Metro. Prop. & Cas. Ins. Co. v. Emerson Hosp.

• Decision Date: 05 May 2021
• Docket Number: No. 20-P-161,20-P-161
• Court: Appeals Court of Massachusetts
• Parties: METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY v. EMERSON HOSPITAL.

99 Mass.App.Ct. 513

171 N.E.3d 168

METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY

v.EMERSON HOSPITAL.

No. 20-P-161

Appeals Court of Massachusetts, Middlesex.

Argued October 9, 2020.

Decided May 5, 2021.

The following submitted briefs for amici curiae:

Francis A. Gaimari, Needham, for the defendant.

Gregory K. Lyon, for the plaintiff.

Heather L. Zengilowski, for Law Offices of PIP Collect, LLC.

Robert A. DiTusa & Laura D. Mangini, Springfield, for Massachusetts Chiropractic Society, Inc.

David L. Arrington, Eli Milne, & Madeline Aller, of Utah, & Philip A. O'Connell, Jr., & Tony K. Lu, Boston, for Mitchell International, Inc.

Present: Milkey, Blake, & Henry, JJ.

HENRY, J.

Emerson Hospital (Emerson) contracted with third party Coventry Health Care Network, Inc. (Coventry), to accept a discounted rate from payors in the Coventry network in return for prompt payment for medical services. Metropolitan Property and Casualty Insurance Company (Metropolitan), which offers automobile insurance, is one of those payors through its own contract with Coventry. Emerson provided medical services to individuals insured by Metropolitan who had been injured in automobile accidents, and Emerson now seeks reimbursement from Metropolitan at rates higher than those set forth in Emerson's contract with Coventry. We are called upon to decide whether the amounts Emerson is owed are controlled by the two contracts or whether the arrangement runs afoul of the no-fault automobile insurance scheme embodied in G. L. c. 90, §§ 34A and 34M (no-fault scheme) or of other statutes. Specifically, we address Emerson's arguments that the contract between Metropolitan and Coventry is void and unenforceable because it (1) conflicts with the no-fault scheme; (2) required the approval of the Commissioner of Insurance (commissioner) as an automobile insurance contract, pursuant to the same statute; (3) required the approval of the commissioner as a preferred provider arrangement, pursuant to G. L. c. 176I, §§ 1 and 2 (or, alternatively, Metropolitan was barred entirely from entering into a preferred provider arrangement); or (4) violates the prohibition on unfair and deceptive business practices for insurers, G. L. c. 176D.¹ We conclude that Metropolitan's contractual arrangement with Coventry does not conflict with any of these statutes. Accordingly, we affirm the judgment, as corrected, in favor of Metropolitan.²

Factual background. The parties submitted the matter to a Superior Court judge as a case stated, stipulating to all relevant facts and leaving the judge only to "apply the correct principles of law and decide the case." Langdoc v. Gevaert Co. of Am., 315 Mass. 8, 10, 51 N.E.2d 780 (1943). See Massachusetts Bay Transp. Auth. v. Somerville, 451 Mass. 80, 84, 883 N.E.2d 933 (2008).

The parties agreed to the following relevant facts: Metropolitan entered into a contract with Coventry effective March 1, 2009, in which Coventry guaranteed Metropolitan access to a pool of medical providers who would accept lower reimbursement rates from Metropolitan in exchange for prompt payment at the agreed-upon rates. Coventry and Emerson subsequently entered into a contract, effective October 1, 2010, for Emerson to be a part of that pool of medical providers. Metropolitan is not a party to Emerson's contract with Coventry nor is Emerson a party to Metropolitan's contract with Coventry.

1. The Metropolitan contract with Coventry. Coventry agreed to grant Metropolitan access to its database of medical providers that had agreed to accept reduced rates, "as set forth in the Provider Agreement."³ In exchange for this access, Metropolitan agreed to use Coventry's network of providers, Coventry Auto Solutions, and to pay providers in Coventry Auto Solutions "the Contract Rate for all Compensable Services that are not disputed within the earlier of: (a) the time period permitted by applicable law, if any, or (b) thirty (30) days [from] the date [Metropolitan] receives a complete and accurate bill from Contract Provider." The contract rate is "as set forth in the Provider Agreement: (i) the lesser of the rate in the Provider Fee Schedule or the Allowable Rate; or (ii) the rate in the Provider Fee Schedule." Paragraph 3.4 of the Metropolitan-Coventry contract also provides that "[t]he parties acknowledge and agree that: (a) Coventry does not provide, direct, or control the provision of Medical Services to Insured Parties." Coventry agreed, in paragraph 3.5, to be "solely responsible for administration of Coventry Auto Solutions, including, but not limited to: (i) maintaining and updating accurate Contract Provider lists; (ii) notification by Coventry to Contract Providers of [Metropolitan]’s participation in utilization of Coventry Auto Solutions; and (iii) listing [Metropolitan] as a participant in utilization of Coventry Auto Solutions ...."

