Corrected Copy to reflect correct Trial Court and Judge
ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEES
THOMAS W. YODER BRIAN L. ENGLAND
Fort Wayne, Indiana Fort Wayne, Indiana
UNITED OF OMAHA, ) ) Appellant-Third Party Defendant, ) ) vs. ) No. 02A05-9709-CV-408 ) WILLIAM HIEBER, DENNIS HIEBER, ) DONALD HIEBER, Individually and as ) a farm partnership, and KEVIN HIEBER, ) ) Appellees and Cross-Appellants- ) Defendant and Third Party Plaintiff, ) ) and ) ) UNITED FARM BUREAU MUTUAL ) INSURANCE COMPANY, ) ) Appellee and Cross-Appellant- ) Intervenor and Third Party Plaintiff. )
which is governed by ERISA. The underlying tort action commenced in 1990. In that year,
United notified Farm Bureau and Hammond's father that it was claiming subrogation rights
and ultimately retained John Grimm, Hammond's attorney, to protect its subrogation rights.
In November of 1992, United provided to Farm Bureau an SPD prepared in accordance with
ERISA requirements and represented to Farm Bureau that the SPD as the entire policy.
Record at 533.
In regard to subrogation rights, the SPD provided,
In the event that payment is made by the Plan for services or charges which are eligible for payment by another source, the Plan shall have the right to recover any payments which were, or became duplicate payments.
Record I at 344.See footnote 3 During the course of the litigation, a dispute arose regarding whether this language gave United enforceable subrogation rights. The defendants in the underlying tort action filed a third-party complaint asking the court to construe the provision. United retained independent counsel to represent its interest and terminated Grimm's representation. On June 22, 1993, United filed its Answer admitting that its subrogation claim was based on the SPD. Record I at 112.
In early July, the parties commenced mediation of Hammond's tort claim. United attended the mediation session, but did not participate. On July 21, 1993, United filed an amended answer in which it admitted asserting subrogation rights under the SPD but for the
first time asserting that its subrogation rights arose under the language of the group policy
which the SPD purported to summarize. United attached a portion of the policy to its
Amended Answer. The policy read,
Subrogation means our right to recover any policy payments:
(a) made because of an injury to you or your dependent caused by
a third party's wrongful act or negligence; and
(b) which you or your dependent later recover from the third party or
the third party's insurer. Third party means another person or organization.
Whenever a Local Union No. 414 Health and Welfare Fund has been or is
providing medical, hospital, dental, vision or disability benefit payments as a result of an injury, sickness or death for which there may be a possible recovery of indemnity from a third party, including an insurer, the participant or dependent recipient of such benefits assigns to the Fund the right to make a claim against the third party to the extent of the amount of such benefits.
In exchange for the assignment of the right to contest and litigate the alleged subrogation claim of United, Defendant and Insurer hereby agree to indemnify and hold harmless the Claimants; their next friend, custodial parent and legal guardian, Marjorie Hammond; and their attorney, John C. Grimm, from any costs, expenses, attorney fees or judgments which may be occasioned as the result of the Defendant and Insurer's litigation of the alleged subrogation claim of United.
Record at 545-46.
The trial court entered a summary judgment denying United's subrogation claim, and United appealed. In deciding the appeal this court confirmed that United's insurance policy is governed by ERISA, and that the actual policy had more extensive subrogation provisions than the SPD. United of Omaha v. Hieber, et al., 653 N.E.2d 83, 85 (Ind. Ct. App. 1995) trans. denied (1996)(Omaha I). The court then reviewed the case law and concluded that [i]t is well settled that, where the provisions of the summary conflict with the provisions of the actual policy, the summary will prevail. 653 N.E.2d at 88. The court went on to explain that before employing this rule of construction, the plan participant must demonstrate reliance on the summary. Id. at 88-89. Finding no evidence of reliance, the Omaha I court reversed the summary judgment and remanded for proof of reliance. 653 N.E.2d at 89.
29 U.S.C. §1022(a)(1) (emphasis added).
Like the statute, the applicable regulations identify beneficiaries as a class of persons protected by the ERISA statute. In 29 C.F.R. § 2520.102-2 (1997), the regulation states: the summary plan description . . . shall be sufficiently comprehensive to apprise the plan's participants and beneficiaries of their rights and obligations under the plan. 29 C.F.R. § 2520.102-2(a)(emphasis added). Further, the regulation states that the summary plan description format must not have the effect [of] misleading, misinforming, or failing to inform participants and beneficiaries. Id. at 102-2(b)(emphasis added). The regulation also requires that the SPD explain forfeiture conditions in words a beneficiary can understand: the SPD must contain a statement clearly identifying circumstances which may result in . . . forfeiture or suspension of any benefits that a participant or beneficiary might otherwise expect the plan to provide. 29 C.F.R. §2520.102-3(l)(emphasis added).
benefits based on the terms of the SPD, but the insurer argued that the terms of the policy
provided a lesser amount of benefits than the claimant sought. The court declared, [t]here
simply is no reliance issue in this case. Id. at 983. Rather, the case turned on the conflict
between the SPD and the policy. The court affirmed a summary judgment in favor of the
claimant on the ground that the SPD should control when it conflicts with the policy.
As Senkier and Hansen demonstrate, reliance is not an issue in ERISA cases when there is no practical connection between the SPD and the claimant's conduct. See Williams v. Midwest Operating Eng'r Welfare Fund, 125 F.3d 1138, 1141 (7th Cir. 1997) overruled on other grounds in Mers v. Marriott Int'l Group Acc. Death & Dismemberment Plan, 144 F.3d 1014 (7th Cir. 1998). When there is no connection between the SPD and the claimant's conduct, a claimant may bind an insurer to the SPD by proving that the SPD does not comply with ERISA's disclosure requirements. Mers, 144 F.3d at 1022. If the SPD complies with the ERISA requirements, the claimant may bind the insurer to the SPD only if there is a direct conflict between the SPD and the underlying policy. Id. at 1024.
