Saginaw Chippewa Indian Tribe of Michigan et al v. Blue Cross Blue Shield of Michigan
Filing
283
OPINION and ORDER Overruling Defendant's 272 Objection to Sanctions Order, Overruling Defendant's 267 Objection to Bill of Costs, Denying Without Prejudice Plaintiffs' 266 Motion for Default Judgment, and Directing Completion of Discovery. (Expert Discovery due by 9/18/2023; TEAMS Video/Telephonic Status Conference set for 9/25/2023 at 3:00 PM before District Judge Thomas L. Ludington.) Counsel will Receive a Separate Email with TEAMS Invite. Signed by District Judge Thomas L. Ludington. (KWin)
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15608 Filed 07/19/23 Page 1 of 16
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION
SAGINAW CHIPPEWA INDIAN TRIBE
OF MICHIGAN and WELFARE BENEFIT PLAN,
Plaintiffs,
v.
Case No. 1:16-cv-10317
Honorable Thomas L. Ludington
United States District Judge
BLUE CROSS BLUE SHIELD OF MICHIGAN,
Defendant.
____________________________________________/
Honorable Patricia T. Morris
United States Magistrate Judge
OPINION AND ORDER OVERRULING DEFENDANT’S OBJECTIONS TO
SANCTIONS ORDER, OVERRULING DEFENDANT’S OBJECTION TO BILL OF
COSTS, DENYING WITHOUT PREJUDICE PLAINTIFFS’ MOTION FOR DEFAULT
JUDGMENT, AND DIRECTING COMPLETION OF DISCOVERY
For nearly a year, the parties have sought to learn what the difference was between the
healthcare prices that Blue Cross negotiated and the prices that are charged to Medicare patients.
The process has not gone smoothly. The source of the problem is at least significantly attributable
to the lack of a meeting of the minds between counsel when they cowrote a single-page stipulation
governing their respective discovery obligations in identifying nearly 100,000 insurance claims.
The parties’ initial point of contention? Whether Blue Cross was obliged to produce
insurance-claims forms for the covered healthcare received by members and employees of the
Saginaw Chippewa Indian Tribe. The Tribe alleged that Blue Cross willfully violated court orders
by producing physical forms but not the electronic versions, leading to sanctions issued by Judge
Morris. Blue Cross countered that the sanctions and the associated costs were issued in error
because the electronic version has a different name than the physical version that it was directed
to produce. Their objections, however, find little traction; the distinction between physical and
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15609 Filed 07/19/23 Page 2 of 16
electronic format is of little significance. As a result of additional motion practice, Judge Morris
also resolved that the Tribe was to furnish Blue Cross with the birthdates of beneficiaries and to
identify the beneficiaries’ dependents.
Yet, the story doesn’t end there. The Tribe’s motion for default judgment, stemming from
the very same stipulation, will be denied.
I.
A.
The two health-insurance plans at issue in this case are governed by two contracts between
the Saginaw Chippewa Indian Tribe of Michigan (SCIT) and Blue Cross Blue Shield of Michigan.
SCIT has a plan for its members (“Member Plan”) and a policy for its employees1 (“Employee
Plan”). See SCIT v. BCBSM, 32 F.4th 548, 554 (6th Cir. 2022). These plans operate within the
complex tapestry of federal-healthcare law.
American Indians2 access federally funded healthcare through the Indian Health Service
(IHS), a wing of the United States Department of Health and Human Services. The IHS funds and
operates healthcare facilities for tribes. 42 C.F.R. § 136.23. The IHS separately funds programs
for Contract Health Services3 (CHS), administered by SCIT. Id. § 136.21; 25 U.S.C. § 1603(5),
(12). The CHS programs are the focus of this case.
1
Some employees are also members of SCIT, but it is a rare circumstance. See SCIT v. BCBSM,
32 F.4th 548, 555 (6th Cir. 2022) (“The Employee Plan covered Tribe employees regardless of
their tribal membership status.”).
