McClure v. United Parcel Service Flexible Benefits Plan et al

Filing 38

OPINION REGARDING CROSS MOTIONS FOR SUMMARY JUDGMENT; signed by Judge Gordon J. Quist (Judge Gordon J. Quist, jmt)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
__________________________

JASON McCLURE,
Plaintiff,
v.

Case No. 1:14-CV-845

UNITED PARCEL SERVICE
FLEXIBLE BENEFITS PLAN,
and STATE FARM MUTUAL
AUTOMOBILE INSURANCE
COMPANY,

HON. GORDON J. QUIST

Defendants.
_____________________________/
OPINION REGARDING CROSS MOTIONS
FOR SUMMARY JUDGMENT
Plaintiff, Jason McClure, has sued Defendants, the United Parcel Service Flexible Benefits
Plan (the UPS Plan) and State Farm Mutual Automobile Insurance Company (State Farm), seeking
declaratory and injunctive relief under the Employee Retirement Security Act of 1974 (ERISA), 29
U.S.C. § 1001 et seq. In particular, McClure requests that the Court declare that State Farm—his
automobile insurer—is primarily liable for payment of the medical expenses that McClure incurred
as a result of a 2011 automobile accident and that, to the extent UPS is entitled to reimbursement
for expenses it paid for McClure’s medical care from any third-party recovery that McClure might
obtain, State Farm must reimburse McClure for his repayment to the UPS Plan.1

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McClure asserts five claims in his first amended complaint: (1) a claim for declaratory relief that State Farm
is primary in coverage subject to a $500 deductible (Count I); (2) enforcement of the UPS Plan terms in a declaration
that State Farm is required to reimburse the UPS Plan for all of the accident-related medical expenses that the UPS Plan
paid on McClure’s behalf (Count II); (3) injunctive relief compelling the UPS Plan to intervene in McClure’s state-court
action (Count III); (4) injunctive relief enjoining the UPS Plan from seeking reimbursement against McClure’s potential
recovery from the third parties he has sued in state court (Count IV); and (5) injunctive relief compelling State Farm to
reimburse McClure to the extent he is required to reimburse the UPS Plan (Count V). It appears that the instant motions
implicate only Counts I and V of the first amended complaint.

McClure has filed a motion for summary judgment seeking a declaration that State Farm is
obligated to reimburse McClure if McClure is required to reimburse the UPS Plan for his medical
care. State Farm and the UPS Plan oppose McClure’s motion and have filed their own motions for
summary judgment, in which they argue, among other things, that the UPS Plan is primarily
responsible for McClure’s medical expenses, but entitled to reimbursement by McClure.2 Although
Defendants have requested oral argument, oral argument is unnecessary because the issues are
adequately briefed and oral argument would not further assist the Court in reaching a decision.
For the reasons set forth below, the Court will grant McClure’s motion with regard to Counts
I, II and V of his first amended complaint, grant the UPS Plan’s motion with regard to Counts III
and IV of the first amended complaint, and deny State Farm’s motion.
I. BACKGROUND
The pertinent underlying facts are undisputed. On October 8, 2009, McClure was injured
in an automobile accident when a vehicle driven by Joseph Cebelak, Jr. ran a blinking red light and
hit McClure’s vehicle. McClure suffered extensive injuries, including a closed head injury, spine
trauma, and cervical radiculopathy, and incurred numerous medical expenses. (Dkt. # 9 at Page ID#
362.) On March 23, 2011, while still recovering from the injuries sustained in the first accident,
McClure was involved in another accident and suffered additional injuries. In the second accident,
Monique Finley, the other driver, rear-ended McClure’s vehicle while he was stopped at a stop sign.
McClure’s injuries included aggravation of his previous injuries and additional disc herniations. (Id.
at Page ID#363.)
At the time of both accidents, McClure was insured under a no-fault automobile insurance
policy issued by State Farm. The State Farm Policy provided coverage for “bodily injury to an

2

The Court’s experience in coordination of benefits cases is that the fight is typically between the no-fault
insurer and the ERISA plan over who is primarily liable for the injured party’s medical expenses. This case is an
exception.

