Thomas J. Knolmayer, M.D., Alaska Trauma and Acute Care Surgery, LLC. v. Charina McCollum and Jason McCollum, 520 P.3d 634

Background

Charina McCollum alleges a 2015 wrong-duct surgery; most medical costs (about $349,049.87) were paid by a Lowe’s self-funded employee health plan administered under ERISA. The Lowe’s Plan contract contains broad subrogation and 100% reimbursement provisions against any recovery by the insured.
McCollum sued Dr. Knolmayer for medical malpractice and sought to recover medical expenses paid by the Lowe’s Plan. Alaska law (AS 09.55.548(b)) generally reduces a claimant’s recoverable damages by amounts paid by collateral sources, except for “federal program[s] that by law must seek subrogation” and life-insurance death benefits.
The superior court initially held AS 09.55.548(b) applied but later, on clarification, concluded the Lowe’s ERISA plan fit the statute’s “federal program” exception and thus McCollum could recover amounts paid by the plan; Knolmayer petitioned for review.
The Alaska Supreme Court considered (1) whether an ERISA-governed, self-funded employer plan is a “federal program that by law must seek subrogation”; (2) whether AS 09.55.548(b) bars a plaintiff from recovering amounts paid by a contractually subrogated insurer; (3) whether an insurer can assign its subrogated claim to the plaintiff to avoid the statute; (4) whether ERISA preempts AS 09.55.548(b); and (5) whether AS 09.55.548(b) violates the Alaska Constitution.
The Court held: an ERISA-governed employer self-funded plan is not a “federal program” within the statutory exception; AS 09.55.548(b) bars plaintiffs from recovering amounts paid by such collateral sources; assignment cannot be used to evade the statutory limit; ERISA does not preempt AS 09.55.548(b); but AS 09.55.548(b) violates Alaska’s equal protection clause when applied to claimants whose insurers have contractual reimbursement rights.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether an ERISA-governed, self-funded employer health plan is a “federal program that by law must seek subrogation” under AS 09.55.548(b)	McCollum: ERISA plans should fall within the exception because federal law governs ERISA plans and may protect subrogation rights, so collateral payments by such plans should be exempt from offset.	Knolmayer: A privately funded/ administered ERISA plan is not a federal government program and its subrogation/reimbursement rights are contractual, not legal obligations.	Held: Not a federal program; the plain meaning and legislative history do not support including private ERISA plans in the exception.
Whether AS 09.55.548(b) permits a plaintiff to recover medical expenses paid by a subrogated insurer	McCollum: Statute shouldn’t produce a double deduction; legislative purpose was to avoid double recovery and protect injured claimants from bearing loss.	Knolmayer: Statute’s plain language bars claimants from recovering amounts already compensated by collateral sources.	Held: The statute’s text bars plaintiffs from recovering amounts paid by collateral sources (except the enumerated exceptions).
Whether an insurer can assign its subrogated claim to the plaintiff to circumvent AS 09.55.548(b)	McCollum: The Plan assigned or ratified its claim, so she can pursue the subrogated claim and recover those amounts.	Knolmayer: Assignment/ratification cannot be used to evade the statutory limitation; subrogation occurs at time of payment so the statute still governs recovery.	Held: Assignment does not allow a claimant to evade AS 09.55.548(b); the claim remains subject to the statutory limit.
Whether ERISA preempts application of AS 09.55.548(b) to ERISA plans	McCollum/Premera: The statute impairs ERISA plans’ contractual reimbursement rights and thus is preempted; it interferes with uniform plan administration.	Knolmayer: AS 09.55.548(b) does not regulate ERISA plans directly and preserves subrogation rights; at most it affects costs.	Held: No preemption — the statute does not refer to ERISA plans nor have an impermissible connection; it is a generally applicable law affecting costs, not one that binds plan design or administration.
Whether AS 09.55.548(b) violates Alaska equal protection when applied to claimants whose insurers have contractual reimbursement rights	McCollum: Statute yields harsh, unfair double-deduction results because insurers commonly contract for reimbursement; this discriminatorily disadvantages insured claimants.	Knolmayer: Any unfairness is the product of legislative policy and plaintiffs’ insurance choices; statute serves legitimate malpractice-insurance cost goals.	Held: Statute violates Alaska Constitution’s equal protection as applied to claimants whose collateral sources have contractual reimbursement rights — the classification is not fairly and substantially related to preventing double recovery.

Key Cases Cited

Gobeille v. Liberty Mut. Ins. Co., 577 U.S. 312 (U.S. 2016) (discusses ERISA’s comprehensive regulation and preemption principles).
FMC Corp. v. Holliday, 498 U.S. 52 (U.S. 1990) (ERISA preemption of state antisubrogation law; emphasized broad preemptive scope).
Rutledge v. Pharm. Care Mgmt. Ass’n, 141 S. Ct. 474 (U.S. 2020) (clarifies tests for when state laws "refer to" or have an "impermissible connection with" ERISA plans).
New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (U.S. 1995) (laws of general applicability that merely affect costs do not necessarily refer to ERISA plans).
In re September 11 Litigation, 649 F. Supp. 2d 171 (S.D.N.Y. 2009) (interpreting a New York collateral-source statute to preserve insurers’ subrogation rights).
Ruggles ex rel. Estate of Mayer v. Grow, 984 P.2d 509 (Alaska 1999) (describes subrogation: insurer is subrogated to insured’s claim upon payment).
Reid v. Williams, 964 P.2d 453 (Alaska 1998) (discussing AS 09.55.548(b)’s purpose as part of medical-malpractice reforms).