Opinion
Docket No. 137975.
Decided August 3, 1992, at 9:40 A.M.
Dilley, Dewey Damon, P.C. (by Jennie Boldish Bryan), for the plaintiff.
Mika, Meyers, Beckett Jones (by Jeffrey A. DeVree and Elizabeth K. Bransdorfer), for the defendant.
Plaintiff instituted this action to seek reimbursement from defendant for medical expenses paid on behalf of Sandra Moon and incurred as a result of a motor vehicle accident. Plaintiff asserted that defendant's employee benefit plan included medical benefits subject to coordination under the no-fault act, MCL 500.3109a; MSA 24.13109(1). The trial court held that coordination by plaintiff under the no-fault act was not available because defendant's plan excluded any benefits for motor vehicle accidents in this case. We affirm.
The trial court granted summary disposition in this case under MCR 2.116(C)(10), ruling that there were no genuine issues of material fact and defendant was entitled to judgment as a matter of law. Under this rule, summary disposition is appropriate only when there is no factual support for a claim. See SSC Associates Limited Partnership v General Retirement System of the City of Detroit, 192 Mich. App. 360, 363-365; 480 N.W.2d 275 (1991).
The parties stipulated the facts in the trial court. Sandra Moon was injured in an automobile accident on November 19, 1988. Her no-fault automobile insurance policy, issued to her father, Harold Moon, contained a valid coordination of benefits provision pursuant to MCL 500.3109a; MSA 24.13109(1). The automobile accident occurred in Michigan while Sandra Moon was a resident of Michigan.
At the time of her accident, Sandra Moon and Harold Moon were both covered under the Rospatch Corporation Employee Benefit Plan, which was administered pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. The Rospatch Corporation Employee Benefit Plan (defendant) contained two separate provisions purporting to exclude the payment of expenses incurred as a result of automobile accidents:
MICHIGAN NO-FAULT EXCLUSION
Benefits are not payable under this Plan for injuries received in an accident involving a car or other motor vehicle.
OUT OF MICHIGAN NO-FAULT EXCLUSION
Benefits will not be paid under this plan for injuries received in an accident involving a car or other motor vehicle which is owned or leased by a covered person or any member of his immediate family or involving any car or other motor vehicle for which there is in effect, or is required to be in effect, any policy of No-Fault insurance. This exclusion is not applicable to expenses not paid by any policy of No-Fault insurance as a result of state required policy deductibles or maximums.
Plaintiff paid the medical expenses incurred by Sandra Moon under its no-fault policy. Defendant reviewed those expenses and determined that if it were required to pay expenses for the injuries, it would pay $13,546.85. The only issue the parties could not resolve was whether defendant had to pay any expenses associated with Sandra Moon's automobile accident.
On appeal, plaintiff challenges the trial court's ruling that defendant's plan provided for the exclusion of benefits for injuries incurred in this case. Plaintiff claims defendant's plan provided for a coordination of medical benefits, and therefore plaintiff was entitled to seek reimbursement under MCL 500.3109a; MSA 24.13109(1).
The trial court held that, despite the ambiguity in the two different clauses, defendant's plan excluded benefits in this case and did not provide for coordination with other insurance benefits. The trial court held that defendant's plan was unambiguous because the Michigan exclusion for no-fault benefits was the only provision that applied.
The seminal case in Michigan regarding coordination of benefits is Federal Kemper Ins Co, Inc v Health Ins Administration, Inc, 424 Mich. 537, 551-552; 383 N.W.2d 590 (1986). The Supreme Court held that the defendant health insurer, under a group plan, was primarily liable for medical coverage as a result of a motor vehicle accident where the defendant's coordinated benefits clause conflicted with the plaintiff's no-fault policies. The Court reasoned that because the Legislature required insurers to offer coordinated coverage with other health insurance under no-fault policies in order to reduce premiums, the no-fault insurer must be secondarily liable in order to effectuate the Legislature's intent. Id., pp 546, 551-552.
The application of Federal Kemper to this case depends on whether defendant's plan can be construed as including a provision for the coordination of benefits or for the exclusion of coverage. If defendant's plan included a "pure" exclusion, then it could not be required to coordinate its benefits with those paid in accordance with the no-fault act.
In Auto-Owners Ins Co v Autodie Corp Employee Benefit Plan, 185 Mich. App. 472, 474; 463 N.W.2d 149 (1990), an almost identical clause was interpreted as an exclusion rather than a coordination provision. The panel relied on Transamerica Ins Co of North America v Peerless Industries, 698 F. Supp. 1350, 1355-1356 (WD Mich, 1988), which held that because the exclusion in the defendant's plan for automobile accidents under Michigan's no-fault act was clear and unambiguous, no other health or accident insurance existed for purposes of MCL 500.3109a; MSA 24.13109(1). Peerless, supra, pp 1353, 1355. This type of an exclusion is considered a "pure" exclusion, because it clearly is not dependent upon the existence of any other insurance. Transamerica Ins Co of America v IBA Health Life Assurance Co, 190 Mich. App. 190, 194-195; 475 N.W.2d 431 (1991).
