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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Paige M. Best v. Fairbanks North Star Borough (8/20/2021) sp-7550
Notice: This opinion is subject to correction before publication in the P ACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@akcourts.gov.
THE SUPREME COURT OF THE STATE OF ALASKA
PAIGE M. BEST, )
) Supreme Court No. S-17734
Appellant, )
) Superior Court No. 4FA-18-02037 CI
v. )
) O P I N I O N
FAIRBANKS NORTH STAR )
BOROUGH,
) No. 7550 - August 20, 2021
)
Appellee. )
)
Appeal from the Superior Court of the State of Alaska,
FourthJudicial District, Fairbanks,ThomasI.Temple, Judge.
Appearances: Ward Merdes, Merdes Law Office, P.C.,
Fairbanks, for Appellant. Wendy M. Dau and Ehren D.
Lohse, Assistant Borough Attorneys, and Jill S. Dolan,
Borough Attorney, Fairbanks, for Appellee.
Before: Bolger, Chief Justice, Winfree, Maassen, Carney,
and Borghesan, Justices.
MAASSEN, Justice.
I. INTRODUCTION
A minor was severely injured in an all-terrain vehicle collision in which the
other driver was at fault. The minor had medical benefits coverage through a health care
plan provided by her father's employer, the Fairbanks North Star Borough. As allowed
by the terms of the plan, the Borough refused to pay the minor's medical bills until she
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signed an agreement that included a waiver of certain defenses to the Borough's
subrogation rights, such as the common fund and made-whole doctrines. The minor
refused to sign the agreement without reservation and filed suit, seeking a declaration
that the Borough could not condition payment of her medical bills on her signature. The
superior court decided on summary judgment that the Borough's health care plan was
not a true insurance plan and that, regardless of whether it was interpreted as an
insurance policy or an ordinary contract, the parties could lawfully reject subrogation
defenses. The minor appeals.
We hold that the health care plan is a bargained-for employee benefit rather
than a true insurance policy and that the superior court's interpretation of it was correct.
We therefore affirm the judgment of the superior court.
II. FACTS AND PROCEEDINGS
A. Facts
In April 2017 Paige Best was severely injured in an accident involving two
1 She was sitting on the rear rack of one ATV when
all-terrain vehicles at Arctic Man.
it was rear-ended by another ATV. Best was thrown off her vehicle, required surgery
to repair a broken hip, and ultimately incurred over $191,000 in medical bills.
At the time of the accident Best was "a covered health plan participant" in
Fairbanks North Star Borough's Health Benefit Plan #P62 (the plan) because of her
1 Arctic Man is a week-long festival held each spring in the Hoo Doo
Mountains near Milepost 197.5 of the Richardson Highway. ARCTIC MAN 2017
Program,1,11,https://www.arcticman.com/images/pdf/AMAN_2017_PROGRAM.pdf.
Centered around a snowmachine and ski race, the festival also features music and
drinking. An estimated 12,000 people attend each year, making the event temporarily
one of Alaska's largest settlements. Laura Carpenter, Arctic Man: The Anti-Burning
UARDIAN (Apr. 24, 2016),
Man Draws 'Slednecks' To Remote Alaska, G
https://www.theguardian.com/us-news/2016/apr/24/arctic-man-burning-man-festival-
alaska-ski-snowmobile-race.
-2- 7550
----------------------- Page 3-----------------------
father's employment by the Borough. The plan includes two provisions relevant to this
appeal.
The first is the third-party liability provision. It excludes coverage when
a third party is liable for the loss. It also provides, however, that the plan may "as a
convenience" advance a payment to cover expenses in such situations as long as the
participant signsand returns aSubrogationand Reimbursement Agreement (subrogation
agreement):
A third party may be liable or legally responsible for
expenses incurred by you or a Dependent for a health
condition. The plan does not provide benefits for an injury,
accident or illness to the extent for which there is or may be
a recovery against a third party. However, if you or your
Dependent has medical expenses as a result of an injury,
accident or illness for which a third party is or may be held
responsible, the plan, as a convenience to you or your
Dependent, may advance payment of such expenses on the
condition that you or your [D]ependent and/or legal counsel,
if any, sign and return a Subrogation and Reimbursement
Agreement and provide any other information as requested
by the plan. The plan may suspend benefits until such
Agreement is fully executed and returned to the Claims
Office along with all other requested information. [Emphasis
in orignal.]
