Great-West Life v. Allstate Ins Co

RECOMMENDED FOR FULL-TEXT PUBLICATION 8 Great-West Life v. Allstate Ins. Co. No. 99-1068 Pursuant to Sixth Circuit Rule 206 ELECTRONIC CITATION: 2000 FED App. 0045P (6th Cir.) File Name: 00a0045p.06 what dependency means in its description of “Dependent Survivors” under its plan: 3. “Dependent Survivors” means: UNITED STATES COURT OF APPEALS a. the surviving spouse of the deceased injured person... FOR THE SIXTH CIRCUIT b. a child of the deceased injured person... _________________ The child is dependent only while:

; i. under 18 years of age;

 ii. mentally or physically incapacitated from GREAT-WEST LIFE &  earning; or ANNUITY INSURANCE  iii. engaged in full-time, formal program of COMPANY,  academic or vocational education or training. No. 99-1068 Plaintiff-Appellee,  Based on Allstate’s own definition, Matthew does not qualify > as a “Dependent” under the Allstate policy. Thus, the district v.  court did not err in categorizing Matthew as “a person other  than a Dependent” under the Great-West plan. As a   ALLSTATE INSURANCE consequence of that categorization, the district court was Defendant-Appellant.  correct in subordinating Great-West’s plan to Allstate’s in this COMPANY, case.  1 IV. Accordingly, we AFFIRM the district court’s grant of Appeal from the United States District Court summary judgment in favor of Great-West. for the Western District of Michigan at Grand Rapids. No. 98-00325—Gordon J. Quist, District Judge. Argued: November 5, 1999 Decided and Filed: February 7, 2000 Before: MARTIN, Chief Judge; DAUGHTREY, Circuit Judge; KATZ, District Judge.*

* The Honorable David A. Katz, United States District Judge for the Northern District of Ohio, sitting by designation.

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_________________ • who has not reached age 21; and • who is not married; and COUNSEL • who is chiefly dependent upon you for support; and • for whom you are entitled to an income tax exemption. ARGUED: Daniel S. Saylor, GARAN, LUCOW, MILLER, SEWARD, COOPER & BECKER, Detroit, Michigan, for In addition, the age limitation does not apply to children who Appellant. James P. Murphy, BERRY, MOORMAN, KING, are full-time students or who are incapable of supporting COOK & HUDSON, Detroit, Michigan, for Appellee. themselves due to mental retardation or a physical disability. ON BRIEF: Daniel S. Saylor, GARAN, LUCOW, MILLER, SEWARD, COOPER & BECKER, Detroit, Michigan, John In interpreting ERISA contract provisions, we have noted P. Seyfried, GARAN, LUCOW, MILLER, SEWARD, that such interpretations are made “according to their plain COOPER & BECKER, Port Huron, Michigan, for Appellant. meaning, in an ordinary and popular sense.” Perez v. Aetna James P. Murphy, BERRY, MOORMAN, KING, COOK & Life Ins. Co., 150 F.3d 550, 556 (6th Cir. 1998) (en banc). HUDSON, Detroit, Michigan, for Appellee. We, therefore, apply a plain meaning analysis to construction of the provision. Matthew clearly falls under the designation _________________ of Dependent as contemplated in Great-West’s integration of benefits clause. He is 20 years old, not married, and chiefly OPINION dependent on his parents for support. Thus, in regard to _________________ dependents such as Matthew, the Great-West plan intended to subordinate its coverage to a no-fault insurer such as Allstate. DAVID A. KATZ, District Judge. In this dispute over which plan has priority over payment of medical expenses Allstate does not contest the district court’s finding that arising from an automobile accident, Allstate Insurance Matthew qualifies as a Dependent of his father under the Company (“Allstate”) appeals the district court’s grant of Great-West plan. Where Allstate disagrees, however, is with summary judgment in favor of Great-West Life & Annuity the district court’s interpretation of the term “resident Insurance Company (“Great-West”). For the reasons stated relative”, described in the Allstate coordination of benefits below, we affirm the district court’s decision. clause, as distinguishable from the term “Dependent” in the Great-West plan. Allstate argues that the term “resident I. relative” in the Allstate plan is not distinguishable from the term “Dependent” in the Great-West plan, and therefore On February 25, 1996, Matthew Gerig was seriously Matthew qualifies as a “Dependent” under Great-West’s injured in a single vehicle automobile accident and incurred definition of that term. Thus, according to Allstate, Matthew extensive medical expenses. At the time of the accident, should not be treated by the court as “a person other than as Matthew was 20 years old and residing with his parents, a Dependent” under the Great-West integration of benefits Doyle and Linda Gerig. Matthew was covered by a policy of clause. We disagree. no-fault automobile insurance1 issued to his parents by Allstate. In addition, Matthew was covered under an The term “resident relative” under the Allstate plan does not mean the same thing as the term “Dependent” under the Great-West plan. In fact, Allstate’s Definitions under Part III 1 Personal Protection Benefits Coverage VA, detail exactly The policy was issued pursuant to Michigan’s No-Fault Insurance Act, Mich. Comp. Laws § 500.3101 et seq.

