Duly Noted . . .

 U.S. Supreme Court will not review fraud judgment against Blue Cross Blue Shield

The U.S. Supreme Court announced Oct. 20 that it will not review a $6 million judgment against Michigan's largest health insurer, Blue Cross Blue Shield of Michigan, in the case of Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Michigan. The decision concludes three years of litigation over the legality of Blue Cross’s hidden fees, as reported in the Mary 23, 2014 issue of the Grand Rapids Legal News. The Hi-Lex matter is the first of nearly fifty cases filed by Varnum over the fees. With the nation’s highest court refusing to review, all appeals are exhausted and the way is now clear for the remaining cases to go forward.

The ruling confirms last year’s judgment by a federal court in Detroit, which found that BCBSM collected millions of dollars in hidden fees over a nearly 20-year period from the  employee health plan for Hi-Lex. Varnum attorneys representing Hi-Lex showed that BCBSM marked up employee hospital claims by as much as 22% and kept the markup. Reports provided to Hi-Lex did not disclose the fees.
Blue Cross had previously appealed the judgment to the U.S. Court of Appeals for the Sixth Circuit, but a three-judge panel of the federal appeals court affirmed the result earlier this year, explaining that “BCBSM committed fraud by knowingly misrepresenting and omitting information about the Disputed Fees in contract documents” which “helped sustain the illusion that BCBSM was more cost-competitive” than others.

“On behalf of our client, we are very pleased that the Supreme Court denied review and essentially agreed with the four other federal judges who reviewed this case,” said Varnum attorney Perrin Rynders. “Now that all appeals have been exhausted, other clients who have been awaiting the outcome can move forward with confidence. We are thankful the matter is concluded, but not surprised that BCBSM pursued it to this degree. The initial award was steep and awards from the pending cases are likely to be significant.”

Rynders noted that the ultimate result is a win for more than just those clients who have filed suit. BCBSM apparently discontinued its practice of rolling fees and surcharges into "hospital claims" for its self-insured clients in 2012, shortly after Varnum filed its first group of lawsuits.

The Varnum litigation team consisted of Rynders, Aaron Phelps, and Stephen MacGuidwin. The original judgment was issued by U.S. District Court Judge Victoria A. Roberts, who entered judgment in favor of Hi-Lex for a return of all hidden fees taken from Hi-Lex since 1994 plus interest.