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Auto Club Insurance Association v Health and Welfare Plans lnc; (USD-PUB, 4/10/1992; RB#1543)


United States Court of Appeals for the Sixth Circuit; Docket No. 91-1617; Published  
Opinion by Batchelder; Unanimous  
Official Federal Reporter Citation:  961 F2d 588; 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.)   

This unanimous Opinion by Judge Batchelder involves a priority dispute regarding payment of medical expenses between a no-fault coordinated insurer (Auto Club) and an ERISA self-funded insurer (Health and Welfare Plans). The Sixth Circuit held that the recent decision of the United States Supreme Court in the case of FMC Corp v Holliday, 111 S Ct 403 (1990) "has effectively overruled" the earlier opinion of the Sixth Circuit in the case of Northern Group Services Inc v State Farm, 833 F2d 85 (CA 6,1987). The Northern Group Services case reached the conclusion that no-fault coordination clauses, written in conformity with the coordinated benefit provisions of §3109a of the no-fault statute were enforceable against ERISA coordination clauses, thus elevating ERISA plans into the primary pay position, vis-a-vis coordinated no-fault insurers. In the FMC decision, the United States Supreme Court addressed the issue of whether a Pennsylvania anti-subrogation statute that conflicted with the subrogation clause in a self-insured ' ERISA plan was preempted. The court concluded that the self-insured ERISA plans were not deemed to be insurance companies for purposes of ERISA that state laws purporting to regulate these plans were, to that extent, preempted; and that the Pennsylvania anti-subrogation statute was such a law.  

In the case at bar, the Sixth Circuit considered the impact of FMC on Northern Group Services and concluded, "as district courts within this circuit have suggested, and as we now hold, the FMC decision effectively has overruled Northern Group Services insofar as self-insured ERISA plans are concerned. Thus, we conclude that self-insured ERISA plans, including self-insured ERISA plans containing coordination of benefits clauses, are not reached by §3109a."  

However, the court held that this holding did not necessarily dispose of the case. On the contrary, there still existed the issue of which of two, apparently irreconcilable but valid coordination clauses, should be enforced. On this point, the court ordered the case to be remanded to the Eastern District of Michigan for further proceedings. On remand, the district court was directed to determine whether the ERISA fund's trustees acted within the discretion afforded them by the plan, when they denied payment of benefits. If the district court finds that the trustees acted reasonably, "then the next issue is the effect of mat proper discretionary decision on the conflict between the two coordination of benefits clauses. Put another way, the district court then must determine how a court should resolve a conflict between two (presumably) unambiguous, seemingly valid, and irreconcilable coordination of benefits clauses, one contained in an ERISA plan and one in a non-ERISA policy." In passing upon this issue, the court eluded to an Indiana case decided by the Seventh Circuit [Winstead v Indiana Insurance Company, 855 F2d 430 (CA 7,1988)] where the district court found the two coordination clauses were "mutually repugnant, voided them both, and held the fund and the insurance company liable pro-rata for the payment of [injured persons] benefits." This decision was affirmed by the Seventh Circuit, which in turn eluded to a decision from the Third Circuit which noted that other courts faced with conflicting coordination of benefits clauses had declared them to be mutually repugnant and voided them both, and apportioned liability pro-rata.  

Therefore, the Sixth Circuit remanded this case to the trial court to determine, among other things, whether the Fund trustees acted within their discretion in denying benefits, and if so, to then "resolve the conflict between the two coordination of benefits clauses." Other than referencing the decisions suggesting pro rata apportionment, the Sixth Circuit gave no other indication as to how the district court should resolve such a conflict between two coordination clauses.  

Michigan auto accident attorney 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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