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Sunday, 26 October 2014 22:00

Supreme Court won’t review ruling against Blue Cross Blue Shield

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The U.S. Supreme Court’s refusal to review a $6.1 million judgment against Blue Cross Blue Shield of Michigan over fees hidden in a self-insured contract with an auto supplier clears the way for several similar cases to proceed.

The refusal by justices to hear the case involving Litchfield-based Hi-Lex Controls Inc. exhausts all appeals by Blue Cross Blue Shield.

Grand Rapids-based law firm Varnum LLP has filed some 50 similar lawsuits on behalf of large employers who contract with Blue Cross Blue Shield to administer self-funded health coverage. Several of the lawsuits have been settled in mediation and 28 remain pending for possible trial or settlement, said Perrin Rynders, an attorney at Varnum who represents Hi-Lex Controls.

Five of the unresolved cases are scheduled for upcoming mediation, he said.

“To the extent that the Blues want to resolve cases, we are certainly amenable to that and willing to use the meditation process as an appropriate mechanism, and if not, then we will go through with the litigation process,” Rynders said. “The ball’s in their court a little bit on that.”

A federal judge in Detroit ruled in May 2013 that Blue Cross Blue Shield marked up Hi-Lex Controls’ hospital medical claims by 22 percent from 1994 to 2013 and did not disclose the fees to the company. A three-judge panel of the U.S. Sixth Circuit Court of Appeals in Cincinnati later upheld the ruling and award, which includes the fees paid and interest.

Blue Shield Blue Shield then appealed to the Supreme Court, which decided Oct. 20 not to hear the case.

“We are disappointed in the decision,” Helen Stojic, the director of corporate affairs at Blue Cross Blue Shield, wrote in a statement emailed to MiBiz. “The access fees in dispute enabled Hi-Lex to receive substantial discounts in hospital services which resulted in millions of dollars of savings in hospital costs.”

The Supreme Court’s refusal to hear the Hi-Lex Controls case makes the appellate court’s ruling binding in all of the remaining cases, Rynders said. The decision could strengthen the plaintiffs’ hand in the outstanding cases and “removes any doubt whether certain things remain issues or not,” he said.

“The Sixth Circuit really decided all of the important legal questions and the Supreme Court has allowed that decision to stand,” he said. “Each case potentially has some factual wrinkles, but in my view, there really aren’t any factual wrinkles that are going to make much of a difference, so we think that allowing the Sixth Circuit ruling to stand is going to resolve pretty much everything except how much is owed. We still have that issue. We still need to figure out how much money was actually taken illegally and how much needs to be repaid.”

That amount, he said, is “likely to be significant.”

U.S. District Court Judge Victoria Roberts initially ruled that Blue Cross Blue Shield violated the federal Employee Retirement Income Security Act, or ERISA, by collecting fees without the client’s knowledge. In upholding her ruling, the appeals court ruled that the health insurer “committed fraud by knowingly misrepresenting and omitting information about the disputed fees in contract documents.” The practice “helped sustain the illusion that (Blue Cross Blue Shield) was more cost-competitive” than competing health coverage providers.

Rynders is also pursuing a court ruling to have legal fees awarded in the case. He believes the Supreme Court decision declining the case could now spur additional lawsuits by self-funded employers to recoup fees in contracts with Blue Cross Blue Shield that they did not previously know about.

“There are going to be more cases and there ought to be more cases,” Rynders said.

Read 4814 times Last modified on Sunday, 26 October 2014 21:23

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