2
Throughout this opinion, the term “American Indian” refers to the indigenous peoples of the
United States. While this term might be viewed as outdated or offensive, its usage here stems from
the historical context and continued use by the United States Government, not an intent to offend
or to perpetuate stereotypes. This Court recognizes the evolving nature of language and the
importance of respecting diverse cultural identities.
3
The Consolidated Appropriation Act of 2014 renamed the Contract Health Services program as
“the Purchased/Referred Care program” (PRC). See Purchased/Referred Care (PRC), INDIAN
HEALTH SERVICE (June 2016), https://www.ihs.gov/newsroom/factsheets/purchasedreferredcare/
-2
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15610 Filed 07/19/23 Page 3 of 16
The CHS programs are essentially safety nets, providing access to health services that are
not available at the IHS facilities. 42 C.F.R. § 136.23(a). Such services come from “public or
private medical or hospital facilities other than those of the IHS.” Id. § 136.21. Before receiving
CHS care in nonemergency situations, the regulations require a preapproval process: the person’s
medical provider or representative must inform an ordering official that the services are necessary,
providing relevant information to determine the medical necessity and the person’s eligibility. Id.
§ 136.24(b). If approved, then the CHS program issues a referral or purchase order, which
authorizes the eligible person to receive the requested medical services from a third-party provider.
Id. § 136.24(a).
Each tribe plays the crucial role of administering, funding, and providing healthcare to its
members. Congress, with concern for the tribes’ sovereignty, enacted the Indian
Self-Determination and Education Assistance Act of 1975, 25 U.S.C. § 5301 et seq. Under this
law, tribes may opt to receive money from the federal government for managing their own IHS
facilities, contracting private insurers for healthcare, and operating their own CHS programs. See
FGS Constructors, Inc. v. Carlow, 64 F.3d 1230, 1234 (8th Cir. 1995).
Yet there remain difficulties in providing accessible and fully funded healthcare to
American Indians. Rancheria v. Hargan, 296 F. Supp. 3d 256, 259 (D.D.C. 2017). To overcome
these financial barriers, the CHS programs are deemed the “payer of last resort” for healthcare
costs, 25 U.S.C. § 1623. Medicare, Medicaid, or private insurance may furnish funding first. 42
C.F.R. §§ 136.30, 136.61.
[https://perma.cc/NLK5-LH8U]. Yet throughout this litigation, every court and the parties have
used the terms “CHS” and “Contract Health Services.” The same is true here.
-3
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15611 Filed 07/19/23 Page 4 of 16
Significant financial constraints on CHS funds have led to amendments to federal law and
regulations. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003
authorized the United States Department of Health and Human Services to demand Medicare
pricing from hospitals that provide services to tribes under the CHS program. Pub. L. No. 108–
173. And it did so by setting a ceiling on payments that Medicare-participating providers may seek
for providing CHS-authorized care. 42 C.F.R. § 136.30.
SCIT operates its CHS program through the Nimkee Medical Clinic. See SAGINAW
CHIPPEWA
INDIAN
TRIBE
OF
MICH.,
Nimkee
Memorial
Wellness
Center
(2023),
http://www.sagchip.org/nimkee/medicalclinic/index.aspx [https://perma.cc/22EW-D9M9]. If the
Nimkee Clinic cannot provide certain care, then it authorizes third-party care, which SCIT must
approve with a purchase order that refers the patient to a third-party provider. See 42 C.F.R. §
136.24. Blue Cross’s only involvement in this part of the process is issuing insurance cards for
patients to present to third-party providers. See ECF No. 173 at PageID.8901.
SCIT funds the two healthcare plans from several sources. SCIT v. BCBSM, 32 F.4th 548,
554 (6th Cir. 2022). In addition to the availability of CHS funds, SCIT covers some expenses with
funds from the Soaring Eagle Casino & Resort. Id. And SCIT has arranged a Medigap4 insurance
policy to fund expenses for other eligible beneficiaries.
