Calhoun County v. Blue Cross Blue Shield
297 Mich. App. 1
| Mich. Ct. App. | 2012Background
- Calhoun County contracts with Blue Cross and Blue Shield of Michigan (BCBSM) to administer its self-insured health plan for many years.
- BCBSM is obliged to subsidize certain Medicare-eligible individuals not in a group, referred to as “other than group” (OTG), and to maintain independent funding for each line of business, including the self-insured plan.
- BCBSM began embedding the OTG subsidy and related access costs into hospital claims through the ASC and Schedule A, rather than billing separately.
- Plaintiff alleged there was no price term for the ASC Access Fee and that BCBSM unilaterally charged excessive fees, violating the contract and good faith, with fiduciary duty asserted by plaintiff.
- The trial court granted partial summary disposition for plaintiff on breach-of-contract and fiduciary-duty claims; defendant sought summary disposition and denial of amendments; on appeal, the court reversed and remanded for entry of summary disposition in defendant’s favor on those claims.
- The appellate court held that the access fee was enforceable and that plaintiff’s fiduciary-duty claim failed as the fee was contractually authorized.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the access fee term indefinite, rendering the contract unenforceable? | Calhoun contends no price term existed, making the contract ill-defined. | BCBSM argues the fee was defined by the ASC and Schedule A and ascertainable via standard procedures. | No; contract valid and enforceable despite lack of a fixed dollar amount. |
| Does absence of a specific amount for the access fee negate consideration or create no contract? | Indefiniteness prevents a binding contract regarding the access fee. | The agreement to pay an access fee and its method of calculation were sufficiently definite. | Contract remains enforceable; price determinable by defendant’s standard operating procedures. |
| Did the contract impose a fiduciary duty on BCBSM, and did BCBSM breach it? | BCBSM owed a fiduciary duty to disclose the access fee and its amounts. | Since the access fee was contractually authorized, no breach occurred. | BCBSM had a fiduciary duty, but breach claim fails because fee was authorized by contract. |
| If the access fee is enforceable, is plaintiff limited to damages within the contract’s limitations (e.g., statute of limitations) for fraudulent concealment claims? | Fraudulent concealment should allow broader recovery beyond limitations if proven. | Fraudulent concealment rejected by jury; contract enforcement remains. | Fraudulent concealment claim rejected; contract enforcement preserved. |
Key Cases Cited
- Nichols v Seaks, 296 Mich 154 (Mich. 1941) (indefiniteness may be cured by surrounding conduct or performance)
- Waites v Miller, 244 Mich 267 (Mich. 1928) (avoid contracting to evade obligations due to indefiniteness)
- Zurcher v Herveat, 238 Mich App 267 (Mich. Ct. App. 1999) (limits of contract formation and interpretation in Michigan law)
- Reed v Vander Zalm, 336 Mich 1 (Mich. 1953) (issues of price and valuation in contract formation)
- Cobble Hill Nursing Home v Henry & Warren Corp, 74 NY2d 475 (N.Y. 1989) (failure to fix a sum certain not necessarily fatal to contract)