The high court on July 25 issued a one-page per curiam order in Highmark v. UPMC denying the hospital company’s petition for allocatur in the case. The order lets stand a ruling from the state Superior Court, which had said Highmark’s lawsuit should be heard in court rather than sent to arbitration.
In December, a unanimous three-judge panel of the intermediate court rejected UPMC’s attempts to arbitrate claims lodged by Highmark, a health care insurance provider. Highmark claimed the hospital network improperly changed its billing practices for oncology-related services.
The appellate court’s ruling affirmed the lower court’s decision to overrule UPMC’s preliminary objections and deny the company’s motion seeking to compel arbitration.
Although UPMC had contended that a consent decree the two companies entered into after the dispute over the oncology services first arose should compel arbitration, Judge John T. Bender said the requirements triggering enforcement of the consent decree had not been met, and therefore, the dispute should head toward trial.
Bender specifically noted that the state Office of Attorney General, the Pennsylvania Department of Insurance and the Department of Health had exclusive jurisdiction to enforce the terms of the consent decree, and it was undisputed that none of those state agencies had done so.
“If Highmark violated the consent decree by filing this lawsuit, commonwealth officials—and, notably, not UPMC—have exclusive jurisdiction to enforce the arbitration provisions of the consent decrees and compel Highmark to dismiss this lawsuit,” Bender said. “It is undisputed between the parties that commonwealth officials have taken no such enforcement action to stop this litigation from proceeding. Further, because commonwealth officials have not sought to dismiss this lawsuit or compel arbitration, we must conclude that the arbitration provisions in the consent decree do not require arbitration of the issues raised in Highmark’s complaint.”
According to Bender, the dispute arose after UPMC allegedly began overbilling for its oncology drugs and services around August 2010. In April 2014, Highmark changed its fee schedule to reduce its oncology reimbursement rates, which allegedly cost UPMC about $200 million in reimbursements annually.
UPMC, which owns numerous hospitals, contended that the move was a “clear breach” of their contract, done in retaliation for UPMC ending existing contracts that the parties had previously. UPMC, according to Bender, then filed a demand for arbitration, seeking to restore the previous oncology rates.
At the same time that dispute was unfolding, UPMC, Highmark and state representatives prepared the consent decree as part of a transition plan aimed at addressing how the parties should handle the expiration of commercial contracts that were set to end in 2014.
About two months after the parties entered into the consent decree, Highmark sued UPMC on breach of contract and unjust enrichment claims, challenging the allegedly inflated oncology bills dating back to 2010.
Although UPMC had pointed to the consent decree as reasoning for why Highmark’s case should be dismissed, the Allegheny County Court of Common Pleas determined that only the underlying contracts, and not the consent decree, should be relevant to the dispute, and rejected UPMC’s attempts to dismiss the case.
Bender agreed with UPMC that the trial court should have taken the consent decree into consideration, but he ultimately upheld the lower court’s order.
Reed Smith attorney Kim Watterson, who handled the case for Highmark, did not return a call for comment. Jones Day attorney Leon DeJulius represented UPMC. He also did not return a message seeking comment.