Orthopedic Inst. v. Sanford Health Plan, Inc.

1

2024 S.D. 9

ORTHOPEDIC INSTITUTE, P.C.; SIOUX FALLS SPECIALTY HOSPITAL, LLP; SIOUX FALLS SPECIALTY HOSPITAL, LLP d/b/a SIOUX FALLS URGENT CARE; SIOUX FALLS SPECIALTY HOSPITAL, LLP d/b/a WORKFORCE OCCUPATIONAL HEALTH AND MEDICAL SERVICES; SIOUX FALLS SPECIALTY HOSPITAL, LLP d/b/a MIDWEST PAIN SPECIALISTS; SIOUX FALLS SPECIALTY HOSPITAL, LLP d/b/a MIDWEST IMAGING; OPHTHALMOLOGY LTD, INC.; and OPHTHALMOLOGY LTD, EYE SURGERY CENTER, LLC, Plaintiffs and Appellees, v. SANFORD HEALTH PLAN, INC., Defendant and Appellant.

No. 30207-a-SRJ

Supreme Court of South Dakota

February 7, 2024

ARGUED AUGUST 30, 2023

APPEAL FROM THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT MINNEHAHA COUNTY, SOUTH DAKOTA THE HONORABLE RACHEL R RASMUSSEN Judge

MARK W. HAIGH

DELIA M. DRULEY of Evans, Haigh & Arndt, LLP

MARTIN S. CHESTER

KATE E. MIDDLETON

JOSIAH D. YOUNG of Faegre, Drinker, Biddle & Reath, LLP

Minneapolis, Minnesota

Attorneys for defendant and appellant.

ANDREW DAMGAARD

JORDAN J. FEIST of Woods, Fuller, Shultz & Smith, P.C.

Sioux Falls, South Dakota

Attorneys for plaintiffs and appellees.

JENSEN, Chief Justice

[¶1.] Several physician groups and health care facilities (Providers) sought a declaratory judgment establishing their right to participate as panel providers in each of the health benefit plans offered by Sanford Health Plan, Inc. (SHP), pursuant to the "Any Willing Provider" law found in SDCL 58-17J-2. Providers and SHP filed cross-motions for summary judgment asking the circuit court to interpret the application of SDCL 58-17J-2. The circuit court granted Providers' motion for summary judgment and denied SHP's motion. The court determined that SDCL 58-17J-2 does not permit SHP to exclude a fully qualified and willing health care provider from participating as a panel provider in every health benefit plan offered by SHP. We affirm.

Factual and Procedural Background

[¶2.] Providers are comprised of health care professionals licensed by the State Boards of Medical and Osteopathic Examiners, Optometry, or Nursing. Each health care professional employed by Providers is board certified within each of their specialties. Additionally, each medical facility is licensed by the South Dakota Department of Health.

[¶3.] SHP is a taxable, non-profit corporation with its principal place of business in Sioux Falls. SHP is a wholly owned subsidiary of Sanford Health, a South Dakota health care system headquartered in Sioux Falls. SHP has been authorized by the South Dakota Division of Insurance to provide health benefit plans to South Dakota residents.

[¶4.] SHP currently offers its insureds four primary health benefit plans: Simplicity Plan, Signature Series Plan, Sanford TRUE Plan, and Sanford PLUS Plan. These plans are offered to individuals, as well as large and small employer groups. While some of SHP's plans include its entire panel of providers, others include a smaller sub-panel of providers. Plans that do not include SHP's entire panel of providers are identified as "focused" plans, while those that include SHP's entire panel of providers are known as "broad" plans.^[1] SHP represents that it requires prospective insureds to be given the choice between a broad plan and a focused plan prior to selecting a health benefit plan.

[¶5.] The Sanford Simplicity Plan is offered to individuals and small employers (50 or less employees) while the Signature Series Plan is offered to large employers (50 or more employees). These broad plans provide insureds with the largest number of panel providers. The Providers are panel providers within the Sanford Simplicity and Signature Series plans.

[¶6.] The TRUE Plan is a focused plan offered to both large and small employers as well as individuals. The TRUE Plan's panel of providers consists primarily of Sanford Health providers as well as other providers necessary to meet network adequacy requirements. The TRUE Plan provides no health insurance benefits to insureds who receive non-emergency care from non-panel providers. Thus, an insured covered by the TRUE Plan must pay the entire cost of medical care received by a non-panel TRUE Plan provider. Providers are non-panel providers under the TRUE Plan and claim to have turned away TRUE Plan insureds who are unable to afford the entire cost of health care received by a non-panel provider.

