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Federal District Court Finds Blue Cross Blue Shield of Michigan Liable for Wrongfully Paying Itself Certain Fees (PDF)

The plaintiffs are two employers sponsoring self-insured health plans for which Blue Cross Blue Shield of Michigan provided claims administration services and health care provider network access under an Administrative Services Contract. "These cases are about certain fees that Blue Cross allocated to itself as additional administrative compensation.... Section 1106(b)(1) prohibits a fiduciary from 'deal[ing] with the assets of the plan in his own interest or for his own account.' This is plainly what Blue Cross did when it unilaterally determined the amount of Disputed Fees to keep as part of its administrative compensation and collected those fees from plan assets. Because Section 1106(b)(1) sets forth 'an absolute bar against self dealing' by a fiduciary, Blue Cross is liable." [Boroughs Corporation v. Blue Cross Blue Shield of Michigan, No. 11-12565 (E.D. Mich., Sept. 7, 2012)]

Text of Michigan Federal District Court Opinion: Church Plan Exemption Correctly Applies to Retirement Plan for Employees of Catholic Hospital (PDF)

"As the Court said at oral argument, the term church plan should be in quotations as the statutory exemption is broader than to over just churches. A church plan is a plan that is [1] established by a church or [2] established by an organization that is controlled by or associated with a church. The St. Johns and Ascension Health pension plans are the latter. As such, the plans are properly exempt from ERISA's requirements. Plaintiff's ERISA based claims therefore fail to state viable claims for relief. Plaintiff's contingent constitutional claim fails for lack of standing." [Overall v. Ascension et al., No. 13-11396 (E.D. Mich. May 9, 2014)]

Text of Michigan District Court Order Enjoining Enforcement of Contraceptive Mandate Against For-Profit Closely-Held Company (PDF)

"This case is analogous to Tyndale, Stormans and Townley -- though the Court finds the facts in this case much stronger. [Domino's Farms Corp., ('DF') a secular, for-profit property management company] does not present any free exercise rights of its own different from or greater than [Thomas Monaghan's] rights. Unlike Tyndale, Stormans, and Townley -- where the companies in question had multiple owners -- Monaghan is DF's sole shareholder, director, and decision-maker. As such, DF is even more closely-held than those companies, making the beliefs of DF and its owner even more indistinguishable."

Federal District Court Finds Michigan Tax as Applied to Self-Insured Health Plan Claims Is Not Preempted by ERISA (PDF)

"The [Michigan Health Insurance Claims Assessment Act] imposes an assessment of 1% on the value of all claims paid by every carrier or third party administrator for medical services that are rendered in Michigan to a resident of Michigan.... As defined in the Act, the word 'carrier' includes, inter alia, certain 'group health plan sponsor[s].... [This Court] concludes that the Act does not have an impermissible 'connection with' an ERISA plan. Because the Court has already concluded that the Act does not impermissibly 'refer to' an ERISA plan, it does not 'relate to' ERISA under either prong of the preemption analysis and is therefore not preempted under [ERISA section] 514(a)." [Self-Insurance Institute of America, Inc. v. Snyder, No. 11-15602 (E.D. Mich., Sept. 7, 2012)]

District Court Judge Says Michigan Health Care Claims Tax on Self-Insured Plans Not Pre-Empted by ERISA

"The Self-Insurance Institute of America Inc. challenged the law, arguing that it is barred by a provision in ERISA that pre-empts state and local laws and rules that relate to employee benefit plans. But U.S. District Court Judge Julian Abele Cook of the Eastern District of Michigan disagreed. The Michigan law 'does not mandate any particular benefit structure or bind administrators to certain benefit structures,' he wrote ... In addition, the law 'does not act exclusively on ERISA plans or single them out for different treatment but rather treats them the same as other entities' that make payments to health care providers, Judge Cook wrote."