Thesecondrelevant provision tothisappealisthe"100%First-Dollar Right
of Recovery." This section grants the plan priority in any recovery from a third party for
"benefits paid or to be paid under this plan" regardless of whether the recovery fully
compensates the participant for the loss and regardless of whether the participant's
recovery is for medical expenses:
The plan has the right to recover or subrogate 100% of the
benefits paid or to be paid under this plan that the claimant is
entitled to receive from any third party and/or any other
recovery source on a priority first-dollar basis, without
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apportionment of value, reduction, or offset of any kind,
whether by suit, settlement or otherwise, regardless of
whether the total recovery amount is less than the actual loss
suffered, and regardless of whether the recovery is described
as being related to medical costs.
The subrogation agreement an injured participant is required to sign
includes an express acceptance of these provisions, as well as an acknowledgment "that
federal and/or state common law defenses [to subrogation] including, but not limited to,
2
the made-whole doctrine and/or the common fund doctrine do not apply."
Best asked that the plan pay for her medical care. The plan administrator
sent Best the subrogation agreement to sign and return.
But Best did not sign the subrogation agreement and instead insisted that
the Borough pay her medical expenses immediately; she asserted equitable defenses to
subrogation and claimed that the plan could not legally condition coverage on her
signature. She ultimately did sign theagreement -following months ofcorrespondence
between her attorney and the plan - but according to her attorney she did so only
"[with] reservation"; she claimed she signed under duress and was reserving her
equitable defenses to subrogation. The Borough responded that it could not advance
payment for Best's expenses unless she consented to the subrogation agreement without
reservation but that the offer to pay on the stated conditions would remain on the table.
2 These doctrines subordinate an insurer's subrogation claimto the insured's
interest in being fully compensated and the insured's attorney's interest in a reasonable
attorney's fee. O'Donnell v. Johnson , 209 P.3d 128, 135 (Alaska 2009) (explaining that
the made-whole doctrine addresses circumstance in which subrogation lien would result
in insured being less than fully compensated); Sidney v. Allstate Ins. Co. , 187 P.3d 443,
454 (Alaska 2008) (explaining that common fund doctrine "provides that 'a litigant or
lawyer who recovers a common fund for the benefit of persons other than himself or his
client is entitled to a reasonable attorney's fee from the fund as a whole' " (quoting
Edwards v. Alaska Pulp Corp. , 920 P.2d 751, 754 (Alaska 1996))).
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Best never signed the agreement without reservation. She asserts in her
brief that she ultimately recovered some amounts in auto liability and uninsured motorist
insurance, though our record does not provide further information about that recovery.
B. Proceedings
In June 2018 Best brought suit against the Borough, seeking damages for
negligence and breach of contract as well as a declaration that the plan was required to
pay her medical bills. In an amended complaint Best sought declarations that the
Borough owed her "approximately $195K of health insurance coverage pursuant to" the
plan and that the Borough's "efforts to contractually expand its rights by reducing its
insureds' equitable subrogation defenses [are] contrary to Alaskan law and
unenforceable."
Aftersomediscovery theparties filed cross-motions for summaryjudgment
on whether the Borough was required to pay Best's medical bills. The superior court
granted the Borough's motion and denied Best's, deciding that the Borough was not
required to pay unless and until Best signed the subrogation agreement without
reservation. First, relying on an affidavit from the State's Director of the Division of
Insurance, the court decided that the plan was not insurance in the usual sense and was
therefore not regulated by Title 21 of the Alaska Statutes. The court further ruled that
the Borough would prevail even if the plan were interpreted under the principles we
apply to insurance policy interpretation, because the plan's challenged provisions were
clear, unambiguous, and consistent with an insured's reasonable expectations. The court
concluded based on the plan's plain language that a reasonable insured would expect the
plan's subrogation interest to take priority.
