Providence Hosp. v. National Labor Union Health and Welfare Fund

• Decision Date: 01 October 1987
• Docket Number: Docket No. 93298
• Citation: 412 N.W.2d 690,162 Mich.App. 191
• Parties: PROVIDENCE HOSPITAL, Assignee of Eugene Cummins, Robert French, Alice Johnson, Ronald Lee, Marie Malane, Frank Pearson, Stanley Tekieli, Michelle Vannester, Thelma Bynum, Charlene Delaney, Carlton Johnson, Clarence Mayrick, Ronald Stamis and Clyde Suppi, Plaintiff-Appellee, v. NATIONAL LABOR UNION HEALTH AND WELFARE FUND, Defendant-Appellant. 162 Mich.App. 191, 412 N.W.2d 690
• Court: Court of Appeal of Michigan — District of US

Page 690

412 N.W.2d 690

PROVIDENCE HOSPITAL, Assignee of Eugene Cummins, Robert French, Alice Johnson, Ronald Lee, Marie Malane, Frank Pearson, Stanley Tekieli, Michelle Vannester, Thelma Bynum Charlene Delaney, Carlton Johnson, Clarence Mayrick, Ronald Stamis and Clyde Suppi, Plaintiff-Appellee, v. NATIONAL LABOR UNION HEALTH AND WELFARE FUND Defendant-Appellant.

Docket No. 93298.

162 Mich.App. 191, 412 N.W.2d 690

Court of Appeals of Michigan.

Submitted May 8, 1987.

Decided Aug. 3, 1987.

Released for Publication Oct. 1, 1987.

[162 MICHAPP 192] Law Offices of Sullivan & Leavitt, P.C. by Martin J. Leavitt and Karen L. Faber, Northville, for plaintiff-appellee.

Zweig & Lane, P.C. by Timothy R. Van Dusen, Southfield, for defendant-appellant.

Before BEASLEY, P.J., and HOOD and E.E. BORRADAILE, ^* JJ.

BORRADAILE, Judge.

Providence Hospital filed suit in Wayne Circuit Court on November 2, 1983, against Health and Welfare Plans, Inc., which is not a party to this appeal, alleging that Health and Welfare Plans, Inc., was contractually bound [162 MICHAPP 193] to pay health benefits to plaintiff's assignors and has a duty to pay plaintiff as an assignee. On May 31, 1984, plaintiff's first amended complaint was filed which alleged that the defendant in this case, National Labor Union Health and Welfare Fund, had breached its contractual obligation to pay for services rendered by plaintiff.

Plaintiff provided health care to certain individuals who were beneficiaries under a multi-employer/employee welfare benefit plan administered by the defendant. The fund is an employee welfare benefit plan within the meaning of the Employee Retirement Income Security Act, 29 U.S.C. Sec. 1002(1). Plaintiff alleged that prior to rendering the services it confirmed with the defendant or its agents that the beneficiaries were covered under the plan and that the services to be provided were covered services. Upon receiving confirmation, plaintiff rendered the services to the beneficiaries and then sought payment from defendant.

Subsequent to plaintiff's rendition of covered services, and after considering all potential available alternatives, on December 23, 1983, the trustees of the fund unilaterally adopted a "plan of arrangement" whereby the trustees determined that, with respect to benefits for services previously provided, the fund would delay making payment until the trustees determined that the fund had sufficient assets. This action was taken in response to a financial crisis experienced by the fund, and was allegedly taken pursuant to the National Labor Union and Welfare Fund Agreement and Declaration of Trust.

The "plan of arrangement" was submitted to providers under the plan, but plaintiff rejected the arrangement and filed the complaint giving rise to this litigation. At oral argument, this Court was informed that the amounts billed had been paid in [162 MICHAPP 194] full but plaintiff sought interest which had been accruing since the trial judge, on February 24, 1986, entered a summary disposition order under MCR 2.116(C)(10) against defendant National Labor Union Health and Welfare Fund only. The amount prayed for in the first amended complaint was $81,467.85.

On May 23, 1986, a stipulation and order of dismissal was entered on the counts against codefendant Health and Welfare Plans, Inc. On March 17, 1986, defendant filed a motion for amendment of judgment alleging that plaintiff's cause of action was preempted by ERISA and that a review of the trustees' decision to modify the method of payment of benefits presented a material issue of fact which was not a proper subject for summary disposition. Finding that the motion, which was nothing more than a motion for rehearing on plaintiff's motion for summary disposition, was untimely, the trial court denied defendant's motion and an order was entered on April 10, 1986. On June 13, 1986, defendant filed a claim of appeal from the April 10, 1986, order. We reverse.

