Priddy v. Health Care Service Corp., No. 16-4127 (7th Cir. 2017)Annotate this Case
HCSC is an Illinois not-for-profit corporation that offers Blue Cross and Blue Shield insurance through licensed affiliates in five states and contracts with outside affiliates for prescription drug services, claim payments, and other administrative work. HCSC owns or controls its affiliates and places its officers on their boards. HCSC does not disclose the extent of these ties to its insureds. Its policies state that the affiliates pay it rebates, but it does not share those rebates with its customers. Alleging that these arrangements violated Illinois law and the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, Priddy and others filed a putative class. The district court certified four classes under Federal Rule of Civil Procedure 23(b)(3): employers who purchased HCSC plans for employees in any of the five states served by HCSC; beneficiaries of employer-furnished plans provided by HCSC in any of the five states; individuals who purchased insurance directly from HCSC in any of the five states; and Illinois insureds who were protected by Illinois insurance regulations. The four classes included approximately 10 million people. The Seventh Circuit vacated class certification. It is not clear that HCSC owed many class members any fiduciary duty. Three of the four classes certified include people whom HCSC does not insure and who do not pay it premiums.