On October 20, 2014, the United States Supreme Court refused to review a $6.1 million judgment against Michigan’s largest health insurer, Blue Cross Blue Shield of Michigan (“BCBSM”). The Supreme Court’s decision finalizes the ruling issued by the Sixth Circuit Court of Appeals in Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Michigan. There, a three judge panel affirmed a judgment issued by U.S. District Court Judge Victoria A. Roberts, holding that BCBSM fraudulently concealed and retained millions of dollars in hidden fees from its self-insured customers.
Varnum attorneys Perrin Rynders and Aaron Phelps took the lead in representing Hi-Lex. They exposed BCBSM’s approximately 20-year practice of actively hiding the amount of fees charged to its self-insured customers. According to an internal BCBSM memo, for example, BCBSM had become “its own worst enemy” because the surcharges and subsidies it assessed were “highlighted for all to see.” Thus, the memo provided a solution—BCBSM would change its fee structure so that the fees were “no longer visible to the customer.” Judge Roberts determined that BCBSM’s retention of these hidden fees constituted a violation of the Employee Retirement Income Security Act (“ERISA”), and entered a $6.1 million dollar judgment in Hi-Lex’s favor. Now, in light of the Supreme Court’s decision, that judgment on Hi-Lex Controls v. Blue Cross Blue Shield of Michigan is completely final and binding.