LANSING, Mich. (Legal Newsline) -- The Michigan Court of Appeals, in an unpublished opinion Tuesday, sided with Blue Cross Blue Shield of Michigan in a case -- one of several filed against it by government agencies across the state -- over so-called "access fees" charged to self-insured customers.
BCBSM asked the appeals court to review, and reverse, a circuit court's order entering judgment for plaintiff Midland County in the amount of $1,028,052.
Of that, $933,052 represented the jury verdict, $55,000 represented case evaluation sanctions and $40,000 was prejudgment interest.
The insurer argued that the circuit court erred in denying its motion for summary disposition. A three-judge panel of the appeals court ultimately agreed with BCBSM.
The panel -- judges Michael J. Kelly, Christopher M. Murray and Mark T. Boonstra -- pointed to its decision in Calhoun Co v. Blue Cross and Blue Shield of Michigan last June.
"The factual summary set forth in Calhoun Co provides a brief background of defendant's access fee: [BCBSM] is governed by various Michigan statutes and is legally obligated to subsidize insurance policies for any Medicare-eligible person who is not a member of a 'group.' [BCBSM] internally refers to this subsidy as 'other than group,' or OTG," the judges explained in their five-page ruling.
In the late 1980s, BCBSM separately billed its customers for the cost of the OTG subsidy.
Many self-insured customers were dissatisfied with paying the OTG charge; as a result, some customers hired BCBSM's competitors, while others simply refused to pay the OTG charge.
BCBSM ultimately decided to merge mandatory business charges, such as the OTG charge, into the hospital claims for self-insured plans. Thus, the various business charges were no longer visible on billing statements, but were instead built into the bill submitted to the customer.
According to the insurer, these built-in charges were part of an "access fee" that was structured in part as the cost for access to its hospital network discounts.
"In Calhoun Co, which interpreted a contract identical to the contract at issue here, this Court reached two distinct conclusions that are relevant to the instant case," the panel wrote.
"First, this Court concluded that the parties' contract, which consisted of the Administrative Services Contract (ASC) and the yearly Schedule A, unambiguously provided for the access fee. Second, this Court concluded that while the amount of the access fee was not set forth in the contract itself, it was 'reasonably ascertainable through [BCBSM's] standard operating procedures.'"
Midland County argued that a paragraph in the ASC was ambiguous and did not authorize BCBSM to charge the fee:
"The Provider Network Fee, contingency, and any cost transfer subsidies or surcharges ordered by the State Insurance Commissioner as authorized pursuant to 1980 PA 350 will be reflected in the hospital claims cost contained in Amounts Billed."
The appeals court said a "straightforward reading" of the paragraph establishes that the parties agreed to the payment of the access fee, and BCBSM was contractually authorized to add the access fee to the hospital claims.
"Further, the standard operating procedures were a valid, objective method for calculating the amount of the access fee," the panel wrote.
The court reversed and remanded the case to the circuit court for entry of judgment in BCBSM's favor.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.