it's number fifteen two three two three farm bureau general insurance versus blue cross blue shield of michigan at all argument not to fifteen minutes per side mr morning runners fred baker on behalf of farm bureau i've reserved three minutes for rebuttal and when i asked my mother the meaning of interest to seize the first thing she did was to correct my pronunciation for which i thank her today and then she explained to me that interest to seize prefer the word refers to the face of the places that are really holes in a grid and she used a very homely example she had a climbing rose which grew on a lattice she said the holes in the  there is no federal common law but in fact there is and when i did my due diligence on this panel i discovered that judge  who has written seventy seven opinions that discuss arista seven of which also involve federal common law and its application in a risk i learned something from reading your opinion litchfield against u p s in which you pointed out that only two statutes so preempt state common law that they require the development of federal common law one of them is a result the other is the federal labor management relations act and you said that the a da does not preempt and we don't look to state law in that case  what we saw in this case on behalf of farm bureau was the development of some federal common law under arizona i'll begin by pointing out that a c o b or coordination of benefit dispute cannot possibly be a prerequisite to a federal common law or the application of federal common law for the simple reason that in one nine hundred ninety four this court definitively decided twenty two years ago that when there are two coordination of benefit clauses one in a plan and a recipient and one in an insurance policy the plan wins because a result preempts state law so your degree there is no priority dispute in this case right that's correct and there doesn't need to be one he blue cross concedes that  yes they would be first in line absolutely if they determined under their plan that the treatment rendered was medically necessary and that's really the question we're trying to get to and have never been allowed to get to in this case but there are many ways to determine priority your honor the coordination of benefits clause is certainly not one of them anymore since torn apple valley in one thousand nine hundred four the plan wins it has a coordination of benefits clause the the real question is how do we determine which policy which the plan or the policy has primary responsibility to pay for poor mr van camp's treatment there is with a catastrophic brain injury i'm here i did what i did farm bureau go ahead and pay pay the freight here without without about to say anyway first the farm bureau paid because one of the unique aspects of this case one of the reasons it's one of the interest to season the risk is that farm bureau is an auto insurer and michigan has the most unique no fault plan in the united states under that plan one of the rules is that when there's a dispute between there's a war between insurers the court and the legislature have both said in michigan we don't care you can solve your dispute after you pay and under the darnell against of auto owner's case that cited in my brief the rule is very clear farm bureau as the only auto insurer here ultimately had to make a payment because if it doesn't we were talking to special treat we were working with them we told them sooner or later this it could get sorted out but when it was clear that a blue cross was was but you you paid way after you file the complaint this is a twelve b six we decided the district court decided based on what's in the complaint payments not part of a complaint and nor does it need to be what we needed to find out was who has priority here not coordination of benefits but priority i don't understand that's a twenty six case and we just look to the complaint well it's actually not a twelve b six case because matters outside the complaint were looked to both by the court and relied upon by us in our motion in our response to the motion i don't want to get in the way of the others were address well the key here is that this is not a court nation of benefits case this is an interesting case and it is interesting because we have unique circumstances one farm bureau was never informed by blue cross blue cross knew that it had an auto insurer it knew that it denied coverage it knew that it had an appeal pending it knew that it had denied that appeal in february excuse me  it denied it yes and on february fourteenth of twenty fourteen none of that was ever passed along to auto owners which was trying to get discovery which it had started a decade action in december of and thirteen because special priest art of the look to us for payment we said we think blue cross has priority here and in fact they admit they do but they wouldn't tell us the basis for their denial they wouldn't tell us what their plan said the court had to order a blue cross to turn that over to us in may of two thousand and fourteen and guess when they did they gave it to us on the anniversary of the fourth month deadline for taking a second level of appeal we didn't get that information until it was too late even if we had paid and become equitably subrogated until it was too late to pursue any administrative remedy under the plan so that's what our joint notices to the court on june nineteenth of twenty fourteen we've been denied discovery we just discovered we just found from documents that blue cross turned over to us pursuant to the court's order in may that the appeal deadline is has passed and we need a determination who has priority here i guess something fused by what you're looking for because again i thought blue cross has already conceded they would have priority if there was a liability which they say there isn't because i guess their view the care was greater in some sense than necessary we're trying to get to the question of medical necessity something with the court never reached because it was only a slight thought there had to be a court nation of benefits dispute for a federal common law remedy to apply there there are two sections of arista what what is the basis then you know the court to come in and  statute is designed to provide a national uniformity for the payment of benefits and for the administration of plans and there has to be a means of determining when there