Paige M. Best v. Fairbanks North Star Borough, 493 P.3d 868

Background:

In April 2017 Paige Best was severely injured in an ATV collision and incurred about $191,000 in medical bills.
Best was a participant in the Fairbanks North Star Borough’s self-funded Health Benefit Plan; the plan excludes coverage to the extent a third party is liable but may advance payments if the participant signs a Subrogation and Reimbursement Agreement.
The plan contains a “100% First-Dollar Right of Recovery” and the subrogation agreement disclaims federal/state equitable defenses (including the made-whole and common fund doctrines).
Best refused to sign the agreement without reservation and sued seeking a declaration that the Borough could not condition payment of her medical bills on signing away equitable subrogation defenses; she later signed with stated reservations.
The superior court granted summary judgment for the Borough, finding the plan was a bargained-for, self-funded employee benefit (not insurance), the contractual subrogation clauses were clear and enforceable, the common fund doctrine did not apply, and the made-whole doctrine could be waived by contract.
The Alaska Supreme Court affirmed the superior court judgment.

Issues:

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is the Borough plan "insurance" subject to insurance-law interpretive rules?	Best: Plan functions like insurance and should be construed in insured's favor.	Borough: Plan is self-funded, bargained-for employee benefit, not insurance.	Held: Plan is a self-funded employee benefit, not insurance; ordinary contract rules apply.
Are the plan's subrogation and 100% first-dollar clauses clear and enforceable?	Best: Clauses improperly abrogate equitable defenses and are unconscionable/coercive.	Borough: Clauses are unambiguous contractual terms the participant agreed to (or could refuse).	Held: Clauses are clear and enforceable under ordinary contract interpretation.
Does the common fund doctrine bar enforcement of the waiver?	Best: Her litigation created a common fund entitling attorney fees and reducing subrogation.	Borough: No payments were advanced and no subrogation recovery existed; no common fund was created.	Held: No common fund existed here; doctrine not implicated.
Does the made-whole doctrine prevent contractual waiver of subrogation?	Best: Made-whole is an equitable protection that cannot be contractually waived as a matter of public policy.	Borough: Made-whole justification (protecting inadequately compensated insureds) does not apply to a self-funded employer plan; clause unambiguously disavows doctrine.	Held: Assuming made-whole exists in Alaska, it can be waived by clear contract language and does not apply to this self-funded plan; waiver valid.
Do due process, public policy, or economic duress arguments preclude summary judgment?	Best: Borough deprived her of due process and coerced waiver; public policy forbids such waivers; genuine fact issues exist on duress.	Borough: These issues were not adequately raised at trial; essential duress element (acceptance) is missing.	Held: Arguments waived or insufficiently developed; duress fails because Best never accepted terms.

Key Cases Cited

O'Donnell v. Johnson, 209 P.3d 128 (Alaska 2009) (discusses made-whole doctrine in context of subrogation)
McCarter v. Alaska Nat'l Ins. Co., 883 P.2d 986 (Alaska 1994) (upheld statutory reimbursement despite insured not yet being made whole)
Stordahl v. Gov't Emps. Ins. Co., 564 P.2d 63 (Alaska 1977) (insurance-contract interpretation principles)
United Servs. Auto. Ass'n v. Neary, 307 P.3d 907 (Alaska 2013) (ambiguous policy language construed for insured)
Edwards v. Alaska Pulp Corp., 920 P.2d 751 (Alaska 1996) (common fund doctrine articulated)
Ruggles ex rel. Estate of Mayer v. Grow, 984 P.2d 509 (Alaska 1999) (discussion of insurer instructions re subrogation)
Maynard v. State Farm Mut. Auto. Ins. Co., 902 P.2d 1328 (Alaska 1995) (distinguishing antisubrogation rule)