The U.S. Department of Labor is suing Blue Cross Blue Shield of Minnesota for allegedly forcing some customers to pay a state tax typically reserved for health care providers.

The so-called “provider tax,” first enacted into law in Minnesota back in 1994, is supposed to be paid by hospitals and clinics to cover the costs associated with the MinnesotaCare health insurance program for low-income residents.

But, in a Jan. 12 filing in the U.S. District Court of Minnesota, the labor department argued that Blue Cross has passed along that cost to its self-funded health plan customers. The insurer serves as a third-party administrator for these types of customers.

Blue Cross Blue Shield of Minnesota “has for years unilaterally caused the self-funded health benefit plans for which it serves as third-party administrator to compensate [the insurer’s] in-network providers for amounts they owe under a Minnesota provider tax—amounts the providers never billed or passed on to the plans—without authority to do so under the plans’ governing documents,” the suit stated.

Between 2016 and 2020, the Eagan-based insurer collected “at least $66.8 million” from self-funded health plans to cover the provider tax, according to the suit. The labor department said Blue Cross “served its own interest over those of the plans” and violated its duty as a fiduciary.

The labor department specifically said Blue Cross acted in violation of the Employee Retirement Income Security Act of 1974, which regulates both pensions and employer health benefit plans.

The suit noted that Blue Cross serves as a third-party administrator for about 370 self-funded employee welfare benefit plans “located or administered in Minnesota.”

In 2024, Minnesota’s provider tax rate is set to be 1.8%. Providers are required to pay the tax on gross revenue earned from patient services.

The labor department’s suit notes that state law does allow health care providers to transfer the tax obligation to third-party contracts for the purchase of health care services on behalf patients, but “the provider must specifically request the tax transfer.”

In an emailed statement, Blue Cross and Blue Shield of Minnesota said it cannot comment on specifics of the case. But the insurer maintained that the labor department’s claims are “without merit and based on unsupported interpretations of the MinnesotaCare Provider Tax Law.”

“Our negotiated payment rates incorporate all applicable taxes and fees and reflect our commitment to ensuring every member has access to affordable, high-quality care,” Blue Cross said. “We look forward to actively defending our position throughout the legal process.”