Grand Traverse Band of Ottawa & Chippewa Indians v. Blue Cross Blue Shield of Michigan
Court of Appeals for the Sixth Circuit • 28 July 2025

Introduction

The Sixth Circuit’s published decision in Grand Traverse Band v. Blue Cross tackles two recurring disputes in tribal-benefit litigation:

• Whether and when a third-party administrator (TPA) such as Blue Cross is legally obliged to pay hospital claims at Medicare-Like Rates (MLR) for services authorized under an Indian Health Service Contract Health Service (CHS) programme; and
• When the limitations clock begins to run on tribal ERISA fiduciary-duty lawsuits that allege overpayment of medical claims.

The Grand Traverse Band (the “Tribe”) and its self-funded employee welfare plan sued Blue Cross, alleging breach of ERISA and state-law duties, violation of Michigan’s Health Care False Claims Act (HCFCA), and related claims after an audit suggested years of MLR overpayments. The district court dismissed or granted summary judgment on every count. The Sixth Circuit affirms across the board, generating two important holdings:

1. MLR Liability Limited to Hospitals. The text of 42 C.F.R. § 136.30 imposes the MLR “payment-in-full” cap only on Medicare-participating hospitals, not on TPAs or plan fiduciaries. Consequently, a TPA’s failure to secure MLR discounts cannot, by itself, constitute a statutory false claim under Michigan’s HCFCA.
2. Actual Knowledge = Statute Starts. A tribe’s ERISA fiduciary-duty claim is time-barred once the tribe actually knows that its TPA is not applying MLR—irrespective of later discoveries about how large the overpayments are. Knowledge in 2009 rendered a 2014 suit untimely.

Summary of the Judgment

The panel (Batchelder, Moore, Bush J.J.) unanimously:

• Affirmed dismissal of the ERISA and Michigan common-law fiduciary claims as untimely under the respective three-year statutes of limitations.
• Affirmed summary judgment for Blue Cross on the sole remaining HCFCA count because § 136.30 does not bind TPAs.
• Affirmed denial of leave to file a second amended complaint as futile.

Detailed Analysis

1. Precedents Cited and Their Influence

• Saginaw Chippewa Indian Tribe v. BCBSM, 748 F. App’x 2 (6th Cir 2018) (“SCIT I”) – Recognised that failure to pursue MLR may state a viable ERISA fiduciary claim. Used by the Tribe to argue plausibility but distinguished on limitations grounds.
• Saginaw Chippewa Indian Tribe v. BCBSM, 32 F.4th 548 (6th Cir 2022) (“SCIT II”) – Held MLR eligibility depends on CHS authorisation, not funding source. Tribe invoked for tolling, but court clarified SCIT II did not decide timeliness.
• Intel Corp. Investment Policy Comm. v. Sulyma, 589 U.S. 178 (2020) – Supreme Court’s definition of “actual knowledge.” Adopted by the panel to show the Tribe’s admissions triggered ERISA § 1113(2) in 2009.
• Wright v. Heyne, 349 F.3d 321 (6th Cir 2003) – Earlier “actual knowledge” framework; still consistent post-Sulyma.
• Michigan cases Rinaldo’s Construction, Fultz, and Prentis – Applied to show that alleged pricing promises sound in contract, not tort, extinguishing the common-law fiduciary claim.

2. The Court’s Legal Reasoning

a) ERISA & Common-Law Fiduciary Claims – Timeliness

1. ERISA § 1113(2) accelerates the six-year period to three years once a plaintiff has “actual knowledge” of the breach.
2. The Tribe’s own pleading admits that in 2009 Blue Cross said it could not apply MLR system-wide and instead offered an 8 % discount via the Facility Claims Processing Agreement (FCPA). That concession = “actual knowledge.”
3. No fraudulent-concealment tolling: nothing hidden about non-application of MLR, only about how far the negotiated rate was from MLR. Knowledge of the breach facts—not legal theory—starts the clock.
4. Michigan’s three-year limitation and discovery-rule concepts are even less protective than ERISA’s “actual knowledge”; therefore the common-law claim also expires.

