Opposition Brief — Travitz v. Northeast Department ILGWU Health & Welfare Fund

- Biprems Court, US

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No. 93-1695 | MAX 9 1994

OFFICE OF THE CLER

IN THE _Srke © ie Cae |

SUPREME COURT OF THE UNITED STATES

October Term, 1993

DOROTHY E. TRAVITZ,

Petitioner,

U.

NORTHEAST DEPARTMENT ILGWU

HEALTH AND WELFARE FUND

AND

ILGWU EASTERN STATES

HEALTH AND WELFARE FUND,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF IN OPPOSITION TO PETITION FOR

WRIT OF CERTIORARI

Charles W. Johnston*

HANDLER, GERBER, JOHNSTON &

ARONSON

Suite 100, 150 Corporate Center Dr.

Post Office Box 98

Camp Hill, PA 17001-0098

(717) 975-5500

Attorneys for Respondent

“Counsel of Record

PACKARD PRESS / LEGAL DIVISION, 1617 JFK BOULEVARD, PHILA, PA 19103 (215) 563-9000

ore 5 an

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5 \

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QUESTION PRESENTED

Whether ERISA’s preemption provisions, as inter-

preted by this Court in FMC Corp. v. Holliday and

Metropolitan Life Insurance Co. v. Massachusetts, pro-

hibit states from applying state insurance regulations to

self-funded employee welfare benefit plans?

es

TABLE OF CONTENTS

Page

QUES ERIS FEIN EE 6 cc cccivcveccceseuses i

DEAE Bee MEAT osc ecisetvevceversioess 1

STATEMENT OF THE CASE ......cccccccccece 2

SUMMARY OF ARGUMENT...............-.4.-- 8

REASONS FOR DENYING THE WRIT ......... 8

CPV AADC oe cer csavees vaeeureeueetse buat 16

ll

TABLE OF AUTHORITIES

Cases: Page

Autoclub Insurance Association v. Health and Wel-

fare Plans, Inc., 961 F.2d 588 (6th Cir. 1992). 9

FMC Corp. v. Holliday, 498 U.S. 52 (1990) ... 5, 8, 9,

11, 14, 15

Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1

tte bas. 06 Wee cb eb eeece baeeee 11

Hampton Industries v. Sparrow, 981 F.2d 726 (4th

EES I ee eae 9

Lincoln Mutual Casualty Co. v. Lectron Products,

Inc. Employee Health Benefit Plan, 970 F.2d

ees See oc cccebuecs ances 9

Metropolitan Life Insurance Co. v. Massachusetts,

Ge Se Ee SEED 0.0 ce eccccececss 8, 9, 10, 12

PM Group Life Insurance v. Western Growers As-

surance Trust, 953 F.2d 543 (9th Cir. 1992).. 9

Provident Life and Accident Insurance Co. v. Lin-

thicum, 930 F.2d 14 (8th Cir. 1991) ......... 9

Shaw v. Delta Airlines, Inc., 463 U.S. 85 (1983). 10, 12

Thompson v. Talquin Building Products Co., 928

eee OEY COUT Gs BED ccc cccccccccceccces 9

ili

No. 93-1695

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1993

DOROTHY E. TRAVITZ,

Petitioner,

Vv.

NORTHEAST DEPARTMENT ILGWU

HEALTH AND WELFARE FUND

AND

ILGWU EASTERN STATES

HEALTH AND WELFARE FUND,

Respondents.

BRIEF IN OPPOSITION TO PETITION FOR

WRIT OF CERTIORARI

STATUTES INVOLVED

In addition to the statute cited in the Petition for

Writ of Certiorari, Section 1719(b) of the Pennsylvania

Motor Vehicle Financial Responsibility Law (“Pa. Law”)

provides:

“(b) Definition.—As used in this section

the term ‘program, group contract or other

arrangement’ includes, but is not limited to,

benefits payable by a hospital plan corporation

or a professional health service corporation

subject to 40 Pa.C.S. Ch. 61 (relating to hospi-

tal plan corporations) or 63 (relating to profes-

sional health services plan corporations).”

1

=F

2

STATEMENT OF THE CASE

Prior to January 1, 1990, the Fund was known as the

Northeast Department ILGWU Health and Welfare

Fund. As of January 1, 1990, the Northeast Department

Fund was merged into the ILGWU Eastern States

Health and Welfare Fund (hereinafter collectively “the

Fund”). The Fund is an employee welfare benefit plan

existing for the purpose of providing hospital, medical/

surgical, major medical, weekly disability, dues-made-

good, preventative health care, eyeglass, and vacation

benefits to employees of contributing employers covered

by collective bargaining agreements. Benefits distrib-

uted by the Fund are funded by employer contributions

and by investment income earned on employer contri-

butions.

