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LAKE v. MARTEN

December 2, 1996

ESTATE OF NATHAN LAKE, a minor, Plaintiff/Counter-defendant,
v.
THERESA MARTEN, Administrator of the Newell Corporation Employee Welfare Benefit Plan, and NEWELL CORPORATION EMPLOYEE BENEFIT PLAN, Defendants/Counter-plaintiffs,



The opinion of the court was delivered by: REINHARD

 INTRODUCTION

 Nathan Lake, a minor, was injured in a shooting accident on September 6, 1993. Susan Lake, his guardian, filed suit on his behalf against the tortfeasor, which eventually led to a settlement of $ 150,000 payable to the minor's estate. Pursuant to Illinois law, the personal injury settlement was conditioned on the approval of the probate court of Winnebago County, Illinois. While the estate was proceeding in state court, defendants, Newell Corporation Employee Benefit Plan ("Plan") and Theresa Marten, the Plan's administrator, filed a claim for a lien against the settlement proceeds for medical benefits paid to Nathan Lake for his injuries. The estate filed a petition to adjudicate medical lien in state court, whereupon defendants removed the action to this court based on federal question jurisdiction in that the estate's petition raised a substantial question of federal law-- namely, a question under the Employee Retirement and Income Security Act ("ERISA"), 29 U.S.C. § 1144, et seq. Upon removal, defendants filed an answer to the petition and filed a counterclaim, which essentially asserts their claim for medical benefits. The estate then filed an amended petition to adjudicate medical lien-- Count I seeking to adjudicate the lien and find it unenforceable and Count II seeking to reduce defendants' lien by one-third, plus a pro-rata share of costs, based on the Illinois common fund doctrine. This court has jurisdiction pursuant to 28 U.S.C. § 1331, and venue is proper as the state court action was pending in this district and division. Pending before the court are cross-motions for summary judgment by plaintiff, Estate of Nathan Lake, and by defendants, the Plan and Marten. Because the motions have common issues of law, the court consolidates the motions for purposes of this opinion.

 FACTS

 The facts are not in dispute and are taken from the parties' statements of fact filed pursuant to Local General Rules 12M and 12N. Susan Lake is an employee of the Newell Company d/b/a Amerock Corporation. Susan Lake elected for group health coverage under the terms of the Plan for herself, effective January 1, 1989, and for Nathan Lake, effective March 1, 1991. The Plan is a self-funded employee welfare benefit plan within the meaning of 29 U.S.C. § 1002(1), and both Susan and Nathan were "covered persons" under the Plan.

 On September 6, 1993, Nathan Lake was injured in a shooting accident. As a result of that accident, Susan Lake (on Nathan Lake's behalf) asserted a claim for personal injuries against Daniel Syverson. Also, in connection with the same injuries alleged in that claim, the Plan paid medical benefits to Nathan Lake in the amount of $ 17,337.10. The Plan contains express provisions for subrogation and right of recovery. These provisions, in pertinent part, provide:

 
A third party may be liable or legally responsible for expenses incurred by a Covered Person for an Illness, a sickness, or a bodily injury.
 
Benefits may also be payable under this Booklet for such expenses. When this happens, the Company may, at its option:
 
take over the Covered Person's right to receive payment of the benefits from the third party.... [or]
 
recover from the Covered Person any benefits paid under the Booklet which the Covered Person is entitled to receive from the third party. The Company will have a first lien upon any recovery, whether by settlement, judgment or otherwise, that the Covered Person receives from:
 
- the third party; or
 
- the third party's insurer or guarantor; or
 
- the Covered Person's uninsured motorist insurance.
 
This lien will be for the amount of benefits paid by the Company for the treatment of the illness, sickness or bodily injury for which the third party is liable or ...

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