Glover v. Nationwide Mut. Fire Ins. Co.

• Decision Date: 28 October 2009
• Docket Number: Case No. 1:08-cv-1086.
• Citation: 676 F. Supp.2d 602
• Parties: Brian GLOVER, Conservator for the Estate of Morgan Glover, a minor, Plaintiff, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Western District of Michigan

676 F.Supp.2d 602

Brian GLOVER, Conservator for the Estate of Morgan Glover, a minor, Plaintiff, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, et al., Defendants.

Case No. 1:08-cv-1086.

United States District Court, W.D. Michigan, Southern Division.

October 28, 2009.

David P. Shafer, Nolan & Nolan & Shafer, PC, Muskegon, MI, Troy W. Haney, Haney Law Office, PC, Grand Rapids, MI, for Plaintiff.

Ronald M. Sangster, Jr., Law Offices of Ronald M. Sangster, PLLC, Troy, MI, Thaddeus E. Morgan, Fraser Trebilcock Davis & Dunlap, PC, Lansing, MI, for Defendant.

OPINION

JOSEPH G. SCOVILLE, United States Magistrate Judge.

For over twenty-five years, insured parties have been caught in the crossfire between ERISA health plans and Michigan no-fault carriers, each of which contends that the other is primarily responsible for medical bills arising from an automobile accident. This case presents a variation on that familiar theme. It proves once again the truth of the adage that the only thing worse than having no insurance policy is having two.

This is a declaratory judgment action brought by Brian Glover on behalf of his daughter Morgan Glover, a minor. Morgan was seriously injured in a motor vehicle accident occurring in Muskegon County on November 22, 2007. At the time of the accident, her father was a participant in the CBI Holdings, Inc. Health and Welfare Plan, a medical benefits plan maintained by Mr. Glover's employer. Morgan qualifies for benefits under the Plan as a dependent. At the same time, the Glover family was covered for personal protection insurance (PIP) benefits under a policy of no-fault auto insurance written by defendant Nationwide Mutual Fire Insurance Company. The Plan has paid over $59,000.00 for Morgan's hospital and other medical expenses. It has asserted a contractual right of reimbursement against Brian Glover to recover these expenses from a proposed settlement for Morgan's claims for pain and suffering and other non-economic loss, offered by the insurance company covering the driver who caused the accident.

Plaintiff's declaratory judgment action seeks a declaration that plaintiff is not responsible to reimburse the Plan from the proceeds of the tort settlement. Alternatively, plaintiff seeks a declaration that the no-fault carrier, Nationwide, is responsible for Morgan's medical bills under the PIP coverage of the no-fault policy, to the extent that plaintiff is required to reimburse the Plan for Morgan's medical expenses. The Plan has filed a counterclaim for recovery of medical expenses from plaintiff.

All parties have now moved for summary judgment. Chief Judge Paul Maloney has issued an order of reference (docket # 21) on the basis of the consent of the parties to the dispositive jurisdiction of a magistrate judge pursuant to 28 U.S.C. § 636(c)(1). The court has reviewed the submissions of the parties and concludes that no factual matters are in dispute and that the legal issues are governed by clearly settled law. Oral argument would therefore not be helpful. See W.D. MICH. L.CIV.R. 7.2(d). For the reasons set forth below, the Plan will be granted summary judgment on its counterclaim for reimbursement, and an equitable lien will be imposed on the proceeds of the tort settlement. Plaintiff will be granted a summary judgment against Nationwide, the no-fault insurer, declaring Nationwide to be responsible for covering plaintiff's medical expenses under the PIP coverage of the no-fault policy, to the extent that plaintiff is required to reimburse the Plan for those medical expenses. Nationwide's motion for summary judgment against plaintiff will be denied.

Findings of Fact

The underlying facts material to a resolution of this case are not subject to genuine dispute. The court finds the relevant facts to be as follows:

A. Parties

1. Plaintiff Brian Glover is an individual residing in Muskegon, Michigan. His daughter Morgan, a minor, was seriously injured in a motor vehicle accident in Muskegon County on November 22, 2007.

2. Defendant CBI Holdings, Inc. Health and Welfare Plan (the Plan) is a self-funded employee welfare benefit plan sponsored by CBI Holdings, Inc. for the benefit of its employees and their dependents. At all relevant times, plaintiff Brian Glover was covered as a participant of the Plan by reason of his employment, and his daughter Morgan was covered as an eligible dependent.

3. Defendant Nationwide Mutual Fire Insurance Company is an insurance company licensed by the State of Michigan to issue policies of insurance in this state. At the time of the accident, Nationwide had in force policy no. 912H636199 (Policy, docket # 28) providing no-fault automobile coverage to Brian and Mary Glover.

