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STATE OF MICHIGAN
COURT OF APPEALS


MARY LOU EMERY and ELMER EMERY, Plaintiffs/Counter-Defendants/Appellees, v AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellee, and DOW CHEMICAL EMPLOYEE'S HEALTH CARE PLAN,

UNPUBLISHED August 14, 1998

No. 199487 Midland Circuit Court LC No. 96-005676 CK

Defendant/Counter-Plaintiff/Third-Party Plaintiff/Appellant v JENNIFER PAULTANIS, Third-Party Defendant/Appellee.

Before: Markey, P.J., and Bandstra and Markman, JJ. PER CURIAM. Defendant Dow Chemical Employee's Health Care Plan appeals by right from the trial court's order granting summary disposition pursuant to MCR 2.116(C)(8) in favor of plaintiffs Mary Lou Emery and Elmer Emery, third-party defendant Jennifer Paultanis, and defendant Auto Club Insurance Association (ACIA), plaintiffs' no-fault insurer. We affirm. Defendant Dow Chemical Employee's Health Plan is a self-funded health care plan organized pursuant to the Employee Retirement Income Security Act, or ERISA, 29 USC 1001 et seq. The Dow Plan paid $10,838.91 in medical benefits to plaintiff Mary Lou Emery after she was injured in a two-car automobile accident. Plaintiffs subsequently initiated a negligence cause of action against third-party

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defendant Paultanis, the driver of the other involved vehicle, pursuant to the no-fault act, MCL 500.3101 et seq.; MSA 24.13101 et seq. When the Dow Plan asserted its right to subrogation under the plan in the event that plaintiffs prevailed in the negligence action against Paultanis, plaintiffs filed the instant declaratory judgment and interpleader action, pursuant to MCR 3.603. The Dow Plan subsequently filed a countercomplaint against plaintiffs and a third-party complaint against Paultanis in the declaratory judgment action. The Dow Plan contains a subrogation provision in its summary plan description that states as follows: The Plan has the right of subrogation, which means that, if you or your covered dependents are victims of accidental sickness or injury caused by another party and you submit your medical bills to the Plan for payment, the Plan is authorized to sue or share in the lawsuit with you against the responsible party for recover of benefits paid by the Plan. If the Plan pays for services and you or your dependents have a right to recover damages from any person or organization, the Plan will have a subrogation interest in the amount of any benefits paid, to the recovery rights of you or dependents. The Plan's right to recover benefits paid shall take precedence over any right that you or your covered dependents have to recover damages or insurance proceeds from another party for the injury or sickness. If you or your covered dependents have recovered money for damages or from a settlement, some or all of which is used to pay for medical expenses, and the Plan has not received a portion to offset claims paid or to be paid by the Plan, the Plan reserves the right to deny payment of otherwise payable claims up to the amount you or your covered dependent received from the damages or settlement award. Upon request of the Plan, you or your dependents must execute and deliver to this Plan an assignment and other instruments that may be required, and do whatever else is necessary to secure such rights for the Plan. [Emphasis added.] The trial court found that the Dow Plan could not recover pursuant to the Plan's subrogation provision an amount equal to the medical benefits it paid plaintiffs because plaintiffs had no right of recovery for medical damages from the third-party tortfeasor, citing the no-fault act, MCL 500.3135; MSA 24.13135. Specifically, the trial court held: I've read the federal cases; they're interesting. Mr. Hoehn has struck on the core of how I read those cases. Fons [v Hotel Employees International Union, 1991 WL 340288 (E.D. Mich, 1991)] is probably as close a fact scenario as we have here, and I certainly take note of those cases and take note of the rationale of decisions in federal court dealing with these -2

