Citizens Ins Co Amer v. MidMichigan Health ( 2006 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 06a0185p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiff-Appellant, -
CITIZENS INSURANCE COMPANY OF AMERICA,
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No. 05-1237
v.
,
>
MIDMICHIGAN HEALTH CONNECTCARE NETWORK -
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Defendant-Appellee. -
PLAN,
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Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 03-74256—Lawrence P. Zatkoff, District Judge.
Argued: January 24, 2006
Decided and Filed: June 1, 2006
Before: MOORE and McKEAGUE, Circuit Judges; POLSTER, District Judge.*
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COUNSEL
ARGUED: Robert L. Goldenbogen, GARAN LUCOW MILLER, Port Huron, Michigan, for
Appellant. Craig H. Lubben, MILLER, JOHNSON, SNELL & CUMMISKEY, Kalamazoo,
Michigan, for Appellee. ON BRIEF: Daniel S. Saylor, GARAN LUCOW MILLER, Detroit,
Michigan, for Appellant. Craig H. Lubben, MILLER, JOHNSON, SNELL & CUMMISKEY,
Kalamazoo, Michigan, for Appellee.
McKEAGUE, J., delivered the opinion of the court, in which POLSTER, D. J., joined.
MOORE, J. (pp. 9-10), delivered a separate dissenting opinion.
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OPINION
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McKEAGUE, Circuit Judge. Plaintiff-appellant, Citizens Insurance Company of America
(“Citizens”) appeals the district court’s denial of its motion for summary judgment, and the
declaration that Citizens is first in priority for the payment of medical expenses incurred as a result
*
The Honorable Dan Aaron Polster, United States District Judge for the Northern District of Ohio, sitting by
designation.
1
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of an automobile accident. For the reasons that follow, the holding of the district court is reversed,
and the case is remanded for proceedings consistent with this ruling.
I. FACTUAL AND PROCEDURAL HISTORY
The facts in this case are undisputed. On December 19, 1999, Jacqueline Bradshaw
(“Bradshaw”) was injured in a motor vehicle accident and required extensive medical treatment.1
At the time of the accident, Bradshaw was covered under a Citizens excess no-fault auto policy, and
MidMichigan Health ConnectCare Network Plan (“MidMichigan”), a health benefit plan offered
through her employer. MidMichigan is a self-funded employee health and welfare benefit plan,
established pursuant to the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001
et seq. The plan provides health insurance benefits to the employees of MidMichigan Medical
Center. As a result of Bradshaw’s injuries, Citizens alleges it paid $135,565.11 in medical expenses
out of priority. Citizens brought this action to recover payment for these expenses.
Citizens filed a motion for summary judgment pursuant to Fed. R. Civ. P. 56, seeking a
declaration that Citizens’ coverage was secondary to the MidMichigan plan, and accordingly,
Citizens was entitled to reimbursement for the payment of Bradshaw’s claims. The parties agree
that a priority dispute arising between an ERISA plan and a no-fault policy is resolved pursuant to
federal common law. See Auto Owners Ins. Co. v. Thorn Apple Valley, Inc., 31 F.3d 371 (6th Cir.
1994). According to Thorn Apple Valley, when an ERISA health benefit plan and a policy of no-
fault insurance have conflicting coordination of benefits clauses, the ERISA plan language prevails.
Id. However, the district court found that the holding of Thorn Apple Valley was inapplicable here,
because the coordination of benefits clauses were not in direct conflict. See Citizens Insurance
Company of America v. MidMichigan Health Connectcare Network Plan, No. 03-CV-74256-LPZ
(E.D. Mich., filed Jan. 3, 2005) (hereinafter slip op.). In so finding, the court determined that
MidMichigan’s plan language did not expressly disavow payment of injuries otherwise covered by
a policy of no-fault insurance, nor did it effectively subordinate its own coverage to Citizens.2 Id.
at 9-10. 3Therefore, the MidMichigan ERISA plan was in full effect at the time of Bradshaw’s
accident. However, the court found that the language of the Citizens’ excess no-fault policy did not
exclude payment of benefits for Bradshaw, even though she was simultaneously covered under the
MidMichigan plan. Id. at 11-12. The court declared Citizens the primary payer. Id.
