BCBSM Slapped With $8.4M Judgement For “Hidden Fees”

BCBSM Slapped With $8.4M Judgement For “Hidden Fees”

Federal Judge rules that Blue Cross Blue Shield Michigan has to repay $8.4 million for violating ERISA and charging “Hidden Fees” to the Saginaw Chippewa Indian Tribe.

On July 14, 2017 U.S. District Judge Thomas L. Ludington ruled Blue Cross Blue Shield of Michigan (BCBSM) had to repay the Tribe $8.4 million for charging “hidden fees” in violation of ERISA. According to court records, the Tribe had two separate plans under BCBSM. The Tribe claimed that BCBSM charged $8,426,278 for Group 1 and $5,035,145 for Group 2. However the court ruled one of the plans was not an ERISA plan, and therefore, BCBSM was not liable for those fees.

 The judge summarized the issues by providing the following backdrop:

“BCBSM had ‘complete discretion to determine the amount of the Disputed Fees, as well as which of its customers paid them.’ As a result of the hidden nature of the fees, the savings from using BCBSM as an administrator appeared greater to customers that they truly were.”

According to the court:

It is undisputed, that, like in the multitude of other similar cases that have been brought against BCBSM, the company included hidden administrative fees in its charges to the Tribe. BCBSM agrees that, between 2004 and 2012, the tribe paid approximately $13 million in hidden administrative fees

Case info: Saginaw Chippewa Indian Tribe of Michigan, et al v. Blue Cross Blue Shield of Michigan, No. 1:16-cv-10317, E.D. Mich., 2017 U.S. Dist. LEXIS 109366 

The “multitude of other similar cases” that have been brought against BCBSM, stem from more than 50 other similar cases in the same court. The decisive point for all these cases was the Hi-Lex case, where the Sixth Circuit Court of Appeals upheld a $6.1 million judgement against BCBSM for, you guessed it, charging clients hidden fees!

The Six Circuit Opinion: “SILER, Circuit Judge. The Hi-Lex corporation, on behalf of itself and the Hi-Lex Health & Welfare Plan, filed suit in 2011 alleging that Blue Cross Blue Shield of Michigan (BCBSM) breached its fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) by inflating hospital claims with hidden surcharges in order to retain additional administrative compensation. The district court granted summary judgment to Hi-Lex on the issue of whether BCBSM functioned as an ERISA fiduciary and whether BCBSM’s actions amounted to self-dealing. A bench trial followed in which the district court found that Hi-Lex’s claims were not time-barred and that BCBSM had violated ERISA’s general fiduciary obligations under 29 U.S.C. § 1104(a). The district court also awarded pre- and post-judgment interest. We AFFIRM.” according to the Sixth Circuit Court document.

“according to BCBSM’s own survey of its self-insured customers, a substantial majority – 83% – did not know the Disputed Fees were being charged.”, according to the Sixth Circuit Court document.

As more and more of these cases make their way through the courts, self-insured health plan administrators charged with properly monitoring and safeguarding plan assets should do so, independent of their TPA’s own reporting. Additionally, as a result of this and other cases, including the Supreme Court’s decision to deny the BCBSM challenge of the Sixth Circuit Court decision, these same self-insured health plan administrators, should seek return of Billions in plan assets.

In the healthcare provider arena the No. 1 health care claim denial in the country today is the overpayment recoupment and claims-offset.  Correspondingly, for self-insured health plans, the No. 1 hidden cost is overpayment recoupment and plan assets embezzlement. The immediate impact of the Supreme Court’s decision could be billions of dollars for all self-insured ERISA health plans nationwide, as a result of the TPA industry’s potential recovery of a billion dollars in overpayment recoupments and anti-fraud campaigns over the past 12 years.

For over 8 years, Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. Now with the Supreme Court’s guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs click here.




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