Mid-Atlantic Health Law TOPICS

Hero Image for page

Different Rates for Different Plans

The federal Employee Retirement Income Security Act (ERISA) regulates employer sponsored benefit plans, including health plans, and imposes strict conduct rules on plan fiduciaries. Generally, a plan fiduciary is subject to significant penalties if it fails to act for the "exclusive benefit" of plan participants.

Recently, the federal Court of Appeals for the Sixth Circuit ruled in DeLuca v. Blue Cross Blue Shield of Michigan, that Blue Cross Blue Shield of Michigan (BCBSM) was not a fiduciary when it negotiated hospital reimbursement rates for its own plans and for its self-funded health plan clients, and, therefore, there was no breach of BCBSM's duties to its self-funded plans when BCBSM negotiated more favorable rates for its own plans.

In a 2-1 decision, the Sixth Circuit acknowledged that BCBSM was an ERISA fiduciary to the extent it processed claims, but it was not a fiduciary when it negotiated rates, the latter of which, in the court's opinion, was just the exercise of a business decision. The court also noted that saddling BCBSM with a fiduciary obligation to negotiate plan-specific rates for all of its clients would undermine BCBSM's ability to negotiate favorable rates for any of its clients.

Print

Date

03.15.11

Type

Publications

Authors

Porter, Mary L.

Related Legal Boutiques

Benefits/ERISA
Health Care