The parties agree that there is no conflict in the coordination of benefits clauses between the
plan and the policy. The sole issue on appeal is whether the district court erred in deciding that the
no-fault policy language did not exclude payment for Bradshaw’s injuries when she was covered
under the MidMichigan employee health benefit plan.
1
Bradshaw died April 18, 2001.
2
During oral argument, MidMichigan mistakenly argued that the district court had not engaged in this analysis.
However, in its brief on appeal, MidMichigan states: “[a]lthough the lower court correctly held that there was no
conflict between the plan language of Citizens’ no-fault policy and MidMichigan’s ConnectCare plan, it is important
to note that if a conflict existed, MidMichigan’s Plan language would control.” (Appellee Br. 15). The fact that an
ERISA coordination of benefits clause would prevail if there were a conflict between the plans is irrelevant, because
there is no conflict between the plan and the policy, and the only issue on appeal is whether the district court properly
interpreted the Exclusions clause in the no-fault policy. (Appellee Br. 2). Further, appellee asks this court to affirm the
ruling of the district court, and the district court ruled that MidMichigan’s plan did not conflict with the no-fault policy.
3
The MidMichigan Plan amended its plan language effective January, 2001. The district court made its
determination based on the plan language that was in effect at the time of the auto accident.
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II. JURISDICTION AND STANDARD OF REVIEW
Subject matter jurisdiction is proper under 29 U.S.C. §§ 1001 et seq, and 28 U.S.C. § 1331.
Because Citizens’ claim against MidMichigan, an ERISA-qualified employee benefit plan, requires
a determination under federal common law, subject matter jurisdiction is appropriate under 28
U.S.C. § 1331. See Thorn Apple Valley, Inc., 31 F.3d at 374.4
We review de novo a denial of summary judgment decided on purely legal grounds. See
McMullen v. Meijer, Inc., 355 F.3d 485, 489 (6th Cir. 2004) (district court’s denial of summary
judgment based on legal grounds is reviewed de novo). The district court’s opinion was based on
the interpretation of the Citizens’ policy language, a purely legal question requiring de novo review.
See Boyer v.Douglas Components Corp., 986 F.2d 999, 1003 (6th Cir. 1993) (question of contract
interpretation is subject to de novo review).
III. ANALYSIS
The resolution of this case depends on the interpretation of the Citizens excess no-fault
policy Personal Injury Protection Exclusions provision. The provision states, in relevant part:
We do not provide Personal Injury Protection coverage for:
1. Medical expenses for you or any ‘family member’:
(a) To the extent that similar benefits are paid, payable, or
required to be paid, under any individual, blanket or group accident or disability
insurance, service, benefit, reimbursement or salary continuance plan. (excluding
Medicare benefits provided by the federal government);
Citizens’ no-fault insurance policy, Exclusions B(1)(a), JA at 107.
The district court held that the language of paragraph B(1)(a) did not exclude medical
expenses covered by a medical or health benefits plan, such as the MidMichigan plan.
Plaintiff does not actually exclude medical expenses covered by a medical or health
benefits plan such as Defendant’s plan. It specifically references ‘accident or
disability insurance.’ This is in stark contrast to the language in the Limit of
Liability provisions of Plaintiff’s policy which limit the benefits payable for an
accident involving a motorcycle when amounts are also payable under ‘any
individual, blanket or group accident, hospitalization, medical or surgical insurance
or reimbursement plan . . . .’ In addition Plaintiff did not cite, and the Court’s review
of Plaintiff’s policy did not reveal, any alternative coordination of benefits provision
which might be relevant to this matter.
Citizens, slip-op at 11.
Citizens asserts that the district court erred, and argues that the policy language excludes
payment of no-fault benefits in this instance, because MidMichigan provides similar benefits for
4
“On occasion, Congress explicitly directs the federal courts to develop a body of common law to fill in the
interstices of a statutory scheme in order to ensure national uniformity of application. ERISA presents just such a
situation, where federal common law is expected to develop and address rights and obligations arising under the Act.”
Thorn Apple Valley, Inc., 31 F.3d at 374-75 (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56 (1987); and In re
White Farm Equipment Co., 788 F.2d 1186, 1191 (6th Cir.1986)).
No. 05-1237 Citizens Ins. Co. of Am. v. MidMichigan Page 4
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medical expenses, and is a group benefit plan listed in the Exclusions clause. Further, Citizens states
that “accident or disability insurance” is just one type of plan that falls within the Exclusions, and
a serial listing of other types of plans are included.