2. The Coventry contract with Emerson. For insurers in the Coventry network, Emerson agreed to accept a thirty percent discount in reimbursement rates "from provider[’]s billed charges."⁴ In exchange, Coventry agreed -- on its own behalf and on behalf of payors in its network⁵ -- to pay Emerson promptly for covered services. At the time Emerson and Coventry entered into a contract, Metropolitan was a payor as defined in the Emerson and Coventry contract. See note 5, supra. Paragraph 3.1.3 of the Coventry-Emerson contract further provides that "payment for Covered Services pursuant to the Agreement shall constitute payment in full for all hospital/professional services for which [the] Hospital bills ...."

3. Emergency care for Metropolitan insureds. At issue here is medical care Emerson provided to five persons insured by Metropolitan after car accidents in which each person sustained injury. Emerson furnished medically necessary treatment for injuries causally related to the accidents. There is no evidence that Metropolitan required the patients to receive care at Emerson. Emerson's bills for each patient were reasonable in their face amount. Metropolitan timely paid Emerson the amounts set forth in the contract between Emerson and Coventry. Each patient had remaining insurance coverage greater than the unpaid balance; no patient was individually responsible for any additional charges.

Discussion. 1. Standard of review. "Because the judge issued her decision on a case stated basis, we review it de novo ...." Hickey v. Pathways Ass'n, Inc., 472 Mass. 735, 743, 37 N.E.3d 1003 (2015). See Rock v. Pittsfield, 316 Mass. 348, 349, 55 N.E.2d 606 (1944) (only question before appellate court is "whether the decision was right on the facts stated and proper inferences therefrom").

2. The no-fault insurance scheme. a. Preemption of Metropolitan contract with Coventry. Emerson argues that the no-fault automobile insurance scheme set forth in G. L. c. 90, §§ 34A and 34M, preempts the contract between Metropolitan and Coventry. As part of this argument, Emerson also contends that the no-fault scheme prevents Metropolitan from paying anything less than a reasonable rate and that, because the parties stipulated that the rate billed was reasonable, Metropolitan is required to pay the amount billed rather than the contract rate.

Massachusetts requires that automobile insurers "provide personal injury protection benefits," which are "granted in lieu of damages otherwise recoverable by the injured person or persons in tort as a result of an accident." G. L. c. 90, § 34M. This is known as a no-fault automobile insurance scheme, as insurers are required to provide a certain level of coverage to injured parties regardless of culpability. Such personal injury protection (PIP) benefits must include:

"payment to the named insured ... of all reasonable expenses incurred within two years from the date of accident for necessary medical, surgical, x–ray, and dental services, including prosthetic devices and necessary ambulance, hospital, [and] professional nursing ... services ... [up to] eight thousand dollars on account of injury to ... any one person ...."

G. L. c. 90, § 34A. Such automobile insurance policies must be sent to the commissioner for approval, and the policies "shall not conflict with" the no-fault insurance scheme. G. L. c. 175, § 113A. See G. L. c. 90, §§ 34A, 34M.

The no-fault automobile insurance scheme requires insureds to "surrender[ ] the possibly minimal damages for pain and suffering" in exchange for "the security of prompt and certain recovery." Pinnick v. Cleary, 360 Mass. 1, 6, 271 N.E.2d 592 (1971). The purposes of the statutory scheme are to "reduce the number of small motor vehicle tort cases being entered in the courts of the Commonwealth, to provide a prompt, inexpensive means of reimbursing claimants for out-of-pocket expenses, and to address the high cost of motor vehicle insurance in the Commonwealth." Flanagan v. Liberty Mut. Ins. Co., 383 Mass. 195, 198, 417 N.E.2d 1216 (1981). See Chipman v. Massachusetts Bay Transp. Auth., 366 Mass. 253, 255 n.3, 256-257, 316 N.E.2d 725 (1974) ; Pinnick, supra at 16, 271 N.E.2d 592 ("The ills against which [the no-fault insurance scheme] is aimed are obvious. One of the most prominent ... [is] the burden of litigation ..."). The no-fault insurance scheme also "might have been designed to cure ... the inequities which have been visited upon claimants," especially the burden of long delays in financial assistance and the uneven awards granted by juries. Id. at 20, 271 N.E.2d 592.

Our goal in interpreting a statute is to give effect to "the purpose of its framers." Dominguez v. Liberty Mut. Ins. Co., 429 Mass. 112, 115, 706 N.E.2d 647 (1999), quoting Board of Educ. v. Assessor of Worcester, 368 Mass. 511, 513, 333 N.E.2d 450 (1975). We interpret a statute "according to the intent of the Legislature ascertained from all its words construed by the ordinary and approved usage of the language, considered in connection with the cause of its enactment, the mischief or imperfection to be remedied...