Both healthcare plans are administered by Blue Cross under separate contracts. Id. at 555.
The contracts limit Blue Cross’s responsibilities “to providing administrative services for the
processing and payment of claims.” Id. Such services included Blue Cross receiving a “claim”
4
Medicare recipients can “expand” their coverage “beyond [Medicare’s] basic limits” by
purchasing “private supplemental insurance plans, commonly referred to as ‘Medigap policies.’”
Edwin Caldie, Note, Medigap: Should Private Insurers Pay Public Rates and Who Should Make
the Decision?, 30 AM. J.L. & MED. 69, 69 (2004) (citing 42 U.S.C. §§ 1395d, 1395ss(g)(1) (2000)).
-4
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15612 Filed 07/19/23 Page 5 of 16
from a third-party provider for any services provided to the plan member,5 paying the bill from
one of two SCIT-funded accounts, and providing quarterly or monthly reports of the remaining
account balances to SCIT, which SCIT would use to determine how much additional funds to
deposit into the accounts for future medical services. See id. at 567–68 (Rogers, J., concurring the
judgment).
B.
In January 2016, SCIT and its Welfare Benefit Plan (“Plaintiffs”) sued Blue Cross under
federal and state law, alleging it breached its fiduciary duty under Employee Retirement Income
Security Act (ERISA) by paying excess claim amounts to Medicare-participating hospitals for
authorized services, violated the Michigan Health Care False Claims Act by not seeking
Medicare-like rates for eligible claims under the Member Plan, and breached its common-law
fiduciary duty by not seeking Medicare-like rates for eligible claims under the Member Plan.
On its most recent trip to the Sixth Circuit, the case was reversed and remanded based on
an interpretation of the applicable regulations. SCIT v. BCBSM, 32 F.4th 548 (6th Cir. 2022)
(holding that Medicare-participating healthcare providers must accept Medicare-like rates as full
payment for any care authorized by an American Indian tribe that is “carrying out” a CHS
program), en banc reh’g denied, No. 21-1226, 2022 WL 2286404, at *1 (6th Cir. June 7, 2022).
Based on numerous “legal and factual disputes” that were either “not address[ed]” or “not fully
consider[ed]” the majority opinion instructed this Court to determine (1) whether SCIT’s CHS
program authorized the care that it asserts was subject to Medicare-like rates; (2) whether Blue
5
The claims forms come in either electronic or physical format. See SCIT v. BCBSM, No. 1:16CV-10317, 2023 WL 1452062, at *9 (E.D. Mich. Feb. 1, 2023) (“UB-04s and 837s are
substantively identical.” (citations omitted)).
-5
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15613 Filed 07/19/23 Page 6 of 16
Cross breached its fiduciary duty by not seeking Medicare-like rates; (3) whether Blue Cross
violated the Michigan Health Care False Claim Act; and (4) whether the claims are barred by the
statute of limitations based on when the Tribe had actual knowledge of the breach and whether
Blue Cross’s actions amounted to fraud or concealment. Id. at 563–65. And the concurring opinion
instructed this Court to determine “whether Blue Cross undertook the administration of
CHS-authorized coverage, and if so, whether Blue Cross applied [Medicare-like rates] to that
coverage.” Id. at 568 (Rogers, J., concurring the judgment).
On remand, the parties decided to conduct discovery on nearly 100,000 insurance claims.
