Commonwealth v. UPMC Apl of: UPMC
188 A.3d 1122
Pa.2018Background
- UPMC and Highmark (and separately the Commonwealth) entered Consent Decrees requiring protection of “vulnerable populations,” including Medicare Advantage (MA) enrollees, by assuring in‑network access through June 30, 2019.
- Prior Pennsylvania Supreme Court decision (Kane) held VP‑3 of the Consent Decree obliges UPMC to "have a contract" to treat Highmark MA members as in‑network but did not require automatic renewal of preexisting provider agreements.
- UPMC historically allowed annual calendar‑year Medicare Acute Care Provider Agreements (with a six‑month post‑termination “runout” that preserves all contract terms) to renew; it served notice to terminate those agreements effective Dec. 31, 2018, invoking the six‑month runout to continue in‑network access through June 30, 2019.
- OAG/Highmark sought enforcement, arguing UPMC could not terminate the Provider Agreements for calendar year 2019 because MA plans operate on a calendar year and the Consent Decree should preserve full‑year 2019 contracts for enrollees; Commonwealth Court ordered the Provider Agreements to remain in effect through Dec. 30, 2019.
- Pennsylvania Supreme Court granted review and reversed: it held the Consent Decree’s June 30, 2019 termination date cannot be rewritten, and the Provider Agreement runout provision constitutes a contract satisfying UPMC’s obligation to provide in‑network access through June 30, 2019.
Issues
| Issue | Plaintiff (OAG/Highmark) Argument | Defendant (UPMC) Argument | Held |
|---|---|---|---|
| Whether "continue to contract" requires renewal of Provider Agreements for full 2019 calendar year | Consent Decree should be construed to preserve full‑year 2019 Provider Agreements so MA enrollees have uninterrupted calendar‑year coverage | Consent Decree expires June 30, 2019; it does not mandate forced renewal of Provider Agreements beyond that date | Court: VP‑3/Consent Decree does not require renewal for all of 2019; cannot rewrite the June 30, 2019 end date |
| Whether UPMC may terminate preexisting Provider Agreements consistent with Kane and still meet Consent Decree obligations | Runout clause is insufficient; termination cannot occur until June 30, 2019; runout is post‑termination housekeeping | Termination plus six‑month runout preserves contract terms and thus provides in‑network access through June 30, 2019 | Court: Runout provision creates a binding post‑termination contract period that satisfies Consent Decree for Jan–June 2019 |
| Whether Commonwealth Court could order extension of Provider Agreements beyond Consent Decree expiration | Extension is a permissible remedy to avoid consumer confusion and align provider contracts with MA calendar year | Court lacked authority to rewrite or extend contractual/Consent Decree termination date | Court: Commonwealth Court erred to extend agreements through full 2019; cannot alter unambiguous Consent Decree end date |
| Whether federal law/CMS preemption or CMS authority bars state court relief or impacts validity of six‑month midyear arrangements | Concern that CMS approval/MA program rules make midyear loss of a major provider problematic, warranting state remedy | CMS rules permit midyear network changes and require notifications; federal preemption does not negate contract interpretation here | Court: CMS framework does not preempt state contract enforcement here; concerns about CMS are speculative and do not justify rewriting Consent Decree |
Key Cases Cited
- Commonwealth ex rel. Kane v. UPMC, 129 A.3d 441 (Pa. 2015) (interpreting Consent Decree obligations re: Medicare Advantage enrollees)
- Shovel Transfer & Storage, Inc. v. Pa. Liquor Control Bd., 739 A.2d 133 (Pa. 1999) (contract formation requires mutual assent to essential terms)
- Hayes v. Altman, 225 A.2d 670 (Pa. 1967) (post‑termination obligations can be enforceable under contract principles)
- Murphy v. Duquesne Univ. of the Holy Ghost, 777 A.2d 418 (Pa. 2001) (extrinsic evidence is admissible only when contract is ambiguous)
- Universal Builders Supply, Inc. v. Shaler Highlands Corp., 175 A.2d 58 (Pa. 1961) (court cannot rewrite unambiguous contract terms)