The court also addressed Best's two claimed defenses to subrogation: the
common fund doctrine and the made-whole doctrine. The court concluded that the
common fund doctrine did not apply because the Borough had made Best aware of its
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intention to directly assert its own recovery against the third party, meaning that Best and
the Borough did not share a fund from which Best's attorney should be compensated.
As for the made-whole doctrine, the court concluded that it could be waived by clear and
3 Best appeals.
explicit contract language, and that the plan did so.
III. STANDARD OF REVIEW
4 Contract
"We review grants of summary judgment de novo."
interpretation presents questions of law which we review de novo using our independent
judgment. 5 We "adopt[] the rule of law that is most persuasive in light of precedent,
reason, and policy."6
IV. DISCUSSION
A. The Superior Court Correctly Ruled That The Plan Was Not
Insurance And That Its Subrogation Provisions Were Clear And
Unambiguous.
Central to Best's argument is her contention that the plan is an insurance
policy, and that as an insurance policy it must be interpreted more strictly in her favor
than a more standard type of contract would be. Generally, "[t]he purpose of contract
7
interpretation is to [ascertain] and effectuate the reasonable expectations of the parties."
3 The court rejected several other contract defenses as inadequately briefed,
unsupported by case law, or irrelevant: that the plan violated the principles of good faith
and fair dealing, that the subrogation agreement was coercive, that subrogation would
be a windfall to the Borough, and that the challenged plan terms were illusory.
4 Ball v. Allstate Ins. Co., 426 P.3d 862, 865 (Alaska 2018).
5 ResQSoft, Inc. v. Protech Solutions, Inc., 488 P.3d 979, 983 (Alaska 2021).
6 Ball, 426 P.3d at 865 (quoting State Farm Mut. Auto. Ins. Co. v. Dowdy,
192 P.3d 994, 998 (Alaska 2008)).
7 Stordahl v. Gov't Emps. Ins. Co., 564 P.2d 63, 65 (Alaska 1977).
-6- 7550
----------------------- Page 7-----------------------
But the "interpretation of insurance contracts is controlled by somewhat different
standards" due to both the insured's lack of bargaining power and the insurer's need for
8 Insurance policy interpretation therefore favors the
certainty when setting premiums.
insured's perspective, as long as it is a reasonable one. An insurance contract is
"construed to provide the coverage which a layperson would have reasonably expected,
given a lay interpretation of the policy language," and this construction does not depend
on an initial finding that the policy language is ambiguous.9
The superior court accepted the Borough's argument that the plan was not
insurance but was rather a bargained-for and self-funded employee benefit. We agree
with the superior court's analysis and conclusion.
1. The plan is not insurance.
Best argues that the Borough plan has all the characteristics typical of an
insurance policy and should be interpreted as such, meaning that the superior court
should have favored her reasonable expectations over the plan's express terms. To
determine whether an agreement is insurance we look to the substance of the parties'
relationship.10 "Insurance is the assumption of another's risk for profit."11 An insurer
is thus paid for its promise that it will make payment upon the loss of something in which
8 Id.
9 Id. at 65-66; see also United Servs. Auto. Ass'n v. Neary , 307 P.3d 907, 910
(Alaska 2013) ("Ambiguities will be construed most favorably to the insured.").
10 1 S TEVEN PLITT ET AL ., C OUCH ON INSURANCE § 1:8 (3d ed. 2020) ("The
character of insurance is not to be determined by the . . . nomenclature used . . . but by
the nature of the contract actually entered into.").
11 Id . at § 1:6.
-7- 7550
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12
the insured has an interest. On the other hand, an insured that retains its own risk of
13 14
loss is a self-insurer.
Insurance and self-insurance are much different concepts.
Another characteristic of insurance contracts is the parties' unequal
15 Insureds are offered a contract on a "take-it-or-leave-it" basis;
bargaining power.
premiums are not negotiated but rather are set so as to ensure that the insurer can profit
from the relationship.16
It is true that the Borough's plan has some characteristics of insurance. The
Borough works with Aetna to provide a network of medical providers, uses a third-party
plan administrator, and carries stop-loss excess insurance.17 But the plan is funded by
the Borough and employee contributions; the risk of loss is not contracted out.
