Michigan Court of Appeals; Docket No. 137975; Published
Judges Shepherd, Connor, and Sapala; Unanimous
Official Michigan Reporter Citation: 195 Mich App 302; Link to Opinion
In this unanimous published Opinion by Judge Connor, the Court of Appeals affirmed the lower court determination that Wolverine, the no-fault insurer, was not entitled to coordinate with the injured parties' employee benefit plan, which contained an exclusion precluding coverage under the plan for injuries received in an automobile accident.
The injured parties were both covered persons under the Rospatch Corporation Employee Benefit Plan which was administered within the meaning of ERISA. The plan contained two separate provisions purporting to exclude payment of expenses incurred due to automobile accidents. The first exclusion stated that benefits were not payable under the plan for injuries received in an accident involving a car or other motor vehicle. The second exclusion was entitled "Out of Michigan No-Fault Exclusion," and stated that benefits would not be paid under this plan for injuries received in an accident involving a car owned or leased by a covered person or member of his family or involving any car for which there was no-fault insurance in effect This same exclusion also stated that it was not applicable to expenses not paid by any policy of no-fault insurance.
Wolverine paid medical expenses for the injured parties and argued that the two exclusions contained in the plan were ambiguous and in reality constituted an effort to coordinate medical benefits with no-fault which, under the Federal Kemper decision, would result in the employee benefit plan being primary.
The Court of Appeals held that the exclusion of coverage in Rospatch's benefit plan for automobile accidents under Michigan's no-fault act is clear and unambiguous, and constituted a "pure" exclusion, since it clearly is not dependent upon the existence of any other insurance. The Court of Appeals rejected plaintiff’s argument that the second exclusion dealing with accidents occurring outside the state of Michigan was an "escape" exclusion that does not avoid coordination under §3109a. The court stated that whether the out of Michigan provision is an escape provision is irrelevant because there was no dispute that the accident in this case occurred in the state of Michigan. Exclusions to coverage in insurance contracts in general are to be read independently of one another.
In a related issue, the court addressed the issue of whether or not the fact that the plan had "stop loss" insurance meant that it was not a self-insured plan within the meaning of ERISA thereby subjecting the plan to Michigan statutory provisions regarding coordinated benefits. The Court of Appeals held mat the case of Auto Club Insurance Association v Frederick & Herrudlnc, (on remand), 191 Mich App 471 (1991) recently held that stop loss coverage does not transform an employee benefit plan into an insured plan for purposes of ERISA. Consequently, the Court of Appeals affirmed the trial court holding that coordination of benefits was not available to the no-fault insurer in this case.