Liberty Corp. v. NCNB Nat. Bank of South Carolina

• Decision Date: 29 January 1993
• Docket Number: No. 92-1370,92-1370
• Citation: 984 F.2d 1383
• Parties: LIBERTY CORPORATION, as Sponsor & Administrator for Liberty Corporation Medical Benefits Plan, Plaintiff-Appellant, v. NCNB NATIONAL BANK OF SOUTH CAROLINA, as Personal Representative for the Estate of John M. Bristow, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1383

984 F.2d 1383

LIBERTY CORPORATION, as Sponsor & Administrator for Liberty Corporation Medical Benefits Plan, Plaintiff-Appellant, v. NCNB NATIONAL BANK OF SOUTH CAROLINA, as Personal Representative for the Estate of John M. Bristow Defendant-Appellee.

No. 92-1370.

United States Court of Appeals Fourth Circuit.

Argued Oct. 27, 1992.

Decided Jan. 29, 1993.

Robert David Black, argued, Greenville, SC, G. Randall Taylor (on brief), Butler, Means, Evins & Browne, Spartanburg, SC, for plaintiff-appellant.

Edward Randolph Cole, argued, Drennan, Shelor, Cole & Evins, P.A., Spartanburg, SC, for defendant-appellee.

Before WIDENER, HALL, and LUTTIG, Circuit Judges.

OPINION

LUTTIG, Circuit Judge:

The Liberty Corporation brought an action for reimbursement against the personal representative of John W. Bristow's estate, NCNB National Bank of South Carolina, after paying the medical expenses incurred by Bristow following an automobile accident. The district court granted NCNB's motion for summary judgment. We affirm.

I.

On October 21, 1989, Bristow's automobile was struck by a dump truck in Charlotte, North Carolina. Bristow was severely injured and died ten days later. At the time of the accident, Bristow was an employee of the Liberty Life Insurance Company and was covered by a group health plan ("the Plan") administered by appellant, the Liberty Corporation ("Liberty"). Liberty paid $93,829.50 in medical bills on Bristow's behalf.

The Plan includes a subrogation provision obligating Bristow to repay Liberty for any medical expenses that he recovered from third parties. ¹ After Bristow died, Liberty and NCNB National Bank of South Carolina ("NCNB"), as the personal representative of Bristow's estate, entered into an analogous "Third-Party Liability Reimbursement Agreement" under which Bristow's estate agreed

to reimburse the Benefits Plan for any medical or dental expenses or loss of earnings benefits which are paid by the Liberty Life Benefits Plan, or will be paid by it, which expenses or benefits arise out of the accident or illness commencing 9/21/89, if payment is received from a third party or its insurer.

J.A. at 101.

On October 10, 1990, the Spartanburg County, South Carolina, Probate Court approved a proposed settlement between NCNB and the driver of the dump truck, Dale Lavone Rankin, and its owner, the F.T. Williams Company. Under the settlement, Rankin and Williams agreed to pay to NCNB $1,500,000, "to be distributed as hereinabove set forth pursuant to the North Carolina Wrongful Death and Intestate Succession Acts." Probate Court Order at 4. NCNB subsequently offered to pay $1,160 to Liberty as reimbursement of the medical expenses Liberty had paid on Bristow's behalf. This sum represented the maximum amount that may be recovered for reasonable hospital and medical expenses under the North Carolina Wrongful Death Act, N.C.Gen.Stat. § 28A-18-2, less a pro rata share of the cost of pursuing the claim against Rankin and Williams.

Liberty thereafter brought an action against NCNB in the United States District Court for the District of South Carolina seeking (1) a declaration that the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., preempted the North Carolina Wrongful Death Act to the extent that it deprived Liberty of its subrogation rights under the Plan, and (2) damages for NCNB's breach of the reimbursement agreement. See J.A. at 4-9. It sought recovery from NCNB of $72,561.17, the amount in medical bills that it had paid on Bristow's behalf, less its pro rata share of pursuing the wrongful death claim. Both parties moved for summary judgment. The district court granted NCNB's motion, concluding that ERISA did not preempt the North Carolina Wrongful Death Act and that NCNB had "offered to pay to Liberty the maximum allowed by the law." See 786 F.Supp. 552, 555 (D.S.C.1992). This appeal followed.

II.

Liberty advances essentially four arguments before this court. First, it argues that the district court erred in applying North Carolina law rather than South Carolina law. Second, it contends that the North Carolina Wrongful Death Act does not bar its full reimbursement for Bristow's medical expenses under the Plan and that, to the extent that the statute does limit reimbursement, it is preempted by ERISA. Third, Liberty contends that it also has a subrogation claim to a portion of the wrongful death recovery proceeds under the terms of the reimbursement agreement. Finally, Liberty argues that it is entitled to equitable subrogation, independent of the Plan or the reimbursement agreement. We reject each of these arguments.