is an admission that there is a primary coverage but there has been no opportunity for the insurer to secure a determination of whether the plan applies because all information was withheld until after it was too late to invoke the plan's procedures for getting that determination there has to be a remedy in federal court applying federal common law this court said into an apple congress explicitly directs the federal courts to develop a determination of whether as blue cross said there is no medical necessity for this treatment all of it they denied it as we finally found out on the basis that it was rendered in the skilled care facility which had been prescribed by mr van camp physician and which is covered by the plan if it is prescribed by the treating physician what effect of any upon your argument is the fact that the event camps for whatever reason did not pursue their running what it is why would it affect legally upon the arguments you're making or does their failure to exhaust have that effect you some sort of like so no it doesn't oh no it does not your honor and the reason it doesn't  that point equitably subrogated we had no standing under the plan to pursue that appeal thank you morning honors i have a blue cross blue shield of michigan this matters a claim for benefits under i think that's pretty clear what brother counsel said here that they're trying to get to the question of medical necessity apart from the intricacies of that denial that's a garden variety claim for benefits under a so it's very clear as to who can bring that type of suit a suit challenging a denial for a claim for benefits aren't accoun in correct in his argument with respect to food futility in as much as he tells us that your production of documents left them no time  there's two ways to that that can be addressed one futility isn't determined by an untimely vocation of the administrative appeal right so one that it never would have been timely the second part of it regarding this in title meant to the no not i didn't follow that answer i'm sorry there's a certain timeframe in which they need correcting is counsel correct in telling us that it was only at the last minute  cross produced the documents that allowed them to perceive that the time had run the documents were produced in june certainly when the timeframe for the appeal process had  run out or been close to running out how much and i was left this is where the futility argument i take it comes in yes and no i think their argument is that it's futile because they didn't have enough time to to you know invoke the appeal process or urge engage him selves in the appeal process and i take it but when you when you sort of take a step back to that in correct incorrect argument incorrect please give us your side of that yes it's incorrect in regard futility is not determined by whether the appeal was filed timely or not futility is whether there can be a clear indication as to whether it would be overturned on that appeal and that's not what we have here there's no clear indication that had they appealed that it would have been overturned on that appeal and that's the standard for judging the futility we're going to go ahead taking you back a step to big picture is it your view that if there's a dispute as to which insurance company should pay when both at least have some potential liability there's no really for a company the position of farm bureau no i believe the courts have established relief in this instance there's certainly direct standing by a participant or a beneficiary to bring claim for benefits the courts have also given derivative standing to assignees as well a if that's the question you farm bureau as either of those two they were not a suburb until they paid the claims which was well after this case had been filed it was about a month before the opinion was run by by the judge and that's where argument was the foundation of our argument always was in this case when this case were was filed they were seeking a challenge to that medical necessity to dial but they don't have standing to do that unless they have derivative standing through a participant or beneficiary they only attain that standing once they paid the claims which was well after this case had been filed and the futility piece and the entitlement to the notice of denial i think that's a bit of a red herring would be looking to derivative standing the case from the southern district is barrack's clinics of ohio versus longer berger family companies group medical plan for fifty nine apps up to six hundred twenty three it says quote and assigning who has not given proper notice of its status to the plan administrators or is not entitled to notice of a denial in the same vein here farm bureau was no it was not a  case until july of two thousand and fifteen the documents were given to them in june of two thousand and fourteen over a year after those those had been given to the they never achieved their status that they needed  should have paid claims they jumped the gun filing the suit earlier right they did pay they did almost two years after these claims were originally denied these claims were denied in july twenty third and they didn't pay the claims and fifteen they filed the suit in december seeking a declaratory action in koopman for priority dispute which didn't exist the only dispute that was issued was a claim for benefits if they wanted to get to that challenge they needed to pay the claims and you're saying the only way that they can contest which of the two companies is liable is if they pay you know they put up all the money that you've refused to put up it seems and their second priority it just seems like a pretty expensive ticket to get into the courtroom they also have the ability to challenge whether claims are also payable under their policy  well under the michigan statute it's whether they're reasonably medically necessary if they felt that the these services were not reasonably medically this fight with you would be a fight with their insurer correct of this fight with you they to to pay you know close to a million dollars and you don't have to do any well i think it always backed whether the claims are covered under the policy i mean i think i think the plan is entitle to its denial if it feels that the claims  not covered under the policy and that's what's happening here yes we ask for primary and as we've indicated we've admitted that but