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October 25, 1983


The opinion of the court was delivered by: Roszkowski, District Judge.


Before the court are cross-motions for summary judgment filed by the plaintiff, Herbert E. Martz, and the defendant, The Union Labor Life Insurance Company. For the reasons stated herein, the plaintiff's motion for summary judgment is granted and the defendant's motion for summary judgment is denied.

Jurisdiction is invoked pursuant to 28 U.S.C. § 1332. Plaintiff is a resident of Illinois, and the defendant is a Maryland corporation authorized to do business in Illinois. The matter in controversy, exclusive of interest and costs, exceeds the sum of Ten Thousand Dollars ($10,000).

The undisputed facts are as follows.

The plaintiff, Herbert E. Martz, was a member of the Central Laborers Union. As a union member, plaintiff was insured by the Union Labor Life Insurance Company under a group policy. The policy covered medical and hospital bills up to a maximum of $100,000 per calendar year.

Termination or modification of the policy was provided for under the policy terms, which stated:


    On any premium due date the Policyholder may
  terminate this Policy or, subject to the Company's
  approval, may modify, amend or change the provisions,
  terms and conditions of this Policy. The Company's
  written consent shall be required to make any such
  modification, amendment or change, but the consent of
  any insured Person or any other Person referred to in
  this Policy shall not be required to effect such
  termination or any modification, amendment or change
  of this Policy.
  SUBROGATION. The Company shall be subrogated to the
  extent of any benefits paid under this Contract, to
  the proceeds of any settlement or judgment effected
  against a third party and resulting from the exercise
  of any rights of recovery which the Person may have
  against any person or organization. The Person
  claiming benefits under this Policy shall execute and
  deliver such instruments and take such other action
  as the Company may require to implement this
  provision. The Person shall do nothing to prejudice
  the rights given the Company by this provision
  without its consent.

The Trustees of the Central Laborers Union Welfare Fund met on October 28, 1980 to consider the subrogation provision. At this meeting the trustees reviewed and unanimously voted to amend the policy to include the subrogation provision. The Rider adopted stated that the subrogation provision was to be effective on and after October 28, 1980.

A little less than a month later, a freight train struck the plaintiff as he was driving his pick-up truck near Lena, Illinois. He suffered severe injuries, was hospitalized, and was treated by various doctors.

After the plaintiff was injured, two actions were taken regarding the insurance policy. First, on December 9, 1980, the trustees of the union's fund formally signed the subrogation rider which was approved in the October 28, 1980 meeting. Second, in mid-December, union members were given notice that the insurance policy had been modified through the addition of the subrogation provision. It is undisputed that the plaintiff received his notice on December 18, 1980.

After incurring medical and hospital costs, the plaintiff filed claims with the insurer. The insurer paid claims amounting to approximately $44,750.00. The insurer then requested the plaintiff to sign a subrogation agreement, authorizing them to proceed against the railroad involved in the accident. Plaintiff refused, contending that the insurer had no right to subrogation. Upon plaintiff's refusal, the insurer immediately ceased paying plaintiff's medical and hospital bills.

Plaintiff then commenced this action seeking a declaratory judgment that the subrogation provision has no binding legal effect upon him. Plaintiff raises four contentions: 1) that the subrogation provision was not adopted in accordance with the Master Plan's procedures for amending the policy; 2) the modification, if valid, did not take effect until December 9, 1980, the day the rider was signed; 3) prior notice of any change to the insured is required by law and plaintiff did not receive notice of the modification until December 18, 1980; and 4) The Rider's subrogation language had not been approved by the Illinois Department of Insurance and is therefore invalid.

Plaintiff seeks a declaration that the subrogation provision has no binding effect upon him and a ruling that the defendant must pay ...

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