McIntosh v. Pacific Holding Co., 92-3621
| Decision Date | 24 June 1993 |
| Docket Number | No. 92-3621,92-3621 |
| Citation | 992 F.2d 882 |
| Parties | , 16 Employee Benefits Cas. 2540, Pens. Plan Guide P 23880E Jean A. McINTOSH, Individually and as Conservator for Plaintiff Kristin K. McIntosh, a Protected Person, Appellee, v. PACIFIC HOLDING COMPANY and Pacific Holding Company Employee Welfare Benefit Plan, Appellants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Shawn D. Renner, Lincoln, NE, argued, for appellants.
Timothy Robert Engler, Lincoln, NE, argued (Timothy R. Engler and Gregory D. Barton, on the brief), for appellee.
Before WOLLMAN and MORRIS SHEPPARD ARNOLD, Circuit Judges, and STOHR, * District Judge.
In July, 1988, Kristin McIntosh was very seriously injured in a car accident. At the time, Jean McIntosh, Kristin's mother, had health care insurance through her employer, the Pacific Holding Company. As Jean McIntosh's minor dependent, Kristin was also insured under that coverage. Kristin made claims through the health care plan for medical expenses related to her injuries; the health care plan has paid over $430,000 to date for those expenses.
In December, 1988, the health care plan and the employer notified Jean McIntosh that they considered it her obligation to reimburse the health care plan for some of the benefits paid if she recovered any money from third parties "by way of settlement" related to Kristin's injuries from the accident. The health care plan and the employer also stated that they considered the health care plan to be subrogated to any claims against third parties that could be made on Kristin's account. A month later, Jean McIntosh acknowledged those understandings of the health care plan and the employer but reserved her own right to seek a legal determination of the health care plan's and the employer's entitlement to reimbursement or subrogation related to any such money recovered.
In the spring of 1990, Jean McIntosh reached a settlement with the other persons involved in the accident. Under the terms of that agreement, those persons paid $250,500 in settlement of all claims against them related to Kristin's injuries from the accident. Those proceeds were placed into an escrow account pending resolution of the question of Jean McIntosh's obligation to the health care plan and the employer.
In late 1990, Jean McIntosh sued in federal court, seeking a declaratory judgment that the health care plan and the employer had no right to the money received from the settlement with the other persons involved in the accident. In early 1992, after cross-motions for summary judgment and the submission of a stipulated record, the trial court granted summary judgment to Jean McIntosh and awarded attorney's fees to her. The health care plan and the employer appeal. We reverse the judgment of the trial court and vacate the award of attorney's fees, for the reasons stated below, and remand the case for the entry of a judgment in favor of the health care plan and the employer.
The health care insurance contract contains the following provisions:
It is hereby agreed that in the event a Covered Person receives any benefits arising out of injury or illness for which the Covered Person has, may have, or asserts any claim or rights to recovery against a third party or parties, then any ... payments by the Plan for such benefits shall be made on the condition and with the agreement and understanding that the Plan will be reimbursed therefor by the Covered Person to the extent of ... the amount or amounts received by the Covered Person from such third party or parties by way of settlement....
The Plan shall be subrogated to all claims, demands, actions and rights of recovery of the Covered Person against a third party or parties ... to the extent of any and all payments made hereunder by the Plan in all jurisdictions where subrogation is lawfully permitted.
In its opinion granting summary judgment to Jean McIntosh, the trial court focused exclusively on the question of whether the health care plan and the employer could assert a right to subrogation under those provisions in a contract for health care insurance conceded by all of the parties to be governed by the Employee Retirement Income Security Act (ERISA), see 29 U.S.C. §§ 1001-1461. The trial court concluded that the preemptive effect of ERISA on state law, see 29 U.S.C. § 1144(a), did not extend to the subrogation right specified in the health care insurance contract at issue here and that Nebraska law would permit subrogation as to payments made by a minor's parent for medical expenses incurred by the minor. Interpreting the settlement agreement executed in this case, however, the trial court held that the proceeds consequent to that agreement were not intended to compensate Jean McIntosh for medical expenses incurred on Kristin's behalf, but instead were intended to compensate Kristin for her personal injuries (e.g., physical pain and mental suffering, see NJI 2d § 4.00, § 4.01). The trial court held, therefore, that the health care plan and the employer were not entitled to receive the proceeds of the settlement.
On appeal, the health care plan and the employer contend, among other things, that the first paragraph quoted above from the health care insurance contract creates an obligation for reimbursement that is separate from any right to subrogation under state law (which the health care plan and the employer consider to be the subject of the second paragraph quoted above) and therefore that the language of the settlement agreement is irrelevant. The health care plan and the employer offer several other arguments as well, but since we agree with the contentions asserted as to reimbursement, we need not reach those other issues.
We agree that the two paragraphs quoted above refer to different obligations--that the first paragraph creates a contractual obligation for reimbursement and that the second paragraph deals with a statutory or common-law right to subrogation. We believe that the language of the health care insurance contract is plain in this respect and, if interpreted in any other way, would...
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