According to Bloomberg BNA (9/11/12), prior to 1993, Blue Cross charged an "access fee" from employers who contracted with the company for certain services. After customers left the company because of the fees, Blue Cross allegedly hid the fee under hospital claims. So, for example, if the employer was charged a $500 hospital fee, Blue Cross allegedly added a fee to that $500 which it took for itself as an administrative fee. In June 2011, a lawsuit was filed against Blue Cross, alleging the company violated ERISA rules by hiding the fees in the billing statements. Furthermore, the plaintiffs—Burroughs Corp. and Hi-Lex Controls Inc., alleged Blue Cross engaged in illegal transactions.
Judge Victoria A. Roberts found that Blue Cross was a fiduciary under ERISA laws but violated those laws when it unilaterally decided the amount of fees it would pay itself. The lawsuit (Borroughs Corp. v. Blue Cross Blue Shield of Michigan, E.D. Mich., No. 2:11-cv-12557-VAR-PJK) will now go to trial to determine how much Blue Cross must pay the plaintiffs and whether the lawsuit was filed in a timely manner, before the statute of limitations ran out.
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This includes ERISA plan participants having information on all fees charged directly to their accounts and an explanation of any fees, including legal and accounting fees. Furthermore, administrators must now send out statements at least quarterly that show the dollar amount that is being spent on fees and plan expenses.