Prospect CCMC, LLC v. Berkshire Hathaway Homestate Ins.

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PROSPECT CCMC, L.L.C. Appellant v. BERKSHIRE HATHAWAY HOMESTATE INSURANCE CO.

No. 839 EDA 2022

No. J-A26017-22

Superior Court of Pennsylvania

March 2, 2023

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

Appeal from the Order Entered March 2, 2022 In the Court of Common Pleas of Delaware County Civil Division at No(s) CV-2018-003234

BEFORE: BOWES, J., KING, J., and PELLEGRINI, J. ^[*]

MEMORANDUM

PELLEGRINI, J.

Prospect CCMC, L.L.C. (Crozer) appeals an order of the Court of Common Pleas of Delaware County (trial court) granting summary judgment in favor of Berkshire Hathaway Homestate Insurance Co. (Berkshire). The trial court had determined that Crozer failed to raise a genuine issue of material fact as to Berkshire's contractual obligation to pay Crozer 90% of the costs of medical treatment afforded to Berkshire's insured. Crozer argues that the trial court erred in making that finding because Crozer produced competent evidence of its contractual entitlement to those funds under Pennsylvania law. We affirm.

I.

In 2017, Berkshire's insured, M.M., was involved in a work-related accident in New Jersey, and she received treatment at the burn unit of the Crozer Chester Medical Center in Upland, Pennsylvania. M.M. then filed an employee claim petition in the workers' compensation division of the state of New Jersey. Berkshire was the insurance carrier for M.M.'s employer at the time of the accident, and an answer to M.M.'s claim petition was submitted on Berkshire's behalf. Notice was sent by the New Jersey Workers' Compensation Court both to Berkshire and Crozer advising that a pretrial hearing would be held on June 13, 2018, regarding M.M.'s claim petition for benefits.

The record is silent as to whether Crozer ever availed itself of the New Jersey Workers' Compensation system to recover the cost of M.M.'s treatment. However, what is certain is that while M.M.'s claim petition was in New Jersey, Crozer filed a complaint in the trial court, alleging that the total cost of M.M.'s treatment was $256,830, and that Crozer was contractually entitled to 90% of that amount from Berkshire. Because Crozer had only been paid $30,175.58, it asserted one count of breach of contract against Berkshire, seeking the remaining balance of $200,971.42. In subsequent pleadings, Crozer clarified that its breach of contract claim was predicated on the theory that Crozer was a third-party beneficiary of a contract entered into by Berkshire.

The purported contract binding Berkshire to pay Crozer 90% of the cost of M.M.'s medical care was a "AWCA Preferred Provider Organization agreement" (Aetna PPO). See Complaint, 4/30/2018, at ¶ 4. Crozer supplied only an "amendment" to this agreement, which relates to Crozer's right to recover the costs of medical treatment afforded to injured workers receiving workers' compensation benefits in Pennsylvania. The amendment's provisions have been copied in pertinent part below:

This Amendment is made as of July 1, 2006 (Effective Date), between Aetna Workers' Comp Access, LLC, on behalf of itself and its Affiliates (hereinafter referred to as "Company") and [Crozer].

Whereas, the parties have entered into a Managed Care ("Agreement") to provide health care services to Members;

Whereas, the parties wish to amend the Agreement in order to participate in the Aetna Workers' Comp Access program and agree to revise the Compensation Schedule as provided herein;

Now, Therefore, in consideration of the mutual promises and undertakings contained herein, the parties agree to be legally bound as follows:

1. The Schedule of the Agreement is hereby amended to update the compensation for such services as set forth as follows:

For Services rendered to a [workers' compensation] Claimant, [Crozer] will be paid:

• 3 percent discount from the Commonwealth's fee schedule, 97% of the state fee schedule.

• 90% of charges for Burn and Trauma cases (Burn case will be identified with Rev code 0207 which is the revenue code we use for services rendered in the Burn Center).

• All payers accessing [Crozer] through [Aetna] will comply with the rules and regulations of the Commonwealth of PA for rates, timeliness of payments, disputes etc.

Brief in Support of Crozer's Reply to Berkshire's Second Motion for Summary Judgment, Exhibit A, at 1-2 (emphases added).

To establish Berkshire's obligation to abide by the terms of the above agreement, Crozer attached to its complaint a copy of Berkshire's internal "Review Analysis," which had been created during the processing of the subject claims for M.M. Id. This non-final version of the Review Analysis referred to Crozer's "Aetna contract" and a "PPO reduction" that Berkshire had initially applied to M.M.'s medical bills for services rendered by Crozer. Id.

