Citizens Ins. v. Midmichigan Connectcare

• Citation: 449 F.3d 688
• Decision Date: 01 June 2006
• Docket Number: No. 05-1237.,05-1237.
• Parties: CITIZENS INSURANCE COMPANY OF AMERICA, Plaintiff-Appellant, v. MIDMICHIGAN HEALTH CONNECTCARE NETWORK PLAN, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 688

449 F.3d 688

CITIZENS INSURANCE COMPANY OF AMERICA, Plaintiff-Appellant, v. MIDMICHIGAN HEALTH CONNECTCARE NETWORK PLAN, Defendant-Appellee.

No. 05-1237.

United States Court of Appeals, Sixth Circuit.

Argued: January 24, 2006.

Decided and Filed: June 1, 2006.

ARGUED: Robert L. Goldenbogen, Garan Lucow Miller, Port Huron, Michigan, for Appellant. Craig H. Lubben, Miller, Johnson, Snell & Cummiskey, Kalamazoo, Michigan, for Appellee. ON BRIEF: Daniel S. Saylor, Garan Lucow Miller, Detroit, Michigan, for Appellant. Craig H. Lubben, Miller, Johnson, Snell & Cummiskey, Kalamazoo, Michigan, for Appellee.

Before: MOORE and McKEAGUE, Circuit Judges; POLSTER, District Judge.^*

McKEAGUE, J., delivered the opinion of the court, in which POLSTER, D. J., joined.

MOORE, J. (pp. 697-698), delivered a separate dissenting opinion.

McKEAGUE, Circuit Judge.

Plaintiff-appellant, Citizens Insurance Company of America ("Citizens") appeals the district court's denial of its motion for summary judgment, and the declaration that Citizens is first in priority for the payment of medical expenses incurred as a result of an automobile accident. For the reasons that follow, the holding of the district court is reversed, and the case is remanded for proceedings consistent with this ruling.

I. FACTUAL AND PROCEDURAL HISTORY

The facts in this case are undisputed. On December 19, 1999, Jacqueline Bradshaw ("Bradshaw") was injured in a motor vehicle accident and required extensive medical treatment.¹ At the time of the accident, Bradshaw was covered under a Citizens excess no-fault auto policy, and MidMichigan Health ConnectCare Network Plan ("MidMichigan"), a health benefit plan offered through her employer. MidMichigan is a self-funded employee health and welfare benefit plan, established pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. The plan provides health insurance benefits to the employees of MidMichigan Medical Center. As a result of Bradshaw's injuries, Citizens alleges it paid $135,565.11 in medical expenses out of priority. Citizens brought this action to recover payment for these expenses.

Citizens filed a motion for summary judgment pursuant to Fed.R.Civ.P. 56, seeking a declaration that Citizens' coverage was secondary to the MidMichigan plan, and accordingly, Citizens was entitled to reimbursement for the payment of Bradshaw's claims. The parties agree that a priority dispute arising between an ERISA plan and a no-fault policy is resolved pursuant to federal common law. See Auto Owners Ins. Co. v. Thorn Apple Valley, Inc., 31 F.3d 371 (6th Cir.1994). According to Thorn Apple Valley, when an ERISA health benefit plan and a policy of no-fault insurance have conflicting coordination of benefits clauses, the ERISA plan language prevails. Id. However, the district court found that the holding of Thorn Apple Valley was inapplicable here, because the coordination of benefits clauses were not in direct conflict. See Citizens Insurance Company of America v. MidMichigan Health Connectcare Network Plan, No. 03-CV-74256-LPZ (E.D. Mich., filed Jan. 3, 2005) (hereinafter slip op.). In so finding, the court determined that MidMichigan's plan language did not expressly disavow payment of injuries otherwise covered by a policy of no-fault insurance, nor did it effectively subordinate its own coverage to Citizens.² Id. at 9-10. Therefore the MidMichigan ERISA plan was in full effect at the time of Bradshaw's accident.³ However, the court found that the language of the Citizens' excess no-fault policy did not exclude payment of benefits for Bradshaw, even though she was simultaneously covered under the MidMichigan plan. Id. at 11-12. The court declared Citizens the primary payer. Id.

The parties agree that there is no conflict in the coordination of benefits clauses between the plan and the policy. The sole issue on appeal is whether the district court erred in deciding that the no-fault policy language did not exclude payment for Bradshaw's injuries when she was covered under the MidMichigan employee health benefit plan.

