Christina George v. Allstate Insurance Company

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
CHRISTINA GEORGE, FOR PUBLICATION
August 13, 2019
Plaintiff-Appellant, 9:15 a.m.
v No. 341876
Wayne Circuit Court
ALLSTATE INSURANCE CO., LC No. 16-004953-NF
Defendant-Appellee,
and
AZIZUR ULLAH,
Defendant,
and
SHAJEDA SHARMIN,
Defendant/Cross-Plaintiff,
and
UBER TECHNOLOGIES, INC.,
Defendant/Cross-Defendant
Before: LETICA, P.J., and M. J. KELLY and BOONSTRA, JJ.
PER CURIAM.
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Plaintiff-appellant, Christina George, appeals by delayed leave granted1 the trial court
order granting defendant-appellee, Allstate Insurance Co, partial summary disposition under
MCR 2.116(C)(10). For the reasons stated in this opinion, we reverse and remand.
I. BASIC FACTS
George was injured in a motor-vehicle crash, but she did not have a policy of no-fault
insurance available to her in her household. Accordingly, she filed a claim for no-fault personal
protection insurance (PIP) benefits through the assigned claims plan, which assigned her claim to
Allstate. George also had health insurance and wage disability insurance under a self-funded
plan organized under the Employee Retirement Income Security Act (ERISA), 29 USC 1001 et
seq. The ERISA plan, which is administered by Aetna Life Insurance Company, provides in
relevant part:
NON-DUPLICATION OF BENEFITS
If you and your spouse or domestic partner both work, your family may be
covered by more than one group health plan. The Plan coordinates its payments
with the payments you may receive from other group insurance plans under which
you or your dependents are covered. The following types of plans are coordinated
with your Plan coverage:
* * *
 Motor vehicle insurance (your own or any other responsible party’s) . . . .
HOW TO DETERMINE WHICH PLAN IS PRIMARY
In general, the Plan will be considered primary for:
 Employees . . . .
* * *
The Other Plan is Automatically Primary
Any other plan will be primary if it:
 Does not have a coordination of benefits or non-duplication of benefits
provision;
 Is a program required or provided by law; or
1
George v Allstate Ins Co, unpublished order of the Court of Appeals, entered May 24, 2018
(Docket No. 341876).
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 Is a motor vehicle insurance policy. (In certain states, the motor
vehicle insurance policy allows you to designate your group plan as
primary. If this applies to you, you must submit written proof to Aetna
that you have designated this Plan as primary.)[2]
Thus, benefits under the ERISA Plan are primary, but under certain circumstances the Plan
expressly disavows primary coverage in favor of other insurance benefits, including benefits
claimed under a program required or provided by law. As the assigned-claims insurer, Allstate is
required to provide George with no-fault benefits pursuant to a program, i.e., the Michigan
Assigned Claims Plan (MACP), and the program is required by law, see MCL 500.3172(1).
Therefore, under the terms of the ERISA plan, the benefits under the Plan are secondary to the
benefits available to George under the no-fault act.
Yet, “benefits through the assigned claims carrier are coordinated under MCL
500.3172(2).” Batts v Titan Ins Co, 322 Mich. App. 278, 282; 911 NW2d 486 (2017). MCL
500.3172(2)3 provides:
(2) Except as otherwise provided in this subsection, personal protection
insurance benefits, including benefits arising from accidents occurring before
March 29, 1985, payable through the assigned claims plan shall be reduced to the
extent that benefits covering the same loss are available from other sources,
regardless of the nature or number of benefit sources available and regardless of
the nature or form of the benefits, to a person claiming personal protection
insurance benefits through the assigned claims plan. This subsection only applies
if the personal protection insurance benefits are payable through the assigned
claims plan because no personal protection insurance is applicable to the injury,
no personal protection insurance applicable to the injury can be identified, or the
only identifiable personal protection insurance applicable to the injury is, because
of financial inability of 1 or more insurers to fulfill their obligations, inadequate to
2
On appeal, Allstate argues that the ERISA plan language does not apply because the ERISA
plan states that it is primary for employees and it requires the existence of multiple insurance
plans. Allstate equates an “insurance plan” with an insurance policy and, therefore, asserts that
the coordination of benefits clause is not triggered. However, the ERISA plan provides that
“motor vehicle insurance” plans coordinate with the ERISA plan, and it also provides that a
program required or provided by law is primary to the ERISA plan. Taking those provisions
together, it is clear that the plan expressly intended to coordinate coverage under circumstances
where a policy of insurance did not exist, but the benefits were nevertheless available by law.
