J-A26007-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

HIGHMARK, INC., AND KEYSTONE 

HEALTH PLAN WEST, INC.,

IN THE SUPERIOR COURT OF

PENNSYLVANIA

Appellees

v.

UPMC, UPMC BEDFORD, UPMC EAST, 

UPMC HORIZON, UPMC MCKEESPORT, 

UPMC NORTHWEST, UPMC PASSAVANT, 

UPMC PRESBYTERIAN-SHADYSIDE, 

MAGEE WOMEN’S-HOSPITAL OF UPMC, 

HEMATOLOGY ONCOLOGY 

ASSOCIATION, ONCOLOGYHEMATOLOGY ASSOCIATION, INC., AND 

SEWICKLEY MEDICAL ONCOLOGY 

HEMATOLOGY GROUP – UPCI,

Appellants No. 557 WDA 2015

Appeal from the Order Entered March 24, 2015

In the Court of Common Pleas of Allegheny County

Civil Division at No(s): GD-14-015441

BEFORE: BENDER, P.J.E., RANSOM, J., and MUSMANNO, J.

MEMORANDUM BY BENDER, P.J.E.: FILED DECEMBER 02, 2016

Appellants, UPMC, UPMC Bedford, UPMC East, UPMC Horizon, UPMC 

McKeesport, UPMC Northwest, UPMC Passavant, UPMC PresbyterianShadyside, Magee Women’s-Hospital of UPMC, Hematology Oncology 

Association (“HOA”), Oncology-Hematology Association, Inc. (“OHA”), and 

Sewickley Medical Oncology Hematology Group–UPCI (“SMOH”) (collectively 

referred to herein as “UPMC”), appeal from the trial court’s March 24, 2015 
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order overruling their preliminary objections based on arbitrability and 

denying their motion to compel arbitration. After careful review, we affirm.

We briefly provide some background information that we find pertinent 

to understanding the issues raised in this appeal. UPMC, a not-for-profit 

corporation with its principal place of business in Pittsburgh, Pennsylvania, 

owns numerous hospitals, including those named in this lawsuit: UPMC 

Bedford, UPMC East, UPMC Horizon, UPMC McKeesport, UPMC Northwest, 

UPMC Passavant, UPMC Presbyterian-Shadyside, and Magee Women’sHospital of UPMC (collectively “UPMC Hospitals”). In addition, it is affiliated 

with multiple physician groups, some of which are also involved in this 

lawsuit: HOA, OHA, and SMOH (collectively “Physician Group Practices”). 

Appellees, Highmark, Inc. and Keystone Health Plan West, Inc. (collectively 

referred to herein as “Highmark”), are organizations that offer non-profit 

hospital and professional health services plans. UPMC and Highmark had 

multiple commercial contracts with one another, which expired at the end of 

2014. UPMC Brief’s at 8; Highmark’s Brief at 5. Highmark sought an 

extension of these contracts, but UPMC declined to extend them. Id. 

In the years leading up to the expiration of the parties’ commercial 

contracts, the parties have clashed over UPMC’s billing practices and 

Highmark’s reimbursement rates for oncology care. According to Highmark, 

UPMC unjustifiably overbilled for their oncology drugs and services. 

Specifically, Highmark alleges that “[a]round August 2010, UPMC began 

charging Highmark customers significantly higher outpatient hospital rates 
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for oncology drugs and services that had been previously rendered at lower 

physician rates—even though the same services were rendered at the same 

location as they had been before.” Highmark’s Brief at 10. 

As a result of UPMC’s alleged overbilling, Highmark changed its fee 

schedules for oncology services and drugs on April 1, 2014. Id. at 4. 

Highmark says these “changes were intended to offset the billing practices 

implemented by a number of UPMC hospitals and physician group practices 

that had artificially inflated the cost of oncology drugs....” Id. at 4-5. In 

turn, UPMC suffered financial losses, claiming that “Highmark’s unilateral 

cuts reduced reimbursement payments to UPMC by about $200 million 

annually.” UPMC’s Brief at 9. Further, it “contended that Highmark’s cuts 

were a clear breach of the parties’ contracts and taken in retaliation for 

UPMC ending the parties’ existing contracts.” Id. 