b) HCFCA Claim – Statutory Interpretation of § 136.30

1. The claim required proving that Blue Cross’s invoices were “false” because they violated a legal ceiling (MLR).
2. Textual reading: “All Medicare-participating hospitals … must accept” MLR. No mention of TPAs.
3. Expressio unius and surrounding subsections reinforce that only hospitals bear the acceptance duty; TPAs remain free to contract at higher rates.
4. Because Blue Cross is outside the duty-imposing class, its invoices cannot be “false” merely for exceeding MLR.
5. The Tribe tried to pivot at summary judgment to a misrepresentation theory (Blue Cross promised rates “close to” MLR). The court barred the pivot as an unpleaded, prejudicial theory.

c) Denial of Second Amendment

Rule 15(a)(2) allows leave when justice requires unless amendment is futile. Proposed additions did not change the key admission of 2009 knowledge, so any new ERISA count would still be time-barred.

3. Impact of the Decision

• Limits False-Claim Exposure of TPAs. In the Sixth Circuit, TPAs administering tribal (and arguably other self-funded) plans are not directly liable under state false-claim analogue statutes merely for paying >MLR.
• Heightened Due-Diligence Burden on Tribes/Plan Sponsors. Once a sponsor learns that MLR is not being applied, the limitations fuse is lit—even if the sponsor has not yet quantified the loss.
• Contract Drafting Incentive. Tribes wishing to enforce MLR savings must write explicit contractual obligations on TPAs or carve-out audit triggers; regulatory reliance is insufficient.
• Precedential Clarity on § 136.30. Confirms that SCIT I/II left open who is bound by MLR; this case answers: only hospitals.
• Strategic Litigation Guidance. Plaintiffs must plead all alternative theories (e.g., misrepresentation) in the complaint; Sixth Circuit disallows theory-switching at summary judgment.

Complex Concepts Simplified

Medicare-Like Rate (MLR)

A discounted amount—essentially the Medicare inpatient/outpatient rate— that qualifying tribal programmes may pay to hospitals for CHS-authorised care. Hospitals participating in Medicare must accept it, but the regulation does not compel TPAs to charge no more than MLR.

ERISA Fiduciary Duties

• Duty of Prudence: act as a prudent expert would regarding plan assets.
• Duty of Loyalty: act solely in interest of participants/beneficiaries.
• Breach and Limitations: claim must be filed within six years, or within three if the plaintiff possesses “actual knowledge” of the breach facts.

“Actual Knowledge”

Per Sulyma, the plaintiff must actually be aware of the factual event constituting the breach; mere availability of information is not enough, but awareness of operational facts (e.g., TPA is not applying MLR) is sufficient—even without awareness of the legal ramifications.

Michigan Health Care False Claims Act (HCFCA)

State analogue to the federal False Claims Act, but limited to claims “presented to a health care corporation or insurer.” To be actionable, the claim must contain a false statement or omission material to payment. Blue Cross’s invoices were not “false” because no legal ceiling applied to them.

Conclusion

The Sixth Circuit’s opinion reinforces a textualist approach to both limitations and regulatory-duty questions. After Grand Traverse Band v. Blue Cross:

• Medicare-Like-Rate obligations rest on hospitals alone, leaving TPAs outside the regulatory cross-hairs unless parties contract otherwise.
• Tribal and other plan sponsors must act promptly once they know their TPA is not using MLR—or any other cost-saving method—because “actual knowledge” starts ERISA’s three-year clock regardless of incomplete damage calculations.
• Litigants in the Sixth Circuit cannot revise the factual foundation of a statutory-fraud claim at summary judgment; all substantive theories should be pled at the outset.

In the broader legal landscape, the decision narrows potential defendant classes in MLR-related litigation and provides a cautionary tale on the statute-of-limitations pitfalls that can doom otherwise plausible fiduciary-duty theories.