may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Illinois Farmers Insurance Co.,
Filed October 28, 1997
Reversed in part, affirmed in part
Short, Judge, concurring in part, dissenting in part
McLeod County District Court
File No. C795263
Peter J. Kasal, Keefe, Kasal & Newman, No. 101, 720 Century Avenue S.W., Hutchinson, MN 55350 (for Appellant)
Louise Dovre Bjorkman, Patrick J. Sauter, Florence C. Humphrey, Rider, Bennett, Egan & Arundel, LLP, 2000 Metropolitan Centre, 333 South Seventh Street, Minneapolis, MN 55402 (for Respondent)
Considered and decided by Short, Presiding Judge, Parker, Judge, and Crippen, Judge.
Appellant Jason Gilhousen contends that the trial court erred in making a collateral source deduction from a verdict in his suit for uninsured motorist benefits. The disputed collateral source is a payment of medical expenses and disability benefits from a qualified self-funded Employee Retirement Income Security Act (ERISA) plan. Because this court recently determined that the collateral source payment statute, Minn. Stat. § 548.36 (1996), is preempted by ERISA, we reverse and remand for redetermination of the judgment without this collateral source deduction. We affirm the trial court on additional issues raised in respondent's notice of review.
Respondent contends the trial court erred (a) in refusing to instruct the jury on the reasonableness of appellant's efforts to identify the driver who struck him and (b) by not granting its motions for judgment notwithstanding the verdict and a new trial.
Collateral Source Deduction.
Under Minn. Stat. § 548.36, subd. 2(1) (1996), a collateral source deduction is not to occur for items "for which a subrogation right has been asserted." Thus, when a plaintiff is exposed to a subrogation claim from a collateral source, the plaintiff is guaranteed a full recovery of the verdict. The plaintiff is to suffer a collateral source deduction only when a subrogation claim has not been asserted and the full verdict would result in double recovery.
The trial court determined the collateral source issue in this case by examining whether Hutchinson Technology's employee benefits plan had authority to assert a subrogation claim. The court reasoned initially that the collateral source payment statute was not preempted by ERISA. The court explained that it should look to ERISA in determining the subrogation question but that any other application of the collateral source statute "has no relation to the ERISA plan in this case and so is not preempted by the ERISA laws." In this respect, the court merely noted as conflicting authority the decision of this court in Koch v. Mork Clinic, P.A., 540 N.W.2d 526 (Minn. App. 1995), review denied (Minn. Jan. 12, 1996).
The collateral source issue in this case is determined by the decision in Koch. In contrast to the trial court's rationale, this court in Koch determined that (a) ERISA is related to and may conflict with the provisions of the collateral source statute and (b) ERISA preemption expressly deals with state laws that "relate to any employee benefit plan." Id. at 531 (citation omitted). In sum, the ERISA preemption provision in 29 U.S.C. § 1144 (a) (1985 & Supp. 1995) applies to the collateral source statute. Id. at 531-532. Consistently, the Koch court reversed a $119,826 collateral source deduction from a jury award. Id. at 532. Under Koch, neither the trial court nor this court reaches the question of whether the Hutchinson Technology employee benefit plan has asserted or could assert a subrogation claim.
The trial court's reasoning, that the collateral source statute has no relation to the ERISA plan in this case, is directly in conflict with the rationale of Koch. Explaining the relationship of the statute to ERISA, the Koch court observed that the collateral source statute expressly covers the broad category of health care reimbursement plans, and that the statute was connected to ERISA insofar as both affect employee plan subrogation rights. Id. at 531-32. In this respect, ERISA determines the authority of a plan administrator to assert a subrogation claim. As the Koch court observed, this connection between ERISA and the collateral source statute may involve a direct conflict. Id. at 532. A conflict arises whenever a plan administrator's authority is challenged by a trial court's collateral source determination, such as the holding of the trial court in this case. If permitted to occur without preemption, the plan administrator would be compelled to either (a) accept the judgment of a state trial court on a subrogation issue or (b) assert a subrogation claim against a plaintiff who has already suffered a collateral source deduction. This circumstance is prejudicial to an ERISA plan administrator and is a result naturally within the scope of the ERISA preemption statute.
