American Medical Security, Inc. v. Allstate Insurance

597 N.W.2d 244 (1999) 235 Mich. App. 301

AMERICAN MEDICAL SECURITY, INC., as Subrogee of John Perri, Plaintiff-Appellee,
v.
ALLSTATE INSURANCE COMPANY, Defendant-Appellant.

Docket No. 206239.

Court of Appeals of Michigan.

Submitted April 8, 1999, at Detroit. Decided April 20, 1999, at 9:00 a.m. Released for Publication July 27, 1999.

Fisher, Franklin & Ford (by Lauren J. Hammett), Detroit, for the plaintiff.

Garan, Lucow, Miller & Seward, P.C. (by Daniel S. Saylor, Detroit, and Robert L. Goldenbogen, Port Huron), for the defendant.

Before: HOOD, P.J., and HOLBROOK, JR., and WHITBECK, JJ.

PER CURIAM.

The trial court denied defendant's motion for summary disposition and granted plaintiff's cross-motion for summary disposition. Defendant appeals as of right, and we reverse.

John Perri was injured in an automobile accident and incurred medical expenses. At the time of the accident, he had medical coverage through his mother's employer. The employer's benefit plan was administered by plaintiff and the medical coverage was provided under a Certificate of Insurance issued by the United Wisconsin Life Insurance Company. At the time of the accident, Perri was also covered by a no-fault insurance policy issued by defendant to Perri's mother. Both policies contained coordination of benefits clauses, which clauses conflicted. Medical benefits were paid to Perri by plaintiff under the policy issued by United Wisconsin. Plaintiff thereafter sought reimbursement from defendant, claiming that defendant was first in priority to pay the medical expenses pursuant to the coordination of benefits clause found in United Wisconsin's Certificate of Group Insurance.

Defendant moved for summary disposition, citing M.C.L. § 500.3109a: M.S.A. § 24.13109(1) and Federal Kemper Ins. Co., Inc. v. Health Ins. Administration, Inc., 424 Mich. 537, 383 N.W.2d 590 (1986). Plaintiff responded by claiming that § 3109a was preempted by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. It also moved for summary disposition. The trial court ruled in favor of plaintiff. We disagree with the trial court's ruling regarding the issue of preemption.

We review decisions on motions for summary disposition de novo. Spiek v. Dep't of Transportation, 456 Mich. 331, 337, 572 N.W.2d 201 (1998). In addition, statutory interpretation is a question of law that this Court reviews de novo. VandenBerg v. VandenBerg, 231 Mich.App. 497, 499, 586 N.W.2d 570 (1998).

M.C.L. § 500.3109a; M.S.A. § 24.13109(1) requires no-fault insurers to offer, at a reduced premium, personal injury protection benefits that are coordinated with benefits available from other health and accident coverage.^[1]Yerkovich v. AAA, 231 Mich.App. 54, 59-60, 585 N.W.2d 318 (1998), lv. pending. The coordination of benefits clause serves to contain automobile insurance and health insurance costs while eliminating duplicative recovery. Major v. Auto Club Ins. Ass'n, 185 Mich.App. 437, 441, 462 N.W.2d 771 (1990). Under Michigan law, where no-fault coverage and health coverage are coordinated, the health insurer is primarily liable for plaintiff's medical expenses. Federal Kemper, supra. See also Tousignant v. Allstate Ins. Co., 444 Mich. 301, 307, 506 N.W.2d 844 (1993). In Auto Club Ins. Ass'n v. Frederick & Herrud, 443 Mich. 358, 388-389, 505 N.W.2d 820 (1993), and its companion case, the plans at issue were self-funded plans created pursuant to the ERISA, and the Court carved an exception to the rule of law set out in Federal Kemper. It held that the unambiguous coordination of benefits clause found in the ERISA plans^[2] must be given their plain meaning despite the clause in the no-fault policy. Id. at 389-390, 505 N.W.2d 820.

In this case, the parties agree that plaintiff's group plan qualifies as an employee welfare benefit plan under the ERISA. The plan, however, is clearly not self-funded,^[3] but rather has purchased insurance through United Wisconsin. The issue is whether § 3109a is preempted in a situation where the ERISA plan is not self-funded but has purchased insurance coverage. We hold that it is not.

