NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 11a0216n.06
No. 09-2294 FILED
Apr 06, 2011
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT LEONARD GREEN, Clerk
PIPEFITTERS LOCAL 636
INSURANCE FUND, et al.,
Plaintiffs-Appellees, ON APPEAL FROM THE
UNITED STATES DISTRICT
v. COURT FOR THE EASTERN
DISTRICT OF MICHIGAN
BLUE CROSS & BLUE SHIELD
OF MICHIGAN,
Defendant-Appellant.
__________________________________/
BEFORE: SUHRHEINRICH, CLAY, and ROGERS, Circuit Judges.
SUHRHEINRICH, Circuit Judge. In this interlocutory appeal Defendant Blue Cross Blue
Shield of Michigan (“BCBSM”) appeals from an injunctive order of the district court requiring
BCBSM to provide Plaintiff Pipefitters Local 636 Insurance Fund and its Trustees (“Fund”) certain
documents that disclose BCBSM’s discount arrangements with medical service providers (“discount
information”). We REVERSE.
I. Background
This case is the subject of a prior appeal. See Pipefitters Local 636 v. Blue Cross & Blue
Shield of Mich., 213 F. App’x 473 (6th Cir. 2007) (hereinafter Pipefitters I). The facts and
applicable law are laid out in that opinion, which we incorporate by reference here. We highlight
those facts and law most pertinent to this appeal.
The Fund is a multi-employer trust fund established under and administered pursuant to the
Taft-Hartley Act, section 302 of the Labor Management Relations Act, 29 U.S.C. § 186, and the
Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq.
BCBSM is a Michigan non-profit corporation established pursuant to the Nonprofit Health Care
Corporation Reform Act (“NHCCRA”), Mich. Comp. Laws § 550.110, et seq.
In June 2002, the Fund converted from an experience rated (i.e. insured) group customer of
BCBSM to a self-funded plan, and entered into an Administrative Services Contract (“ASC”) with
BCBSM. The ASC describes the administrative services that BCBSM provides for the Fund’s
medical benefits plan, including but not limited to: automated claims processing, financial
management and reporting, cost containment initiatives, provider utilization audits, services for
participant inquiries and/or participant communications, maintenance of all necessary records,
provider utilization audits, and participation in trustee meetings. The ASC expressly states that
“BCBSM is not the Plan Administrator, Plan Sponsor, or a named fiduciary for purposes of [ERISA]
and its obligations shall be limited to the processing and payment of Enrollees’ claims as provided
herein.”
Throughout their contractual relationship, BCBSM has provided the Fund with
comprehensive monthly and quarterly reports containing aggregate claims data. These reports show
the Fund the exact price it pays for medical services and where, when, how and how much was
spent. As noted, the comprehensive financial data provides the Fund with the aggregate, or
collective, claims experience and discount information.
In April 2003, the Fund requested that BCBSM turn over “claims records” providing both
the specific amount charged by the provider before application of the discount as well as the specific
amount paid to that provider for each individual hospital, physician, and prescription drug claim
2
since the beginning of the ASC – the so-called “discount information.” The information was
requested outside of the contractually agreed-upon audit procedures. BCBSM declined to reveal the
discount arrangements, claiming it would reveal highly confidential proprietary discount
arrangements with medical service providers and, as such, would be an improper intrusion into
BCBSM’s business affairs.
In 2004, the Fund sued BCBSM, alleging that BCBSM had a contractual obligation under
the ASC to disclose certain claims-related information and that BCBSM breached an ERISA
fiduciary duty by refusing to provide it (hereinafter characterized as the “First Amended
Complaint”). The First Amended Complaint also asserted that BCBSM breached its ERISA
fiduciary duty for imposing and failing to disclose an “Other Than Group” (“OTG”) subsidy, a type
of “cost transfer subsidy” to subsidize coverage for non-group clients. The district court granted
BCBSM’s motion to dismiss the Fund’s First Amended Complaint in its entirety.
The Fund appealed. This court affirmed in part and reversed in part. See Pipefitters I, 213
F. App’x 473. The Pipefitters I court affirmed the dismissal of the Fund’s claim that BCBSM
breached an ERISA fiduciary duty when it refused to supply the discount information. It held that
“the complaint does not sufficiently allege a claim for relief under ERISA with regard to BCBSM’s
decision not to release the specified claims-related information in the manner requested.” Id. at 480.
