Court: District Court, E.D. Michigan; September 25, 2012; Federal District Court
The Court, presided over by District Judge Paul D. Borman, granted Defendant Blue Cross Blue Shield of Michigan's (BCBSM) Motion for Summary Judgment, leading to the dismissal of the Plaintiff's complaint. The Plaintiff alleged that BCBSM owed him payments equivalent to those already made by his no-fault automobile insurer, Farmers Insurance Exchange, for his medical expenses following an accident on January 6, 2006. BCBSM contended that it was not the appropriate Defendant as it acted merely as the third-party administrator for the Chrysler Corporation-UAW Pension Plan, which is a self-funded Employee Benefit Plan governed by ERISA.
The Plaintiff had health insurance through Chrysler and a separate no-fault insurance policy with Farmers. The relevant insurance plan documents include the Chrysler Hourly Active Plan Summary Plan Description (SPD), the Collective Bargaining Agreement Manual (CBA Manual), and the Health Care Administrative Manual, all of which outlined the coordination of benefits. The Active SPD emphasized adherence to the CBA Manual, which was amended to specify that benefits from individually purchased no-fault insurance would be coordinated, making BCBSM's benefits secondary to those from such insurance. Consequently, the Court ruled that even if BCBSM were a proper Defendant, the Plaintiff was not entitled to the payments sought, as the plan's provisions disallowed double recovery for benefits already provided by other sources.
Plaintiff was enrolled in the Chrysler Hourly Retiree Plan from August 1, 2007, until December 31, 2009, with coverage governed by the Retiree Summary Plan Description, along with the CBA Manual and Administrative Manual. BCBSM serves as the third-party administrator for this plan. Effective January 1, 2010, Plaintiff transitioned to the UAW Retiree Medical Benefits Trust (URMBT), which includes a coordination of benefits provision based on the 2003 CBA amendments, also administered by BCBSM. Plaintiff became eligible for Medicare Parts A and B on July 1, 2008.
Although Farmers Insurance has covered Plaintiff's medical expenses, he seeks to recover those amounts from BCBSM, claiming BCBSM should have paid his providers directly. Plaintiff argues that he would have received the same amount from Farmers had BCBSM fulfilled its obligations. BCBSM contends it is not financially liable for Plaintiff's benefits despite being the administrator of the relevant plans and has invoked ERISA as a defense, leading to the removal of the case to federal court.
The court found that BCBSM's denial of Plaintiff’s claim was not arbitrary or capricious, referencing the CBA amendments that dictate coordination of benefits with Plaintiff's no-fault insurance. BCBSM has moved for summary judgment, and the court must determine if there are any genuine issues of material fact, applying the arbitrary and capricious standard due to the discretionary authority granted to the plan administrator in the governing documents. If no issues exist, the court will rule in favor of BCBSM, provided its decision aligns with the plan’s provisions.
BCBSM contends it is not financially liable to the Plaintiff under the Chrysler self-funded ERISA plan that covered him during his accident. The relationship between an employer and a third-party administrator in a self-funded ERISA plan is outlined, with BCBSM acting as the administrator for plans maintained by employers like Ford and American Axle. In a self-insured plan, employers pay health care costs directly from their funds, assuming the financial risk, unlike traditional insurance where premiums are paid to an insurer. BCBSM, as a health care corporation, processes claims for these plans, negotiating service rates and collecting payments from employers for services rendered to employees. The excerpt references relevant case law, indicating that BCBSM provides a variety of health care coverage options and enters into Administrative Services Contracts (ASCs) that define its administrative role. Under these ASCs, BCBSM is granted fiduciary authority to interpret and administer the terms of the health benefit programs.
BCBSM, as a third-party administrator under Chrysler's self-funded plans, acts as an ERISA fiduciary due to its discretionary authority to administer the Plan. Although BCBSM claims it is not financially responsible for claims payments, it acknowledges its fiduciary responsibilities under ERISA, particularly concerning eligibility and benefit determinations. The court applies an arbitrary and capricious standard to review BCBSM's denial of claims, as the Plan documents grant BCBSM sufficient discretionary authority. Plaintiff argues that BCBSM has not adequately demonstrated this authority but fails to cite specific language or legal precedent to support its position. The governing documents explicitly state that the arbitrary and capricious standard applies to BCBSM’s decisions, aligning with precedents set by the Sixth Circuit. BCBSM’s interpretation of the Plan documents, which identify the Collective Bargaining Agreement as controlling in case of inconsistencies, is deemed rational. Additionally, ERISA does not require all plan terms to be consolidated into a single document, per established case law.