Their goals were to assess the scope of the CHS services that SCIT carried out and to quantify the
monetary difference between Medicare-like rates and the rates that Blue Cross negotiated and paid
to the third-party providers. To that end, the Parties entered the following “Stipulation as to Certain
Discovery” in August 2022:
Under the Parties’ Stipulation, through their counsel of record, and
consistent with the issues addressed during the July 20, 2022 Status Conference,
the Parties agree to an Order recognizing that:
(i) BCBSM will make best efforts to produce to Plaintiffs, by August 31,
2022, the claims data relative to the Member Plan going back to July 2007,
consistent with the claims data produced by BCBSM in the Grand Traverse Band
litigation;
(ii) Plaintiffs will make best efforts to identify for BCBSM, by August 31,
2022, the Tribal Members that participated in the Employee Plan (“Employee
Tribal Members”);
(iii) after Plaintiffs identify for BCBSM the Employee Tribal Members,
BCBSM will produce to Plaintiffs the claims data relative to those individuals
going back to July 2007, consistent with the claims data produced by BCBSM in
the Grand Traverse Band litigation; and
(iv) the Parties will report to this Court, by September 2, 2022, the status of
the foregoing discovery, and another status conference will follow that report.
ECF No. 222. The Stipulation, breathtaking in its simplicity and narrow scope, has caused months
of discovery issues to dominate the merits of the case. In relevant part, Plaintiffs filed two motions
for sanctions, Blue Cross was sanctioned by the magistrate judge, Blue Cross objected to the
-6
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15614 Filed 07/19/23 Page 7 of 16
sanctions, Plaintiffs filed a motion for default judgment, and a hearing was held to address the
issues.
Blue Cross’s objections will be resolved infra Part II, followed by Plaintiff’s Motion for
Default Judgment infra Part III.
II.
A.
Blue Cross first objects that Judge Morris clearly erred in ordering sanctions because the
Stipulation did not require the production of the electronic claims forms (“837s”) or any claims
data for the dependents of SCIT employees who have the Employee Plan. ECF No. 272. The
Parties disagreed over whether the Stipulation required Blue Cross to produce physical forms
containing claims data (“UB-04s”). So Plaintiffs filed a motion to compel production of the
UB-04s, and Blue Cross was directed to produce them. SCIT v. BCBSM, No. 1:16-CV-10317, 2022
WL 16920410, at *2–3 (E.D. Mich. Nov. 14, 2022). As it turned out, there is an electronic version
of the UB-04s (“837s”), which Blue Cross was unwilling to produce under the Stipulation. SCIT
v. BCBSM, 2023 WL 1452062, at *4 (E.D. Mich. Feb. 1, 2023) (“837s and UB-04s are
substantively identical.”). Plaintiffs filed two motions for sanctions, arguing Blue Cross violated
the Stipulation and this Court’s order. ECF Nos. 233; 235. On referral, United States Magistrate
Judge Patricia T. Morris agreed that “Blue Cross willfully violated the orders” and sanctioned Blue
Cross with attorney’s fees and costs. SCIT v. BCBSM, 2023 WL 1452062, at *9–10.
“The Magistrate Judge’s order resolved a nondispositive discovery dispute.” Cratty v. City
of Allen Park, No. 2:17-CV-11724, 2018 WL 3983806, at *1 (E.D. Mich. June 14, 2018) (citing
Baker v. Peterson, 67 F. App’x 308, 311 (6th Cir. 2003) (per curiam) (unpublished)). So, this Court
“must consider timely objections and modify or set aside any part of the order that is clearly
-7
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15615 Filed 07/19/23 Page 8 of 16
erroneous or is contrary to law.” FED. R. CIV. P. 72(a); accord 28 U.S.C. § 636(b)(1)(A). But the
bar is high. 12 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE
AND
PROCEDURE § 3069 (3d ed. 2022) (“In sum, it is extremely difficult to justify alteration of the
magistrate judge’s nondispositive actions by the district judge.”). “A finding is ‘clearly erroneous’
[if] the reviewing court on the entire evidence is left with the definite and firm conviction that a
mistake has been committed.” United States v. Mabry, 518 F.3d 442, 449 (6th Cir. 2008) (quoting
United States v. U.S. Gypsum Co., 333 U.S. 364, 398 (1948)). Legal conclusions are reviewed de
novo and contrary to law only if it “fails to apply or misapplies relevant statutes, case law, or rules
of procedure.” Bisig v. Time Warner Cable, Inc., 940 F.3d 205, 219 (6th Cir. 2019) (quoting United
States v. Winsper, No. 3:08-CV-00631, 2013 WL 5673617, at *1 (W.D. Ky. Oct. 17, 2013)).