The Pipefitters I court reversed the dismissal of the separate OTG fiduciary claim, finding
that “the Fund’s complaint sets forth sufficient allegations that BCBSM acted as a fiduciary under
ERISA in assessing and failing to disclose the OTG subsidy fees” and “remand[ed] for further
proceedings consistent herewith.” Id.
On remand, the Fund moved to amend its complaint to correct the “pleading issues” raised
by this court relative to the discount information claim. Over BCBSM’s objection, the district court
3
allowed the Fund to file a Second Amended Complaint. Count III of the Second Amended
Complaint purportedly cured the pleading defects of the First Amended Complaint as discussed in
Pipefitters I.1 Soon thereafter, BCBSM filed a motion for partial summary judgment to dismiss
Count III, which the district court denied as premature. Both parties later filed motions for summary
judgment.
On September 1, 2009, the district court held a hearing on the parties’ respective motions
for summary judgment. The district court issued an oral ruling from the bench. First, the district
court held that BCBSM was an ERISA fiduciary when it collected the OTG fee, because it
exercised authority or control over the Plan assets. The court also held that BCBSM breached its
fiduciary duty by assessing the fee, based on its conclusion that the OTG fee constituted an
impermissible cost transfer under Mich. Comp. Laws § 550.1211(2).2
Next, the district court ruled that BCBSM was acting as an ERISA fiduciary when it denied
the Fund’s request for the discount information. Initially, the court stated that the Fund failed to
provide an affidavit or deposition testimony suggesting that the contractual audit procedure or
aggregate reports were not sufficient for determining discount information, characterizing the failure
as “a weakness in the Funds’ case,” and that the Fund further failed to “provide[] an affidavit or
deposition testimony suggesting that Blue Cross exercised discretion and authority in the way it
negotiated these discounts.” “[H]owever,” because the district court found that it was “clear that
1
In its brief the Fund asserts that “[t]he Second Amended Complaint now contains extensive
factual detail of the additional fiduciary duties arising from the discretionary authority possessed
by Defendant regarding all activities through which Blue Cross accumulates financial information
concerning plan assets.”
2
This issue remains before the district court, although the court’s certification of a class
action as to that claim is also currently before this court. See Pipefitters Local 636 v. Blue Cross &
Blue Shield of Mich., No. 2607 (6th Cir., filed Dec. 18, 2009).
4
Blue Cross negotiated these discounted rates[,] . . . [a]nd as a matter of law, such negotiations ha[ve]
to involve discretion,” the district court concluded that BCBSM was a fiduciary in negotiating the
rates and “has a duty to tell the Funds what those discounts are.”
The district court further ruled that
[a]ny argument that [the] Sixth Circuit has already decided that Blue Cross isn’t a
fiduciary with respect to the Plaintiff’s records relies on dicta from the Sixth Circuit
opinion. And this is a rather esoteric point, but I believe that dicta, even though it
is in the case, does not become law of the case.
The district court granted the Fund’s motion for summary judgment on Count III and denied
BCBSM’s motion as to that count.
On September 3, 2009, the district court entered its order granting in part and
denying in part the parties’ motions for summary judgment. The order granting the Fund
summary judgment had the practical effect of granting injunctive relief because, in the
Second Amended Complaint, the Fund sought an “Order [for] BCBSM to provide access to
Claims Records as requested by the Fund[].” Therefore, on October 2, 2009, BCBSM filed
a timely notice of interlocutory appeal to this court under 28 U.S.C. § 1292(a)(1). On
November 12, 2009, the Fund in turn filed a motion to dismiss this appeal on the grounds
that this court lacked jurisdiction, because the September 3 order did not expressly direct
BCBSM to produce the discount information by a specific date.
Meanwhile, on October 5, 2009, BCBSM filed in the district court a motion to stay
the district court proceedings pending resolution of its appeal. On December 18, 2009, the
district court denied BCBSM’s motion and required BCBSM to provide the discount
information to the Fund by January 15, 2010. However, the district court conditioned
production of the discount information on “a protective order allowing for the disclosure of
5
the records solely for purposes of preparation of or use in this matter,” and requiring that
they be used solely by the Fund’s legal counsel and not shared with any of BCBSM’s
competitors.
