Molina Healthcare of Ky. v. Anthem Ky. Managed Care Plan, Inc.

MOLINA HEALTHCARE OF KENTUCKY, INC. APPELLANT v. ANTHEM KENTUCKY MANAGED CARE PLAN, INC.; AETNA BETTER HEALTH OF KENTUCKY INSURANCE COMPANY D/B/A AETNA BETTER HEALTH OF KENTUCKY INC.; COMMONWEALTH OF KENTUCKY; ERIC FRIEDLANDER, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES; HOLLY M. JOHNSON, IN HER OFFICIAL CAPACITY AS SECRETARY OF THE KENTUCKY FINANCE AND ADMINISTRATION CABINET; HUMANA HEALTH PLAN, INC.; KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES; KENTUCKY FINANCE AND ADMINISTRATION CABINET; UNITEDHEALTHCARE OF KENTUCKY, LTD.; AND WELLCARE HEALTH INSURANCE COMPANY OF KENTUCKY, INC. D/B/A WELLCARE OF KENTUCKY, INC. APPELLEES AND HUMANA HEALTH PLAN, INC. APPELLANT v. ANTHEM KENTUCKY MANAGED CARE PLAN, INC.; AETNA BETTER HEALTH OF KENTUCKY INSURANCE COMPANY D/B/A AETNA BETTER HEALTH OF KENTUCKY INC.; COMMONWEALTH OF KENTUCKY; ERIC FRIEDLANDER, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE CABINET FOR HEALTH AND FAMILY SERVICES; HOLLY JOHNSON, IN HER OFFICIAL CAPACITY AS SECRETARY OF THE FINANCE AND ADMINISTRATION CABINET; KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES; KENTUCKY FINANCE AND ADMINISTRATION CABINET; MOLINA HEALTHCARE OF KENTUCKY, INC.; UNITEDHEALTHCARE OF KENTUCKY, LTD.; AND WELLCARE HEALTH INSURANCE COMPANY OF KENTUCKY, INC. D/B/A WELLCARE OF KENTUCKY, INC. APPELLEES AND UNITEDHEALTHCARE OF KENTUCKY, LTD. APPELLANT v. ANTHEM KENTUCKY MANAGED CARE PLAN, INC.; AETNA BETTER HEALTH OF KENTUCKY INSURANCE COMPANY D/B/A AETNA BETTER HEALTH OF KENTUCKY INC.; COMMONWEALTH OF KENTUCKY; ERIC FRIEDLANDER, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES; HOLLY M. JOHNSON, IN HER OFFICIAL CAPACITY AS SECRETARY OF THE FINANCE AND ADMINISTRATION CABINET; HUMANA HEALTH PLAN, INC.; KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES; KENTUCKY FINANCE AND ADMINISTRATION CABINET; MOLINA HEALTHCARE OF KENTUCKY, INC.; AND WELLCARE HEALTH INSURANCE COMPANY OF KENTUCKY, INC. D/B/A WELLCARE OF KENTUCKY, INC. APPELLEES AND AETNA BETTER HEALTH OF KENTUCKY INSURANCE COMPANY D/B/A AETNA BETTER HEALTH OF KENTUCKY INC. APPELLANT v. ANTHEM KENTUCKY MANAGED CARE PLAN, INC.; COMMONWEALTH OF KENTUCKY; ERIC FRIEDLANDER, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES; HOLLY M. JOHNSON, IN HER OFFICIAL CAPACITY AS SECRETARY OF THE KENTUCKY FINANCE AND ADMINISTRATION CABINET; HUMANA HEALTH PLAN, INC.; KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES; KENTUCKY FINANCE AND ADMINISTRATION CABINET; MOLINA HEALTHCARE OF KENTUCKY, INC.; UNITEDHEALTHCARE OF KENTUCKY, LTD.; AND WELLCARE HEALTH INSURANCE COMPANY OF KENTUCKY, INC. D/B/A WELLCARE OF KENTUCKY, INC. APPELLEES AND KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES CROSS-APPELLANT v. ANTHEM KENTUCKY MANAGED CARE PLAN, INC.; AETNA BETTER HEALTH OF KENTUCKY INSURANCE COMPANY D/B/A AETNA BETTER HEALTH OF KENTUCKY INC.; HUMANA HEALTH PLAN, INC.; KENTUCKY FINANCE AND ADMINISTRATION CABINET; MOLINA HEALTHCARE OF KENTUCKY, INC.; UNITEDHEALTHCARE OF KENTUCKY, LTD.; AND WELLCARE HEALTH INSURANCE COMPANY OF KENTUCKY, INC. D/B/A WELLCARE OF KENTUCKY, INC. CROSS-APPELLEES AND ANTHEM KENTUCKY MANAGED CARE PLAN, INC. CROSS-APPELLANT v. KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES; AETNA BETTER HEALTH OF KENTUCKY INSURANCE COMPANY D/B/A AETNA BETTER HEALTH OF KENTUCKY INC.; HUMANA HEALTH PLAN, INC.; KENTUCKY FINANCE AND ADMINISTRATION CABINET; MOLINA HEALTHCARE OF KENTUCKY, INC.; SECRETARY ERIC FRIEDLANDER, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES; SECRETARY HOLLY JOHNSON, IN HER OFFICIAL CAPACITY AS SECRETARY OF THE FINANCE AND ADMINISTRATION CABINET; UNITEDHEALTHCARE OF KENTUCKY, LTD.; AND WELLCARE HEALTH INSURANCE COMPANY OF KENTUCKY, INC. D/B/A WELLCARE OF KENTUCKY, INC. CROSS-APPELLEES AND v. ANTHEM KENTUCKY MANAGED CARE PLAN, INC.; AETNA BETTER HEALTH OF KENTUCKY INSURANCE COMPANY; CABINET FOR HEALTH AND FAMILY SERVICES, COMMONWEALTH OF KENTUCKY; HUMANA HEALTH PLAN, INC.; MOLINA HEALTHCARE OF KENTUCKY, INC.; UNITEDHEALTHCARE OF KENTUCKY, LTD.; AND WELLCARE HEALTH INSURANCE COMPANY OF KENTUCKY, INC. CROSS-APPELLEES

