Court Opinion

ID: 2671491
Source: CourtListenerOpinion
Date Created: 2014-04-29 00:01:41.24284+00
Date Added: 2024-06-11T12:35:55.540498
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                          File Name: 14a0331n.06

                                        No. 12-1887
                                                                                    FILED
                                                                                Apr 28, 2014
                         UNITED STATES COURT OF APPEALS                    DEBORAH S. HUNT, Clerk
                              FOR THE SIXTH CIRCUIT

ARTHUR HILL, JR.,

       Plaintiff-Appellant,

v.                                                 ON APPEAL FROM THE UNITED
                                                   STATES DISTRICT COURT FOR THE
CITIZENS INSURANCE COMPANY OF                      EASTERN DISTRICT OF MICHIGAN
AMERICA,

       Defendant -Appellee,

and

ARVINMERITOR,            INC.   HEALTH        &
WELFARE PLAN,

       Defendant.

       BEFORE: MOORE, CLAY, and WHITE, Circuit Judges.

       HELENE N. WHITE, Circuit Judge. Arthur Hill appeals from the district court’s grant

of summary judgment to Citizens Insurance Company of America (Citizens) in this insurance

coverage dispute. We AFFIRM.

                                              I.

       The facts are undisputed. Hill was catastrophically injured in a July 2009 motor-vehicle

accident with an at-fault uninsured driver in Oakland County, Michigan. ArvinMeritor, Hill’s

employer since 1988, paid Hill’s medical expenses, approximately $480,000.00, pursuant to its
No. 12-1887
Hill v. Citizens Ins. Co. of Am.

ERISA-governed employee benefit plan, former Defendant ArvinMeritor Inc. Health & Welfare

Plan (the Plan).

       Hill was also covered under a no-fault auto policy issued by Citizens that provided personal-

injury-protection (PIP) insurance in accordance with Michigan law, but only on a coordinated,

“excess”1 basis. Citizens also provided Hill uninsured motorist (UM) coverage under the same

policy, under which it paid Hill $500,000 in settlement of his non-economic damages, i.e., pain and

suffering.

       The Plan sought reimbursement from Hill out of the UM settlement proceeds. Hill

forwarded the Plan’s reimbursement demand to Citizens, asserting that Citizens had an obligation

to indemnify him against the Plan’s demand. After Citizens refused, Hill brought suit against

Citizens in state court, seeking indemnification in the event that the Plan succeeded in obtaining

reimbursement. Citizens counterclaimed, relying on the coordinated, excess-only nature of its PIP

coverage, and sought a declaratory judgment that it was not obligated to indemnify Hill against the

Plan’s subrogation/reimbursement claim. The state court ruled in Citizens’ favor, Hill v. Citizens

Ins. Co. of Am., Oakland Cnty. Cir. Court (No. 10-111539-NF, Nov. 30, 2011), and the Michigan

Court of Appeals affirmed. Hill v. Citizens Ins. Co. of Am., No. 304700, 2012 WL 4512571 (Mich.

Ct. App. Oct. 2, 2012). The state court expressly did not resolve “(1) the priority dispute between

[the Plan] and Citizens to determine the primary insurer for [Hill]’s economic damages and (2)

whether [Hill] must reimburse [the Plan].” Id. at *3.

              1
               Hill opted to subordinate Citizens’ PIP coverage with his other insurance coverage in exchange
     for a reduced premium. See Mich. Comp. Laws § 500.3109a.

                                                        2
No. 12-1887
Hill v. Citizens Ins. Co. of Am.

        While his appeal in the state-court action was pending, Hill filed the instant action against

the Plan and Citizens in federal district court, seeking injunctive and other equitable relief under the

Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1132(a)(3). Hill sought an

injunction barring the Plan from seeking reimbursement from his UM-benefits settlement and a

declaration that Citizens is obliged to reimburse the Plan for amounts the Plan paid for his medical

care. The Plan counterclaimed, seeking a declaration that it is entitled to enforce the Plan’s

reimbursement and subrogation provision. In the alternative, the Plan crossclaimed against Citizens,

seeking a declaration that the Plan’s coverage is secondary to Citizens’ no-fault insurance coverage

such that it is entitled to reimbursement from Citizens for amounts the Plan paid for Hill’s medical

care.