issues, but what I come to is that what I'm being asked to do in this case, now that I have the [Dow] plan in front of me, is to look at that language of that plan and make a judgment on what it says in regard to the rights of subrogation that the company, or the plan--pardon me--is by their agreement designing. What are the rights that are here. And I don't know how I can do that without doing it in the context of the law that the employee is bound by. The plan is authorized to sue or share in a lawsuit with you against the responsible party. That, to me, is the key here. What is the lawsuit [?] The lawsuit of the party happens to be under no-fault, a third party claim for non-economic damages under the No-Fault Act. That is the lawsuit that the plan describes, that is the lawsuit that the plan contemplates. It is the lawsuit with you against the responsible party. To interpret it otherwise, to me, is to destroy the whole concept of what's trying to be accomplished. If the plan wants to accomplish something else, I'm sure that they can devise language that would do it, but this language doesn't. I read the plan, it says to me that the only way it can be interpreted is that there's no right of reimbursement unless in fact the responsible--or unless in fact the employee has a right of reimbursement for the specific economic damages, the medical that is being sued for, and they don't in Michigan under these circumstances. And that's how I see it and that, in a nutshell, is my ruling, and it's in favor of the Plaintiff Emerys and against Dow Chemical. There's no question where--I don't think there is any question on any other issues in this case once I cross that bridge. I Although neither the trial court's decision from the bench nor the order granting plaintiffs' motion for summary disposition states which court rule forms the basis for the decision, we believe that the trial court granted summary disposition pursuant to MCR 2.116(C)(10).1 We review de novo the grant of summary disposition pursuant to MCR 2.116(C)(10) and will affirm where, except with regard to the amount of damages, there is no genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law. Skinner v Square D Co, 445 Mich 153, 161; 516 NW2d 475 (1994); Fitch v State Farm Fire and Casualty Co, 211 Mich App 468, 470-471; 536 NW2d 273 (1995). We must consider the pleadings, affidavits, depositions, admissions, and any other documentary evidence in favor of the nonmoving party and grant the benefit of any reasonable doubt to the opposing party. Radtke v Everett, 442 Mich 368, 374; 501 NW2d 155 (1993). The opposing party may not rest upon mere allegations or denials in the pleadings but must, by affidavit or other documentary evidence, set forth specific facts showing that there is a genuine issue f or trial. MCR 2.116(G)(4). The court may not make factual findings or weigh credibility in deciding a motion for summary disposition. Featherly v Teledyne Industries, Inc, 194 Mich App 352, 357; 486 NW2d

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361 (1992). Thus, this Court examines the facts of this case in a light most favorable to plaintiff. Radtke, supra; Manning v Hazel Park , 202 Mich App 685, 689-690; 509 NW2d 874 (1993). Contrary to the Dow Plan's assertions, this is not a situation where we review for an abuse of discretion because the Dow Plan2 does not contain the same discretionary language found in cases employing this standard. Cf. Firestone Tire & Rubber Co v Bruch, 489 US 101, 115; 109 S Ct 948; 103 L Ed 2d 80 (1989); Fons, supra, slip op at 5-7. II At the outset, we are mindful that "[t]he rights of the Company [with an ERISA health care plan] are limited by the language in the Plan. US Healthcare, Inc v O'Brien, 868 F Supp 607 (SDNY, 1994) (ERISA plan's subrogation rights are limited by the subrogation provision in the plan)." Western and Southern Life Ins Co v Wall, 903 F Supp 1155, 1160 (ED Mich 1995). Courts have further applied to ERISA plans the rule of contra proferentem, which states that ambiguities in a plan should be construed against the fund. Germany v Operating Engineers Trust Fund of Washington DC, 789 F Supp 1165, 1169 (DDC, 1992). We are also cognizant that the federal district court cases the parties cite to us are not binding or precedential in this Court, although they are instructive, particularly where they address competing issues presented by the interplay between ERISA plans and the Michigan no-fault act.3 Of all the cases presented to us, we find one federal case that both plaintiffs and defendant cite to be most analogous and persuasive. In Wall, supra at 1157, the plaintiff, a self-funded ERISA plan, filed suit against Wall to recover $21,053.52 in medical benefits that the plan paid to Wall, who was the plaintiff's employee, after Wall was injured in a two-car automobile collision. Wall also had no-fault insurance through AAA of Michigan. Wall sued the other vehicle's driver and recovered $100,000 in settlement of her personal injury claims. Id. Pursuant to its subrogation policy within the plan, the plaintiff filed suit to recover the medical expense benefits it paid to Wall. Id. With respect to a coordination of benefits issue not relevant here,4 the Wall court first determined that ERISA preempted the application of the Michigan no-fault act to this action because the act "relate[s] to" any employee benefit plan, and both the United States Supreme Court and the Sixth Circuit Court of Appeals have held that ERISA preempts application of state insurance law to a self-funded ERISA plan. Wall, supra at 1158, citing 29 USC

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