Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

09/19/96 RANDY SCHOLTENS v. JEFFREY SCHNEIDER ET

September 19, 1996

RANDY SCHOLTENS, APPELLEE,
v.
JEFFREY SCHNEIDER ET AL. (ELECTRICAL INSURANCE TRUSTEES, APPELLANT).



Chief Justice Bilandic delivered the opinion of the court:

The opinion of the court was delivered by: Bilandic

CHIEF JUSTICE BILANDIC delivered the opinion of the court:

Electrical Insurance Trustees (Trustees) appeal from an appellate court judgment that affirmed a circuit court order holding the Trustees liable under the common fund doctrine for attorney fees and costs expended in recouping the Trustees' subrogation lien. The Trustees claim that section 514 of the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1144 (1982)) preempts application of the common fund doctrine to self-funded employee welfare benefit plans. We hold that ERISA does not preempt application of the common fund doctrine.

The plaintiff, Randy Scholtens, an electrician, was a participant in an employee benefit plan as a member of the Illinois Brotherhood of Electrical Workers, Local 134. It is undisputed that the plan is a welfare benefit plan within the meaning of ERISA (29 U.S.C. § 1001 et seq. (1982)). The appellant, Trustees, administers the plan pursuant to a trust agreement between Local 134 and the Electrical Contractor Association of the City of Chicago. The plan is a self-funded benefit plan which provides medical and disability benefits to union electrical workers.

On December 22, 1989, Scholtens was injured in a non-work-related automobile accident. The accident occurred when a vehicle in which Scholtens was a passenger was struck by another vehicle. Scholtens' injuries required hospitalization and surgery. Pursuant to the plan, the Trustees paid medical bills and disability benefits totalling $42,921.75 to Scholtens for those injuries.

Scholtens subsequently retained an attorney to pursue a cause of action for damages arising out of the automobile accident. Scholtens filed a lawsuit against the two drivers involved in the accident, Jeffrey Schneider and L.C. O'Banner. Prior to trial, Scholtens settled his claim against the two defendants for $100,000.

The Trustees never made an independent effort to seek reimbursement of the benefits paid to Scholtens from Schneider or O'Banner, nor did they attempt to intervene in Scholtens' pending litigation against those defendants. Following Scholtens' settlement of the lawsuit, however, the Trustees demanded full reimbursement of all of the benefits paid to Scholtens. The Trustees premised their demand on the subrogation clause contained in the benefit plan and a subrogation agreement that Scholtens signed on January 3, 1990, shortly after the accident.

The subrogation clause, which appears in the booklet explaining plan benefits to participants, provided:

"In some circumstances, such as an automobile accident, a third party may ultimately pay medical expenses for you or an enrolled dependent through an insurance settlement or otherwise. In that case, you must reimburse benefits paid by the Plans to the extent they are paid by the third party."

The subrogation agreement that Scholtens signed after his accident provided, in part:

"The undersigned hereby agrees, in consideration of money paid or to be paid by the Electrical Insurance Trustees to me as an employee under a Plan of benefits maintained by the Trustees, or to another on my behalf as such employee, because of loss or damage for which I or my dependent may have a cause of action against a third party who caused this loss or damage, the Trustees shall be subrogated, to the extent of such payment, to any and all recovery by me or my dependent, and such right shall be assigned to the Trustees by me as a condition of the payment of such money by the Trustees."

Faced with the demand for complete reimbursement by the Trustees, Scholtens' attorney filed a petition to adjudicate the Trustees' subrogation lien in the court where Scholtens' tort action was pending. The trial court applied the common fund doctrine and directed that the amount Scholtens owed to the Trustees would be reduced in accordance with the attorney fees and costs incurred in the litigation from $42,921.75 to $28,286.76. The trial court stated that it did not adjudicate the Trustees' rights under the terms of either the ERISA plan or the subrogation agreement, but simply applied the common fund doctrine to the facts before it.

The appellate court affirmed, rejecting the Trustees' claim that ERISA preempted the application of the common fund doctrine. We allowed the Trustees' petition for leave to appeal. 155 Ill. 2d R. 315. Amicus briefs were filed on behalf of both the appellant and the appellee.

ANALYSIS

The issue in this appeal is whether section 514 of ERISA (29 U.S.C. § 1144 (1982)) preempts application of the common fund doctrine to self-funded employee benefit plans. The question of whether a federal statute, such as ERISA, preempts a particular state law is one of congressional intent. Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724, 738, 85 L. Ed. 2d 728, 739, 105 S. Ct. 2380, 2388 (1985). Congress' intent to preempt state law may be explicitly stated in the statute's language or implicitly contained in its structure and purpose. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 95, 77 L. Ed. 2d 490, 500, 103 S. Ct. 2890, 2900 (1983). In analyzing claims of preemption, however, the Supreme Court has "never assumed lightly that Congress has derogated state regulation." New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645, 131 L. Ed. 2d 695, 704, 115 S. Ct. 1671, 1676 (1995). Instead, the Court instructs that the analysis should begin with the presumption that Congress did not intend to supplant state law. Travelers, 514 U.S. at , 131 L. Ed. 2d at 704, 115 S. Ct. at 1676.

In ascertaining congressional intent, the inquiry necessarily begins with an analysis of the language of the statute. Travelers, 514 U.S. at , 131 L. Ed. 2d at 705, 115 S. Ct. at 1677. The text of ERISA's preemption provision, section 514(a), is expansive. Section 514(a) provides, with some exceptions not relevant here, that:

"the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." (Emphasis added.) 29 U.S.C. § 1144(a) (1982).

A brief discussion of the manner in which the Supreme Court has interpreted this provision and the progression of law relating thereto is helpful in ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.