and local governments are generally excluded from coverage under ERISA because of concerns of federalism. Therefore, this case presents only a state law insurance issue, no federal question under ERISA having been presented.  

Alternatively, the court noted that the United States Sixth Circuit Court of Appeals had recently barred the relief Auto Owners requested by way of pro rata allocation of the expenses. The Sixth Circuit, when recently presented with the precise question about what to do when a traditional insurance policy and an ERISA plan have competing coordination of benefits clauses, held:

"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 coordination of benefits clause, must be given full effect."  

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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