LINCOLN MUT. v. LECTRON PRODUCTS EMP. HEALTH PLAN
| Decision Date | 15 June 1993 |
| Docket Number | No. 90-71372.,90-71372. |
| Parties | LINCOLN MUTUAL CASUALTY COMPANY, a Michigan Insurance Company, Plaintiff, v. LECTRON PRODUCTS, INC. EMPLOYEE HEALTH BENEFIT PLAN, Defendant. |
| Court | U.S. District Court — Western District of Michigan |
David Lawson and James Mulcahy, Detroit, MI, for plaintiff.
Michael Kell, Birmingham, MI, for defendant.
ORDER ADOPTING, IN PART, AND REJECTING IN PART, THE MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION, GRANTING SUMMARY JUDGMENT IN FAVOR OF DEFENDANT, AND DISMISSING THIS ACTION IN ITS ENTIRETY, WITH PREJUDICE
This matter is presently before the Court on the April 26, 1993 Report and Recommendation of United States Magistrate Judge Virginia M. Morgan, recommending that the Court grant summary judgment in favor of the Defendant employee health benefit plan and dismiss Plaintiff's Complaint in its entirety on waiver grounds or, in the alternative, on the basis of application of federal common law.1
The Court has reviewed the Magistrate Judge's Report and Recommendation, Plaintiff's Objections to the Report and Recommendation, Defendant's Response to Plaintiff's Objections, the Sixth Circuit's July 29, 1992 Opinion in this case, and the Court's entire file of this matter.2 Based upon that review, the Court agrees with Plaintiff's assertion at page 5 of its Objections that the Court of Appeals made it clear that it wants the conflict between Plaintiff's no-fault policy and the Defendant plan resolved "based on federal common law." For this reason, the Court finds no merit in the Defendant plan's argument that Plaintiff Lincoln Mutual is precluded—by application of the doctrine of waiver—from arguing a basis for recovery in this action under federal common law. Moreover, ERISA decisional law in this Circuit suggests that a litigant whose state-law claim is determined to be preempted should be afforded an opportunity to have his claim considered on the merits under ERISA or be allowed to amend his complaint to attempt to assert a federal law-based ERISA claim. See Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 982-983 (6th Cir.1991).
For these reasons, the Court rejects that portion of Magistrate Judge Morgan's Report and Recommendation pp. 5-7 of the R & R recommending that the Defendant Plan's motion for summary judgment be granted on the basis of waiver.
On the other hand, the Court finds the rest of the Magistrate Judge's April 26, 1993 R and R to be well-reasoned to fully address the issues as specifically ordered by the Court of Appeals. Therefore, the Court ACCEPTS and ADOPTS Magistrate Judge Morgan's very thorough and thoughtful Report and Recommendation on the application of federal common law, and will GRANT summary judgment in favor of the Defendant on the basis of application of federal common law as detailed by Magistrate Judge Morgan.
IT IS HEREBY ORDERED that the April 26, 1993 Report and Recommendation of Magistrate Judge Virginia M. Morgan is ADOPTED AND ACCEPTED, in part, and REJECTED, in part, as set forth above in this Order.
IT IS FURTHER ORDERED that for the reasons stated by the Magistrate Judge in her Report and Recommendation, summary judgment is hereby GRANTED in favor of the Defendant employee health benefit plan, and this case, accordingly, is hereby, DISMISSED in its entirety, with prejudice.
Let Judgment be entered accordingly.
REPORT AND RECOMMENDATION
This matter is before the court following an order of remand from the Sixth Circuit. The defendant has filed a motion for summary judgment to which plaintiff has responded. This case involves a dispute over the impact of the Employee Retirement Security Income Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461, on the parties' liability for an insured's medical expenses resulting from an automobile accident. The plaintiff is Lincoln Mutual Casualty Company ("Lincoln"), a Michigan insurance company; defendant is Lectron Products, Inc. Employee Health Benefit Plan ("Plan"), an ERISA-qualified health and welfare benefit plan. Plaintiff had claimed that it was due reimbursement from the Plan pursuant to a state statute. This court granted summary judgment to the Plan, and dismissed the case, finding that ERISA preempted application of the state statute: MCLA § 500.3109a. Under that statute and the case law interpreting it, primary liability was allocated to the health insurer as against an automobile insurance carrier with respect to claims for injuries to an insured arising out of an automobile accident.
The Court of Appeals affirmed the district court's finding of preemption, but held that the finding of preemption did not resolve the case. The court remanded the case for "the district court to resolve the conflict between the incompatible COB coordination of benefits clauses of the no-fault policy and the plan." 970 F.2d 206, 211 (6th Cir.1992). The Court of Appeals found that the Plan and Lincoln Mutual each had valid, unambiguous, and irreconcilable clauses. The court stated:
The parties had not raised the issue of the application of federal common law in the district court. The defendant has on remand filed a second motion for summary judgment to which the plaintiff has responded.1
The Plan argues that Lincoln Mutual has waived federal common law as a basis of recovery against the Plan where it failed to raise the claim until it filed its reply brief in the appellate court. The Plan argues further that federal common law may only be used to allocate medical expenses to which ERISA's indirect regulation applies, i.e. to that portion of the medical expenses which the Plan would pay through "stop loss" insurance.
For the reasons discussed in this Report, it is recommended that the motion be granted on the issue of waiver, but if no waiver, then federal common law should apply to the totality of the expenses. It is further recommended that pursuant to such application the Plan would be entitled to summary judgment.
In 1989, Charles and Diane Sisson and their six children were injured in an automobile accident. Mr. Sisson was insured under a no-fault automobile insurance policy issued by Lincoln. Mrs. Sisson was an employee of Lectron Products and as such, she and her family were covered by the defendant ERISA-qualified employee health benefit plan. The Plan contained the following language:
Lincoln Mutual paid approximately $500,000 in medical expenses arising out of this automobile accident and sued the Plan for reimbursement, arguing that MCLA § 500.3109a made the Plan the primary coverage source for all of the Sissons' medical expenses. In response, the Plan pointed out that the Plan documents clearly excluded payment for these expenses, except to the extent of $300 per covered person, and that ERISA preempted the Michigan law.
On November 30, 1990, the magistrate judge issued a Report and Recommendation granting the Plan's motion of summary judgment and agreeing that ERISA preempted § 3109a. The Report and Recommendation was adopted by the district judge and Lincoln Mutual appealed.
On July 29, 1992, the United States Court of Appeals for the Sixth Circuit filed its opinion and judgment, affirming the finding of preemption, reversing the dismissal of the action, and remanding the case with directions to resolve, under federal common law, incompatible coordination of benefits clauses in the no fault insurance policy and in the Plan. The court stated:
The Sixth Circuit concluded that ERI...
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Western and Southern Life Ins. Co. v. Wall, Civ. A. No. 94-75225.
...for medical expense benefits when they contain a coordination of benefits clause. In Lincoln Mut. Cas. Co. v. Lectron Products, Inc. Employee Health Ben. Plan, 823 F.Supp. 1385 (E.D.Mich.1993) (on remand from the Sixth Circuit), the court held that a coordination of benefits clause in an ER......