But Judge Morris did not make a clear error in sanctioning Blue Cross. Any distinction
between UB-04s and 837s, she noted, “puts form over substance” because “Blue Cross was to
produce the underlying claim forms” under the Stipulation, and “837s and UB-04s are
substantively identical” claims forms. SCIT v. BCBSM, No. 1:16-CV-10317, 2023 WL 1452062,
at *4, 9 (E.D. Mich. Feb. 1, 2023). And true, she explained, the Stipulation “does not explicitly
reference the dependents,” but “a commonsense reading of the [Stipulation] would suggest that
Blue Cross was to produce data for all claims under each employee's plan, which would include
claims arising from care provided to the employee's dependents.” Id. at *8 (noting the “briefing
and emails from both parties” agreeing “that claims arising from care provided to dependents fell
under the scope of the [Stipulation]”).
Because Judge Morris applied the correct law and drew reasonable inferences in ordering
sanctions, Blue Cross’s objections to her decisions will be overruled. See Anderson v. Bessemer
City, 470 U.S. 564, 574 (1985) (“Where there are two permissible views of the evidence . . . [the]
-8
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15616 Filed 07/19/23 Page 9 of 16
choice between them cannot be clearly erroneous.”); see also Matthew N. Preston II, The Tweet
Test: Attributing Presidential Intent to Agency Action, 10 BELMONT L. REV. 1, 5 (2022)
(explaining that “[i]nconsistent review” of governmental decisionmaking can “devolve[] into an
endless morass of discovery and policy disputes” (quoting Dep’t of Com. v. New York, 139 S. Ct.
2551, 2576 (2019) (Thomas, J., concurring in part and dissenting in part))).
B.
Blue Cross’s objections hold no sway against Plaintiffs’ Bill of Costs either. First, Blue
Cross suggests no fee should be awarded if Judge Morris’s sanctions order is overturned. ECF No.
267 at PageID.15012–14. But the sanctions will stand, see discussion supra Section II.A, and so
will the fees. Next, Blue Cross insinuates that Plaintiffs did not exercise good judgment in their
billing. Id. at PageID.15014–16 (citing ECF Nos. 260 at PageID.14784; 260-1). Not so.
Apart from numerous conclusory statements, Blue Cross protests that Plaintiffs put too
many cooks in the kitchen, three attorneys and three other staff, to file two discovery motions. Id.
at PageID.15015. But Blue Cross has not substantiated its argument with any benchmark or
comparative analysis to prove that Plaintiffs colored outside the lines. Considering the unique
complexity of the case—which weaves in nearly 100,000 insurance claims and a novel data
analysis—multiple minds were required. Indeed, the parties have repeatedly acknowledged the
need for expert opinions just to understand the insurance claims. Without specific evidence of
excessive or redundant hours, Blue Cross’s argument remains speculative.
Yet Plaintiffs bear the burden of “documenting [their] work” to justify their entitlement to
attorney’s fees and costs. Gonter v. Hunt Valve Co., 510 F.3d 610, 617 (6th Cir. 2007). To that
end, they must “submit evidence supporting the hours worked and rates claimed,” or “the . . . court
may reduce the award accordingly.” Perry v. AutoZone Stores, Inc., 624 F. App’x 370, 372 (6th
-9
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15617 Filed 07/19/23 Page 10 of 16
Cir. 2015) (per curiam) (unpublished) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)).