Nos. 2021-CA-0806-MR, 2021-CA-0819-MR, 2021-CA-0822-MR, 2021-CA-0824-MR, 2021-CA-0847-MR, 2021-CA-0849-MR, 2021-CA-0855-MR,

Court of Appeals of Kentucky

September 9, 2022

APPEAL FROM FRANKLIN CIRCUIT COURT HONORABLE PHILLIP J. SHEPHERD JUDGE ACTION NOS. 20-CI-00719 AND 20-CI-00987

CROSS-APPEAL FROM FRANKLIN CIRCUIT COURT HONORABLE PHILLIP J SHEPHERD, JUDGE ACTION NOS. 20-CI-00719 AND 20-CI-00987

BRIEFS FOR MOLINA: David Tachau Dustin E. Meek Katherine Lacy Crosby Louisville, Kentucky Mitchel T. Denham Kayla M. Campbell Louisville, Kentucky David V. Kramer Covington, Kentucky

ORAL ARGUMENT FOR MOLINA: Katherine Lacy Crosby Louisville Kentucky

BRIEFS FOR HUMANA: Michael P. Abate Casey L. Hinkle Louisville, Kentucky

ORAL ARGUMENT FOR HUMANA: Michael P. Abate Louisville, Kentucky

BRIEFS FOR UNITED: Mark W. Leach Louisville, Kentucky Alex P. Hontos, pro hac vice Christopher A. DeLong, pro hac vice Minneapolis, Minnesota

ORAL ARGUMENT FOR UNITED: Alex P. Hontos, pro hac vice Minneapolis, Minnesota

BRIEFS FOR AETNA: Fredrick Ryan Keith Louisville, Kentucky Marc J. Kessler, pro hac vice Columbus, Ohio Robert J. Fogarty, pro hac vice Cleveland, Ohio

ORAL ARGUMENT FOR AETNA: Marc J. Kessler, pro hac vice Columbus, Ohio

BRIEFS FOR CHFS: Wesley W. Duke Jessica D. Williamson Blake A. Vogt Frankfort, Kentucky

ORAL ARGUMENT FOR CHFS: Wesley W. Duke Frankfort, Kentucky

BRIEFS FOR FAC: Brian C. Thomas Wm. Robert Long, Jr. Cary Bishop Frankfort, Kentucky

ORAL ARGUMENT FOR FAC: Brian C. Thomas Frankfort, Kentucky

BRIEFS FOR ANTHEM: Craig C. Dilger Harry L. Dadds Adam C. Reeves Louisville, Kentucky James A. Washburn, pro hac vice Atlanta, Georgia Christopher G. Browning, Jr., pro hac vice Raleigh, North Carolina

ORAL ARGUMENT FOR ANTHEM: James A. Washburn, pro hac vice Atlanta, Georgia

BEFORE: GOODWINE, JONES, AND MAZE, JUDGES.

