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Supreme Court sends legal fight over UPMC-Highmark split back to lower court

Monday, June 3, 2019  
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by Natasha Lindstorm

Supreme Court sends legal fight over UPMC-Highmark split back to lower court

The state Supreme Court on Tuesday sent Pennsylvania Attorney General Josh Shapiro’s legal push against UPMC back to a lower court to determine whether the looming split of health care rivals UPMC and Highmark can be delayed in the name of public interest.

In a split ruling, the state’s highest court ordered the state’s Commonwealth Court to hold an expedited hearing on the fate of a 2014 state-brokered agreement between UPMC and Highmark. In April, the Commonwealth Court ruled that the agreement’s June 30 end date could not be changed. Shapiro had appealed that ruling to the state Supreme Court.

“At this juncture, we do not deem it necessary to extend the termination date of the Consent Decrees through the extraordinary powers that (the Office of the Attorney General) asks us to invoke,” Justice David Wecht wrote in the 22-page document. “Although the presently applicable termination date is near, the dispositive legal question is narrow, and the evidentiary record that is necessary to resolve that question accordingly will be limited.We are confident that the skilled advocates before us will be able to marshal adequate extrinsic evidence of the parties’ intent expeditiously, and to promptly build a narrowly focused record sufficient for the fact-finder to interpret the contested provision.”

Minutes after the ruling, UPMC hailed the opinion as a victory since the Supreme Court did not decide outright that it had the authority and urgent need to alter the scheduled expiration date of the consent decree. The 2014 agreement aimed to ease the transition after the two competing Pittsburgh-based hospital systems and health insurers failed to agree on contracts that would preserve access to patients from both systems.

“None of the justices, notably, accepted the Office of Attorney General’s position that the modification clause was unlimited, deciding this issue was a matter for Commonwealth Court to resolve after receiving additional evidence,” UPMC spokesman Paul Wood said. “Importantly, all the justices agreed that it was not necessary for them to extend the termination date of the Consent Decrees through their extraordinary powers.”

But the Attorney General’s Office, too, considered Tuesday’s ruling to be a win. Though they would have welcomed direct intervention by the high court, Shapiro’s legal team said they got what they asked for from the justices, which was the right to hold a hearing on the critical dispute.

UPMC contends that the expiration date of the consent decree it inked with Highmark five years ago cannot be changed now and says UPMC executives never would have signed the agreement had they known it ever could.

Shapiro argues he has the right to do so in the name of public interest because of a modification provision folded into the consent decree.

The high court “took a crucial step toward delivering justice for the people of Western Pennsylvania by agreeing with my office’s argument and reversing Commonwealth Court’s decision that the end date of UPMC/Highmark’s consent decrees could not be modified as a matter of law,” Shapiro said.

“As directed by the Supreme Court, my office will now make our case in Commonwealth Court on an expedited basis that modification of the end date is not just permitted — but necessary to ensure UPMC fulfills its role as a public charity and isn’t able to shun the very taxpayers whose tax dollars built their business.”

Highmark, which argued alongside Shapiro’s team during a May 16 hearing before the Supreme Court in Harrisburg, touted the ruling as “a critical step for preserving health care choice for consumers” across Western Pennsylvania.

“In sending the case back to Commonwealth Court, the Supreme Court has expressly authorized the Commonwealth Court to promptly conduct a hearing to determine the scope and intent of the modification provision and the relief the Attorney General seeks through his proposed modified Consent Decree,” Highmark spokesman Aaron Billger said. “Pennsylvania Attorney General Josh Shapiro continues to maintain his strong commitment to ensuring accessible affordable health care for all and to precluding UPMC from continuing its denial of access to the whole community.”

Shapiro’s ultimate wish list

Shapiro’s broader legal fight goes beyond the terms of the initial consent decree.

Among other demands, Shapiro asked in a Feb. 7 legal petition filed in Commonwealth Court that UPMC hospitals and doctors must accept Highmark patients “in perpetuity,” contract with any interested insurer and drop a controversial prepay rule for out-of-network patients. He also has asked for UPMC to replace a majority of its board.

UPMC argues that Shapiro is overstepping his bounds in a politically charged quest to singlehandedly reshape how health care works.

The attorney general asserts his right to intervene via his office’s role as a watchdog over public charities. He is using the 2014 consent decree as leverage to force changes upon UPMC before the end of June, when the agreement expires and efforts to use it as a vehicle for change effectively are rendered moot.

At the yet-to-be-scheduled Commonwealth Court hearing, Supreme Court justices directed the lower court to prioritize the issue of the expiration of the consent decree, ordering the parties involved “to refrain from offering evidence or arguments that stray into other disputed issues.”

Justices Debra Todd, Kevin M. Dougherty and Sallie Updyke Mundy joined Tuesday’s opinion granting the attorney general’s right to present his case in the lower court as written by Wecht. Justice Max Baer filed a dissenting opinion joined by Chief Justice Thomas G. Saylor and Justice Christine Donohue.

It’s unclear precisely when the Commonwealth Court will schedule the hearing.

Without court intervention, UPMC and Highmark will officially split insurance networks for Medicare Advantage and cancer patients on June 30, and a controversial prepay-in-full rule for out-of-network patients seeking nonemergency care at most UPMC hospital is set to take effect July 1.

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