Hunacek v. Union Welfare Fund Local 202

• Decision Date: 30 August 1979
• Citation: 100 Misc.2d 740,420 N.Y.S.2d 156
• Parties: Frederick HUNACEK and Gerri Hunacek, Plaintiffs, v. UNION WELFARE FUND LOCAL 202, Defendant.
• Court: New York Supreme Court

Page 156

420 N.Y.S.2d 156

100 Misc.2d 740

Frederick HUNACEK and Gerri Hunacek, Plaintiffs, v. UNION WELFARE FUND LOCAL 202, Defendant.

Supreme Court, Trial Term, Queens County, Part I.

Aug. 30, 1979.

Shapiro, Shiff, Beilly, Castleman & Fox, New York City, for defendant.

Bertram Herman, P. C., Forest Hills, for plaintiffs.

MEMORANDUM

HAROLD HYMAN, Justice.

The issue in this case is one of first impression. The novelty of the issue presented to the court herein, upon an agreed statement of facts, is whether by reason of the application of our "no-fault" statutes (Insurance Law § 672, Article XVIII) plaintiffs are entitled to a windfall, that is, in addition to payment under no-fault, are they entitled to duplicate such receipt of payment under defendant's Union Welfare Fund. The agreed upon facts relevant to the issue involved are as follows:

Union Local 202, I.B.T. is an organized labor union in which plaintiff, Frederick Hunacek, is a member in good standing. He was also a member in good standing on January 17, 1978; plaintiff, Gerri Hunacek, was on said date, the wife of plaintiff Frederick Hunacek; defendant afforded to its members and their dependents on said date certain benefits which are specifically enumerated in the Welfare Fund booklet entitled "Your Welfare Fund Benefit Program."

On January 17, 1978 plaintiff, Gerri Hunacek, was involved in a motor vehicle accident and incurred certain expenses which were covered by a policy of "no-fault" insurance issued by Nationwide Insurance Co.; said insurance company paid said charges or is responsible for their payment; plaintiffs also seek payment of such health care items from the Union Welfare Fund Benefit Program, the effect of which would result in plaintiffs' receiving "double-payment", a windfall.

It is the plaintiffs contention that the payment of "no-fault benefits" pursuant to a separate policy of insurance, does not preclude recovery pursuant to the coverage afforded by the defendant Welfare Fund (hereinafter Fund). This contention is not unfounded in principle inasmuch as where the injured party has been wholly or partly indemnified for his loss by insurance his recovery is not diminished by reason of this collateral source. (Healy v. Rennert, 9 N.Y.2d 202, 206, 213 N.Y.S.2d 44, 46, 173 N.E.2d 777, 778). Hence, the plaintiffs cite cases to support their claim for duplicate payments.

In Rubin v. Empire Mutual Ins. Co., 25 N.Y.2d 426, 306 N.Y.S.2d 914, 255 N.E.2d 154), the Court of Appeals held that an insured under an automobile liability policy is entitled to receive payment of the amount of his medical expenses under a medical expense indorsement in the policy despite the fact that such expenses were satisfied out of Workmen's Compensation payments. Likewise, in a recent case decided by this court (Greenspan v. Travelers Ins. Co., 98 Misc.2d 43, 412 N.Y.S.2d 1009 (Hyman, J.), it was held that satisfaction of medical expenses incurred by payment obtained through some third party would not militate against recovery under a Group Accident and Sickness Policy providing for major medical coverage.

However, a careful review of the above decisions indicates certain specific underlying circumstances for their allowing duplicate payments therein. The court in Rubin (Supra, 25 N.Y.2d pp. 429, 430, 306 N.Y.S.2d p. 917, 255 N.E.2d pp. 155-56) reinforced its result by quoting the following language from a text on insurance law in which the author analyzing the nature of the medical expense indorsement in automobile liability policies states: " 'Since such expense payments are in the nature of health insurance, and payments under such policies are considered to be merely a return of premiums, duplicate payments ordinarily may be secured * * * ' (8 Appleman, Insurance Law and Practice, § 4896, p. 351)". In Greenspan (Supra ) decided by this court, the defendant insurer contended that the claimant did not "actually incur" such expense because eventually another source remunerated the primary source for the "expense incurred" in the supplying of blood for the claimant's decedent during his last illness. That case hinged upon a claimed, but unfounded, distinction in the language of the policy prepared by defendant and defendant's failure to insert any limitation, exclusion, or distinction in said verbiage. Thus, the reasoning behind both decisions (supra) is that, crucial to any final determination is an evaluation of the language used in the policy or agreement involved and the purposes and scope of their application to the issue of "double-payment".