The Fund is a self-insured, multiemployer plan to

which thousands of employers, primarily in the ladies’

apparel industry, make contributions pursuant to collec-

tive bargaining agreements between such employers

and the International Ladies’ Garment Workers’ Union.

Dorothy E. Travitz was, on or about October 18, 1990, a

participant of the Fund.

The fiscal integrity of the Fund is maintained

through, among other ways, excluding from coverage

certain types of claims for benefits. The Fund contains

various exclusions from coverage including, among

others, an exclusion pertaining to conditions for which

costs of treatment or losses are recoverable through legal

action or claims settlement from another party or insur-

ance company.

The Fund provides as follows:

“General Exclusions and Limitations

“The information in this section applies to

all of the benefits that the Fund offers. It is not

repeated in each specific section, but it applies

anyway.

Exclusions”

* * *

3

“(S) You can not receive benefits/coverage

for a condition if the costs of treating that

condition are recoverable through legal action

or claim settlement from another party or in-

surance company.”

The Fund further provides for a temporary advance

of benefits pending litigation or claims settlement with

respect to injuries or illnesses otherwise excluded from

coverage under the Fund, in order to assist the partici-

pant during delays in recovering the payment for those

excluded conditions from a third party. The Fund terms

require that in the event of recovery from a third party,

the Fund must be reimbursed to the full extent of

advanced benefits, without a deduction for attorneys’

fees incurred by the participant in third-party litigation

related to the excluded conditions.

The Fund provided as follows:

“Advance of Benefits

“If you have a right to recover payment for

an injury or illness from another source, there

may be delays because of the time it takes to

process the claim or because of lawsuits. If this

happens, the Fund may be able to help you

temporarily by paying benefits in advance. If

this is done, you must sign a legal document

stating that the Fund will be repaid in full, from

any settlement you receive. The Fund must be

repaid to the full extent (without any deduction

of attorney fees, court costs, or arbitration

costs) of the benefits it provided. The Fund

may also require legal assurances that the party

which is liable to you will honor your claim and

that the money due to you will be repaid

directly to the Fund. In all cases, only the

Trustees of the Fund can decide whether an

4

advance of benefits is appropriate. Each case

will be decided on its own merits.

“If you are denied benefits from the Fund

because the Fund or its agents believe that

payment is recoverable from another source,

you may appeal that decision directly to the

Board of Trustees. See page 49 for information

on the procedure for this type of appeal.”

Subsequent to October 18, 1990, the Fund received

numerous claims for benefits from Dorothy Travitz

relating to treatment or services for injuries resulting

from the use of a motor vehicle on October 18, 1990.

The Fund initially began to process the payment of

claims submitted by Travitz pursuant to the Advance of

Benefits provisions of the Plan. The Fund paid a total of

$2,924.78 of benefits for Travitz relating to the treat-

ment or services for in juries resulting from the October

18, 1990 motor vehicle accident.

pet re to October 18, 1990, the Fund sought

assurances from Travitz and her attorney that, if the

Fund was to advance benefits, the participant and

counsel would recognize and protect the Fund’s interest

in the benefits advanced to participant. By letter dated

April 12, 1991, counsel for the Fund wrote to counsel for

Travitz advising him of the Fund’s position and request-

ing that Travitz execute an Assignment of Claim form

enclosed in the letter. Despite the request by Fund and

Fund’s counsel for participant to execute the Assign-

ment of Claim, participant refused to executed the form.

Subsequent to October 18, 1990, Travitz submitted to

the Fund bills for treatment or services resulting from

injuries sustained by her in the October 18, 1990 motor

vehicle accident requesting that the bills be paid by the

Fund. In view of Travitz’s refusal to execute the Assign-

ment of Claim, the Fund ceased advancing benefits and

did not pay any additional bills submitted by Travitz.

Subsequent to October 18, 1990, Travitz asserted

tort claims against certain tortfeasors alleging that the

5

motor vehicle accident occurring on October 18, 1990,

and the resulting physical and personal injuries to

Travitz, arose out of certain negligent acts or omissions

of the tortfeasors.

