Source: https://law.justia.com/cases/federal/appellate-courts/F2/970/206/269822/
Timestamp: 2019-10-21 05:12:16
Document Index: 658352334

Matched Legal Cases: ['§ 3109', '§ 514', '§ 1144', '§ 1144', '§ 1144', '§ 1144', '§ 500', '§ 3109', '§ 3109']

Lincoln Mutual Casualty Company, a Michigan Insurancecompany, Plaintiff-appellant, v. Lectron Products, Inc., Employee Health Benefit Plan,defendant-appellee, 970 F.2d 206 (6th Cir. 1992) :: Justia
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Lincoln Mutual Casualty Company, a Michigan Insurancecompany, Plaintiff-appellant, v. Lectron Products, Inc., Employee Health Benefit Plan,defendant-appellee, 970 F.2d 206 (6th Cir. 1992)
US Court of Appeals for the Sixth Circuit - 970 F.2d 206 (6th Cir. 1992) Argued June 12, 1992. Decided July 29, 1992. Rehearing Denied Aug. 25, 1992
The district court referred the motions to a magistrate judge, who filed a report and recommendation in which she determined that ERISA preempts the application of § 3109a. Relying on FMC Corp. v. Holliday, --- U.S. ----, 111 S. Ct. 403, 112 L. Ed. 2d 356 (1990), she concluded that the State of Michigan could regulate neither the provisions of the Plan nor the terms and conditions of the payment of benefits under the Plan. She recommended granting the Plan's motion for summary judgment and denying Lincoln's cross-motion. The district court entered an order adopting the magistrate judge's report, granting the Plan's motion for summary judgment, and dismissing Lincoln's complaint. Lincoln now appeals the entry of judgment in favor of the Plan.
We review a grant of summary judgment de novo. Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962, 965 (6th Cir. 1991). There being no factual issues in dispute, the issues for review in this case are strictly matters of law.
* Clearly, a conflict exists between the coverage terms of the Plan and the statutorily required COB clause of Lincoln's no-fault insurance policy. The general exclusions in the Plan purport to hold no-fault insurers primarily responsible for medical expenses arising from an automobile accident. On the other hand, when insureds elect to pay reduced premiums in exchange for coordinating no-fault benefits with other insurance coverage, Lincoln, a no-fault insurer, is required by the State of Michigan to place primary responsibility for such expenses on the suppliers of "excess medical benefits," such as the Plan. Resolution of this dispute, therefore, requires us to apply § 514(a) of ERISA, the ERISA preemption clause, as set out in 29 U.S.C. § 1144(a). Moreover, because the case implicates Michigan's regulation of insurance, we must consider also subparagraphs 514(b) (2) (A) and (B), 29 U.S.C. §§ 1144(b) (2) (A) & (B), ERISA's so-called "savings" and "deemer" clauses.
29 U.S.C. § 1144(b) (2) (A) (the savings clause).
29 U.S.C. § 1144(b) (2) (B) (the deemer clause).
We summarized the significance of the above provisions in Liberty Mutual Insurance Group v. Iron Workers Health Fund of Eastern Michigan, 879 F.2d 1384, 1386 (6th Cir. 1989), when we stated:
[I]t appears that if a state law "relate [s] to" an ERISA benefit plan it is preempted; but if the state law "regulates insurance" it is not preempted. But an ERISA covered employee benefit plan that provides insurance coverage is "deemed" not to be an insurance company for purposes of state laws regulating insurance, and ERISA, therefore, preempts such state laws.
Next we must address the effect of the contract between the Plan and Harbor, under which Harbor reimburses the Plan for claims the Plan is required to pay in excess of $75,000. In essence, we must determine whether, and to what extent, the Plan's purchase of stop-loss insurance allows the state to regulate the Plan. Lincoln contends that, for claims above $75,000, the Plan is "insured" for ERISA purposes and, therefore, under FMC Corp. v. Holliday, --- U.S. ----, 111 S. Ct. 403, 112 L. Ed. 2d 356 (1990), is subject to regulation by the state.
We conclude that Lincoln's contention is without merit. As the FMC Court instructs us, "if a plan is insured, a State may regulate it indirectly through regulation of its insurer and its insurer's insurance contracts." --- U.S. at ----, 111 S. Ct. at 411 (emphasis added). Because Mich.Comp.Laws § 500.3109a and Michigan case law interpreting § 3109a, see Federal Kemper Ins. Co. v. Health Ins. Admin., Inc., 424 Mich. 537, 383 N.W.2d 590 (1986), would directly regulate the Plan under the circumstances of the instant case, ERISA preempts the application of Michigan law.
Contrary to Lincoln's assertion, FMC does not hold that states are free to regulate ERISA plans insofar as the plans are insured. Instead, we read the FMC Court to hold that states may not regulate ERISA plans but may, consistent with the traditional state regulation of insurance, regulate the companies that insure ERISA plans. Although a plan may be affected by the state's regulations "insofar as [the regulations] apply to the plan's insurer," --- U.S. at ----, 111 S. Ct. at 409, the effect is "indirect" and, therefore, is not prohibited by federal law. In other words, the deemer clause relieves ERISA benefit plans--both uninsured and insured plans--from direct state regulation, but, because the clause does not relieve a plan's insurer, state regulation may have an incidental, or "indirect," effect on ERISA plans.3 Consequently, in the case at bar, ERISA preempts the application of state law even though the Plan holds stop-loss insurance for losses in excess of $75,000. Federal law, not Michigan law, therefore, governs whether Lincoln or the Plan is primarily responsible for the Sissons' medical expenses.
The Plan contends that, once we have determined that ERISA preempts Michigan law, our inquiry is at an end. Determination of the preemption issue, however, does not resolve the dispute between the Plan and Lincoln; it merely answers the question of whether Michigan law governs the dispute. Having answered that question in the negative, we must now address the fact that, as in Auto Club Insurance Association v. Health & Welfare Plans, Inc., 961 F.2d 588 (6th Cir. 1992), the Plan contains a provision that competes with the COB clause of the Sissons' no-fault insurance policy.
As we noted in Auto Club, the fact that § 3109a is preempted by ERISA does not necessarily render Lincoln's COB clause void, nor does it necessarily mean that the Plan's terms prevail. See id. at 593. We have before us, then, two valid, unambiguous, and irreconcilable clauses. Because no federal statutory law addresses the issue of how to resolve the conflict between the clauses, this case must be resolved by applying federal common law. See id.; Winstead v. Indiana Ins. Co., 855 F.2d 430, 433-34 (7th Cir. 1988), cert. denied, 488 U.S. 1030, 109 S. Ct. 839, 102 L. Ed. 2d 971 (1989). In the instant case, the parties did not address this matter before the district court. We must, therefore, as we did in Auto Club, remand the case to the district court where the parties will have an opportunity to brief the issue of how to resolve the conflict under federal common law.
To the extent that our opinion in Northern Group Services, Inc. v. Auto Owners Insurance Co., 833 F.2d 85 (6th Cir. 1987), cert. denied, 486 U.S. 1017, 108 S. Ct. 1754, 100 L. Ed. 2d 216 (1988), held otherwise, it is no longer viable in light of FMC