Opinion
839 EDA 2022 J-A26017-22
03-02-2023
PROSPECT CCMC, L.L.C. Appellant v. BERKSHIRE HATHAWAY HOMESTATE INSURANCE CO.
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37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, 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 first summary judgment motion was denied without prejudice in 2019 so that the parties could continue with discovery. See Trial Court Order, 9/9/2019. Berkshire's second summary judgment motion was filed on January 12, 2022.
Berkshire's summary judgment motion, agreeing with Berkshire that Crozer had failed to raise a raise a genuine issue of material fact as to whether there existed a contract that bound Berkshire to pay Crozer 90% of M.M.'s medical bills under that agreement. See Trial Court Order, 2/17/2022, at 1-2; Trial Court Opinion, 4/27/2022, at 5-8.
The trial court first found that Crozer could not establish the existence of a valid contract because it had not attached the Aetna PPO agreement to its complaint. Second, the trial court found that Crozer had failed to plead its third-party beneficiary status in the complaint, and this theory of recovery was not reasonably deducible because Crozer and Berkshire did not both appear as signatories in the same contract. Third, the trial court disregarded the contracts between Berkshire's affiliate and Aetna, reasoning that "parent corporations are not necessarily liable for acts of subsidiaries." Id. at 7.
Crozer timely appealed, raising the following issues in its brief:
1. Whether, by requiring that [Crozer] produce "compelling evidence" that it was a third-party beneficiary, the trial court used the wrong standard for deciding a motion for summary judgment.
2.Whether a material factual dispute exists as to whether [Crozer] was a third-party beneficiary of the Medata/Aetna contracts.
3. Whether the complaint properly pleads that [Crozer] was a third-party beneficiary of the Medata/Aetna contracts.
4. Whether [Crozer's] failure to attach the contracts to the complaint warrants summary judgment where [Berkshire] did not file preliminary objections and the contracts were produced in discovery.Appellant's Brief, at 5 (suggested answers omitted, questions renumbered).
II.
While we agree with the trial court that Crozer's breach of contract claim does not survive Berkshire's motion for summary judgment, we do so for a reason different from those given by the trial court. What is dispositive in this appeal is that the employee, M.M., was injured on the job in New Jersey, and she filed a claim for workers' compensation benefits in that state. New Jersey, therefore, had jurisdiction over any dispute concerning Berkshire's payment of the hospital fees incurred by M.M. in Crozer's facility. See N.J. Stat. § 34:15-15 ("Exclusive jurisdiction for any disputed medical charge arising from any claim for compensation for a work-related injury or illness shall be vested in the division."); see also 77 P.S. § 1 ("That this act shall be called and cited as the [Pennsylvania] Workers' Compensation Act, and shall apply to all injuries occurring within this Commonwealth[.]").
It is well established that this Court may uphold a trial court's order for any reason that is supported by the evidence of record. See Moss Rose Mfg. Co. v. Foster, 314 A.2d 25, 26 (Pa. Super. 1973) (en banc) (citation omitted) ("As an appellate court, we may affirm the judgment of the lower court where it is correct on any legal ground or theory disclosed by the record, regardless of the reason or theory adopted by the trial court."). Moreover, questions regarding jurisdiction to adjudicate a workers' compensation claim must be considered on appeal regardless of whether the issue was raised by the parties. See Atkins v. W.C.A.B., 651 A.2d 694, 699 n. 3 (Pa. Cmwlth. 1994).
In reviewing a grant of summary judgment, this Court's standard of review is de novo and our scope of review is plenary. See Bourgeois v. Snow Time, Inc., 242 A.3d 637, 649-50 (Pa. 2020). Summary judgment must be granted where "the record contains no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Id. The party seeking summary judgment "has the burden to demonstrate the absence of any issue of material fact, and the trial court must evaluate all the facts and make reasonable inferences in a light most favorable to the non-moving party." Id. Any doubt "as to the existence of a genuine issue of material fact against the moving party may grant summary judgment only where the right to such a judgment is clear and free from doubt.'" Id. (quoting Toy v. Metro. Life Ins. Co., 928 A.2d 186, 195 (Pa. 2007)).
The Aetna PPO "Amendment Page" shows that it was only intended to cover claims governed by the Pennsylvania Workers' Compensation Act. It provides that Crozer was to be enrolled in the "Aetna Workers' Compensation Access Program" in compliance with "the rules and regulations of the Commonwealth of Pennsylvania for rates, timeliness of payments, disputes etc." Under the Aetna PPO, the facility (Crozer) would be paid for services rendered to "a claimant" at a rate of "90% of charges for burn and trauma cases." This contract rate represented a negotiated reduction of the amount mandated by Pennsylvania law, which is "100% of usual and customary charges" for critical care in a burn unit. See 34 Pa. Code § 127.128(a). Reimbursement rates are calculated differently under New Jersey law, which does not guarantee payment of any specific percentage of charges for such care.
