Court Opinion

ID: 3158795
Source: CourtListenerOpinion
Date Created: 2015-11-30 22:07:45.066195+00
Date Added: 2024-06-11T11:52:29.744193
License: Public Domain

[J-77-2015] [MO: Todd]
                   IN THE SUPREME COURT OF PENNSYLVANIA
                                MIDDLE DISTRICT

COMMONWEALTH OF PENNSYLVANIA,                :   No. 48 MAP 2015
BY KATHLEEN G. KANE, ATTORNEY                :
GENERAL; PENNSYLVANIA                        :   Appeal from the Order of the
DEPARTMENT OF INSURANCE, BY                  :   Commonwealth Court at No. 334 MD
TERESA D. MILLER, INSURANCE                  :   2014 dated May 29, 2015.
COMMISSIONER; AND PENNSYLVANIA               :
DEPARTMENT OF HEALTH, BY DR.                 :   ARGUED: October 6, 2015
KAREN MURPHY, SECRETARY OF                   :
HEALTH                                       :
                                             :
                                             :
             v.                              :
                                             :
                                             :
UPMC, A NONPROFIT CORP.; UPE,                :
A/K/A HIGHMARK HEALTH, A                     :
NONPROFIT CORP., AND HIGHMARK,               :
INC., A NONPROFIT CORP.                      :
                                             :
                                             :
APPEAL OF: UPMC, A NONPROFIT                 :
CORP.                                        :

                     CONCURRING AND DISSENTING OPINION

MR. JUSTICE BAER                                       DECIDED: November 30, 2015

      I commend the Majority Opinion for its excellent recitation in Part I of the

acrimonious factual and contractual history of this complex legal dispute. Additionally, I

join Part IV of the opinion rejecting UPMC’s challenges to Paragraphs Three and Four

of the Commonwealth Court’s order below. Also, I agree with the Majority that the

Commonwealth’s overarching intent in drafting the Consent Decree, and specifically the

Vulnerable Population Provision, was to protect the listed at-risk groups, including

Medicare Advantage participants, from becoming collateral damage in the war between
Highmark and UPMC.          Indeed, the path taken by the Majority in Part II is an

understandable attempt to comport the intent to protect Medicare Advantage

subscribers with the language of the Vulnerable Population Provision. Nevertheless, I

am constrained to dissent from Part II because I conclude that the Majority’s

interpretation is inconsistent with the plain language of the provision.

       While the Consent Decree unambiguously provides protection for most of the

listed vulnerable populations, the parties either intentionally or negligently failed to

require UPMC and Highmark to continue to contract regarding Medicare Advantage.

This Court has no authority to read ambiguity into plain language in order to effectuate

what we discern to be the more favorable result. As set forth below, I conclude that the

language plainly does not require UPMC to continue to contract with Highmark in regard

to Medicare Advantage, even if that was the original intent of the parties and would

have been the better policy for the citizens of this Commonwealth. See, e.g., Willison v.

Consolidation Coal Co., 637 A.2d 979, 982 (Pa. 1994) (“The accepted and plain

meaning of the language used, rather than the silent intentions of the contracting

parties, determines the construction to be given the agreement.”); Moore v. Stevens

Coal Co., 173 A. 661 (Pa. 1934) (“It is not the province of the court to alter a contract by

construction or to make a new contract for the parties; its duty is confined to the

interpretation of the one which they have made for themselves, without regard to its

wisdom or folly.”) (quoting 13 C.J. § 485, at 524).

       As noted by the Majority, prior to signing the Consent Decree, UPMC and

Highmark, in 2012, entered into a Mediated Agreement and a related global amendment

of the prior individual Medicare Advantage provider agreements, which specified that

the underlying Medicare Advantage provider agreements could not be terminated earlier

than December 31, 2014, and would automatically renew annually after December 2014

                                [J-77-2015] [MO: Todd] - 2
unless either party provided timely notice of termination. Following disputes between

the parties, the Commonwealth brokered the Consent Decree relevant to this case.1

The Consent Decree specifies that it is not a contract extension of the prior provider

agreements and instead creates separate contractual obligations between Highmark

and UPMC in regard to the specified service areas, including emergency room/trauma

services, oncology/cancer services, unique hospitals (such as Western Psychiatric

Institute and Clinic), and, as relevant to the case at bar, vulnerable populations. UPMC