Contributions are not based on risk or set to cover the expected losses; according to the
12 Id.
13 Id. at § 10:1.
14 See, e.g., Fellhauer v. Alhorn , 838 N.E.2d 133, 137 (Ill. App. 2005)
("[S]o-called self-insurance is not insurance at all. It is the antithesis of insurance."
(alteration in original) (quoting Am. Nurses Ass'n v. Passaic Gen. Hosp., 471 A.2d 66,
69 (N.J. Super. App. Div. 1984), aff'd in part, rev'd in part , 484 A.2d 670 (N.J. 1984)));
Loomis v. Ameritech Corp., 764 N.E.2d 658, 668 (Ind. App. 2002) (noting that " 'self-
insurance' is not insurance at all"). Federal law makes the same distinction. Under the
Employee Retirement Income Security Act (ERISA), self-funded employee benefit plans
shall not be "deemed to be an insurance company or other insurer . . . for purposes of any
law of any State purporting to regulate insurance companies." 29 U.S.C.
§ 1144(b)(2)(B) (2018); see also 1A PLITT ET AL., supra note 10, § 7:34.
15 See Stordahl v. Gov't Emps. Ins. Co., 564 P.2d 63, 65 (Alaska 1977).
16 Id. at 65 n.4.
17 Under the stop-loss excess insurance, the Borough contracts with a third-
party insurer to cover individual claims that exceed a certain dollar amount and to cover
plan costs if in the aggregate they exceed a certain threshold.
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Borough's risk manager, contributions make up "significantly less than 50 percent" of
the "actuarial expense associated with the employee." The plan thus does not run at a
profit or even come close to paying for itself; the Borough ultimately pays over 80% of
the plan expenses. Best cites the fact that the plan is presented to Borough employees
"as a pre-printed booklet" as evidence that it is "a classic adhesionary 'take it or leave
it situation.' " But although Best did not bargain for the terms herself, they were
negotiated on her behalf by union representatives.
In concluding that the plan was not insurance but rather "a bargained for
employee health benefit," the superior court relied in part on the affidavit of Lori Wing-
Heier, Director of the State's Division of Insurance. Wing-Heier attested that Title 21
of the Alaska Statutes, the state's insurance code, "does not apply to self-funded health
benefit plans" "[e]xcept for self-funded multiple employer welfare arrangements
regulated under Alaska Statutes 21.85." Best did not respond to this point in the superior
court, but on appeal she contends that the Borough plan is a "multiple employer welfare
18 Best contends that the
arrangement," falling within the exception Wing-Heier noted.
plan satisfies this definition because the Borough and the Fairbanks North Star Borough
School District are both parties to the plan and are separate employers. The Borough
responds that it and the School District must be viewed as a single entity.19
18 See AS 21.85.500(5) (" 'multiple employer welfare arrangement' has the
same meaning given in 29 U.S.C. 1002," which at subsection 37 defines "multiemployer
plan" for ERISA purposes as "a plan (i) to which more than one employer is required to
contribute, (ii) which is maintained pursuant to one or more collective bargaining
agreements between one or more employee organizations and more than one employer,
and (iii) which satisfies such other requirements as the Secretary may prescribe by
regulation").
19 See AS 14.12.010(2) (providing that "each organized borough is a borough
school district"); AS 29.35.160(a) ("Each borough constitutes a borough school district
(continued...)
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As the Borough points out, because Best did not argue in the superior court
that the plan was in fact a multiple employer welfare arrangement, the court lacked either
the incentive or the factual record to decide the issue. In any event, Best gives us no
basis on which to conclude that any specific provision of Title 21 would change our
analysis even if the plan were a multiple employer welfare arrangement. The insurance
code carefully distinguishes between insurance generally and self-funded plans such as
20 and the stated purpose of the 2002 code
multiple employer welfare arrangements,
amendments was to create a separately regulated framework for such alternatives.21 Best
directs us to nothing in Title 21 that, even if it applied to the Borough's plan, would
require us to interpret the plan in a way that favors her position.
