General v. Blue Cross Blue Shield
291 Mich. App. 64
| Mich. Ct. App. | 2010Background
- Plaintiff challenges BCBSM's financing scheme under the Nonprofit Health Care Corporation Reform Act, focusing on the Accident Fund's acquisitions of three for-profit insurers and a $125 million capital contribution.
- The Accident Fund, a wholly owned for-profit subsidiary of BCBSM, acquired United Wisconsin Insurance Company (UWI), CWI Holdings (and its subsidiary CompWest), and Third Coast Insurance Company between 2005 and 2007.
- BCBSM authorized a $125 million contribution to the Accident Fund in 2007 to support the affiliated insurers’ rating; the Accident Fund subsequently acquired CWI.
- Plaintiff alleged these transactions violated MCL 550.1207(l)(o), which governs permissible investments and acquisitions by BCBSM as a health care corporation.
- The trial court granted summary disposition on count I, dismissed count I on reconsideration, and referred count II to the OFIR Commissioner under primary jurisdiction, while dismissing a related action as moot in later proceedings.
- The OFIR Commissioner later concluded BCBSM did not violate § 207(l)(x)(ci) with the 2007 capital contribution, prompting further litigation challenging that interpretation in the trial court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 550.1207(l)(o) prohibits the Accident Fund's acquisitions by BCBSM's subsidiary | UWI, CWI, and Third Coast acquisitions violate 550.1207(l)(o). | The statute applies to BCBSM as a health care corporation and not to the Accident Fund; the acquisitions by the subsidiary fall outside § 1207(l)(o). | Affirmed: § 1207(l)(o) does not directly apply to the Accident Fund's acquisitions. |
| Whether BCBSM's $125 million capital contribution to the Accident Fund violated § 550.1207(l)(x)(vi) and related provisions | Contribution constitutes impermissible subsidy/financial support of the Accident Fund. | Constitutional or statutory allowances permit such subsidies or are outside the scope of the statute. | Remanded: the trial court must independently interpret the statute de novo. |
Key Cases Cited
- Rooyakker & Sitz, PLLC v Plante & Moran, PLLC, 276 Mich App 146 (2007) (final disposition when claims are resolved; final order for purposes of appeal)
- In re Complaint of Rovas Against SBC Mich, 482 Mich 90 (2008) (agency statutory interpretations are reviewed de novo; respect for agency interpretation but not binding)
- Travelers Ins Co v Detroit Edison Co, 465 Mich 185 (2001) (primary jurisdiction principles; agency expertise and uniformity considerations)
- Attorney General v Diamond Mortgage Co, 414 Mich 603 (1982) (definition and scope of primary jurisdiction; agency expertise)
- Boyar-Campbell v Fry, 271 Mich 282 (1935) (proper standard of review for agency statutory construction; deferential but not binding)
- Sun Valley Foods Co v Ward, 460 Mich 230 (1999) (interpret statutory language in grammatical context; avoid surplusage)
- Neal v Wilkes, 470 Mich 661 (2004) (interpretation presumed from plain language; avoid surplusage)