A.

Liberty, a South Carolina corporation, first contends that the substantive law of South Carolina should apply to this case. As the district court recognized, however, South Carolina has long adhered to the rule of lex loci delicti, that the law of the place where the injury occurred governs the disposition of tort claims. See, e.g., Thornton v. Cessna Aircraft Co., 886 F.2d 85, 87-88 (4th Cir.1989); Wright v. American Flyers Airline Corp., 263 F.Supp. 865, 869 (D.S.C.1967); Oshiek v. Oshiek, 244 S.C. 249, 136 S.E.2d 303, 305-06 (1964). Rather than directly challenge this well-settled rule, Liberty argues that application of North Carolina's wrongful death statute violates "the public policy of South Carolina as set forth in Section 38-71-190 of the South Carolina Code." Appellant's Br. at 22. Although Liberty does not specify either the public policy that it believes is embodied in section 38-71-190 (other than by asserting without support that it "provides liberal rights for subrogation," Appellant's Br. at 22) or the manner in which it contends that that policy is violated by North Carolina's wrongful death statute, presumably it believes that this section guarantees an insurer full recovery of amounts paid. We disagree.

Section 38-71-190 simply provides that

[a]ny policy or contract of accident and health insurance issued in this State may include provision for subrogation by the insurer to the insured's right of recovery against a liable third party for not more than the amount of insurance benefits that the insurer has paid previously in relation to the insured's injury by the liable third party.

S.C.Code Ann. § 38-71-190 (Law.Co-op.1989). That is, it authorizes the inclusion of insurer subrogation provisions in accident and health insurance contracts. Nothing in this provision even arguably purports to guarantee full recovery by subrogated insurance companies.

We also reject Liberty's alternative argument for the inapplicability of North Carolina law, that as a South Carolina-appointed personal representative, NCNB "had no capacity to bring suit in North Carolina." See Appellant's Br. at 23. Whether NCNB could actually have maintained a suit in North Carolina is irrelevant to the resolution of this case, since the third party settled before NCNB filed suit. See 786 F.Supp. at 553 n. 1. We conclude, therefore, given that Bristow was injured in Charlotte, North Carolina, that the district court correctly applied North Carolina law.

B.

No more than $1,500 of the $1,500,000 settlement that NCNB recovered could be applied in payment of Bristow's "reasonable hospital and medical expenses" under North Carolina's wrongful death statute. ² NCNB offered to pay Liberty this statutory maximum minus a pro rata share of the cost of pursuing the wrongful death claim. ³

1.

Despite the plain language of the statute, Liberty challenges application of the $1,500 statutory cap on the ground that its "entitlement to be reimbursed for medical expenses paid on behalf of the decedent should be construed as a 'right' and not as a 'debt' under the North Carolina Wrongful Death Statute." Appellant's Reply Br. at 1. In support of that argument, it relies on Byers v. North Carolina State Highway Comm'n, 3 N.C.App. 139, 164 S.E.2d 535, 541 (1968), aff'd, 275 N.C. 229, 166 S.E.2d 649 (1969). ⁴ Liberty's reliance on Byers is misplaced. That case turned simply on the permissibility of the lower court's consideration of new evidence. The court of appeals explicitly noted that the conflict between the statutory subrogation provision and the Wrongful Death Act was not "presently before [it]," and accordingly "refrain[ed] from expressing any opinion on it." 164 S.E.2d at 541. Even the Byers court's dictum, suggesting that the subrogation provision of the Workmen's Compensation Act would still apply in wrongful death actions, id., does not bear on the case before us. Liberty's alleged subrogation rights stem not from the Workmen's Compensation Act, or from any other statute, but from the Plan and the reimbursement agreement.

At argument, Liberty also contended that under In re Peacock, 261 N.C. 749, 136 S.E.2d 91 (1964), it was not subject to the statutory cap. In Peacock, however, the court explicitly acknowledged that in a wrongful death action, "the limitation fixed in the statute for payment of hospital and medical expenses would control," id. 136 S.E.2d at 93, and in that case, it limited recovery under the Wrongful Death Act to the statutory maximum, id. at 95. The court did, in the first instance, allocate the recovery amount equally between the wrongful death action and the action for the decedent's personal injuries and medical expenses. It did this, however, only because it could not discern how much of the settlement was attributable to each cause of action but believed that the settlement was predominantly attributable to the personal injury action, see id. at 93. ⁵ Here, of course, NCNB's settlement was indisputably only for wrongful death. See Probate Court Order at 3. Neither Byers nor Peacock, therefore, precludes the application of section 28A-18-2's $1,500 limit to Liberty's recovery of medical expenses.

2.

Even if the $1,500 cap would otherwise apply, Liberty argues, ERISA preempts its application. ERISA preempts "any and...