Unlike Pennsylvania, New Jersey does not mandate that burn units treating a worker for an acute injury must be paid 100% of the usual and customary charges. New Jersey's scheme provides generally, and without exempting burn unit care, that "[a]ll fees and other charges for such physicians' and surgeons' treatment and hospital treatment shall be reasonable and based upon the usual fees and charges which prevail in the same community for similar physicians', surgeons' and hospital services." N.J. Stat. § 34:15-15. There is nothing in the record from which it can be gleaned that the Aetna PPO was intended to cover analogous claims for burn unit care in New Jersey, a state which does not exempt burn unit care from price caps or guarantee 100% reimbursement to care providers.
Viewing the facts in the light most favorable to Crozer, summary judgment was properly granted to Berkshire because the record contains no evidence that would establish Pennsylvania's jurisdiction over M.M.'s underlying workers' compensation claim. The record instead shows that M.M. was injured in New Jersey, that a claim was properly filed for workers' compensation benefits in that state, and that the proceedings were pending there when Crozer filed its breach of contract claim against Berkshire in Pennsylvania.
The terms of the Aetna PPO did not alter New Jersey's exclusive jurisdiction over any dispute as to Berkshire's payment to Crozer. See N.J. Stat. § 34:15-15. At most, the Aetna PPO bound Crozer and Berkshire to follow the rules and regulations of Pennsylvania in an unspecified class of cases, but nothing in the Aetna PPO suggests that the parties intended for New Jersey workers' compensation claims to be governed by the rules and regulations of Pennsylvania. Even if the Aetna PPO contained such a provision, the dispute would still have to be litigated in New Jersey due to that state having exclusive jurisdiction over the underlying workers' compensation claim. See id.
While Berkshire initially determined that the Aetna PPO covered M.M.'s medical treatment, any resulting dispute of material fact as to the applicability of the contract would be irrelevant for jurisdictional purposes. The order granting summary judgment to Berkshire must, therefore, stand because Crozer did not present any evidence that the trial court was authorized to adjudicate a dispute relating to New Jersey workers' compensation benefits. Having resolved this appeal on those grounds, it is unnecessary for this Court to address any other issues raised in the parties' briefs.
Order affirmed.
Judge King joins the memorandum.
CONCURRING MEMORAND
BOWES, J.
I agree with my esteemed colleagues that Prospect CCMC, L.L.C. ("Crozer") has failed to establish that its complaint stated a viable claim against Berkshire Hathaway Homestate Insurance, Co. ("Berkshire"). However, I would not affirm the grant of summary judgment to Berkshire based upon the failure of Crozer, a Pennsylvania corporation who treated Berkshire's insured in Pennsylvania, to exhaust New Jersey administrative remedies as purportedly mandated by a New Jersey statute. Instead, I would hold that the trial court properly concluded that Crozer failed to create an issue of material fact as to its contractual right to recover.
The Majority concludes that, "[v]iewing the facts in the light most favorable to Crozer, summary judgment was properly granted to Berkshire because the record contains no evidence that would establish Pennsylvania's jurisdiction over [the] underlying worker's compensation claim." Majority Memorandum at 11. Berkshire did not move for summary judgment on that basis. Rather, it contended that Crozer failed to produce evidence to support its breach of contract claim. While this Court, as a general rule, may affirm a trial court ruling on any basis apparent from the record, we "cannot affirm a trial court's grant of summary judgment upon an argument that was never raised in support of the summary judgment motion." Shamis v. Moon, 81 A.3d 962, 970 (Pa.Super. 2013).
Certainly, we may sua sponte address the issue of subject-matter jurisdiction. See, e.g., Liberty Mut. Grp., Inc. v. 700 Pharmacy, LLC, 270 A.3d 537, 544 (Pa.Super. 2022). However, when jurisdiction is determined to be lacking, the only valid disposition is dismissal of the action. See MCI WorldCom, Inc. v. Pennsylvania Pub. Util. Comm'n, 844 A.2d 1239, 1249 (Pa. 2004) ("Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause."). Consequently, if the Majority were correct in its jurisdictional ruling, the proper result would be the dismissal of the action, not affirmance of the grant of judgment in favor of Berkshire. In the absence of jurisdiction, the judgment would be a nullity. See, e.g., Turner v. Estate of Baird, 270 A.3d 556, 560 (Pa.Super. 2022) ("[I]t is well settled that a judgment or decree rendered by a court which lacks jurisdiction of the subject matter or of the person is null and void." (cleaned up)).
