Sixth Circuit Rejects Tribe’s ERISA Fiduciary Breach Claims as Time-Barred in Longstanding Dispute with Blue Cross

In Grand Traverse Band of Ottawa & Chippewa Indians v. Blue Cross Blue Shield of Michigan, No. 24-1367, —F.4th—-, 2025 WL 2104569 (6th Cir. July 28, 2025) the Sixth Circuit affirmed the dismissal of fiduciary breach claims under ERISA brought by a tribal employee welfare plan against its third-party administrator, Blue Cross. While the Court acknowledged that ERISA fiduciary duties encompass efforts to pursue cost-saving Medicare-Like Rate (MLR) discounts, it ultimately held that the Tribe’s claims were untimely under ERISA’s statute of limitations.

The Grand Traverse Band and its self-funded health plan sued Blue Cross, alleging the insurer breached fiduciary duties by failing to obtain federally mandated MLR discounts for hospital services provided to tribal members and employees. These discounts, mandated by federal regulations under 42 C.F.R. § 136.30, require Medicare-participating hospitals to accept rates equivalent to Medicare when providing care authorized by a Tribe operating a Contract Health Service (CHS) program.

Blue Cross was responsible under its Administrative Services Contract (ASC) for processing and pricing claims for the Tribe. In 2009, after the MLR regulations became effective, the Tribe requested that Blue Cross apply MLR pricing. Blue Cross refused, asserting its system could not accommodate MLR calculation. Instead, Blue Cross offered to apply a discount under a separate Facility Claims Processing Agreement (FCPA), stating it would provide rates “close to” MLR for claims from Munson Medical Center. In 2012, an audit revealed that Blue Cross had not been applying true MLR rates, leading the Tribe to file suit.

The key question before the Sixth Circuit was whether the Tribe’s ERISA fiduciary breach claims were barred by the statute of limitations. Under ERISA § 413, breach of fiduciary duty claims must be filed within six years of the breach or within three years of the plaintiff’s “actual knowledge” of the breach, unless the plaintiff can show fraud or concealment.

The Tribe argued that it did not gain actual knowledge of Blue Cross’s misconduct until its 2013 audit revealed the extent of overpayment. However, the court disagreed, emphasizing that the Tribe’s own complaint admitted that by 2009, Blue Cross had explicitly informed it that MLR pricing would not be applied.

The panel explained that under the Supreme Court’s decision in Intel Corp. Investment Policy Committee v. Sulyma, 589 U.S. 178 (2020), actual knowledge means being aware of the facts underlying the breach—not the legal implications. The Tribe knew that Blue Cross would not apply MLR pricing and instead negotiated an alternative rate structure. That was enough to start the three-year limitations clock. Because the lawsuit was filed in 2014, the ERISA claims were untimely.

The Tribe argued for tolling based on fraud or concealment, pointing to Blue Cross’s statements that the alternate rates would be “close to” MLR. But the court held that any such misrepresentation went to the terms of the FCPA—a separate contractual arrangement outside ERISA’s scope. Moreover, the Tribe had not plausibly alleged that Blue Cross took affirmative steps to conceal the truth. It knew it was not receiving MLR, and that foreclosed tolling.

The Tribe’s common-law fiduciary duty claim fared no better. The court explained that Michigan’s three-year statute of limitations, triggered by when a plaintiff “knew or should have known” of the breach, was also blown. The Tribe knew by 2009 that it was not receiving MLR and could not rely on tolling because Blue Cross’s statements about providing “close to” MLR rates did not amount to active concealment or establish a separate, post-2009 fiduciary obligation.

The Sixth Circuit reaffirmed that ERISA fiduciary obligations require plan administrators to act prudently and seek cost savings—even those arising from regulatory frameworks like the MLR rules. As the Court emphasized, this duty is not confined strictly to the written terms of a plan. However, plan sponsors must act swiftly when they suspect a breach. Awareness of facts—even if the legal implications are unclear—starts the statute of limitations clock ticking.

Here, despite the plausible theory that Blue Cross failed to pursue cost-saving measures in violation of ERISA, the Tribe’s own pleadings doomed its claim. The case underscores the importance of timely legal action when fiduciary misconduct is suspected, especially where critical cost-saving regulations like the MLR may apply.