        On cross-motions for summary judgment, the district court granted Citizens’ motion in full

(including a declaration that the Plan is primary to Citizens’ policy for purposes of covering Hill’s

accident-related costs), granted the Plan’s motion in part (i.e., its request for declaratory judgment

that it has a right to seek reimbursement from the proceeds of Hill’s UM settlement), and denied

Hill’s motion.

                                                  II.

        Several issues are not before us. First, priority of coverage is no longer disputed, Hill having

conceded at argument that the Plan is primary under the coordination-of-benefits provision. Second,

the issue whether Citizens is required to indemnify Hill for UM benefits he is required to repay to

the Plan was resolved by the state court. And third, the issue whether the Plan has a right to seek

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No. 12-1887
Hill v. Citizens Ins. Co. of Am.

reimbursement from the proceeds of Hill’s UM settlement is not before us given that Hill and the

Plan stipulated to dismiss the Plan with prejudice after both appealed to this court.

          The sole remaining issue is whether the Plan has a right to reimbursement from Citizens for

amounts the Plan paid for Hill’s medical care; that is, whether under the Plan’s

subrogation/reimbursement provision2 the Plan has the right to recover PIP payments from Citizens.

          Hill argues that under ERISA, the Plan has the authority to interpret what its language means

and the district court was obliged to accord that interpretation the highly deferential review of

               2
                   The Plan provides in pertinent part:

               Third Party Reimbursement (Subrogation)
               Subrogation is the substitution of one person or entity in the place of another with
               reference to a lawful claim, demand or right. Immediately upon paying or providing any
               benefit, we shall be subrogated to and shall succeed to all rights of recovery, under any
               legal theory of any type, for the reasonable value of any services and benefits we
               provided to you, from any or all of those listed below.
               In addition to any subrogation rights and in consideration of the coverage provided by
               this Summary Plan Description, we shall also have an independent right to be
               reimbursed by you for the reasonable value of any services and benefits we provide to
               you, from any or all of the following:
               ....
     1.        Any person or entity who is or may be obligated to provide benefits or payments to you,
               including benefits or payments for underinsured or uninsured motorist protection, no-
               fault or traditional auto insurance, medical payment coverage (auto, homeowners or
               otherwise), workers’ compensation coverage, other insurance carriers or third party
               administrators.
     2.        Any person or entity who is liable for payment to you on any equitable or legal liability
               theory.
               ....
               You agree as follows:
               ....
     3.        That we have the sole authority and discretion to resolve all disputes regarding the
               interpretation of the language stated herein.
               ....
     4.        That regardless of whether you have been fully compensated or made whole, we may
               collect from you the proceeds of any full or partial recovery that you or your legal
               representative obtain, whether in the form of a settlement (either before or after any
               determination of liability) or judgment, with such proceeds available for collection to
               include any and all amounts earmarked as non-economic damage settlement or
               judgment.
     PID 279-80.

                                                          4
No. 12-1887
Hill v. Citizens Ins. Co. of Am.

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Although this is a correct

statement of ERISA law, Hill’s argument fails nonetheless because the interpretation Hill advances

on appeal was not advanced by the Plan, and thus is entitled to no deference. Further, no party

argued below that Firestone deference applies. On appeal, Hill offers an alternative reading of the

Plan’s language that gives effect to the Plan’s coordination-of-benefits provision by making the Plan

primary in the sense that the Plan pays first and Plan policy determines benefits, but he then cabins

that section and finds a right to recover those benefits from Citizens in the Plan’s separate

subrogation/reimbursement provision. Although the Plan’s subrogation/reimbursement provision

states in pertinent part that “we have the sole authority and discretion to resolve all disputes

regarding the interpretation of the language stated herein,” Hill conceded at oral argument, as he was

bound to do, that the interpretation he advances on appeal is not the interpretation the Plan itself

advanced before the district court, and that the Plan’s position in the district court—that Citizens’

coverage is primary—is not supported by the Plan’s language. Thus, we must reject Hill’s argument

and affirm the district court.

       Our affirmance notwithstanding, we observe that Hill’s contention that Michigan’s no-fault

act was not intended to operate as it has in this case is well taken. In its decision in Hill’s action

against Citizens, the Michigan Court of Appeals followed a prior state court of appeals panel’s

decision in Dunn v. Detroit Automobile Inter-Insurance Exchange, 657 N.W.2d 153 (Mich. Ct. App.

