United States District Court, E.D. Michigan, Southern Division
The Grand Traverse Band of Ottawa and Chippewa Indians, and Its Employee Welfare Plan Plaintiffs,
Blue Cross and Blue Shield of Michigan, Defendant.
K. Majzoub Mag. Judge.
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART DEFENDANT'S MOTION TO DISMISS 
E. LEVY UNITED STATES DISTRICT JUDGE.
earlier stages, this case was about claims brought under the
Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. § 1001; now, this case
is about state law violations regarding non-employee group
health insurance. Plaintiffs, the Grand Traverse Band of
Ottawa and Chippewa Indians (“the Tribe”) and its
Employee Welfare Plan (“the Plan”) raise EIRSA,
state law breach of contract, Michigan's Health Care
False Claims Act (“HCFCA”), Mich. Comp. Laws
§ 752.1001, common law fiduciary duty, and other common
law tort claims against defendant Blue Cross Blue Shield of
Michigan (“BCBSM”), the Plan administrator.
Previously, the Court rejected all of plaintiffs' claims
except its breach of contract claim, in part because the
parties agreed that the breach of common law fiduciary duty
and the HCFCA claims were preempted by ERISA. However, the
parties agreed to reinstate the common law fiduciary duty and
HCFCA claims in the wake of the Sixth Circuit's decision
in Saginaw Chippewa Indian Tribe of Mich. v. Blue Cross
Blue Shield of Mich., 748 Fed.Appx. 12 (6th Cir. 2018).
Before the Court is defendant's motion to dismiss those
Court provided a complete factual background of the
underlying claims in its previous opinion and order granting
in part and denying in part defendant's motion to
dismiss, which it reincorporates fully here. (Dkt. 99 at
2-6.) For clarity, the Court summarizes the background and
notes new developments in the case's procedural history.
Tribe is federally-recognized. The Tribe maintains a
self-funded employee welfare plan, the Plan, which covers
three groups of participants: members of the Tribe who are
employed by the Tribe (Group #01010); members of the Tribe
who are not employed by the Tribe (Group #01020); and
employees of the Tribe who are not members of the Tribe
(#48571). BCBSM has been the Plan administrator since 2000.
(Dkt. 90-2 at 3.)
2007, new federal regulations went into effect which provided
that “[a]ll Medicare-participating hospitals . . . must
accept no more than the rates of payment under the
methodology described in this section as payment in full for
all terms and services authorized by [Indian Health Service],
Tribal, and urban Indian organization entities, ” and
even if the parties had negotiated different rates, tribes
would “pay the lesser of” the amount determined
by the methodology and the negotiated amount. 42 C.F.R.
§§ 136.30(a), (f). These are known as the
“Medicare-Like Rates” (“MLR”)
allege that they asked BCBSM to ensure that they were
receiving MLR for the Tribe member groups, Groups #01019 and
#01020. (Dkt. 90 at 14). BCBSM claimed that “it could
not adjust its entire system to calculate MLR on those claims
eligible for MLR discounts, ” but could provide a rate
that would be close to MLR by providing a discount for
plaintiffs' claims for services at the Munson Medical
Center to Group #01020, the non-employee Tribe members.
(Id. at 15.) This led the parties to enter into the
Facility Claims Process Agreement (“FCPA”) with
Munson Medical Center, effective on March 1, 2009. (Dkt. 90
at 6; Dkt. 90-4.) However, in 2012, plaintiffs obtained a
third-party audit and discovered that they were “not
paying anything ‘close to MLR' on claims.”
(Dkt. 90 at 16.) They state that they “did not discover
the full extent of BCBSM's” conduct until 2013.
(E.g., id. at 19.)
filed their first complaint on April 1, 2014. (Dkt. 1.) On
January 24, 2019, plaintiffs were permitted to file an
amended complaint, alleging breach of fiduciary duty under
ERISA, violations of the HCFCA, breach of contract and the
covenant of good faith and fair dealing in the alternative,
breach of common law fiduciary duty, fraud and
misrepresentation, and silent fraud. (Dkt. 90.) BCBSM filed a
motion to dismiss those claims (Dkt. 94), which the Court
granted in part and denied in part. (Dkt. 99.) The Court
dismissed all claims except for the breach of contract claim,
noting that the parties agreed that the breach of common law
fiduciary duty and HCFCA claims were preempted by ERISA.
(Id. at 22, 25.) Plaintiffs filed a motion for
reconsideration (Dkt. 101) and a motion to file a second
amended complaint (Dkt. 102), and both were denied. (Dkt.
August 2018, the Sixth Circuit held that the Saginaw Chippewa
Indian Tribe of Michigan's Welfare Benefit Plan was not
an ERISA plan when it covered non-employee Tribe members.
