Great-West Life v. Allstate Ins Co ( 2000 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
8 Great-West Life v. Allstate Ins. Co. No. 99-1068 Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0045P (6th Cir.)
File Name: 00a0045p.06
what dependency means in its description of “Dependent
Survivors” under its plan:
3. “Dependent Survivors” means: UNITED STATES COURT OF APPEALS
a. the surviving spouse of the deceased injured
person... FOR THE SIXTH CIRCUIT
b. a child of the deceased injured person... _________________
The child is dependent only while:
;
i. under 18 years of age;

ii. mentally or physically incapacitated from GREAT-WEST LIFE &

earning; or ANNUITY INSURANCE

iii. engaged in full-time, formal program of COMPANY,

academic or vocational education or training. No. 99-1068
Plaintiff-Appellee,

Based on Allstate’s own definition, Matthew does not qualify >
as a “Dependent” under the Allstate policy. Thus, the district v. 
court did not err in categorizing Matthew as “a person other 
than a Dependent” under the Great-West plan. As a 

ALLSTATE INSURANCE
consequence of that categorization, the district court was
Defendant-Appellant. 
correct in subordinating Great-West’s plan to Allstate’s in this COMPANY,
case. 
1
IV.
Accordingly, we AFFIRM the district court’s grant of Appeal from the United States District Court
summary judgment in favor of Great-West. for the Western District of Michigan at Grand Rapids.
No. 98-00325—Gordon J. Quist, District Judge.
Argued: November 5, 1999
Decided and Filed: February 7, 2000
Before: MARTIN, Chief Judge; DAUGHTREY, Circuit
Judge; KATZ, District Judge.*
*
The Honorable David A. Katz, United States District Judge for the
Northern District of Ohio, sitting by designation.
1
2 Great-West Life v. Allstate Ins. Co. No. 99-1068 No. 99-1068 Great-West Life v. Allstate Ins. Co. 7
_________________ • who has not reached age 21; and
• who is not married; and
COUNSEL • who is chiefly dependent upon you for support; and
• for whom you are entitled to an income tax exemption.
ARGUED: Daniel S. Saylor, GARAN, LUCOW, MILLER,
SEWARD, COOPER & BECKER, Detroit, Michigan, for In addition, the age limitation does not apply to children who
Appellant. James P. Murphy, BERRY, MOORMAN, KING, are full-time students or who are incapable of supporting
COOK & HUDSON, Detroit, Michigan, for Appellee. themselves due to mental retardation or a physical disability.
ON BRIEF: Daniel S. Saylor, GARAN, LUCOW, MILLER,
SEWARD, COOPER & BECKER, Detroit, Michigan, John In interpreting ERISA contract provisions, we have noted
P. Seyfried, GARAN, LUCOW, MILLER, SEWARD, that such interpretations are made “according to their plain
COOPER & BECKER, Port Huron, Michigan, for Appellant. meaning, in an ordinary and popular sense.” Perez v. Aetna
James P. Murphy, BERRY, MOORMAN, KING, COOK & Life Ins. Co., 150 F.3d 550, 556 (6th Cir. 1998) (en banc).
HUDSON, Detroit, Michigan, for Appellee. We, therefore, apply a plain meaning analysis to construction
of the provision. Matthew clearly falls under the designation
_________________ of Dependent as contemplated in Great-West’s integration of
benefits clause. He is 20 years old, not married, and chiefly
OPINION dependent on his parents for support. Thus, in regard to
_________________ dependents such as Matthew, the Great-West plan intended to
subordinate its coverage to a no-fault insurer such as Allstate.
DAVID A. KATZ, District Judge. In this dispute over
which plan has priority over payment of medical expenses Allstate does not contest the district court’s finding that
arising from an automobile accident, Allstate Insurance Matthew qualifies as a Dependent of his father under the
Company (“Allstate”) appeals the district court’s grant of Great-West plan. Where Allstate disagrees, however, is with
summary judgment in favor of Great-West Life & Annuity the district court’s interpretation of the term “resident
Insurance Company (“Great-West”). For the reasons stated relative”, described in the Allstate coordination of benefits
below, we affirm the district court’s decision. clause, as distinguishable from the term “Dependent” in the
Great-West plan. Allstate argues that the term “resident
I. relative” in the Allstate plan is not distinguishable from the
term “Dependent” in the Great-West plan, and therefore
On February 25, 1996, Matthew Gerig was seriously Matthew qualifies as a “Dependent” under Great-West’s
injured in a single vehicle automobile accident and incurred definition of that term. Thus, according to Allstate, Matthew
extensive medical expenses. At the time of the accident, should not be treated by the court as “a person other than as
Matthew was 20 years old and residing with his parents, a Dependent” under the Great-West integration of benefits
Doyle and Linda Gerig. Matthew was covered by a policy of clause. We disagree.
no-fault automobile insurance1 issued to his parents by
Allstate. In addition, Matthew was covered under an The term “resident relative” under the Allstate plan does
not mean the same thing as the term “Dependent” under the
Great-West plan. In fact, Allstate’s Definitions under Part III
1 Personal Protection Benefits Coverage VA, detail exactly
The policy was issued pursuant to Michigan’s No-Fault Insurance
Act, Mich. Comp. Laws § 500.3101 et seq.
6 Great-West Life v. Allstate Ins. Co. No. 99-1068 No. 99-1068 Great-West Life v. Allstate Ins. Co. 3
II. ERISA-qualified employee benefit plan administered by
Great-West, by virtue of his father’s employment with the
On an appeal from summary judgment, we review the Prince Corporation.
district court’s judgment de novo. Smith v. Ameritech, 129
F.3d 857, 863 (6th Cir. 1997). Both policies contain a coordination of benefits (“COB”)
clause. The policy under Great-West provides in pertinent
III. part:
This appeal presents a question of federal common law that INTEGRATION OF BENEFITS (IOB)
stems from a dispute between two insurers, one of which
qualifies as an employee welfare benefit plan under the The IOB provision is used when a person has health
