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Heade, et al v Liberty Mut Ins Co, et al (COA – UNP 9/29/2022; RB #4489)   

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Michigan Court of Appeals; Docket #359422; Unpublished  
Judges Gleicher, Markey, and Patel; Per Curiam 
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING: 
Social Security Disability Benefits [§3109(1)]
Coordination with Other Health and Accident Disability Insurance [§500.3109a]

TOPICAL INDEXING: 
Employee Retirement Income Security Act (ERISA – 29 USC Section 1001, Et Seq.)


SUMMARY: 
In this unanimous, unpublished, per curiam decision, the Court of Appeals reversed the trial court’s summary disposition order dismissing Plaintiff Jasmine Heade’s first-party action against Defendant Liberty Mutual Insurance Company (“Liberty Mutual”).  The Court of Appeals held, first, that Liberty Mutual was primarily responsible for Jasmine’s medical expenses—not Blue Cross Blue Shield (“BCBSM”), which provided Jasmine with health insurance under a self-funded ERISA plan issued to her father by her father’s employer.  The Court reached its holding based on the fact that both the Liberty Mutual policy and the BCBSM plan contained unambiguous coordination-of-benefits (“COB”) clauses.  In such cases, Michigan caselaw establishes that the no-fault policy is deemed primary.  The Court of Appeals held, second, that Liberty Mutual was entitled to set off Heade’s work loss benefits by both her Social Security Disability Insurance (“SSDI”) benefits and the benefits she received under a disability policy with Sun Life Assurance Company of Canada.

Jasmine Heade was seriously injured in a motor vehicle accident while traveling as a passenger in a vehicle insured by Liberty Mutual.  At the time of the accident, Heade was covered under a self-funded ERISA health insurance plan administered by BCBSM, and both the BCBSM plan and the Liberty Mutual policy contained unambiguous COB clauses.  BCBSM paid Heade’s medical expenses following the accident, but later sought reimbursement from Liberty Mutual, which, in turn, argued that it did not have to reimburse BCBSM in light of the COB clause in its policy.  Heade proceeded to file suit against Liberty Mutual, arguing, first, that Liberty Mutual was first in priority for payment of her accident-related medical expenses, and, second, that Liberty Mutual was not paying as much as it should have in work loss benefits.  Specifically, as to the latter, Heade noted that Liberty Mutual was setting off its work loss payments by her SSDI and Sun Life disability payments, even though Sun Life had already set off its disability payments by her SSDI.  Ultimately, the trial court granted partial summary disposition in Liberty Mutual’s favor and against BCBSM, but denied Liberty Mutual’s motion regarding Heade’s work loss benefits, holding that Liberty Mutual was not entitled to set off its work loss payments by Heade’s SSDI after Sun Life had already done so.

The Court of Appeals reversed the trial court’s summary disposition order on the issue of priority between BCBSM and Liberty Mutual, holding that Liberty Mutual had primary responsibility for Heade’s accident-related medical expenses.   The Court of Appeals observed that in Auto Club Ins Ass’n v Frederick & Herrud, Inc (After Remand), 443 Mich 358 (1993), the Michigan Supreme Court held that if a self-funded ERISA plan has an unambiguous COB clause, it will be secondary to any no-fault policy, even if the no-fault policy also contains an unambiguous COB clause.  Such was the case here, where both the BCBSM plan and the Liberty Mutual policy had unambiguous COB clauses. 

“ ‘Under Michigan law, where no-fault coverage and health coverage are coordinated, the health insurer is primarily liable for plaintiff’s medical expenses.’ American Med Security, Inc v Allstate Ins Co, 235 Mich App 301, 304; 597 NW2d 244 (1999), citing Federal Kemper Ins Co, Inc v Health Ins Admin, Inc, 424 Mich 537; 383 NW2d 590 (1986). Under federal preemption principles, however, self-funded ERISA health plans are treated much more deferentially . . . 

Accordingly, if a self-funded ERISA plan has an unambiguous COB clause, then the no-fault policy will be primary. 

The FCA/BCBSM plan is a self-funded ERISA plan with a COB provision making the no-fault insurer primary, while Liberty Mutual is a no-fault insurer whose COB provision makes a health insurer primary. As the two COB provisions conflict, the Liberty Mutual plan is primary.” 

The Court of Appeals also reversed the trial court’s denial of Liberty Mutual’s motion for summary disposition on the issue of Heade’s work loss benefits, holding that Liberty Mutual was “clearly permitted to set off the wage-loss benefits paid to Jasmine by the amounts Jasmine received from Sun Life and SSDI,” pursuant to MCL 500.3109 and MCL 500.3109a and in light of the COB provision in the Liberty Mutual policy. 

“Liberty Mutual was clearly permitted to set off the wage-loss benefits paid to Jasmine by the amounts Jasmine received from Sun Life and SSDI. The question is what effect Sun Life’s previous setoff of the SSDI benefits has on Liberty Mutual. The COB provision of the Liberty Mutual policy renders the Sun Life policy primary to pay wage-loss benefits. As the Sun Life policy is not a self-funded ERISA plan, it cannot claim priority over Liberty Mutual despite the no-fault policy’s COB provision. Accordingly, Liberty Mutual, not Sun Life, was entitled to off set its wage-loss benefit obligation by the SSDI payments. We reverse the circuit court in this regard as well.” 

Regarding concerns over whether this was a harsh result for Heade, the Court added in footnote that Heade’s recourse was “to seek reimbursement from Sun Life for the benefits it withheld,” not from Liberty Mutual.  


Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit SinasDramis.com.

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