Court Opinion

ID: 9007024
Source: CourtListenerOpinion
Date Created: 2022-11-27 13:37:15.983164+00
Date Added: 2024-06-11T17:11:18.936941
License: Public Domain

K.K. HALL, Circuit Judge,
dissenting:
Because I conclude that the Wrongful Death Act’s anti-subrogation provision, N.C.Gen.Stat. § 28A-18-2(a), “relates to” the operation of Liberty’s ERISA Plan (“Plan”), I dissent.
I.
After Mr. Bristow’s accident, the Plan paid $93,829.50 in medical bills on his behalf. Under the North Carolina Wrongful Death Act, Bristow’s personal representative had the right to recover all of these medical costs from the tortfeasor who injured Bristow. N.C.Gen.Stat. § 28A-18-2(b) (“Damages recoverable for death by wrongful act include: (1) Expenses for care, treatment and hospitalization incident to the injury resulting in death ...”). When NCNB, acting as Bristow’s personal representative of the estate and trustee for Bristow’s statutory beneficiaries under the Wrongful Death Act,1 settled all claims arising from Bristow’s death, this settlement necessarily included some payment for Bristow’s medical expenses.2
After the settlement, the Plan attempted to subrogate $72,561.17 (Bristow’s medical costs minus the Plan’s pro rata share of his attorneys’ fees) from NCNB. NCNB of*1391fered to pay $1,160 ($1500 minus the Plan’s share of attorneys’ fees), the amount it contends is the maximum allowable under the Wrongful Death Act’s antisubrogation provision. N.C.Gen.Stat. § 28A-18-2(a). Therefore, although the Plan paid for Bris-tow’s medical expenses and these medical expenses were also, in some as yet undetermined amount, recovered from the tortfea-sor, NCNB hopes to rely on the Act’s anti-subrogation provision to secure a double recovery for Bristow’s beneficiaries.
II.
Under North Carolina law, it is an open question whether the Plan’s subrogation right for recovered medical expenses is barred by the Wrongful Death Act’s anti-subrogation provision. Although the majority rejects Liberty’s state law argument out of hand, see Majority Op. at pp. 1386-88, it ignores Bowen v. Constructors Equip. Rental Co., 283 N.C. 395, 196 S.E.2d 789 (N.C.1973), where the North Carolina Supreme Court stated that it was “improbable that the General Assembly intended that recovery for [medical, hospital, and funerary costs] should be exempt from liability for the payment of the debts and liabilities of the decedent....” Id. 196 S.E.2d at 807 (dicta). Although Bowen’s statement is persuasive, see United Services Auto. Ass’n v. Barger, 910 F.2d 321 (6th Cir.1990) (dicta is valuable source for federal court attempting to predict state law), because the Court expressly refrained from deciding the issue, it does not control our decision. Assuming arguendo that the North Carolina Supreme Court would interpret the Act to bar the subrogation of medical benefits that have been paid by an ERISA Plan and subsequently recovered from the tortfeasor, I conclude that the Act would be preempted by ERISA.
ERISA’s preemption clause is “conspicuous for its breadth. It establishes as an area of exclusive federal concern the subject of any state law that “relate[s] to” an employee benefit plan governed by ERISA.” FMC Corp. v. Holliday, 498 U.S. 52, 58, 111 S.Ct. 403, 407, 112 L.Ed.2d 356 (1990). ERISA’s preemption clause has repeatedly been interpreted to preempt state laws infringing upon ERISA Plan subrogation rights.
In Hampton Indus., Inc. v. Sparrow, 981 F.2d 726 (4th Cir.1992), am ERISA plan insured was injured in an accident. The insured’s plan paid $20,278.53 of her medical costs, and she later recovered $25,000 from the tortfeasor. When the plan attempted to subrogate from the insured’s recovery, she refused, arguing that subro-gation was barred by N.C.Gen.Stat. § 44-50, which limits a medical provider’s recovery of settlement funds to fifty percent of the amount of damages recovered, exclusive of attorneys’ fees. Id. at p. 728. Relying on FMC, 498 U.S. at 52, 111 S.Ct. at 403, we held that the statute was preempted by ERISA because it interfered with the Plan’s subrogation rights. Id. at p. 6; see also Provident Life & Accident Ins. Co. v. Waller, 906 F.2d 985 (4th Cir.), cert. denied, 498 U.S. 982, 111 S.Ct. 512, 112 L.Ed.2d 524 (1990); Baxter ex rel. Baxter v. Lynn, 886 F.2d 182 (8th Cir.1989).
The majority distinguishes Hampton, arguing that in this case the wrongful death recovery was for the benefit of Bristow’s beneficiaries, and, under North Carolina law, could not be applied as an asset of the estate. The majority ignores that the Plan seeks to subrogate against the part of the settlement that was paid solely because of Bristow’s medical expenses. Of course the Plan cannot seek to subrogate any part of the settlement that was recovered by Bristow’s beneficiaries for their personal losses. However, the Plan is entitled to be repaid from the part of the settlement that was provided solely as compensation for Bristow’s medical costs.
The majority’s reading of Hampton is far too subtle to stand in light of Congress’ intent to preempt state laws encroaching on ERISA Plan subrogation rights. North Carolina may not, by artfully structuring its Wrongful Death Act, deprive an ERISA plan of its subrogation rights. The controlling issue is whether the state law “relates to” the ERISA plan — not whether the North Carolina Legislature chooses to de*1392clare that recovered medical costs will, or will not, be treated as assets of the estate.3
One of the reasons for the breadth of ERISA’s preemption clause is that Congress intended ERISA to establish “uniformity in employee benefit laws.” Holland v. Burlington Indus. Inc., 772 F.2d 1140, 1147 (4th Cir.1985) (emphasis in original); FMC, 498 U.S. at 60-61, 111 S.Ct. at 408-09; Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 99, 103 S.Ct. 2890, 2901, 77 L.Ed.2d 490 (1983) (discussing ERISA’s legislative history); Hampton, at p. 729. By ensuring uniformity, Congress protected plan administrators from a patchwork of conflicting state and federal regulations that would “complicate the administration of nationwide plans, producing inefficiencies that employers might offset with decreased benefits.” FMC, 498 U.S. at 60, 111 S.Ct. at 408 (citations omitted); Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142, 111 S.Ct. 478, 484, 112 L.Ed.2d 474 (1990) (Congress sought to “ensure that [plans] would be subject to a uniform body of benefit law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among states ...”).
This Plan covers employees in 24 states and, under the majority’s approach, is subject to directly conflicting state law approaches to the subrogation of medical costs paid on behalf of deceased tort victims.4 While I do not doubt that the Plan is capable of complying with each states’ antisubrogation laws, I am equally satisfied that requiring it to do so is contrary to the will of Congress. In this case, as in Hampton, the Plan administrator has been subjected to “different risks in different states.” Hampton, at p. 729.
III.
I also disagree with the majority’s conclusion that the Plan has waived its right to argue that it is entitled to “equitable subro-gation” to prevent Bristow’s beneficiaries from being unjustly enriched. In its complaint, Liberty asserted its “subrogation rights according to the Plan and Federal law.” Subrogation, even when based on a contract, is driven by equitable concerns.5 Furthermore, although the majority states that the record contains only “one, minor reference to equitable subrogation in the entire record”, I note that immediately following the “minor reference” mentioned by the majority, Liberty expressly raised the effect of Provident Life & Acc. Ins. Co. v. Waller, 906 F.2d 985 (4th Cir.1990), a case dealing with unjust enrichment under ERISA.
IV.
I believe that this ease must be remanded for a factual finding as to what portion of Bristow’s beneficiaries’ settlement represents recovery of his medical costs. To the extent that the Wrongful Death Act’s antisubrogation provision would bar the subrogation of sums recovered by Bris-tow’s beneficiaries on account of Bristow’s medical costs, I would rule that it is *1393preempted by ERISA. Therefore, I respectfully dissent.