In response to Citizens’ claim that “accident or disability insurance” is just one in a series
of plans excluded from coverage under the Citizens’ policy, MidMichigan asserts two incompatible
arguments. First, MidMichigan argues that “accident and disability insurance” is the only type of
plan excluded:
That exclusion is clearly limited to benefits payable under an ‘accident or disability’
insurance plan. Citizens argues . . . that this language ‘expressly covers group
benefit plans’ but that argument ignores the fact that it only covers ‘group accident
or disability insurance,’ not all group plans.
Appellee Br. 13 (emphasis in original). Second, when pressed to explain the remainder of the
Exclusions clause, MidMichigan argues that the phrase “accident or disability” is a qualifier for each
of the terms that follow. Under this theory, the Exclusions clause would be read as follows:
To the extent that similar benefits are paid, payable, or required to be paid, under any
individual, blanket or group accident or disability insurance, accident or disability
service, accident or disability benefit, accident or disability reimbursement or
accident or disability salary continuance plan (excluding Medicare benefits provided
by the federal government).
Citizens’ no-fault insurance policy, Exclusions B(1)(a), JA at 107 (italicized material added).
In order to decide which interpretation is correct, we must consider both the policy language
and the intent underlying the provision. See Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101,
112-13 (1989); Wulf v. Quantum Chemical Corp., 26 F.3d 1368, 1376 (6th Cir. 1994) (“When
interpreting a contract, courts look not only at the language, but also for additional evidence that
reflects the intent of the contracting parties.”). The rules of contract interpretation that have evolved
under the federal common law in ERISA priority disputes mirror those applied in the Michigan
courts. See Regents of University of Michigan v. Employees of Agency Rent-A-Car, 122 F.3d 336,
339 (6th Cir 1997). Id. “A technical construction of a policy’s language which would defeat a
reasonable expectation of coverage is not favored . . . . Accordingly, an insurer has a duty to express
clearly the limitations in its policy; any ambiguity will be construed liberally in favor of the insured
and strictly against the insurer ” Id. When interpreting ERISA plan provisions, courts have gone
beyond the actual language of the plan, even if “clumsily drafted,” to ascertain the underlying
intent. “Yet, the Court’s paramount responsibility in construing plan language is to ascertain and
effectuate the underlying intent.” Travelers Ins. Co. v. Auto-Owners Ins. Co., 971 F. Supp. 298,
300-01 (W.D.Mich. 1997); accord Allstate Ins. Co. v. Knape & Vogt Mfg. Co., 147 F. Supp 2d 804
(W.D.Mich. 2001).
A. Policy Language
The Exclusions clause excludes payment of benefits for medical expenses payable by “any
individual, blanket or group accident or disability insurance, service, benefit, reimbursement, or
salary continuance plan (excluding Medicare benefits provided by the federal government).”
Citizens’ no-fault insurance policy, Exclusions B(1)(a), JA at 107. Looking at the plain language
of the Exclusions clause, we find that MidMichigan’s first argument that the clause is limited to
“accident or disability insurance” ignores the remainder of the clause. If the policy was intended
to exclude only payment for medical benefits otherwise payable under “accident or disability
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insurance,” the exclusions clause would have ended at the phrase so stating. Presumably,
MidMichigan takes this stance in order to track the language of the district court opinion, wherein
the court noted that the clause “specifically references accident or disability insurance.” Citizens,
slip op. at 11. The district court did not however, indicate that “accident or disability insurance”
plans were the only plans excluded.
The district court relied on the motorcycle Limit of Liability provision in order to interpret
the meaning of the clause here. In so doing, the court pointed out that the policy language in the
motorcycle provision specifically referred to hospitalization, medical or surgical insurance or
reimbursement plans, while the language in this provision did not. While this is true, the district
court erred when it failed to interpret the remainder of the Exclusions provision here. The
Exclusions clause also excludes payment for medical expenses otherwise payable under “service,
benefit, reimbursement, or salary continuance plan[s].” MidMichigan’s first argument fails because
the no-fault policy expressly excludes plans other than “accident or disability insurance” plans, even
though the district court failed to determine the type of plans the remainder of the Exclusions clause
intended to exclude.