3
The no-fault act, MCL 500.3101 et seq., was substantially amended by 2019 PA 21, effective
June 11, 2019. This case was commenced before the amendment and, therefore, it is controlled
by the former provisions of the no-fault act. See Johnson v Pastoriza, 491 Mich. 417, 429; 818
NW2d 279 (2012) (stating that as a general rule amendments to statutes are presumed to operate
prospectively only). All references to the no-fault act are to the version in effect at the time this
action was commenced.
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provide benefits up to the maximum prescribed. As used in this subsection,
“sources” and “benefit sources” do not include the program for medical assistance
for the medically indigent under the social welfare act, 1939 PA 280, MCL 400.1
to 400.119b, or insurance under the health insurance for the aged act, title XVIII
of the social security act, 42 USC 1395 to 1395kkk-1. [emphasis added.]
Therefore, under MCL 500.3172(2), an insurer providing benefits under the assigned claims plan
is generally entitled to a set-off for any other benefits covering the same loss that are received by
or on behalf of the injured party. The only statutory exemption to the right to a set-off is if the
benefits covering the loss are received under either Medicare or Medicaid.
After George filed her complaint against Allstate asserting that it was primarily
responsible for payment of her first-party PIP benefits, Allstate moved for partial summary
disposition. Allstate asserted that because the ERISA plan was a benefit source that covered the
same loss, it was entitled to a set-off under MCL 500.3172(2). In response, George asserted that
MCL 500.3172(2) was preempted by the ERISA. The trial court, however, reasoned that
because George’s no-fault benefits were only available through the assigned claims plan and not
a no-fault insurance policy, the state law, MCL 500.3172(2), was not preempted by the ERISA.
Accordingly, the court granted partial summary disposition in favor of Allstate, ruling that
Allstate was secondary and that the ERISA plan was primary for medical expenses and wage-
loss benefits.
II. FEDERAL PREEMPTION
A. PRESERVATION
Allstate asserts that George’s arguments on appeal as they relate to the language of the
ERISA plan are unpreserved. An issue is preserved for appeal if it was raised, addressed, and
decided by the trial court. Polkton Charter Twp v Pellegron, 265 Mich. App. 88, 95; 693 NW2d
170 (2005). Based on our review of the lower court proceedings, it is clear that George’s
primary argument was that because her health insurance was through a self-funded ERISA plan,
the set-off provision in MCL 500.3172(2) was preempted by federal law. She did not directly
reference the coordination of benefits (COB) in the ERISA plan, nor did she provide a copy of
the Plan language until she filed a motion for reconsideration of the trial court’s order granting
summary disposition. The trial court granted summary disposition, concluding that MCL
500.3172(2) was not preempted by the preemption provision in the ERISA. As a result, the issue
of federal preemption was raised before and decided by the trial court, so that part of the issue is
undisputedly preserved.
Yet, to the extent that George’s argument is reliant on the language in the ERISA plan, it
is clear that those aspects of her argument were raised and supported for the first time on
reconsideration. As a general rule an issue is not preserved if it is raised for the first time in a
motion for reconsideration in the trial court. Vushaj v Farm Bureau Gen Ins Co of Mich, 284
Mich. App. 513, 519; 773 NW2d 758 (2009). Still, as the ERISA plan was attached to a lower
court filing, it is part of the record and we may consider it on appeal. See MCR 7.210(A)(1).
Moreover, to the extent that the aspects of the preemption issue relating to the language in the
ERISA plan are unpreserved, we may overlook the preservation requirements in civil cases “if
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the failure to consider the issue would result in manifest injustice, if consideration is necessary
for a proper determination of the case, or if the issue involves a question of law and the facts
necessary for its resolution have been presented.” Smith v Foerster-Bolser Constr, Inc, 269
Mich. App. 424, 427; 711 NW2d 421 (2006). Because the facts necessary for resolution of the
issue were presented below and are undisputed on appeal, and because the issue involves a
question of law that was actually decided by the trial court in response to the primary argument
raised by the parties, we will consider all aspects of George’s argument on appeal.