Because the Borough plan lacks the for-profit and adhesionary aspects
typical of an insurance policy, the superior court properly interpreted it using the usual
tools of contract interpretation rather than through the special lens that favors an insured.
19 (...continued)
and establishes, maintains, and operates a system of public schools on an areawide basis
as provided in AS 14.14.060."); Blue v. Stockton, 355 P.2d 395, 397 (Alaska 1960)
(deciding that "the school district and city is one and the same thing so far as corporate
status is concerned").
20 See, e.g., AS 21.85.020 (prohibiting "a self-funded multiple employer
welfare arrangement" from using any name "descriptive of an insurer or insurance
business); AS 21.85.100 (identifying sections of the code that apply to "self-funded
multiple employer welfare arrangements").
21 H. Labor & Commerce Comm., Sponsor Statement of Proposed H.B. 246,
22d Leg., 2d Sess. at 1 (2002) (noting that the 2002 amendments to Title 21 would
"establish[] a more appropriate regulatory structure for "multiple employer welfare
arrangements," rather than the system at the time, in which they were "regulated as
insurers"). H.B. 246 was passed and added a new chapter to Title 21 titled "Regulation
of [Multiple Employer Welfare Arrangements]." Ch. 38, § 57, SLA 2002.
-10- 7550
----------------------- Page 11-----------------------
2. Under the usual rules of contract interpretation, the plan's
clear, unambiguous terms prevail.
Interpreting the plan as an ordinary contract, we give "primary effect to the
language of the contract but also consider extrinsic evidence of 'the parties' intent at the
22
time the contract was made.' "
Best concedes that the plan's terms are "unequivocal"
and "not ambiguous," and she offers no extrinsic evidence that would give the terms a
different meaning. Barring some other consideration, therefore, the challenged
provisions are enforceable.
B. The Plan Did Not Unfairly Abrogate Best's Equitable Defenses To
Subrogation.
The Borough's plan states that it "specifically disavows any federal or state
common law defense including, but not limited to, the made-whole doctrine and/or the
common fund doctrine." The agreement Best was asked to sign reiterates this disavowal:
"I understand that federal and/or state common law defenses including, but not limited
to, the make whole doctrine and/or the common fund doctrine do not apply." Best
argues that the Borough's attempt to abrogate these defenses violates equity and public
policy. We consider each defense in turn.
1. Common fund doctrine
Under the common fund doctrine, "a litigant or lawyer who recovers a
common fund for the benefit of persons other than himself or his client is entitled to a
23
reasonable attorney's fee from the fund as a whole." "In the insurance context, where
an injured plaintiff confers a benefit on his or her insurer by securing recovery for both,
22 Beardsley v. Robert N. Jacobsen & Darlene F. Jacobsen Living Tr. , 472
P.3d 500, 504 (Alaska 2020) (quoting Norton v. Herron, 677 P.2d 877, 880 (Alaska
1984)).
23 O'Donnell v. Johnson, 209 P.3d 128, 134 (Alaska 2009) (quoting Edwards
v. Alaska Pulp Corp. , 920 P.2d 751, 754 (Alaska 1996)).
-11- 7550
----------------------- Page 12-----------------------
the insurer is liable for pro rata fees and costs based on what it recovers as a result of
plaintiff's efforts." 24
The common fund is not implicated in this case. Best never fully accepted
the terms of the subrogation agreement, and the plan never made any payments related
to the injury. Best's independent efforts to secure a recovery could not create a common
fund because the Borough has no subrogation rights to pursue and no recovery to claim.
Best is thus complaining about being asked to waive a defense that was not available to
her in any event.25
Best suggests that we "may want to take another look at" a case in which
we articulated the proposition that an insurer may instruct its insured not to pursue the
subrogation claim on its behalf, thereby eliminating the prospect of a common fund
26 We do not address this argument. Because there is no common fund here,
recovery.
our cases establishing the common fund disclaimer rule are irrelevant to this dispute.
