Rickard v. American National Property & Casualty Co.
173 A.3d 299
| Pa. Super. Ct. | 2017Background
- William Rickard was injured in a 2012 car accident; his ERISA-governed Welfare Fund paid ~$279,498 in medical/disability benefits. Rickard and his wife were in bankruptcy when the accident occurred and had counsel appointed to pursue the UIM claim; settlement required bankruptcy-court approval.
- ANPAC (insurer) issued a $250,000 underinsurance (UIM) draft in January 2014; bankruptcy court refused to approve the proposed settlement because the Welfare Fund asserted a superior subrogation interest. No settlement was consummated.
- Rickard died two days after the bankruptcy court’s memorandum denying settlement. After bankruptcy dismissal, Rickard’s administratrix (wife) filed a wrongful-death claim under 42 Pa.C.S. § 8301 and ANPAC issued a new $250,000 check payable to counsel and the administratrix.
- The administratrix petitioned the orphans’ court for distribution; the Welfare Fund intervened claiming its subrogation/reimbursement lien had priority and argued collateral estoppel based on the bankruptcy ruling.
- Orphans’ court denied distribution on collateral-estoppel and McCutchen grounds; the Superior Court (en banc) reversed, holding collateral estoppel inapplicable and that ERISA plan subrogation did not automatically attach to separate wrongful-death beneficiaries’ recovery.
Issues
| Issue | Plaintiff's Argument (Rickard) | Defendant's Argument (Welfare Fund) | Held |
|---|---|---|---|
| Whether bankruptcy court’s denial of settlement collaterally estops the orphans’ court from determining whether the ERISA plan’s lien attaches to a wrongful-death recovery | Bankruptcy court’s ruling did not address wrongful-death beneficiaries; collateral estoppel is inapplicable because the wrongful-death claim arose after bankruptcy and involves different issues/parties | The bankruptcy court decided the Plan’s subrogation priority over the insured’s UIM recovery; that determination is final and bars relitigation | Collateral estoppel does not apply: the wrongful-death issue was not identical, did not exist at time of bankruptcy adjudication, and beneficiaries lacked opportunity to litigate it |
| Whether a decedent’s contractual subrogation/reimbursement obligation under an ERISA plan transfers to statutory wrongful-death beneficiaries | Wrongful-death claims are separate and distinct from survival claims; subrogation rights tied to decedent do not automatically attach to beneficiaries’ separate statutory recovery | Plan terms (per McCutchen) control and can reach recoveries related to covered individual’s injury, so lien should attach to funds related to that injury | Held for Rickard: wrongful-death recovery belongs to beneficiaries and does not automatically carry over the decedent’s contractual subrogation; McCutchen does not control this post-death, statutory-beneficiary context |
| Whether U.S. Airways v. McCutchen requires enforcement of plan terms to reach administratrix’s UIM proceeds | McCutchen is factually different (decedent was living participant there); it does not require extending lien to separate wrongful-death beneficiaries | Plan relies on McCutchen to argue plan documents govern and create a prior lien on any sums recovered related to the covered individual | Court rejects McCutchen as controlling; distinguishes the wrongful-death context and finds McCutchen inapplicable |
| Whether Plan proved a valid subrogation lien against the administratrix’s recovery (concurrence’s narrower ground) | Administratrix: Plan failed to prove she was a covered individual or that its documents supported subrogation against her recovery; Plan did not carry its burden | Plan: its terms purport to subrogate “any sums recovered by the Covered Individual or their representative” and so applied | Concurrence: also would deny Plan’s claim because Plan failed to introduce controlling plan and policy documents into the record and thus failed to prove a valid lien |
Key Cases Cited
- U.S. Airways v. McCutchen, 569 U.S. 88 (2013) (ERISA-plan reimbursement/enforcement of plan terms against participant recoveries)
- Pisano v. Extendicare Homes, Inc., 77 A.3d 651 (Pa. Super. 2013) (wrongful-death and survival actions are distinct)
- Kiser v. Schulte, 648 A.2d 1 (Pa. 1994) (distinguishing wrongful-death versus survival claims and beneficiary rights)
- Gillette v. Wurst, 937 A.2d 430 (Pa. 2007) (surviving spouse cannot avoid valid subrogation interest in certain contexts)
- Estate of Shackelford v. [unnamed plan], 63 N.E.3d 584 (Ohio Ct. App. 2016) (refusing to extend ERISA lien for decedent’s lifetime medical payments to wrongful-death beneficiaries; require allocation between survival and wrongful-death shares)
- MedCath Inc. Emp. Health Care Plan v. Stratton, 79 F. Supp. 3d 1046 (D. Ariz. 2015) (ERISA plan’s reimbursement rights did not transfer to decedent’s children in wrongful-death action)