By letters dated April 12, 1991, June 3, 1992, June

17, 1992, and July 10, 1992, counsel for the Fund wrote

to counsel for Travitz detailing the Fund’s position with

respect to: (1) the Fund’s exclusionary provisions relat-

ing to treatment or services for injuries resulting from

recoveries through legal action or claim settlement from

another party or insurance company; (2) the Fund’s

advance of benefits provisions; (3) the Fund’s federal

common law right of subrogation; and (4) that the

Employee Retirement Income Security Act preempts

the application of the Pennsylvania Motor Vehicle Fi-

nancial Responsibility Law to the Fund, since it is a

self-insured employee welfare benefit plan, as held by

this Court in FMC Corp. v. Holliday, 498 U.S. 52 (1990).

Prior to the settlement of Travitz’s tort claim, the

June 3, 1992 letter detailed at length the position of the

Fund with respect to the Fund’s interpretation and

application of the Fund’s exclusion provisions. Counsel

for Travitz was advised as follows:

“The Fund is a self-insured employee wel-

fare benefit fund which does not purchase an

insurance policy from any insurance company

in order to satisfy its obligations to its partici-

pants. In FMC Corporation v. Holliday, __

U.S. ___, 111 S.Ct. 403, 107 L.Ed. 2d 356

(1990), the Supreme Court held that ERISA

preempts the application of Pennsylvania state

law to self-funded employee benefit plans. Al-

though state laws directly regulating insurance

are not preempted under ERISA, the Act also

provides that self-funded employee benefit

plans may not be deemed to be insurance

companies or engaged in the business of insur-

ance for purposes of such state laws. Thus the

6

Fund, being self-insured, is not subject to the

Pennsylvania automobile insurance laws.

“Accordingly, since Pennsylvania insur-

ance law is preempted by ERISA with respect

to the Fund, the rules under the Fund’s plan

take primary effect. A copy of the general

exclusions and limitations language found in

the Fund’s Summary Plan Description is en-

closed for your review. Paragraph 3 excludes all

Fund benefits ‘for treatment or services for

injuries resulting from the maintenance or use

of a motor vehicle if such treatment or service is

paid under a plan or policy of motor vehicle

insurance.’ Therefore, the Fund is not respon-

sible for paying benefits that would be payable

to Mrs. Travitz under the auto insurance

coverage.

“Moreover — and more importantly — under

Paragraph 5, Mrs. Travitz ‘cannot receive be-

nefits/coverage for a condition if the costs of

treating the condition are recoverable through

legal action or claim settlement from another

party or insurance company. Thus, benefits

are not payable to your client for medical treat-

ment arising out of the automobile accident on

October 18, 1990.”

On June 17, 1992, Travitz entered into a Settlement

Agreement and Release with the tortfeasors and their

insurer. By virtue of the Release, Travitz received the

following payments, or will receive the following pay-

ments:

2. Payments

In consideration of the release set forth

above, the Insurer on behalf of the Defendants

agrees to pay to the individual(s) named below

(“Payee(s)”) the sums outlined below:

(A) Immediate cash: $125,000.00

7

(B) The Periodic Payments shall be

deemed paid when mailed by First Class Mail

on the dates specified as follows:

— $1,030 per month for life with 15 years

guaranteed, compounding 3% annually,

commencing 4-20-1992.

— $10,000 payable on 4-20-1997, guaranteed.

— $15,000 payable on 4-20-2002, guaranteed.

— $20,000 payable on 4-20-2007, guaranteed.

— $30,000 payable on 4-20-2013, guaranteed.

Notwithstanding the significant recovery of settlement

proceeds by Travitz, the Fund was never notified of the

recovery. Furthermore, no portion of the advanced ben-

efits were reimbursed to the Fund.

Subsequent to June 17, 1992, Travitz initiated suit

against the Fund in the United States District Court for

the Middle District of Pennsylvania seeking payment of

all medical bills that she incurred arising out of the

October 18, 1990 automobile accident. Travitz asserted

that Section 1722 of the Pa. Law precluded her from

recovering the cost of the medical benefits from the

tortfeasor since the benefits were payable by the Fund,

regardless of the coverage exclusion of the Fund. The

Fund responded by arguing that Exclusion 5 was appli-

cable to Travitz, since Section 1722 of the Pa. Law was

preempted by ERISA, and that Travitz therefore should

have sought recovery from the tortfeasor for the medical

bills.