2. Made-whole doctrine
Best next alleges that the plan runs afoul of the made-whole doctrine, the
rule that an insurer is not allowed to collect on its subrogated claim until the insured has
been fully compensated for her loss. The superior court surveyed state and federal case
law and ruled that "if the made-whole doctrine applies to contractual subrogation under
24 Id.
25 Cf. Creekside Ltd. P'ship v. Alaska Housing Fin. Corp., 482 P.3d 377, 385
(Alaska 2021) (affirming superior court's determination "that waiver theory did not
apply" when plaintiff "made no viable evidentiary showing" that it had the contract right
it was claiming).
26 Best asks us to revisit Grow v. Ruggles, 860 P.2d 1225 (Alaska 1993), but,
as the Borough points out, Best likely intended to cite Ruggles ex rel. Estate of Mayer
v. Grow, 984 P.2d 509, 511-13 (Alaska 1999), a later case that contains the relevant
discussion.
-12- 7550
----------------------- Page 13-----------------------
Alaska law, it can be waived by a clear and explicit clause in the contract, such as is
present in the Plan." We conclude that, assuming an insured has an equitable right to the
benefit of the made-whole doctrine, the right need not be recognized by the Borough's
plan because -as explained above -it is not insurance but a bargained-for, self-funded
employee benefit, and the justification for the made-whole doctrine does not apply.
The made-whole doctrine is an equitable principle that "in the absence of
contrary statutory law or valid contractual obligations to the contrary . . . it is only after
the insured has been fully compensated for all of the loss that the insurer acquires a right
27 Best's briefing of the
to subrogation or is entitled to enforce its subrogation rights."
issue appears to conflate the doctrine with the antisubrogation rule - the principle that
an insurer cannot seek subrogation from its own insured for claims arising from a
28 But the antisubrogation rule is not synonymous with the made-whole
covered risk.
doctrine and does not apply to this case.29 The Borough is not attempting to recover
against Best for a loss for which Best was liable.
We have twice discussed the made-whole doctrine but never decided
whether it applies in Alaska. In O'Donnell v. Johnson we held that the made-whole
27 16 PLITT ET AL., supra note 10, § 223:134; see also O'Donnell, 209 P.3d
at 135.
28 16 PLITT ET AL., supra note 10, § 224:4; see Graham v. Rockman, 504 P.2d
1351, 1356 (Alaska 1972) ("It is well settled that an insurer cannot recover by means of
subrogation against its own insured.").
29 See Maynard v. State Farm Mut. Auto. Ins. Co., 902 P.2d 1328, 1332
(Alaska 1995) ("[T]he rule prohibiting subrogation against one's own insured . . .
involve[s] situations in which the insurer paid out on a loss to its insured and then sought
to hold a second coinsured party under the same insurance contract liable for the loss.").
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----------------------- Page 14-----------------------
30
doctrine did not apply because the insured was found to have been fully compensated.
In McCarter v. Alaska National Insurance Co. we upheld a statute that required a
worker's compensation beneficiary to reimburse his employer for damages recovered
against a third party, even though the worker had not yet been fully compensated for his
31 We held that even if equitable subrogation defenses applied, they were
injuries.
restricted by the unambiguous language of the statute.32 Thus the status of the made-
whole doctrine in Alaska law remains undetermined.
But we need not decide whether to adopt the doctrine in this case either,
because the justification for the doctrine is absent. The doctrine is based on the idea that
the "burden of loss should rest on the party paid to assume the risk, and not on an
inadequately compensated insured, who is the least able to shoulder the loss."33 As
described above, the Borough is not a true insurer, but rather a self-insurer that provides
a benefit to its employees at a loss. The Borough was not required to recognize the
made-wholedoctrineas adefenseto subrogation, andits plan unambiguously disallowed
it. The superior court was therefore correct to conclude that the doctrine did not apply
to Best's claim.
C. Best's Remaining Arguments Are Waived Or Otherwise Without
Merit.
Best makes several other arguments that we address briefly. First, she
argues that the Borough, a state actor, deprived her of due process by not providing a
hearing before requiring her to waive her defenses to subrogation. Best identifies only
30 209 P.3d at 135.
31
883 P.2d 986, 989-91 (Alaska 1994).
32
Id. at 990.
33 16 P LITT ET AL., supra note 10, § 223:136.
