Court Opinion

ID: 9696135
Source: CourtListenerOpinion
Date Created: 2023-08-25 18:38:03.123897+00
Date Added: 2024-06-11T18:20:18.905483
License: Public Domain

PELLEGRINI, Judge,
concurring.
While I concur with the majority’s decision to affirm the order of the Court of Common Pleas of Allegheny County (trial court) granting the preliminary injunction filed by Charles'J. Carlini, M.D. (Dr. Carli-*1189ni) because it was the Medical Review Committee’s ultimate decision to reinstate his participation in the Keystone network, I disagree with the majority that High-mark was a “state actor” requiring Dr. Carlini to be provided with due process during the recredentialing process.
In 1997, Dr. Carlini was informed by Highmark’s medical director that its Credentials Committee had denied his recre-dentialing application to the Keystone network based on malpractice claims filed against him.1 Dr. Carlini appealed that decision and pursuant to Highmark’s (Blue Shield’s) bylaws, a hearing was held before a Medical Review Committee consisting of peer physicians at which Dr. Carlini appeared and offered evidence in his defense. The Medical Review Committee recommended to the Credentials Committee that its decision to terminate Dr. Carlini’s participation in the Keystone network be reversed, but despite that recommendation, the Credentials Committee upheld its earner determination.
Dr. Carlini then filed a complaint in equity and a request for a preliminary injunction contending that when High-mark did not accept the Medical Review Committee’s recommendation that he be reinstated as a participating physician, it violated his due process rights because Highmark was a “state actor” and its medical review procedures had to be in compliance with constitutional due process precepts applicable to state administrative agencies. Highmark responded by arguing that it was a separate entity from Keystone and Dr. Carlini never lost his right to participate in Highmark’s network, only Keystone’s network. Further, it stated that because Keystone was an HMO, the Health Maintenance Organization Act (HMO Act)2 applied rather than the Pennsylvania Professional Health Services Plan Corporation Act (PHSPCA)3 and did not require due process during the recredentialing process.
Not distinguishing Highmark and Keystone as separate entities because their letterhead bore both their names and had the same logos, the trial court found that a hearing had been held pursuant to High-mark’s bylaws and the PHSPCA, and that Highmark was a creature of the state based on our Supreme Court’s decision in Rudolph v. Pennsylvania Blue Shield, 553 Pa. 9, 717 A.2d 508 (1998)4 whose proceedings were subject to due process review under the 14th Amendment to the United States Constitution. Citing Lyness v. State Board of Medicine, 529 Pa. 535, 605 A2d 1204 (1992) (an administrative board, such as the State Board of Medicine, violates due process when it initiates disciplinary proceedings and then acts as the ultimate fact finder in determining whether a violation occurred), a decision decided under the Pennsylvania Constitution, it then held that the commingling of the *1190Credentials Committee’s actions were inconsistent with the notion of due process embodied in the Pennsylvania Constitution and granted Dr. Carlini’s request for a preliminary injunction and ordered Ms continued participation in the Keystone network.
The majority affirms the trial court’s decision for two reasons. First, under Highmark’s bylaws, it is the Medical Review Committee that makes the final determination as to whether a physician will be terminated from a network. Second, based on Rudolph, Highmark is a “state actor” and all the due process standards that apply to governmental bodies are applicable to Highmark’s review process. While I agree with the majority that for purposes of a preliminary injunction the Credentials Committee’s decision could not apply, I disagree that Highmark is a state actor.
At the core of the majority’s decision is that Highmark’s bylaws control. However, Dr. Carlini’s relationship with Keystone was terminated, not with Highmark. Highmark and Keystone are two separate entities. Highmark is a corporation that is governed by the PHSPCA and Keystone is an HMO governed by the HMO Act. Pursuant to Section 6324 of the PHSPCA, all disputes are to “be considered and determined only by health service doctors as selected in a manner prescribed in the bylaws of the professional health service corporation.” Under Highmark’s bylaws, a hearing is required to be provided by the Medical Review Committee which determines what action is necessary to take. Its decision is dispositive. If the action involves either suspension or termination of a doctor as participating, the matter is then referred directly to the Secretary of Health for approval. Under the HMO Act, there is no requirement for a hearing prior to termination or suspension.
While this distinction exists, Highmark sent a letter to Dr. Carlini indicating that it had streamlined its credentialing process for all of its managed care networks, including Keystone, saying that Highmark’s bylaws control. It is from that letter that the trial court determined that Highmark’s credentialing process governed rather than Dr. Carlini’s contract with Keystone. Because. I agree that this letter could serve as a reasonable basis upon which the trial court could find that Highmark’s bylaws control, I agree with the majority that the grant of the preliminary injunction was proper.
