BPS Clinical Laboratories v. Blue Cross and Blue Shield of Michigan

• Decision Date: 06 September 1994
• Docket Number: 151163,151162,152010 and 153383,Docket Nos. 145988,146035
• Citation: 206 Mich.App. 570,522 N.W.2d 902
• Parties: BPS CLINICAL LABORATORIES; Michigan Clinical Laboratory; MML, Inc.; MBL Laboratories; Flint Medical Laboratory; Allied Medical Laboratory--Flint, Inc.; William E. Blamey, D.O. Robert Chatfield, D.O.; Mid-Michigan Pathology Services, P.C.; and Universal Standard Medical Laboratories, Inc., Plaintiffs-Appellants-Cross Appellees, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Defendant-Appellee-Cross Appellant. AMERICAN HEALTH RESOURCES, INC., Plaintiff-Appellant-Cross Appellee, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Defendant-Appellee-Cross Appellant. BPS CLINICAL LABORATORIES; Michigan Clinical Laboratory; MML, Inc.; MBL Laboratories; Flint Medical Laboratory; Allied Medical Laboratory--Flint, Inc.; William E. Blamey, D.O. Robert Chatfield, D.O.; Mid-Michigan Pathology Services, P.C.; and Universal Standard Medical Laboratories, Inc., Plaintiffs-Appellees, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Defendant-Appellant. AMERICAN HEALTH RESOURCES, INC., Plaintiff-Appellee, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Defendant-Appellant. AMERICAN HEALTH RESOURCES, INC., Plaintiff-Appellee, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Defendant-Appellant. BPS CLINICAL LABORATORIES; Michigan Clinical Laboratory; MML, Inc.; MBL Laboratories; Flint Medical Laboratory; Allied Medical Laboratory--Flint, Inc.; William E. Blamey, D.O. Robert Chatfield, D.O.; Mid-Michigan Pathology Services, P.C.; and Universal Standard Medical Laboratories, Inc., Plaintiffs-Appellees, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 902

522 N.W.2d 902

206 Mich.App. 570

BPS CLINICAL LABORATORIES; Michigan Clinical Laboratory;

MML, Inc.; MBL Laboratories; Flint Medical Laboratory;

Allied Medical Laboratory--Flint, Inc.; William E. Blamey,

D.O. Robert Chatfield, D.O.; Mid-Michigan Pathology

Services, P.C.; and Universal Standard Medical

Laboratories, Inc., Plaintiffs-Appellants-Cross Appellees, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN,

Defendant-Appellee-Cross Appellant.

AMERICAN HEALTH RESOURCES, INC., Plaintiff-Appellant-Cross Appellee, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN,

Defendant-Appellee-Cross Appellant.

BPS CLINICAL LABORATORIES; Michigan Clinical Laboratory;

MML, Inc.; MBL Laboratories; Flint Medical Laboratory;

Allied Medical Laboratory--Flint, Inc.; William E. Blamey,

D.O. Robert Chatfield, D.O.; Mid-Michigan Pathology

Services, P.C.; and Universal Standard Medical

Laboratories, Inc., Plaintiffs-Appellees, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Defendant-Appellant.

AMERICAN HEALTH RESOURCES, INC., Plaintiff-Appellee, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Defendant-Appellant.

AMERICAN HEALTH RESOURCES, INC., Plaintiff-Appellee, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Defendant-Appellant.

BPS CLINICAL LABORATORIES; Michigan Clinical Laboratory;

MML, Inc.; MBL Laboratories; Flint Medical Laboratory;

Allied Medical Laboratory--Flint, Inc.; William E. Blamey,

D.O. Robert Chatfield, D.O.; Mid-Michigan Pathology

Services, P.C.; and Universal Standard Medical

Laboratories, Inc., Plaintiffs-Appellees, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Defendant-Appellant.

Docket Nos. 145988, 146035, 151162, 151163, 152010 and 153383.

Court of Appeals of Michigan.

Submitted March 8, 1994, at Detroit.

Decided Sept. 6, 1994, at 9:15 a.m.

Released for Publication Oct. 31, 1994.

Feikens, Foster, Vander Male, Bellamy & Gilchrist, P.C. by Alan G. Gilchrist, Keith J. Soltis, and Gail F. McIntyre, Detroit, for BPS Clinical Laboratories and other plaintiffs.

Frimet & Michalsen, P.C. by Gilbert M. Frimet and John A. Michalsen, Southfield, for American Health Resources, Inc.

Richard John Mathews and Joseph W. Murray, Detroit, for Blue Cross and Blue Shield of Michigan.

Before WHITE, P.J., and MICHAEL J. KELLY and CAPRATHE, ^* JJ.

MICHAEL J. KELLY, Judge.

Plaintiffs, independent clinical laboratories and two physicians, alleged that they wrongfully were denied the opportunity to participate as panel providers in defendant's new health care program, Premier PLUS. On October 9, 1991, the circuit court granted defendant's motion for summary disposition with regard to all issues except plaintiffs' claim under the Prudent Purchaser Act (PPA), M.C.L. § 550.51 et seq.; M.S.A. § 24.650(51) et seq., which the court found defendant had violated. The parties each appeal the court's summary disposition decision adverse to it. Defendant also appeals an order of March 18, 1992, enjoining operation of Premier PLUS until defendant filed the criteria for participating in the program with the Insurance Commissioner and reconsidered plaintiffs' applications, and an order of April 9, 1992, denying defendant's motion for security pending appeal. The appeals were consolidated. We affirm the order of April 9, 1992, reverse the order of March 18, 1992, and affirm that part of the October 9, 1991, order dismissing all of plaintiffs' claims except the PPA claim. We reverse the part of the October 9, 1991, order finding defendant in violation of the PPA and order it amended to reflect a grant of summary disposition for defendant in light of defendant's preemption defense under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq.