Both Travitz and the Fund moved for summary

judgment. The District Court found that there were no

disputed material facts, granted the Fund’s Motion, and

denied Travitz’s Motion. The Court of Appeals affirmed

the District Court’s decision, holding that the application

of Section 1722 of the Pa. Law to the Fund was

preempted by ERISA since Section 1722 attempts to

shift liability for medical and health care benefits to the

Fund.

8

SUMMARY OF ARGUMENT

In enacting ERISA’s expansive preemption provi-

sion Congress intended to preempt all state laws which

relate to self-funded employee benefit plans. Section

1722 of the Pa. Law relates to the Fund since it has a

direct economic impact upon the Fund by effectively

mandating that the Fund must pay all of Travitz’s

medical benefits despite the explicit exclusionary lan-

guage in Exclusion 5. If the Fund was required to follow

the provisions of Section 1722 of the Pa. Law in Penn-

sylvania, it would be subject to potentially inconsistent

participant coverage requirements. This Court, in FMC

Corp., found that in enacting the preemption provisions

Congress did not intend to have self-insured employee

benefit plans subject to a “patchwork scheme of regula-

tion” on a state-to-state basis.

REASONS FOR DENYING THE WRIT

There are no special and important reasons

for granting the Writ, since the decision of

the Court of Appeals for the Third Circuit is

consistent with the Court’s opinions in FMC

Corp. and Metropolitan Life Insurance Co.,

and therefore does not conflict with a deci-

sion of another court of appeals or conflict

with a decision of this Court.

The decision of the Court of Appeals for the Third

Circuit, affirming that of the United States District

Court for the Middle District of Pennsylvania, is consis-

tent with this Court’s decision in FMC Corp. v. Holliday,

498 U.S. 52 (1990) and Metropolitan Life Insurance Co.

v. Massachusetts, 471 U.S. 724 (1985). There is no

conflict or any other basis for further review of the issues

raised below and herein by this Court.

Moreover, Travitz fails to articulate what substantial

question she is seeking to have this Court review. Rule

11 of this Court addresses the consideration governing

9

the grant or denial of certiorari. The Rule emphasizes

the necessity of a substantial question before certiorari

will be granted. The Rule sets forth a list of reasons

which clearly indicate the character of the reasons that

it will consider in whether to grant certiorari. The issues

that Travitz raises in her Petition do not establish that

the decision of the Court of Appeals conflicts with any

decisions of other circuits or raises an important ques-

tion of federal law which has not been settled by this

Court.! The issues raised by the Petition had been

addressed and settled by the Court in FMC Corp., 498

U.S. 52 (1990) and Metropolitan Life Insurance Co.,

471 U.S. 724 (1985).

This case is therefore not appropriate for the Su-

preme Court to review, and therefore the subject Peti-

tion for Writ of Certiorari should be denied.

Despite this Court’s decisions in FMC Corp., which

reaffirmed and reinforced its decision in Metropolitan

Life that the application of the Pennsylvania law to a

self-insured employee welfare benefit plan was pre-

empted by ERISA, Travitz suggests that this holding

should be revisited herein.

In Metropolitan Life, this Court held that ERISA

preempts the application of state insurance laws to

uninsured, or self-funded employee welfare benefit

plans. In so doing, this Court gave life to the distinction

between insured and self-insured plans which Congress

1. Since FMC Corp., the courts have uniformly found that

ERISA preempts any attempt to regulate self-insured employee

benefit plans. Hampton Industries v. Sparrow, 981 F.2d 726 (4th

Cir. 1992); Lincoln Mutual Casualty Co. v. Lectron Products, Inc.

Employee Health Benefit Plan, 970 F.2d 206 (6th Cir. 1992);

Autoclub Insurance Association v. Health and Welfare Plans, Inc.,

961 F.2d 588 (6th Cir. 1992); PM Group Life Insurance v. Western

Growers Assurance Trust, 953 F.2d 543 (9th Cir. 1992); Provident

Life and Accident Insurance Co. v. Linthicum, 930 F.2d 14 (8th Cir.

1991); Thompson v. Talquin Building Products Co., 928 F.2d 649

(4th Cir. 1991).

10

created in the so-called “deemer clause” of ERISA,

Section 514(b)(2)(B).

In Metropolitan Life, this Court employed a three-

part analysis following the structure of Section 514 in

considering whether state regulation of self-insured

benefit plans is preempted by ERISA. First, Section

514(a), ERISA’s broad preemption provision, provides

that ERISA shall preempt “any and all state laws insofar

as they may now or hereafter relate to any employee

benefit plan.” 29 U.S.C. §1144(a). “The phrase ‘relate to’

was given its broad common-sense meaning, such that a

State law ‘relate[s] to’ a benefit plan ‘in the normal sense

of the phrase, if it has a connection with or reference to

such plan.’ ” Metropolitan Life, 471 U.S. at 739 quoting

Shaw v. Delta Airlines, Inc., 463 U.S. 85, 97 (1983).