MidMichigan’s second argument contends that the phrase “accident or disability” is meant
to qualify each of the terms that follow. In contrast, Citizens argues that the reminder of the clause
is a serial listing of the types of plans excluded. In an attempt to unravel this linguistic knot, we
begin with a grammatical analysis. According to A Dictionary of Modern Legal Usage, each
adjective that qualifies a noun in the same way should be separated by a comma. For example, “a
cautious[,] reserved person.” Bryan A. Garner, A Dictionary of Modern Legal Usage 714 (Oxford
University Press, 2d ed. 1995). The application of this rule yields the interpretation urged by
Citizens. Under this interpretation, the Exclusions provision is a listing of plans that are qualified
by the preceding adjectives. These adjectives include; accident or disability insurance, service,
benefit, reimbursement, and salary continuance. This interpretation would properly exclude a
benefit plan, as Citizens argues.
However, when one adjective is intended to qualify a noun phrase containing another
adjective, as MidMichigan argues is the case here, no comma is used to separate the two adjectives.
Id. In the no-fault provision, the phrase “accident or disability” precedes “insurance, service,
benefit, reimbursement, or salary continuance plan” with no comma separating terms. Under this
rule, “accident or disability” would be considered a qualifier for the other adjectives, all qualifying
the noun “plan”. Thus, the policy would exclude an accident or disability insurance plan, an
accident or disability service plan, an accident or disability benefit plan, an accident or disability
reimbursement plan, or an accident or disability salary continuance plan, as MidMichigan argues.
Hence, a pure grammatical analysis results in two plausible readings. “Contract language is
ambiguous if it is subject to two reasonable interpretations.” Boyer v. Douglas Components Corp.,
986 F.2d 999, 1003 (6th Cir. 1993) (citing Smith v. ABS Indus., 890 F.2d 841, 846-47 n. 1 (6th
Cir.1989)). Having found that the language of the no-fault provision is subject to two grammatical
interpretations, we turn to “traditional methods of contract interpretation to resolve the ambiguity,
including drawing inferences and presumptions and introducing extrinsic evidence.” Boyer, 986 F.2d
at 1005.
B. Intent Underlying the Policy
Citizens claims that the no-fault policy issued to Bradshaw was “expressly identified as
‘excess’ for purposes of medical benefits and thus, does not apply to the extent that other available
coverage exists.” Br. of Appellant at 17. The record contains a “Certification of Policy Coverage”
signed by Pamela Martin of Citizens, which certifies that the policy issued to Bradshaw provided
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Medical Excess Personal Injury Protection. JA at 89. Citizens claims that the Exclusions provision
in the no-fault policy was “intended to effectuate Ms. Bradshaw’s choice of acquiring a coordinated
no-fault policy, with premiums appropriately reduced to reflect secondary medical coverage.” Br.
of Appellant at 22. To bolster its position, Citizens refers to the statute that requires Michigan no-
fault insurers to offer their policy holders the option of electing a reduced premium coordinated
policy, when they have other health and accident coverage. Mich. Comp. Laws § 500.3109(a)
states: “an insurer providing personal protection insurance benefits shall offer, at appropriately
reduced premium rates, deductibles and exclusions reasonably related to other health and accident
coverage on the insured.” Citizens states that it issued Bradshaw’s reduced rate policy in
compliance with this statute, evidencing its intent to coordinate benefits with Bradshaw’s other
available health coverage, namely MidMichigan. Further, Citizens quotes Transamerica Ins. Group
v. American Community Mutual Ins. Co. in support of its assertion that the clause was meant to
subordinate its coverage to other health insurance carriers:
By mandating that no-fault insurers offer coordination of benefit clauses at
appropriately reduced rates, the Legislature expressed a clear intent that the no-fault
insurer not have primary liability under any circumstances when the insured elects
to coordinate benefits. Although a health insurance carrier that coordinates benefits
may become secondary to a carrier other than a no-fault carrier, the no-fault carrier
cannot under any circumstances be primary.
437 N.W.2d 28, 30 (Mich. App. 1989) (Br. of Appellant at 22, n.3).
Citizens argues that the district court erred when it rendered a restrictive reading to its
Exclusions clause, because the policy was issued as a reduced rate excess policy, in compliance with
Michigan law, as interpreted by the Transamerica court. Citizens states that “the district court
unnecessarily required that the provision include the terms “medical” or “health” in order to reach
Defendant’s plan ” when:
the Exclusions clause manifestly envisions that medical benefits or ‘similar benefits’
will be payable by a variety of ‘plan[s],’ any one of which might be an individual,
blanket or group plan. Several plans are listed; and while accident or disability
insurance is one, the clause also includes a service plan, a reimbursement plan, a
salary continuation plan, and most notably, a benefit plan.
