Simonetta v. Geico Casualty Company et al
Filing
51
ORDER Granting Defendant Navistar's 38 MOTION for Summary Judgment and Denying Defendant Geico's 36 Motion for Summary Judgment - Signed by District Judge Judith E. Levy. (FMos)
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTICT OF MICHIGAN
SOUTHERN DIVISION
Corey Alan Simonetta, Jr.,
Plaintiff,
Case No. 13-cv-12751
Hon. Judith E. Levy
Mag. Michael J. Hluchaniuk
v.
Geico Casualty Company,
Navistar Inc. Health Plan, Alfonso
Dortch, Carey Lee Koch, and
Progressive Universal Insurance
Company,
Defendants,
and
Navistar Inc. Health Plan,
Counter-Claimant,
v.
Corey Alan Simonetta, Jr.,
Counter-Defendant.
__________________________________________/
ORDER GRANTING DEFENDANT NAVISTAR’S MOTION FOR
SUMMARY JUDGMENT [38] AND DENYING DEFENDANT
GEICO’S MOTION FOR SUMMARY JUDGMENT [36]
The matter before the Court arises out of a dispute about who
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must pay for medical expenses following a car accident. The moving
parties are defendant/counter-plaintiff Navistar, Inc. Health Plan
(“Navistar”), an ERISA health plan, and Defendant Geico Casualty
Company (“Geico”), an out-of-state auto-insurer.
In his initial
complaint, plaintiff Corey Alan Simonetta, Jr. (“Simonetta”) sought to
enforce its rights under the Michigan No-Fault Act, §500.3163(4),
against Geico and sought injunctive relief under § 502(a)(3) of the
Employment Retirement Income Security Act (“ERISA”) against
Navistar to enjoin it from collecting reimbursement debt owed to it
under plaintiff’s plan.
Currently before the Court are Navistar’s and Geico’s Motions for
Summary Judgment.
Navistar, as counter-plaintiff, seeks equitable
relief to enforce the terms of the Navistar Health Plan, imposing a lien
or constructive trust over settlement proceeds possessed by the plaintiff.
At oral argument held on June 23, 2014, plaintiff agreed that Navistar
was entitled to these funds.
Geico’s Motion seeks judgment in its favor as it contends that
plaintiff is not entitled to any personal injury protection (“PIP”) benefits
under his auto-insurance plan. Plaintiff opposes this motion arguing
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that, pursuant to Michigan’s No Fault Insurance Act, he is entitled to
PIP coverage from Geico.
For the reasons set forth below, the Court GRANTS defendant
Navistar’s Motion for Summary Judgment and DISMISSES WITH
PREJUDICE plaintiff’s complaint against Navistar.
The Court
DENIES defendant Geico’s Motion for Summary Judgment, and,
pursuant to Rule 56(f), GRANTS the declaratory relief plaintiff seeks
with respect to Geico.
I.
Background
Plaintiff is an Illinois resident. He is a beneficiary of the Navistar
Inc. Health Plan (“the Navistar Plan”), an ERISA plan. The Navistar
Plan has a provision that requires the beneficiary to reimburse
Navistar for benefits it has already paid that are later recovered from a
third party. The Navistar Plan stated:
[I]f the Plan does advance moneys or provide care for [] an Injury,
Sickness or other condition, the Covered Person shall promptly
convey moneys or other property from any settlement, arbitration
award, verdict or any insurance proceeds or monetary recovery
from any party received by the Covered Person (or by the legal
representative, estate or heirs of the Covered Person), to the Plan
for the reasonable value of the medical benefits advanced or
provided by the Plan to the Covered Person, regardless of whether
or not (1) the Covered Person has been fully compensated… (2)
liability for payment is admitted by the Covered Person or any
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other party; or (3) the recovery by the Covered Person is itemized
or called anything other than a recovery for medical expenses
incurred.
(Dkt. 9-1). Plaintiff was also covered by an Illinos Geico auto-insurance
plan that did not include PIP coverage.
On August 12, 2012, Plaintiff sustained injuries when he was
involved in a motorcycle accident in Michigan. The motor vehicle that
struck him was operated by an uninsured Michigan resident. Following
the accident, plantiff’s Navistar Plan paid medical benefits in the
amount of $6.447.64. Because the at-fault owner and operator of the
motor vehicle was uninsured at the time of the accident, plaintiff also
filed an uninsured motorist claim with his motorcycle insurer,
Progressive, in May 2013, and settled that claim for $20,000.