B. STANDARD OF REVIEW
George argues that the trial court erred by granting partial summary disposition in
Allstate’s favor. We review de novo a trial court’s decision on a motion for summary
disposition. Barnard Mfg Co, Inc v Gates Performance Engineering, Inc, 285 Mich. App. 362,
369; 775 NW2d 618 (2009). Under MCR 2.116(C)(10), a party is entitled to summary
disposition if “there is no genuine issue as to any material fact, and the moving party is entitled
to judgment or partial judgment as a matter of law.” “A genuine issue of material fact exists
when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an
issue upon which reasonable minds might differ.” West v Gen Motors Corp, 469 Mich. 177, 183;
665 NW2d 468 (2003). When reviewing a motion for summary disposition, the trial court must
consider the pleadings, affidavits, depositions, admissions and other documentary evidence
submitted in the light most favorable to the nonmoving party. Joseph v Auto Club Ins Ass’n, 491
Mich. 200, 206; 815 NW2d 412 (2012). All reasonable inferences must be drawn in favor of the
nonmoving party. Dextrom v Wexford Co, 287 Mich. App. 406, 415-416; 789 NW2d 211 (2010).
C. ANALYSIS
“When determining whether federal law preempts a state statute, this Court must look to
congressional intent.” American Med Security, Inc v Allstate Ins Co, 235 Mich. App. 301, 305;
597 NW2d 244 (1999). The United States Supreme Court has explained that “[p]reemption 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) (quotation marks and
citation omitted). The ERISA explicitly addresses the issue of preemption in three separate
clauses:
The preemption clause itself, 29 USC 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 USC 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. Further, 29 USC 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. [American Med Security, Inc, 235
Mich. App. at 305.]
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Our Supreme Court has previously addressed whether MCL 500.3109a was preempted by
the ERISA. In doing so, the Court recognized that under MCL 500.3109a “a no-fault insurer is
secondarily liable for insurance coverage where there is any other form of health care coverage
and where the insurers both sought to escape liability through the use of competing coordination-
of-benefits clauses.” Auto Club Ins Ass’n v Frederick & Herrud, Inc (After Remand), 443 Mich.
358, 383-384; 505 NW2d 820 (1993), citing Fed Kemper Ins Co, Inc v Health Ins Admin, Inc,
424 Mich. 537, 546; 383 NW2d 590 (1986). In Auto Club Ins Ass’n, the ERISA plan and the no-
fault policy contained competing coordination-of-benefits clauses; therefore, under MCL
500.3109a and Federal Kemper, the no-fault policy would have been secondary to the ERISA
plan.
Our Supreme Court, however, determined that under principles of federal preemption,
“MCL 500.3109a does not reach an ERISA plan with a COB clause where that clause is
unambiguous.” Auto Club Ins Ass’n, 443 Mich. at 387-388. In reaching that conclusion, the
Court examined a number of opinions from the United States Supreme Court:
In Alessi [v Raybestos-Manhattan, Inc, 451 U.S. 504; 101 S. Ct. 1895; 68 L
Ed 2d 402 (1981)], the United States Supreme Court held that state law was
preempted to the extent that it attempted to control the terms of an ERISA pension
plan. In Shaw [v Delta Air Lines, Inc, 463 U.S. 85; 103 S. Ct. 2890; 77 L. Ed. 2d 490
(1983)], the Court interpreted the preemption clause to prevent state regulation of
welfare benefits in multibenefit ERISA plans, while noting the danger of the
administrative difficulty that would result from piecemeal state legislation. Next,
the Court defined the saving clause to preserve state law mandating certain
minimum benefits in an ERISA plan as long as the state law regulates insurance
law rather than an ERISA plan directly. Metropolitan Life [Ins Co v
Massachusetts, 471 U.S. 724; 105 S. Ct. 2380; 85 L. Ed. 2d 728 (1985)]. Although
the Court majority in Fort Halifax [Packing Co, Inc v Coyne, 482 U.S. 1; 107 S. Ct.