However, where I part company with the majority is its finding that Highmark is a state actor, thereby making all the procedural safeguards required under the Pennsylvania and United States Constitutions applicable. Initially, I would point out that Rudolph, the case relied on by the majority, has no precedential value because only three of the six Justices agreed that the medical review committee was a state actor, with the other three justices specifically rejecting that view. McGowan v. University of Scranton, 759 F.2d 287 (3rd Cir.1985) (decision of less than a majority of the Commonwealth’s Supreme Court Justices is not binding or controlling precedent). In his dissenting opinion in Rudolph, Justice Zappala stated that:
The parties to this action are Blue Shield, a private, non-profit, professional health services corporation, and former participating Blue Shield physicians and professional corporations. Pursuant to Section 6324(c) of the Professional Health Services Plan Corporation Act, 40 Pa.C.S. § 6324(c), disputes relating to the professional health services rendered by health service doctors “shall be considered and determined only by the health service doctors as selected in a manner prescribed in the bylaws of the professional health service corporation.” [553 Pa. at 21, 717 A.2d 508] (Emphasis added). Article X of Blue Shield’s Bylaws provides that all disputes “shall be considered, acted upon, disposed of and determined by the [Medical Review Committee].” The parties to this matter entered into a private contract whereby Appellants agreed that they would “perform services ... and accept *1191compensation therefore, as provided for in the ... Regulatory Act ... and [Ap-pellee’s] Bylaws.” The Legislature, in enacting the Regulatory Act, did not specify in what manner professional health service corporations are to resolve disputes relating to the professional health services rendered by health service physicians. To the contrary, the Legislature specifically left it to the discretion of professional health service corporations, through their bylaws, to establish how disputes should be resolved. Section 6324(c) in no way directs, limits or guides professional health service corporations concerning the manner in which they are to structure their bylaws regarding dispute resolution.
Given that professional health service corporations are free to set forth, in their bylaws, whatever dispute resolution scheme they deem appropriate, without direction from the Legislature, i.e., the state, there is not a sufficiently close nexus between the state and the challenged action for due process to be implicated. See, e.g., Staino v. Pennsylvania State Horse Racing Commission, 98 Pa.Cmwlth. 461, 512 A.2d 75, 77 (1986), wherein the court noted:
Because a private corporation is licensed and pervasively regulated by the state does not make its actions “state actions” meaning that those actions must comport with the requirements of the Fourteenth amendment to the constitution...
Moreover, the fact that a private party follows a procedure outlined in a state statute does not convert the private action into state action.
717 A.2d at 513-514.
Recently, the United States Supreme Court in American Manufacturers Mutual Insurance Company v. Sullivan, 526 U.S. 40, 119 S.Ct. 977, 143 L.Ed.2d 130 (1999) echoed that reasoning when it addressed whether a private health insurer was a state actor when it withheld payment for medical expenses for an employee’s work-related injury under the Pennsylvania Workers’ Compensation Act subject to the constraints of the Fourteenth Amendment. The Supreme Court determined that the decision of a private insurer to request the review was not state action, explaining that private insurers could not be held to constitutional standards unless there was a sufficiently close nexus between the State and the challenged action so that the latter could be fairly treated as that of the State itself. ‘Whether such a ‘close nexus’ exists, our cases state, depends on whether the State has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the State ... Action taken by private entities with the mere approval or acquiescence of the State is not state action.” 119 S.Ct. at 986. Additionally, “[t]he mere fact that a private business is subject to state regulation does not by itself convert its action into that of the State for purposes of the Fourteenth Amendment.” Id. Based on this reasoning, Highmark is simply a private business and not a state actor because it does not receive significant “encouragement from the State.”
Accordingly, I concur in the result only.

. The parties intentionally did not supply the Court with the underlying facts relative to the malpractice claims.

. Act of December 29, 1972, P.L. 1701, as amended, 40 P.S. §§ 1551-1568.

. 40 Pa.C.S. §§ 6301-6335. Pursuant to 40 Pa.C.S. § 6324(a) and (c), all disputes relating to professional health services rendered by a physician covered by a health service corporation shall be considered and determined by health service doctors as selected in a manner prescribed in the corporation’s bylaws. Highmark’s bylaws require that a doctor affected by a complaint shall be afforded an opportunity to be heard before the Medical Review Committee and to produce evidence and witnesses at such hearing. Article X, Sections 2, 8.

.Our Supreme Court in Rudolph provided the following reasoning when finding that Blue Shield, a subsidiary of Highmark, was a state actor subject to the PHSPCA:
This court has held that "the requirement of due process of law extends to administrative as well as judicial proceedings...” Commonwealth v. Cronin, 336 Pa. 469, 473, 9 A.2d 408, 410 (1939). Since the medical review committee is formed and functions pursuant to the terms of the regulatory act, it is a creature of the state, and like an administrative agency, is subject to due process review.
Id. at 14, 717 A.2d at 510.