                                                  5
No. 12-1887
Hill v. Citizens Ins. Co. of Am.

2002), but noted its disagreement with Dunn and its agreement with this court’s decision in Shields

v. Government Employees Hospital Association, Inc., 450 F.3d 643 (6th Cir. 2006)3:

       While we must follow Dunn, we find that the sixth court of appeals’s decision in
       Shields is convincing.

       The plaintiff in Shields was injured in an automobile accident and insured by both
       a coordinated Michigan no-fault policy issued by State Farm and a Government
       Employees Hospital Association (GEHA) benefits plan. Shields, 450 F.3d at 645.
       GEHA paid the plaintiff over $160,000 in medical expenses. Id. The plaintiff then
       recovered pain-and-suffering damages in a tort claim. Id. Pursuant to the terms of
       her GEHA benefits plan, the plaintiff reimbursed GEHA out of her tort recovery. Id.
       The plaintiff then sought to have State Farm reimburse her for the cost of the medical
       expenses, but State Farm refused on the basis that, under the language of the
       plaintiff’s coordinated no-fault policy, the payment initially made by GEHA was
       “paid or payable.” Id.

       The sixth circuit court of appeals held that State Farm was required to reimburse the
       plaintiff for the cost of her medical expenses. Id. at 644. When analyzing the issue,
       the Shields court first addressed the Michigan Supreme Court’s opinion in Sibley [v.
       Detroit Auto. Inter-Ins. Exch., 427 N.W.2d 528 (Mich. 1988),] and opined that its
       case was “materially indistinguishable from Sibley,” explaining as follows:

                  In this case, the insured received payment to cover medical expenses,
                  that pursuant to federal law, she is required to repay from the
                  proceeds of her tort recovery for pain and suffering damages.
                  Because federal law preempts state law, Michigan cannot stop GEHA
                  from requiring reimbursement. Consequently, here, as in Sibley, the
                  insured is being forced to pay her own medical expenses out of her
                  tort damages for pain and suffering. This contravenes the expressed
                  intent of the Michigan legislature as embodied in [the] [Michigan
                  No–Fault Insurance Act,] MNFIA, which requires all car owners to
                  maintain insurance coverage for medical expenses and prohibits
                  no-fault insurers from seeking reimbursement from tort settlements.
                  Mich. Comp. Laws §§ 3101, 3116. Furthermore, the Michigan
                  legislature mandated coordinated benefits plans to avoid duplicative
                  coverage, not to deny insured persons coverage altogether. See Smith

              3
               Shields was overruled in part on other grounds in Adkins v. Wolever, 554 F.3d 650, 652–53 (6th
     Cir. 2009).

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No. 12-1887
Hill v. Citizens Ins. Co. of Am.

               [v. Physicians Health Plan, Inc.,] 514 N.W.2d [150,] 154 [(Mich.
               1994)].
                                              ***
               [T]he Dunn court’s primary rationale conflicts with Sibley. The
               Michigan Court of Appeals based its holding in Dunn on the theory
               that the insured would receive duplicative benefits if allowed to keep
               his or her tort recovery and to receive no-fault insurance coverage.
               Sibley expressly holds, however, that such coverage is not duplicative
               because the tort recovery was for pain and suffering, whereas the
               insurance coverage was for medical benefits and lost income.

               Finally, and perhaps most importantly, the Dunn decision essentially
               allowed a no-fault insurer to receive reimbursement from tort
               damages. As the Michigan Supreme Court noted in Sibley, by
               requiring an insured to pay for his or her own medical expenses from
               his or her tort recovery, the insurance company is saved from
               covering medical expenses and the tort victim thereby loses her tort
               recovery. Thus, in essence, the insurance company is receiving
               reimbursement from the tort recovery as surely as if its policy
               required such reimbursement. This is expressly prohibited by
               Michigan law[, MCL 500.3116].

Hill, 2012 WL 4512571 at *7–9 (Mich. Ct. App. Oct. 2, 2012).

       Although Dunn remains good law in Michigan, it subverted one of the basic foundations of

the no-fault scheme with the result that instead of simply being denied double coverage, insureds

who coordinated are deprived of the very PIP benefits they contracted for in their no-fault policies.

       We AFFIRM the grant of summary judgment to Citizens.

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