Employment Retirement Income Security Act of 1974 coverage for the same expenses under two or more of the
(“ERISA”). At issue is the extent to which conflicting plans listed below. Should this type of duplication occur,
coordination of benefits clauses affect the relative liability of the benefits under this Plan will be directly reduced by
the parties. the amounts payable for the same expenses provided by
the other plans so that the total benefits from all plans
The federal common law rule applicable to resolve priority will not exceed the amount payable under this Plan.
of coverage disputes between a self-funded ERISA-qualified
employee benefit plan and a traditional insurance policy The benefits provided by the plans listed below are
dictates that a conflict between the two carriers will be considered in determining duplication of coverage:
resolved in favor of the ERISA plan. Auto Owners Insurance • This Plan;
Co. v. Thorn Apple Valley, Inc., 31 F.3d 371, 374 (6th Cir.
1994), cert. den., 513 U.S. 1184, 115 S. Ct. 1177, 130 L.Ed.2d • Any other group insurance or prepayment plan...
1129 (1995). In such a situation involving conflicting
coordination of benefits provisions, the terms of the ERISA • Any individual automobile “no-fault” insurance plan.
plan, including its COB clause, must be given full effect. Id.
However, this consideration does not necessarily mean that ORDER OF BENEFIT DETERMINATION
the ERISA plan must prevail. Auto Club Ins. Ass’n v. Health
and Welfare Plans, Inc., 961 F.2d 588, 593 (6th Cir. 1992). Certain rules are used to determine which of the plans
There still exists here the issue of which of two apparently will pay benefits first. This is done by using the first of
valid insurance policies, containing what would appear to be the following rules which applies:
irreconcilable “other insurance” clauses, is liable for payment
of the insured’s medical expenses. • A plan with no IOB or Co-ordination of Benefits
(COB) provision will determine its benefits before a
In this particular case, the coordination of benefits plan with an IOB or COB provision.
provisions in the Great-West plan and the Allstate no-fault
policy may conflict to some degree, but are not irreconcilable. • A plan that covers a person other than as a Dependent
Under the Great-West plan, “[a] plan that covers a person will determine its benefits before a plan that covers
other than as a Dependent will determine its benefits before such person as a Dependent.
a plan that covers such a person as a Dependent.”
Great-West defines the term Dependent as a child:
4 Great-West Life v. Allstate Ins. Co. No. 99-1068 No. 99-1068 Great-West Life v. Allstate Ins. Co. 5
• When a claim is made for a Dependent child who is If Allowable Expenses are identified as excess on the
covered by more than one plan: . . . declarations page, the injured person must seek
treatment afforded for, or payable by his other coverage
• A plan that covers a person as: before we will be liable for any excess not paid for by
- a laid-off Employee; or such other coverage. You have a duty to mitigate your
- a Retired Employee; or damages.
- a Dependent of such Employee;
will determine its benefits after the plan that does not Following submission of the claim to the employee benefit
cover such person as: plan, Great-West administered payments of nearly $500,000
- a laid-off Employee; or for the medical expenses related to Matthew’s accident.
- a Retired Employee; or Great-West then sued Allstate for recovery of those
- a Dependent of such Employee. expenditures on the basis of its contention that Allstate is first
If one of the plans does not have this rule, and if, as a in priority for payment of Matthew’s medical expenses
result, the plans do not agree on the order of benefits, pursuant to its integration of benefits provision. Both parties
this rule will not apply. submitted motions for summary judgment.
• If none of the above rules establishes the order of On December 8, 1998, after the parties waived oral
payment, a plan which the person has been covered for argument, the district court issued an order granting Great-
the longer time will determine its benefits before a West’s motion for summary judgment and denying Allstate’s
plan covering that person for a shorter time. motion for summary judgment. The court determined that the
rule pertaining to the “Order of Benefit Determination” of
Under the Allstate policy, the COB clause provides as Great-West’s integration of benefits provision – stating that
follows: “a plan that covers a person other than as a Dependent will
determine its benefits before a plan that covers such a person
Coordination of Benefits as a Dependent”– resolved the priority dispute in favor of
1. If Allowable Expenses are identified as excess on the Great-West. The Allstate plan, in other words, covered
declarations page, Allowable Expenses benefits will be Matthew as a “resident relative,” while the Great-West plan
reduced by any amount paid or payable under the covered him as a Dependent, thus making Allstate’s coverage
provisions of any: primary.2
a) individual, blanket or group accident disability or
hospitalization insurance. Allstate filed a timely notice of appeal to this Court on
b) medical or surgical reimbursement plan. January 7, 1999.
c) automobile no-fault benefits or medical expense
benefits, or premises insurance affording medical
2
expense benefits. The district court, in granting declaratory relief in favor of Great-
West, stated:
This reduction applies only to amounts that are Defendant Allstate Insurance Company’s obligation to pay
duplication of payment for the same items of loss or benefits to or on behalf of Matthew Gerig in connection with
Mr. Gerig’s injuries incurred in his February 26, 1996
expense. This reduction applies only to you or a automobile accident is primary to Plaintiff Great-West Life &
resident relative. Annuity Insurance Company’s obligation to pay the same
benefits.