Martin v. Metropolitan Life Ins. Co.

• Decision Date: 01 April 1985
• Docket Number: Docket No. 73862
• Citation: 140 Mich.App. 441,364 N.W.2d 348
• Parties: Olly V. MARTIN, Joe Bean, Dolores Zimmer and Alfonso Easterwood, Individually and as representative of all similarly situated persons as a class, Plaintiffs-Appellants, v. METROPOLITAN LIFE INSURANCE COMPANY, a foreign corporation, and General Motors Corporation, a Delaware corporation, Defendants-Appellees. 140 Mich.App. 441, 364 N.W.2d 348
• Court: Court of Appeal of Michigan — District of US

Page 348

364 N.W.2d 348

Olly V. MARTIN, Joe Bean, Dolores Zimmer and Alfonso Easterwood, Individually and as representative of all similarly situated persons as a class, Plaintiffs-Appellants, v. METROPOLITAN LIFE INSURANCE COMPANY, a foreign corporation and General Motors Corporation, a Delaware corporation, Defendants-Appellees.

Docket No. 73862.

140 Mich.App. 441, 364 N.W.2d 348

Court of Appeals of Michigan.

Submitted July 18, 1984.

Decided Feb. 4, 1985.

Released for Publication April 1, 1985.

[140 MICHAPP 442] Sachs, Nunn, Kates, Kadushin, O'Hare, Helveston & Waldman, P.C. by David K. Barnes, Jr., Elizabeth J. Larin and Susan B. Fellman, Detroit, for plaintiffs-appellants.

Dickinson, Wright, Moon, Van Dusen & Freeman by Thomas G. Kienbaum, Kenneth J. McIntyre,[140 MICHAPP 443] Philip M. Frost, Joseph C. Marshall, III, and Theodore R. Opperwall, Detroit, and Nancy Mayer, New York City, of counsel, for Metropolitan Life Ins. Co.

David M. Davis, Detroit, for General Motors Corp.

Jordan Rossen, Gen. Counsel, and Leonard R. Page, Associate Gen. Counsel, Detroit, for amicus curiae International Union, UAW.

Before V.J. BRENNAN, P.J., and ALLEN and GRIBBS, JJ.

V.J. BRENNAN, Presiding Judge.

Plaintiffs appeal as of right from a January 1, 1984, Wayne County Circuit Court order which granted partial summary judgment to defendants. GCR 1963, 117.2(1). The trial court had determined that prior to bringing suit the plaintiffs had failed to exhaust their administrative remedies as set forth in the collective bargaining agreement between the United Automobile Workers Union (the plaintiffs' acknowledged bargaining agent) and General Motors Corporation, covering the General Motors Corporation (GM) employees' insurance plan. Although the plaintiffs' suit was technically dismissed, the trial court retained jurisdiction in the event that plaintiffs did exhaust their administrative remedies.

In their complaint ¹ filed against defendant Metropolitan Life Insurance Company (Metropolitan), ² the plaintiffs alleged that as GM employees they were insured [140 MICHAPP 444] under a group insurance policy contract underwritten by Metropolitan and issued to GM for the benefit of GM's employees. While insured under the policy, each named plaintiff became totally disabled and each had received the maximum number of weeks of sickness and accident insurance benefits payable under the policy. Plaintiffs further alleged that they were then entitled to receive extended disability benefits (EDB) from Metropolitan.

The plaintiffs alleged that the policy provided that the amount of monthly EDB as shown in the benefit schedule is to be reduced by an amount equal to the monthly equivalent of the total of other benefits for which the employee is eligible, such as Social Security Disability Insurance Benefits under the Federal Social Security Act. The policy also provided that the extended disability benefit payment computations presumed eligibility for Social Security Disability Insurance Benefits and that any amounts which have been deducted by Metropolitan from the EDB are to be paid to the employee upon presentation of satisfactory evidence that the Social Security Disability Insurance Benefits were applied for and denied. ³

[140 MICHAPP 445] Plaintiffs averred that they each presented satisfactory evidence to Metropolitan that their individual applications for Social Security Disability Insurance Benefits had been submitted and denied. Metropolitan, therefore, paid to each plaintiff EDB which were not reduced by social security disability payments the plaintiffs would have received.

Each plaintiff subsequently appealed from the denial of social security benefits and each was awarded retroactive benefits to the original date of his or her determined disability. Plaintiffs alleged that Metropolitan then notified each plaintiff that the retroactive awards were considered to be overpayments of EDB and Metropolitan demanded that each plaintiff repay the alleged overpayment in either a lump sum or by Metropolitan's withholding sums from future payments to offset the initial payments of duplicative benefits.

The plaintiffs brought this action to recover the sums allegedly wrongfully recovered by Metropolitan as a result of the repayment of the alleged overpayments. In short, the plaintiffs alleged that Metropolitan breached the group insurance policy it issued to GM by reducing the amount of EDB payments by the amount of retroactively awarded social security benefits.