[¶7.] The PLUS Plan, offered to large employers, includes SHP's entire panel of providers, however, the plan divides providers into two tiers. Tier 1 is closely related to the panel of providers offered in the TRUE Plan, comprised primarily of Sanford Health providers and facilities. Care received from Tier 1 providers results in the lowest out-of-pocket cost for the insured. Tier 2 has a broader panel of health care providers that expands beyond the Sanford Health system and has higher out-of-pocket costs for the insured. Providers are Tier 2 providers under the PLUS Plan.

[¶8.] Providers claim they are fully qualified under SDCL 58-17J-2 and willing to meet SHP's terms and conditions to participate as panel providers in the TRUE Plan, and as Tier 1 providers in the PLUS Plan. Prior to commencing this action, Providers requested to participate as panel providers for both plans. SHP denied Providers' requests, maintaining that the focused plans allow insureds to choose a less expensive health care plan as a tradeoff for a narrower choice of health care providers.

[¶9.] In response to SHP's denial, Providers filed suit on September 21, 2021, seeking a declaratory judgment pursuant to SDCL 58-17J-2 to allow Providers to participate as panel providers in the True Plans, and as Tier 1 panel providers in the PLUS plan. Providers filed a motion for summary judgment alleging that there was no genuine dispute as to any material fact relating to the application of SDCL 58-17J-2 and that SHP may not exclude them from participating as panel providers in the TRUE Plans and Tier 1 of the PLUS Plan. SHP filed an opposition to Providers' motion for summary judgment as well as a cross-motion for summary judgment alleging Providers lacked standing to assert a declaratory judgment claim under SDCL 58-17J-2. In its cross-motion for summary judgment, SHP alleged that it complied with the statute by offering prospective insureds a choice between plans that include a broad panel of providers and a focused panel of providers.

[¶10.] The circuit court issued a memorandum opinion and order granting Providers' motion for summary judgment and denying SHP's motion. The circuit court held that Providers have standing to bring their suit,^[2] and determined that SDCL 58-17J-2 does not "allow a health insurer to exclude a health care provider from a health benefit plan's panel of providers who is (1) licensed under the laws of South Dakota; (2) located within the geographic coverage area of the health benefit plan; and (3) willing and fully qualified to meet the terms and conditions of participation as established by the health insurer."

[¶11.] SHP filed a notice of appeal, raising two issues:

1. Whether SDCL 58-17J-2 allows a health insurer to exclude a provider from participating as a panel provider in a health benefits plan for any reason other than those included within the statute.

2. Whether the circuit court erred in concluding there was no genuine dispute of material fact precluding entry of summary judgment in favor of Providers.

Standard of Review

[¶12.] This Court has routinely held that "[s]tatutory interpretation and application are questions of law that we review de novo." Krsnak v. S.D. Dep't of Env't and Nat. Res., 2012 S.D. 89, ¶ 8, 824 N.W.2d 429, 433 (alteration in original) (quoting State v. Goulding, 2011 S.D. 25, ¶ 5, 799 N.W.2d 412 414). "We review a circuit court's entry of summary judgment under the de novo standard of review." Harvieux v. Progressive N. Ins. Co., 2018 S.D. 52, ¶ 9, 915 N.W.2d 697, 700 (citation omitted). Our rules for reviewing the entry of summary judgment under SDCL 15-6-56(c) are well settled:

Summary judgment is proper where, the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. We will affirm only when no genuine issues of material fact exist and the law was applied correctly. We make all reasonable inferences drawn from the facts in the light most favorable to the non-moving party. In addition, the moving party has the burden of clearly demonstrating an absence of any genuine issue of material fact and an entitlement to judgment as a matter of law.

Garrido v. Team Auto Sales, Inc., 2018 S.D. 41, ¶ 15, 913 N.W.2d 95, 100 (quoting McKie Ford Lincoln, Inc. v. Hanna, 2018 S.D. 14, ¶ 8, 907 N.W.2d 795, 798).

Analysis

1. South Dakota's Any Willing Provider Law.

[¶13.] In 2014, South Dakota voters approved Initiated Measure 17, also referred to as the State's "Any Willing Provider Law". 2015 S.D. Sess. Laws ch. 278, § 1. Initiated Measure 17 is codified at SDCL 58-17J-2. The purpose of the statute is to secure patient choice in the selection of health care, and provides:

No health insurer, including the South Dakota Medicaid program, may obstruct patient choice by excluding a health care provider licensed under the laws of this state from participating on the health insurer's panel of providers if the provider is located within the geographic coverage area of the health benefit plan and is willing and fully qualified to meet the terms and conditions of participation as established by the health insurer.

[¶14.] SHP argues that SDCL 58-17J-2 does not require a health insurer to include any "willing and fully qualified" health care...