Br. of Appellant at 23-24.
Citizens asserts that the MidMichigan plan is encompassed by the Exclusions clause, because the
MidMichigan plan is, by its own definition, a group “benefit plan.” 5
Further, Citizens argues that if the policy intended to only exclude payment of medical
expenses that were otherwise payable under various “accident and disability insurance plans,” and
medical and health benefit plans were not intended to be excluded, there would be no reason for
Citizens to include the Medicare qualifying language. Medicare is defined as a “health insurance
5
MidMichigan defines itself as a “Benefit Plan” in its own plan document for purposes of coordination of
benefits. The relevant provision states: “Benefit plan. This provision will coordinate the medical benefits of a benefit
plan. The term benefit plan means this Plan or any of the following plans . . . . MidMichigan Summary Plan
Description, JA 278.
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program” for the elderly and certain disabled individuals.6 If “health insurance” plans were not
intended to be encompassed by the Exclusions clause in the first instance, it would be unnecessary
to exempt Medicare benefits from its reach.
In response to Citizens’ assertions, MidMichigan claims that the policy fails to exclude
payment for benefits otherwise payable under a “medical” or “surgical” insurance plan, unlike the
motorcycle limit of liability provision in its policy. “Citizens’ argument is further undermined by
the fact that it demonstrated in the very same policy that it knew what language to use if it intended
to exclude coverage for benefits payable under a group medical plan.” Br. of Appellee at 14.
MidMichigan further argues that Citizens’ interpretation requires the court to redraft the Exclusions
provision, omitting the accident and disability “qualifying language.”
MidMichigan does not address Citizens’ contention that MidMichigan is a “benefit plan”
by its own definition, nor does it offer an explanation of the Medicare exception within the
Exclusions provision that would support MidMichigan’s interpretation of the clause. In response
to Citizens’ assertion that the no-fault statute underpins the issuance of the policy, MidMichigan
avers that §500.3109(a) does not reach ERISA plans, and that ERISA plans with a coordination of
benefits clause pre-empt §500.3109(a) .
While the Exclusions clause in the Citizens’ no-fault policy is no model of clarity, we find
that the intent of the clause was to exclude payment of medical expenses for a variety of “plans,”
including a “benefit plan.” Citizens provided Bradshaw a reduced rate coordinated policy, and she
elected the same, based on the availability of coverage for medical expenses from Bradshaw’s
MidMichigan plan. The Michigan Court of Appeals has found that the legislature intended to give
no-fault insurers “unrestrained application of § 3109a to health and accident coverage from
whatever source.” Transamerica Ins. Group, 437 N.W.2d at 29 (emphasis added). We find that
the Citizens Exclusions provision was intended to exclude a broad range of medical and health
coverage plans, in keeping with Citizens’ intent to provide Bradshaw a coordinated reduced rate no-
fault policy consistent with § 3109a.7
Moreover, Citizens’ assertion that the Medicare exception to the Exclusions provision
evinces its intent to otherwise exclude health and medical insurance benefit plans is valid. Medicare
is a health insurance plan, not an accident or disability plan. Under MidMichigan’s interpretation,
Medicare would not be reached by the Exclusions provision if the provision were to only exclude
payment of medical benefits otherwise payable by “accident or disability” plans, so there would be
no reason to exempt Medicare benefits. MidMichigan has offered no other plausible explanation
for the inclusion of the Medicare language.
Further, we find that MidMichigan’s argument that ERISA plans are not reached by
§ 500.3109(a) misstates the law in this area. An ERISA plan pre-empts § 500.3109(a), however this
does not necessarily mean that the ERISA plan will prevail in a priority dispute. See Thorn Apple
6
See The Official U.S. Government Site for People with Medicare,
www.medicare.gov/Publications/pubs/pdf/10116.pdf.