Subsequently, BCBSM filed a motion in this court seeking a stay of the district court
proceedings. On January 13, 2010, this court denied the Fund’s motion to dismiss the appeal
for lack of jurisdiction, finding that the summary judgment order and the district court’s
subsequent enforcement order had the practical effect of an immediately appealable
injunctive order pursuant to 28 U.S.C. § 1292(a)(1). This court further found that the
protection afforded by the district court’s December 18 protective order was sufficient, and
denied BCBSM’s motion for a stay. Finally, this court expedited the appeal.
II. Analysis
On appeal, BCBSM contends that the district court erred in granting summary
judgment to the Fund on Count III of the Second Amended Complaint because: (1) the
count had been previously dismissed by the district court and that dismissal had been
affirmed by this court; (2) the district court granted summary judgment sua sponte on
grounds not argued or briefed by the parties; (3) the decision is wrong because BCBSM is
not an ERISA fiduciary with respect to the administration of the Fund’s benefit plan merely
because it negotiates with providers as part of its overall business strategy; and (4) the Fund
failed to present any evidence to support its claim. The Fund counters each of these
contentions, and argues that the appeal is moot.
Initially, we consider our jurisdiction. This court held that we have jurisdiction
pursuant to 28 U.S.C. § 1292(a)(1) in our January 13, 2010 decision. Accordingly, we may
review all issues that are “inextricably intertwined” with the portion of the order from which
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the appeal is taken. See Hadix v. Johnson, 228 F.3d 662, 669 (6th Cir. 2000) (“The doctrine
of pendent appellate jurisdiction allows an appellate court, in its discretion, to exercise
jurisdiction over issues that are not independently appealable when those issues are
‘inextricably intertwined’ with matters over which the appellate court properly and
independently has jurisdiction.” (citation and internal quotation marks omitted)). This court
has interpreted “inextricably intertwined” as “coterminous with, or subsumed in, the claim
before the court on interlocutory appeal.” Id. (citation and internal quotation marks
omitted). See also United States v. Contents of Accounts, 629 F.3d 601, 606 (6th Cir. 2011)
(summarizing the scope of pendent appellate jurisdiction, and noting that “the ‘inextricably
intertwined’ requirement is satisfied only if the resolution of the properly appealable issue
‘necessarily and unavoidably’ decides the non-appealable issue”). The district court’s partial
summary judgment ruling is the basis for, and is inextricably intertwined with, the order
requiring production of the discount information. We therefore have jurisdiction to review
that ruling.
This court reviews a district court’s grant of summary judgment de novo. ACLU of
Ky. v. Grayson Cnty. Ky., 591 F.3d 837, 843 (6th Cir. 2010) (citation omitted). Summary
judgment is proper where there is no genuine issue as to any material fact and the moving
party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c)(2).
Because we conclude that BCBSM’s first argument–that the Fund’s discount
information claim was already decided by this court– is dispositive, we need address that
issue only. We recently summarized the law of the case doctrine as follows:
The law of the case doctrine provides that “when a court decides upon a rule of law,
that decision should continue to govern the same issues in subsequent stages in the
same case.” Scott v. Churchill, 377 F.3d 565, 569-70 (6th Cir.2004) (quoting Arizona
7
v. California, 460 U.S. 605, 618, 103 S.Ct. 1382, 75 L.Ed.2d 318 (1983)). The
doctrine precludes a court from reconsideration of issues “decided at an early stage
of the litigation, either explicitly or by necessary inference from the disposition.”
Hanover Ins. Co. v. Am. Eng’g Co., 105 F.3d 306, 312 (6th Cir.1997) (quoting Coal
Res., Inc. v. Gulf & Western Indus., Inc., 865 F.2d 761, 766 (6th Cir.1989)). Pursuant
to the law of the case doctrine, and the complementary “mandate rule,” upon remand
the trial court is bound to “proceed in accordance with the mandate and law of the
case as established by the appellate court.” Id. (quoting Petition of U.S. Steel Corp.,
479 F.2d 489, 493 (6th Cir.), cert. denied, 414 U.S. 859, 94 S.Ct. 71, 38 L.Ed.2d 110
(1973)). The trial court is required to “implement both the letter and the spirit” of the
appellate court’s mandate, “taking into account the appellate court’s opinion and the
circumstances it embraces.” Brunet v. City of Columbus, 58 F.3d 251, 254 (6th
Cir.1995).