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insured arising out of the ownership, operation, maintenance or use of a motor vehicle,” including
benefits for “all reasonable charges incurred for reasonably necessary products, services and
accommodations for an insured’s care, recovery or rehabilitation.” (Dkt. # 28-3 at Page ID#779.)
As authorized by M.C.L.A. § 500.3109a, the State Farm policy contained a coordination of benefits
(COB) provision.3 The COB provision states, in relevant part:
3.

If benefits are shown as “Coordinated”, after making any reductions in
accordance with 1. above, any remaining amount will be further reduced for
you or any resident relative by any amount paid or payable to that person
under any:
a.

vehicle or premises insurance;

b.

individual, blanket or group accident or disability insurance; or

c.

medical or surgical reimbursement plan.

If allowable expense benefits are shown as “Coordinated” we will not pay the
first $500 of the remaining allowable expenses that were incurred for bodily
injury to you or any resident relative if there is no other medical insurance
applicable to the bodily injury at the time of the accident.
(Id. at Page ID#781.)
McClure was also a participant in the UPS Plan, a welfare benefit plan governed by ERISA,
under which McClure was entitled to medical benefits. The UPS Plan contains a COB provision,
which provides:
5.08 Coordination of Benefits with Other Plans. As set forth in the
[summary plan description], in the event that an Enrolled Person is entitled to any
benefits from another plan or policy, Benefits under this Plan may be reduced to an
amount, which together with all other amounts paid under any other plan or policy,
will not exceed the Benefits that would in fact be eligible for reimbursement under
this Plan.

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Section 3109a of Michigan’s No-Fault Act requires no-fault insurers to offer, at reduced premiums, insurance
coverage that coordinates with other insurance that their insureds may have. See Transamerica Ins. Co. of N. Am. v.
Peerless Indus. (MASCO), 698 F. Supp. 1350, 1351 (W.D. Mich. 1998). Michigan courts have held that when a no-fault
insurance policy and a health insurance policy contain COB clauses, absent an exclusion of coverage by the health
insurance policy, the No-Fault Act requires that the health insurance carrier be primarily liable for the insured’s medical
expenses arising from an automobile accident. Auto-Owners v. Autodie Corp. Emp. Benefit Plan, 185 Mich. App. 472,
474, 463 N.W.2d 149, 150 (1990) (per curiam).

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(Dkt. # 34-1 at PageID#1408.) The UPS Plan also contains a “Maintenance of Benefits” section that
explains how benefits under multiple group plans are coordinated. (Dkt. # 34-3 at 112–14.) This
section does not address coordination of benefits with non-group plans or individual automobile
insurance policies. However, the UPS Plan Summary Plan Description (SPD) in effect at the time
of the 2011 accident excluded coverage under certain circumstances, including the following4:
In addition to the items specifically listed above as excluded, the following
additional items are not covered.
....
•

Services and supplies provided by a personal injury protection or compulsory
medical payments provision of any motor vehicle insurance contract required
by federal or state law, whether or not the participant properly asserts his or
her rights under the motor vehicle insurance contract.

(Id. at 49-50.)5
The UPS Plan also contains provisions requiring participants to reimburse the UPS Plan for
medical benefits paid by the UPS Plan “arising from an accident . . . for which the [participant] has,
may have, or has asserted any claim or rights to recovery against a third party or parties.” (Dkt. #
34-1 at PageID#1408.) The participant is obligated to reimburse the UPS Plan from “any amount
or amounts received or receivable from or with respect to the third party or parties, whether by way
of suit, judgment, settlement, compromise or otherwise and without regard to how the amount
received from the third party or parties is characterized.” (Id.)6 In other words, the UPS Plan would

4

The UPS Plan provides that Summary Plan Descriptions are “incorporated by reference and shall constitute
a part of the Plan.” (Dkt. # 34-1 at PageID#1399.)
5

Although the UPS Plan attaches a copy of the 2008 SPD to its brief and notes that it did not contain an
exclusion similar to the no-fault exclusion in the 2010 SPD, that distinction is irrelevant for purposes of this case because
all of the expenses for which the UPS Plan seeks reimbursement from McClure were incurred as of 2011, when the 2010
SPD was in effect.
6

The SPD contains a similar provision obligating a participant to reimburse the UPS Plan from any third-party
recovery. (Dkt. # 34-3 at 111–12.)

