Federal Judge Rules That Blue Cross Blue Shield of Michigan’s Contracts Did Not Disclose Wrongfully Charged Hidden Fees
On February 26, 2015, a federal judge in the case of Kent Companies v. BCBSM ruled that Blue Cross Blue Shield of Michigan's contracts did not reveal that it was charging hidden fees (often described as "provider network" or "access" fees) to its self-funded customers.
The Kent Companies lawsuit is one among more than sixty similar cases brought by Varnum on behalf of self-funded companies against Blue Cross to recover the hidden fees charged in violation of federal law (ERISA). In these cases, Blue Cross would inflate the amounts it reported hospitals charged for claims, and then would keep the difference between what it actually paid the hospitals and the amounts it reported paying.
In the Kent Companies case, BCBSM argued that its contract language disclosed Blue Cross's practice of charging the hidden fees, barring the plaintiffs' claims. In his ruling, Judge George C. Steeh found Varnum's arguments "compelling," and held that Blue Cross's contracts were ambiguous and did not disclose the fees. The Court further held that regardless of what the contract language said, Blue Cross continued to provide the plaintiffs with false reports (including monthly claims reports, quarterly and annual settlements, and Form 5500 Certifications) that outright misrepresented that Blue Cross was not charging these hidden fees.
In 2013, Varnum successfully represented a client against Blue Cross Blue Shield of Michigan in a matter that involved millions of dollars in illegal hidden access fees. The practice was widespread and Varnum has now represented more than 60 clients in similar litigation against BCBSM. These case updates serve as a record of Varnum's activity on behalf of our clients in these matters.
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