Foster McGaw Hosp. of Loyola University of Chicago v. Building Material Chauffeurs, Teamsters and Helpers Welfare Fund of Chicago, Local 786

• Decision Date: 08 March 1991
• Docket Number: Nos. 90-2014,90-2098,s. 90-2014
• Citation: 925 F.2d 1023
• Parties: 13 Employee Benefits Ca 1529 FOSTER McGAW HOSPITAL OF LOYOLA UNIVERSITY OF CHICAGO, et al., Plaintiffs-Appellees, Cross-Appellants, v. BUILDING MATERIAL CHAUFFEURS, TEAMSTERS AND HELPERS WELFARE FUND OF CHICAGO, LOCAL 786, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1023

925 F.2d 1023

13 Employee Benefits Ca 1529

FOSTER McGAW HOSPITAL OF LOYOLA UNIVERSITY OF CHICAGO, et

al., Plaintiffs-Appellees, Cross-Appellants, v. BUILDING MATERIAL CHAUFFEURS, TEAMSTERS AND HELPERS WELFARE

FUND OF CHICAGO, LOCAL 786, Defendant-Appellant,

Cross-Appellee.

Nos. 90-2014, 90-2098.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 22, 1991.

Decided Feb. 12, 1991.

Rehearing and Rehearing En Banc Denied March 8, 1991.

Ronald J. Hennings, Raymond E. Clutts, Neil J. Greene, Paul A. Grabowski, Hayt, Hayt & Landau, Evanston, Ill., for plaintiffs-appellees.

Anthony Pinelli, Chicago, Ill., for defendant-appellant.

Before CUMMINGS, COFFEY, and EASTERBROOK, Circuit Judges.

EASTERBROOK, Circuit Judge.

After the end of his shift on November 3, 1987, Anthony McGinty and a friend set to work on their employer's premises repairing a Bobcat (a small tractor with a hydraulic lift in front) to get it ready for the snow season. The Bobcat slipped into gear and pinned McGinty against the wall. Fifteen days later McGinty died of the injuries he had received. Foster McGaw Hospital and its medical practice group (collectively the Hospital) incurred about $90,000 in charges during the effort to save McGinty. Their only source of repayment is McGinty's insurance benefits, which he assigned to them. If the Hospital thought itself lucky that McGinty was insured under two plans, it has been disabused. Each carrier denied responsibility, concluding that the other should pay.

One potential source of payment was the workers' compensation carrier of Thomas M. Madden Company, McGinty's employer. The other was the Building Material Chauffeurs, Teamsters and Helpers Welfare Fund of Chicago, Local 786, which underwrote a welfare plan covered by the Employee Retirement Income Security Act (ERISA). These sources are exclusive: the workers' compensation carrier is responsible for injuries in the course of employment, and the welfare fund for other injuries. The workers' compensation carrier concluded that the injury, which occurred after hours while McGinty was working on a machine he owned jointly with his friend, did not occur during the course of employment. The welfare fund concluded that because other employees said that they had seen the Bobcat on the employer's premises for several weeks being used in the employer's business, the injury was indeed in the course of employment.

One might suppose that this is an occasion for an "inverse interpleader": the provider of medical care sues both carriers, observes that one or the other owes it a debt, and leaves them to fight things out. Fed.R.Civ.P. 11 would not bar such a step, even if the provider thinks it knows which carrier ought to pay, any more than it bars the assertion of inconsistent positions in whipsaw cases under the tax laws. See Centel Communications Co. v. CIR, 920 F.2d 1335 (7th Cir.1990). In whipsaw cases, as in normal interpleaders, the nominal plaintiff is a bystander to a fight among others, and it satisfies its duty by taking care to restrict the list of parties to the genuine contestants.

Joining both underwriters is easier said than done, however. ERISA supplies jurisdiction for suit against the welfare fund. 29 U.S.C. Sec. 1132(a)(1)(B); see Kennedy v. Connecticut General Life Insurance Co., 924 F.2d 698 (7th Cir.1991). Illinois law does not allow a provider of medical care to sue a workers' compensation carrier. See Ill.Rev.Stat. ch. 48 p 138.5 (specifying who may recover under the workers' compensation act), id. at p 138.21 (forbidding assignment of claims). So the Hospital would have to arrange for McGinty's estate to do so. Such a suit by the estate, supported neither by diversity of citizenship nor by ERISA, could not readily be appended to the Hospital's suit against the welfare fund. Lack of common parties would make the invocation of ancillary jurisdiction difficult, even under the Federal Courts Study Committee Implementation Act of 1990, Sec. 310 of which authorizes pendent party jurisdiction (renamed "supplemental jurisdiction"). See Pub.L. 101-650, 104 Stat. 5089.

Unable to see an attractive way to bring the workers' compensation carrier into the litigation, the Hospital sued only the welfare plan, which defended by arguing that its decision is neither arbitrary nor capricious. Such a standard of review creates the possibility that no one will pay in close cases. Each carrier may say that the other is responsible, and neither decision will be arbitrary. The provider will go without payment, despite the supposition that one carrier or the other is contractually obliged to pay. When two plaintiffs must file separate suits in separate courts--the estate against the workers' compensation carrier in state court under state law, the provider against the welfare fund in federal court under ERISA--the likelihood of this unhappy outcome goes up. Dovetailed plans are common, and disputes about the location of the boundary between them certain to recur. Congress might think it beneficial to allow consolidated litigation when a plan subject to ERISA interlocks with coverage governed by state law. Such litigation is as appropriate as the interpleaders authorized by 28 U.S.C. Secs. 1335, 1397, and 2361, and Fed.R.Civ.P. 22. No "inverse interpleader" law is on the books, however, and the providers did not try to bring the workers' compensation carrier into the suit. The hospital has not argued that the standard of review differs in whipsaw cases. As the case stands, we must assess the responsibilities of the welfare fund the same way we would if it were the sole potential source of payments.

The district court tried this case on stipulated facts after both sides waived the right to present testimony. Its first opinion, 1989 WL 152616, 1989 U.S. Dist. LEXIS 14310, says that the fund's denial of coverage was arbitrary and capricious. The court found that McGinty and friend bought the Bobcat for their personal use and that none of Madden's supervisors was aware of its presence on the firm's premises. Their after-hours repair work was accordingly not in the course of employment, making the welfare fund rather than the workers' compensation carrier liable. See Orsini v. Industrial Commission, 117 Ill.2d 38, 109 Ill.Dec. 166, 509 N.E.2d 1005 (1987); Fisher Body Division of General Motors Corp. v. Industrial Commission, 40 Ill.2d 514, 240 N.E.2d 694 (1968); Mazursky v. Industrial Commission, 364 Ill. 445, 4 N.E.2d 823 (1936), holding that the workers' compensation system does not cover injuries that occur while servicing private cars on the employer's premises.

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