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require reimbursement from a damage award for pain and suffering and loss of income - up to the
amount paid in benefits by UPS.
On September 14, 2012, McClure filed a lawsuit in Kent County Circuit Court against State
Farm and Cebelak and Finley, the other drivers involved in the accidents. In the state-court lawsuit,
McClure seeks to recover non-economic damages from the other drivers and his medical expenses
from State Farm. State Farm contends that it is not liable for McClure’s medical expenses because
coverage under McClure’s no-fault policy is subordinated to the UPS Plan’s liability for payment
of McClure’s expenses.
The UPS Plan paid a substantial portion of McClure’s medical expenses arising out of the
accident. At some point Accent Cost Containment Solutions sent McClure an itemization of
medical expenses paid as of November 12, 2013 by the UPS Plan. Accent sought payment on behalf
of the UPS Plan of $70,319.31, based on McClure’s pending lawsuit. (Dkt. # 28-4.) All of the
medical services included in the itemized statement were provided on and after March 24,
2011—following the 2011 accident. (Id. at PageID#784.)
McClure filed the instant case pursuant to ERISA, seeking declaratory relief from this court
on priority of coverage and reimbursement issues. The state case has been stayed pending this
court’s decision in the instant case.
II. DISCUSSION
Summary judgment is appropriate if there is no genuine dispute as to any material fact and
the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(a).
A.
The central issue in this case boils down to whether State Farm or the UPS Plan is primarily
liable for McClure’s injuries arising from the 2011 accident. Because the UPS Plan is governed by
ERISA, the Court must apply federal rules of contract interpretation. Perez v. Aetna Life Ins. Co.,
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150 F.3d 550, 556 (6th Cir. 1998); cf. Great-West Life & Annuity Ins. Co. v. Allstate Ins. Co., 202
F.3d 897, 900 (6th Cir. 2000) (noting that “a dispute between two insurers, one of which qualifies
as an employee welfare benefit plan under [ERISA]” is governed by “federal common law”). The
federal common law of contracts incorporates both state law and general contract principles. Perez,
150 f.3d at 552 (citing Regents of the Univ. of Mich. v. Emps. of Agency Rent-A-Car Hosp. Ass’n,
122 F.3d 336, 339 (6th Cir. 1997)); see also US Airways, Inc. v. McCutchen, __ U.S. __, 133 S. Ct.
1537, 1548–49 (2013) (applying “[o]rdinary principles of contract interpretation” to construe an
ERISA plan). Courts must interpret ERISA plan provisions “according to their plain meaning, in
an ordinary and popular sense,” Perez, 150 F.3d at 556, and give effect to the plan’s unambiguous
terms. Lake v. Metro. Life Ins. Co., 73 F.3d 1372, 1379 (6th Cir.1996).
In Auto Owners Insurance Co. v. Thorn Apple Valley, Inc., 31 F.3d 371 (6th Cir. 1994), the
Sixth Circuit held that federal common law applies to determine priority of coverage between a nofault automobile insurance policy and an ERISA plan with competing COB clauses. Id. at 374. The
court further held that ERISA preempts M.C.L.A. § 500.3109a, which requires no-fault insurers to
offer insurance coverage that coordinates with other insurance plans or policies. Id. The court noted
that preemption does not necessarily mean that the ERISA plan prevails over the no-fault policy.
Rather, it held that the no-fault insurer will be primarily liable for an insured’s auto-related medical
expenses if the ERISA plan “expressly disavow[s]” such claims. Id. at 375. Because the ERISA
plan’s COB clause expressly disavowed claims when medical or hospital expenses were also
covered by no-fault insurance, the court held that the terms of the ERISA plan “must be given full
effect in order to comply with a primary goal of ERISA, which is to safeguard the financial integrity
of qualified plans by shielding them from unanticipated claims.” Id.
Unlike the situation in Thorn Apple Valley, the instant case does not involve competing COB
provisions that create an irreconcilable conflict. The UPS Plan’s COB clause does not “expressly