Trust agreement terms, such as those in a Collective Bargaining Agreement (CBA), can be incorporated into an ERISA plan if the references are clear and unequivocal. The reference must be highlighted to the other party, who must consent, and the terms must be accessible to the parties involved. In the case analyzed, the Plaintiff acknowledges that the CBA terms are integral to the employee benefit plans. He relies on amendments from September 29, 2003, stating there is no contradiction between the CBA and the summary plan description (SPD) or administrative manual.
However, while the Plaintiff asserts that the amended CBA does not allow coordination with his privately-purchased no-fault insurance, he overlooks a crucial provision stating that benefits will be coordinated with any insurance, including no-fault coverage. This provision was designed to prevent duplicate payments when a person is covered by multiple health plans. Although the CBA's coordination of benefits provision conflicts with earlier statements in the CBA Administrative Manual and Retiree SPD—both of which assert that coordination does not apply to individually purchased insurance—these documents also state they are subordinate to the CBA. Therefore, the amended CBA explicitly allows for coordination with the no-fault insurance that the Plaintiff purchased, which counters his argument.
The 2008 Retiree Summary Plan Description (SPD) was amended to clarify that benefits under the Program are secondary to any group or individual insurance, including automobile and homeowner's insurance. This indicates that privately purchased insurance is included in the coordination of benefits. BCBSM acknowledges that its Administrative Manual was not updated promptly and that the Hourly Retiree SPD was updated while the Plaintiff received healthcare coverage. The Administrative Manual, utilized by BCBSM and Chrysler for compliance with the Collective Bargaining Agreement (CBA), is not typically provided to plan participants or beneficiaries. Any inconsistencies between plan documents and the CBA must favor the CBA, which clearly states that individually purchased policies, such as the Plaintiff's with Farmers, are secondary to plan benefits. BCBSM, which administers the Plan in line with the CBA, denied the Plaintiff's claim under this framework. The court found that denying the claim was not arbitrary or capricious, particularly in contrast to the case of Haefele v. Meijer, Inc., where the court ruled differently due to the lack of explicit mention of privately purchased insurance in the coordination provisions. The amended CBA, however, directly addresses individually purchased automobile insurance, aligning more closely with the ruling in Smith v. Physicians Health Plan, Inc., where benefits under an employer-sponsored plan were not provided to the extent covered by an automobile-related policy.
The Michigan Supreme Court ruled that the employer was not obligated to provide uncoordinated coverage as dictated by the coordinated policy, which aims to eliminate duplicate coverage and lower health insurance costs. The court addressed the plaintiff's claim that he was denied the benefits of his uncoordinated no-fault coverage despite having paid a premium. It clarified that the contract was solely between the plaintiff and the no-fault carrier, which designated the carrier as primary in claims, and did not alter the employer's agreement to provide health insurance.
The Collective Bargaining Agreement (CBA), amended in September 2003, clearly requires coordination of benefits, aligning with the terms of the Uniformed Retiree Medical Benefits Trust (URMBT). The court affirmed that the case follows the precedent set in Smith and not Haefele, denying the plaintiff's request for double-dip payments. Although the plaintiff did not present an estoppel argument, the court noted that any claim of equitable or promissory estoppel would fail, as the CBA's terms manifestly prohibit double dipping. The Sixth Circuit has established that reasonable reliance cannot be based on terms inconsistent with clear plan documents, which are unambiguous. The plaintiff acknowledged the applicability of the amended CBA but mistakenly argued it supported his claim for benefits, whereas it explicitly disallows the relief sought. There was no ambiguity in the relevant documents, reinforcing that his no-fault benefits would be coordinated and primary.