“This burden is generally satisfied through the submission of invoices and billing records,” Hardy
v. United States, 157 Fed. Cl. 464, 470 (2021) (citation omitted), containing “sufficient detail and
probative value to enable the court to determine with a high degree of certainty that such hours
were actually and reasonably expended in the prosecution of the litigation,” Imwalle v. Reliance
Med. Prods., Inc., 515 F.3d 531, 553 (6th Cir. 2008) (citation omitted). They must also prove that
the hours invested in the case were reasonable, Granzeier v. Middleton, 173 F.3d 568, 577 (6th
Cir. 1999) (citing Hensley, 461 U.S. at 433), and make a genuine effort to exclude hours that are
“excessive, redundant, or otherwise unnecessary,” Hensley, 461 U.S. at 434.
Plaintiffs have done their homework here. Their Bill of Costs spans from the day before
they filed their first successful motion to compel, September 1, 2022, to the day before their
successful oral argument on two motions seeking sanctions for Blue Cross’s failure to compel,
January 30, 2023. ECF No. 260 at PageID.14760–84. Each entry lucidly underscores it necessity
vis-a-vis Blue Cross’s violations and the ensuing sanctions. See generally id.
And Plaintiffs’ fees and costs are well within reason. Plaintiffs request $91,672.00 for
239.85 hours of work, averaging $382.21 per hour. See ECF No. 260 at PageID.14784–85.
Applying the required “lodestar method,” see Naji v. Lincoln, No. 2:13-CV-10738, 2014 WL
6669278, at *1 (E.D. Mich. Nov. 24, 2014) (first citing FED. R. CIV. P. 37(a)(5); and then citing
Ellison v. Balinski, 625 F.3d 953, 960 (6th Cir. 2010)), the hourly rate for plaintiffs’ counsel in
insurance law in Michigan is $350 per hour for the 25th percentile, $550 for the 75th percentile,
and $750 for the 95th percentile, STATE BAR OF MICH., ECONOMIC OF LAW PRACTICE IN MICHIGAN
10 (2020), https://www.michbar.org/file/pmrc/articles/0000156.pdf [https://perma.cc/8KLRDD8D]. Plaintiffs’ counsel, billing slightly above the 25th percentile, have earned their due. Their
- 10
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15618 Filed 07/19/23 Page 11 of 16
work throughout the discovery process—clear and cogent briefings, patient pursuits of discovery
disputes, and averaging less than 1.6 hours of work per day on uniquely complex issues—has
demonstrated efficiency, diligence, and competence such that $382.21 per hour is well deserved.
For those reasons, Blue Cross’s objections to Plaintiffs’ Bill of Costs will be overruled,
and Blue Cross will be directed to pay $91,672.00 in attorney’s fees and costs to Plaintiffs. But
this does not quite tie up all the loose ends stemming from the Stipulation, ultimately leading to
the motion for default judgment resolved in the next Part.
III.
The next part of this story began three weeks after Judge Morris ordered sanctions, when
Plaintiffs sought a default judgment for Blue Cross’s slow and unresponsive discovery. ECF No.
266; see also ECF Nos. 276; 277. The parties’ relevant disagreements were many, persisting
through nine status conferences and two hearings. At the most recent hearing, the parties’
discussed everything from the meaning of the Sixth Circuit’s remand order to the discovery
disputes as issue here. For brevity, this Part will only focus on the key issues relevant to this Order.
A.
Four factors govern the determination of the appropriate sanctions for discovery violations:
(1) Was the party’s lack of cooperation in discovery due to willfulness, bad faith,
or fault?
(2) Was the adversary prejudiced as a result of the lack of cooperation?
(3) Was the party forewarned that failing to cooperate could trigger the sanction?
(4) Did the court first consider or impose milder sanctions?
Freeland v. Amigo, 103 F.3d 1271, 1277 (6th Cir. 1997) (citations omitted) (“In regard to the first
factor, the Sixth Circuit has held that absent a clear record of delay or contumacious conduct, an
abuse of discretion occurs if the district court dismisses an action with prejudice.”). When Blue
Cross was sanctioned with an order compelling discovery and the payment of fees and costs, it
- 11
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15619 Filed 07/19/23 Page 12 of 16
was warned about possibly being sanctioned with a default judgment. SCIT v. BCBSM, No. 1:16CV-10317, 2023 WL 1452062, at *10 (E.D. Mich. Feb. 1, 2023). So only the first factor warrants
discussion.
