Blue Cross Michigan Hit With Flurry of ERISA Lawsuits

A Shell Game Common To Health Care Financial Transactions

As a plan sponsor are you paying undisclosed fees that don’t show up on the fixed cost side of the ledger but rather on the claim cost side? There are numerous lawsuits that have exposed this industry practice and is not limited to BCBS………………….

Blue Cross Michigan Hit With Flurry of ERISA Lawsuits

 

By Jacklyn Wille

Blue Cross Blue Shield of Michigan has been sued more than 30 times in the past week by employers that say the insurer skimmed unauthorized fees from their health plans.

The lawsuits, filed between Aug. 9 and 11 in federal court in Michigan, accuse Blue Cross of charging hidden and unauthorized fees to the employers’ health plan assets as a means of improving its financial position without alienating customers. The lawsuits build from a 2014 appeals court decision holding Blue Cross liable for this conduct under the Employee Retirement Income Security Act and upholding a $6 million judgment against the insurer.

Since that 2014 decision by the U.S. Court of Appeals for the Sixth Circuit, more than 200 ERISA cases have accused Blue Cross of charging hidden health plan fees. Two Michigan-based law firms are spearheading this recent flurry of lawsuits: Varnum LLP and Michigan Health Lawyers. The employers suing Blue Cross include a car dealer, a plastics manufacturer, an auto parts maker, and acollege, among others.

This recent spate of lawsuits is partly in response to a deadline identified by a district court, Aaron Phelps, a partner with Varnum LLP in Grand Rapids, Mich., who filed several of the recent lawsuits, told Bloomberg BNA. That court held that lawsuits based on this purported scheme would be timely “until at least” Aug. 12 of this year, Phelps said.

Even so, Phelps said he didn’t believe the statute of limitations has expired on these claims. He said his firm, which has represented more than 200 businesses bringing claims against Blue Cross, would “continue to recover the fraudulent overcharges into the future.”

Blue Cross’ conduct affected “hundreds, if not thousands, of businesses,” Phelps added.

Blue Cross didn’t respond to Bloomberg BNA’s request for comment.

Many of these newer lawsuits claim to be “nearly identical” to the allegations found to be valid by the Sixth Circuit and other courts. Specifically, the insurer is accused of adopting a scheme to improve its financial position by adding surcharges to the fees it charged health plans. When these surcharges proved unpopular and caused the insurer to lose customers in the late 1980s, Blue Cross in 1993 replaced the disclosed fees with hidden markups no longer visible to customers, the lawsuits claim.

In allowing lawsuits to proceed against Blue Cross many years after the fees were issued and capable of being discovered, the Sixth Circuit said that the insurer’s acts of concealment warranted extending the relevant statute of limitations.

To contact the reporter on this story: Jacklyn Wille in Washington atjwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer atjmeyer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

 

Comments are closed.