Federal District Court Remands Subrogation Claim to State Court
In this subrogation case, State Farm Mutual Automobile Insurance Company filed suit in state court against Blue Care Network of Michigan. After an automobile wreck, State Farm paid benefits to its underlying insured, Fred Owen. State Farm sought to recover these amounts from Owen's ERISA health plan. The ERISA plan was administered by Blue Care. In response to the complaint, Blue Care removed the case to federal court.
The dispute centered on whether ERISA preempted the state court action. The federal district court in Michigan concluded that State Farm's subrogation claim was not preempted by ERISA. State Farm's subrogation claim was based on the Michigan No-Fault Act. The court found that this statute "regulates" insurance under ERISA's savings clause (29 U.S.C. § 1144(b)(2)(A)). Further, the court found that the plan was not self-funded. As a result of these two factors, the court reasoned that State Farm's subrogation claim under the Michigan No-Fault Act was not preempted. Removal was thus improper, and the court remanded the case to state court. This opinion can be found at 2005 WL 2123730 (E.D. Mich. August 31, 2005).