2211; 96 L. Ed. 2d 1 (1987)], concluded that a one-time severance payment
required by state law did not relate to an ERISA plan so that it was preempted, the
majority did reiterate the ERISA purpose of avoiding variable state regulation that
would pose administrative burdens to plan administrators. Finally, the Court
concluded in FMC Corp that states could not regulate the contractual terms of
ERISA benefits plans in cases of self-funded plans. ERISA plans, however, are
subject to indirect regulation in a case in which a state regulates an insurance
carrier that has contracted with the plans to provide coverage for claims made on
the plans. [Id. at 386.]
The Auto Club Court then explained:
[T]he COB clause in an ERISA policy must be given its clear meaning without
the creation of any artificial conflict based upon MCL 500.3109a. Therefore,
because both plans provide that no-fault insurance is primary where the potential
for duplication of benefits occurs, we hold that the ERISA plans’ terms control.
The no-fault insurer, ACIA, is primarily liable for the benefits at issue. Although
the Michigan statute purports to regulate insurance and not ERISA plans, we
conclude that it has a direct effect on the administration of the plans in these
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cases because it would virtually write a primacy of coverage clause into the
plans. This is the type of state regulation that would lead to administrative
burdens that the historical progression of federal cases recounted earlier forbids.
[Id. at 387 (emphasis added).]
The ERISA plan in Auto Club was self-funded.4 In American Med, this Court declined to
extend the ruling in Auto Club to cases where the ERISA plan was not self-funded. American
Med, 235 Mich. App. at 306-307. The American Med Court explained:
In FMC Corp, the [United States Supreme] 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 (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, citing
4
On appeal, Allstate asserts that there is no evidence that the ERISA plan in this case was self-
funded. However, George attached a number of documents to her response to Allstate’s motion
for summary disposition. In particular, a March 14, 2017 letter from Aetna stated that George’s
medical benefits “were paid pursuant to an ERISA-qualified self-funded plan as defined by
federal law.” A trial court may consider “substantively admissible evidence” when ruling on a
motion for summary disposition. Barnard Mfg Co, Inc, 285 Mich. App. at 373. Substantively
admissible evidence is not required to be in an admissible form when a trial court rules on a
motion for summary disposition, “[b]ut it must be admissible in content.” Id. (quotation marks
and citation omitted). We conclude that the letter is substantively admissible evidence that
George’s health insurance was through a self-funded ERISA plan.
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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. See also Lincoln Mut Casualty Co v Lectron Products,
Inc, Employee Health Benefit Plan, 970 F2d 206, 210 (CA 6, 1992).
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. [Id. at 305-307.]
Consequently, in order to preempt a state law on a coordination-of-benefits issue, an ERISA plan
must be self-funded, American Med, 235 Mich. App. at 306-307, and contain an unambiguous
coordination of benefits clause, Auto Club, 443 Mich. at 389.
On appeal, Allstate seeks to avoid application of Auto Club by noting that, in that case,
there were two competing COB clauses: one in the ERISA plan and one in the applicable no-
fault policy. Allstate correctly points out that there is only one policy in this case: the ERISA
plan. However, like a COB clause, MCL 500.3172(2) provides for the coordination of benefits.
Specifically, it establishes that where duplicative benefits are available, i.e., where benefits from
multiple sources cover the loss, the assigned-claims insurer is entitled to a set-off, i.e., the insurer
is not primarily liable. Therefore, in this case, there is a state law expressly providing that
George’s ERISA plan is primary whereas the ERISA plan expressly disavows primacy under
these circumstances. Because George’s ERISA plan is self-funded and because it contains an
unambiguous COB clause, Allstate is primarily liable for the benefits at issue here. To hold to
the contrary would have the direct effect of dictating the terms of the ERISA plan, which the
state is not permitted to do under federal law. 5 Auto Club, 443 Mich. at 389-390.
Reversed and remanded for further proceedings. We do not retain jurisdiction. George
may tax costs as the prevailing party. MCR 7.219(A).
/s/ Anica Letica
/s/ Michael J. Kelly
/s/ Mark T. Boonstra
5
Given our resolution, we need not address George’s alternative arguments.
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