Michigan Court of Appeals; Docket No. 130551; Unpublished
Judges Sawyer, Neff, and Fitzgerald; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
In this unanimous per curiam Opinion, the Court of Appeals affirmed trial court rulings interpreting the application of the ERISA law which preempts state no-fault law as it applies to a conflict between Citizens, as the no-fault carrier, and two ERISA health and welfare benefits plans providing health benefits to the husband and wife covered under their separate employee benefit plans, one provided by Michigan Precision Industries (MPI) and the other by MASCO. The MASCO plan provided a $10,000 limitation on benefits per automobile accident, and also contained a coordination of benefits provision. The MPI plan was a partially commercially insured plan which provided benefits up to the point where employment terminates. The Citizens no-fault insurance policy also contained a coordination of benefits clause.
Thomas Coles was instantly killed and his wife was injured in a motor vehicle accident on February 16, 1986. The Coles were insured for PIP benefits with Citizens under a coordinated policy. Mr. and Mrs. Coles were both covered by employee health and welfare benefit plans within the meaning of ERISA. Mr. Coles was covered by MPI and Mrs. Coles was covered by the MASCO plan. The trial court held that MPI was obligated to provide benefits up until the point in time when Mr. Coles' employment was terminated on the last day of the calendar month of his death. The trial court also determined that the MASCO plan's $10,000 limitation on benefits was a valid "exclusion" and was enforceable.
Citizens argued on appeal that its coordination of benefits clause was not preempted by the provisions of the ERISA statute.
The Court of Appeals noted that in FMC Corp v Holliday, 498 US (1990), the United States Supreme Court held that the preemption clause of the ERISA statute, 29 USC § 1144(b)(2)(B) establishes an area of exclusive federal concern in connection with ERISA plans. The court has construed the "deemer" clause to exempt self-funded ERISA plans from state laws that purport to regulate insurance. As a result, self-funded ERISA plans are exempt from state insurance regulations, thereby resulting in the conclusion that §3109a of the no-fault act cannot mandate priority for coordination of benefits as to such plans.
In the instant case, the MASCO plan providing benefits to Mrs. Coles contained a coordination of benefits clause making coverage under the plan secondary to any no-fault automobile insurance coverage. Further, with respect to any benefits required to be paid under the plan, there was an aggregate maximum of $10,000 for each covered individual for each automobile accident Citizens contended that the MASCO plan contained a "modified version of an escape type coordination clause," and that since MASCO opted to provided some coverage for automobile accident related injuries, its attempt to limit coverage for expenses arising as a result of automobile accidents constituted an "other insurance" provision which should be construed as an attempt to coordinate benefits.
The Court of Appeals affirmed the result of the trial court, holding that the MASCO coordination of benefits provisions were valid, and that it was an "excess type" provision providing benefits over the limits of the primary automobile insurance policy. Further, the court construed the $10,000 limitation on benefits to be an exclusion on benefits without regard to whether the insured had purchased no-fault insurance or not. Therefore, this exclusion was valid, based upon the federal preemption provisions of the ERISA statute. Whatever benefits were not covered under the Citizens policy, therefore, were covered under the MASCO plan up to the maximum benefit of $10,000.
With respect to the MPI plan, the Court of Appeals upheld the trial court interpretation of the plan provisions as to "termination" of employment Although the plan was silent as to the "event of death" and its effect upon benefits under, the plan, the court construed the provisions of the plan with respect to duration of benefits to allow for termination of such benefits on the last day of the calendar month in which employment terminates. The Court of Appeals agreed with the trial court that the death of Mr. Coles constituted termination of employment and therefore, benefits were properly terminated on February 28, 1986.