U.S. Department of Labor sues Blue Cross Blue Shield of Minnesota, alleges state tax was passed onto employer health plans
The U.S. Department of Labor is suing Blue Cross Blue Shield of Minnesota (BCBSM), accusing the company of incorrectly passing along a state tax to employer health plans.
The MinnesotaCare Provider Tax is paid by clinics, hospitals and surgical centers. It was established in 1994 to help fund a state healthcare program for those with lower incomes. The current rate is set at 1.8% but was 1.6% for 2023.
The Department of Labor says BCBSM violated the Employee Retirement Income Security Act (ERISA) of 1974 by “serving its own interests over that of the plans.”
Federal investigators are alleging that between 2016 and 2020, Blue Cross Blue Shield collected at least $66.8 million from its self-funded health plans to pay the tax for healthcare providers in its network, according to a complaint filed on Friday. The complaint lists two counts of prohibited transactions and one count of breach of fiduciary duties.
Court documents show that BCBSM provides third-party administrative services to about 370 self-funded employee welfare benefit plans in Minnesota.
The company is accused of acting as a fiduciary of these plans by “exercising discretionary authority” and causing those employee welfare benefit plans to reimburse BCBSM for payments of the network providers’ liabilities without their authorization.”
BCBSM released the following statement in response to the allegations:
“While we cannot comment on specifics of active litigation, Blue Cross and Blue Shield of Minnesota strongly believes the underlying claims in the Department of Labor lawsuit are without merit and based on unsupported interpretations of the MinnesotaCare Provider Tax law. Our negotiated payment rates incorporate all applicable taxes and fees and reflect our commitment to ensuring every member has access to affordable, high-quality care. We look forward to actively defending our position throughout the legal process.”Blue Cross and Blue Shield of Minnesota
The Department of Labor is now asking for BCBSM to restore all the losses to the employee welfare benefit plans as a result of the prohibited transactions and fiduciary breaches. They also want BCBSM to “disgorge all unjust enrichment and profits” it received as a result of these practices and no longer engage in them.