Pipefitters Local 636 Insurance Fund v. Blue Cross Blue Shield of Michigan

In 2006, plaintiffs filed a class action lawsuit under ERISA, on behalf of hundreds of self-insured customers and its trustees against Blue Cross, alleging that Blue Cross breached its fiduciary duty when it charged fees that allegedly should not have applied to their funds under federal benefits law.

On September 3, 2009, the district court for the Eastern District of Michigan certified a class of plaintiffs against Blue Cross consisting of "all entities which had or have administrative-services contracts with Blue Cross [and] which were or are assessed [an] other-than-group fee." Administrative-services contracts allow self-insured employers, retirement funds and other entities to utilize the Blue Cross network and administrative services to process insurance claims. According to the complaint, the other-than-group fee is allegedly a two to three percent fee that Blue Cross charged to its insurance, but not administrative service customers.

The court ordered Blue Cross to disclose all self-insured employers, retirement funds and other entities that used its administrative services and paid the carrier a contested fee. The certified issues were whether Blue Cross was a fiduciary under ERISA and whether Blue Cross breached a fiduciary duty owed to the class.

On Sept 18, 2009, Blue Cross filed its Motion for Reconsideration. In its motion, Blue Cross argued that a necessary pre-requisite to certifying a class and asserting a claim under ERISA should be a court determination that Blue Cross acted as a fiduciary. Blue Cross claimed that it did not have a fiduciary relationship with the class members. Blue Cross further argued that the court would have to undertake complex individualized inquires to determine both liability and damages, therefore making class treatment unmanageable.

The court has not yet ruled on Blue Cross’ motion for reconsideration.