AFFIRMING IN PART, REVERSING IN PART, VACATING IN PART, AND REMANDING^[1]

OPINION

GOODWINE, JUDGE

Molina Healthcare of Kentucky, Inc. ("Molina"), Humana Health Plan, Inc. ("Humana"), UnitedHealthcare of Kentucky, Ltd. ("United"), and Aetna Better Health of Kentucky Insurance Company d/b/a Aetna Better Health of Kentucky Inc. ("Aetna") appeal the April 28, 2021 opinion and order and the June 16, 2021 order of the Franklin Circuit Court. The Cabinet for Health and Family Services ("CHFS"), the Finance and Administration Cabinet ("FAC"), and Anthem Kentucky Managed Care Plan, Inc. ("Anthem") cross-appeal. After a thorough review of the record, as well as oral arguments, we affirm, in part; reverse, in part; vacate, in part; and remand.

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BACKGROUND

In Kentucky, a managed care organization ("MCO") is a private company selected through the government procurement process to run the Commonwealth's Medicaid system. In 2019, during the administration of Governor Matthew Bevin the FAC and the Department of Medicaid Services of CHFS issued a request for proposals ("2019 RFP") to determine which five health insurance companies would be awarded contracts to operate Kentucky's MCO program. Seven companies, Anthem, Passport Health Plan ("Passport"), Molina, United, Humana, Aetna, and WellCare Health Insurance Company of Kentucky, Inc. ("WellCare"), responded to the 2019 RFP. After scoring, Molina, United, Humana, Aetna, and WellCare were awarded MCO contracts.

In December 2019, Governor Andy Beshear was sworn into office. Thereafter, CHFS cancelled the previously awarded MCO contracts because Governor Beshear intended to modify Kentucky's Medicaid program. The Bevin administration had applied for and received a waiver under Section 1115 of the Social Security Act, 42 United States Code ("U.S.C.") § 1315(a) ("Section 1115 waiver"). As part of the Section 1115 waiver, Kentucky implemented a work requirement as a condition for qualification for Medicaid. Governor Beshear

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terminated the waiver.^[2] The Commonwealth then issued a new RFP ("2020 RFP") for the MCO program.

The same seven companies submitted proposals. After scoring, the same five companies - Molina, United, Humana, Aetna, and WellCare - were awarded contracts. Sixteen points separated Molina, the fifth awardee, and Anthem which had the sixth highest score.^[3]

On June 12, 2020, Anthem filed a protest with the FAC contesting the awards.^[4] Anthem also filed three subsequent supplements to its protest. First, Anthem argued the FAC should have conducted oral presentations on the 2020 RFP. Second, Anthem claimed the FAC improperly waived scoring two categories. Third, Anthem complained that the FAC should not have deducted points for its failure to include its certificate of authority ("COA") in the electronic copy of its proposal because it provided a hardcopy of the COA. Fourth, Anthem argued the FAC failed to produce the evaluators' notes upon its open records request.

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Finally Anthem alleged Molina should have been disqualified from the RFP due to its retention of Emily Parento ("Parento"). Prior to being retained by Molina on January 30, 2020, Parento was the co-chair of Governor Beshear's Transition Team for Health and Families from November 15, 2019, until his inauguration on December 10, 2019. As a member of the transition team, Parento advised the administration on matters relating to CHFS. She was given access to the identities of the awardees of the 2019 RFP prior to their public announcement. Record on Appeal ("R.") ^[5] at 402. Molina hired her "to consult related to the planned implementation of its anticipated new health plan in the Kentucky Medicaid market." Id. at 401. Anthem claimed Parento's position with the transition team gave her access to...