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----------------------- Page 15-----------------------
one terse and undeveloped mention of due process in the superior court, where her
argument on summary judgment about coercion and duress included the words "No due
process. No hearing." But a due process argument that is not sufficiently raised in the
34 and we conclude that Best's bare mention of the phrase was not
trial court is waived,
sufficient to alert the superior court or the Borough that Best considered it to be a serious
issue.
Second, Bestinterweaves publicpolicyconcernswith her argumentthatthe
Borough should not be allowed to abrogate by contract her equitable defenses to
subrogation. "A promise or other term of an agreement is unenforceable on grounds of
public policy if legislation provides that it is unenforceable or the interest in its
enforcement is clearly outweighed in the circumstances by a public policy against the
35 The interests to be weighed include "the parties' justified
enforcement of such terms."
expectations, any forfeiture that would result if the term were not enforced, and whether
36
there is any special public interest in enforcing the term."
Best does not identify any law that would make the plan's challenged
provisions unenforceable. The only case law she cites is a decision of the Alabama
Supreme Court that was later overruled.37 More importantly, Best failed to brief this
34 Conkey v. State, Dep't of Admin., Div. of Motor Vehicles , 113 P.3d 1235,
1237 n.6 (Alaska 2005).
35 Pavone v. Pavone, 860 P.2d 1228, 1231 (Alaska 1993) (quoting
RESTATEMENT (SECOND) OF CONTRACTS § 178(1) A M. L AW INST . (1981)).
36 Id.
37 Powell v. Blue Cross & Blue Shield of Ala. , 581 So. 2d 772, 777 (Ala.
1990), overruled by Ex parte State Farm Fire & Cas. Co. , 764 So. 2d 543, 546 (Ala.
2000) (reaffirming pre-Powell rule "that, while the doctrine of subrogation is of purely
equitable origin and nature, it may be modified by contract" (quoting Int'l
(continued...)
-15- 7550
----------------------- Page 16-----------------------
issue in the superior court, affording the Borough and the court no opportunity to
develop a record relevant to the required interest-weighing process. Best mentioned
public policy only once, in passing, as precluding the Borough from "employing [the]
strong-arm tactic" of conditioning the payment of medical expenses on Best's signing
of the subrogation agreement. She asked the superior court to order the Borough to pay
her medical bills at once and to save for later motion practice the question of whether the
Borough was permitted to "nullify state law subrogation defenses." She thus never
made - or asked the court to reach - the argument she is making here: that the plan's
terms were void because of public policy.
Thesuperior court mentioned Best'spublicpolicy referencein its summary
judgment order, apparently interpreting it as subsumed in her arguments about fiduciary
duties and the covenant of good faith and fair dealing. The court noted that Best did not
"further elucidate" the issue. Because it would be "both unfair to the trial court and
38
unjust to the opposing litigant" to allow Best to introduce the issue on appeal, we
conclude that any public-policy-based argument is waived.
Finally, Bestargues that genuineissues ofmaterial fact precluded summary
judgment on her economic duress claim. In order to survive summary judgment, the
non-moving party must demonstrate a factual issue on each of the claim's elements.39
An essential element of an economic duress claim is that "one party involuntarily
37 (...continued)
Underwriters/Brokers, Inc. v. Liao, 548 So. 2d 163, 165-66 (Ala. 1989))).
38 Harvey v. Cook, 172 P.3d 794, 802 (Alaska 2007) (quoting In re Marriage
of Walker, 42 Cal. Rptr. 3d 325, 332 (Cal. App. 2006)).
39 N. Fabrication Co. v. UNOCAL, 980 P.2d 958, 960 (Alaska 1999).
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----------------------- Page 17-----------------------
40
accepted the terms of another." It is undisputed that Best never accepted the Borough's
terms; her refusal to sign the subrogation agreement without reservation is central to this
suit. Given the absence of this essential element, summary judgment on the economic
duress claim was appropriate.
V. CONCLUSION
We AFFIRM the judgment of the superior court.
40 Id. (quoting Zeilinger v. SOHIO Alaska Petroleum Co., 823 P.2d 653, 657
(Alaska 1992)).
-17- 7550
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