Buatte v. Gencare Health Systems, Inc., No. 69962

• Court: Court of Appeal of Missouri (US)
• Writing for the Court: RHODES RUSSELL
• Citation: 939 S.W.2d 440
• Docket Number: No. 69962
• Decision Date: 17 December 1996
• Parties: Lonnie and Theresa BUATTE, Respondents, v. GENCARE HEALTH SYSTEMS, INC., Appellant.

Page 440

939 S.W.2d 440 Lonnie and Theresa BUATTE, Respondents,
v.
GENCARE HEALTH SYSTEMS, INC., Appellant. No. 69962. Missouri Court of Appeals,
Eastern District,
Division Four. Dec. 17, 1996.
Motion for Rehearing and/or Transfer to
Supreme Court Denied Feb. 5, 1997.
Application to Transfer Denied
March 25, 1997.

Theodore G. Pashos, Byrce M. Boswell, Amelung, Wulff & Willenbrock, St. Louis, for appellant.

Spencer E. Farris, Thomas C. Hullverson, The Hullverson Law Firm, St. Louis, for respondents.

Page 441

RHODES RUSSELL, Presiding Judge.

Gencare Health Systems, Inc. ("Gencare") appeals from the entry of summary judgment in favor of Lonnie and Theresa Buatte in their declaratory judgment action seeking interpretation of a subrogation provision of an insurance policy. The trial court found that state law governed and based the grant of summary judgment, in part, on Gencare's waiver of its right of subrogation. We find that federal law permitting subrogation preempted state law and that Gencare did not waive its right to subrogation. We reverse and remand.

In 1987 Lonnie and Theresa Buatte enrolled in the Sanus Health Benefit Plan ("Plan") ¹ through Mr. Buatte's employment with the federal government. In 1990, while still enrolled in the Plan, Theresa Buatte was injured in a car accident involving a railroad company. As a result of the accident, she incurred $71,640.00 in medical expenses which were paid by Gencare.

The Buattes filed a personal injury action in the Circuit Court of the City of St. Louis against the railroad company. Gencare was informed about the suit and filed a petition to intervene in the action, however, it later withdrew its petition. The railroad settled the suit by paying $400,000 to the Buattes. Gencare requested that the Buattes reimburse it for the money it had spent on Theresa Buatte's medical expenses pursuant to the subrogation/reimbursement provisions of the Plan.

The Plan stated, in a section titled "Third Party Actions,":

If a covered person is injured through the act or omission of another, the Plan requires that it be reimbursed for the benefits provided, in an amount not to exceed the amount of the recovery or that it be subrogated to the person's rights to the extent of the benefits received under this Plan, including the right to bring suit in the person's name.

The Buattes refused to reimburse Gencare and filed a declaratory judgment action in the Circuit Court of the City of St. Louis seeking an interpretation of the Plan's subrogation provision. Gencare removed the action to the United States District Court. The district court remanded the case back to the state court stating that the action did not arise under federal law.

The Buattes filed a motion for summary judgment listing four grounds. First, they argued that Gencare had waived its right to subrogation by failing to intervene in the action against the railroad that was now settled. Second, they contended that their settlement with the railroad did not preclude Gencare from pursuing indemnification directly from the railroad. Third, they stated that there was no proof before the court that they were subject to any subrogation provision in the policy that covered them. Finally, they argued that the Plan's provision granting Gencare subrogation rights was contrary to the public policy of Missouri and void.

The trial court granted the motion for summary judgment based upon the Buattes' first three grounds and specifically found that Missouri law governed. Gencare now appeals the grant of summary judgment.

The standard of review for summary judgment cases is governed by ITT Commercial Finance Corp. v. Mid-America Marine Supply Corp. 854 S.W.2d 371 (Mo.banc 1993). When considering appeals from summary judgment, we review the record in the light most favorable to the party against whom judgment was entered. Id. The propriety of summary judgment is purely an issue of law. Our review is essentially de novo. Id. Summary judgments should only be maintained where facts are not in dispute, so that the prevailing party can be determined as a matter of law. Id.

In its first point on appeal, Gencare contends that the trial court erred in applying Missouri law, as the Federal Employees Health Benefits Act (FEHBA), 5 U.S.C.A. §§ 8901-8914, preempts state law where the provisions are inconsistent.

Missouri law, as a matter of public policy, does not allow an insurer to acquire part...