Saginaw Chippewa Indian Tribe v. Blue Cross Blue Shield of Mich. ( 2018 )

NOT RECOMMENDED FOR PUBLICATION
File Name: 18a0452n.06
No. 18-1170
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
SAGINAW CHIPPEWA INDIAN TRIBE OF ) Aug 30, 2018
MICHIGAN; WELFARE BENEFIT PLAN, ) DEBORAH S. HUNT, Clerk
)
Plaintiffs-Appellants, )
) ON APPEAL FROM THE
v. ) UNITED STATES DISTRICT
) COURT FOR THE EASTERN
BLUE CROSS BLUE SHIELD OF MICHIGAN, ) DISTRICT OF MICHIGAN
)
Defendant-Appellee. )
BEFORE: BOGGS, BATCHELDER, and THAPAR, Circuit Judges.
BOGGS, Circuit Judge. The Saginaw Chippewa Indian Tribe of Michigan (“the Tribe”)
appeals the district court’s decision denying in part its motion for attorney’s fees and costs. For
the reasons stated below, we affirm the district court’s decision in part and reverse in part.
I
The Tribe provided two self-insured healthcare policies through Blue Cross Blue Shield of
Michigan (“BCBSM”), one for tribal employees (“Employee Policy”) and another for tribal
members (“Member Policy). In January 2016, the Tribe filed suit against BCBSM, alleging that
BCBSM’s administration of these policies violated the Employee Retirement Income Security Act
of 1974 (“ERISA”). Contending that the two policies constituted a single ERISA plan, the Tribe
asserted that BCBSM breached its fiduciary duties under ERISA in three distinct ways:
(1) including undisclosed administrative fees in marked-up hospital claims; (2) charging an
No. 18-1170, Saginaw Chippewa Indian Tribe of Mich. v. Blue Cross Blue Shield of Mich.
additional fee in connection with BCBSM’s Physician Group Incentive Program (“PGIP”); and
(3) squandering plan assets by failing to take advantage of federal regulations that permit Indian
tribes to pay no more than Medicare-Like Rates (“MLRs”) for services provided by certain
hospitals.
The district court dismissed the Tribe’s MLR claim for failure to state a claim. After the
completion of discovery, the parties filed cross-motions for partial summary judgment. The
district court concluded that the Tribe’s two policies were separate healthcare plans and that only
the Employee Policy constituted an ERISA plan. The district court also granted summary
judgment to BCBSM on the Tribe’s PGIP claim. But BCBSM conceded that it had violated
ERISA by adding hidden administrative fees to the hospital bills associated with the Employee
Policy. The district court therefore granted summary judgment to the Tribe on that claim, awarding
it roughly $8.4 million in damages.
The litigation did not end there. The Tribe appealed the district court’s adverse rulings.
On appeal, the Tribe also argued that the district court erred by failing to award it prejudgment
interest on its hidden-fees claim for the Employee Policy. In an opinion issued today, we affirmed
all but one of the district court’s rulings, concluding that it was premature to dismiss the Tribe’s
MLR claim. See Saginaw Chippewa Indian Tribe of Mich. v. Blue Cross Blue Shield of Mich.,
No. 17-1932.
Relying on 29 U.S.C. § 1132(g)(1), both parties also moved for attorney’s fees and costs.
The district court denied BCBSM’s motion but granted in part its challenge to the taxed costs
awarded to the Tribe. The taxed-costs award concerned certain fees associated with depositions
that the parties used in their motions for summary judgment. Because the summary-judgment
motions addressed three categories of claims—(1) the Employee Policy and hidden fees; (2) the
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No. 18-1170, Saginaw Chippewa Indian Tribe of Mich. v. Blue Cross Blue Shield of Mich.
Member Policy and hidden fees; and (3) PGIP—and because the Tribe prevailed only on the first
of these claims, the court reduced the Tribe’s taxed costs by two-thirds.
The district court then considered the Tribe’s motions for fees and costs. The court granted
the Tribe’s motion for attorney’s fees in part, holding that the Tribe was entitled to an award
because it had achieved “some success on the merits” on its hidden-fees claim associated with the
Employee Policy. But since the Tribe prevailed on only one of its four claims,1 the court first
excluded more than 500 hours of attorney time from the fee award, concluding that this time was
spent on the Tribe’s three non-meritorious claims, and it then reduced the award by 75% to reflect
the Tribe’s limited success. Consistent with its fee award, the court also granted the Tribe’s motion
for nontaxable costs but reduced that award by 75%. The Tribe now appeals.
II
A court in its discretion may award reasonable attorney’s fees and costs to either party in
an ERISA action. 29 U.S.C. § 1132(g)(1). A party “must show ‘some degree of success on the
merits’ before a court may award attorney’s fees under § 1132(g)(1).” Hardt v. Reliance Standard
Life Ins. Co., 560 U.S. 242, 255 (2010) (quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 694
(1983)).
The Tribe argues that the court erred in dismissing its MLR claim and in granting summary
judgment to BCBSM on both the Tribe’s PGIP claim and its hidden-fees claim in connection with
the Member Policy. Given these errors, the Tribe asks us to vacate the portions of the district
court’s fee-and-cost order pertaining to these claims, so that the Tribe can file a renewed motion
for fees and costs if it achieves some success on the merits of these claims. BCBSM acknowledges
that our resolution of the Tribe’s related merits appeal may impact the propriety of the district
1
These claims included the three mentioned in the previous paragraph, plus the Tribe’s MLR claim.
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court’s fee-and-cost award. See Green Party of Tenn. v. Hargett, 767 F.3d 533, 554 (6th Cir.
2014).
Accordingly, because we have reversed the district court’s dismissal of the Tribe’s MLR
claim, we must reverse the court’s decisions to exclude certain hours from the Tribe’s fee award
and to reduce the amount of the fee-and-cost award insofar as those decisions were premised on
the dismissal of the MLR claim. See ibid. The Tribe may yet show that it has achieved the
necessary degree of success on the merits on that claim to warrant an award of fees and costs.
However, since we have affirmed the district court’s rulings on the merits on the Tribe’s other
claims, we affirm the court’s fee-and-cost award to the extent that it relates to those claims.
Further, the district court need not revisit its determination of the Tribe’s taxed costs, as the MLR
claim was not relevant to that decision.
III
For the foregoing reasons, we AFFIRM the judgment of the district court in part and
REVERSE in part and REMAND for further proceedings consistent with this decision.
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