7
The dissent claims that we wrongly consider the intent of the provision rather than the intent of the parties in
our analysis. We disagree. The intent of the parties is clear. Bradshaw elected a coordinated policy and enjoyed the
benefit of reduced no-fault automobile insurance premiums because she was covered under another health plan. Citizens
issued the coordinated policy in order to effectuate Bradshaw’s election, as required under § 500.3109(a). We interpret
the provision bearing in mind the intent of the parties. “[T]he court must give effect to the intent which manifestly
informs the language, despite technical shortcomings or hypothetical ambiguities in the language.” Allstate Insurance
Co., v. Knape, 147 F. Supp 2d 804, 809 (W.D. Mich. 2001).
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Valley, 31 F.3d at 374. The Thorn Apple Valley court found that “when a traditional insurance
policy and a qualified ERISA plan contain conflicting coordination of benefits clauses, the terms
of the ERISA plan, including its COB clause must be given full effect.” Id. at 374 (emphasis added).
However, in instances when the ERISA plan does not expressly disavow coverage for payment of
medical benefits otherwise covered under a no-fault policy, the coordination of benefits clauses of
each plan are given their full effect, and the ERISA plan is not automatically deemed secondary.
See Great-West Life & Annuity Insurance Company v. Allstate Insurance Company, 202 F.3d 897,
900 (6th Cir. 2000); see also Dayton Hudson Dept. Store Co. v. Auto-Owners Ins. Co., 953 F. Supp.
177, 179-80 (W.D.Mich. 1995) (“[T]he Thorn Apple Valley court cautioned that preemption ‘does
not necessarily mean that the ERISA plan must prevail.’ Rather, any conflict between COB
provisions should be resolved under federal common law.”). Here, the district court properly found
that MidMichigan’s plan did not expressly disavow coverage, and therefore the coordination of
benefits clauses between the plan and the policy did not conflict. Thus, the holding of Thorn Apple
Valley is inapplicable here.
We also agree with Citizens’ assertion that MidMichigan is a “benefit plan,” encompassed
by the Exclusions clause. MidMichigan defines itself as a benefit plan in its coordination of
benefits clause8, and the statutory language of the Employee Retirement Income Security Act,
ERISA, 29 U.S.C. § 1001 et seq. refers to the plans it regulates as “benefit plans.” See 29 U.S.C.
§ 1001(a).
Having found that the intent underlying the Exclusions provision clearly militates in favor
of Citizens interpretation, we find that Citizens properly excluded payment of medical benefits for
a series of plans, including a “benefit plan.” MidMichigan is such a plan. Because MidMichigan’s
plan was in full force at the time of Bradshaw’s injury, and the plan did not expressly disavow
coverage for medical benefits otherwise payable under9 a no-fault policy, we find that MidMichigan
is first in priority for payment of Bradshaw’s claims.
IV. CONCLUSION
For the aforementioned reasons, we REVERSE the district court’s denial of summary
judgment for plaintiff, and REMAND this case for proceedings consistent with this finding.
8
See n. 6, supra.
9
On remand, the district court will have to determine if the January 1, 2001, amendment of MidMichigan’s plan
affects the priority for payment of Bradshaw’s claims that accrued after that date.
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DISSENT
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KAREN NELSON MOORE, Circuit Judge, dissenting. I agree with the majority that the
language of Citizens’s personal-injury-protection exclusions provision is ambiguous. However,
because two rules of contract construction direct us to resolve the ambiguity against Citizens, I
believe we are compelled to conclude that the Citizens plan does not exclude coverage on the basis
of the MidMichigan plan. Accordingly, I respectfully dissent.
The majority has highlighted the ambiguity in the personal-injury-protection exclusions
provision of Citizens’s excess no-fault policy. The phrase “accident or disability” in the provision
can be read to modify only “insurance,” the term that immediately follows it, or it can be read to
modify each of the subsequent terms: “insurance,” “service,” “benefit,” “reimbursement,” and
“salary continuance.” Joint Appendix (“J.A.”) at 107 (Citizens Policy at 16). Under the first,
nondistributive reading, all individual-, blanket-, or group-benefit plans would be included within
Citizens’s coverage exclusions, and thus Citizens would not be required to make any payments that
were payable under MidMichigan’s group-benefit plan. Under the second, distributive reading, the
only type of individual, blanket, or group benefit plans that would be excluded would be accident-
or disability-benefit plans, and Citizens could not deny personal-injury-protection coverage based
on coverage by MidMichigan’s health-benefit plan. Two rules of contract interpretation instruct us
to resolve this ambiguity against Citizens.
