Yerkovich v. AAA
| Citation | 610 N.W.2d 542,461 Mich. 732 |
| Decision Date | 25 April 2000 |
| Docket Number | Docket No. 112891, Calendar No. 4. |
| Parties | Mary Jean YERKOVICH, Individually, and as Next Friend of Lisa Yerkovich, a Minor, Plaintiffs-Appellees, v. AAA, also known as ACIA, Defendant-Appellant, and Michigan United Food and Commercial Workers Unions and Food Employers Health and Welfare Fund, Jointly and Severally, Defendants-Appellees. |
| Court | Supreme Court of Michigan |
Fraser & McHugh, P.C. (by Stuart A. Fraser and Carrie L. Fuca), Mt. Clemens, MI, for plaintiff-appellee.
Lanctot, McCutcheon, Schoolmaster, Taylor & Hom (by Charles Trickey, III), Mt. Clemens, MI, and John A. Lydick, of counsel, Detroit, MI, for defendant-appellant.
Sachs, Waldman, O'Hare, Helveston, Bogas & McIntosh, P.C. (by I. Mark Steckloff and Reginald M. Turner, Jr.), Detroit, MI, for defendant-appellee.
Miller, Shpiece & Andrews, P.C. (by Wayne J. Miller and Michael R. Shpiece), Southfield, MI, amici curiae for Professors Miller and Shpiece.
The issues presented are: (1) whether the subrogation agreement between defendant fund and plaintiff Yerkovich entitled the fund to reimbursement from plaintiff for medical expenses and, if so, (2) whether plaintiff's no-fault insurer, defendant AAA, must refund plaintiff for that reimbursement. We hold that the subrogation clause did not confer upon the fund the right to be reimbursed out of plaintiff's third-party recovery from tortfeasors. Because we hold that the fund was not entitled to reimbursement, we do not reach the second question.
Plaintiff's minor daughter was injured in an automobile accident when the driver of the vehicle in which she was riding negligently collided with another vehicle. At the time of the accident, plaintiff was a participant in the Michigan United Food and Commercial Workers Unions and Food Employers Health and Welfare Fund. The fund is a self-funded employee welfare benefit plan created and administered pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. Plaintiff also had a no-fault policy issued by defendant AAA.
Plaintiff filed this action on behalf of her daughter against both defendants, seeking payment of medical expenses. The fund had initially denied coverage, claiming plaintiff had failed to execute a subrogation agreement. The fund claimed this was required by the plan's subrogation clause. Plaintiff eventually signed the "Subrogation Agreement and Assignment" form, and the fund paid $6,832 in medical expense benefits. The AAA also denied coverage, claiming that plaintiff's policy contained a coordination of benefits clause that made the fund primarily responsible for medical expenses from the accident. Plaintiff also filed a negligence claim seeking noneconomic damages against the driver of the vehicle in which her daughter was riding. That case was settled for $20,000.
Plaintiff and the fund each filed motions for summary disposition in the trial court, essentially advancing the same position. The fund argued that, pursuant to the plan, plaintiff was required to reimburse the fund the $6,832 it had paid for medical expenses out of her third-party tort recovery. Plaintiff and the fund agreed that if such reimbursement were required, it would result in plaintiff paying her own medical expenses, contrary to the provisions of the no-fault act. Plaintiff and the fund argued that the AAA should be responsible for paying for the medical expenses. The AAA argued that the language of the subrogation agreement between plaintiff and the fund did not support a right to reimbursement and limited reimbursement to situations where plaintiff recovered medical expenses from a third-party suit. The trial court granted the motions for summary disposition and ordered the AAA to repay plaintiff any sums she paid to reimburse the fund. The Court of Appeals affirmed. 231 Mich.App. 54, 585 N.W.2d 318 (1998).
At issue in this case is the interpretation of the plan agreement between the fund and plaintiff. Specifically, we must answer whether the fund was entitled to a refund from plaintiff for medical expenses. The fund provided plaintiff with a plan booklet that laid out the rights, benefits, and duties of the parties. Under the "General Provisions" section, the plan provided a subsection entitled "Third Party Subrogation." The fund argues that, under this section, plaintiff was required to sign further documents ensuring its rights to subrogation, reimbursement, repayment, and assignment. It provides in pertinent part:
* * *
Under this plan, the fund declared "subrogation" rights in order to recover from a third party medical expense benefits it paid. In contrast, it declared the right to "repayment" from plaintiff for lost wage benefits it paid in the event that plaintiff recovered the lost wages "from any other source."
Traditional subrogation is defined by Black's Law Dictionary (4th ed.); p. 1595, as "[t]he substitution of one person in the place of another with reference to a lawful claim, demand or right, ... so that he who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or securities." As a subrogee, one stands in the shoes of the subrogor and acquires no greater rights than those possessed by the subrogor. Shermer v. Merrill, 33 Mich. 284, 287 (1876). In this case, the fund provided its own definition for "subrogation" in the second paragraph of that subsection. It explains that subrogation means the fund may "recover from the person who caused the injury, or that person's insurance company...." This is consistent with the traditional definition.
Although the agreement provides that the fund may "recover from the person who caused the injury," the fund seeks to recover instead from plaintiff. It has done so by arguing that the second agreement signed by plaintiff required plaintiff to repay, reimburse, subrogate, and assign sums and rights to the fund.1 It is agreed that plaintiff signed the second agreement—that greatly expanded her duties under the plan agreement—only after the fund conditioned the payment of medical expenses on her signing the second agreement.
Under the plan agreement, the fund was entitled to seek recovery from the negligent driver for the medical expenses it paid. Plaintiff, in return, was required to sign documents necessary to secure the fund's right of subrogation. Plaintiff was also required to provide any information requested regarding the injuries and the identity of the tortfeasor. If plaintiff impaired that right of "subrogation," the fund could then seek reimbursement. Plaintiff has done nothing to hinder or obstruct the fund's rights of subrogation. Plaintiff did not sue the tortfeasor for medical expenses or any economic damages. Instead, plaintiff recovered from the tortfeasor purely noneconomic damages for pain and suffering. The fund does not claim that it has paid noneconomic damages. It does not claim that it had a right of subrogation for noneconomic damages, only for benefits it paid. It paid only medical expense benefits. Nor does the plan agreement provide that it may seek reimbursement from plaintiff for medical expenses from plaintiff's noneconomic damage recovery. Under the language of the plan agreement, the fund's right of reimbursement is triggered only if the plaintiff impairs or negates the fund's right of subrogation. This was not triggered. In fact, the fund may step into plaintiff's shoes and sue the negligent driver for medical expenses incurred, because plaintiff has yet to seek them.2
Moreover, the fund might have, but did not, place language in the plan agreement requiring reimbursement of medical expenses from plaintiff. Instead, it sought only subrogation as defined in the second paragraph. Therefore, it has no right to reimbursement from plaintiff for medical expenses. This view is strengthened by examining the final paragraph quoted from the plan agreement where the fund demanded "repayment" from the plaintiff for lost wage benefits, in contrast to the "subrogation" clause, which allows recovery from the person who caused the injury for medical expense benefits.
The fund argues that subrogation and reimbursement rights are triggered whenever a plan participant recovers monies for the same injury or accident from a third party. It also urges that we should apply an "arbitrary and capricious" standard of review to the fund's interpretation of the plan agreement, citing Firestone Tire &...
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