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II. ERISA-qualified employee benefit plan administered by Great-West, by virtue of his father’s employment with the On an appeal from summary judgment, we review the Prince Corporation. district court’s judgment de novo. Smith v. Ameritech, 129 F.3d 857, 863 (6th Cir. 1997). Both policies contain a coordination of benefits (“COB”) clause. The policy under Great-West provides in pertinent III. part: This appeal presents a question of federal common law that INTEGRATION OF BENEFITS (IOB) stems from a dispute between two insurers, one of which qualifies as an employee welfare benefit plan under the The IOB provision is used when a person has health Employment Retirement Income Security Act of 1974 coverage for the same expenses under two or more of the (“ERISA”). At issue is the extent to which conflicting plans listed below. Should this type of duplication occur, coordination of benefits clauses affect the relative liability of the benefits under this Plan will be directly reduced by the parties. the amounts payable for the same expenses provided by the other plans so that the total benefits from all plans The federal common law rule applicable to resolve priority will not exceed the amount payable under this Plan. of coverage disputes between a self-funded ERISA-qualified employee benefit plan and a traditional insurance policy The benefits provided by the plans listed below are dictates that a conflict between the two carriers will be considered in determining duplication of coverage: resolved in favor of the ERISA plan. Auto Owners Insurance • This Plan; Co. v. Thorn Apple Valley, Inc., 31 F.3d 371, 374 (6th Cir. 1994), cert. den., 513 U.S. 1184, 115 S.Ct. 1177, 130 L.Ed.2d • Any other group insurance or prepayment plan... 1129 (1995). In such a situation involving conflicting coordination of benefits provisions, the terms of the ERISA • Any individual automobile “no-fault” insurance plan. plan, including its COB clause, must be given full effect. Id. However, this consideration does not necessarily mean that ORDER OF BENEFIT DETERMINATION the ERISA plan must prevail. Auto Club Ins. Ass’n v. Health and Welfare Plans, Inc., 961 F.2d 588, 593 (6th Cir. 1992). Certain rules are used to determine which of the plans There still exists here the issue of which of two apparently will pay benefits first. This is done by using the first of valid insurance policies, containing what would appear to be the following rules which applies: irreconcilable “other insurance” clauses, is liable for payment of the insured’s medical expenses. • A plan with no IOB or Co-ordination of Benefits (COB) provision will determine its benefits before a In this particular case, the coordination of benefits plan with an IOB or COB provision. provisions in the Great-West plan and the Allstate no-fault policy may conflict to some degree, but are not irreconcilable. • A plan that covers a person other than as a Dependent Under the Great-West plan, “[a] plan that covers a person will determine its benefits before a plan that covers other than as a Dependent will determine its benefits before such person as a Dependent. a plan that covers such a person as a Dependent.” Great-West defines the term Dependent as a child:

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• • When a claim is made for a Dependent child who is If Allowable Expenses are identified as excess on the covered by more than one plan: . . . declarations page, the injured person must seek treatment afforded for, or payable by his other coverage • A plan that covers a person as: before we will be liable for any excess not paid for by - a laid-off Employee; or such other coverage. You have a duty to mitigate your - a Retired Employee; or damages. - a Dependent of such Employee; will determine its benefits after the plan that does not Following submission of the claim to the employee benefit cover such person as: plan, Great-West administered payments of nearly $500,000 - a laid-off Employee; or for the medical expenses related to Matthew’s accident. - a Retired Employee; or Great-West then sued Allstate for recovery of those - a Dependent of such Employee. expenditures on the basis of its contention that Allstate is first If one of the plans does not have this rule, and if, as a in priority for payment of Matthew’s medical expenses result, the plans do not agree on the order of benefits, pursuant to its integration of benefits provision. Both parties this rule will not apply. submitted motions for summary judgment. • If none of the above rules establishes the order of On December 8, 1998, after the parties waived oral payment, a plan which the person has been covered for argument, the district court issued an order granting Great- the longer time will determine its benefits before a West’s motion for summary judgment and denying Allstate’s plan covering that person for a shorter time. motion for summary judgment. The court determined that the rule pertaining to the “Order of Benefit Determination” of Under the Allstate policy, the COB clause provides as Great-West’s integration of benefits provision – stating that follows: “a plan that covers a person other than as a Dependent will determine its benefits before a plan that covers such a person Coordination of Benefits as a Dependent”– resolved the priority dispute in favor of 1. If Allowable Expenses are identified as excess on the Great-West. The Allstate plan, in other words, covered declarations page, Allowable Expenses benefits will be Matthew as a “resident relative,” while the Great-West plan reduced by any amount paid or payable under the covered him as a Dependent, thus making Allstate’s coverage provisions of any: primary.2 a) individual, blanket or group accident disability or hospitalization insurance. Allstate filed a timely notice of appeal to this Court on b) medical or surgical reimbursement plan. January 7, 1999. c) automobile no-fault benefits or medical expense benefits, or premises insurance affording medical 2 expense benefits. The district court, in granting declaratory relief in favor of Great- West, stated: This reduction applies only to amounts that are Defendant Allstate Insurance Company’s obligation to pay duplication of payment for the same items of loss or benefits to or on behalf of Matthew Gerig in connection with Mr. Gerig’s injuries incurred in his February 26, 1996 expense. This reduction applies only to you or a automobile accident is primary to Plaintiff Great-West Life & resident relative. Annuity Insurance Company’s obligation to pay the same benefits.