[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.
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