ORDER
In this civil action, the plaintiff, as chairman on behalf of the Upholsters International Union (UIU) Health & Welfare Fund (hereinafter “UIU” or “Fund”) seeks reimbursement, for amounts it paid to defendant Kalana Mathwig (“Kalana”) for medical expenses she incurred from the settlement proceeds recovered by Kalana from third parties. Because this case involves the interpretation of an employee benefit plan regulated by the Employee Retirement Income Security Act (ERISA), jurisdiction exists pursuant to 29 U.S.C. § 1132. Presently before the court are the parties’ cross motions for summary judgment.
Plaintiff seeks summary judgment that the amounts it paid be reimbursed from the settlement proceeds held by Kalana, and declaratory judgment that the plaintiff does not have an obligation to pay any further medical bills or other claims. Defendant Kalana also seeks summary judgment that plaintiff has no contractual right of subrogation against her. Further, Kalana contends that even if the court finds plaintiff has a contractual right of subrogation, she has not been “made whole” as that term is defined by Wisconsin common law of subrogation, thereby precluding plaintiff from seeking reimbursement before Kalana is fully reimbursed for her injuries. These cross motions are fully briefed with additional authorities submitted by the parties at the court’s direction after a conference call on the motions.
I. Background
When the parties have both moved for summary judgment, the facts are usually undisputed, as is true in this case. The following serves as a summary of the court’s findings of fact. This case arises out of injuries suffered by Kalana Mathwig in an auto accident which occurred on June 13,1989. Kala-na, then age four, was a passenger in the back of a pick-up truck owned and operated by her grandfather, Douglas D. Meyer. Ka-lana’s mother, Sunday Dittmer, was also a passenger in the back of the truck. The Meyer truck was struck by a car operated by Timothy Beamon. Kalana and her mother Sunday were thrown from the truck. Kalana was severely injured and her mother was killed. Kalana was treated on an inpatient basis first at Children’s Hospital of Wisconsin in Milwaukee for about six weeks, then at Mercy Medical Center in Oshkosh, Wisconsin for about five weeks. Prior to the accident, Sunday Dittmer was married to James Ditt-mer and Kalana had been living with them. Kalana’s natural father is the defendant Derek Dahlke.
UIU Health & Welfare Fund is an employee welfare benefit plan which provides compensation for health expenses to its members. UIU is regulated by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1002 et seq. Plaintiff John H. Serembus is the chairman of UIU. UIU is self-funded, in that it pays benefits from its own funds rather than contracting with a third party insurance company to pay the benefits. Kalana’s stepfather, James Ditt-mer, was a member of the Fund at the time of the accident by virtue of his employment with Duo-Safety Ladder in Oshkosh, which participates in the Fund.
After the accident, a claim was made to the Fund for payment of Kalana’s medical expenses on the grounds that Kalana was a dependent stepdaughter of James Dittmer, and therefore, covered under the plan. Before benefits were paid, James Dittmer was required to sign an assignment and subrogation agreement pursuant to the Plan’s subro-gation provision. That assignment and' sub-rogation agreement contained the following language:
The trustees of the UIU Health and Welfare Fund have established the following subrogation policy:
If a covered member incurs any medical expense or loss time expense resulting *1417 from bodily injury or sickness for which he or she may have any right of recovery against a third party, other than an insurer of the covered member, any benefits paid by the fund for such expense shall be made on the condition that the fund will be reimbursed therefore by the covered member and his or her dependents to the extent of the amount received by the covered member from such third party by way of settlement or in satisfaction for any judgment. As security for the fund’s rights to such reimbursement, the fund shall be subro-gated to all rights of recovery of the covered member and his or her dependents against such third party to the extent of any benefit paid by the fund with respect to such expense. The covered member and his or her dependents shall do whatever is necessary fully to secure and to protect, and nothing to prejudice, the rights of the fund to such subrogation.
Assignment and Subrogation Agreement
Whereas, the undersigned (hereinafter called “claimant”) may be or has been furnished benefits in connection with the above claim under a benefit plan with the UIU Health and Welfare Fund (hereinafter called “the fund”) and the cost of such benefits may be recovered by the claimant from a party liable to claimant, other than an insurer of claimant.