II. JURISDICTION AND STANDARD OF REVIEW

Subject matter jurisdiction is proper under 29 U.S.C. §§ 1001 et seq, and 28 U.S.C. § 1331. Because Citizens' claim against MidMichigan, an ERISA-qualified employee benefit plan, requires a determination under federal common law, subject matter jurisdiction is appropriate under 28 U.S.C. § 1331. See Thorn Apple Valley, Inc., 31 F.3d at 374.⁴

We review de novo a denial of summary judgment decided on purely legal grounds. See McMullen v. Meijer, Inc., 355 F.3d 485, 489 (6th Cir.2004) (district court's denial of summary judgment based on legal grounds is reviewed de novo). The district court's opinion was based on the interpretation of the Citizens' policy language, a purely legal question requiring de novo review. See Boyer v. Douglas Components Corp., 986 F.2d 999, 1003 (6th Cir.1993) (question of contract interpretation is subject to de novo review).

III. ANALYSIS

The resolution of this case depends on the interpretation of the Citizens excess no-fault policy Personal Injury Protection Exclusions provision. The provision states, in relevant part:

We do not provide Personal Injury Protection coverage for:

1. Medical expenses for you or any `family member':

(a) To the extent that similar benefits are paid, payable, or required to be paid, under any individual, blanket or group accident or disability insurance, service, benefit, reimbursement or salary continuance plan. (excluding Medicare benefits provided by the federal government);

Citizens' no-fault insurance policy, Exclusions B(1)(a), JA at 107.

The district court held that the language of paragraph B(1)(a) did not exclude medical expenses covered by a medical or health benefits plan, such as the MidMichigan plan.

Plaintiff does not actually exclude medical expenses covered by a medical or health benefits plan such as Defendant's plan. It specifically references `accident or disability insurance.' This is in stark contrast to the language in the Limit of Liability provisions of Plaintiff's policy which limit the benefits payable for an accident involving a motorcycle when amounts are also payable under `any individual, blanket or group accident, hospitalization, medical or surgical insurance or reimbursement plan . . . .' In addition Plaintiff did not cite, and the Court's review of Plaintiff's policy did not reveal, any alternative coordination of benefits provision which might be relevant to this matter.

Citizens, slip-op at 11.

Citizens asserts that the district court erred, and argues that the policy language excludes payment of no-fault benefits in this instance, because MidMichigan provides similar benefits for medical expenses, and is a group benefit plan listed in the Exclusions clause. Further, Citizens states that "accident or disability insurance" is just one type of plan that falls within the Exclusions, and a serial listing of other types of plans are included.

In response to Citizens' claim that "accident or disability insurance" is just one in a series of plans excluded from coverage under the Citizens' policy, MidMichigan asserts two incompatible arguments. First, MidMichigan argues that "accident and disability insurance" is the only type of plan excluded:

That exclusion is clearly limited to benefits payable under an `accident or disability' insurance plan. Citizens argues . . . that this language `expressly covers group benefit plans' but that argument ignores the fact that it only covers `group accident or disability insurance,' not all group plans.

Appellee Br. 13 (emphasis in original). Second, when pressed to explain the remainder of the Exclusions clause, MidMichigan argues that the phrase "accident or disability" is a qualifier for each of the terms that follow. Under this theory, the Exclusions clause would be read as follows:

To the extent that similar benefits are paid, payable, or required to be paid, under any individual, blanket or group accident or disability insurance, accident or disability service, accident or disability benefit, accident or disability reimbursement or accident or disability salary continuance plan (excluding Medicare benefits provided by the federal government).

Citizens' no-fault insurance policy, Exclusions B(1)(a), JA at 107 (italicized material added).

In order to decide which interpretation is correct, we must consider both the policy language and the intent underlying the provision. See Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 112-13, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); Wulf v. Quantum Chemical Corp., 26 F.3d 1368, 1376 (6th Cir.1994) ("When interpreting a contract, courts look not only at the language, but also for additional evidence that reflects the intent of the contracting parties."). The rules of contract interpretation that have evolved under the federal common law in ERISA priority disputes mirror those applied in the Michigan courts. See Regents of University of Michigan v. Employees of Agency Rent-A-Car, 122 F.3d 336, 339 (6th Cir.1997). Id. "A technical construction of a policy's language which would defeat a reasonable expectation of coverage is not favored . . . . Accordingly, an insurer has a duty to express clearly the limitations in its policy; any ambiguity will be construed liberally in favor of the insured and strictly against the insurer" Id. When interpreting ERISA plan provisions, courts have gone beyond the actual language of the plan, even if "clumsily drafted," to ascertain the underlying intent. "Yet, the Court's paramount responsibility in construing plan language is to ascertain and effectuate the underlying intent." Travelers Ins. Co. v. Auto-Owners Ins. Co., 971 F.Supp. 298, 300-01 (W.D.Mich.1997); accord Allstate Ins. Co. v. Knape & Vogt Mfg. Co., 147 F. Supp 2d 804 (W.D.Mich.2001).

A. Policy Language

The Exclusions clause excludes payment of...