Saginaw Chippewa Indian Tribe of Mich. v. Blue Cross Blue
Shield of Mich., 748 Fed.Appx. 12, 19 (6th Cir. 2018).
Because this undermined the parties' previous agreement
that all claims for violations of HCFCA and breach of common
law fiduciary duty were preempted by ERISA, the parties
agreed to reinstate those claims as to Group #01020, the
non-employee Tribe members, for the purpose of testing that
legal theory in this case. (Dkt. 116.) The motion to dismiss
before the Court followed (Dkt. 117) and is now fully
briefed. (Dkts. 119, 120.)
deciding a motion to dismiss under Federal Rule of Procedure
12(b)(6), the Court must “construe the complaint in the
light most favorable to the plaintiff and accept all
allegations as true.” Keys v. Humana, Inc.,
684 F.3d 605, 608 (6th Cir. 2012). “To survive a motion
to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). A plaintiff's claim is facially
plausible “when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Id. A plausible claim need not contain
“detailed factual allegations, ” but it must
contain more than “labels and conclusions” or
“a formulaic recitation of the elements of a cause of
action.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007).
reasons set forth below, plaintiffs raise claims under the
HCFCA and for breach of common law fiduciary duty, but only
state a claim as to the HCFCA. Plaintiffs have statutory
standing under the HCFCA. However, their breach of fiduciary
duty claim, although cognizable, is barred by the statute of
Health Care False Claims Act
motion, defendant argues that plaintiffs lack statutory
standing under the HCFCA. (Dkt. 117 at 11.) It is undisputed
that plaintiffs must meet the definition of a “health
care insurer” to have statutory standing under the
HCFCA. Mich. Comp. Laws § 752.1009 (“A person who
knowingly presents or causes to be presented a claim which
contains a false statement, shall be liable to the health
care corporation or health care insurer for the full
amount of the benefit or payment made.” (emphasis
added)). A “health care insurer” is “any
legal entity which is self-insured and providing health
care benefits to its employees.” Mich. Comp. Laws
§ 752.1002(f) (emphasis added). The Plan is
self-insured, and so the only remaining question is whether
plaintiffs are “providing health care benefits to its
employees” in relation to the non-employee Tribe
members, Group #01020.
standing is a matter of statutory interpretation. Miller
v. Allstate Ins. Co., 481 Mich. 601, 607 (2008) (quoting
Graden v. Conexant Sys., Inc., 496 F.3d 291, 295 (3d
Cir. 2007)). “When interpreting a statute, the primary
rule of construction is to discern and give effect to the
Legislature's intent . . . .” Perkovic v.
Zurich Am. Ins. Co., 500 Mich. 44, 49 (2017) (citing
Jesperson v. Auto Club. Ins. Ass'n, 499 Mich.
29, 34 (2016)). And the key question when interpreting
statutory standing provisions is “whether [the
Legislature] has accorded this injured plaintiff the
right to sue the defendant to redress his injury.”
Miller, 481 Mich. at 607 (emphasis in original)
(quoting Graden, 496 F.3d at 295).
and unambiguous” statutory language is the best
evidence of legislative intent. Perkovic, 500 Mich.
at 49 (citing Jesperson, 499 Mich. at 34). When
interpreting statutory language, courts “enforce such
language as written, giving effect to every word, phrase, and
clause, ” id. (same), meaning that
“every . . . word in the statute must be read and
understood in its grammatical context, ” Herman v.
Berrien Cty., 481 Mich. 352, 366 (2008) (quoting Sun
Valley Foods Co. v. Ward, 460 Mich. 230, 237 (1999)).
Generally, “[i]ndividual words and phrases . . . should
be read in the context of the entire legislative
scheme.” Bush v. Shabahang, 484 Mich. 156, 167
(2009) (footnotes omitted). If “the language of the
statute is unambiguous, ” “no further judicial
construction is required or permitted”; but if the
language is ambiguous, courts may use other methods of
interpretation “to ascertain legislative intent.”
City of Coldwater v. Consumer's Energy Co., 500
Mich. 150, 167 (2017) (quoting Sun Valley, 460 Mich.
the text of the statute is ambiguous because two equally
reasonable readings are possible, courts “should give
effect to the interpretation that more faithfully advances
the legislative purpose behind the statute.” People
v. Adair, 452 Mich. 473, 479-80 (1996) (citing
People v. Rehkopf, 422 Mich. 198, 207 (1985)).
“Statutes must [also] be construed to prevent absurd
results.” People v. Tennyson, 487 Mich. 730,
741 (2010) (quoting Rafferty v. Markovitz, 461 Mich.
265, 270 (1999)). In this case, plaintiffs offer a plain
language interpretation that is in accord with these
principles. But even if the Court were to ...