Auto-Owners Ins. Co. v. Corduroy Rubber Co.

• Decision Date: 27 July 1989
• Docket Number: Docket No. 114550,AUTO-OWNERS
• Citation: 443 N.W.2d 416,177 Mich.App. 600
• Parties: INSURANCE COMPANY, Subrogee of Randal L. Vanderwal and Ginny Vanderwal, Plaintiff-Appellant, v. CORDUROY RUBBER COMPANY, Cadillac Molded Rubber Co., Corduroy Rubber Company Employee Benefit Plan & Corduroy Rubber Company Employee Benefit Trust & Voluntary Employee Benefit Association, Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

Page 416

443 N.W.2d 416

177 Mich.App. 600

AUTO-OWNERS INSURANCE COMPANY, Subrogee of Randal L Vanderwal and Ginny Vanderwal, Plaintiff-Appellant, v. CORDUROY RUBBER COMPANY, Cadillac Molded Rubber Co Corduroy Rubber Company Employee Benefit Plan & Corduroy Rubber Company Employee Benefit Trust & Voluntary Employee Benefit Association, Defendants-Appellees.

Docket No. 114550.

Court of Appeals of Michigan.

Submitted Jan. 18, 1989.

Decided April 21, 1989.

Released for Publication July 27, 1989.

Barney, Hoffman & Gano by Steven L. Barney, Petoskey, for plaintiff-appellant.

Miller, Johnson, Snell & Cummiskey by Richard R. Hyde, Grand Rapids, for defendants-appellees.

Before HOOD, P.J., and MAHER and BEASLEY, JJ.

PER CURIAM.

The Michigan Supreme Court 431 Mich. 908, 432 N.W.2d 720 (1988) has vacated our earlier opinion in this case and remanded for reconsideration in light of Teper v. Park West Galleries, Inc., 431 Mich. 202, 427 N.W.2d 535 (1988). See 431 Mich. 907 (1988).

This case concerns whether the federal Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq., precludes application of our no-fault coordination-of-benefits law, M.C.L. § 500.3109a; M.S.A. § 24.13109(1). Specifically at issue is whether the Vanderwals' no-fault insurer can look to Mr. Vanderwal's health plan, a self-insured plan of his employer governed by ERISA, to assume primary responsibility for medical expenses incurred by the Vanderwals in a car accident. The employer's health plan specifically excludes benefits for injuries received in accidents involving a car for which a no-fault insurance policy was in effect. The health plan indicates that the benefits involved here were self-funded by the employer.

In our earlier unpublished opinion per curiam, decided June 22, 1987 (Docket No. 90026), we affirmed the trial court's dismissal of plaintiff's claim by finding that the claim was precluded under ERISA, relying on State Farm Mutual Automobile Ins. Co. v. C.A. Muer Corp., 154 Mich.App. 330, 397 N.W.2d 299 (1986).

As set forth in State Farm, pp. 334-336, 397 N.W.2d 299, two questions must be addressed to resolve the issue before us: (1) Since our no-fault law would require the health plan to take primary responsibility for paying for the medical expenses, does that law "relate to" the plan so that ERISA would preempt its application; and (2) Does our answer change because the health plan is a self-insured plan? The Teper opinion concerns only the first question.

ERISA expressly preempts the application of a state law which "relates to" an employee benefit plan. 29 U.S.C. § 1144(a). In Teper, our Supreme Court reviewed the various United States Supreme Court decisions regarding ERISA preemption and the meaning of the term "relates to." Our Supreme Court found that a state law is preempted if it "relates to" an employee benefit plan by

1) altering the level of benefits which would be paid out under a given plan from state to state, 2) altering the terms of the plan such as requirements for eligibility, or 3) subjecting the fiduciaries of a plan to claims other than those provided in the ERISA itself. [431 Mich. at 221, 427 N.W.2d 535.]

The Michigan no-fault coordination-of-benefits law would require the health plan to assume primary responsibility for the Vanderwals' medical expenses despite the plan's exclusion clause. Federal Kemper Ins. Co., Inc. v. Health Ins. Administration, Inc., 424 Mich. 537, 383 N.W.2d 590 (1986); Auto-Owners Ins. Co. v. Lacks Industries, 156 Mich.App. 837, 402 N.W.2d 102 (1986), lv. den., 428 Mich. 902 (1987). By doing so, our no-fault law comes under the second example set forth in Teper, because it alters the terms of the plan by requiring a benefit that the employer otherwise was under no obligation to provide. Teper, supra, 431 Mich. at p. 214, 427 N.W.2d 535; Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). Therefore, if Teper were our only consideration, the no-fault law would be preempted.

However, ERISA also includes a provision which allows for the application of insurance laws even if they "relate to" the plan. We therefore turn to consideration of our second question: Does our answer change because the health plan is a self-insured plan?

As noted in State Farm, supra, 154 Mich.App. at p. 335, 397 N.W.2d 299, there is a "saving" clause in ERISA which would allow enforcement of the no-fault policy as a state law regulating insurance. 29 USC 1144(b)(2)(A). This saving clause is, however, limited by the "deemer" clause which provides that an employee benefit plan shall not be deemed an insurance company for purposes of a state law regulating insurance companies or contracts. 29 U.S.C. § 1144(b)(2)(B). State Farm held that, because the health plan there was self-funded and not insured by a commercial insurance company, it was not deemed to be subject to the insurance laws of Michigan. Under State Farm, the no-fault law would continue to be preempted.

Since State Farm, however, the Sixth Circuit Court of Appeals has considered the identical question raised here of whether Michigan's no-fault coordination-of-benefits law was preempted when applied to self-insured health plans. In Northern Group Services, Inc. v. Auto Owners Ins. Co., 833 F.2d 85 (C.A.6, 1987), cert. den., --- U.S. ----, 108 S.Ct. 1754, 100 L.Ed.2d 216 (1988), the court held that Michigan's coordination-of-benefits law was not preempted by ERISA. The Northern Group Services analysis has recently been adopted by this Court in Michigan Millers Mutual Ins. Co. v. West Michigan Health Care Network, 174 Mich.App. 196, 435 N.W.2d 423 (1988), and in Auto Club Ins. Ass'n v. Frederick & Herrud, Inc., 175 Mich.App. 412, 438 N.W.2d 320 (1989). The...