After Highmark reduced its oncology reimbursement rates in April 

2014, UPMC filed a demand for arbitration. Highmark’s Brief at 5; UPMC’s 

Brief at 10. Through arbitration, UPMC “sought to restore the parties’ preApril 1 oncology rates, and require Highmark to pay the reimbursement 

rates set forth in the parties’ contracts.” UPMC’s Brief at 10 (internal 

quotations omitted).1 

____________________________________________

1 We acknowledge that this initial arbitration of Highmark’s oncology 

reimbursement rates has been enjoined, but subsequent arbitrations of this 

same issue have ensued. See Highmark’s Brief at 9-10; UPMC’s Brief at 13-

15. 
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While that arbitration was pending, UPMC, Highmark, and various 

representatives from the Commonwealth began preparing a transition plan 

to address the expiration of the parties’ commercial contracts at the end of 

2014, which led to the execution of the Consent Decrees asserted by UPMC 

as the basis for compelling arbitration in this case.2 In its brief, UPMC 

describes the impetus for the Consent Decrees, explaining:

[] UPMC, Highmark, and certain Pennsylvania state officials 

discussed a transition plan to deal with expiration of the parties’ 

commercial contracts at the end of 2014. These discussions 

culminated on June 27, 2014, when UPMC and Highmark each 

executed mirror-image Consent Decrees with those officials. The 

Commonwealth Court adopted and entered the Consent Decrees 

as Orders on July 1, 2014.

The purpose of the Consent Decrees was to “lessen[] the anxiety 

of Highmark subscribers by providing certainty as to what would 

occur during transitional periods and provid[e] a basis by which 

Highmark subscribers ... could make informed decisions 

regarding their healthcare.”

UPMC’s Brief at 11 (internal citations and footnote omitted). Highmark 

similarly explained that “[t]he Consent Decrees were designed both in 

express terms and in concept to protect the public by ensuring continued 

____________________________________________

2 Our Supreme Court has explained:

A consent decree is not a legal determination by the court of the 

matters in controversy but is merely an agreement between the 

parties - a contract binding the parties thereto to the terms 

thereof[.] As a contract, the court, in the absence of fraud, 

accident or mistake, had neither the power nor the authority to 

modify or vary the terms set forth....

Lower Frederick Township v. Clemmer, 543 A.2d 502, 510 (Pa. 1988) 

(internal citations omitted). 
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access to UPMC facilities so that vulnerable members of the public would not 

experience immediate disruptions in their medical care.” Highmark’s Brief at 

6. It further elaborated that “[t]he Consent Decrees achieved that objective 

by guaranteeing continued access to certain UPMC services at in-network 

rates for specific groups of patients—including cancer patients, those 

currently in a course of treatment with a UPMC doctor, those considered to 

be ‘vulnerable populations,’ and others.” Id. 

Approximately two months after the Consent Decrees were entered, 

on September 3, 2014, Highmark filed the lawsuit underlying this appeal. In 

this lawsuit, Highmark asserts claims for breach of contract and unjust 

enrichment, challenging the purportedly inflated billing rates charged by 

UPMC from August 2010 through March 2014.3 Highmark’s Brief at 10. 

Highmark seeks to be “made whole for overpayments Highmark made to 

UPMC.... [] UPMC was unjustly enriched when it improperly shifted billing for 

oncology services from a lower physician rate to a higher outpatient hospital 

rate—despite that there had been no change in the service rendered or the 

actual site of service.” Id. at 3. Highmark claims that while its “April 2014 

rate change attempted to address the problem going forward, it did not 

address UPMC’s past wrongful billing practices.” Id. at 10. Highmark bases 

____________________________________________

3 We note that Highmark initially sought a declaratory judgment, but that 

request was withdrawn in its Amended Complaint, dated November 21, 

2014. Highmark’s Brief at 10. 
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its breach of contract claims on various contracts entered into between 

Highmark and UPMC. See id. at 18 (explaining that Highmark asserts 

“claims against the three physician group practices for breach of the 

agreements between Highmark and each of those practices,” “a claim 

against UPMC for breach of the Oncology Drug Agreement,” and “claims for 

breach of multiple contracts by UPMC and the ... UPMC hospitals”). 

UPMC subsequently sought to dismiss this lawsuit and compel 

arbitration, arguing that the Consent Decrees required arbitration of 

Highmark’s claims in this case. UPMC’s Brief at 14, 16. In short, UPMC 

argued that “the Consent Decrees were an arbitration agreement that tie[d] 

into one comprehensive, binding arbitration all of the parties’ disputes over 

oncology reimbursements.” Id. at 16 (citations and quotations omitted). 

The trial court, however, overruled UPMC’s preliminary objections and 

denied its motion to compel arbitration. Trial Court Opinion (TCO), 

5/22/2015, at 9. The trial court determined that “the parties’ intent can be 

determined based solely upon the contractual terms at issue” and, therefore, 

it did not “consider[] any extrinsic evidence, such as the Consent Decrees.” 