Now therefore, claimant intending to be legally bound, agrees to assign and does hereby assign to the fund any amounts recovered from any party, other than an insurer of claimant, to the extent of the benefits furnished or to be furnished by the fund to or on behalf of claimant. Claimant also agrees that) when claimant shall have any rights to recover from any person or persons, other than an insurer of claimant, for benefits furnished under the agreement, the fund shall be subrogated to such rights to the extent of the benefits so furnished.
Claimant agrees to reimburse the UIU Health and Welfare Fund from any recovery he or she obtains from a third party to the extent of any benefits the fund pays on account of the accident giving rise to this claim. Claimant shall immediately inform the fund of any legal action or settlement which arises subsequent to the payment of benefits hereunder. In addition, claimant shall do nothing to prejudice such rights of the fund.
Claimant authorizes the fund to claim and receive any amounts hereby assigned or to which the fund is subrogated hereby, directly from any party liable to the claimant and hereby directs such party to make such payment directly to the fund upon presentation of a permanent copy of this assignment and right of subrogation. Claimant warrants that no settlement has been made by the undersigned with any person, or corporation against whom a claim may lie, and no release has been given to anyone responsible for the loss, and that no such settlement will be made nor release given by the undersigned without prior notice and the written consent of the said UIU Health and Welfare Fund.
The UIU Fund Plan Document includes the following language pertinent to the question of subrogation:
8.1 Upon payment under this plan and as security for the plan’s right to reimbursement to the extent of its payments, the plan will be subrogated to the covered person’s rights of recovery against any third party causing the injury or sickness for which the claim is made. The covered person may not act to prejudice the rights of the plan and may be asked to sign a subrogation agreement before the release of benefits. In the event of any payment under this plan on behalf of an employee or a dependent, the plan shall be subrogat-ed to all the rights of recovery therefor against any person or organization. The employee and/or dependent shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights, including but not limited to the right of the plan to sue in the. name of the employee and/or dependent. The employee and/or dependent shall do nothing after loss to prejudice such rights. The receipt of any payment by any employee or depen *1418 dent shall be specifically conditioned upon an agreement by the employee or dependent acknowledging the subrogation clause, its terms and conditions and the agreement of the employee and/or dependent to repay any sums expended in full. 8.2 The plan shall be entitled to reimbursement from the first dollars to be paid to or received by an employee or dependent from a settlement or judgment from a third party (emphasis added).
On November 1, 1989, James Dittmer signed the Assignment and Subrogation Agreement form provided by UIU wherein he, as the claimant, agreed to assign to the Fund any amounts recovered from any party, other than an insurer of the claimant, to the extent of the benefits furnished by the Fund to or on behalf of the claimant, and also agreed that the Fund would be subrogated to such rights to the extent of the benefits so furnished. After James Dittmer signed the agreement, the Fund paid a total of $78,-381.36 as benefits on behalf of Kalana. At the time of the accident the Fund provided coverage for stepchildren of plan members. As such, Kalana was covered under the plan and the expenses paid by UIU were covered expenses under the plan.
In 1990, proceedings were begun for settlement of Kalana’s claims arising from the accident. A settlement agreement was reached and its terms approved by the Circuit Court for Winnebago County, Wisconsin, on January 26, 1990. The approved settlement terms were as follows: Heritage Mutual Insurance Co. (“Heritage”) paid $100,-000.00 under its liability' policy issued to Douglas Meyer for the liability of Douglas Meyer to Kalana; Heritage paid $100,000.00 under its uninsured motorist policy issued to Douglas Meyer; and the Milwaukee Mutual Insurance Co. paid to Kalana $25,000.00, the limits bn its uninsured motorist policy issued to James Dittmer. The total settlement Ka-lana received was $225,000.00; net recovery was about $167,000.00 after payment of attorneys’ fees and expenses. A wrongful death claim was also brought by James Dittmer as the survivor of Sunday Dittmer. Pursuant to statute, Kalana received a portion of this settlement, approximately $32,000.00.
There are presently outstanding more than $70,000.00 in unpaid medical expenses for treatment of Kalana’s injuries resulting from the accident.
II. Summary Judgment Standard
Summary judgment is appropriate whenever the “pleadings, depositions, answers to interrogatories and admissions on file, together with any affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). A material fact is one that might affect the outcome of the case under applicable law.
Anderson v. Liberty Lobby, Inc.,
The moving party has the initial burden of showing that no material facts are in dispute.
