Outside Employment Injury Not Covered Under Health Plan

Sixth Circuit Appeals Justice Cornelia Kennedy, writing for the court in Marquette General Hospital v Goodman Forest Industries, affirmed lower court opinions, finding the plan administrator for the company did not act arbitrarily and capriciously in finding that Michael Egan’s work as an independent contractor constituted “any occupation or employment for wage or profit” under the plan.

Log Jam

Egan was employed by Goodman full-time as a log buyer and was covered by an ERISA-governed health insurance plan.   However, during slow periods, Goodman employees often did supplemental work, a practice Goodman knew of and accepted.    Egan found supplemental employment in 1998 cutting trees for Patrick Newland Logging Inc as an independent contractor. While performing these duties for Newland, a tree fell on Egan, rendering him a paraplegic.

Following his accident, Egan submitted medical claims to Goodman’s plan administrator, who denied his claim based on plan language that stated medical benefits would not be paid for claims arising out of any employment for wage or profit not performed for Goodman. After the denial, Egan assigned a portion of his claims to Marquette General Hospital, which brought the present action.

The US District Court for the Western District of Michigan granted Goodman’s motion for summary judgment. The appeals court affirmed, finding that under the clear language of the plan Egan was not entitled to benefits.