B. Relevant Provisions of the Plan and the Insurance Policy

4. The provisions of the Plan are set forth in an extensive summary plan description (SPD) found in the record as docket #'s 23 and 24. The provisions of the SPD differ for beneficiaries who have elected one of the preferred provider options (PPO) and those who have elected the consumer-driven health plan (CDHP). At all relevant times, Morgan Glover was enrolled in the PPO portion of the Plan. (Aff. of Mabel Suzanne Fairley, ¶ 4).¹

5. The SPD includes detailed coordination-of-benefits provisions applicable to PPO coverage. (pp. 27-30). The coordination-of-benefits provisions purport to address coverage by a no-fault auto policy, as well as other health insurance or health plans. The coordination-of-benefits provisions applicable to PPO coverage, however, do not disavow primary responsibility or otherwise indicate that the Plan's coverage will be secondary to no-fault coverage in the circumstances of this case.

6. The provisions of the SPD relative to PPO coverage create rights of subrogation and reimbursement in favor of the Plan. Relative to the present case, the SPD provides as follows:

Right to Reimbursement

The right to reimbursement means that if a third party causes a Sickness or Injury for which you receive a settlement, judgment, or other recovery, you must use those proceeds to fully return to the Plan 100% of any benefits you received for that Sickness or Injury.

(SPD, p. 31). The SPD contains these further provisions concerning the right to reimbursement:

• The Plan has first priority to receive payment on any claim against a third party before the participant receives payment.

• The Plan's reimbursement rights apply to both full and partial settlements, no matter how the proceeds are characterized. The right to reimbursement attaches to economic, non-economic and punitive damages.

• The Plan may enforce its right to reimbursement regardless of whether the injured party has been made whole (fully compensated for injuries and damages).

• If a Plan participant receives payment of a settlement or judgment from any third party as a result of a sickness or injury, and the Plan asserts a right to those funds, the participant agrees "to hold those settlement funds in trust either in a separate bank account or in your name or in your attorney's trust account."

(SPD, p. 32).

C. Relevant Provisions of No-Fault Policy

7. The Nationwide no-fault policy contains the personal injury protection (PIP) coverage required by Michigan law (Policy, p. N2). The declarations page indicates that medical benefits are "coordinated." The policy's coordination-of-benefits provision, set forth below, therefore applies:

If the Declarations show "COORDINATED MEDICAL BENEFITS," sums paid or payable to or for you or any relative shall be reduced by any amount paid or payable under any valid and collectible: individual, blanket or group disability or hospitalization insurance; medical, surgical or hospital direct pay or reimbursement health care plan; or car or premises insurance affording medical expense benefits. Such other insurance, plan or benefits are agreed to be primary protection for you or a relative. We will pay, except to the extent that: (a) benefits are paid or payable under the primary protection; or (b) a provider within the primary protection is qualified and competent to render the products, services or accommodations.

(Policy, p. N4).

D. Events Giving Rise to Controversy

8. Morgan Glover was a passenger in a car involved in an automobile accident on U.S. 31 on November 22, 2007. Morgan Glover suffered serious injuries as a result of the accident, requiring hospitalization, multiple surgeries, and rehabilitation. The other vehicle, a 1996 GMC Jimmy, was operated by Virginia Hines. At the time of the motor vehicle accident, Ms. Hines had liability insurance coverage through State Farm Insurance Company with policy limits of $50,000. (Aff. of Virginia Hines, attached as Ex. 2 to Cross-Motion for Summary Judgment by Nationwide, docket # 48).

9. The defendant Plan paid a total of $59,818.94, representing claims submitted on behalf of Morgan Glover for medical and related expenses (dates of service from November 22 through December 20, 2007) arising from her injuries in the automobile accident. (Fairley Aff., ¶¶ 7-8).

10. State Farm Insurance Company, on behalf of its insured Virginia Hines, has tendered policy limits of $50,000 to plaintiff as conservator for the Estate of Morgan Glover, a minor, in satisfaction of all claims arising from the automobile accident occurring on November 22, 2007. (Letter of 3/28/08, attached as Ex. 2 to the Plan's Motion, docket # 33).

11. The Plan has asserted a claim against the entire proceeds of the proposed settlement tendered by State Farm, under the reimbursement provisions of the SPD cited above. Plaintiff has denied the Plan's claim and instead has initiated this declaratory judgment action.

Applicable Standard

Summary judgment is appropriate when the record reveals that there are no genuine issues as to any material fact in dispute and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c); Sybrandt v. Home Depot, U.S.A., Inc., 560...