Adickes v. S.H. Kress & Co.,
The court must then examine the evidence in the light most favorable to the
*1419
nonmoving party, giving that party the benefit of every reasonable inference that can be drawn from those facts.
Smart v. State Farm Insurance Co.,
III. Analysis
A. Contractual Subrogation
Plaintiff seeks summary judgment that the amounts it paid for Kalana’s treatment be reimbursed from the settlement proceeds held by Kalana Mathwig. It is plaintiffs contention that the language of the plan document and the subrogation agreement which Mr. Dittmer signed clearly provides for reimbursement. The defendant contends that plaintiff does not have any contractual right to subrogation.
Essentially, the Plan Document and the Assignment and Subrogation Agreement state that UIU would not pay any benefits to a covered person for injuries caused by a third person unless the covered person agreed in writing to reimburse the fund if money was received from or on behalf of the responsible third party.
The issues to be determined are whether the terms of the plan document and subrogation agreement in question provide UIU with any contractual right of subrogation against Kalana and whether said language is binding as to Kalana as the dependent of Mr. Ditt-mer and a third-party beneficiary of the fund. Plaintiff argues that the plan and sub-rogation agreement language is clear that they have a right to subrogation. Defendant Kalana does not dispute the language of the plan document or subrogation agreement. Instead, she relies on the fact that
she
never signed any subrogation agreement, arguing that she is not bound by the agreement, and relying on
Wahl v. Northern Telecom Inc.,
In Wahl, Jennifer Wahl, a minor, sustained physical injuries in an auto accident. As part of a prior marital dissolution, her noncustodial father had been ordered to pay “any reasonable medical and optical expenses incurred for the care and treatment of the minor children of the parties.” Jennifer’s father, pursuant to the terms of the above noted order, had included Jennifer as a dependent beneficiary under his employer’s (Northern Telecom, .Inc., “Northern”) Group Benefits Plan for Employees. That plan was self-insured and subject to ERISA.
After Jennifer was injured, the plan paid in excess of $42,000 in medical expenses incurred on her behalf. The plan then sought to share in the $100,000 in proceeds recovered from the responsible party’s liability carrier, State Farm. A declaratory action was filed.on Jennifer’s behalf to determine whether Northern had any subrogation rights to the State Farm funds and Northern filed a counterclaim to obtain said subrogation rights.
The court found that Northern’s plan stated that it would not pay any benefits to a covered person for injuries caused by a third party unless the covered person agreed in writing to reimburse the plan if money was. received from, or on behalf of, the responsible third party.
Wahl,
The court found nothing in the agreement which stated:
1. That it was between Northern and Jennifer, or
2. That it was signed by Mr. Wahl on Jennifer’s behalf or,
*1420 3. That Mr. Wahl promise(d) to pay Northern if Jennifer received future payments.
Id. at 242-43.
The court held in favor of Jennifer, finding her not to be contractually liable to Northern. Id. at 243. In addition, the court found that Jennifer was not liable as a third-party beneficiary because neither the plan nor agreement between Mr. Wahl and Northern granted Northern subrogation rights to money received by Jennifer. Id.
It is Kalana’s contention that she, like Jennifer in the Wahl case, should not be found contractually liable to the Fund for reimbursement. She asserts that the language of the subrogation agreement signed by her stepfather; Mr. Dittmer, contains no language which demonstrates that the agreement is between UIU and Kalana. She argues that the agreement was between Mr. Dittmer and UIU, not Kalana and UIU. Mr. Dittmer signed the' agreement on the line labeled “claimant.” She claims that there is nothing in this agreement which states that it was between UIU and Kalana, or that it was signed by Mr. Dittmer on Kalana’s behalf, or that Mr. Dittmer promised to pay UIU if Kalana received future payments. Therefore, following the rationale of Wahl, the court should find in favor of Kalana.