we're also allowed to determine whether claims are covered under that plan i haven't seen it in this instance but i guess i i t certainly may be a possibility that they could have received in the simon of benefits from the member and maybe they could have pursued it that way without having to pay it you know in the instance of lately when a medical possibility but i think this goes back to the say idea that the resupplying isn't is allowed to make its denial based on the terms of the plan now whether and to what bearing that has on the secondary  apparently have a disagreement with you about whether payment was due under the plan and they feel it is i guess for that reason they've made some payment and you feel there isn't  you're saying that the only way they can just spew the liability under the plan itself is to to buy their way into the position of a suburb i think makes that very clear i think how does it make it very clear i think under the statute under five zero to a one b it permits a claim for benefits which i believe that the lens that we're looking at right now and it says there are two parties that can bring that  but ultimately that standing is still derivative of that participant beneficiary it's not creating another subset of folks that can bring it it's almost as if the member had brought it themselves through the assignment or as several of the member who have achieved derivative standing of those two folks and if that requires payment to achieve that derivative standing i think that's what the courts have established and that's what a recess has established that those are the only two ways that you can achieve this direct standing  or derivative standing for a claim for benefits they didn't do that when the they jumped the gun in this case the argument obviously is that despite having failed to meet the requirements of being on this track counsel's argument today is that we fit within the within the trying to get a federal common law claim so what's your help us with that federal common laws only look to w in there and of speaks to this that almost all that cases that her look too in this space are corden asian of benefits cases but when you're looking at something that involves plan interpretation it is a claim for benefits  too i mean it's his very specifically that they sever he can bring a claim for benefits actually mean that we're not disputing that here i'm not saying that they don't have the ability to do that but when the suit was filed in and when our response was filed they were not a participant or a beneficiary certainly and they certainly didn't have derivative standing because those claims were not paid until almost a year and a half after the amended complaint was filed probably over a year and a half after that they didn't have standing to and that was always our  i'm asking you even had piped up about that it was still too late the payment date didn't leave them in the in the shoes at the right time in the shoes of the been the decision on the motion for reconsideration acknowledge that that despite the fact that they made that payment achieve the standing that was necessary the derivative standing they still had the probably exhaustion which had not been accomplished and that that's why the the the dismissal stuck in that instance because that still had not been shored up instance forecloses the case and it should be dismissed thank you if you were listening carefully you just heard counsel assert that the only way we could achieve standing to challenge the medical necessity determination was to pay the claim without having any knowledge of the plan because they refused to provide us any information about the plan or its deadlines or the status of the claim they didn't even inform us that of the denial or the basis for the denial until the court ordered them to do so long after the deadline for any appeal had passed what for what blue cross just said is that we can insure an auto insurer has to pay in the dark with no knowledge and become a somebody of the insured under their plan your your coverage would have to include payment as well so additionally we had to be something you already of the plant participant that's correct and we and we did dispute that but  we did not dispute our obligation to pay but we said if it's not medically necessary under their plan it may not be reasonably necessary under ours so so that again required a determination by the court excuse me that may sound harsh to make the papers but you're only required hey if you were coverage would include payment right that is correct but if blue cross has priority as they say they do and they won't even tell us that they admit they have priority until after we've made a payment what what the decision below stands for is the proposition that whenever blue cross refuses to pay someone else has to step in before and pay before they can even challenge that determination and that's not what to me if you have your you know your own independent obligation under your policy there is that well i don't challenge that that in fact there is a limit of a million dollar limit on blue crosses up legation here after that we pay for ever basically because under the no fault law there's a limit i think i mean kind of what you're making here is sort of an equitable argument absolutely and those usually don't fare too well when one tries to plant them in the middle of a very complex carefully drawn statutory regime in which the risk undoubtedly is i mean you want to have a fight about their liability under the plan to pay benefits that is a classic five zero one five zero two a one b claim we see it all the time congress has a numerated certain kinds of parties that can bring them bring that kind of claim specifically and farm bureau as they come to us here seems not to be among them i mean why isn't that just the end of it congress has chosen not to give you the cause of action you're trying to assert well first of all we do have that standing now because we have made payment and that gives us standing under stand congress has said who can bring this kind of claim and unfair or not it seems that your client is not in that position your honor i with respect i want to point out that bellfield isn't didn't you answer my question i appreciate it and i say i'm out of time thank you thanks thank you for your argument we will consider your case carefully and issue an opinion in due course and the court