Plaintiff brought this suit on June 21, 2013, against Geico,
Navistar, BlueAdvantage, Progressive Universal Insurance Company,
Alfonso Dortch, and Carey Lee Koch. Plaintiff’s complaint is, in part,
an effort to resolve whether Geico or Navistar is responsible for his
medical expenses, so he can determine whether and where to disburse
the funds he received from Progressive.
Plaintiff also has pled a
negligence claim against the driver of the vehicle, Alfonso Dortch.
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On July 18, 2013, Navistar filed a counter-complaint against the
plaintiff seeking enforcement of the terms of the Navistar Plan,
invoking an equitable lien over funds in possession and/or control of the
plaintiff (up to the amount of the benefits advanced by the Navistar
Plan on plaintiff’s behalf). (Dkt. 9).
Alfonso Dortch failed to answer the complaint and a clerk’s entry
of default was entered in August 2013. Progressive deposited $20,000
with the Court in September 2013, and was subsequently dismissed
from the complaint. BlueAdvantage was voluntarily dismissed from the
case by stipulation signed in October 2013. After a show cause order,
plaintiff also voluntarily dismissed his claim against Carey Lee Koch.
II.
Standard of Review
Summary judgment is proper where “the movant shows that there
is no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The Court may
not grant summary judgment if “the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.”
Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248. The Court “views the evidence,
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all facts, and any inferences that may be drawn from the facts in the
light most favorable to the nonmoving party.” Pure Tech Sys., Inc. v.
Mt. Hawley Ins. Co., 95 F. App'x 132, 135 (6th Cir. 2004) (citing
Skousen v. Brighton High Sch., 305 F.3d 520, 526 (6th Cir.2002)).
III. Analysis
A. Navistar’s Motion for Summary Judgment
The Navistar Plan has a valid provision requiring a beneficiary to
reimburse Navistar following any recovery made by the beneficiary for
any damages related to the incident causing injury. Navistar now seeks
equitable relief, pursuant to 29 U.S.C. § 1132(a)(3), to impose a
constructive trust or equitable lien over the settlement proceeds
currently held by the Court. Plaintiff concurs that Navistar is entitled
to reimbursement of the $6,447.64 it paid for plaintiff’s medical
coverage.
Accordingly, the Court will grant Navistar’s Motion for Summary
Judgment.
B. Geico’s Motion for Summary Judgment
In plaintiff’s action against Geico, he seeks declaratory relief to
determine whether Geico was responsible for plaintiff’s medical
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coverage under the Michigan No Fault Insurance Act. Geico argues
that the plaintiff is not entitled to any PIP benefits under his auto
insurance plan because he was an Illinois resident at the time of the
accident and his Illinois plan did not provide for any medical coverage.
The relevant provision of the Michigan No Fault Insurance Act requires
out-of-state auto insurers to provide “roll-on” PIP benefits so that out-ofstate drivers are treated the same as Michigan drivers if they get into
an accident within the state. See M.C.L. § 500.3163; Jones v. State
Farm Mut. Auto. Ins. Co., 202 Mich. App. 393 (Mich. Ct. App. 1993).
The law also states that “benefits… are not recoverable to the extent
that benefits covering the same loss are available from other sources,
regardless of the nature or number of benefit sources available and
regardless of the nature or form of the benefits.” M.C.L. § 500.3163(4)
(emphasis added). Because plaintiff is covered by the Navistar Plan,
Geico argues that no “roll-on” PIP benefits are triggered. (Dkt. 36 at 23).
i. ERISA Preemption
The Court first must address plaintiff’s argument that M.C.L.
§3163(4) is preempted by ERISA to the extent that “benefits covering
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the same loss… from other sources” includes ERISA plans.
ERISA
preempts state laws to the extent that they “relate to” any employee
benefit plan. 29 U.S.C. § 1144(a). ERISA does not preempt state laws
regulating insurance.
29 U.S.C. § 1144(b)(2)(A).
In Shaw v. Delta
Airlines, Inc., 463 U.S. 85 (1983), the Supreme Court laid out a broad
interpretation of ERISA’s preemption clause, finding that a state law
“relates to” an ERISA plan “if it has a connection with or reference to
such a plan.” Id. at 97-97; see also Firestone Tire & Rubber Co. v.
Neusser, 810 F.2d 550, 552 (6th Cir. 1987). “Under this broad commonsense meaning, a state law may ‘relate to’ a benefit plan, and thereby be
pre-empted, even if the law is not specifically designed to affect such
plans, or the effect is only indirect,” and even if the “state law is
consistent with ERISA's substantive requirements.”
Ingersoll–Rand
Co. v. McClendon, 498 U.S. 133, 139, (1990) (citations and internal
quotations omitted).