Yet, I am unconvinced that the Majority is correct. Its ruling is based upon a New Jersey statute which states: "Exclusive jurisdiction for any disputed medical charge arising from any claim for compensation for a work-related injury or illness shall be vested in the [New Jersey Division of Worker's Compensation]." Majority Memorandum at 9 (internal quotation marks omitted) (quoting N.J. Stat. § 34:15-15). While this lengthy statute unquestionably governs medical bill disputes between an employer and its injured employee, nothing on its face precludes a foreign medical provider from suing the employer to recover the costs of treatment to the employee in the jurisdiction in which the services were provided. The Majority has not cited, nor have I uncovered, any case in which this New Jersey statute was invoked in the way the Majority has employed it.
To hold that the state of New Jersey may lawfully deprive an aggrieved Pennsylvania company of its right to seek redress in Pennsylvania for a loss it sustained in Pennsylvania, the Majority would first have to undertake examinations of the principles such as conflict of laws and constitutional rights that I question would ultimately support its decision. Rather than trouble myself with unnecessary legal analyses, I would resolve this appeal through examining the ruling that was actually made and appealed to this Court.
See Crozer's Brief in Support of Answer to Preliminary Objections, 6/28/18, at 4 (quoting Gov't Employees Ins. Co. v. Allstate Ins. Co., 818 A.2d 474, 485 (N.J.Super.Ct.App.Div. 2003)) ("There are . . . constitutional problems that would be created if New Jersey asserted jurisdiction over out-of-state companies not transacting any business in this State and without any ties to this State.").
Crozer filed a complaint alleging that, during the relevant time, it and Berkshire "were parties to the AWCA Preferred Provider Organization ("AWCA PPO") agreement with Aetna/Coventry," and that this agreement entitled Crozer to pay it ninety percent of the charges for the care of Berkshire's employee. Complaint, 4/30/18, at ¶¶ 4-5. Nearly four years later, when it responded to Berkshire's motion for summary for judgment, Crozer had yet to produce any agreement to which it and Berkshire were both parties, let alone one that mandated Berkshire to pay the demanded sum.
The best that Crozer could muster was: (1) an amendment of an AWCA agreement signed only by Crozer and AWCA concerning compensation for services rendered to Pennsylvania Worker's Compensation claimants; (2) a license for computer software for medical bill review from Medata to licensees Oak River Insurance Company, Cypress Insurance Company, Brookwood Insurance Company, Redwood Fire & Casualty, and Cornhusker Casualty Insurance, that incorporated by reference differing PPO rates for nine different networks, one of which was Aetna/Coventry; and (3) deposition testimony indicating that Oak River is an "affiliate" of Berkshire. See Response to Motion for Summary Judgment, 2/11/22, at Exhibits A & B; Motion for Summary Judgment, 1/12/22, at Exhibit J (Deposition of Jade Uhl, 12/14/21, at 79-80 ("Q. And by the way, Oak River is essentially Berkshire Hathaway? A. Yes, that is my employer. Their affiliate.")).
Faced with this evidentiary record, I would hold that Crozer's failure to produce any contract with Berkshire, which was the only entity it actually sued, entitled Berkshire to judgment as a matter of law on the breach of contract claim, which was the only one raised in its complaint. Furthermore, I agree with the trial court that the agreement of an affiliate of Berkshire to use computer software that utilized the Aetna/Coventry pricing along with eight others, which did not indicate that Crozer was an intended third-party beneficiary, likewise failed to establish in Crozer a right to force Berkshire to utilize Medata's computer application to reach the pricing result Crozer desired. Although Crozer produced evidence that Berkshire initially applied the ninety-percent compensation rate upon the mistaken belief that the work-related accident occurred in Pennsylvania, and that it applied that rate in other instances related to other providers, Crozer established no contractual right to relief in this instance.
Accordingly, I would affirm the judgment in favor of Berkshire for the reasons explained by the trial court. See Trial Court Opinion, 4/27/22, at 6-8 (explaining that Crozer failed to establish it had a right to ninety-percent compensation pursuant to a contract with Berkshire or as a third-party beneficiary to Berkshire's contract with another entity).
To the extent Crozer complains that the trial court "reversed the burdens of proof" by faulting Crozer's failure to produce evidence of an applicable, enforceable contract, Crozer fails to appreciate that it may not rest on its pleadings in opposing summary judgment, but must come forth with evidence which, if believed by the fact-finder, would support a verdict in its favor. See, e.g., DiDomizio v. Jefferson Pulmonary Associates, 280 A.3d 1039, 1045 (Pa.Super. 2022) ("To survive a defense motion for summary judgment, a plaintiff must adduce sufficient evidence on an issue essential to his case and on which he bears the burden of proof such that a jury could return a verdict in his favor.").
[*] Retired Senior Judge assigned to the Superior Court.