The Union Welfare Fund Local 202, was created on October 1, 1977 by Union Local 202, I.B.T. and various contributing "Employers ". It is non-contributing in its application to "Employees ". The purpose of the Fund is to provide health and welfare benefits for employees covered by collective bargaining agreements between those "employers and the Local Union." The nature of the benefits offered brings this Fund within the definition of an "Employee Welfare Benefit Plan" provided for and within the federal Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C.A. § 1001, et seq.). ERISA is designed to protect the interests of employees and their beneficiaries in the private sector by regulating the participation, funding, vesting, reporting, administering, as well as other aspects of such plans. As stated, the clear intention of ERISA was to provide federal regulation of the field of employee benefit plans (Azzaro v. Harnett, 414 F.Supp. 473, affd. 553 F.2d 93, cert. den. 434 U.S. 824, 98 S.Ct. 71, 54 L.Ed.2d 82); with the purpose to provide minimum standards "assuring the equitable character of such plans and their financial soundness (29 USCA 1001, subd. (a)), and to protect the interests of participants in employee benefit plans and their beneficiaries by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions and ready access to the Federal Courts (29 USCA 1001 subd. (b))." As stated in National Bank of North America v. International Brotherhood of Electrical Workers Local 3, Pension and Vacation Funds, et al., App.Div., 419 N.Y.S.2d 127, 130: "It is clear from the foregoing and from an examination of the history of ERISA that its purpose was to protect the beneficiaries of the funds from mismanagement of those funds by the fiduciaries of the plans. By enacting ERISA Congress sought to correct the pattern of wasting and looting which had resulted in a devastating denial of benefits to the intended recipients of the plans * * * 'Congress found also that, due to mismanagement, "employees and their beneficiaries have been deprived of anticipated benefits." ' "

To show and provide without equivocation, that there be a distinct and different relationship of such plans than as to insurance agreements, the Federal Act explicitly provides for exclusive federal jurisdiction in this area and removes from all doubt that these plans, or any trusts established thereunder, shall not be deemed to be engaged in the business of insurance and thereby subject to State insurance regulatory provisions

(ERISA, § 514(b)(2) (B), 29 U.S.C.A. § 1144(b)(2)(B)).

These "employee benefit plans" are distinguished from the concept of "insurance" based on the premise that they are non-profit, non-advertising and nothing more than incidents of the employment contract by which the employer hopes to get better services from its employees. (Bell v. Employee Security Benefit Assn., 437 F.Supp. 382, 390.) Moreover, non-insured programs are further distinguished by the total absence of insurance. (Dusenberg, The Legality of Non-Insured Employee Benefit Programs, 5 BC. Ind. & Com.L.Rev. 231, 238-240, 1964).

This Fund is a "non-insured" program. No assets of the Fund consist of insurance contracts or policies issued by an insurance company for the payment of claims. It is funded solely by employers' contributions. In accordance with the statutory mandate, these contributions which make up the assets of this benefit plan " * * * shall be held in trust by one or more trustees." (Section 403(a) (ERISA); 29 U.S.C. § 1103(a)); those trustees named in the Welfare Fund Booklet have exclusive authority and discretion to manage and control the assets of the Fund, they serve as fiduciaries obligated to discharge their duties in the sole interest of the plan participants and beneficiaries and " * * * in accordance with the documents and instruments governing the plan * * * " (Section 404(a)(1)(D) (ERISA); 29 U.S.C. § 1104(a) (1)(D)). This high standard of performance demanded of a benefit plan trustee, as opposed to that of the profit-motivated insurer, serves to highlight still another distinction between these plans and the insurance concept.

However, not unlike an insurance policy, the extent of...