Unlike the situation in Wahl, the facts of this case clearly support a finding that UIU has a contractual right to subrogation against Kalana as the plaintiff urges. In the instant case, the language of the plan document is unmistaken, it clearly sets forth that UIU shall be subrogated to the rights of the covered person. Furthermore, it states “[t]he plan shall be entitled to reimbursement from the first dollars to be paid to or received by an employee or dependent from a settlement or judgment from a third party (emphasis added). UIU Fund Plan Document, § 8.2. Such reimbursement language was notably absent in Wahl. Rather, the only written agreement regarding subrogation rights in Wahl was the subrogation agreement signed by Jennifer’s father. It is true, as defendant points out, that here Mr. Dittmer signed the subrogation agreement and not Kalana, like the Wahl case where Mr. Wahl signed a subrogation agreement but not his daughter, Jennifer. However, the court cannot ignore the clear language of the contract between UIU and Mr. Dittmer. The plan is entitled to reimbursement from the settlement proceeds received by Kalana, Mr. Dittmer’s dependent. Reading the Assignment and Sub-rogation Agreement within the context of the UIU' Fund Plan Document, which requires that such an agreement be signed prior to receipt of benefits, provides an ample basis for finding Kalana contractually liable for reimbursement to the UIU Fund.
B. Preemption
Having found that plaintiff has a contractual right of subrogation to Kalana’s settlement proceeds, the court must next look to apply the appropriate law to determine what, if any, federal limitations should exist on a self-insured employee benefit plan’s right to subrogation against an insured. It is well established that state subrogation laws “relaten to” employee benefit plans and are preempted by ERISA. 29 U.S.C. § 1144(a) (ERISA preempts state laws that “relate to any employee benefit plan);
FMC Corp. v. Holliday,
C. Federal Common Law
Defendant urges this court to adopt Wisconsin common law as the federal common law, citing
Sargeant v. Local 478 Health Benefits & Ins. Fund,
ERISA does not expressly address the enforceability of subrogation provisions; therefore, this court may fashion federal common law to protect the interests of plan participants.
Firestone Tire & Rubber Co. v. Bruch,
Although the Court of Appeals for the Seventh Circuit has not ruled on the question directly, the court agrees with the reasoning in
Cutting v. Jerome Foods, Inc.,
In Cutting, plaintiffs sought to have the defendant pay their medical bills, but defendant refused until plaintiff executed a reimbursement agreement pursuant to the subro-gation clause in the defendant’s Health Care Plan. Cutting, at *1. Defendant moved for summary judgment on the ground that its interpretation of the Plan’s subrogation clause was valid and enforceable under federal law. Plaintiff opposed the motion on the ground that the common law of subrogation, the “make-whole” doctrine precludes defendant from seeking reimbursement before plaintiffs are fully reimbursed for their injuries. Id. In determining that the federal common law should not be tailored after the Wisconsin common law, the court examined the Supreme Court’s decision in FMC Corp.:
In FMC Corp., the Supreme Court held that ERISA exempted self-funded'plans from a Pennsylvania statute that prohibited insurers and employee benefit plans from exercising their subrogation fights. Relying on ERISA’s goals of producing uniformity and eliminating state interference in self-funded employee benefit plans, the Court reasoned that “[application of differing state subrogation laws to plans would therefore frustrate plan administrators’ continuing obligation to calculate uniform benefits nationwide.” FMC Corp.,498 U.S. at 60-62 ,111 S.Ct. at 409 . The Court did not discuss whether a federal common law might be created to qualify a Plan’s subrogation rights, but its reasoning appears to preclude any federal common law that would alter the terms of a written employee benefit plan. Modeling a federal common law upon state subrogation law would hamper the “calculation of uniform benefits nationwide,” since the states do not treat subrogation clauses identically, and a plan’s subrogation provision would be enforceable in one federál court but not another.
Cutting, at *12-13.
. Defendant directs the court attention to
Wahl v. Northern Telecom, Inc.,
In
Sargeant,
the court characterized sub-rogation as not being a “core concern” of ERISA, and stated that national uniformity was not necessary in “non-core” ERISA matters.
Sargeant,
As the plaintiff aptly points out, any implication which
Wahl
might have had has been undermined by the Supreme Court’s rationale in
FMC Corp..
In ruling that state law would not be adopted as federal common law, the Court concluded that, “[t]o require plan providers to design their programs in an environment of different State regulations would complicate the administration of nationwide plans, producing inefficiencies that employers might offset with decreased benefits.”
FMC Corp.,
The policy considerations of ERISA weigh against creating a federal common law “make-whole” doctrine. As the court in Cutting explained:
[b]ecause ERISA’s primary method of protecting beneficiaries is to ensure that they receive promised benefits, there is no need to fashion an equitable remedy under ERISA “where there is no violation of ERISA under the written terms of the plan.” Creating a federal common law “make-whole” rule of subrogation would substantially change the design of the plaintiff Plan, and would have the effect of allowing state law to govern in an area in which state law is preempted, (citation omitted).