Id. at 2-3, 9. Ultimately, it concluded that the contracts underlying 

Highmark’s lawsuit — that is, the agreements between Highmark and the 

Physician Group Practices, the agreements between Highmark and the UPMC 
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hospitals, and the Oncology Drug Agreement — did not require arbitration of 

Highmark’s claims.4 Id. at 9.

Following the trial court’s order, UPMC filed a timely notice of appeal to 

this Court.5 In its appeal, UPMC raises two issues for our review:

A. Did the trial court err in failing to consider the 

parties’ Consent Decrees, when UPMC asserted those 

agreements as the basis for the arbitration?

B. Did the trial court err in ruling on UPMC’s motion to 

compel arbitration without holding an evidentiary 

hearing when numerous underlying facts were 

disputed between the parties?

UPMC’s Brief at 4 (unnecessary emphasis omitted).6 

____________________________________________

4

In their briefs, both parties acknowledge that the underlying contracts do 

not require arbitration. See Highmark’s Brief at 18 (“Only some of the 

agreements between Highmark and UPMC contain arbitration provisions—

and none of those arbitration provisions cover the claims Highmark advances 

in this litigation.”); UPMC’s Reply Brief at 7 (“Highmark follows the trial 

court’s fatally flawed lead and devotes significant attention to the 

unremarkable—and irrelevant—question of whether the parties’ other 

contracts require arbitration. But UPMC never argued the point, and never 

identified those contracts as the source of Highmark’s obligation to 

arbitrate.”) (emphasis in original).

5 We acknowledge that “[a]s a general rule, an order denying a party's 

preliminary objections is interlocutory and, thus, not appealable as of right. 

There exists, however, a narrow exception to this oft-stated rule for cases in 

which the appeal is taken from an order denying a petition to compel 

arbitration.” Elwyn v. DeLuca, 48 A.3d 457, 460 n.4 (Pa. Super. 2012) 

(citations omitted).

6 At the outset, UPMC’s brief contained an additional issue, regarding 

whether the trial court erred “by not staying the case either pursuant to 42 

Pa. C.S.A. § 7304(d) pending the outcome of a pending arbitration, or 

pursuant to the court’s discretion pending a separate appeal to this Court 

raising some of the issues present in this case[.]” UPMC’s Brief at 4. On 

(Footnote Continued Next Page)
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Initially, we note that “[o]ur scope and standard of review of a claim 

that the trial court erred in overruling a preliminary objection in the nature 

of a motion to compel arbitration is whether there has been an abuse of 

discretion and whether the trial court's findings are supported by substantial 

evidence.” Washburn v. Northern Health Facilities, Inc., 121 A.3d 

1008, 1012 (Pa. Super. 2015) (citation omitted). This Court applies “a twopart test to determine whether the trial court should have compelled 

arbitration: 1) whether a valid agreement to arbitrate exists, and 2) whether 

the dispute is within the scope of the agreement.” Id. (citations omitted). 

We have explained that “[w]hether a claim is within the scope of an 

arbitration provision is a matter of contract, and as with all questions of law, 

our review of the trial court's conclusion is plenary.” Elwyn, 48 A.3d at 461 

(citations omitted). See also Warwick Township Water and Sewer 

Authority v. Boucher & James, Inc., 851 A.2d 953, 955 (Pa. Super. 

2004) (“The existence of an agreement and whether a dispute is within the 

scope of the agreement are questions of law and our review is plenary.”) 

(citation omitted). 

(Footnote Continued) _______________________

February 25, 2016, UPMC withdrew this argument, based on mootness, 

“[b]ecause of the conclusion of the arbitrations and the discontinuance of 

the prior appeal and underlying lawsuit[.]” See Notice of Partial Withdrawal, 

2/25/2016, at 3, ¶ 9. Accordingly, we need not consider this issue here. 
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We begin by deciding whether the trial court erred by not considering 

and interpreting the parties’ Consent Decrees. UPMC asserts that “the trial 

court declined to compel arbitration without considering the arbitration 

agreement,” i.e., the Consent Decrees. UPMC’s Brief at 19. UPMC maintains 

that “the Consent Decrees are agreements in their own right that require 

arbitration independent of any other contract[,]” and it emphasizes that it 

did not seek to compel arbitration under any prior agreements but, instead, 

only based on the Consent Decrees. Id. at 23. Moreover, it states that 

“[t]he Consent Decrees’ express terms require arbitration of all oncology 

rate and billing disputes, which are indeed tied together by the ‘causal or 

factual link’ of UPMC’s hospital-based billing.” UPMC’s Reply Brief at 2 

(quoting Highmark’s brief). 