Consent Decree, § I(A). The question presented in the case is whether the following

four-sentence Vulnerable Population Provision of the Consent Decree acts to restrict

UPMC’s right under the Mediated Agreement to terminate its provider agreements for

Medicare Advantage:

             [VP-1] UPMC and Highmark mutually agree that vulnerable
             populations include: (i) consumers age 65 or older who are
             eligible or covered by Medicare, Medicare Advantage, (ii)
             Medigap health plans, (iii) Medicaid and/or (iv) CHIP. [VP-2]
             With respect to Highmark’s covered vulnerable populations,
             UPMC shall continue to contract with Highmark at in-network
             rates for all of its hospital, physician and appropriate
             continuity of care services for CHIP, Highmark Signature 65,
             Medigap and commercial retiree carve out as long as
             Highmark does not make unilateral material changes to
             these programs. [VP-3] UPMC shall treat all Medicare
             participating consumers as In-Network regardless of whether
             they have Medicare as their primary or secondary insurance.
             [VP-4] UPMC reserves the right to withdraw from these
             arrangements if Highmark should take the position that it has
             the authority to revise the rates and fees payable under
             those arrangements unilaterally and materially.

1
      We will use the singular term “Consent Decree” to reference the document
signed by UPMC. However, we recognize that Highmark signed a functionally
equivalent decree with the same language.

                              [J-77-2015] [MO: Todd] - 3
UPMC Consent Decree, § IV(A)(2) (sentence designations added for ease of
discussion).
      The first sentence, which will be referenced as VP-1, undisputedly provides that

UPMC and Highmark agree “that vulnerable populations include: (i) consumers age 65

or older who are eligible or covered by Medicare, Medicare Advantage, (ii) Medigap

health plans, (iii) Medicaid and/or (iv) CHIP.” Id. This sentence distinguishes between

Medicare and Medicare Advantage programs, a distinction that is consistent with federal

law. As the Majority notes, Medicare Advantage is Part C of the Medicare program

which is governed by separate statutes and regulations from those governing standard

Medicare Parts A (hospital) and B (medical). Maj. Op. at 16-18. Medicare Advantage is

administered by private insurance companies that negotiate with health care providers

regarding rates for services, while Medicare Parts A and B are administered by the

federal government with rates set by the Centers for Medicare and Medicaid Services

(CMS), without negotiation with the provider. Maj. Op. at 18. An individual cannot have

both standard Medicare and Medicare Advantage because they provide essentially the

same benefits.   Maj. Op. at 16-18.    Thus, Medicare Advantage and Medicare are

distinct programs, which the Consent Decree recognizes in VP-1.

      The second sentence of the Vulnerable Population Provision (“VP-2”) addresses

when UPMC is bound to continue to contract with Highmark:

             With respect to Highmark’s covered vulnerable populations,
             UPMC shall continue to contract with Highmark at in-network
             rates for all of its hospital, physician and appropriate
             continuity of care services for CHIP, Highmark Signature 65,
             Medigap and commercial retiree carve out as long as
             Highmark does not make unilateral material changes to
             these programs.

                              [J-77-2015] [MO: Todd] - 4
UPMC Consent Decree, § IV(A)(2). This sentence clearly requires UPMC to “continue

to contract with Highmark at in-network rates” for the groups listed in the sentence,

which, conspicuously and importantly, does not include Medicare Advantage.

      There is a reason for this omission, which informs our analysis. A prior draft of

the sentence included Medicare Advantage in the list of vulnerable populations for

which UPMC was obligated to continue to contract with Highmark.             During the

negotiations resulting in the final language, Highmark requested that Medicare

Advantage be stricken from the “continue to contract” provision to permit Highmark to

offer its new Community Blue Medicare Advantage product that did not include UPMC

as an in-network provider. See Cmwlth. Ct. Op., June 29, 2015, at 19-20; UPMC Brief

at 38-40. If Medicare Advantage had remained in this list, the entire four-sentence

Vulnerable Population Provision would have fulfilled its purpose of protecting the

vulnerable populations listed in the first sentence. However, while the parties included

Medicare Advantage as a vulnerable population in VP-1, they failed to protect this

population by binding UPMC to continue to contract with Highmark when they

intentionally deleted the term from VP-2 during the drafting process. I fully agree with

the Majority that this sentence does not require UPMC to continue to contract with

Highmark regarding Medicare Advantage. Maj. Op. at 41.

