Gateway Health Plan, Inc. v. Department of Human Services
172 A.3d 700
| Pa. Commw. Ct. | 2017Background
- The Department of Human Services issued RFP No. 12-15 (Mar. 1, 2016) to contract MCOs for the Community HealthChoices (CHC) program, dividing Pennsylvania into five zones and stating it would award no fewer than two and no more than five offerors per zone.
- Proposals required a Technical Submittal (80%) and an SDB Submittal (20%); offerors needed at least 70% on Technical to be responsible. Gateway submitted proposals for all five zones; 14 MCOs applied in total.
- The Department ranked PHW, Vista, and UPMC highest and selected them for negotiations in all five zones; Gateway ranked fifth in every zone and met the 70% technical threshold.
- Gateway filed a September 6, 2016 protest challenging the selections, claiming (1) the Department should have selected five MCOs per zone, (2) the selected offerors had inadequate membership/provider networks and regulatory issues, (3) the Department treated Gateway unequally, and (4) SDB scoring was improper. Gateway supplemented its protest on September 14.
- The Director denied the protest (Nov. 14, 2016), finding several grounds untimely and, on the merits, that the Department properly evaluated proposals and applied the RFP criteria. Gateway appealed; the Commonwealth Court affirmed on July 24, 2017.
Issues
| Issue | Plaintiff's Argument (Gateway) | Defendant's Argument (Department) | Held |
|---|---|---|---|
| Timeliness of challenge to RFP structure/number of MCOs | Gateway contends five MCOs were required in each zone and raised the claim timely after selections announced | RFP expressly allowed 2–5 offerors per zone; challenge was apparent from the RFP and should have been filed within 7 days of notice | Claim untimely; waived under 62 Pa. C.S. §1711.1(b) |
| Timeliness of other procedural claims (SDB scoring; investigation of other offerors) | Gateway argued Department failed to investigate selected offerors and mis-scored SDB | These grounds were known or apparent earlier and were not raised within 7 days; thus untimely | Untimely and disregarded |
| Standard of review the Director applied | Gateway argued the Director should have used a broad "best interests of the Commonwealth" review, not a narrow legal-error review | Department: Procurement Code fixes standard — challenges to evaluation/selection are reviewed for "clearly erroneous, arbitrary, capricious or contrary to law" | Director applied correct statutory standard; no reversible error |
| Merits of evaluation and equal treatment | Gateway claimed it had superior membership/provider networks and was treated unequally | Department evaluated existing membership and networks but gave other RFP factors appropriate weight per evaluation scheme | No abuse of discretion or arbitrary action; selection affirmed |
Key Cases Cited
- Bureau Veritas N. Am., Inc. v. Dep’t of Transp., 127 A.3d 871 (Pa. Cmwlth.) (untimely protests waived; seven-day rule applies)
- JPay, Inc. v. Dep’t of Corr., 89 A.3d 756 (Pa. Cmwlth.) (protest timing principles; challenges apparent from RFP must be timely)
- Collinson, Inc. v. Dep’t of Transp., 959 A.2d 480 (Pa. Cmwlth.) (untimely protest doctrine and waiver)
- Cummins v. Dep’t of Transp., 877 A.2d 550 (Pa. Cmwlth.) (seven-day protest rule; debriefing does not extend deadline)
- Common Sense Adoption Servs. v. Dep’t of Pub. Welfare, 799 A.2d 225 (Pa. Cmwlth.) (protest timing and waiver principles)
- CenturyLink Public Commc’ns, Inc. v. Dep’t of Corr., 109 A.3d 820 (Pa. Cmwlth.) (RFP-apparent defects must be protested promptly)
- Global Tel*Link Corp. v. Dep’t of Corr., 109 A.3d 809 (Pa. Cmwlth.) (standard of review for competitive sealed proposal evaluations)