“Despite the breadth of the preemption provision, the Supreme
Court has indicated that ‘[s]ome state actions may affect employee
benefit plans in too tenuous, remote, or peripheral a manner to warrant
a finding that the law relates to the plan.’” Firestone, 810 F.2d at 553-
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54 (quoting Shaw, 463 U.S. at 100 n. 21).
In Firestone, the Sixth
Circuit laid the three factors most often considered when determining
whether a state regulation falls within this narrow Shaw exception. Id.
at 555-56.
Those factors are as follows: (1) “whether the state law
represents a traditional exercise of state authority,” id.; (2) whether the
state law “‘affects relations among the principal ERISA entities – the
employer, the plan, the plan fiduciaries, and the beneficiaries –” as
opposed to merely affecting “‘relations between one of these entities and
an outside party, or between two outside parties with only an incidental
effect on the plan,’ ” id. at 556 (quoting Sommers Drug Stores Co.
Employee Profit Sharing Trust v. Corrigan Enterprises, 793 F.2d 1456,
1467 (5th Cir.1986)); and (3) the extent to which any possible effect of
the state law on an ERISA plan is incidental. Firestone, 810 F.2d at
556.
Applying these factors, the Court concludes that M.C.L. §
500.3163(4) falls within the “tenuous, remote, and peripheral” exception
to preemption. Laws regulating insurance fall within the traditional
exercise of state authority. See 29 U.S.C. § 114(b)(2)(A); Lincoln Mut.
Cas. Co. v. Lectron Prods., Inc., Emp. Health Ben. Plan, 970 F.2d 206,
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210 (6th Cir. 1992); Physicians Health Plan, Inc. v. Citizens Ins. Co. of
Amer., 673 F.Supp. 903, 906-07 (W.D. Mich. November 10, 1987)
(finding that § 3109a of the No Fault Insurance Act governing autoinsurers was an exercise of the state’s traditional authority).
More
critical is the fact that § 500.3163(4) has no impact on the relationship
between any ERISA plan and its beneficiary. Instead, the law governs
the
relationship
between
out-of-state
auto-insurers
and
their
beneficiaries. The fact that someone in plaintiff’s shoes might also seek
to recover from an ERISA plan is only tangentially related to the
provision at issue. Indeed, § 3163(4) creates no obligations for and has
no impact on ERISA plans. The law merely prevents PIP coverage from
“rolling over” if those losses were already covered by some other source.
See Physicians Health, 673 F.Supp at 906 (holding that even an
economic effect on an ERISA plan was insufficient to invalidate a state
law under preemption principles).
The cases plaintiff relies on in its brief are distinguishable from
the matter before the Court. In Mackey v. Lanier Collection Agency &
Serv., 486 U.S. 825 (1988), for example, the Supreme Court found
ERISA preemption where a state law explicitly singled out ERISA
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benefits for protective treatment.
Id.
Dist. of Columbia v. Greater
Washington Bd. of Trade, 506 U.S. 125 (1992) also addressed a law that
“specifically refer[red] to welfare benefit plans regulated by ERISA and
on that basis alone is preempted.” Id. at 656. Section 3163(4), on the
other hand, makes no reference to and has no impact on ERISA plans.
M.C.L. § 3163(4).
As the Sixth Circuit has noted, “Congress sought to preempt state
laws that have a burdensome effect on ERISA plans.” Thiokol Corp.,
Morton Intern., Inc. v. Roberts, 76 F.3d 751, 757 (6th Cir. 1996)
(emphasis in original). Laws that merely make broad reference to some
category of loss that might include loss covered by an ERISA plan shall
not be preempted. See id.
Accordingly, the Court finds that §3163(4)
falls within the “tenuous, remote, and peripheral” exception and is not
preempted by ERISA. See Fisher v. Gov’t Emps. Ins. Co., 762 A.2d 35
(D.C. Ct. App. November 16, 2000) (applying the Firestone factors in
holding that a law limiting PIP benefits where such damages were
covered by another insurer fell within the “tenuous, remote and
peripheral” exception to ERISA); Austin v. Dionne, 909 F.Supp. 271
(E.D. Pa. December 7, 1995) (noting that a prohibition against double
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recovery only affects the relations between a beneficiary and a nonERISA plan and is likely exempt from ERISA preemption).
ii. Payment of Benefits under 3163
The Court next turns to whether Geico is obligated to pay plaintiff
PIP benefits under § 500.3163. Section 3163(4) states that “[b]enefits…
are not recoverable to the extent that benefits covering the same loss
are available from other sources, regardless of the nature or number of
benefit sources available and regardless of the nature or form of the
benefits.” Id.
iii. Navistar’s Payments
Defendant Geico is mistaken in arguing that Navistar’s payment
of benefits prevents it from having to cover plaintiff under § 3163. This
section is essentially a coordination of benefits provision, requiring nonresidents to coordinate with their health, disability, and auto-insurance
plan to determine who shall pay for the personal injury loss.