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disavow” claims payable under a no-fault policy. Rather, it simply allows for the reduction of
benefits to the extent the participant is entitled to benefits from another source, so that the participant
does not recover more than he is entitled to receive under the UPS Plan. But this does not resolve
the issue in the instant case, at least with regard to medical expenses that McClure incurred in 2011,
because the UPS Plan excluded benefits for “[s]ervices and supplies provided by a personal injury
protection or compulsory medical payments provision of any motor vehicle insurance contract
required by federal or state law, whether or not the participant properly asserts his or her rights under
the motor vehicle insurance contract.”
As an initial matter, the Court notes that this exclusion in the UPS Plan for no fault benefits
is not a pure exclusion because it does not absolutely exclude coverage for medical expenses arising
out of an automobile accident. Instead, it conditions the exclusion of benefits on the existence of
no-fault insurance—a type of COB provision referred to as an escape provision, “which provides
that there shall be no liability if the risk is covered by other insurance.” Agency Rent-A-Car, 122
F.3d at 340-41 (citing NALC Health Benefit Plan v. Lunsford, 879 F. Supp. 760, 765 (E.D. Mich.
1995)). The escape provision is not ambiguous. It makes clear that benefits are not available if the
participant has coverage under a no-fault policy. The first phrase of the provision, “[s]ervices and
supplies provided by a personal injury protection or compulsory medical payments provision of any
motor vehicle insurance contract required by federal or state law,” is somewhat awkward, but the
intent, as disclosed by the entire provision, is that benefits are not provided if they are available
under a no-fault insurance contract.
Invoking its discretion “to interpret the terms and conditions of the Plan,” (dkt. # 34-3 at
124), the UPS Plan argues that the Court must defer to its interpretation so long as it is not arbitrary
and capricious. The UPS Plan asserts that the exclusion does not apply because it was intended to
prevent “double dipping” and excludes coverage only when benefits have already been “provided”
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under a no-fault policy. It argues that the UPS Plan coverage exclusion does not apply because State
Farm has not yet “provided” any services or supplies to McClure. This proposed interpretation
ignores a common sense reading and the second phrase of the exclusion which states that it applies
“whether or not the participant properly asserts his or her rights under the motor vehicle insurance
contract.” The plain intent of the provision is to prevent any “dipping” into the plan when a no-fault
insurance policy is available to provide benefits, regardless of whether the no-fault insurer actually
delivers the benefits. “Even if the plan generally confers discretion on the administrator to interpret
its terms, such discretion does not confer discretion to alter the plan’s terms or to read out
unambiguous provisions.” Colucci v. Agfa Corp. Severance Pay Plan, 431 F.3d 170, 176 (4th Cir.
2005), abrogated on other grounds by Champion v. Black & Decker (U.S.), Inc., 550 F.3d 353 (4th
Cir. 2008); see also Gosselink v. AT&T, Inc., 272 F.3d 722, 727 (5th Cir. 2001) (noting that if a plan
administrator interprets the plan “in a manner that directly contradicts the plain language, the
administrator has abused its discretion”). Thus, the Court need not defer to the UPS Plan’s
interpretation.
State Farm takes a different approach. In a somewhat tortured argument, it notes that the
language of the exclusion refers to “motor vehicle contract[s]” mandated by state or federal law
rather than benefits required by law. State Farm concedes that McClure’s no-fault policy was a
contract required by state law, but it argues that his contract did not provide benefits (medical
coverage) because it contained a COB provision, as authorized by M.C.L.A. § 500.3109a. This
argument ignores that, as mentioned above, ERISA preempts § 500.3109a. Thorn Apple Valley, 31
F.3d at 374; see also Citizens Ins. Co. of Am. v. MidMichigan Health ConnectCare Network Plan,
449 F.3d 688, 697 (6th Cir. 2006) (“An ERISA plan pre-empts § 500.3109a.”). Because the State
Farm policy is an “insurance contract required by federal or state law” and the exclusion expressly