      While the Majority acknowledges the absence of Medicare Advantage from VP-2,

it finds the third sentence (“VP-3”) ambiguous in an attempt to protect Medicare

Advantage participants. Maj. Op. at 36-37. Unfortunately, the plain language of VP-3

does not allow for such a reading, as again it provides:

             UPMC shall treat all Medicare participating consumers as In-
             Network regardless of whether they have Medicare as their
             primary or secondary insurance.

                               [J-77-2015] [MO: Todd] - 5
UPMC Consent Decree, § IV(A)(2). The Majority acknowledges that this sentence does

not utilize “the same ‘continue to contract’ terminology” as VP-2, but concludes that the

sentence “nevertheless obliges UPMC to treat those participants in Highmark Medicare

Advantage programs as ‘In-Network,’ and, thus, requires [UPMC] to have a contract

with Highmark that establishes negotiated rates for treatment of those in Medicare

Advantage programs for which Highmark currently has provider contracts with UPMC

[or through arbitration under Section IV(C)(1)(a)(iii)].”   Maj. Op. at 47.     While the

Majority’s paraphrase of the sentence unambiguously champions the protection of

Medicare Advantage participants, the Consent Decree itself simply does not include this

language.

      We must restrict our examination to the language to which the parties actually

agreed. There is just no way to construe the language of VP-3 to require UPMC to

continue to contract with Highmark regarding Medicare Advantage.            If the parties

desired to require UPMC to continue to contract with Highmark regarding Medicare

Advantage, they could have either included the term in VP-2, as suggested above and

as they did in an earlier draft, or they could have drafted a separate sentence stating:

“UPMC shall continue to contract with Highmark at in-network rates for all of its hospital,

physician and appropriate continuity of care services for Medicare Advantage.” This

language or a similar expression does not exist in the Vulnerable Population Provision,

and I am unable to twist the language of VP-3 into a “continue to contract” provision to

reform the parties’ removal of Medicare Advantage from VP-2, the substantive provision

requiring UPMC to continue to contract with Highmark.

      The plain language of VP-3 addresses the separate and very limited issue of the

rate UPMC charges in a coordination of benefits situation where a patient has both a

primary and a secondary source of health insurance coverage, where one source is

                               [J-77-2015] [MO: Todd] - 6
Medicare, which does not utilize negotiated rates, and the other source is a health plan

with negotiated in-network rates. The sentence addresses a problem that apparently

plagued the parties prior to the Consent Decree regarding the rate charged when a

patient was covered by both Medicare and a private insurance plan. UPMC Brief at 47-

49 (quoting testimony of Highmark President Deborah Rice-Johnson, Notes of

Testimony (“N.T.”), May 27, 2015, at 215). The clear language of VP-3, when read in

conjunction with the defined term “In-Network,” merely provides that “regardless of

whether [the consumers] have Medicare as their primary or secondary insurance[,]”

“UPMC shall treat” the consumers “as In-Network,” which pertains to “where a health

care provider has contracted with a Health Plan to provide specified services for

reimbursement at a negotiated rate.”2 UPMC Consent Decree, §§ IV(A)(2), II(I). The

2
      The Consent Decree defines “In-Network” as :

             “In-Network” means where a health care provider has
             contracted with a Health Plan to provide specified services
             for reimbursement at a negotiated rates to treat the Health
             Plan’s members. The member shall be charged no more
             than the co-pay, co-insurance or deductible charged by his
             or her Health Plan, the member shall not be refused
             treatment for the specified service in the contract based on
             his or her Health Plan and the negotiated rate paid under the
             contract by the Health Plan and the member shall be
             payment in full for the specified services.

UPMC Consent Decree, § II(I).