We agree that the trial court should have considered UPMC’s asserted 

basis for arbitration — the Consent Decrees. See Collier v. National Penn 

Bank, 128 A.3d 307 (Pa. Super. 2015) (considering arbitration provision in 

separate contract asserted by appellant); Highmark Inc. v. Hospital 

Service Association of Northeastern Pennsylvania, 785 A.2d 93 (Pa. 

Super. 2001) (looking at dispute resolution provisions in both a license 

agreement and joint operating agreement).7 While we could vacate the trial 

____________________________________________

7 Highmark argues that the trial court “looked at the Consent Decrees to the 

extent needed to address the only question that was relevant to UPMC’s 

motion to compel arbitration—whether the Consent Decrees amended or 

overrode the parties’ arbitration agreements.” Highmark’s Brief at 21. 

(Footnote Continued Next Page)
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court’s order and remand this matter for it to interpret the Consent Decrees, 

this case raises questions of law — rather than fact — and, thus, we are 

permitted to continue our review and render a legal conclusion. See

Sanitary Sewer Authority of Borough of Shickshinny v. Dial 

Associates Construction Group, Inc., 532 A.2d 862, 864-65 (Pa. Super. 

1987).8 See also Smith v. Cumberland Group, Ltd., 687 A.2d 1167, 

1171 (Pa. Super. 1997) (“Because the construction and interpretation of 

contracts is a question of law, the trial court's conclusion as to whether the 

parties have agreed to arbitrate is reviewable by this Court.”) (citation 

omitted). Accordingly, we examine the Consent Decrees. 

We reiterate that this Court applies “a two-part test to determine 

whether the trial court should have compelled arbitration: 1) whether a valid 

(Footnote Continued) _______________________

However, the trial court’s opinion contains no such analysis, and it explicitly 

stated that it “has not considered any extrinsic evidence, such as the 

Consent Decrees.” TCO at 9 (emphasis added). Moreover, we are 

persuaded by UPMC’s argument that “[t]he Consent Decrees are not 

evidence about some other agreements; they are themselves 

agreements[.]” UPMC’s Brief at 23. Further, it states that “[t]he later 

Consent Decrees cannot be ‘extrinsic evidence’ of hospital and provider 

contracts signed over a decade earlier.” UPMC’s Reply Brief at 8. 

8

In Sanitary Sewer Authority, the trial court failed to “determine whether 

the dispute involved in the arbitration proceeding is covered by the 

arbitration clause of the contract.” Sanitary Sewer Authority, 532 A.2d at 

865. In response, this Court reasoned that “[a]lthough we could vacate the 

order granting the stay and remand the case for the trial court to make this 

determination, this issue is one of law rather than fact; in the interest of 

judicial economy, we shall examine the dispute, along with the arbitration 

clause, and reach a legal conclusion.” Id. (citations omitted). This same 

reasoning applies to the case sub judice. 
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agreement to arbitrate exists, and 2) whether the dispute is within the scope 

of the agreement.” Washburn, 121 A.3d at 1012 (citation omitted). “Even 

though it is now the policy of the law to favor settlement of disputes by 

arbitration and to promote the swift and orderly disposition of claims, 

arbitration agreements are to be strictly construed and such agreements 

should not be extended by implication.” Elwyn, 48 A.3d at 461 (citation 

omitted). 

Even if we presume that UPMC met the two-part test set forth above, 

we nevertheless would not compel arbitration because the proper procedure 

for doing so under the Consent Decrees has not been met. Highmark’s 

Consent Decree, which again is a mirror-image of UPMC’s Consent Decree, 

provides for the following, in relevant part:

IV. TERMS

[Highmark] shall comply with the following terms:

***

C. Miscellaneous Terms 

4. Enforcement of the Consent Decree- The [Office of 

the Attorney General (“OAG”)], [Pennsylvania 

Department of Insurance (“PID”),] and [Pennsylvania 

Department of Health (“DOH”)] shall have exclusive 

jurisdiction to enforce the Consent Decree.

(a) If the OAG, PID or DOH believe that a 

violation of the Consent Decree has taken 

place, they shall so advise [Highmark] and 

give [Highmark] twenty (20) days to cure 

the violation. If after that time the violation 

is not cured, the OAG, PID or DOH may seek 

enforcement of the Consent Decree in the 
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Commonwealth Court; (b) Any person who 

believes they have been aggrieved by a violation 

of this Consent Decree may file a complaint with 

the OAG, PID or DOH for review. If after that 

review, the OAG, PID, or DOH believes either a 

violation of the Consent Decree has occurred or 

they need additional information to evaluate the 

complaint, the complaint shall be forwarded to 

Highmark for a response within thirty (30) days. 

