DeLuca v. Blue Cross Blue Shield of Michigan
628 F.3d 743
6th Cir.2010Background
- ERISA fiduciary duties require discharge of duties solely in the interest of participants and beneficiaries.
- BCBSM administered a self-insured Flagstar Plan and negotiated rates with health-care providers for multiple BCBSM plans.
- Flagstar and BCBSM entered a contract (and later a HIPAA addendum) for claims processing and network management services.
- Beginning around 2004, BCBSM executed letters with hospitals to equalize HMO rates with PPO/traditional rates, often budget-neutral and sometimes retroactive.
- DeLuca, a Flagstar Plan participant, alleged in 2006 that BCBSM breached ERISA fiduciary duties by these rate changes and appealed after summary judgment.
- The district court granted summary judgment, holding BCBSM was not acting as a fiduciary in negotiating the rate changes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BCBSM acted as an ERISA fiduciary when negotiating rate changes. | DeLuca argues BCBSM fiduciary under 1104. | BCBSM's rate negotiations were business decisions, not fiduciary acts. | BCBSM was not acting as a fiduciary in rate negotiations; summary judgment affirmed. |
| Whether § 1106(b)(2) liability attaches when the fiduciary acts outside a fiduciary capacity. | DeLuca contends § 1106(b)(2) can impose liability for non-fiduciary actions related to plan assets. | Section 1106(b)(2) applies only to actions taken in a fiduciary capacity. | Section 1106(b)(2) liability requires fiduciary action; the court found no fiduciary action here; judgment affirmed. |
Key Cases Cited
- Pegram v. Herdrich, 530 U.S. 211 (U.S. 2000) (fiduciary status depends on whether action was a fiduciary function)
- Mertens v. Hewitt Assocs., 508 U.S. 248 (U.S. 1993) (fiduciary definition is functional, not formal)
- Hunter v. Caliber Sys., Inc., 220 F.3d 702 (6th Cir. 2000) (§ 1106 applies only to those who act in a fiduciary capacity)
- Sengpiel v. B.F. Goodrich Co., 156 F.3d 660 (6th Cir. 1998) (fiduciary standards depend on conduct; not merely business decisions)
- Central States, S.E. & S.W. Areas Pension Fund v. Int'l Comfort Prod., LLC, 585 F.3d 281 (6th Cir. 2009) (caselaw cautioned against divergence from statutory terms by prior circuits)