Sixth Circuit Lifts Injunction Requiring Blue Cross to Disclose Discount Information

MyHealthGuide Source: John Eggertsen, Esq., Eggertsen Consulting, P.C.,

The U.S. Court of Appeals for the Sixth Circuit April 6 reversed an injunction that required Blue Cross Blue Shield of Michigan (BCBSM) to provide a multiemployer health fund with documents detailing BCBSM’s discount arrangements with medical providers (Pipefitters Local 636 Insurance Fund v. Blue Cross & Blue Shield of Michigan, 6th Cir., No. 09-2294, unpublished 4/6/11).

In its unpublished opinion, the Sixth Circuit ruled that the U.S. District Court for the Eastern District of Michigan was foreclosed on issuing the injunction by the fact that the Sixth Circuit had already ruled in earlier phases of the litigation that BCBSM had no fiduciary obligation to disclose the documents. The Pipefitters Local 636 Insurance Fund alleged in its lawsuit that BCBSM breached its Employee Retirement Income Security Act-imposed fiduciary duties by refusing to provide the fund with information about the discount arrangements BCBSM had with medical providers.

The fund also alleged that BCBSM breached its ERISA fiduciary duties by imposing an “other than group” subsidy on the fund. This subsidy was described as a “cost transfer subsidy,” and was collected only from BCBSM’s group insurance clients, not its self-insured clients.
The district court initially dismissed the lawsuit after finding that BCBSM was not an ERISA fiduciary. But in 2007, the Sixth Circuit reversed part of that ruling. The appeals court held that BCBSM was not acting as a fiduciary when it refused to provide the fund with provider discount information. However, the Sixth Circuit found that the fund had adequately alleged that BCBSM was an ERISA fiduciary when it assessed the cost transfer subsidy on the fund (12 PBD, 1/19/07; 34 BPR 215, 1/23/07; 39 EBC 2643).

Decision on Remand

The case was then sent back to the district court for a trial. The fund then filed an amended complaint and again raised the provider discount disclosure issue. This time the district court agreed with the fund and found that BCBSM was a plan fiduciary with an obligation to disclose the provider discount information. The court issued an injunctive order requiring BCBSM to provide the fund with this information.

BCBSM appealed to the Sixth Circuit, arguing that the appeals court’s prior decision in the case foreclosed on the district court addressing BCBSM’s fiduciary status with respect to the provider discount disclosure claim.

The appeals court agreed and reversed the lower court. The appeals court said its ruling regarding BCBSM’s fiduciary status was a ruling on the merits and that the fund could not file an amended complaint to re-challenge that issue.

Editor’s Note: A landmark lawsuit filed several years ago – Oakland County vs BCBS – precipitated additional lawsuits in the state seeking remedies regarding alleged “PPO Discounts” some claim that were obtained by BCBS and not entirely passed on to the consumer. Secrecy surrounding PPO contracts continue. We usually have found that when you are not allowed to review a contract, you are probably paying too much.