Drs. Pass & Bertherman, Inc. v. Neighborhood Health Plan

31 A.3d 1263, 2011 R.I. LEXIS 139, 2011 WL 6100402
CourtSupreme Court of Rhode Island
DecidedNovember 30, 2011
Docket2009-349-Appeal
StatusPublished
Cited by23 cases

This text of 31 A.3d 1263 (Drs. Pass & Bertherman, Inc. v. Neighborhood Health Plan) is published on Counsel Stack Legal Research, covering Supreme Court of Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Drs. Pass & Bertherman, Inc. v. Neighborhood Health Plan, 31 A.3d 1263, 2011 R.I. LEXIS 139, 2011 WL 6100402 (R.I. 2011).

Opinions

OPINION

Justice FLAHERTY,

for the Court.

We are called upon to determine whether the defendant, Neighborhood Health Plan of Rhode Island (NHP), violated state law when it compensated optometrists at a lower rate than ophthalmologists for the same, or substantially the same, medical procedures. For the reasons set forth in this opinion, we hold that it did not and we affirm the judgment of the Superior Court.

I

Facts & Travel

NHP is a Rhode Island not-for-profit corporation that operates a licensed health maintenance organization (HMO) that provides health insurance coverage to its en-rollees. NHP is controlled by its corporate members, which consist of the Rhode Island community health centers and the Rhode Island Community Foundation. NHP voluntarily limits enrollment in its health insurance program to those individuals for whom the State of Rhode Island Department of Health Services (DHS) purchases health care. This population primarily, but not exclusively, consists of Rite Care participants.1 In its administration of the Rite Care program, DHS contracts with private HMOs that agree to provide comprehensive health services to Rite Care participants. The HMOs are obligated to ensure that each participant has a primary care provider and access to all of the health care services that are included in the benefit package.

Since 1994, DHS has maintained a contractual relationship with NHP to provide healthcare benefits to Rite Care program participants.2 According to the terms of the contract, DHS remits a monthly “eapi-[1265]*1265tation payment” to NHP on behalf of each member of NHP enrolled under the state plan. DHS makes the capitation payment to NHP whether or not the member receives any medical services during the period covered by the payment. Distilled to its essence, the capitation payment is an insurance premium. Each month, DHS conveys the capitation payments via wire transfer to NHP’s operating bank account. Once the transfer of funds is completed, NHP immediately shifts most of the payment into higher-yield investment accounts. NHP then uses its investment accounts to fund a number of “controlled disbursement accounts” for the payment of service-related expenses, such as claims, pharmacy benefits, or administrative costs. The disbursement accounts are funded daily, based on projected needs.

It is significant that each of the aforementioned financial accounts is held solely in NHP’s name, and each is under NHP’s exclusive control. NHP freely transfers and spends the money-in its accounts without consulting with or receiving input from DHS. NHP recognizes the money it receives from DHS as revenue in its financial statements, audits, and tax returns. Furthermore, the contract between DHS and NHP insulates the state from either primary or secondary liability for NHP’s sundry financial obligations. Specifically, the agreement provides that the “State shall bear no liability (other than liability for making payments required by this Agreement) for paying the valid claims of Health Plan subcontractors, including providers and suppliers * *

In return for the capitation payments, NHP provides medical benefits to its en-rollees. NHP accomplishes this goal by entering into separate medical group specialty services agreements (“participating provider agreements”) with medical professionals and physician groups, including, pertinent to this appeal, optometrists and ophthalmologists.3 The participating provider agreement is a contract between NHP and the provider whereby the provider agrees to perform particular “covered services” in exchange for reimbursement at NHP’s specified rate. When a provider treats a NHP member, the provider submits a claim to NHP, which pays the provider from one of its disbursement accounts.

The last facet of this triangular arrangement is the relationship between NHP and its individual enrollees. The state conducts enrollment activities for Rite Care-eligible citizens and provides NHP, on a daily basis, with a list of newly enrolled members. NHP is contractually obligated to enroll any eligible Rite Care beneficiary who selects or is assigned to it, and only the state may disenroll a Rite Care participant from the health plan. Nonetheless, as its participating provider agreements set forth, the “Certificate of Coverage” issued to NHP enrollees is “the documents) issued to a Member by NHPRI which entitle the Member to have NHPRI pay for the Member’s Covered Services.” (Emphasis added.)

For most of its history, NHP reimbursed optometrists and ophthalmologists [1266]*1266at the same rate for performing the same services. However, when NHP began serving a new population of enrollees designated as “Children with Special Needs,” NHP determined that its then existing network of ophthalmologists was inadequate to serve the needs of this new population. NHP concluded that the only way it could persuade more ophthalmologists to participate in its health plan was to increase its reimbursement rates for them. Therefore, beginning on November 1, 2002, NHP reimbursed ophthalmologists at a different, higher rate than the rate paid to optometrists.

The optometrists contended that this differential reimbursement violated state law, arguing that the law required that optometrists and ophthalmologists be compensated at the same rate for the services in question. Under Rule 23 of the Superi- or Court Rules of Civil Procedure, they brought an action in the Superior Court on behalf of all optometrists who had entered into participating provider agreements with NHP during the period that the differential reimbursement policy was in effect.4 On February 18, 2008, the Superior Court certified the class of optometrists pursuant to Rule 23(a) and (b)(3).5 In July 2008, Optometrists and NHP filed cross-motions for summary judgment. On May 5, 2009, a justice of the Superior Court found that there were no genuine issues of material fact, and that summary judgment was appropriate to resolve the matter. After a lengthy analysis, the motion justice concluded that NHP did not violate G.L. 1956 § 5-35-21.1(b), as amended by P.L. 1997, ch. 216, § 1, as it existed during the relevant period because NHP paid for the ophthalmologists services using private, rather than public, money. He reasoned that the statutory antidiscrimination provision applied only to expenditures of public funds. Accordingly, the motion justice granted summary judgment in favor of NHP and denied summary judgment for the optometrists. The optometrists timely appealed to this Court from the entry of summary judgment in favor of NHP.

II

Arguments of the Appellants

Before this Court, the optometrists advance two arguments. First, they contend that the hearing justice erred when he concluded that the money paid to the optometrists and ophthalmologists by NHP were private, not public. Second, they maintain that because the contract between DHS and NHP “called for the expenditure of public funds,” then any variance between the reimbursement rates for optometrists and ophthalmologists violated the provisions of § 5-35-21.1(b).

III

Standard of Review

“This Court reviews de novo a trial justice’s decision granting summary [1267]*1267judgment.” Trust of McManus v. McManus,

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Drs. Pass & Bertherman, Inc. v. Neighborhood Health Plan
31 A.3d 1263 (Supreme Court of Rhode Island, 2011)

Cite This Page — Counsel Stack

Bluebook (online)
31 A.3d 1263, 2011 R.I. LEXIS 139, 2011 WL 6100402, Counsel Stack Legal Research, https://law.counselstack.com/opinion/drs-pass-bertherman-inc-v-neighborhood-health-plan-ri-2011.