Defendant first raised the preemption question in the motion for amendment of judgment, and because the trial court denied the motion for untimeliness it did not address the preemption issue. Generally, this Court will not review issues that were not raised and decided by the trial court. MCR 7.203; Bajis v. City of Dearborn, 151 Mich.App. 533, 391 N.W.2d 401 (1986), lv. den. 426 Mich. 874 (1986). However, there are exceptions to this general rule. This Court will review issues not raised below if a miscarriage of justice will result from a failure to pass on them, American Way Service Corp. v. Comm'r of Ins., 113 Mich.App. 423, 317 N.W.2d 870 (1982), or if the question is one of law and all the facts necessary for its resolution [162 MICHAPP 195] have been presented, Kahn-Reiss, Inc. v. Detroit & Northern Savings & Loan Ass'n, 59 Mich.App. 1, 228 N.W.2d 816 (1975), or where necessary for a proper determination of the case, Loper v. Cascade Twp., 135 Mich.App. 106, 352 N.W.2d 357 (1984).

Although the complaint does not mention ERISA, 29 U.S.C. 1001 et seq., or specifically allege a violation thereof, the parties do not dispute that the fund, as defined in the trust agreement, is an employee welfare benefit plan as defined in 29 U.S.C. Sec. 1002(1), and is therefore regulated by ERISA.

Defendant, both in brief and in argument, claims that the federal act entirely preempts state law. Defendant asserts that there is no basis for a common-law action as defined under Michigan law that can stand in view of the Congressional intent, and that the proper review of this case by the trial judge should have been as to whether the trustees violated their duties as defined in ERISA.

The preemption provision of ERISA is found in 29 U.S.C. Sec. 1144, which provides:

"Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in [29 USC 1003(a) ] and not exempt under [29 USC 1003(b) ]. This section shall take effect on January 1, 1975.

* * *

"For purposes of this section:

"(1) the term 'State law' includes all laws, decisions, rules, regulations, or other State action having the effect of law, of any State...."

The state law at issue need not specifically concern subjects covered by ERISA to be preempted. Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, [162 MICHAPP 196] 101 S.Ct. 1895, 68 L.Ed.2d 402 (1981). Instead, even a state's general common law will be preempted by ERISA if, in its present application, the common law "relates to" an employee benefit plan. Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208 (C.A.8, 1981), cert. den. 454 U.S. 968, 102 S.Ct. 512, 70 L.Ed.2d 384 (1981).

In its appellate brief, plaintiff states that it has never asserted that its claim does not arise under ERISA, and that its claim is based upon the civil enforcement provision of ERISA, specifically, 29 U.S.C. Sec. 1132(a)(1)(B), which permits plan participants to bring a cause of action for benefits due under the terms of a plan. We find that the plaintiff is correct in arguing that its claim may be based upon the civil enforcement provision of ERISA, but we also find that the plaintiff has relied upon common law within the State of Michigan to enforce its claim against defendant, which is not permitted. Claims under subsection (a)(1)(B) of 29 U.S.C. Sec. 1132 may be brought either in state courts of competent jurisdiction or district courts of the United States, the act giving concurrent jurisdiction. 29 U.S.C. Sec. 1132(e)(1). In Authier v. Ginsberg, 757 F.2d 796 (C.A.6, 1985), cert. den. 474 U.S. 888, 106 S.Ct. 208, 88 L.Ed.2d 177 (1985), the United States Court of Appeals for the Sixth Circuit, in ruling on a decision of Judge Cook in the United States District Court for the Eastern District of Michigan, found that the fiduciary suing in that case asserted a cause of action under Michigan law and because the fiduciary's alleged compliance with ERISA had a connection with or reference to an employee benefit plan, it was fully preempted by federal law. In two recent companion cases decided by the United States Supreme Court, Metropolitan Life Ins. Co. v. Taylor, --- U.S. ----, [162 MICHAPP 197] 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987), and Pilot Life Ins. Co. v. Dedeaux, --- U.S. ----, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), it was held that ERISA preempts state common law tort and contract actions where there was an assertion of improper processing of a claim for benefits under an insured employee benefit plan.

In the Metropolitan case, supra, the plaintiff had filed suit in state court. Defendants in the state suit removed the suit to federal court alleging federal question jurisdiction under ERISA and pendent jurisdiction over the remaining state claims. The district court found the case properly removable and granted the defendants summary judgment on the merits. 588 F.Supp. 562 (E.D.Mich.1984). The Court of Appeals reversed on the ground that the district court lacked removal jurisdiction. 763 F.2d 216 (C.A.6, 1985). The Court of Appeals found that the complaint stated only state-law causes of action subject to the federal defense of ERISA preemption and that the "well-pleaded complaint" rule precluded removal on the basis of a federal defense. 763 F.2d 216, 219 (C.A.6, 1985). The United States Supreme Court subsequently reversed. Justice O'Connor, speaking for a unanimous Court, stated:

"Federal pre-emption is ordinarily a federal defense to the plaintiff's suit. As a defense, it does not appear on the face of a well-pleaded complaint, and, therefore, does not authorize removal to federal court. Gully v. First National Bank, [299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70 (1936) ]. One corollary of the well-pleaded complaint rule developed in the case law, however, is that Congress may so completely pre-empt a particular area, that any civil...