Siho v. George

SHARPNACK, Chief Judge,

Dissenting.

I respectfully dissent with respect to the-issue of whether the Plan Administrator’s interpretation of the Plan was arbitrary or capricious. I agree that the “question in this case is whether the- plan’s language can rea*481sonably be construed to include a participant’s uninsured motorist coverage.” I believe, however, the plain language of the subrogation provision in the SIHO plan does not support an interpretation that permits subrogation as to uninsured motorist payments.

The language in issue follows:

“You may claim benefits under this plan for covered expenses incurred by you or a dependent which are due to injury or sickness caused by the negligence or wrong of a third party.
However, if there is recovery (by you, your dependent, or personal representative) from the third party or his personal representative — whether by judgment, settlement, or otherwise — for the illness or injury, you must reimburse the plan.”

Record, pp. 114-115 (emphasis added). It is clear that the third party or his personal representative, described in the second paragraph, is the same third party described in the first paragraph whose negligence or wrong caused the injury. In this case, the payment at issue was payment by George’s uninsured motorist carrier. That payment is neither from nor on behalf of the third party. It is a payment made in fulfillment of the contractual obligation between George and the insurer of the uninsured motorist policy. SIHO’s interpretation of this provision requires that the terms “a third party” and “the third party” be given different meanings.

The facts in the cases relied upon in support of SIHO’s position are distinguishable from the facts before us. Although the language in those cases supports the conclusions reached in those cases, the language in this Plan is not “sufficiently similar” to the language in those plans to support SIHO’s interpretation.

First, in the Wendy’s case, the summary plan description provided:

“If you or a dependent incurs an injury or illness caused by the negligence or wrongdoing or a third party, the plan will cover those medical expenses. However, if you are reimbursed or recover monies from the person responsible for the loss, the plan shall be reimbursed the total amount of the benefits paid by the plan, but such reimbursement shall not exceed the total proceeds of the recovery.”

Wendy’s, 94 F.3d at 1011. In addition, the plan’s subrogation clause read as follows:

“With respect to benefits payable under this Plan, the Plan reserves the right to be reimbursed if a Participant or personal representative thereof recovers monies from a third party or a personal representative thereof whether by judgment, settlement or otherwise, on account of such Injury or Illness.”

Id. (original emphasis). The Sixth Circuit held that the administrator could reasonably interpret the word “responsible” to mean any person or insurance company legally obligated to the plan member under the circumstances. Id. at 1012-1013. It found that the words “responsible for the loss” did not necessarily mean the same party as the third party who caused the injury. Id. It reasoned that the overall plan document permitted recovery from proceeds received from “a third party” and not just the party that caused the loss. Id. at 1013. The court further reasoned:

“Had the [summary plan disposition] said that Wendy’s had a right to monies collected only from the person who ‘caused’ the injuries, this might have been a closer ease, since Nationwide certainly did not cause Karsko’s loss. The phrase ‘person responsible for the loss’ is much more ambiguous, however, and is therefore subject to a broader range of interpretations.”

Id.

This language is broader than that contained in the SIHO plan, particularly with respect to the fact that there is no limitation of the' definition of a third party. The unmodified use of the term “third party” in the Wendy’s ease would include anyone. In the SIHO plan, the third party is clearly the one whose negligence or wrong caused injuries. In addition, SIHO’s right to subrogation does not extend to any party responsible for the loss, but is limited to recoveries made from the party who caused the loss. As noted in Wendy’s, an uninsured motorist carrier is not the party who caused the loss.

*482Next, in Rhodes, the language of the sub-rogation clause was as follows:

“The Covered Person, by accepting benefits under this Plan for an accidental bodily injury or illness for which such Covered Person may seek recovery from a third party or his personal representative, agrees, in the event of a recovery from such third person on account of such injury or illness, to pay the Plan Administrator an amount equal to the value of the benefits provided under this Plan on account of such injury or illness. In the event of an accident which may give rise to a right of a Covered Person to recover from a third party, the right to receive the benefits under this Plan shall be conditioned upon the Covered Person or his personal Representative delivering to the Plan a signed agreement to repay amounts recovered .... ”

Rhodes, 937 F.Supp. at 1210-1211 (emphasis added). The court held that the term “a third party” meant any party from whom a recovery could be made, including an under-insurance carrier. Id. at 1214. Again, the term “a third party” is broader than the one in the SIHO plan, and the specific language “which may give rise to a right of a Covered Person to recover from a third party” clearly would include an uninsured motorist carrier as a third party.

Finally, in the Harmond ease, the subro-gation clause read as follows:

“In the event the Fund pays benefits under any Plan to any Employee, Dependent, or assignee for injuries, expenses, or loss caused by negligence or wrongful act of a third party, the Fund shall be subrogated for the amount of such payment to all rights of the Employee or Dependent against any person, firm, corporation, or other entity as respects such injuries, expenses, or loss.”

Harmond, 795 F.Supp. at 783-784. The court held that the plan permitted subrogation to uninsured motorist benefits. Id. at 785.

It seems quite clear that the broad language “any person, firm, corporation, or other entity as respects such injuries” is broad enough to include an uninsured motorist carrier, a liability carrier, or almost anyone else who has any obligation to pay the employee “as respects such injuries.” The language in the Harmond case subrogation clause is not anything like the language in the SIHO plan.

As the majority noted, we will reverse the trial court only if SIHO’s decision to assert subrogation was arbitrary or capricious. See Patterson, 70 F.3d at 505. The Seventh Circuit has stated that a decision is arbitrary or capricious when it is “downright unreasonable.” Donato, 19 F.3d at 380. Factors that bear on the reasonableness of a plan administrator’s interpretation have been identified as:

“whether the interpretation contradicts the plan’s clear language, whether the interpretation renders any plan language internally inconsistent or meaningless, whether the interpretation is consistent with earlier interpretations, whether the interpretation is consistent with the plan’s goals, and whether the plan satisfies ERISA requirements.”

Kennedy v. Georgia-Pacific Corp., 31 F.3d 606, 609 (8th Cir.1994).

Here, SIHO’s interpretation contradicts the Plan’s clear language and renders the language internally inconsistent. Therefore, because the interpretation is unreasonable, I would conclude that SIHO’s decision to sub-rogate George’s settlement was arbitrary and capricious. See Donato, 19 F.3d at 380. As a result, I would affirm the trial court’s granting of summary judgment in favor of George.