Advanzeon Solutions, Inc. v. State ex rel. Fla. Dep't of Fin. Servs.
Decision Date | 01 June 2021 |
Docket Number | No. 1D18-3087,1D18-3087 |
Citation | 321 So.3d 911 |
Parties | ADVANZEON SOLUTIONS, INC. f/k/a Comprehensive Behavioral Care, Inc., Appellant, v. STATE of Florida EX REL. FLORIDA DEPARTMENT OF FINANCIAL SERVICES, as the receiver of Universal Health Care Insurance Company, Inc. and Universal Health Care, Inc., Appellee. |
Court | Florida District Court of Appeals |
Thomas Burns of Burns, P.A., Tampa, for Appellant.
Gigi Rollini and Kelly A. O'Keefe of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., Tallahassee; Miriam Victorian, Assistant General Counsel, and Jamila G. Gooden, Assistant General Counsel, Department of Financial Services, Tallahassee, for Appellee.
This is a contract interpretation dispute in an insurance receivership case. The issue is whether the contract between a health plan and its network provider/claims processor required the health plan to keep paying the processor contractual administrative fees after the health plan terminated the contract. We affirm the trial court's holding that the contract did not require such payments.
Universal Health Care Insurance Company and Universal Health Care, Inc. (together, Universal), contracted with Appellant Advanzeon Solutions, Inc. (which originally had a different name). Universal had health plan members who might need certain health care services, and Advanzeon had a network of providers who could render those services. Under the contract, Advanzeon provided a variety of services to Universal's eligible members, including billing, claims payment, and quality management. Advanzeon paid the providers in its network, and Universal reimbursed Advanzeon for those payments.
The contract required Universal to pay Advanzeon an administrative fee each month. The most important point for this analysis is that the contractual monthly administrative fee due to Advanzeon was calculated by multiplying the number of Universal's "eligible members" for that month, times a contractually specified rate. The number of members fluctuated and therefore so did the administrative fee. The administrative fee payment was not dependent on the number of claims processed or the dollar amount of claims.
The contract allowed termination upon 90 days’ advance notice. Universal gave the required termination notice 90 days before the contract was set to end. Upon termination, Universal no longer had access to Advanzeon's provider network. Evidence presented later established that there were no pending or unpaid claims involving Advanzeon's providers when the contract ended.
Within months after Universal terminated its contract with Advanzeon, the Florida Department of Financial Services initiated receivership proceedings over Universal. In quick succession, Universal filed a Chapter 11 bankruptcy petition, the Department was appointed receiver of Universal, and the circuit court ordered Universal into liquidation.
Advanzeon asserted various claims against Universal that ultimately came down to its seeking over $820,000 in unpaid administrative fees allegedly due after the contract ended. Advanzeon called these "tail and extended tail" fees, and argued that they were customarily paid in the industry even though, as Advanzeon conceded, the contract did not expressly authorize them. Advanzeon's witnesses disagreed about how long those tail periods could extend, but argued it was at least three months and as long as five months after contract termination. To overcome the problem of there being no Universal "eligible members" on which to base the contractual administrative fee calculation once the contract ended, Advanzeon argued its ongoing fees should be calculated based on the number of eligible members there were in the last month under the contract.
Apparently the theory behind tail fees would be that claims would continue to require processing after contract termination. Apparently on the same reasoning, Advanzeon also argued that the new company contracted to take its place was not yet up to speed and so Advanzeon continued to be entitled to the administrative fee even past the 90-day "tail" period, into an "extended tail" period. However, Advanzeon provided no evidence that it continued to process claims during the tail or extended-tail periods. In a nutshell, Advanzeon argued that its entitlement to administrative fees, in the amount due in the final month of the contract, should continue for up to five months after termination despite its providing Universal no further services—and that this was industry custom to be imposed even in the absence of any contractual provision.
The Department disputed that tail and extended-tail payments were customary, and it argued that in any event, the contract did not authorize continued payment of administrative fees after termination of the contract itself. The Department demonstrated that no claims remained pending for Advanzeon's network providers after the contract was terminated. Further, Universal began paying administrative fees to Advanzeon's successor the day after the Advanzeon contract ended, and therefore there was not only no authority, but also no need, to keep paying Advanzeon.
The trial court rejected Advanzeon's arguments, finding that the contract did not provide for tail payments and no such requirement could be added to the contract. The court particularly rejected the concept that alleged industry practice could be imposed on the parties to a written contract after the fact. The trial court's judgment reflected the court's credibility determinations about both parties’ witnesses.
Our standard of review in interpreting a contract is de novo. Imagine Ins. Co., Ltd. v. State ex rel. Dep't of Fin. Servs. , 999 So. 2d 693, 696 (Fla. 1st DCA 2008). Advanzeon raises only one issue on appeal, arguing broadly that the trial court both erred and abused its discretion in denying Advanzeon's claim for tail-period fees. The primary argument is that the trial court erred by refusing to apply "trade custom and usage" to expand the payment terms of the parties’ written contract to include a tail and extended tail. Advanzeon also takes issue with several aspects of the trial court's reasoning. None of these arguments has merit.
Advanzeon admits the parties’ contract did not expressly authorize any tail payments, but argues the trial court should have interpreted the word "terminate" to include tail payments in light of trade custom and usage. The contract included a section entitled "Duration of the Agreement" that established a one-year term with automatic renewals unless terminated...
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