BCBS of Michigan accused of charging hidden fees

A nonprofit organization filed a lawsuit against Blue Cross Blue Shield of Michigan accusing the health insurer of skimming additional fees from the organizations, according to court documents.

Chippewa-Luce-Mackinac Community Action Human Resource Authority sued BCBSM over how the insurer administered self-insured employee benefit plans. Chippewa Luce, as the nonprofit is referred to in the Feb. 19 lawsuit, alleges it sent large sums of money to BCBSM to play employee healthcare claims.

However, BCBSM "skimmed additional administrative fees from the plan assets Chippewa Luce provided on behalf of the plan to pay claims," according to the lawsuit. Chippewa Luce said the alleged scheme violated the Employee Retirement Income Security Act.

The lawsuit provided an example of the alleged scheme: Chippewa Luce said BCBSM, which was required to pay a hospital $6,000, reported a larger charge — $6,810 — to the plaintiff. BCBSM then kept the additional $810 as a "hidden administrative compensation."

This isn't the first time BCBSM has faced litigation over the alleged hidden fees. In August 2017, news surfaced that more than 30 lawsuits were filed against BCBSM accusing the the insurer of charging employers unauthorized and hidden fees for their health plans. The allegations stem from a 2014 appeals court decision finding the payer responsible for the unauthorized fees under ERISA. The decision upheld a $6 million judgment against BCBSM.

In an emailed statement to Becker's Hospital Review, BCBSM communications director Helen Stojic said: "This lawsuit dates back to issues from more than 20 years ago and pre-date many of us at Blue Cross. We are of course disappointed when parties go to court because we prefer to resolve these matters by working with customers."

Editor's note: This article was updated Feb. 26 to include a statement from BCBSM.

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