Cutting, at *16-17.
Moreover, other courts have reached a similar conclusion.
See Provident Life & Accident Ins. Co. v. Linthicum,
In sum, if each state were permitted to apply its own law relating to subrogation as the federal common law, the congressional intent of ERISA would surely be subverted. ERISA’s expansive preemptive provision would thereby be rendered meaningless. If Congress had intended to prohibit subrogation in the context of ERISA plans, it could have done so by including an anti-subrogation clause in the statute. Because ERISA does not expressly prohibit subrogation, the court must assume Congress intended to allow it. The court, therefore, holds that the terms of the Plan document and the provisions of its subrogation agreement, as construed above, granting plaintiff a contractual right of subrogation, control the rights of the parties.
D. Interpretation of Plaintiffs Subro-gation Right
The court has found that the UIU Health & Welfare Fund Plan clearly provides plaintiff with a right of subrogation against defendant. Defendant has maintained that she has not been “made whole,” according to Wisconsin common law, and therefore, equitable considerations weigh in her favor, and plaintiff is not entitled to any recovery. For the reasons set forth supra, the court has reasoned that the Wisconsin common law “make whole” doctrine should not be applied. Rather, the court will give full effect to the language of the plan and provisions of the subrogation agreement.
Defendant has asked the court for a credit for attorney fees in the collection of the underlying settlement'in the event that we find plaintiff is entitled to summary judgment. Generally, under the American Rule, a person bears the expenses of his own case.
See Mars Corp. v. Continental Bank,
N.A,
Declaratory Relief
Plaintiff also asks for a declaratory judgment that it does not have an obligation to pay any further medical expenses or other benefits resulting from injuries sustained by Kalana in the automobile accident of June 13, 1989. Defendant Kalana has stated that no claim for additional benefits has been made nor will she make such a claim in the future. Therefore, the court will grant plaintiff its requested declaratory relief. Accordingly,
IT IS ORDERED that defendant Kalana Mathwig’s motion for summary judgment be and the same is hereby DENIED; and
IT IS FURTHER ORDERED that plaintiffs motion for summary judgment be and the same is hereby GRANTED; and
IT IS FURTHER ORDERED that defendants Kalana Mathwig and Valley Trust Company, as the Trustee of the Kalana Ma-thwig Irrevocable Trust, U.A., pay plaintiff, the UIU Health & Welfare Fund, the sum of $52,220.91 for reimbursement of medical expenses incurred by Kalana Mathwig; and
IT IS ALSO ORDERED that plaintiff shall have no obligation to pay any further expenses resulting from injuries sustained by Kalana Mathwig in the automobile accident of June 13, 1989.
The Clerk is directed to enter judgment accordingly.
Notes
. The UIU Health and Welfare Fund Assignment and Subrogation Agreement states that the claimant assigns to the fund any amounts recovered from any party, other than the insurer of the claimant. Therefore, defendant argues, the sub-rogation agreement is unenforceable against money recovered from uninsured motorist carriers. Defendant directs the court’s attention to
Employers Health Insurance v. General Casualty Company of Wisconsin,
Under the language of the plan and subrogation agreement, together with Wisconsin common law of subrogation, defendant contends that of the total settlement of $225,000.00 which Ka-lana received, only $100,000.00, coming from a liability insurer of another, is available to accommodate plaintiff's subrogation right. This assertion is incorrect. If the terms of the subrogation agreement were construed according to Wisconsin common law, plaintiff could recover from “any party, other than the insurer of the claimant.” The only recovery Kalana received from the insurer of the claimant, Mr. Dittmer, was $25,000.00 paid by Milwaukee Mutual Insurance Co., the limits on its uninsured motorists policy. The remaining $200,000.00 ($100,000.00 each for liability and uninsured motorists coverage) was paid by Heritage Mutual Insurance Co., the insurer of Douglas Meyer. Douglas Meyer was not a claimant under the UIU Plan and subrogation agreement. Therefore, $200,000.00 of the settlement proceeds is available to accommodate plaintiffs subrogation right.
In any event, whether $100,000.00 or $200,-000.00 is available to plaintiff is simply irrelevant, since either amount is sufficient to accommodate plaintiff's subrogation right in the amount of $52,220.91.