       Additionally, the Consent Decree includes detailed provisions to set the In-
Network rate in the absence of a negotiated rate, which could pertain to situations
where UPMC and Highmark do not have a current contract. Section IV(C)(1)(a)(i)
provides that if the parties cannot otherwise negotiate the rates, the “In-Network” rates
for 2015 “shall revert to the last mutually agreed upon rates or fees by UPMC and
Highmark with the applicable medical market basket index (MBI) increase applied
January 1, 2015.” Similarly, Section IV(C)(1)(a)(iii) addresses “In-Network” rates for the
period beginning January 1, 2016 until the later of the expiration of the Consent Decree
(continuedL)

                               [J-77-2015] [MO: Todd] - 7
definition of “In-Network” further operates to protect the consumer by limiting the

amount the member can be charged to “no more than the co-pay, co-insurance, or

deductible charged by his or her Health Plan” and instructs that the member “shall not

be refused treatment for the specified services in the contract based on his or her

Health Plan.” Id. Finally, it provides that the negotiated rate “shall be payment in full for

the specified services.”3    Id.     Thus, VP-3 limits the out-of-pocket expense of an

individual who has both Medicare (which would pay no more than the CMS designated

rate) and another health plan (which would pay up to the in-network rate).4

       I see no suggestion in the language of VP-3 that the parties intended to require

UPMC to continue to contract with any entity; rather it simply addresses the rate

applicable for the treatment of a consumer who is covered by Medicare in addition to

another health plan. Ambiguity only arises in this sentence when it is read to address

(Lcontinued)
or “the expiration of any agreements between UPMC and Highmark for all In-Network
services” and provides that the rates shall either be negotiated between UPMC and
Highmark or requries UPMC and Highmark to “engage in a single last best offer binding
arbitration.”

3
       In summarizing its argument in regard to VP-3, Highmark states, “[t]he Consent
Decree defines ‘In-Network’ to mean that UPMC ‘has contracted with’ Highmark.”
Highmark Brief at 28. The definition of In-Network does not state that UPMC has or has
not contracted with Highmark, nor does it inform whether UPMC currently has a contract
with Highmark; it merely describes what happens if a heath care provider, like UPMC,
has contracted with a Health Plan, like Highmark. Moreover, as noted supra in note 2,
the Consent Decree addresses the situation where there is no current negotiated in-
network rate. Highmark’s recitation of the contractual language, thus, appears to be a
mischaracterization of the definition of In-Network.

4
       Notably, as the Commonwealth Court correctly acknowledged during the hearing,
VP-3 is not a standard coordination of benefits provision in that it is not determining
which plan is primary and which is secondary; instead, it is dictating what rate will apply
to services provided to this subset of patients regardless of which program is the
patient’s primary insurance. N.T., May 27, 2015, at 398-99.

                                   [J-77-2015] [MO: Todd] - 8
an entirely unrelated concept of contract continuation in an effort to compensate for the

Commonwealth’s and UPMC’s acquiescence to Highmark’s request to remove

Medicare Advantage from VP-2. 5

      I respectfully disagree with the criticism of this analysis as explained by my

colleagues in the Majority and the Commonwealth Court. First, I reject the reading of

VP-3’s term “Medicare participating consumer” to include consumers with Medicare

Advantage. Maj. Op. at 41-44; Cmwlth. Ct. Op., June 29, 2015, at 27-28. It is beyond

cavil, and all parties agree, that Medicare Advantage is an integral part of the Medicare

system as Part C, along with the federally operated Medicare Parts A and B. Thus,

unmoored to the language of the current provision, it would be eminently reasonable to

refer to someone who has Medicare Advantage as a “Medicare participating consumer.”

However, the negotiated language of VP-1 distinguishes between “Medicare” and

“Medicare Advantage,” such that the term “Medicare,” for purposes of this provision,

applies only to the federally operated Medicare Parts A and B, and is distinct from

Medicare Advantage, the private-insurer-operated Medicare Part C. Under our rules of

contract interpretation, we cannot recognize the drafters’ distinction between the two

terms in VP-1 and ignore it in VP-3. See Maloney v. Glosser, 235 A.2d 607, 609 (Pa.

1967) (observing that Williston on Contracts instructs that “a word used by the parties in

one sense is to be interpreted as employed in the same sense throughout the writing in

the absence of countervailing reasons”); 11 Williston on Contracts § 32:6.

5
      Moreover, Highmark’s suggestion that VP-2 addresses non-Medicare entities
and VP-3 addresses Medicare entities fails. Highmark Brief at 34-35. As noted above,
VP-3 does not contain any language requiring UPMC to contract with any entity, but
merely defines the rates to be applied if a patient has two insurers. Additionally, there
would be no reason to require UPMC to contract for in-network rates with Medicare
because, as all have acknowledged, CMS sets non-negotiable rates for Medicare.
Therefore, if VP-3 can only apply to Medicare Advantage, as Highmark argues,
Highmark Brief at 32-33, the parties should have used that term rather than Medicare.