In its amended answer, as one of several defenses (including waiver, novation, accord and satisfaction), Metropolitan alleged that plaintiffs' claims were barred because the terms of the insurance coverage as reflected in the group policy contract were negotiated by and between GM and the UAW, as agent and representative of all UAW members including the named plaintiffs, and the terms were part of the collective bargaining contracts as negotiated. The collective bargaining supplemental[140 MICHAPP 446] agreement which covered the insurance plan has been consistently interpreted, intended, and expected by GM, Metropolitan, and the UAW (the UAW concurs in defendant's position herein) to allow for the recovery of such overpayment. Metropolitan also claimed that the plaintiffs were barred from bringing suit because of their failure to exhaust the remedies available under the insurance supplement. Metropolitan also filed a counterclaim against plaintiffs alleging that if plaintiffs prevailed each would receive a windfall at Metropolitan's expense, that payment of benefits without reduction of the retroactive award was made by mutual mistake, and that the contract should be reformed to provide that the retroactive award would create an overpayment as was intended by the parties who negotiated the agreement. Metropolitan requested judgment against the plaintiffs individually in the amount of any outstanding overpayment of EDB resulting from the retroactive awards.

Metropolitan then filed a motion for summary judgment to dismiss plaintiffs' complaint, alleging inter alia that the plaintiffs' suit sought redress for a "denied claim" and the suit was based on a breach of a collective bargaining agreement. Metropolitan claimed that plaintiffs, therefore, failed to exhaust their administrative remedies prior to bringing suit. After two hearings on defendants' motion, the trial court agreed with Metropolitan's arguments and also found that collateral estoppel did not apply to the instant action.

Plaintiffs' first claim is that the trial court erred in ruling that plaintiffs must exhaust their remedies for the review of denied claims as contained in the supplemental bargaining agreement before plaintiffs could bring this suit. Plaintiffs argue that they are seeking redress for breach of an [140 MICHAPP 447] insurance contract and not for breach of a collective bargaining agreement. We disagree.

In Graves v. Wayne County, 124 Mich.App. 36, 333 N.W.2d 740 (1983), the Court set forth the standards for this Court's review of a grant or denial of a summary judgment motion based on GCR 1963, 117.2(1):

"The motion is to be tested by the pleadings alone. The motion tests the legal basis of the complaint, not whether it can be factually supported. The factual allegations of the complaint are taken as true, along with any inferences or conclusions which may fairly be drawn from the facts alleged. Unless the claim is so clearly unenforceable as a matter of law that no factual development can possibly justify a right to recover, the motion under this subrule should be denied. Partrich v Muscat, 84 Mich App 724, 729-730; 270 NW2d 506 (1978)." 124 Mich.App. at 40, 333 N.W.2d 740.

Although the trial court was asked to grant defendants' motion under this subrule, it is our opinion that this motion should have been brought as one for accelerated judgment under GCR 1963, 116.1(5), because the plaintiffs' complaint was dismissed for failure to exhaust collective bargaining remedies. The merits of plaintiffs' pleadings were not actually addressed and we cannot review plaintiffs' complaint because dismissal was not based upon plaintiffs' failure to state an actionable claim. We will, however, review the propriety of granting defendants' motion under GCR 1963, 116.1(5).

The focus of plaintiffs' argument is that they are not seeking redress for a denied claim. Rather, plaintiffs maintain that their claim is against defendant Metropolitan for its subsequent manipulation of plaintiffs' funds.

The Supplemental Agreement covering the insurance[140 MICHAPP 448] plan sets forth a six-step ⁴ procedure for [140 MICHAPP 449] review of denied claims and a four-step procedure for review of denial of medical expenses or questions concerning coverage.

In Rhodes v. Aetna Life Ins. Co., 135 Mich.App. 735, 356 N.W.2d 247 (1984), the plaintiff was a member of the UAW and entitled to group disability insurance benefits under an insurance plan collectively bargained for between Chrysler and the UAW. Employee disability benefits were provided by Chrysler through a policy underwritten by Aetna. The plaintiff received extended disability benefits which were eventually terminated by Aetna. An employee's right to disability benefits was subject to two procedures as provided by two agreements (1976 and 1979) entered into between Chrysler and the UAW. These agreements supplemented the master bargaining agreement. The 1979 agreement between Chrysler and the UAW created a procedure for review of terminated or denied benefits. When the employee disputed the denial or termination of benefits, a six-step review procedure was to be followed. This procedure is similar to, but not as detailed as, the review procedure in the instant case. ⁵ Aetna claimed that [140 MICHAPP 450] the plaintiff never utilized the procedures and never sought internal review of Aetna's decision to terminate benefits. The plaintiff claimed that her...