“If we overpaid or skimmed, it’s your fault for not catching us.”
By Chris Deacon
Blue Cross Blue Shield of Michigan has filed counterclaims against former client, Tiara Yachts. You’re going to want to hear this one.
After years of motions and appeals, the Sixth Circuit overturned a District Court Order and allowed Tiara’s ERISA fiduciary-breach claims to move forward.
BCBSM has come back swinging with a sweeping counterattack — one that effectively blames the employer for not catching BCBSM’s own self-dealing.
Here’s what BCBSM argues:
▪️ Co-Fiduciary Liability under ERISA
BCBSM claims Tiara “retained all other fiduciary responsibilities” and that because Tiara had monthly access to claims data, it “knowingly participated” in any breach by failing to detect or stop it.
Translation: “If we overpaid or skimmed, it’s your fault for not catching us.”
▪️ Statute of Limitations and Knowledge Defense
They say Tiara knew about the “Shared Savings Program” since 2017 — including BCBSM’s retention of “30% of recoveries or cost avoidance” as “administrative compensation” — and waited too long to sue.
▪️ Release and Settlement
BCBSM claims that when Tiara terminated its relationship with BCBSM as a client and accepted the final reconciliation provided for within the contract, ($52,950), they “fully and finally settle[d], release[d], and discharge[d] [BCBSM] from any and all claims… known or unknown.”
▪️ Dispute Resolution Defense
BCBSM says Tiara’s claims are barred because it didn’t follow the contract’s dispute-resolution clause — “Group shall notify BCBSM in writing of any Claim that Group disputes within 60 days of Group’s access to a paid Claims listing.”
BCBSM argues it “waived its right to dispute any particular claim.”
▪️ Indemnification / Hold-Harmless
This one gets me…BCBSM invokes an indemnity clause requiring Tiara to “hold BCBSM harmless from any claims resulting from [Tiara’s] breach… including [its] obligation to read and understand the terms of this Contract.”
They allege Tiara failed to review claims data, never requested audits, and therefore must indemnify BCBSM for any consequences of BCBSM actions.
▪️ “Reasonable Compensation” under ERISA § 408(b)(2)
Finally, BCBSM insists that the 30% “Shared Savings” fee was “reasonable compensation for services rendered” — and therefore exempt from fiduciary breach.
So, BCBSM’s position is that the employer:
▪️ Knew about the 30% skim;
▪️ Failed to dispute it in time;
▪️ Released all claims by cashing a final check;
▪️ Must indemnify BCBS for its own conduct; and
▪️ Can’t sue anyway because BCBS’s self-manipulated compensation was “reasonable.”
Employers don’t just need to read this because it makes for good conference chatter — they need to understand that this is the position their vendors are already taking.
You knew, you agreed, you released, and you owe them.
I’ll break down what this filing means in my upcoming Substack deep dive-employers NEED to understand the full implications of what is being argued in this case.
Stay tuned….