Geico argues, incorrectly, that §3163 does not follow the line of
priority created by the Michigan No Fault Insurance Act. Michigan
courts have held, on the contrary, that non-residents seeking benefits
under § 3163 follow the order of priority established by §§ 3114 and
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3115. See Safeco Ins. Co. v Econ. Fire and Cas. Co., 182 Mich App 552
(1990); Smith v Continental Western Ins. Co., 169 F. Supp. 2d. 687
(2001).
This, as Geico acknowledges, would place Geico’s roll-on
benefits as primary over plaintiff’s ERISA health insurance policy.1
Under Geico’s theory, out-of-state auto-insurers could always avoid
payment of PIP benefits if the insured had some other means of
recovery.
Out-of-state insurers could initially deny payment of PIP
benefits forcing the insured to seek coverage from an ERISA-based or
other health insurer. The out-of-state insurer could then avoid paying
PIP payments at a later date by saying that the loss had already been
covered under §3163(4). This approach undermines the priority system
the Michigan legislature intended to create as well as its intent to put
out-of-state drivers in the same position as Michigan drivers.
Accordingly, the Court finds that plaintiff’s entitlement to roll-on
PIP coverage from Geico is not impacted by Navistar’s prior payment of
medical benefits.
iv. Progressive’s Payments
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All that is required to trigger roll-on PIP benefits for an out-of-state insurer is a showing of three factors, which are
met here: (1) the insurer is certified in Michigan, (2) there is an automobile liability policy between the non-resident
and the certified insurer, and (3) there is a sufficient causal relationship between the non-resident’s injury and the
operation or use of a motor vehicle. See Goldstein v. Progressive Cas. Ins. Co, 218 Mich. App. 105, 109 (1969).
These factors are not in dispute in this case.
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If the Navistar benefit was the only one received by plaintiff, the
Court could conclude its analysis here and declare that plaintiff’s rights
under the Michigan No Fault Insurance Act require Geico to pay
plaintiff/Navistar $6,447.64. However, plaintiff also received $20,000
from Progressive as part of his uninsured motorist claim. Accordingly,
the question for the Court is whether plaintiff’s recovery from
Progressive constitutes a benefit for the same PIP loss he was entitled
to from Geico.
Uninsured motorist coverage is not required as part of the
Michigan No Fault Insurance Act; however, “it may be purchased to
provide the insured with a source of recovery for excess economic loss
and noneconomic loss if the tortfeasor is uninsured.” Citizens Ins. Co. of
America v. Buck, 216 Mich. App. 217, 224-25 (Mich. App. 1996). In
passing the No Fault Act, the Michigan legislature “divided an injured
person’s loss into two categories [of] loss” – (1) work loss and medical
expenses from the insured and (2) excess economic loss and noneconomic loss if the threshold of injury is met. Bradley v. Mid-Century
Ins. Co., 409 Mich. 1, 61-62 (1980), overruled in part on other grounds
Wilkie v. Auto-Owners Ins. Co., 469 Mich. 41 (2003); see M.C.L. §§
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500.3107, 500.3135. “No-fault insurance provides security for the first
type [of loss]; uninsured motorist coverage, which presupposes that the
insured is entitled to recovery under the tort system, provides security
for the second type [of loss]-it is offered to protect against being left with
a worthless claim against an uninsured motorist.”
Id. at 62.
The
$20,000 paid to plaintiff by Progressive as part of an uninsured motorist
benefit falls in this second category and does not constitute “benefits
covering the same loss” under §3163(4).
Accordingly, as Geico’s roll-on benefits are primary to Navistar’s
coverage and plaintiff has not received any “benefit covering the same
loss,” the Michigan No Fault Insurance Act requires Geico to pay
plaintiff/Navistar $6,447.64.
IV.
CONCLUSION
For the reasons set forth above,
Defendant
Navistar’s
Motion
for
Summary
Judgment
is
GRANTED and defendant Navistar is DISMISSED WITH PREJUDICE
from this case.
Defendant Geico’s Motion for Summary Judgment is DENIED.
The Court, having determined the rights and responsibilities of
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the moving parties, declares that Geico is responsible for plaintiff’s PIP
benefits under the Michigan No Fault Insurance Act.
SO ORDERED.
Dated: August 14, 2014
Ann Arbor, Michigan
s/Judith E. Levy___________
JUDITH E. LEVY
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on August 14, 2014.
s/Felicia M. Moses
FELICIA M. MOSES
Case Manager
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