. The confusion in this case arises from the structure of North Carolina's Wrongful Death Act. In 1969, North Carolina combined its survival action (recovery for injuries to the decedent) with its wrongful death action (recovery for injuries to the survivor's). After the actions were combined, the personal representative was required to seek, in a single suit, recovery for all losses stemming from the decedent’s death. See Majority Op. at p. 1388 n. 5, relying on Bowen v. Constructors Equip. Rental Co., 283 N.C. 395, 196 S.E.2d 789, 801-807 (N.C.1973). However, because of the Act’s structure, recoveries for the decedent’s medical costs are arguably not treated as assets of the estate. Compare, N.C.Gen. Stat. § 28A-18-2(a), with Bowen, 196 S.E.2d at 807.

. NCNB is estopped from arguing that it did not recover some of Bristow's medical expenses by its attempt to pay the statutory maximum for recovered medical expenses. Because the $1,500,000 settlement was structured as a lump sum, it is impossible to determine on appellate review if NCNB recovered the entire amount of medical costs owed by the tortfeasor. I would remand the case to allow the district court to determine the portion of the settlement alloca-ble to medical costs. See Jones v. McCaskill, 99 N.C.App. 764, 394 S.E.2d 254 (N.C.App.1990) (separating damages under Wrongful Death Act recovery).

. ERISA’s savings clause, 29 U.S.C. § 1144(b)(2)(A) (states retain the power to regulate insurance), does not apply. If it did the Plan would be exempted by the "deemer" clause, 29 U.S.C. § 1144(b)(2)(B), because it is self-funded.

. In its brief, Liberty argues that it will be subjected to seven different approaches to sub-rogating wrongful death benefits, including (1) full subrogation, (2) full subrogation minus attorneys' fees, (3) subrogation up to a certain dollar amount, (4) subrogation only if the heirs survive, (5) no subrogation because monies pass directly to heirs without passing through the estate, (6) no subrogation, and (7) states where the law is unclear.

.Hocker v. New Hampshire Ins. Co., 922 F.2d 1476, 1485 (10th Cir.1991) (subrogation is "a device whereby a court compels the ultimate payment of an obligation by the party who in good conscience ought to pay it.”); General Ins. Co. of America v. Faulkner, 259 N.C. 317, 130 S.E.2d 645, 651 (N.C.1963) ("Subrogation originated in equity and is a creature of equity. Its object is the prevention of injustice and its basis is the doing of complete, essential, and perfect justice between all parties without regard to form.”); Appleman, Insurance Law and Practice § 4981 (Subrogation is a doctrine governed by equity).