Where, as here, there is a practical connection between the claimant's conduct and the SPD, the claimant cannot bind the insurer to the SPD merely by showing a conflict between the SPD and the policy.See footnote 6 The claimant must prove that he relied on the SPD to his detriment.See footnote 7 See Branch v. G. Bernd Co., 955 F.2d 1574, 1579 (11th Cir. 1992). There is no
direct proof of such detrimental reliance in the designated materials in this case. Indeed,
those materials allow an inference that Grimm as Hammond's attorney was apprised of the
risk that United had a colorable and potentially enforceable subrogation claim and that he
bargained for the Assignment and Indemnification Agreement to avoid any detrimental result
from that risk. Record at 545-46. Thus, there is a question of fact as to whether Hammond
relied upon the SPD, and summary judgment is inappropriate. We must therefore remand
for a determination of whether Hammond detrimentally relied upon the SPD.
B. Effect of Certification by Hammond's Father
Hammond's father completed the forms necessary to apply for coverage of the medical expenses, including a one-page form containing the following notice:
I understand that my group policy contains a provision which allows United of Omaha to pursue recovery of policy benefits paid due to the wrongful act or negligence of a third party. I also agree to do whatever reasonably necessary to assist United of Omaha in pursuing its reimbursement rights and that I will reimburse United of Omaha any monies received, not to exceed policy benefits paid, in settlement of my claim against the third party.
Record at 75. The form has no title and is not dated.
United claims that Hammond is bound by his father's signature on this form. Farm Bureau responds that the form has no probative value, pointing out that Hammond and his attorney were unaware of the form until after they reached a settlement with Farm Bureau. As such, Farm Bureau continues, the form has no bearing on the issue of whether Hammond relied on the subrogation provisions in the plan summary.
Record at 853. The trial court's decision regarding the certification was a valid exercise of
United nonetheless cites Serembus v. Mathwig, 817 F. Supp. 1414 (E.D. Wis. 1992) for the proposition that a certification signed by a plan participant binds both the participant and the beneficiary to the subrogation provisions in the certification. The Serembus decision does not control the certification here because the Serembus facts are materially different from the facts here. In Serembus, there was no conflict between the SPD and the plan document, nor was there any suggestion that the beneficiary had relied on the SPD. Here, the beneficiary's reliance and the conflict between the SPD and the policy are central facts. The trial court did not err in its findings concerning the certification as it relates to the ERISA claim.See footnote 8
IV. Farm Bureau's State Law Reliance Claim
ERISA preempts many state law claims, but does not preempt every claim that tangentially involves an ERISA plan.See footnote 9 The ERISA statute is designed to promote the interests of employees and their beneficiaries in employee benefit plans. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890, 2896 (1983). A claimant may pursue a state law cause of action so long as the claim does not impact the interests of employees and beneficiaries, and resolution of the claim does not interfere with the uniform federal scheme governing ERISA actions. Hospice of Metro Denver, Inc. v. Group Health Ins. of Okla., Inc., 944 F.2d 752, 754 (10th Cir. 1991). Further, state law may control the dispute if the parties involved are outside the scope of ERISA. Morstein v. Nat'l Ins. Svcs., Inc., 93 F.3d 715, 719-22 (11th Cir. 1996)cert. denied (ERISA does not preempt a state law claim brought by a plan participant against a non-ERISA entity); Lordmann Enter., Inc., v. Equicor, Inc., 32 F.3d 1529, 1533-34 (11th Cir. 1994) cert. denied.
Here, Farm Bureau has a separate claim against United that does not arise directly from ERISA or from the SPD. Rather, the claim arises from United's representations during the course of the litigation that the SPD constituted the entire policy and that the SPD was the only document upon which United based its subrogation claim. This claim is one of simple promissory estoppel, and does not derive from or depend upon Hammond's ERISA claim. Farm Bureau's promissory estoppel claim does not affect the relationship between United and its participants and beneficiaries, nor does the claim impact the administration
of the ERISA plan. At most, the claim impacts the manner in which United responds during
litigation to requests for information about its subrogation provisions. As such, the claim is
not preempted by ERISA.
According to Indiana law, a promissory estoppel claim has five elements:
1) a promise by the promisor (here, United), 2) made with the expectation that the promisee (here, Farm Bureau) will rely thereon, 3) which induces reasonable reliance by the promisee, 4) of a definite and substantial nature, and 5) injustice can be avoided only by enforcement of the promise. Lightle v. Harcourt Mgmnt.Co., 634 N.E.2d 858, 860 (Ind. Ct. App. 1994) trans. denied.
Questions of fact concerning these elements preclude a summary judgment on Farm Bureau's promissory estoppel claim. First, the Record does not indicate whether, at the time Farm Bureau reached a settlement agreement with Hammond, Farm Bureau was relying upon United's promise that the SPD was the entire policy. From the facts in the Record we cannot determine whether Farm Bureau knew, from experience or otherwise, that there was an actual policy in addition to the SPD. Second, if Farm Bureau did rely upon United's representations, the Record does not indicate whether that reliance was reasonable, particularly in light of the Amended Answer which included the actual policy language and which United served before the settlement was complete. Third, neither the Record nor the parties'arguments identify an injustice to be avoided by enforcing the United's representation that the SPD was the entire policy.
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