When determining whether federal law preempts a state statute, this Court must look to congressional intent. "Preemption may be either express or implied, and is compelled whether Congress' command is explicitly stated in the statute's language or implicitly contained in its structure and purpose." FMC Corp. v. Holliday, 498 U.S. 52, 56-57, 111 S. Ct. 403, 112 L. Ed. 2d 356 (1990) (citations omitted). The ERISA contains three provisions that address the question of preemption. The preemption clause itself, 29 U.S.C. § 1144(a), is extremely broad and provides that the provisions of the ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." That clause is tempered by 29 U.S.C. § 1144(b)(2)(A), commonly known as the "saving clause," which "returns to the States the power to enforce those state laws that ``regulate insurance.'" FMC Corp, supra at 58, 111 S. Ct. 403. Further, 29 U.S.C. § 1144(b)(2)(B) sets out the "deemer" clause under which employee benefit plans themselves may not be deemed insurance companies for purposes of state laws "purporting to regulate" insurance companies or insurance contracts. FMC Corp, supra at 58, 111 S. Ct. 403.

In FMC Corp, the Court stated:

We read the deemer clause to exempt self-funded ERISA plans from state laws that "regulat[e] insurance" within the meaning of the saving clause. By forbidding States to deem employee benefit plans "to be an insurance company or other insurer ... or to be engaged in the business of insurance," the deemer clause relieves plans from state laws "purporting to regulate insurance." As a result, self-funded ERISA plans are exempt from state regulation insofar as that regulation "relate[s] to" the plans.... State laws that directly regulate insurance are "saved" but do not reach self-funded employee benefit plans because the plans may not be deemed to be insurance companies, other insurers, or engaged in the business of insurance for purposes of such state laws. On the other hand, employee benefit plans that are insured are subject to indirect state insurance regulation. An insurance company that insures a plan remains an insurer for purposes of state laws "purporting to regulate insurance" after application of the deemer clause. The insurance company is therefore not relieved from state insurance regulation. The ERISA plan is consequently bound by state insurance regulations insofar as they apply to the plan's insurer. [Id. at 61, 111 S. Ct. 403 (emphasis added).]

The Supreme Court distinguished between insured and uninsured plans, "leaving the former open to indirect regulation while the latter are not." Id. at 62, 111 S. Ct. 403, citing Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 747, 105 S. Ct. 2380, 85 L. Ed. 2d 728 (1985). It emphasized that "if a plan is insured, a State may regulate it indirectly through regulation of its insurer and its insurer's insurance contracts." FMC Corp, supra at 64, 111 S. Ct. 403. See also Lincoln Mut. Casualty Co. v. Lectron Products, Inc., Employee Health Benefit Plan, 970 F.2d 206, 210 (C.A.6, 1992).^[4]

Section 3109a is not preempted under the circumstances of this case. The employee benefit plan at issue was not a self-funded plan, and plaintiff's insurer, United Wisconsin, was subject to Michigan insurance law and regulation, specifically § 3109a, even where that statute indirectly affects the plan. Our ruling does not allow our state law to control an ERISA plan, but simply recognizes that state law can regulate the insurer of an ERISA plan even if that regulation may indirectly affect the plan, which is the case here.

Having determined that § 3109a is not preempted, we remand for entry of a judgment of no cause of action in favor of defendant.

Reversed and remanded. We do not retain jurisdiction.

NOTES

[1] M.C.L. § 500.3109a; M.S.A. § 24.13109(1) provides:

An insurer providing personal protection insurance benefits shall offer, at appropriately reduced premium rates, deductibles and exclusions reasonably related to other health and accident coverage on the insured. The deductibles and exclusions required to be offered by this section shall be subject to prior approval by the commissioner and shall apply only to benefits payable to the person named in the policy, the spouse of the insured and any relative of either domiciled in the same household.

[2] It is important to note that the coordination of benefits clauses were terms in the self-funded plans themselves, and not in any insurance policies paid for by the plans. Id. at 362, 365, 505 N.W.2d 820.

[3] The trial court did not discuss or decide the issue whether plaintiff's plan was insured or self-funded, finding that defendant did not provide proof with respect to its allegations regarding the issue. We disagree. Defendant provided adequate documentary support to enable the trial court to determine that the plan was not self-funded, but was insured, and plaintiff does not contest that it was insured with a group policy through United Wisconsin.

[4] In Lincoln Mut., the plan was self-funded, but also had stop-loss insurance for catastrophic claims. The Court found that the ERISA preempted state law in the case notwithstanding the stop-loss coverage. The plan was self-funded except for catastrophic claims; thus, § 3109a would directly effect the plan. Note that stop-loss policies do not affect an ERISA plan's status as self-insured. See Wolverine Mut. Ins. Co. v. Rospatch Corp. Employee Benefit Plan, 195 Mich.App. 302, 308, 489 N.W.2d 204 (1992). The Lincoln Mut. Court acknowledged, however, that FMC holds that states may regulate companies that insure ERISA plans even if those state regulations may indirectly effect those ERISA plans. Id.