Opinion ID: 453346
Heading Depth: 2
Heading Rank: 1

Heading: Generally Applicable Principles

Text: 55 Although this case appears to present an issue of first impression in the context of the federal common law of benefit plans covered by ERISA, the conflict between other insurance provisions in policies that both arguably cover an insured is a common occurrence in the insurance industry and is the subject of extensive state common law jurisprudence and treatise discussion. The issue has most commonly been presented to the courts in connection with automobile insurance policies, but disputes between health insurers have recently begun to arise. See, e.g., Starks v. Hospital Service Plan of New Jersey, 182 N.J.Super. 342, 440 A.2d 1353 (App.Div.1981). We will begin our analysis by setting out some basic propositions of the relevant insurance law and determining to what extent and in what manner they are applicable in the ERISA setting. 56 The general common law rule is that the liability of insurers under overlapping coverage policies is to be governed by the intent of the insurers as manifested by the terms of the policies which they have issued. 16 Couch on Insurance 2d Sec. 62:44, at 480 (rev'd ed. 1983). [W]here such contractual provisions are not inconsistent with public policy, they will be enforced. 8A Appleman, Insurance Law and Practice Sec. 4907.65, at 367. Under state common law, then, the judicial task is first to determine from the contracts themselves what obligations the respective obligors intended to assume and then to determine whether these intentions are compatible not only each with the other but also with the insured's rights and expectations and with the controlling demands of public policy. Starks, 182 N.J.Super. at 351, 440 A.2d at 1358. We believe that this mode of analysis is fundamentally sound. In the ERISA context, courts should give effect to the intent of the trustees of the competing benefit plans, as evidenced by their incorporation of other insurance provisions, if the provisions are compatible, unless doing so results in the enforcement of a provision that conflicts with the language or policies of ERISA. We turn first to an analysis of the other insurance provisions of the two plans. 57