Auto supplier Hi-Lex wins federal court appeal over insurance costs

Chad Halcom
CRAIN'S DETROIT BUSINESS

Published: May 16, 2014 11:05 am ET
Updated: May 16, 2014 11:07 am ET

Related to this story

Topics Public Policy, United States, Automotive

An auto supplier won a federal court appeal over a health insurer in a $6 million dispute over hidden fees charged to self-insured clients.

The 6th U.S. Circuit Court of Appeals on Wednesday ruled in favor of Hi-Lex Controls Inc., a Litchfield, Mich.-based maker of window regulators with an automotive design center in suburban Detroit, over Blue Cross Blue Shield of Michigan.

The company is a subsidiary of Tokyo-based Hi-Lex Corp. and molds cables and regulators for car windows, sun roofs and other systems.

The appellate court in Cincinnati upheld a U.S. District Court judgment last June in favor of the supplier.

The appeals court had sided with U.S. District Judge Victoria Roberts, who found that Blue Cross had used a deceptive practice to hide fees and surcharges that were rolled into claims billed under administrative services contracts with self-insured businesses and local governments.

“(Blue Cross) also gave a misleading response to a request for proposal issued by Hi-Lex by denying that it charged ‘access fees,’” the appellate ruling states. “This response helped sustain the illusion that (the insurer) was more cost-competitive than other (third party administrators) who responded to the (request).”

Administrative services contracts allow self-insured employers, retirement funds, unions and other organizations to use Blue Cross’ network and administrative services to process insurance claims.

Roberts had previously found Blue Cross had concealed four fees in billing statements to Hi-Lex for employee benefit claims — a network access fee, a contribution to the Blues' contingency reserve, a retiree coverage surcharge and an “other-than-group fee” that helped subsidize its Medigap coverage plan for senior citizens.

The insurer has said previously that its Hi-Lex contract language is identical to a similar agreement it maintained for a self-insured county government. That county obtained a $1.14 million judgment in 2011 in its own lawsuit against Blue Cross, but the Michigan Court of Appeals the following year reversed that judgment in the insurer's favor.

“Blue Cross Blue Shield of Michigan is disappointed in the decision in federal court, which runs contrary to state court rulings over the same contract language,” Blue Cross Director of Corporate Communications Helen Stojic said in a statement.

“We are reviewing the decision for appeal. The access fees under dispute enabled Hi-Lex to receive substantial discounts in hospital services, which resulted in millions of dollars of savings in hospital costs for Hi-Lex.”

“We are very happy that the judgment was affirmed,” said Hi-Lex attorney Perrin Rynders of Grand Rapids, Mich.-based Varnum LLP. “It's been a long time coming, but we never doubted that this would be the ultimate outcome … litigation was not our client's preferred approach, but (the Blues) refused at every turn to accept responsibility for its actions.”

Varnum has brought more than 30 lawsuits in U.S. District Court in Detroit on behalf of various self-insured companies, including Hi-Lex, but the other pending cases were under a stay to await the outcome of Hi-Lex's appeal.


Comments

Auto supplier Hi-Lex wins federal court appeal over insurance costs

Chad Halcom
CRAIN'S DETROIT BUSINESS

Published: May 16, 2014 11:05 am ET
Updated: May 16, 2014 11:07 am ET

Post Your Comments


Back to story


More stories

Image

Judge limits scope of jury verdict against JM Eagle

December 19, 2014 2:30 pm ET

A federal judge in Los Angeles said Dec. 18 that last year's jury verdict issued against J-M Manufacturing Co. — now JM Eagle — for...    More

Image

Jarden hiring for new plastics plant

December 19, 2014 1:45 pm ET

Consumer products conglomerate Jarden Corp. is hiring plastics technicians for a new operation in Erlanger, Ky.    More

Image

Antimicrobial polymers firm TiFiber launching pilot production in Ark.

December 19, 2014 10:58 am ET

TiFiber Inc., which makes synthetic compounds to control dangerous microorganisms, will locate a pilot production facility and its future company...    More

Image

Spray PU foam aids in NASA launch

December 19, 2014 9:22 am ET

NASA's test of the Orion spacecraft earlier this month took advantage of spray polyurethane foam insulation from North Carolina Foam Industries...    More

Image

Sabic: Rapid demand growth led to Ultem shortage

December 18, 2014 12:06 pm ET

Sabic Innovative Plastics has been increasing production capacity for its Ultem polyetherimide but it still got caught short by increasing demand for ...    More

Market Reports

Flexible Packaging Trends in North America

Our latest RESEARCH report examines trends in FLEXIBLE PACKAGING impacting the North American market including a review of economic conditions, key drivers of growth, materials pricing, M&A activity, sustainability challenges and the outlook for 2015.

Learn more

Plastics in Brazil - State of the Industry Report

This in-depth report examines the Brazilian plastics industry from a historical and geographical context. Our analysts provide insight on economic trends and forecasts, growing manufacturing sectors that utilize plastics, private investment opportunities, market environment challenges, and innovations in R&D.

Data tables and charts on producer prices, trade, plastics production and end market indicators is also included.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events