Holland to file lawsuit against Blue Cross Blue Shield

Dec 3, 2010

Holland is the latest city in Michigan planning to file a lawsuit against Blue Cross Blue Shield over variable fees. The fee is a 13.5% administrative access fee Blue Cross charged the city on any insurance claims filed by employees.  The city claims the insurer didn’t tell them about the fees for 17 years.

Holland Mayor Kurt Dykstra says,

“It’s my understanding that actually one of our finance people at one point did ask a question of Blue Cross Blue Shield specifically related to the fees that they were charging and was told by BCBS that - no there were no additional fees, no additional charges being passed along. Now it turns out that may not in fact have been the case.”

Blue Cross Blue Shield spokesperson Helen Stojic claims the company did disclose the fees.  She says they benefited the city, “In return for paying this fee, the city received access to millions of dollars of hospital discounts. It helped save money – hold down costs for that community,” Stojic said. At the heart of this issue, Stojic says, is that the city knew about the fees. “At the other heart of the matter is variable fees are not unusual when they’re based on services or the contract period,” Stojic said. She says plaintiffs in similar cases have admitted they knew about the fees.

Last month an Oakland County Circuit judge awarded the City of Pontiac nearly one-and-a-half-million-dollars in a similar civil case. Several other cases alleging the insurance company hid fees from local governments are pending.

Stojic said it doesn’t make sense that cash-strapped cities are suing them even though the fees gave their employees access to discounts on hospital bills.

Dykstra says any money recovered would stay strictly in the city’s insurance pool, a separate fund from the city’s general operations. “We believe we’ve overpaid for the services we’ve agreed to pay for and that’s all we’re dealing with here nothing…we’re not looking to Blue Cross Blue Shield for any bailout for goodness sakes,” Dykstra said.

Holland hired the same law-firm that represented three other local governments in similar cases against BCBS.

Stojic says BCBS feels judges have made errors on points of law in the Pontiac case and another decided in the favor of Calhoun County. She says the company is considering an appeal in those cases.