The Review Analysis indicated that Crozer was owed $231,147 "in accordance with [Crozer's] Aetna contract." This amount corresponded with the figure Crozer claims was due based on calculating 90% of M.M.'s medical bills. Berkshire would later override this Review Analysis by omitting reference to the Aetna contract, resulting in the payment of $30,175.58 to Crozer.

In addition to Berkshire's own internal acknowledgment of the Aetna PPO, Crozer sought to show that Berkshire was bound by the agreement through a contract between its affiliate, Oak River, and the medical bill servicing company, Medata, which, in turn, had contracted with Aetna. Crozer maintained that since it had contracted with Aetna to receive the benefit of the Aetna PPO and Berkshire had contracted to apply Aetna rates through its affiliate and bill servicer, Berkshire had breached its obligation to pay Crozer the full Aetna PPO amount as to the medical services provided to M.M.

In its preliminary objections, Berkshire challenged the trial court's jurisdiction over a dispute concerning a New Jersey workers' compensation claim and objection on that ground was overruled. See Berkshire Preliminary Objections, 6/8/2018, at 1-5; Trial Court Order, 8/3/2018, at 1.

As to the merit of breach of contract claim, Berkshire disputed that it was bound to pay Crozer pursuant to the Aetna PPO. The Assistant Vice President of Medical Management, Theresa Kelly, testified in an affidavit that Berkshire was not a party to that agreement. See Affidavit of Theresa Kelly, 5/15/2019, at ¶¶ 8-9. Kelly also averred that Berkshire's reference to the Aetna PPO in the non-final Review Analysis was simply an error by Berkshire which was later corrected. See id. at ¶ 11.

The medical bills review manager who processed M.M.'s hospital charges, Jade Uhl, further explained Berkshire's handling of the claim. See Deposition of Jade Uhl, 12/14/2022, at pp. 112-14. She testified that Berkshire had contracted with Medata to do its medical bill pricing, and that Medata would reprice hospital bills pursuant to a negotiated rate stipulated in the Aetna PPO where applicable. See Deposition of Jade Uhl, 12/14/2021, at pp. 76, 82. After M.M. was discharged in this case, Medata's software had initially calculated that Crozer was entitled to 90% of the hospital charges for M.M.'s treatment pursuant to the Aetna PPO. See id. at pp. 83-84.

When reviewing the pricing of M.M.'s medical bill, however, Uhl determined that Medata's calculation (using the Aetna PPO rate) was an "error" because Berkshire had "no [applicable] contract with [Crozer] or Aetna, so [Berkshire] had no requirement of sending it to that PPO for repricing." Id. at p. 106. Uhl overrode the Aetna PPO amount and recalculated the sum payable to Crozer by applying a multiple of 1.5 to the Medicare reimbursement rate for a New Jersey workers' compensation claim, totaling $30,175.58.

Theresa Kelly and Jade Uhl attributed the miscalculation in Berkshire's Review Analysis to the automated Medata billing application. They both explained that Medata had generated the initial figures for the claim as if the jurisdiction was the location of M.M.'s treatment (Pennsylvania) rather than the location of M.M.'s work-related accident and resulting claim for workers' compensation benefits (New Jersey). See Deposition of Theresa Kelly, at pp. 19; Deposition of Jade Uhl, at pp. 43-45.

Uhl testified that a claim within the jurisdiction of Pennsylvania would be priced in the Medata system such that a medical provider would be entitled to 90% of the cost of providing acute care to an employee in a burn unit. However, claims within the jurisdiction of New Jersey would be processed under a completely different fee schedule. See Deposition of Jade Uhl, at pp. 43-45; see also Affidavit of Theresa Kelly, 5/15/2019, at ¶ 5 (averring that Berkshire supplies workers' compensation insurance policies "to employers who provide benefits to their employees pursuant to the New Jersey Work[men's] Compensation Act").

Kelly further stated that Berkshire had recalculated the amount due to Crozer as a claim in the jurisdiction of New Jersey and, as such, Crozer would be paid "according to New Jersey rules," which mandate payment in an amount that would be "reasonable" and based upon the "usual fees and charges which prevail in the same community." Id. at pp. 110-11. In New Jersey, there was no contract, rule or regulation - analogous to those in Pennsylvania - which guaranteed medical providers 90% or more of the cost of burn unit care.

In Berkshire's second motion for summary judgment,^[1] it asserted that Crozer had failed to show that Berkshire and Crozer had contracted for Crozer to receive the rate set forth in the Aetna PPO. See Berkshire's Second Motion for Summary Judgment, 1/12/2021, at 8-9. The trial court granted

Berkshire's summary judgment motion, agreeing with Berkshire that Crozer had failed to raise a raise a genuine issue of...