Commonwealth v. UPMC, Appeal of: UPMC
129 A.3d 441
| Pa. | 2015Background
- UPMC (nonprofit health-care provider) and Highmark (nonprofit insurer) were embroiled in contract disputes over provider agreements covering Medicare Advantage and other plans; state intervened to protect vulnerable populations.
- The Commonwealth brokered consent decrees (entered as court orders) in 2015 requiring protections for "vulnerable populations" (including Medicare Advantage enrollees) and defining "In-Network" as a provider contracted to deliver services at negotiated rates.
- UPMC announced it would terminate its Medicare Advantage provider contracts effective December 31, 2015; Commonwealth sought enforcement, arguing the consent decree obligates UPMC to treat Highmark Medicare Advantage members as in-network through the decree term (to 2019).
- Commonwealth Court (Judge Pellegrini) held the phrase "Medicare participating consumers" in the vulnerable-populations clause includes Medicare Advantage enrollees and ordered UPMC to be "in a contract" and in-network for those plans, directed arbitration if parties could not agree on rates, and enjoined parties from changing covered business relationships without court approval.
- UPMC appealed, challenging (1) the decree interpretation requiring it to remain in-contract for Medicare Advantage, (2) whether Highmark’s pre-decree actions triggered UPMC’s reservation-of-rights to withdraw, and (3) due-process/authority limits on the court’s sweeping relief.
Issues
| Issue | Plaintiff's Argument (Commonwealth/Highmark) | Defendant's Argument (UPMC) | Held |
|---|---|---|---|
| Does the vulnerable-populations clause require UPMC to remain "in contract"/treat Medicare Advantage enrollees as in-network for the consent-decree term? | The clause’s opening lists Medicare Advantage as a protected group; "Medicare participating consumers" reasonably includes Medicare Advantage enrollees; "In-Network" requires a contract or arbitration-based rate-setting, so UPMC must treat those enrollees in-network. | The clause is ambiguous or plain-read excludes Medicare Advantage: the second sentence omitted Medicare Advantage intentionally; "Medicare participating consumers" refers only to Original Medicare (Parts A/B), not MA; parties retained termination rights. | Court affirmed Commonwealth Court: phrase ambiguous, extrinsic evidence supports inclusion of Medicare Advantage; UPMC must be in contract/be in-network for affected Highmark Medicare Advantage plans and rates set by the decree/arbitration. |
| Did Highmark’s pre-decree actions (e.g., altering oncology fee schedules, filings) trigger UPMC’s reservation to withdraw under the clause? | Highmark: reservation applies prospectively; pre-decree rate disputes are addressed by the arbitration mechanisms in the consent decree and do not excuse UPMC. | UPMC: Highmark ‘‘took the position’’ it could unilaterally change rates (including in pleadings and communications), triggering UPMC’s right to withdraw. | Held for Commonwealth/Highmark: the reservation is prospective (post-decree); disputes over pre-decree rate changes were contemplated and preserved for arbitration and do not free UPMC from its consent-decree duties. |
| Did the Commonwealth Court exceed authority or violate due process by enjoining changes to business relationships and ordering supplemental relief? | Relief is within the court’s retained jurisdiction under the consent decree and protects vulnerable populations; procedural protections in the decree safeguard due process. | UPMC: relief was beyond scope, not requested, and gives the court excessive supervisory power over private business matters and corporate governance without proper notice. | Court affirmed injunction scope (paragraph 3) as authorized and appealable; directed-paragraph requiring Commonwealth to seek supplemental relief (paragraph 4) was quashed as not ripe because no enforcement steps had been taken. |
| Standard of contract interpretation applied to consent decree ambiguity | N/A | N/A | Court applied Pennsylvania contract canons: if ambiguous, consider extrinsic evidence, read contract as whole, avoid interpretations that render provisions illegal or meaningless; factual findings reviewed for support. |
Key Cases Cited
- Int’l Org. Masters, Mates & Pilots of Am., Local No. 2 v. Int’l Org. Masters, Mates & Pilots of Am., Inc., 497 Pa. 102, 439 A.2d 621 (1981) (consent decrees are construed like contracts and courts may consider surrounding circumstances).
- Murphy v. Duquesne Univ. of the Holy Ghost, 565 Pa. 571, 777 A.2d 418 (2001) (ambiguous contract terms permit resort to extrinsic evidence).
- Lesko v. Frankford Hosp.-Bucks Cnty., 609 Pa. 115, 15 A.3d 337 (2011) (contract interpretation seeks parties’ intent; clear terms control).
- Kripp v. Kripp, 578 Pa. 82, 849 A.2d 1159 (2004) (plain, unambiguous contract language governs).
- Pritchard v. Wick, 406 Pa. 598, 178 A.2d 725 (1962) (contract read as a whole to give effect to true purpose).
- LJL Transp. v. Pilot Air Freight, 599 Pa. 546, 962 A.2d 639 (2009) (interpretation must give effect to all provisions; avoid annulling parts of contract).
- Atlantic Richfield Co. v. Razumic, 480 Pa. 366, 390 A.2d 736 (1978) (course of performance is evidence of contractual meaning).
- Levin v. Barish, 505 Pa. 514, 481 A.2d 1183 (1984) (an injunction is a court order commanding or prohibiting action; interlocutory injunctions are appealable).