First, federal common law, the law that governs the interpretation of this contract, has
adopted the longstanding rule of construction that ambiguities in contract language are resolved
against the drafter, in this case, Citizens. Regents of the Univ. of Mich. v. Employees of Agency
Rent-A-Car Hosp. Ass’n, 122 F.3d 336, 339-40 (6th Cir. 1997); see also RESTATEMENT (SECOND)
OF CONTRACTS § 206 (1981). Citizens had the opportunity to draft a provision that clearly excluded
coverage where the insured was covered by a health-benefit plan. See RESTATEMENT (SECOND) OF
CONTRACTS § 206 cmt. a (explaining that “[w]here one party chooses the terms of a contract, he is
likely to provide more carefully for the protection of his own interests than for those of the other
party” and “is also more likely than the other party to have reason to know of uncertainties of
meaning”). In fact, Citizens has demonstrated that it was capable of doing precisely that in its limit-
of-liability provision regarding injuries sustained while operating a motorcycle, which explicitly
excludes coverage where benefits are payable through a “medical or surgical insurance or
reimbursement plan.” J.A. at 107 (Citizens Policy at 17). Moreover, because Citizens had “the
stronger bargaining position” and Citizens alone determined the terms of its “standardized
contract[],” the rule of construction against the drafter applies with additional force here.
RESTATEMENT (SECOND) OF CONTRACTS § 206 cmt. a.
Second, our prior precedent, by which we are bound, instructs that “an insurer has a duty to
express clearly the limitations in its policy,” and thus that “any ambiguity will be construed liberally
in favor of the insured and strictly against the insurer.” Regents of the Univ. of Mich., 122 F.3d at
339-40 (emphasis added) (internal quotation marks omitted). Therefore, we must construe the
ambiguity as to the limitations of the Citizens policy against Citizens, the insurer.
Because these rules of construction direct us to construe the ambiguity in Citizens’s
exclusions provision against Citizens, I believe that we must read “accident or disability” as
modifying each of the terms that follow it, including “benefit.” Under this reading of the provision,
the insured’s coverage under MidMichigan’s plan, which is a health-benefit plan, not an accident-
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or disability-benefit plan, would not exclude coverage under the Citizens plan.1 Because this court’s
precedents regarding the rules of contract interpretation dictate 2this understanding of the exclusions
provision, it is unnecessary to look to the intent of the parties. I respectfully dissent.
1
Contrary to the majority’s suggestion, reading the provision so that it does not reach health-benefit plans does
not render the Medicare language meaningless. The inclusion of the language “excluding Medicare benefits provided
by the federal government” in Citizens’s exclusions provision simply means that where an accident or a disability results
in benefits paid by Medicare, Citizens will reimburse Medicare for the cost of the benefits.
2
Even if it were necessary to consider the intent of the parties, the majority errs in its approach to ascertaining
the parties’ intent. The majority acknowledges that our prior precedent instructs that “‘[w]hen interpreting a contract,’”
we “‘look not only at the language, but also for additional evidence that reflects the intent of the contracting parties,’”
Majority Opinion (“Maj. Op.”) at 4 (quoting Wulf v. Quantum Chem. Corp., 26 F.3d 1368, 1376 (6th Cir. 1994))
(emphasis added). The majority misconstrues this instruction, however, as one to consider “the intent underlying the
provision,” Maj. Op. at 4 (emphasis added), and “the intent of the clause,” Maj. Op. at 7 (emphasis added), rather than
the “intent of the parties,” Wulf, 26 F.3d at 1376 (emphasis added). This leads the majority to focus on the intent of
Citizens, the drafter of the provision, while giving short shrift to the intent of the other party to the contract, the insured,
Jacqueline Bradshaw. Such a one-sided inquiry cannot produce an accurate assessment of the intent of the parties.
Moreover, although the majority claims that “[t]he intent of the parties is clear,” Maj. Op. at 7 n.7, the majority’s view
of the parties’ intent is based on mere conjecture rather than the language of the contract or any evidence presented by
the parties. The majority credits self-serving statements that Citizens made regarding its own intent in its brief to this
court without any supporting evidence, either extrinsic or from the contract language. The basis for the majority’s
conclusion as to Bradshaw’s intent is not evident or supported.