The Court concludes that BCBSM's denial of Plaintiff's benefits was neither arbitrary nor capricious, thus granting BCBSM's Motion for Summary Judgment and dismissing the Plaintiff's Complaint with prejudice. Relevant portions of the Administrative Service Agreement between BCBSM and The Chrysler Corporation were submitted to the Court and opposing counsel post-hearing, but the Agreement itself was not filed. Unlike the case of Edwards v. State Farm, which involved conflicting terms between a Summary Plan Description (SPD) and an actual Plan, here, the SPDs received by the Plaintiff clearly indicated that the Collective Bargaining Agreement (CBA) governed all claims and that conflicts would favor the CBA. The Court noted that the Plaintiff's reliance on the SPD was misplaced given its clear instruction that the CBA controls claim determinations. Furthermore, both the Active and Retiree SPDs established their subordination to the CBA, which had been amended to allow coordination with the type of no-fault insurance purchased by the Plaintiff. The Retiree SPD was updated in 2008 to clarify that benefits would be coordinated with both group and individual insurance coverages, including no-fault insurance. BCBSM acknowledged that its Administrative Manual had not been updated timely, but the updated Retiree SPD aligned with the CBA's language during the Plaintiff's healthcare coverage period.
BCBSM asserts that the Administrative Manual, which is not typically shared with plan participants or beneficiaries, is utilized to implement the Collective Bargaining Agreement (CBA). It is undisputed that any inconsistencies between plan documents and the CBA should favor the CBA. The CBA, amended on September 29, 2003, clearly states that individually purchased policies, such as the Plaintiff's policy with Farmers, are secondary to benefits from the Plans. BCBSM administers the Plan in accordance with the CBA and has adjusted its claims processing to align with it, resulting in the denial of the Plaintiff's claim for benefits.
The Court finds this denial was not "arbitrary and capricious," given the provisions of the Plans. The Plaintiff's reliance on Haefele v. Meijer, Inc. is deemed misplaced because the amended CBA language is explicit in addressing individually purchased automobile insurance, unlike the provision in Haefele, which did not mention privately purchased insurance. Comparatively, in Smith v. Physicians Health Plan, the Michigan Supreme Court concluded that the coordinated policy clearly allowed for coordination with other insurance, thereby reducing duplicate coverage and medical costs.
Plaintiff's argument regarding the deprivation of benefits from his uncoordinated no-fault coverage is flawed because there was no contractual relationship between the employee, employer, and healthcare provider for such coverage. The contract for uncoordinated coverage exists solely between the plaintiff and the no-fault carrier, which is designated as primary in claims. This contract does not bind PHP or alter its agreement with Meijer, Inc. The amended Collective Bargaining Agreement (CBA) mandates coordination of benefits, which applies to the plaintiff’s no-fault insurance, and it is affirmed that the URMBT language matches the amended CBA. The case is governed by the precedent set in Smith, not Haefele, denying the plaintiff's request for double-dip payments.
Although the plaintiff does not argue estoppel, any claim of equitable or promissory estoppel would fail because the plan documents explicitly incorporate the CBA terms, which unequivocally disallow double-dipping. The Sixth Circuit has established that reliance on estoppel cannot be reasonable if inconsistent with clear plan terms. The plaintiff acknowledges the applicability of the amended CBA but incorrectly claims that it supports his benefits claim, despite the amendments clearly prohibiting the relief sought. The plan documents specify that benefits are subject to the provisions of the CBA, which were accessible to all participants, further confirming that the plaintiff’s no-fault benefits will be primary and coordinated in accordance with the CBA.
No ambiguity or internal contradiction exists in the controlling documents, rendering estoppel an unviable theory. The Court finds no genuine issue of material fact regarding BCBSM’s denial of Plaintiff's benefits, ruling that the decision was not arbitrary and capricious. Consequently, the Court grants BCBSM’s Motion for Summary Judgment and dismisses the Plaintiff's Complaint with prejudice. Relevant parts of the Administrative Service Agreement between BCBSM and The Chrysler Corporation are attached as Exhibit A. This Agreement was not submitted to the Court initially but was provided later upon request. The Court distinguishes this case from Edwards v. State Farm Mut. Ins. Co., where a summary plan description (SPD) contradicted the actual plan. Here, the SPDs and Administrative Manual clearly state that the collective bargaining agreement (CBA) governs all matters, and any conflicts with the Plan provisions favor the CBA. Therefore, the Plaintiff's reliance on the SPD was misplaced, as it explicitly indicated that the CBA would control final claim determinations. The rulings in Parr v. Diebold, Inc. and Walborn v. Aetna Life Ins. Co. further support that Edwards is not applicable due to the Plaintiff’s access to the controlling plan language.
