Consent Decree, Contract Interpretation

Commonwealth v. UPMC, 5 MAP 2018 (direct appeal)

This is a direct appeal by UPMC from an order of the Commonwealth Court (Pellegrini, J.)  interpreting and enforcing the July 1, 2014 separate but parallel consent decrees entered into between the Office of Attorney General and UPMC and the Office of Attorney General and Highmark to resolve conflicts between UPMC and Highmark and ensure access for Highmark subscribers at in-network rates during a 5 year period of transition to enable the Highmark subscribers to decide whether to remain with Highmark and lose access to UPMC facilities at in-network rates or change insurance carriers in order to have continued access to UPMC facilities.  This dispute is the most recent chapter in the long-running and contentious UPMC-Highmark struggle over payment for care in the Western Pennsylvania health care market. The Supreme Court provided a detailed description of the dispute between UPMC and Highmark in a previous opinion that affirmed Judge Pellegrini’s interpretation of the consent decrees in a previous dispute.  Com. ex rel. Kane v. UPMC, 129 A. 3d 441 (Pa. 2015).

The current dispute involves interpretation of the consent decree provision that mandates that UPMC will “continue to contract” with Highmark to provide access to UPMC facilities for certain vulnerable populations at in-network rates until June 30, 2019. UPMC maintains that it may terminate the “contract” involved, a 1999 provider agreement, on December 31, 2018, because the provider agreement provides for a 6 month runout period after termination, during which Highmark subscribers would continue to have access to UPMC facilities, thus honoring the June 30, 2019 consent decree “continue to contract” commitment.

In agreeing with Highmark’s interpretation and moving to enforce the consent decree, the Attorney General took the position that the consent decree requires that UPMC must be “in a contract” with Highmark until June 30, 2019, whereas the 6 month runout provision in the provider agreement does not take effect until after the contract is terminated.  The Attorney General further contended that another provision in the provider agreement requires that the agreement remain in effect for an entire calendar year, with the result that the contract could not terminate until December 31, 2019, when the 6 month runout provision would then kick in, resulting in coverage through June 30, 2020.

However, because certain types of Medicare plans – called MA plans – must run on  a calendar year basis under federal regulations,  the Attorney General recognized that his interpretation would create a gap  from July 1 through December 31, 2020 for MA plan participants.  Accordingly, the Attorney General argued, and the Commonwealth Court agreed, that in order to provide certainty to subscribers, UPMC be barred from terminating the provider agreement for the calendar year 2019, but Highmark be prohibited from representing that UPMC is in-network for any part of 2020 based on the 6 month runout clause.  As the Commonwealth Court concluded: “This resolution is the same as fixing a June 30, 2019 date for termination of the Provider Agreement, then activating [the 6 month runout provision] with the obligations expiring December 31, 2019,” thereby providing certainty for UPMC, Highmark, and the subscribers.

For more information, contact Kevin McKeon or Dennis Whitaker.