Westside Mothers v. Olszewski, 454 F.3d 532, 538 (6th Cir. 2006). Thus, “[t]he law of the case
doctrine precludes reconsideration of a previously decided issue unless one of three ‘exceptional
circumstances’ exists.” Id. These are “(1) where substantially different evidence is raised on
subsequent trial; (2) where a subsequent contrary view of the law is decided by the controlling
authority; or (3) where a decision is clearly erroneous and would work a manifest injustice.” Id.
(citation omitted).
In Pipefitters I, this court explicitly ruled that the Fund’s complaint and supporting
documents did “not sufficiently allege a claim for relief under ERISA with regard to BCBSM’s
decision not to release the specified claims-related information in the manner requested.” Pipefitters
I, 213 F. App’x at 480. The Pipefitters I court also held that “[d]iscretionary authority does not exist
where a party merely decides to adhere to an existing contract term . . . or makes business decisions
on its own behalf, outside of its role as plan administrator.” Id. at 479 (citation omitted). The court
then “affirm[ed] the district court’s dismissal of the Fund’s claims arising from BCBSM’s refusal
to release claims-related information.” Id. at 480.
In other words, this court’s mandate dismissed the Fund’s claim on the merits, as part of its
determination whether the First Amended Complaint stated a claim for breach of an ERISA
8
fiduciary duty. This ruling does not contemplate or permit the filing of an amendment.3 The district
court’s statement that the ruling was mere dicta is contrary to “both the letter and the spirit of the
appellate court’s mandate.” See Westside Mothers, 454 F.3d at 538 (internal quotation marks
omitted). Thus, the Pipefitters I decision affirming the dismissal “govern[s] the same issues in
subsequent stages” of the case, see id., and the district court was required to dismiss Count III.
Nor do any of the exceptions apply, and the Fund does not in any meaningful way claim
otherwise.4 Instead, the Fund asserts that the amendment was appropriate given the liberal standard
applied to amendments under Fed. R. Civ. P. 15(a). We disagree. Although Fed. R. Civ. P. 15(a)
provides that amendment “shall be freely given when justice so requires,” an amended complaint
cannot be filed if “a plaintiff chooses to appeal from a judgment of dismissal” rather than amending
his complaint, and that order of dismissal is affirmed. Royal Bus. Grp., Inc. v. Realist, Inc., 933 F.2d
1056, 1066 (1st Cir. 1991). Indeed, were we to accept the Fund’s argument, we would be reducing
the ruling in Pipefitters I “to an advisory opinion from the Court informing [the Fund] of the
deficiencies of the complaint” and giving it “an opportunity to cure those deficiencies.” Cf. Begala
v. PNC Bank, Ohio, Nat’l Ass’n, 214 F.3d 776, 784 (6th Cir. 2000) (emphasis omitted) (reviewing
3
In contrast, the Pipefitters I court reversed the district court’s dismissal of the Fund’s claims
arising out of the BCBSM’s imposition of the subsidy fee and remanded “for further proceedings
consistent herewith.” 213 F. App’x at 480.
4
The Fund suggests that the law of the case doctrine may not apply because “different
circumstances or evidence is present.” However, this exception applies only if the record actually
contains new evidence and “if the new evidence differs materially from the evidence of record when
the issue was first decided and if it provides less support for that decision.” Hamilton v. Leavy, 322
F.3d 776, 788 (3d Cir. 2003) (citation omitted). There is no substantive difference between the First
Amended Complaint and the Second Amended Complaint on the issue of whether the Fund’s
alleged facts establish that BCBSM breached an ERISA fiduciary duty by failing to release the
discount information. In short, the exception does not apply in this case.
9
a district court’s denial of a post-judgment action). The Fund has no right to such an entitlement.
See id.
III. Conclusion
The judgment of the district court granting the Fund summary judgment on Count III of the
Second Amended Complaint is REVERSED and the matter is REMANDED for an entry of an
order granting partial summary judgment to BCBSM on this count. The December 18 order
requiring production of the discount information is VACATED.
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