Second, Section 514(b)(2)(A), the so-called insur-

ance savings clause, provides that ERISA does not

preempt any state law “which regulates insurance,

banking or securities law.” 29 U.S.C. §1144(b)(2)(A). A

state law “regulates insurance” if it meets the common-

sense requirement that it is specifically directed towards

some aspect of the insurance irdustry or if it falls within

the reference in the McCarran-Ferguson Act, 15 U.S.C.

§1011, et seq., to the “business of insurance.” Metropol-

itan Life, 471 U.S. at 742-43.

Third, Section 514(b)(2)(B), ERISA’s deemer

clause, limits the reach of the insurance savings clause,

providing “neither an employee benefit plan nor any

trust established under such a plan, shall be deemed

to be an insurance company. . . for the purposes of

any law of any state purporting to regulate insurance

companies for] insurance contracts.” 29 U.S.C.

§1144(b)(2)(B). Thus, this Court’s analysis in Metropol-

itan Life established a bright line test relating to pre-

emption as between insured and self-insured employee

benefit funds. As the Court stated,

“Our decision results in a distinction between

insured and uninsured plans, leaving the

11

former open to indirect regulation while the

latter are not. By so doing, we merely give life to

the distinction Congress is aware of and one it

has chosen not to alter.”

Id. at 474 (footnote omitted).

By so concluding, this Court recognized that Con-

gress established benefit plan regulation as exclusively a

federal concern to minimize the need for interstate

self-insured funds such as the Fund to administer their

plans differently in each state in which they have

participants. This recognized the administrative realities

of self-insured, multi-state employee benefit plans, and

sought to promote a fund’s capacity to provide benefits to

participants scattered throughout many states in the

most efficient manner—i.e., through a single employee

benefit plan. As this Court stated in Fort Halifax Pack-

ing Co., Inc. v. Coyne, 482 U.S. 1, 11 (1987):

“It is thus clear that ERISA’s preemption pro-

vision was prompted by recognition that em-

ployers establishing and maintaining employee

benefit plans are faced with the task of coordi-

nating complex administrative activities. A

patchwork scheme of regulation would intro-

duce considerable inefficiencies and benefit

program operation, which might lead these

employers with existing plans to reduce bene-

fits, and those without such plans to refrain

from adopting them. Preemption ensures that

the administrative practices of a benefit plan

will be governed by only a single set of regula-

tions.”

In FMC Corp., this Court was called upon to revisit

the issue of whether the ERISA deemer clause protects

selfinsured employee benefit plans from all state insur-

ance regulation. In FMC Corp., this Court considered

whether ERISA preempted Section 1720 of the Pa.

Law —i.e., anti-subrogation provision—which specifi-

cally prohibited an insurer from collecting funds from a

12

plaintiff in satisfaction of its subrogation interest when

the plaintiff had been injured and obtained recovery in

an action arising out of the maintenance or use of a

motor vehicle. Following its three-step analysis set forth

in Metropolitan Life, this Court concluded that Section

1720 “‘relate[s] to’ an employee benefit plan” since

Section 1720, as does Section 1722 herein, has a “ref-

erence” to employee benefit plans, as does Section 1722,

and a “connection” to employee benefit plans, as does

Section 1722. Travitz is asserting that while this Court

found that ERISA preempted Section 1720 of the Pa.

Law, the preemption provisions of ERISA do not pre-

empt the application of Section 1722 of the Pa. Law to

the Fund, despite the Pa. Law’s specific reference to

employee welfare benefit plans in Section 1722 of the

Law.

Travitz acknowledges and concedes in the Petition

that Section 1722 of the Pa. Law contains a “reference

to” an employee welfare benefit plan. Despite conceding

that Section 1722 of the Pa. Law makes “reference to,”

and thus “relates to” the Fund and is therefore pre-

empted by Section 514(a) of ERISA, Travitz goes on to

argue that there is no “connection with” the Fund.

Under the Court’s test in Shaw v. Delta Airlines, Inc.,

Travitz’s queries and arguments relating to Section

514(a) of ERISA should have stopped at that point. The

court below, in concluding that Section 1722 of the Pa.