The baffling Stipulation caused the relevant quagmires. The main problem, causing months
of delay, was whether the Stipulation obligated Plaintiffs to supply Blue Cross with the birthdates
of the SCIT members and employees so that it could more accurately search its database for
pertinent claims. The hearing revealed that the parties could have unraveled this knot had they put
their heads together. Although Plaintiffs showed that Blue Cross had the information earlier in the
case, it was lost in translation when both sides played musical chairs with counsel. Plaintiffs later
gave Blue Cross a list of names without birthdates. Why remove the birthdates? They don’t say.
Equally puzzling, Blue Cross, which could have mined its database to discover the respective
birthdates, didn’t do so. There remains another mystery.
A smattering of other issues still clutter the path. For example, Plaintiffs argue they have
received thousands of claims for procedures performed by healthcare professionals that lack a
corresponding facility claim from the hospital where the procedures were performed. If a SCIT
member underwent an operation by a professional at a facility, and Blue Cross has produced the
related professional claim, then where is the expected facility claim? Blue Cross’s response:
Plaintiffs can learn the information about the remaining claims data by serving its subpoenas on
the third-party providers. Why haven’t Plaintiffs served the subpoenas? They don’t say.
Another sticking point is whether Blue Cross could have conducted a comprehensive
search of its database for all relevant claims data but refused to do so. In the most recent hearing,
counsel mentioned that Blue Cross’s database has a searchable field showing whether a claim was
referred by the Nimkee Clinic, indicating CHS authorization. See also SCIT v. BCBSM, 2022 WL
- 12
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15620 Filed 07/19/23 Page 13 of 16
16920410, at *2 (E.D. Mich. Nov. 14, 2022) (“[T]he UB-04s would identify ‘the Tribe’s Nimkee
Contract Health Program’ in Box 38 as the ‘Responsible Party.’”); ECF No. 271 at PageID.15079
(stipulating that “[e]ach Claim Form identifies the Tribe’s ‘Nimkee Clinic Contract Health
Program’ in Box 38 as the ‘Responsible Party’ . . . and each Claim Form identifies the Tribe’s
‘Nimkee Clinic Contract Health Program’ in Box 80 as the ‘authorized agent’”). If Blue Cross
could indeed run such a search, then why the delay? Once again, Blue Cross is silent.
But these loose ends should not stall the case’s progression on the merits. True, Plaintiffs
cry prejudice, arguing Blue Cross is sitting on undisclosed claims data. But, as explained above,
the parties appear to have exchanged most of the necessary information. So why the inaction? The
Stipulation. Its lack of clarity has the parties lodged in a stalemate. Yet their intransigence is not
defiance—it is a classic standoff in the face of confusion. See Agarwal v. Morbark, LLC, 585 F.
Supp. 3d 1026, 1030 (E.D. Mich. 2021) (“With all the injustices in today’s world, it can be easy
to assume the worst in others. But we would all benefit from a bit more grace.”), aff’d, No. 20221348, 2022 WL 2092774 (Fed. Cir. June 10, 2022).
For those reasons, Plaintiffs’ Motion for Default Judgment will be denied. All that remains
then is how to manage the case among the lingering discovery disputes—a topic on which the
parties do not agree.
B.
During the most recent hearing, the parties claimed that the Sixth Circuit’s remand order
is too ambiguous to guide their actions on remand. Although the majority opinion directs “the
district court [to] proceed with the triable and threshold factual question of whether the Tribe’s
CHS program authorized the care for which they assert they were entitled to pay Medicare-like
rates,” SCIT v. BCBSM, 32 F.4th 548, 565 (6th Cir. 2022), it is undisputed that SCIT’s CHS
- 13
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15621 Filed 07/19/23 Page 14 of 16
program authorized some care, see discussion supra Section III.A. This confusion, no doubt,
contributed to the Sixth Circuit’s clarification that “[t]he question, to be clear, is whether Blue
Cross undertook the administration of CHS-authorized coverage, and if so, whether Blue Cross
applied MLR to that coverage.” SCIT v. BCBSM, 32 F.4th at 568 (Rogers, J., concurring in
judgment) (directing the district court to determine “whether Blue Cross was in any way
responsible for administering the CHS program, which was described by SCIT’s counsel in its
rebuttal argument as claims for care for tribal members, authorized by CHS, and paid for from a
pool of money that included some CHS dollars”).