Plaintiff contends this case should be distinguished from Autodie because defendant's plan appears to coordinate benefits with no-fault insurance benefits for motor vehicle accidents that occur outside the State of Michigan. This arguably is an "escape" exclusion that does not avoid coordination under MCL 500.3109a; MSA 24.13109(1). See Peerless, supra, pp 1351, 1354; Auto-Owners Ins Co v Lacks Industries, 156 Mich. App. 837, 838-839; 402 N.W.2d 102 (1986).
We believe that this "escape" provision is inapplicable and irrelevant in this case because the parties agree that Sandra Moon's accident occurred in Michigan while she was a resident of Michigan. Generally, exclusions in insurance contracts are to be read independently of one another. Hawkeye-Security Ins Co v Vector Construction Co, 185 Mich. App. 369, 384; 460 N.W.2d 329 (1990). Under the facts of this case, the only applicable provision clearly excludes coverage, and another inapplicable exclusion cannot be relied upon to make the entire plan ambiguous. Id., pp 384-385. See also Fresard v Michigan Millers Mutual Ins Co, 414 Mich. 686, 697-698; 327 N.W.2d 286 (1982) (FITZGERALD, C.J.).
Defendant also argued below, as an alternative theory, that because it was self-insured, 29 U.S.C. § 1144(a) preempted the coordination of benefits under the state no-fault insurance act. Defendant conceded through the testimony of its administrator that its plan includes stop-loss insurance coverage, or excess insurance coverage for claims in excess of $50,000. Defendant pays all benefits due claimants under the plan, but defendant can seek reimbursement for those claims that exceed $50,000 as a means of protecting the plan. The trial court held that defendant was not a self-insured plan within the meaning of the ERISA because of the excess insurance coverage, and consequently federal law did not preempt the coordination of benefits in this case.
We believe the trial court erred in this portion of its ruling. The panel in Auto Club Ins Ass'n v Frederick Herrud, Inc (On Remand), 191 Mich. App. 471, 475; 479 N.W.2d 18 (1991), recently held that stop-loss coverage does not transform an employee benefit plan into an insured plan for purposes of the ERISA, citing FMC Corp v Holliday, 498 US ___; 111 S Ct 403; 112 L Ed 2d 356, 366 (1990). We are satisfied that Auto Club, supra, was correctly decided and, under Administrative Order No. 1990-6, 436 Mich. lxxxiv, and Administrative Order No. 1991-11, 439 Mich. xlv, both this Court and the trial court are bound by that decision.
In FMC Corp, supra, 112 L Ed 2d 362, Justice O'Connor wrote in the Court's opinion that the plan in that case was self-funded because it did not purchase an insurance policy from any insurance company in order to satisfy the obligations to its participants. Consequently, an insurance policy that merely protects the plan from disastrous consequences, but does not directly insure the obligations owed to the plan members, does not affect the plan's status as self-insured, according to the panel in Auto Club, supra.
But see Frankenmuth Mutual Ins Co v Meijer, Inc, 176 Mich. App. 675, 677-679 ; 440 N.W.2d 7 (1989), wherein another panel of this Court held that stop-loss coverage does not render an ERISA plan uninsured. The panel in that case placed its reliance on Northern Group Services, Inc v Auto Owners Ins Co, 833 F.2d 85 (CA 6, 1987), opinion clarifying first decision 898 F.2d 1125 (CA 6, 1990), which the panel in Auto Club, supra, p 474, believed was effectively overruled by the decision in FMC Corp, supra. The federal courts have also held that FMC Corp, supra, overruled Northern Group, supra. Auto Club Ins Ass'n v Health Welfare Plans, Inc, 961 F.2d 588, 592-593 (CA 6, 1992), and cases cited therein. But see Michigan United Food Commercial Workers Unions v Baerwaldt, 767 F.2d 308, 312-313 (CA 6, 1985); Auto Club Ins Ass'n v Mutual Savings Loan Ass'n, 672 F. Supp. 997, 1000 (ED Mich, 1987); State Farm Mutual Automobile Ins Co v American Community Mutual Ins Co, 659 F. Supp. 635, 637-639 (ED Mich, 1987), aff'd 863 F.2d 49 (1988) (stop-loss insurance only did not affect the status of an employee benefit plan as insured for purposes of the savings clause pursuant to the ERISA). See also Udell v Georgie Boy Mfg, Inc, 174 Mich. App. 171, 179; 435 N.W.2d 413 (1988), vacated and remanded for reconsideration 432 Mich. 889 (1989).
Affirmed in part and reversed in part.