Magnolia Health Plan, Inc. v. Mississippi's Cmty. Mental Health Commissions

334 So.3d 42

MAGNOLIA HEALTH PLAN, INC., and Cenpatico Behavioral Health, LLC

v.MISSISSIPPI'S COMMUNITY MENTAL HEALTH COMMISSIONS, Region One Mental Health, North MS Commission on MI/MR d/b/a Communicare, Northeast Mental Health - Mental Retardation Commission, Region III d/b/a Lifecore Health Group, Region IV Mental Health Services d/b/a Timberhills, Region 6 Community Mental Health Commission d/b/a Life Help, Region VII Mental Health/Intellectual Disabilities Commission d/b/a Community Counseling Services, Region 8 Mental Health Services, Hinds Behavioral Health Services, Region 10 State of MS d/b/a Weems Community Mental Health Center, Southwest Mississippi Mental Health and Retardation Commission-Region 11 d/b/a Southwest Mississippi Mental Health Complex, Region XII Commission on Mental Health and Retardation d/b/a Pine Belt Mental Healthcare Resources, Gulf Coast Mental Health Center, Singing River Mental Health/Mental Retardation Services, Region XIV and Warren Yazoo Behavioral Health, Inc.

NO. 2020-CA-00167-SCT

Supreme Court of Mississippi.

October 28, 2021

ATTORNEYS FOR APPELLANTS: TIMOTHY LEE SENSING, TREMARCUS D'RAY KESHON ROSEMON, KATIE B. LYONS, Jackson, HUGH RUSTON COMLEY

ATTORNEYS FOR APPELLEES: GEORGE H. RITTER, JOHN P. SNEED, CHARLES EDWARD COWAN, Jackson

BEFORE RANDOLPH, C.J., COLEMAN AND CHAMBERLIN, JJ.

COLEMAN, JUSTICE, FOR THE COURT:

¶1. Magnolia, a managed care organization that contracts with the State to provide Medicaid services, applied what it saw as a statutory 5 percent reduction in Medicaid rates to Mississippi's fourteen regional mental health providers. The regional providers responded by filing a complaint against Magnolia in which they sought injunctive relief and monetary damages.

¶2. On February 18, 2020, Magnolia Health Plan, Inc., and Cenpatico Behavioral Health, LLC (collectively, "Magnolia"), filed a timely notice of appeal after the Circuit Court for the First Judicial District of Hinds County denied Magnolia's motion to compel arbitration and granted a preliminary injunction against it in favor of Defendants, Mississippi's fourteen regional health commissions. The notice of appeal includes both orders. As to the first, the order denying Magnolia's motion to compel arbitration, at oral argument before the Supreme Court panel Magnolia abandoned the issue. As to the second, the order granting Magnolia's request for a permanent injunction, the order is not a final, appealable judgment. Accordingly, we do not have jurisdiction.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

¶3. Magnolia is "one of the managed care organizations (MCOs) contracted by the state of Mississippi to provide Medicaid services under the Mississippi Division of Medicaid's (DOM's) managed care program established pursuant to [ Mississippi Code Section 43-13-117(H) ] and known as ‘MississippiCAN.’ " Magnolia provides managed care services in exchange for specified, capitated fees; "[s]pecifically, [DOM] pays Magnolia a ‘capitated’ per member per month rate or fee to provide covered services to Medicaid members enrolled with Magnolia." And Magnolia "enters into provider agreements with various network providers to provide healthcare services to Medicaid beneficiaries enrolled in Magnolia's plan."

¶4. The appellees are the fourteen, public regional health commissions established by Mississippi Code Section 41-19-31 and -33 (Rev. 2018); "[e]ach regional commission operates a [Community Mental Health Center (CMHC)] to provide facilities and services for the prevention and treatment of mental illness, mental disorders, developmental and learning disabilities, alcoholism, narcotic addiction, drug dependence and other related handicaps or problems." (citing Miss. Code Ann. § 41-19-33(1)(c) ). All appellees here participate in the Mississippi Medicaid program.

¶5. The circuit court described the underlying contractual attraction between the parties as follows:

Medical providers that provide medical services to patients enrolled in the Medicaid program are generally paid pursuant to one of two types of models: (1) a "fee-for-service" model--i.e., payments made directly by the Division of Medicaid (DOM); or (2) a managed care model--i.e., payments made by Medicaid contracted managed care organizations (MCOs).

Under a traditional fee-for-service model, the state agency itself makes direct payments for the services to the healthcare provider. 42 U.S.C. § 1396a. Providers submit claims for reimbursement directly to that executive agency, in this case DOM. The rate DOM will pay the provider is predetermined by a fee schedule fixed by DOM. In the managed care model, the state contracts with private managed care organizations ("MCOs"), like Defendant, to provide medical benefits to Medicaid beneficiaries. See 42 U.S.C. § 1396b(m) (2000) ; 42 C.F.R. § 438.6(c).

¶6. In 2012, Magnolia and Cenpatico entered into provider agreements with the fourteen community health centers to "provide mental health services to ... Medicaid beneficiaries enrolled in Magnolia's plan." And "[f]rom late 2012 through 2018, Magnolia paid the CMHCs exactly as the Provider Agreements required." The current dispute began in 2018, which coincided with the year Mississippi Code Section 43-13-117(B) (Supp. 2020) was amended "to include outpatient hospital services to the list of those services excluded from subsection (B)'s 5 percent rate reduction." Being advised by DOM, Magnolia seemingly saw the revision as "appl[ying] to services regardless of delivery model." And in February 2019, Magnolia began applying the 5 percent rate reduction to its payments to the community health centers for mental health services.

¶7. Then, "[b]etween early May and September 27, 2019, without first amending the contracts, Magnolia wrote each of the CMHCs to inform them that it had imposed an acrossthe-board 5% rate cut on all payments effective January 1, 2019." The community health centers argued that the rate cut resulted in Magnolia's "paying less than the ‘normal Magnolia reimbursement rate’ as required by Miss. Code Ann. § 43-13-117(H)(1)(c)." In addition, Magnolia began asserting recoupments for alleged overpayments made, spanning back to July 1, 2018. The community health centers assert that the overpayments ranged from $26,988.45 to $239,172.09 and that the overall total was $1,347,946.86.

¶8. The community health centers then sent Magnolia letters protesting the recoupments and rate cut. In addition, they asserted that the mandatory arbitration provision was unenforceable "against public entities under the Mississippi Constitution and statutes." While Magnolia asserts today that "[n]o mediation or arbitration occurred[,]" many of the letters acknowledged participation in "informal dispute resolution ... provided that Magnolia agreed in writing not to implement any recoupments until after such efforts are complete." Magnolia did not cease and desist.

¶9. On November 7, 2019, the community health centers filed their Complaint for Damages and Injunctive Relief. Therein, the health centers prayed for not only an injunction against Magnolia but also monetary damages for lost revenue and damages to their businesses and operations. The health centers also requested punitive damages.

¶10. Later, the health centers filed a motion for a preliminary injunction against Magnolia, alleging breach of contract and violations of Mississippi law. The community health centers asked the circuit court to prohibit Magnolia from applying the 5 percent rate cut, paying the community health centers less than the normal...