United States District Court, E.D. Michigan, Northern Division
ORDER GRANTING IN PART PLAINTIFFS' MOTION FOR
Honorable Thomas L. Ludington, Judge
January 29, 2016, Plaintiffs Saginaw Chippewa Indian Tribe of
Michigan and the Welfare Benefit Plan
(“Plaintiffs”) brought suit against Blue Cross
Blue Shield of Michigan (“BCBSM”).
Plaintiffs' suit takes issue with BCBSM's management
of Plaintiffs' “self-insured employee benefit
Plan.” Am. Compl. at 1, ECF No. 7. Specifically,
Plaintiffs assert that BCBSM violated its fiduciary duty
under the Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. § 1001, et
seq., when it did not authorize payment of Medicare-like
Rates for certain health services (Count I),
that BCBSM engaged in prohibited transactions under ERISA
when it charged Plaintiff hidden fees (Count II), and seven
state law claims (Count III-IX). On August 3, 2016, the Court
granted Defendant's motion to dismiss Counts I and
III-IX. ECF No. 22. Plaintiffs filed a motion for
reconsideration, ECF No. 24, which is now before the Court.
relevant allegations have been recounted in the Court's
August 3, 2016, order granting Defendant's motion to
dismiss. ECF No. 22. That summary will be incorporated as if
fully recounted herein. For clarity, the procedural history
of this action will be further described.
April 25, 2016, Defendant filed a motion to dismiss
Plaintiffs' state law claims and ERISA claims related to
the nonpayment of Medicare-like Rates. Mot. Dismiss, ECF No.
14. In that motion, Defendant argued that Plaintiffs'
claims related to the nonpayment of Medicare-like rates
should be dismissed because “when: (a) an
ERISA-governed plan does not include a particular benefit . .
.; and (b) ERISA does not require application of the
non-ERISA federal law in question, then a third-party
administrator does not owe a fiduciary duty relative to the
same.” Mot. Dismiss at 7, ECF No. 14. Defendant cited
numerous cases in support of the proposition that
“absent clear and unambiguous language by Congress,
ERISA liability does not extend to an alleged failure to
comply with a non-ERISA statute.” Id. at 10
(citing, among other cases, Bell v. Pfizer, Inc.,
626 F.3d 66, 77-78 (2d Cir. 2010); Clark v. Feder Somo
and Bard, P.C., 739 F.3d 28 (D.C. Cir. 2014); Reklau
v. Merchants Nat'l Corp., 808 F.2d 628, 631 (7th
Cir. 1986)). Plaintiffs countered by arguing in general terms
that BCBSM's behavior violated its ERISA fiduciary duties
by not paying the lowest possible rate for medical services
rendered. Pl. Resp. at 13-14, ECF No. 18. Plaintiffs further
attempted to distinguish the cases cited by Defendant.
See Id. at 16-19. In particular, Plaintiffs tried to
distinguish Clark by arguing that the case did not
involve a claim that the ERISA fiduciary violated his
“prudent person” obligations under 29 U.S.C.
§ 1104(a)(1). Id. at 17. Plaintiffs did not
cite any legal authority which affirmatively established that
ERISA liability should be extended to cover BCBSM's
failure to take advantage of Plaintiffs' entitlement to
Medicare-like Rates under 42 C.F.R. § 136.30.
August 3, 2016, the Court granted Defendant's motion to
dismiss. ECF No. 22. The Court dismissed Plaintiffs'
state law claims with prejudice because all parties agreed
that they were preempted by ERISA. The Court further
dismissed Count I in whole and Count II to the extent it
related to BCBSM's obligation to ensure that the Plan
paid Medicare-like Rates for healthcare claims. In the order,
the Court explained that “courts have uniformly held
that an ERISA fiduciary does not owe a duty to the plan to
comply with obligations extrinsic to the text of ERISA and
the plan.” Id. at 6. In support, the order
extensively discussed the D.C. Circuit's decision in
Clark. Id. at 6-8. The Court noted that the
plaintiff in Clark “grounded her claim in
§ 404 of ERISA (29 U.S.C. § 1104), ” like
August 17, 2016, Plaintiffs filed a motion for
reconsideration of the Court's order which granted
Defendant's motion to dismiss. ECF No. 24. For the
reasons stated below, Plaintiffs' motion for
reconsideration will be granted in part.
to Eastern District of Michigan Local Rule 7.1(h), a party
can file a motion for reconsideration of a previous order,
but must do so within fourteen days. A motion for
reconsideration will be granted if the moving party shows:
“(1) a palpable defect, (2) the defect misled the court
and the parties, and (3) that correcting the defect will
result in a different disposition of the case.”
Michigan Dept. of Treasury v. Michalec, 181
F.Supp.2d 731, 733-34 (E.D. Mich. 2002) (quoting E.D. Mich.
LR 7.1(g)(3)). A “palpable defect” is
“obvious, clear, unmistakable, manifest, or
plain.” Id. at 734 (citing Marketing
Displays, Inc. v. Traffix Devices, Inc., 971 F.Supp.2d
262, 278 (E.D. Mich. 1997). “[T]he Court will not grant
motions for rehearing or reconsideration that merely present
the same issues ruled upon by the Court, either expressly or
by reasonable implication.” E.D. Mich. L.R. 7.1(h)(3).
See also Bowens v. Terris, No. 2:15-CV-10203, 2015
WL 3441531, at *1 (E.D. Mich. May 28, 2015).
their motion for reconsideration, Plaintiffs take issue with
two aspects of the Court's opinion. First, Plaintiffs
argue the Court misconstrued Clark v. Feder Somo and
Bard, P.C. when holding that Plaintiffs had not stated a
claim on which relief can be based regarding BCBSM's
obligation to ensure the Plan was paying only Medicare-like
Rates. Second, Plaintiffs argue that Count I should not have
been dismissed in its entirety.
begin by arguing that “BCBSM's decision not to take
advantage of MedicareLike Rates” violated BCBSM's
fiduciary duties pursuant to § 1104(a) of ERISA. Mot.
Reconsideration at 7-9, ECF No. 24. Plaintiffs assert that
BCBSM imprudently paid contractual rates to hospitals instead
of the lower Medicare-like Rates, and that this refusal
violates BCBSM's general fiduciary duty under ERISA. This
argument is materially identical to the argument considered
and rejected in the Court's opinion granting
Defendant's motion for reconsideration. See
Order Granting Mot Dismiss at 5-6.
support this reiterated argument by citing two cases for the
proposition that “a plan administrator breaches its
fiduciary duties when the administrator has a pattern or
practice of using plan assets to overpay healthcare
claims”: United Teamster Fund v. Magnacare
Administrative Services, LLC, 39 F.Supp.3d 461, 471
(S.D.N.Y. 2014) and Autonation, Inc. v. United Healthcare
Ins. Co., 423 F.Supp.2d 1265, 1272-73 (S.D. ...