District Court Finds Concealment of Administrative Fees for Self-Insured Plan Breaches Fiduciary Duties and Triggers 6-Year Statute of Limitations (PDF)

"[Blue Cross and Blue Shield of Michigan] also violated its fiduciary duty ... to disclose information to the Plaintiffs about its compensation, which necessarily included information about the Disputed Fees, even if [the plan sponsor] did not make a specific request for information.... BCBSM determined its own administrative fees by acting unilaterally with respect to the Disputed Fee; this type of self-dealing is a per se breach of [ERISA] Section 1106(b)(1).... Plaintiffs prove that BCBSM actively concealed their knowing misrepresentations and omissions in the contract documents in order to allay Plaintiffs' suspicion and prevent inquiry into Disputed Fees. [T]hey are entitled to damages from 1994 through 2011." [Hi-Lex Controls v. Blue Cross and Blue Shield of Michigan, No. 11-12557 (E.D. Mich. May 23, 2013)]

Text of District Court Order in CNH Industrial America Case, Denying Lifetime Retiree Health Benefits Under Collective Bargaining Agreement

"In concluding that the parties intended to confer lifetime benefits to the retirees ... the Court relied heavily on contract language tying eligibility for contribution-free healthcare benefits to eligibility for pension benefits.... However ... [M&G Polymers v. Tackett] forecloses reliance on this rationale ... Tackett suggests that courts should not rely on language 'tying.... eligibility for health care benefits to receipt of pension benefits.' ... It does not suggest that courts cannot rely on language tying the duration of retiree healthcare benefits to the receipt of benefits. There is a difference.... [T]he tying language used here no longer supports the Court's determination that the parties intended to confer lifetime benefits." [Reese v. CNH Industrial N.V., No. 04-CV-7059 2 (E.D. Mich. Sept. 28, 2015)]

Text of Federal District Court Opinion Finding SPD's Language Enforceable Despite Amara

"Amara does not support the broad proposition urged by the Estate, i.e. that an SPD can never serve as an ERISA plan document. As recently as May, 2011, notably in a decision rendered just two days after Amara, the Sixth Circuit recognized that where there is no formal ERISA plan separate and apart from the SPD, the SPD is the relevant plan document ... Amara does nothing to change the analysis and conclusion in this case. At the heart of Amara is the requirement that there be a conflict between the language of the SPD and the controlling plan document before the terms of the SPD can be ignored or overriden." [L&W Associates Welfare Benefit Plan v. Estate of Terance R. Wines, No. 12-cv-13524 (E.D. Mich. Jan. 13, 2014)]

Text of District Court's Temporary Restraining Order Against HHS Contraceptive Mandate (PDF)

"[Plaintiff Thomas] Monaghan asserts that acting to have his company provide such coverage would cause him to commit a grave sin according to his religious beliefs. This argument is well-taken, since DF cannot act (or sin) on its own. Therefore, even though the ACA does not literally apply to Monaghan, the Court is in no position to declare that acting through his company to provide certain health care coverage to his employees does not violate Monaghan's religious beliefs. They are, after all, his religious beliefs.... The Government may substantially burden a person's exercise of religion "only if it demonstrates that application of the burden to the person is in furtherance of a compelling governmental interest'.... The government bears the burden of proof and 'ambiguous proof will not suffice'.... [A]t this point, the Court has insufficient information before it to adequately determine whether the Government's interests are sufficiently 'compelling,' or whether the Government's actions are the least restrictive. Thus the Government has failed to carry its burden."

Courts Penalize Employer for Denial of Intermittent FMLA Leave

"In the case of a telephone company worker under long-term psychiatric treatment, an eight-member jury and the U.S. District Court for the Eastern District of Michigan found that an FMLA case manager made a good faith but 'unreasonable' decision to deny intermittent FMLA leave to [an employee].... The infraction cost Michigan Bell Telephone Company, an AT&T subsidiary, nearly $523,000 in damages and attorney fees.... [T]he 6th U.S. Circuit Court of Appeals upheld the award of liquidated damages and affirmed the district court's denial of Michigan Bell's motions for directed verdict and new trial." [Hyldahl v. Michigan Bell Telephone Company, No. 09-2087 (6th Cir. Oct. 31, 2012)]