Respondent contends that the failure to apply the collateral source deduction in this case will result in a double recovery for appellant if the plan administrator is unsuccessful in recovering a subrogation claim. This observation is correct. In the current state of the law, having respect for ERISA preemption law, cases may arise where double payments occur. Nonetheless, the mandate of the ERISA preemption statute upholds a superseding public interest, that is, protection for the discretion of ERISA plan administrators to assert subrogation claims.
Respondent contends that the trial court erred in refusing to get a jury decision on the reasonableness of appellant's efforts to identify the uninsured driver. This is a coverage question. If the insurer's concern has merit, it is an issue properly brought before the trial court for a decision as a matter of law. State Farm Ins. Cos. v. Seefeld, 481 N.W.2d 62, 64 (Minn. 1992) ("Insurance coverage issues are questions of law for the court."). There is no authority under Minnesota law to support respondent's contention that the coverage question could be put before the jury for its determination. The trial court did not abuse its discretion in denying respondent's request for the jury instruction or a new trial.
Disputing the jury's finding on fault attributable to appellant, respondent contends that the trial court erred in not granting judgment notwithstanding the verdict. "The granting of a judgment notwithstanding a jury verdict is a pure question of law." Edgewater Motels, Inc. v. Gatzke, 277 N.W.2d 11, 14 (Minn. 1979) (citation omitted). "In reviewing the facts in a case where a motion for judgment notwithstanding the verdict has been denied, we must affirm if there is any competent evidence reasonably tending to sustain the verdict."" Rettman v. City of Litchfield, 354 N.W.2d 426, 429 (Minn. 1984) (citation omitted).
There is ample evidence to support the jury's fault determination. The jury could have reasonably concluded that the unidentified driver's fault substantially exceeded appellant's fault. Appellant testified at trial that the unidentified driver drove forward over his arm and pinned him under the car. Appellant explained that the driver actually had to speed up to clear his body. The police investigation confirmed that the driver accelerated because there were tire marks indicating that the driver had spun his wheels. The trial court was correct in denying judgment notwithstanding the verdict because there is competent evidence that supports the verdict.
Reversed and remanded in part and affirmed in part.
SHORT, Judge (concurring in part, dissenting in part).
I concur insofar as the majority concludes: (1) the trial court did not commit reversible error in failing to instruct the jury on Gilhousen's efforts to identify the phantom driver; and (2) the fully self-funded ERISA plan did not have a right of subrogation. I respectfully dissent on the collateral source issue.
First, Minn. Stat. § 548.36 is not preempted by ERISA because it functions independently of subrogation rights and its incidental impact on the plan is insufficient to trigger the preemption doctrine. See N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 659 (1995) (concluding indirect economic influence does not function as regulation of ERISA plan itself); Danowski v. United States, 924 F.Supp. 661, 672 (D. N.J. 1996) (concluding policy of prohibiting double recoveries should be given full effect as long as doing so does not shift liability to the ERISA plan); but see Koch v. Mork Clinic, P.A., 540 N.W.2d 526, 532 (Minn. App. 1995) (holding ERISA preempts Minn. Stat. § 548.36 because it "relates to" ERISA plan).
Second, Minn. Stat. § 548.36 impacts only Gilhousen and Illinois Farmers Insurance Company, not the plan. The doctrine of preemption is triggered where a state law affects two ERISA entities. See FMC v. Holliday, 498 U.S. 52, 54-56 (1990) (holding preemption of state law in declaratory judgment action brought by plan sponsor regarding its subrogation rights against plan participant); Baxter v. Lynn, 886 F.2d 182, 186 (8th Cir.) (holding preemption of state law in case in which plan and beneficiaries rights to recovery were at issue); Danowski, 924 F.Supp. at 672 (discussing relationship between plan and plan beneficiaries, and concluding preemption necessary when plan reimbursement scheme frustrated by statute); see e.g., Gallagher Corp., v. Massachusetts Mut. Life Ins. Co., 940 F.Supp. 176, 181-82 (N.D. Ill. 1996) (concluding relationship between two ERISA entities is lynchpin to ERISA preemption and rules affecting relationship between ERISA entity and non-ERISA entity are not preempted).
Plan payments made to Gilhousen for past medical expenses constitute collateral sources, which the trial court properly deducted from the amount of the award. I would affirm.