HEALTH
PLAN CANNOT COORDINATE BENEFITS
WITH AUTO UM COVERAGE
In Boston Mut. Ins. v. Murphree (01 CDOS 2021), a
plaintiff was severely injured in an automobile accident caused by an
uninsured motorist. Plaintiff
incurred some $312,000 in medical expenses.
Her auto insurer paid $5,000 under its medical payments (MP)
coverage and her health plan paid the remaining $307,000.
Because her damages exceeded $1.5 million, and the
uninsured motorist had only $100,000 in coverage, plaintiff’s auto
insurer was prepared to tender its $500,000 in uninsured motorist (UM)
coverage benefits. However,
the health plan claimed an interest in the $500,000 in UM benefits under a
provision in its plan that called for a coordination of benefits with any
other auto insurance. The
health plan wanted the auto insurer to pay a share of the $307,000 in
benefits the health plan had provided for plaintiff’s medical expenses.
The auto insurer then interpleaded its $500,000 in UM benefits.
The Ninth Circuit agreed that ERISA preempted state laws
in interpretation of the health plan’s coordination of benefits
provision because the plaintiff was covered under her father’s employee
health benefit plan.
The Ninth Circuit also agreed that health plan’s
coordination of benefits provision appeared to allow for coordination with
the MP coverage of an auto policy but not with the UM coverage of an auto
policy. The court also
pointed out that any other interpretation of the provision would be
unreasonable because of the basic differences between MP and UM coverage
in an auto policy.
The Ninth Circuit noted that the health plan could have
made its coordination of benefits provision apply to UM coverage by
specifically referencing UM coverage in its policy language.
Boston
Mut. Ins. v. Murphree points
out that health plans can make their coordination of benefits provision
language include UM coverage if it is clear and unambiguous.
Auto insurers should be aware that health plans may seek to
coordinate their benefits with an auto insurer’s UM coverage.