During the hearing, the parties also covered the factual questions that the Sixth Circuit
outlined pertaining to the case’s merits. See discussion supra Section I.B. For instance, Plaintiffs
suggested that Blue Cross, being in the business of administering other tribal plans, should have
known about the requirement for Medicare-like rates since it was enacted—a point they say is
supported by the testimony of Connie Sprague, who heads the Member Plan and the Employee
Plan. Blue Cross countered that Plaintiffs should have acted sooner, so many or most of the ERISA
claims are barred by the statute of limitations. Even if true, Plaintiffs argued, Blue Cross could
have honored its obligation sooner but instead chose to follow the contract it had with SCIT. The
parties also discussed the funding of claims in relation to the Nimkee Clinic, with Plaintiffs
explaining the process and Blue Cross confirming it: SCIT deposits money into an account owned
by Blue Cross, subject to a quarterly settlement where SCIT determines its next contribution.
Despite the discovery process generating this unnecessary conflict, Plaintiffs have enough
information to assess the value of their claims. Nearly 100,000 claims are already on the table, and
Plaintiffs’ unsubstantiated speculation of lurking claims would not significantly affect the math,
at least at this juncture. That is, the remaining discovery disputes mostly concern damages, not
- 14
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15622 Filed 07/19/23 Page 15 of 16
liability. Meanwhile, the Sixth Circuit has remanded a well-briefed motion for summary judgment
ripe for resolution. See ECF Nos. 173; 175; 177; 178. Hence, the parties will be directed to put
forth their best efforts to complete the remaining discovery, which is necessary for the experts to
complete their calculations. See Zakary A. Drabczyk, Note, Share with Caution: The Dangers
Behind Sharing Orders, 65 WAYNE L. REV. 401, 435 (2020) (“The costly and inefficient state of
discovery requires that courts and practitioners make reasonable efforts to streamline the exchange
of information.”). The motion for summary judgment will be addressed in a future order.
IV.
Accordingly, it is ORDERED that Defendant’s Objections to Judge Morris’s Sanctions
Order, ECF No. 272, is OVERRULED.
Further, it is ORDERED that Defendant’s Objections to Plaintiffs’ Bill of Costs, ECF No.
267, is OVERRULED.
Further, is it ORDERED that Defendant is DIRECTED to pay $91,672.00 in attorney’s
fees and costs to Plaintiffs on or before August 15, 2023.
Further, it is ORDERED that Plaintiffs’ Motion for Default Judgment, ECF No. 266, is
DENIED WITHOUT PREJUDICE.
Further, it is ORDERED that the parties are DIRECTED to put forth their best efforts to
resolve the remaining discovery disputes while the pending motion for summary judgment is
resolved.
Further, it is ORDERED that the parties are DIRECTED to complete expert discovery
with respect to Lynda Myrick and Dawn Cornelis on or before September 18, 2023.
- 15
Case 1:16-cv-10317-TLL-PTM ECF No. 283, PageID.15623 Filed 07/19/23 Page 16 of 16
Further, it is ORDERED that a TEAMS Video/Telephone status conference is
SCHEDULED for September 25, 2023, at 3:00 pm. Counsel will receive a TEAMS Invite in a
separate email.
This is not a final order and does not close the above-captioned case.
Dated: July 19, 2023
s/Thomas L. Ludington
THOMAS L. LUDINGTON
United States District Judge
- 16
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?