Deadline nears to file Blue Cross settlement claim

Target 8

GRAND RAPIDS, Mich. (WOOD) — The clock is ticking on a massive class-action lawsuit that affects as many as 8 million Michigan residents.

The deadline to make a claim and get part of a nearly $30 million settlement is Saturday.

The lawsuit was filed in 2010 against Blue Cross Blue Shield of Michigan, the state’s largest insurer. Originally asking for $13.7 billion, the lawsuit sought reimbursement for patients and businesses who, according to the plaintiffs, paid more for health insurance and hospital costs due to old Blue Cross contracts.

The case has been settled for $29.99 million, pending a final hearing for approval.


Under a typical contract, insurance companies negotiate the lowest reimbursement rate to hospitals for a patient’s bill.

But between 2006 and 2014, Blue Cross Blue Shield of Michigan offered to pay hospitals more money toward bills if the hospitals agreed to charge all other insurance companies as much or more than Blue Cross Blue Shield of Michigan. These were called “most favored nation,” or MFN, agreements.

“If you’re a Michigan resident, you went to the hospital during that time period, you probably paid more than you should have,” said attorney Perrin Rynders of the Varnum Law Firm in Grand Rapids.

Rynders represents a number of businesses that say they paid more for employee health care due to the MFN contracts.

“If health care costs go up, insurance rates are going to go up,” he said.

Michigan lawmakers made MFN contracts illegal in 2013.


Even though Blue Cross had similar agreements with dozens of Michigan hospitals, court documents connected to the $29.99 million settlement say a plaintiffs’ expert was only able to show costs went up at 13 hospitals.

Those hospitals include the following West Michigan locations:

  • Bronson Lakeview (Paw Paw)
  • Three Rivers Health
  • Allegan General Hospital
  • Sparrow Ionia Hospital
  • Mercy Health Lakeshore

Other West Michigan hospitals also had controversial MFN agreements, but the expert was unable to prove those hospitals used the contracts to increase costs. Those other hospitals include:

  • Borgess Lee Memorial Hospital (Dowagiac)
  • Borgess Medical Center (Kalamazoo)
  • Borgess Pipp Hospital (Plainwell)
  • Bronson Vicksburg Hospital
  • Community Health Center of Branch County
  • Memorial Medical Center of West Michigan (Ludington)
  • Metro Health Hospital
  • Pennock Hospital (Hastings)
  • Sheridan Community Hospital
  • South Haven Community Hospital

The expert estimated the cost increases due the agreements came to about $118 million.

Target 8 reached out to both Blue Cross Blue Shield of Michigan and the plaintiffs’ lawyers to discuss the settlement. Due to the terms of the agreement, both sides were only able to give the following statement:

“Blue Cross Blue Shield of Michigan and the Class Plaintiffs are pleased to announce that they have reached an amicable resolution of the Plaintiffs’ lawsuit about most favored nation clauses in Blue Cross’s contracts with Michigan hospitals. This settlement, the parties agree, is an amicable resolution reached before the court or the jury had decided the merits of either party’s legal position.”

But in court documents, Blue Cross Blue Shield of Michigan denied its contracts caused prices to rise.


The settlement creates a tier system to determine how the money will be divided.

Claims related to the 13 identified hospitals during the affected period will get a larger share of the settlement.

Patients who sought treatment at other hospitals with MFN agreements will be eligible for a smaller share.

Exact numbers will depend on how many claims are submitted.


Like most class-action lawsuits of this kind, the lawyers for the plaintiffs have paid for the litigation upfront, expecting they will collect their fees when the case is either won in court or settled.

They have been working on this case since 2010 and say they have put in a total of 32,449 hours to date. The lawyers have also paid $3.5 million of their own money for experts.

They are now asking a judge to approve a plan that gives them about 41 percent of the settlement funds to cover those expenses and attorney fees. That money would come out before claimants get paid. If approved by a federal judge, the share for patients and businesses would be reduced to $17,858,371.33.

“If we had not done that work, there’d be zero. Nobody would get anything,” Powell Miller of Miller Law, one of the lead attorneys on the case, said. “What we are seeking is only an effective hourly rate of $266 per hour, which is very, very low for this type of litigation that takes many years.”

Ryners and the Varnum Law Firm are asking the judge to take a hard look at the requested attorney fees.

“Even if the settlement itself is fair in terms of the total amount paid … how much goes to the victims and how much goes to the lawyers?” Rynders said.

While opposing the attorney fee amounts filed by the plaintiffs, Varnum is also asking the judge to approve $165,128.43 in attorney fees for its firm. It says its appeal of the original settlement was successful and helped patients and companies get a better understanding of the settlement and its merits.

The plaintiffs’ lawyers disagree.

“Vanum has got $0 for the class. The only thing they have accomplished is to delay for years the ability of people to get their share of this settlement,” Miller told Target 8.

He pointed out that when averaged over the hours worked, Varnum is seeking a higher billable rate than the plaintiffs’ lawyers.


The lawsuit was originally filed in 2010 and settled in 2014. Millions of notices were mailed out and about 45,000 people submitted claims.

Then Varnum and a small number of other firms objected to the settlement. They argued that too much of the court record was sealed, including an expert’s report, documents showing the impact of the Blue Cross contracts and information about how the settlement was reached.

In 2016, the U.S. Circuit Court of Appeals sent the case back to a federal court in Detroit with an order to unseal the documents and allow people to see what was behind the settlement.

After the documents were unsealed, a nearly identical settlement was resubmitted to the court and nearly 3 million more notices were mailed out.


The only way to get a share of the settlement is to file a claim by Saturday. Information on how to do that can be found online.

“If someone doesn’t have time to complete the claim form, do the best you can, submit what you can by the deadline,” Daniel Small, an attorney for the plaintiffs, said.

Small says the claims administrator will go through the claims and reach out to those who have missing information.

A hearing is scheduled for next week in a Detroit federal court. A judge will hear arguments on whether the settlement is fair and should be given final approval. The judge will also be asked to decide what amount of legal fees and costs are fair.

While the arguments will be heard Nov. 8, lawyers expect a decision will come at a later date.

Copyright 2021 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Know something newsworthy? Report It!