I

Defendant is a nonprofit health care corporation. It administers General Motors Corporation's traditional option coverage program under an "administrative services only" contract, which requires General Motors to pay defendant a fee for administering the program and reimburse defendant for all covered health care charges paid by defendant on behalf of program enrollees. Defendant is not an insurer for General Motors' employees. The Premier Prudent Laboratory Use Program (Premier PLUS) is a diagnostic laboratory network pilot program developed, marketed, and implemented by defendant. Employees under General Motors' self-funded, traditional option coverage plan were the first group to enroll in the program when, in 1990 and 1991, the Corporation-Union Committee on Health Care Benefits at General Motors evaluated potential pilot programs for laboratory services and approved Premier PLUS. Although defendant developed Premier PLUS in part out of a desire to negotiate contracts with the employee health benefit plans for Ford, Chrysler, AT & T, and Ameritech and planned to use Premier PLUS in its own employee benefit plan, General Motors is apparently the only entity enrolled in the program at this time. The General Motors traditional option coverage program is an "employee benefit plan" for purposes of the ERISA.

Before implementation of the Premier PLUS program, defendant paid all diagnostic laboratories according to a maximum-fee schedule. Health care providers who drew blood and sent the samples to the laboratories for analysis received a $3 blood-handling fee from defendant.

Under the Premier PLUS program, defendant established a panel of six provider laboratories, which agreed to discount the rate charged to defendant for services rendered. Physicians who referred blood specimens to nonpanel laboratories would not receive the $3 blood-handling fee. Nonpanel laboratories themselves would be reimbursed only fifty percent of the maximum payment scheduled. In addition, the new program differentiated between standard and nonstandard laboratory procedures. Physicians who performed nonstandard procedures would be reimbursed fifty percent of the maximum fee scheduled. The range of services eligible for reimbursement under the program, whether in whole or in part, remained the same.

II

Plaintiffs are health care providers excluded from full reimbursement under Premier PLUS. On March 27, 1991, plaintiffs sued defendant, alleging that Premier PLUS violated the Nonprofit Health Care Corporation Reform Act (Act 350), M.C.L. § 550.1101 et seq.; M.S.A. § 24.660(101) et seq., and resulted in a tortious interference in the established business relationship between plaintiffs and referring physicians. Plaintiff doctors also alleged that Premier PLUS constituted a breach of contract with defendant.

Plaintiff American Health Resources, Inc., filed a complaint for mandamus on April 25, 1991, requesting that defendant be ordered to comply with the PPA by allowing it to apply for membership as a panel provider in Premier PLUS. The complaint also alleged an unlawful attempt to establish a monopoly in violation of the Antitrust Reform Act, M.C.L. § 445.771 et seq.; M.S.A. § 28.70(1) et seq. The two cases were consolidated and assigned to the same circuit court judge.

Defendant removed the cases to the federal district court, arguing that plaintiffs' claims were subject to complete preemption under federal law by the ERISA. The federal court on the basis of the face of the complaints, found that it did not have subject-matter jurisdiction under the ERISA and remanded the case to the circuit court on August 7, 1991. It expressly left open the question whether the ERISA preempted plaintiffs' state law claims.

On August 27, 1991, defendant moved for summary disposition. The circuit court granted the motion on October 9, 1991, except with regard to plaintiffs' claim under the PPA, which the court found defendant had violated. With regard to that claim, the court issued a final order requiring defendant to accept applications from plaintiffs for participation in Premier PLUS. In addition, the court permitted plaintiffs to reinstate their claim for money damages if defendant refused to accept their applications. It also continued a temporary restraining order issued on August 14, 1991, which permitted plaintiffs to be treated as panel providers in Premier PLUS.

On October 31, 1991, defendant rejected all of plaintiffs' applications. On November 13, 1991, the circuit court continued the temporary restraining order with regard to BPS Clinical Laboratories, Michigan Clinical Laboratory, and Universal Standard Medical Laboratories, Inc.

On December 20, 1991, the circuit court found that defendant had continued to violate the PPA and also had violated the October 9, 1991, order. It issued an additional final order requiring defendant to submit its standards for panel membership to the Insurance Bureau within sixty days and added that it would enjoin operation of Premier PLUS if defendant did not comply. The court once again extended the temporary restraining order.

Subsequently, defendant moved for relief from this order and to stay any further proceedings, arguing that the order was void as an improper modification of the October 9, 1991, order and that, nonetheless, it had complied with the December 20, 1991, order. The court denied the motion on March 18, 1992, finding that defendant had not filed its standards with the Insurance Commissioner before reviewing plaintiffs' applications. The court enjoined operation of Premier PLUS until defendant filed its standards and considered plaintiffs' applications in light of those standards.

Defendant moved for security to protect its interests pending appeal. The circuit court denied the motion in an order dated April 9, 1992.

Concurrent with the circuit court proceedings, the Insurance Commissioner also reviewed allegations that defendant had not complied with statutory regulations in implementing Premier PLUS. Although initially having found that defendant had not violated the law and having noted that the law, as applied to Premier PLUS, was probably preempted under the ERISA, the Insurance Commissioner later issued a notice of opportunity to show compliance, requiring defe...