Appeals court revives tribe's lawsuit against BCBS of Michigan

A federal appellate court has revived the Saginaw Chippewa Indian Tribe's lawsuit against Blue Cross Blue Shield of Michigan that alleges the payer failed to fulfill its fiduciary duties in administering tribal health insurance, costing the tribe millions of dollars.

Blue Cross Blue Shield of Michigan administered two self-funded plans for the tribe, according to the decision filed April 25  by the 6th Circuit Court of Appeals. One plan was for tribal members and the other was for tribal employees. 

The tribe sued the payer in 2016, alleging Blue Cross Blue Shield charged hidden fees, overstated the cost of medical services and violated its fiduciary duties under the Employee Retirement Income Security Act by not demanding rates similar to Medicare's. The tribe alleges the payer knew it was supposed to pay "Medicare-like-rates" to hospitals participating in Medicare, but instead chose to pay standard contractual rates for eligible services. 

The tribe said its beneficiaries were entitled to those rates under its Contract Health Services program, a healthcare program for Native American tribal members that receives funding from the HSS Indian Health Service division   

The tribe said Blue Cross Blue Shield's failure to insist on "Medicare-like-rates" cost it millions of dollars. 

A Michigan federal court judge sided with Blue Cross Blue Shield, concluding that the payer had no duty to seek "Medicare-like-rates" under either plan because the rates are only applicable for those services funded by Contract Health Services and the payer was not authorized, nor did it pay for, services using Contract Health Services funds. 

The 6th Circuit Court of Appeals reversed the decision and sent the case back to the lower court.  

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