Court Opinion

ID: 4968598
Source: CourtListenerOpinion
Date Created: 2021-09-24 16:28:25.390507+00
Date Added: 2024-06-11T08:16:24.864010
License: Public Domain

DISSENTING OPINION BY
Judge McCullough.
I respectfully dissent. For the reasons stated in the dissenting portion of my opinion in Department of Public Welfare v. Eiseman, 85 A.3d 1117 (Pa.Cmwlth.2014) (McCullough, J. concurring and dissenting), I would conclude that the Managed Care Organization (MCO) Rates1 should be disclosed. Because my analysis in Eiseman is equally applicable to Provider Rates, I would conclude that these rates should also be disclosed. The only remaining issue in this case is whether the Provider Agreements are in the possession of the Department of Public Welfare (DPW) under section 506(d)(1) of the Right-To-Know Law (RTKL).2 Unlike the Majority, I would conclude that they are.
The facts relevant to our inquiry can be summarized as follows. To effectuate and pay for the dental care aspect of Medicaid, DPW enters into contracts with MCOs; the MCOs, on behalf of DPW, then enter into contracts with various business entities (Subcontractors); and the Subcontractors enter into contracts with the Providers. The contracts between the Subcontractors and the Providers, “Provider Agreements,” contain the payment rates, “Provider Rates,” that a person/entity receives for rendering dental services to Medicaid beneficiaries.
In pertinent part, section 506(d)(1) of the RTKL states:
A public record that is not in the possession of an agency but is in possession of a party with whom the agency has contracted to perform a governmental function on behalf of the agency, and which directly relates to the governmental function ... shall be considered a public record of the agency for purposes of this act.
65 P.S. § 67.506(d)(1) (emphasis added).
The Majority concludes that this two-part test is not met — first because “the third party in possession of the records containing Provider Rates, a Subcontractor, has no contractual relationship with DPW.” (Maj. op. at 940.) Second, the Majority concludes that the rate to be paid from public funds for dental services “do not ‘directly relate’ to performing the government function of administering [Medicaid].” Id. at 941. I disagree with both propositions.
Initially, no one disputes, and the Majority agrees, that the Provider Agreements are in the physical possession of the Subcontractors and that the administration and implementation of the dental care aspect of Medicaid is a “government function.” Therefore, in order for the Provider Agreements to be deemed the public records of DPW under section 506(d)(1), the following must occur: (1) the Subcontractors must have “contracted” with DPW to perform a government function; and (2) the Provider Agreements must “directly relate” to the administration or implemen*944tation of dental care for Medicaid beneficiaries.
“[C]ourts should liberally construe the RTKL to effectuate its purpose of promoting access to official government information in order to prohibit secrets, scrutinize actions of public officials, and make public officials accountable for their actions.” Levy v. Senate of Pennsylvania, — Pa. -,-, 65 A.3d 361, 381 (2013). The RTKL does not define “contract” and consequently, this term must be construed according to its legal meaning. See Pantuso Motors, Inc. v. Corestates Bank, N.A., 568 Pa. 601, 608, 798 A.2d 1277, 1281 (2002) (“Terms that have acquired specialized meaning, however, are to be interpreted according to such meaning.”).
Here, the HealthChoices Agreement between DPW and the MCOs states that the MCOs are obligated to establish and maintain a provider network. (R.R. at 915a.) Specifically, the MCOs are “required to have written Provider Agreements with a sufficient number of [providers to ensure [mjember access to all medically necessary services covered by [Medicaid].” Id. at 784a. Under the HealthChoices Agreement, the MCOs do not have the authority to independently bind DPW through contractual arrangements with third parties. Id. at 714a. Although the HealthChoices Agreement permits the MCOs to subcontract their duty to obtain Provider Agreements to Subcontractors, these subcontracts are not valid unless they receive advance written approval from DPW. Id. at 865a-66a.