                               [J-77-2015] [MO: Todd] - 9
      Secondly, our reading of Medicare participating consumer as applying solely to

those consumers with Medicare Parts A and B is consistent with the provision’s intent to

protect at-risk groups and is not illegal as suggested by the Majority and the

Commonwealth Court. Maj. Op. at 44; Cmwlth. Ct. Op., June 29, 2015, at 28. My

colleagues accept Highmark’s argument that reading the term “Medicare participating

consumer” to mean only a consumer participating in Medicare Parts A and B would

require the legal impossibility of UPMC negotiating rates with Medicare. This is a straw

man argument created to obfuscate the analysis. As discussed above, VP-3 is not

requiring UPMC to negotiate regarding rates but instead dictates the rate that a health

care provider can charge for a customer’s treatment and directs that the “in-network”

rate of the health plan applies regardless of whether Medicare is the primary or

secondary insurer. This plain reading does not suggest any need to negotiate payment

rates with Medicare, which all agree are set by the CMS.

      Finally, the Commonwealth Court opined that if the drafters intended to refer only

to Medicare rather than a broader category of Medicare participating consumers, then “it

easily could have stated ‘Medicare’ instead of Medicare participating consumer.”

Cmwlth. Ct. Op., June 29, 2015, at 27-28. Respectfully, the drafters could not have

used only the term Medicare because the provision is addressing the consumers, not

the plan.   Specifically, the sentence is addressing consumers who have multiple

insurance coverages, one of which is Medicare. Thus, “Medicare participating” is an

adjective phrase describing the consumer. It would eliminate the purpose of the phrase

to use the term “Medicare,” which describes the plan, not the person. The phrase

cannot be drafted in any more limited fashion than “Medicare participating consumers.”

      As previously discussed, I agree that the Commonwealth, at the outset of the

negotiations, intended to protect Medicare Advantage participants as they were

                              [J-77-2015] [MO: Todd] - 10
specifically included in the vulnerable populations listed in VP-1 of the provision.

Moreover, Medicare Advantage participants should have been included in the

protections provided by the Consent Decree.          Indeed, they were included in the

protections of the “continue to contract” provision, until the term was deleted at

Highmark’s request during negotiations. It is not within this Court’s authority to reinsert

the protection for Medicare Advantage into the Vulnerable Population Provision when it

was specifically removed by the parties.       We also cannot read an otherwise clear

sentence addressing a separate concept as ambiguous merely to correct a concession

made during difficult negotiations. I find no ambiguity in VP-3, which simply addresses

a problem that arises in a coordination of benefits situation.

        While the result of this contractual analysis is to permit UPMC to terminate its

Medicare Advantage agreements with Highmark, which in turn will result in UPMC

doctors and hospitals being “out of network” for Highmark Medicare Advantage

participants, it does not necessarily leave the Medicare Advantage participants without

recourse.      The Commonwealth Court observed that CMS could allow “a special

enrollment period.” Cmwlth. Ct. Op., June 29, 2015, at 24. In such a case, Highmark’s

Medicare Advantage participants could choose to stay with their Highmark plan or

switch to another plan which would allow in-network access to UPMC doctors and

facilities.   Cmwlth. Ct. Op., June 29, 2015, at 23-24.          Additionally, testimony was

presented to the Commonwealth Court that CMS can grant individualized special

enrollments to customers who assert that they are “confused.” N.T., May 27, 2015, at

342, 365, see also Cmwlth. Ct. Op., June 29, 2015, at 22.

        As a function of this Court’s basic duty to decide the plain meaning of a contract,

I dissent from Part II of the Majority Opinion and would reverse the Commonwealth

Court’s order to the extent it holds that UPMC must continue to contract with Highmark

                               [J-77-2015] [MO: Todd] - 11
regarding Medicare Advantage. As I would reverse on this basis, I need not address

whether UPMC establishes its right to relief under Part III of the Majority Opinion

addressing the fourth sentence of the Vulnerable Population provision. Finally, as noted

at the outset of the opinion, I join Part IV of the Majority Opinion addressing Paragraphs

Three and Four of the Commonwealth Court Order.

      Mr. Justice Stevens joins this concurring and dissenting opinion.

                              [J-77-2015] [MO: Todd] - 12