Law not only made “reference to” but was “connected

with” the Fund, found that:

Section 1722, which precludes the recovery of

benefits from a tortfeasor where a person is

eligible to receive those benefits under another

program, group contract or arrangement, as

defined in Section 1719, has ‘reference’ to

benefit plans governed by ERISA... .”

* * *

“In addition, Section 1722 has a ‘connec-

tion’ to ERISA benefit plans. The Court has

13

held that state laws have a ‘connection’ to an

ERISA plan when the laws risk subjecting plan

administrators to conflicting state regulations.

. . . Section 1722 has that very effect.”

ere is a Clear “connection with” the Fund that is

not “too tenuous, remote or peripheral,” since one of the

objects of Section 1722 of the Pa. Law when there are

injuries to an individual and there are resulting medical

charges is to dictate the order of coverage/recovery

under various policies of insurance, i.e., first-party ben-

efits mandated by Subchapter B of the Pa. Law, workers’

compensation and benefits paid by a program, group

contract, or other arrangement. Section 1719, Coordina-

tion of Benefits, says that the first-party benefits man-

dated by Subchapter B shall be primary with respect to

all other policies of insurance except workers’ compen-

sation, which shall always be primary over the first-party

benefits. Section 1719 goes on to say that all other

policies of insurance covering the individual, i.e., “pro-

grams, group contracts or other arrangements,” shall be

deemed to contain a provision in the policy of insurance

that its benefits shall be in excess of the first-party

benefits.

In Section 1720, Subrogation, and 1722, Preclusion

of Recovering Required Benefits of the Law, the Penn-

sylvania legislature went on to dictate that in situations

where there is litigation arising out of the maintenance

or use of a motor vehicle and the individual incurs

medical bills, the individual or a program, group contract

or other arrangement may not recover medical benefits

paid or payable because of injuries sustained by the

individual.

The ultimate object of Sections 1720 and 1722 is to

shift the responsibility for the payment of medical bills to

either the workers’ compensation carrier or to some

third-party carrier, i.e., a program, a group contract, or

an other arrangement —the Fund as asserted by Travitz.

14

By enacting these provisions, the Pennsylvania legisla-

ture is dictating the structure and the terms of coverage

of employee benefit plans.

What this Court said in FMC Corp., is that Section

512 of ERISA prohibits this shifting by the Pa. Law of

responsibility for the payment of medical bills to self-

insured employee welfare benefit plans or the waiver of

federal common law subrogation rights of self-insured

employee welfare benefit plans. This Court concluded

that Section 512 prohibited the Pennsylvania legislature

from attempting to mandate plan design and coverage

for self-insured employee welfare benefit plans.

The ultimate object of the self-insured employee

welfare benefit plan in FMC Corp., and the Fund herein,

was to avoid being ultimately responsible for the pay-

ment medical charges where there has been or may be a

recovery from a party ultimately responsible for the

injuries. The fund in FMC Corp. chose not to exclude

from coverage the costs of treating the injuries sustained

in an automobile accident, as did the Fund herein. The

FMC Corp. fund took the approach of agreeing to cover

these charges, and if there was a recovery from a third

party they would be subrogated to that recovery. Since

the benefits were covered, subrogation was the control-

ling theory in FMC Corp. Here, the benefits were not

covered. The advance of benefits provision, unlike su-

brogation provision is directed solely at excluded bene-

fits advanced under that unique provision. The Fund

here took a different approach to ultimately achieve the

same result and excluded coverage for treatment from

injuries arising out of automobile accidents if the costs

of treating the injury were recoverable through legal

action or claims settlement. In addition, the Fund also

provided that in certain circumstances where certain

benefits were excluded it would advance benefits to the

participant and the participant would repay the Fund

from any settlement or recovery against a third party.

15

The result achieved by both approaches was the same,

and neither approach is subject to the application of the

Law.

This case is a mirror image of the FMC Corp. case.

The Courts below recognized this fact and correctly

concluded that Section 1722 of the Pa. Law was pre-

empted by ERISA.

16

CONCLUSION

The Writ of Certiorari should not be granted in this

case since there is no important question of federal law

or any conflict with any other court of appeal to be

settled by this Court.

Respectfully submitted,

Charles W. Johnston, Esquire

HANDLER, GERBER, JOHNSTON &

ARONSON

Suite 100, 150 Corporate Center Dr.

Post Office Box 98

Camp Hill, PA 17001-0098

(717) 975-5500

Attorneys for Respondents

Dated: May 9, 1994