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Grand Traverse Band of Ottawa & Chippewa Indians v. Blue Cross & Blue Shield of Michigan

United States District Court, E.D. Michigan, Southern Division

December 26, 2017

The Grand Traverse Band of Ottawa and Chippewa Indians, and Its Employee Welfare Plan, Plaintiffs,
Blue Cross and Blue Shield of Michigan, Defendant.

          Mag. Judge Mona K. Majzoub


          JUDITH E. LEVY United States District Judge

         Plaintiffs have twice asserted that defendant Blue Cross and Blue Shield of Michigan violated the Employee Retirement Income Security Act (“ERISA”) by breaching their fiduciary duty with respect to the payment of certain claims at Medicare-Like Rates (“MLR”). Twice, the Court has dismissed the claim.

         The Court first dismissed plaintiffs' ERISA claim regarding MLR because it was a restatement of their state-law breach of contract claim regarding a non-ERISA contract, seeking the same damages as the state-law claims. (Dkt. 73 at 11-12.) Plaintiffs then filed a motion for reconsideration of that order, arguing that they were asserting a variety of ERISA claims outside of the non-ERISA contract. (Dkt. 74.) The Court denied the motion for reconsideration on substantive grounds, but granted it in part by granting plaintiffs leave to file a motion to amend the complaint. (Dkt. 76.) On January 23, 2017, the Court granted the motion to amend the complaint, and on January 24, 2017, plaintiffs filed their amended complaint. (Dkt. 90.)

         On February 23, 2017, defendant Blue Cross and Blue Shield of Michigan (“BCBSM”) filed a motion to dismiss the first amended complaint, arguing in relevant part that the restated ERISA claim related to MLR payment rates was barred by the three-year statute of limitations applicable to ERISA claims. (Dkt. 94.) The Court held oral argument on the motion on June 7, 2017, and on July 21, 2017, issued an opinion and order granting the motion to dismiss and dismissing the repleaded ERISA claim for the second time, now as barred under the applicable statute of limitations. (Dkt. 99.)

         On August 4, 2017, plaintiffs filed a motion for reconsideration and a motion for leave to file a second amended complaint. (Dkts. 101, 102.) Both motions are now fully briefed. The Court determines that oral argument is not necessary pursuant to E.D. Mich. Local R. 7.1(f)(2), and apologizes to the parties for the delay in adjudicating these motions.

         I. Legal Standards

         To prevail on a motion for reconsideration under Local Rule 7.1, a movant must “not only demonstrate a palpable defect by which the court and the parties and other persons entitled to be heard on the motion have been misled but also show that correcting the defect will result in a different disposition of the case.” E.D. Mich. LR 7.1(h)(3). “A palpable defect is a defect that is obvious, clear, unmistakable, manifest or plain.” Witzke v. Hiller, 972 F.Supp. 426, 427 (E.D. Mich. 1997). The “palpable defect” standard is consistent with the standard for amending or altering a judgment under Fed.R.Civ.P. 59(e). Henderson v. Walled Lake Consol. Schs., 469 F.3d 479, 496 (6th Cir. 2006). Motions for reconsideration should not be granted if they “merely present the same issues ruled upon by the court, either expressly or by reasonable implication.” E.D. Mich. LR 7.1(h)(3). But “parties cannot use a motion for reconsideration to raise new legal arguments that could have been raised before a judgment was issued.” Roger Miller Music, Inc. v. Sony/ATV Publ'g, 477 F.3d 383, 395 (6th Cir. 2007).

         A party seeking to amend a complaint for a second or successive time may do so “only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). Leave should be denied where the amendment demonstrates defects “such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962).

         II. Analysis

         The factual background of this case has been repeated multiple times in multiple orders, and the Court adopts the most recently stated background for the purposes of this opinion. (Dkt. 99 at 2-6.)

         A. Motion for Reconsideration

         The motion for reconsideration argues that the Court improperly framed plaintiffs' ERISA claim, and improperly found that BCBSM did not commit fraud or concealment in relation to the ERISA claim.

         In its opinion and order granting BCBSM's motion to dismiss, the Court held that the complaint “[did] not assert a fiduciary duty to obtain MLR, but instead a fiduciary duty to, among other things, preserve plan assets and make decisions with the care of a prudent person, which, as set forth above, are established fiduciary duties.” (Dkt. 99 at 9.) The Court then determined that the ERISA fiduciary duty claim was time-barred because the basis of the fiduciary duty asserted was actually to achieve MLR, and plaintiffs were aware that BCBSM was not obtaining MLR for ...

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