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disavows coverage when the participant has a no-fault policy, State Farm cannot rely on §
500.3109a.
State Farm further argues—albeit ambiguously—that the exclusion speaks not in terms of
benefits that are “covered” or “payable” under a no-fault policy, but instead applies only to
“[s]ervices and supplies provided” under a no-fault policy. State Farm argues that it did not
“‘provide’ medical ‘services or supplies’” to McClure. This argument is nonsense. The term
“provide” generally means “to make available” or “furnish”, Random House Dictionary of the
English Language 1556 (2d. 1987), and there is no reason to conclude that a “personal injury
protection or compulsory medical payments provision” of a no-fault policy does not make available
medical services and supplies through benefits to insureds. Moreover, as noted above, the fact that
State Farm did not pay for medical services or supplies is irrelevant because the exclusion applies
regardless of whether the participant seeks or obtains benefits under the no-fault policy.
State Farm argues, in the alternative, that if the Court concludes that McClure’s 2011
medical expenses are not covered under the UPS Plan, the Court still should not grant summary
judgment for McClure because issues of fact remain with regard to how the UPS Plan treats claims
for medical expenses arising out of the 2009 accident, as opposed to claims arising out of the 2011
accident. State Farm contends that because the UPS Plan did not include the exclusion at the time
of the 2009 accident, “the Court must make factual determinations about the nature and extent of
the injuries from each accident, as well as which claims or expenses are related to which
injuries”—a task that cannot be performed on the current record. (Dkt. # 31 at Page ID809.) The
Court disagrees. The expenses for which the UPS Plan seeks reimbursement were incurred in 2011
and later, when the exclusion was in effect, making State Farm primary. The only question is
whether the medical expenses were incurred while the 2010 SPD was in effect. Thus, there is no
reason to consider the prior version of the SPD.
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B.
In its motion for summary judgment, the UPS Plan contends that it is entitled to summary
judgment on Counts III and IV of McClure’s first amended complaint through a declaration that it
is entitled to reimbursement from any third-party recovery that McClure may obtain in the statecourt action, regardless of how the amount is characterized, and that the UPS Plan is not required
to intervene in the state-court action to obtain reimbursement and may seek it directly from
McClure.
McClure does not dispute the UPS Plan’s right to reimbursement, nor does he dispute the
UPS Plan’s argument that it may obtain reimbursement from McClure without intervening in the
state-court action. Based upon the provisions of the plan, including the SPD, as well as applicable
case law, see Glover v. Nationwide Mut. Fire Insurance Co., 676 F. Supp. 2d 602, 613 (W.D. Mich.
2009), the UPS is entitled to summary judgment on these issues. Accordingly, the Court will enter
an order declaring that the UPS is entitled to reimbursement from any third-party recovery that
McClure obtains, so long as the third party was responsible for the injuries and related medical
expenses encompassed in the UPS Plan’s claim for reimbursement, and that the UPS Plan may
obtain such reimbursement directly from McClure without intervening in the state-court action.
C.
The final issue is whether the Court should reach McClure’s request for declaratory relief
that State Farm must reimburse McClure if he is required to reimburse the UPS Plan out of any
third-party recovery that McClure may obtain in the state-court action. In support of his request,
McClure relies upon Glover, supra, which concluded that the Sixth Circuit’s opinion in Shields v.
Government Employees Hospital Association, Inc., 450 F.3d 643 (6th Cir. 2006), is “authoritative
and binding on this court,” with regard to a no-fault insurer’s obligation to reimburse an insured
under the Personal Injury Protection (PIP) provisions of its no-fault policy for amounts the insured
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is required to reimburse a health care plan. Id. at 616–18. State Farm does not dispute the general
applicability of Shields or Glover to the instant case, but it argues that the Court should decline to
address reimbursement by State Farm and instead dismiss this claim without prejudice and allow
the state court to resolve it within the context of McClure’s PIP claims against State Farm in the
state-court action. State Farm argues that McClure’s claim in this case is factually unsupported, and
there are a plethora of issues pending in the state-court action as to whether McClure’s expenses
relating to medical treatment he received in 2011 are even covered under the PIP provisions of the
no-fault policy.
The Court concludes that it may properly address McClure’s claim for declaratory relief
against State Farm, for the reasons set forth in Glover, without the necessity of addressing the factual
issues that are being raised in the state-court case. Rockwell International Corp. Employee Health
Plan v. Detroit Automobile Inter-Insurance Exchange, No. 1:99-CV-104, 1999 U.S. Dist. LEXIS
20284 (W.D. Mich. Dec. 23, 1999), which State Farm relies on as support for its argument that the
Court should dismiss McClure’s reimbursement claim without prejudice, is distinguishable from
Glover and the instant case. In Rockwell, the plaintiff had not actually asserted a claim for
reimbursement against the no-fault insurer and the court did not have the benefit of Shields, which
was decided almost seven years after Rockwell. In contrast, in both the instant case and in Glover,
the insured asserted claims against the no-fault insurer for declaratory relief and Shields addressed
the issue. Although the Court recognizes that factual issues remain open in the state-court case, the
Court can fashion declaratory relief that will allow for resolution of the factual issues in state court.
For example, in Glover, the court did not conclude that the no-fault insurer was automatically on
the hook to reimburse the insured for the amount the insured was required to reimburse the ERISA
plan, but instead instructed the no-fault insurer to identify the medical expenses it declined to cover

