Aetna Better Health of N.C., Inc. v. N.C. Dep't of Health & Human Servs.
| Decision Date | 21 September 2021 |
| Docket Number | No. COA21-97,COA21-97 |
| Citation | 866 S.E.2d 265,279 N.C.App. 261 |
| Parties | AETNA BETTER HEALTH OF NORTH CAROLINA, INC., Petitioner, North Carolina Provider Owned Plans, Inc., d/b/a My Health by Health Providers, Intervenor, v. NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, Respondent, and WellCare of North Carolina, Inc., Blue Cross and Blue Shield of North Carolina, AmeriHealth Caritas North Carolina, Inc., UnitedHealthcare of North Carolina, Inc., and Carolina Complete Health, Inc., Respondents-Intervenors. |
| Court | North Carolina Court of Appeals |
Hedrick Gardner Kincheloe & Garofalo LLP, Raleigh, by Patricia P. Shields, Linda Stephens, M. Duane Jones, and Tatiana M. Terry ; Hunton Andrews Kurth LLP, Charlotte, by Nash Long and Kevin J. Cosgrove ; Hahn Loeser & Parks LLP by Marc J. Kessler and E. Sean Medina, for Petitioner-Appellant Aetna Better Health of North Carolina, Inc.
Haynswoth Sinkler Boyd, P.A., by Robert Y. Knowlton, Elizabeth H. Black, Boyd B. Nicholson, Jr. ; and Attorney General Joshua H. Stein, by Special Deputy Attorney General Colleen M. Crowley, and Special Deputy Attorney General John R. Green, Jr., for Respondent-Appellee North Carolina Department of Health and Human Services.
Alexander Ricks PLLC, Charlotte, by Rodney E. Alexander and Mary K. Mandeville, and Mayer Brown, LLP, by Rodger V. Abbot, Luke Levasseur, and Marcia G. Madesen, for Respondent-Intervenor-Appellee AmeriHealth Caritas of North Carolina, Inc.
Brooks, Pierce, McLendon, Humphry & Leonard, LLP, by Jennifer K. Van Zant, Greensboro, Jessica Thaller-Moran, and Eric F. Fletcher, Greensboro, for Respondent-Intervenor-Appellee Blue Cross and Blue Shield of North Carolina.
Wyrick Robbins Yates & Ponton, LLP, Raleigh, by Lee M. Whitman, Paul J. Puryear, Jr., for Respondent-Intervenor-Appellee Carolina Complete Health, Inc.
Alston & Bird LLP, by Jessica L. Sharron ; and Tharrington Smith LLP, Raleigh, by F. Hill Allen and Colin Shive, for Respondent-Intervenor-Appellee UnitedHealthcare of North Carolina, Inc.
Morningstar Law Group, Raleigh, by Shannon R. Joseph ; and Holland & Knight, by Karen D. Walker, for Respondent-Intervenor-Appellee Wellcare of North Carolina, Inc.
Parker Poe Adams & Bernstein LLP, Raleigh, by Matthew W. Wolfe, Robert A. Leandro, and Melanie Black Dubis, for Respondent-Intervenor-Appellee North Carolina Provider Owned Plans, Inc. d/b/a My Health by Health Providers.
¶ 1 Aetna Better Health of North Carolina, Inc. ("Aetna") appeals from an order entered dismissing their petition for lack of subject matter jurisdiction and denying their motion for an extension of time for service of process. We affirm.
¶ 2 The North Carolina Department of Health and Human Services ("DHHS") is responsible for overseeing and operating North Carolina's Medicaid plan. DHHS is transitioning North Carolina's Medicaid delivery system from a fee-for-service model to a managed care model operated by Prepaid Health Plans, pursuant to North Carolina's Medicaid Transformation Act. S.L. 2015-245; see N.C. Gen. Stat. § 122C-115(e) (2019). This Act directed DHHS to develop a request for proposals to award prepaid health contracts. S.L. 2015-245, § 4. In 2018, DHHS formed an evaluation committee ("Committee") to review and score proposals.
¶ 3 Aetna is a managed-care provider, one of eight entities who submitted proposals for Medicaid managed-care services. The Committee issued its recommendations on 24 January 2019, which identified four statewide contracts for Medicaid managed care services to be awarded. On 4 February 2019, DHHS awarded contracts to WellCare of North Carolina, Inc. ("Wellcare"), Blue Cross and Blue Shield of North Carolina ("BCBS"), AmeriHealth Caritas of North Carolina ("AmeriHealth"), and UnitedHealthcare of North Carolina, Inc. ("United Healthcare"). DHHS also awarded a regional contract to Carolina Complete Health, Inc. ("CCH") (collectively "Intervenors").
¶ 4 Aetna, along with the two other entities who were not awarded contracts, protested DHHS’ contract and award decisions by filing contested case petitions in the Office of Administrative Hearings ("OAH"). Aetna filed its contested case petition and motion for preliminary injunction on 16 April 2019. The Administrative Law Judge ("ALJ") denied Aetna's motion for preliminary injunction on 26 June 2019. The ALJ consolidated all three petitions on 26 July 2019.
¶ 5 The ALJ entered an order on 9 September 2020 granting DHHS’ motion for summary judgment of all claims. The decision included a "notice of appeal," paragraph which provides:
[u]nder the provisions of North Carolina General Statute § 150B-45, any party wishing to appeal the final decision of the Administrative Law Judge must file a Petition for Judicial Review in the Superior Court of the county where the person aggrieved by the administrative decision resides.... The appealing party must file the petition within 30 days after being served with a written copy of the Administrative Law Judge's Final Decision ... N.C. Gen. Stat. § 150B-46 describes the contents of the Petition and requires service of the Petition on all Parties.