When an agent contracts on behalf of a principal, “the general rule [is] that where there is a disclosed principal, known as such at the inception of the transaction, the principal alone is liable for a breach of the contract.” Levy v. Conly, 340 Pa. 332, 336, 17 A.2d 382, 383 (1941). Even when an agent lacks apparent authority and is not authorized to conduct a transaction, if a principal approves or ratifies the contractual agreement of an unauthorized agent and a third party, the contract is valid and the principal is held liable upon the contract to the third party. Todd v. Shelly, 384 Pa. 423, 427, 120 A.2d 906, 909 (1956); 1 P.L.E. § 101. In other words, the principal’s actions in ratifying or approving the contract replaces the agent’s unauthorized behavior and the principal becomes the main party to the contract with the third party. See Restatement (Third) of Agency § 4.02 cmt. b. (2005) (“Ratification creates claims not otherwise present, giving the principal and the third party enforceable rights against each other... .”); Sheppard v. Aerospatiale, Aeritalia, 165 F.R.D. 449, 452 (E.D.Pa.1996) (“[G]eneral agency law supports the proposition that ratification will bind a principal”).
As explained in my dissenting opinion in Eiseman, DPW and the MCOs are in an agency relationship, with DPW acting as the principal and the MCOs acting as the agents. (Dissenting op. at 1134, quoting Lukes v. Department of Public Welfare, 976 A.2d 609, 623-24 (Pa.Cmwlth.2009) (“Applying agency principals to the instant matter, we believe the Provider Agreements at issue are the product of the agency relationship between DPW and the [MCO]. The HealthChoices Agreement constitutes a manifestation by DPW that the [MCO] shall administer the Health-Choices Program and the acceptance of the undertaking by the [MCO].”)). In this case, DPW is the party principal to the subcontracts between the MCOs and the third party Subcontractors. The MCOs lack authority to enter into subcontracts with the Subcontractors, and the only way in which the subcontracts can become valid and enforceable under the HealthChoices Agreement is if DPW ratifies or approves *945the subcontracts as the principal. Therefore, because the Subcontractors have directly contracted with DPW as principal and are in possession of the Provider Agreements (“in possession of a party with whom the agency has contracted”), I would conclude that DPW possesses “public records” for purposes of section 506(d)(1) of the RTKL.
Moreover, as used in the RTKL, the term “governmental function” is materially ambiguous; yet, it should be construed generally “to connote an act of delegation of some substantial facet of the agency’s role and responsibilities.” SWB Yankees, LLC v. Wintermantel/The Scranton Times Tribune, 615 Pa. 640, 45 A.3d 1029, 1041 and 1043 (2012). So long as the requested documents directly relate to the governmental function that is contracted out to the third party, the records are considered to be in the agency’s possession under the RTKL. 65 P.S. § 67.506(d)(1).
In this case, the request for Provider Agreements and Provider Rates falls squarely within the terms of the Subcontractors’ contractual duties and explicit governmental undertakings. Via sub-contractual arrangements, the Subcontractors assume DPWs governmental obligation to implement Medicaid and ensure that dental care is available for Medicaid recipients. Pursuant to their governmental and contractual duties, the Subcontractors are not only obligated to secure dental services through Provider Agreements, but are also required to negotiate Provider Rates with the dental providers. On these facts, I would conclude that the Provider Agreements and Provider Rates directly relate to the Subcontractors’ performance of a government function. These agreements and rates are indispensably necessary to effectuate Medicaid and represent the very thing the Subcontractors contractually agreed to do for and on behalf of DPW.
For these reasons, I would conclude that the Provider Agreements are in the possession of a government agency for purposes of section 506(d)(1) of the RTKL. Accordingly, I dissent.

. As discussed in Eiseman and simplified and charted by the Majority: DPW -* MCOs (MCO Rates) -> Subcontractors -> Providers (Provider Rates). The symbol denotes a contractual agreement, with their being a total of three different contracts. The rates listed in the "()" represent the rates that the parties negotiated for in the relevant contract.

. Act of February 14, 2008, P.L. 6, 65 P.S. § 67.506(d)(1).