If after receiving the response, the OAG, PID or 

DOH, believe a violation of the Consent Decree 

has occurred, they shall so advise Highmark and 

give Highmark twenty (20) days to cure the 

violation. If after that time the violation is not 

cured, the OAG, PID or DOH may seek 

enforcement of the Consent Decree in [the 

Commonwealth Court of Pennsylvania]. []

***

11. Retention of Jurisdiction- Unless this Consent 

Decree is terminated, jurisdiction is retained by the 

Commonwealth Court of Pennsylvania to enable any 

party to apply to this Court for such further orders and 

directions as may be necessary and appropriate for the 

interpretation, modification and enforcement of this 

Consent Decree. 

Highmark’s Consent Decree, 7/1/2014, at 6, 11, 14-15, 17 (emphasis 

added). 

As noted supra, we must strictly construe the Consent Decrees. They 

expressly state that if a violation of the Consent Decrees has occurred, 

Commonwealth officials have exclusive jurisdiction to enforce their terms.9 

____________________________________________

9

In its reply brief, UPMC argues that section IV(C)(11) (“Retention of 

Jurisdiction”), cited supra, permits UPMC to enforce the Consent Decrees. 

UPMC’s Reply Brief at 10. That section, however, does not delegate direct 

power to Highmark or UPMC to enforce the Consent Decrees, but instead 

requires them to seek enforcement through the Commonwealth Court. 

(Footnote Continued Next Page)
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Therefore, if Highmark violated the Consent Decrees by filing this lawsuit, 

Commonwealth officials — and, notably, not UPMC — have exclusive 

jurisdiction to enforce the arbitration provisions of the Consent Decrees and 

compel Highmark to dismiss this lawsuit. It is undisputed between the 

parties that Commonwealth officials have taken no such enforcement action 

to stop this litigation from proceeding.10 Further, because Commonwealth 

officials have not sought to dismiss this lawsuit or compel arbitration, we 

must conclude that the arbitration provisions in the Consent Decrees do not 

require arbitration of the issues raised in Highmark’s Complaint.11 Finally, 

(Footnote Continued) _______________________

10 In its brief, Highmark points out that “state officials with ‘exclusive 

jurisdiction’ to enforce the Consent Decrees have not acted to force 

Highmark to dismiss this case.” See Highmark’s Brief at 31, n.13 (citing 

Record evidence). UPMC does not dispute this assertion in its brief or reply 

brief. Accordingly, no question of fact exists regarding this issue. 

11 In their briefs, the parties debate whether the underlying dispute falls 

within the scope of the arbitration provisions in the Consent Decrees. Both 

parties focus on the “current arbitration” language in section IV(C)(1)(a)(ii) 

of the Consent Decrees. See Highmark’s Consent Decree, at 12. 

Unsurprisingly, the parties offer starkly different interpretations of what 

matters the “current arbitration” encompass. See Highmark’s Brief at 28-29 

(“The Consent Decrees do not say that the ‘current arbitration’ is a 

receptacle for all of the parties’ past, present and future disputes. Instead, 

the Consent Decrees reference the current arbitration for a very specific and 

narrow reason—explaining how resolution of the current arbitration will 

affect the parties’ 2014 and 2015 rates for oncology drugs and services.”); 

UPMC’s Brief at 25 (“Highmark’s lawsuit and the ‘current arbitration’ involve 

the same contracts between the same parties related to the same billing 

practices, service locations, and reimbursement rates. Highmark seeks 

damages dating from August 2010 ‘through the present,’ a period that 

overlaps directly with the arbitrations.”). Because we determine the 

(Footnote Continued Next Page)
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because this is a purely legal question based on the express terms of the 

Consent Decrees, and there are no questions of fact at issue, we also 

determine that an evidentiary hearing is unnecessary. As such, we affirm 

the trial court’s order overruling UPMC’s preliminary objections and denying 

its motion to compel arbitration.12

Order affirmed. 

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 12/2/2016

(Footnote Continued) _______________________

enforcement provision of the Consent Decrees to be dispositive of the issues 

raised on appeal, we find no need to interpret the meaning of “current 

arbitration” here. 

12 “[N]otwithstanding the trial court's stated grounds, if its result is correct, 

this Court can affirm the trial court on any basis.” See, e.g., Staub v. 

Staub, 960 A.2d 848, 853 (Pa. Super. 2008) (citation omitted).