¶ 6 Aetna timely filed its Petition for Judicial Review in superior court on 23 September 2020. The remaining companies not receiving an offer also filed a Petition for Judicial Review. Aetna served its Petition on counsel of record in the proceedings. Aetna filed a notice of Petition with the OAH, which transmitted notice to all counsel of record.
¶ 7 Aetna failed to serve a copy of its Petition on DHHS’ designated service of process agent, Lisa Granberry Corbett or any member of her office as required, pursuant to N.C. Gen. Stat. § 1A-1, Rule 4(j)(4) (2019). On 8 October 2020, Intervenors and DHHS filed motions to dismiss and served them on Aetna the same day. On 12 October 2020 at 9:00 a.m., Aetna personally served Corbett. At 10:18 a.m. the same day, Aetna filed an amended Petition for Judicial Review and personally served Corbett at 10:30 a.m. ¶ 8 On 13 October 2020, Aetna moved for an extension of time to serve its Petition for Judicial Review and served the amended Petition for Judicial Review on Intervenors’ counsel. The superior court heard the motions to dismiss on 9 November 2020, denied Aetna's request for an extension of time for service of process, and granted DHHS’ and Intervenors’ motions to dismiss for lack of jurisdiction by order entered 23 November 2020. Aetna appeals.
¶ 9 Jurisdiction lies in this Court pursuant to N.C. Gen. Stat. § 7A-27(b) (2019).
¶ 10 Aetna raises four arguments in their brief. We consolidate and restructure their arguments as follows, whether the superior court erred by: (1) granting DHHS’ and Intervenors’ motion to dismiss; and, (2) denying Aetna's motion to extend the time for service.
¶ 11 Aetna argues the superior court erred by granting DHHS’ and Intervenors’ motion to dismiss.
¶ 12 "This Court must conduct a de novo review of the pleadings to determine their legal sufficiency and to determine whether the trial court's ruling on the motion to dismiss was correct." Leary v. N.C. Forest Prods., Inc. , 157 N.C. App. 396, 400, 580 S.E.2d 1, 4, aff'd per curiam , 357 N.C. 567, 597 S.E.2d 673 (2003).
¶ 13 Our Supreme Court has held: "No appeal lies from an order or decision of an administrative agency of the State or from judgments of special statutory tribunals whose proceedings are not according to the course of the common law, unless the right is granted by statute." Empire Power Co. v. N.C. Dep't of Env't, Health & Nat. Res. , 337 N.C. 569, 586, 447 S.E.2d 768, 778 (1994) (citations omitted).
¶ 14 "[B]ecause the right to appeal to an administrative agency is granted [only] by statute, compliance with statutory provisions is necessary to sustain the appeal." Gummels v. N.C. Dep't of Human Resources , 98 N.C. App. 675, 677, 392 S.E.2d 113, 114 (1990) (citation omitted). Aetna has the right to appeal pursuant to N.C. Gen. Stat. § 150B-43 (2019).
¶ 15 N.C. Gen. Stat. § 150B-45(a) articulates the filing requirement for judicial review in the superior court: "the person seeking review must file a petition within 30 days after the person is served with a written copy of the decision ... in the county where the contested case which resulted in the final decision was filed." N.C. Gen. Stat. § 150B-45(a) (2019) (emphasis supplied). N.C. Gen. Stat. § 150B-46 provides the mandatory service requirement: "Within 10 days after the petition is filed with the court, the party seeking the review shall serve copies of the petition by personal service or by certified mail upon all who were parties of record to the administrative proceedings." N.C. Gen. Stat. § 150B-46 (2019) (emphasis supplied).
¶ 16 Here, Aetna failed to timely serve DHHS or any other party within the "10 days after the petition is filed" as is mandated by N.C. Gen. Stat. § 150B-46. Prior to serving DHHS, Aetna amended its Petition on 12 October 2020 and served its amended Petition the same day. Aetna argues "the relation-back provision of Rule 15(c) allows the service of an amended pleading where the original pleading was not properly served."
¶ 17 Aetna cites Rone v. Winston-Salem/Forsyth Cnty. Bd. of Educ. , 207 N.C. App. 618, 701 S.E.2d 284, 289 (2010) for the proposition Rule 15 allows a petition to be amended. Rone is not controlling as the pleading therein was amended after service was timely completed pursuant to N.C. Gen. Stat. § 150B-46. Id.
¶ 18 To allow Rule 15 to control timeliness of service, when a party did not complete service pursuant to N.C. Gen. § 150B-46, would contravene our prior precedents and the legislative intent, and could lead to gamesmanship to overcome dilatory lapses. N.C. Gen. Stat. § 150B-46 ; Gummels , 98 N.C. App. at 677, 392 S.E.2d at 114. Rule 15 applies "to all proceedings in superior court except...
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...to timely serve Defendants. Aetna Better Health of N. Carolina, Inc. v. N. Carolina Dep’t of Health & Hum. Servs., 2021-NCCOA-486, ¶ 4, 279 N.C. App. 261, 263, 866 S.E.2d 265, 267. The Court stated, “Here, Aetna failed to timely serve DHHS or any other party within the “10 days after the pe......