11

and to provide the insured the reason for its decisions. The court indicated that it would address the
insurer’s objections, if any, in a subsequent order. Glover, 676 F. Supp. 2d at 622–23.7
Therefore, the Court will include in its order a declaration that State Farm is obligated to
reimburse McClure for any amount that he is required to reimburse the UPS Plan, to the extent the
medical expenses that the UPS Plan paid are within the terms of State Farm’s PIP coverage.
III. CONCLUSION
For the foregoing reasons, the Court will grant McClure’s motion for summary judgment
with regard to Counts I and II of his first amended complaint and declare that State Farm is
primarily liable for McClure’s automobile-accident-related medical expenses incurred in 2011. The
Court will also grant McClure’s motion for summary judgment on Count V regarding his claim for
reimbursement from State Farm, as set forth above. In addition, the Court will grant the UPS Plan’s
motion for summary judgment with regard to Counts III and IV of McClure’s first amended
complaint. Finally, the Court will deny State Farm’s motion for summary judgment.
An Order consistent with this Opinion will enter.

Dated: February 10, 2016

/s/ Gordon J. Quist
GORDON J. QUIST
UNITED STATES DISTRICT JUDGE

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State Farm’s obligation to reimburse McClure may not necessarily be coextensive with McClure’s obligation
to reimburse the UPS Plan. For example, if McClure obtains a settlement with, or judgment against, either of the other
drivers determined to have caused the injuries relating to the 2011 medical expenses, the UPS Plan would have a claim
for reimbursement of all the medical expenses it paid. However, it is possible that McClure’s claim for reimbursement
against State Farm may fail in whole or in part if the medical expenses that the UPS Plan paid are not within the terms
of State Farm’s PIP coverage. In Glover, the no-fault insurer ultimately reimbursed the insured the same amount the
insured was required to pay to the ERISA plan. Glover v. Nationwide Mut. Fire Ins. Co., et al., Case No. 1:08-cv-1086
(W.D. Mich. Dec. 22, 2009 (dkt. # 57).) In this case that question may be resolved in the state-court action.

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