North Dakota COB Case
The U.S. District Court in North Dakota recently sorted out conflicting COB provisions of motor vehicle and health coverage. The court ruled that the motor vehicle policy had to pay its maximum benefits before the health plan began paying its benefits. In the North Dakota case, an auto policy restricted benefits to $5,000 in the event the policyholder is covered by another policy; the health plan mandated that the auto insurer must pay up to its policy limit before the plan would begin paying. The court upheld the health plan’s decision.
The case is Progressive Insurance Co. v. Blue Cross and Blue Shield of North Dakota, 2008 WL 2761309 (d. N.D., July 11, 2008).
The Facts
Justin Moser was injured when the car he was driving struck another vehicle head on, resulting in the death of the driver who was his mother. He was covered by a motor vehicle no-fault policy issued by Progressive Insurance Co. that provided health benefits up to $30,000. It also provided that coverage under that part of the policy:
Not apply to medical expenses in excess of $5,000…to the extent that such medical expenses are paid or payable under any other insurance.
He was also covered for medical expenses under his mother’s self-insured ERISA health plan issued by her employer and administered by Blue Cross Blue Shield of North Dakota (BCBSND). It provided:
If a member is eligible for basic automobile no-fault benefits or other automobile medical payment benefits as the result of accidental bodily injury arising out of the operation or use of a motor vehicle, the benefits available under this Benefit Plan will be reduced by and coordinated with the basic automobile no-fault benefits or other automobile medical payment benefits.
The health plan also gave the claims administrator full, final and complete discretion to construe and interpret the provisions of the Plan, including doubtful or disputed terms and to determine all questions of eligibility…The decision of the Claims Administrator shall be final, conclusive and binding on all parties.
Progressive paid $5,000 of Justin’s medical expenses, and BCBSND refused to pay the next $25,000. Progressive then paid the $25,000 balance and began this lawsuit in state court seeking reimbursement of the $25,000 from BCBSND. The case was removed to the federal district court based on federal jurisdiction, particularly for the applicability of ERISA, and both parties moved for summary judgment.
The Decision
Based on the plan language, the district court concluded that its review of the benefits denial by BCBSND should be limited to whether the claims administrator abused its discretion (rather than whether the court could review the matter de novo – thereby allowing the court to substitute its judgment of what the claim determination should be). It said that:
Under Eighth Circuit case law, it is clear that de novo review does not apply when ERISA plan vests the administrator with complete discretion to interpret and construe the plan provisions, as [the plan] does.
It then concluded that the claims administrator did not abuse its discretion in denying the $25,000 claim. It found that the applicable provision in the summary plan description was reasonable justification for the BCBSND plan to refuse to pay benefits until Progressive paid the full $30,000 no-fault limit.
Implications
The lesson of the North Dakota case is that it is important for self-insured ERISA plans to clearly set forth its provisions related to coordinating with no-fault health benefits, however they are characterized. Of course, insured plans are limited as to what their policies may provide by applicable state law.
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