Care New England Health Sys. v. R.I. Office of the Health Ins. Comm'r

• Decision Date: 28 September 2011
• Docket Number: C.A. No. PC 10-6984
• Court: Rhode Island Superior Court
• Parties: CARE NEW ENGLAND HEALTH SYSTEM; WOMEN & INFANTS HOSPITAL OF RHODE ISLAND; BUTLER HOSPITAL, KENT COUNTY MEMORIAL HOSPITAL; and KENT COUNTY VISITING NURSE ASSOCIATION d/b/a VNA OF CARE NEW ENGLAND v. THE RHODE ISLAND OFFICE OF THE HEALTH INSURANCE COMMISSIONER; CHRISTOPHER F. KOLLER in his capacity as HEALTH INSURANCE COMMISSIONER; UNITED HEALTHCARE OF NEW ENGLAND, INC., UNITED BEHAVIORAL HEALTH, INC.; and BLUE CROSS & BLUE SHIELD OF RHODE ISLAND

CARE NEW ENGLAND HEALTH SYSTEM; WOMEN & INFANTS HOSPITAL OF RHODE ISLAND;

BUTLER HOSPITAL, KENT COUNTY MEMORIAL HOSPITAL;

and KENT COUNTY VISITING NURSE ASSOCIATION d/b/a VNA OF CARE NEW ENGLAND

v.THE RHODE ISLAND OFFICE OF THE HEALTH INSURANCE COMMISSIONER;

CHRISTOPHER F. KOLLER in his capacity as HEALTH INSURANCE COMMISSIONER;

UNITED HEALTHCARE OF NEW ENGLAND, INC., UNITED BEHAVIORAL HEALTH, INC.;

and BLUE CROSS & BLUE SHIELD OF RHODE ISLAND

C.A. No. PC 10-6984

STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS PROVIDENCE, SC. SUPERIOR COURT

FILED: September 28, 2011

DECISION

SILVERSTEIN, J. Before the Court is Plaintiffs Care New England Health System, Women & Infants Hospital of Rhode Island, Butler Hospital, Kent County Memorial Hospital, and Kent County Visiting Nurse Association d/b/a VNA of Care New England's (collectively, CNE) Partial Motion for Summary Judgment.¹ Also before the Court is Defendants The Rhode Island Office of the Health Commission and Health Insurance Commissioner Christopher F. Koller's (Commissioner Koller) (collectively, OHIC) Motion for Summary Judgment. The instant matterarises out of OHIC's November 16, 2010 Final Order (OHIC-2010-5) (Final Order)—following an examination pursuant to G.L. 1956 §§ 27-13.1-1, et seq. (Examinations Statute)—which abrogated certain provisions contained within contracts between CNE and Blue Cross and Blue Shield of Rhode Island (Blue Cross) and imposed upon Blue Cross an administrative penalty of $5,000.

IBackground

As a preface, the Court will provide a brief survey of the legislative and statutory terrain encompassing OHIC and Blue Cross as it relates to the instant matter.

Blue Cross is a nonprofit hospital and medical service corporation incorporated pursuant to title 27, chapters 19, 19.2, and 20 of our General Laws. See Blue Cross/Blue Shield of R.I. v. State Dep't of Bus. Regulation, No. 04-5769, 2005 WL 1530449, at * 7 (R.I. Super. June 23, 2005) (Silverstein, J.); see also Blue Cross and Blue Shield of R.I. v. Caldarone, 520 A.2d 969, 970 (R.I. 1987). Within the confines of this statutory scheme, Blue Cross is generally authorized to establish, maintain, and operate health plans for the purpose of providing medical and hospital services to its subscribers. See generally, §§ 27-19-1(3); 20-1(4), (5), and (6).

In 2004, following a public controversy over the management of Blue Cross, the General Assembly enacted The Rhode Island Health Care Reform Act of 2004 – Health Insurance Oversight (the Act), G.L. 1956 §§ 42-14.5-1 through 42-14.5-3, creating OHIC within the Rhode Island Department of Business Regulation (DBR). See Blue Cross and Blue Shield of R.I. v. McConaghy, No. PC 04-6806, 2005 WL 1633707, at *1 (R.I. Super. 2005). Under the Act, OHIC was endowed with specific regulatory powers and duties related to the health insurance industry in Rhode Island. Id.

In connection therewith, the General Assembly made the following legislative findings:

"(1) A substantial amount of health care services in this state are purchased for the benefit of patients by health care insurers engaged in the provision of health care financing services or is otherwise delivered subject to the terms of agreements between health care insurers and providers of the services.

"(2) Health care insurers are able to control the flow of patients to providers of health care services through compelling financial incentives for patients in their plans to utilize only the services of providers with whom the insurers have contracted.

"(3) Health care insurers also control the health care services rendered to patients through utilization review programs and other managed care tools and associated coverage and payment policies.

"(4) By incorporation or merger the power of health care insurers in markets of this state for health care services has become great enough to create a competitive imbalance, reducing levels of competition and threatening the availability of high quality, cost-effective health care.

"(5) The power of health care insurers to unilaterally impose provider contract terms may jeopardize the ability of physicians and other health care providers to deliver the superior quality health care services that have been traditionally available in this state.

"(6) It is the intention of the [G]eneral [A]ssembly to authorize health care providers to jointly discuss with health care insurers topics of concern regarding the provision of quality health care through a committee established by an advisory to the health insurance commissioner." Sec. 42-14.5-1.1.

The General Assembly endowed the health insurance commissioner with the following powers and duties:

"(a) To conduct quarterly public meetings throughout the state . . . regarding the rates, services and operations of insurers licensed to provide health insurance in the state[,] the effects of such rates, services and operations on consumers, medical care providers, patients, and the market environment in which such insurers operate and efforts to bring new health insurers into the Rhode Island market. . . .

"(b) To make recommendations to the governor and the house of representatives and senate finance committees regarding health care insurance and the regulations, rates, services, administrative expenses, reserve requirements, and operations of insurers providing health insurance in the state, and to prepare or comment on, upon the request of the governor, or chairpersons of the house or senate finance committees, draft legislation to improve the regulation of health insurance. . . . The commissioner shall also make recommendations on the levels of reserves including consideration of: targeted reserve levels; trends in the increase or decrease of reserve levels; and insurer plans for distributing excess reserves.

"(c) To establish a consumer/business/labor/medical advisory council to obtain information and present concerns of consumers, business and medical providers affected by health insurance decisions. The council shall develop proposals to allow the market for small business health insurance to be affordable and fairer. . . .

"(d) To establish and provide guidance and assistance to a subcommittee ('The Professional Provider-Health Plan Work Group') of the advisory council created pursuant to subsection (c) above, composed of health care providers and Rhode Island licensed health plans. . . .

"(e) To enforce the provisions of [t]itle 27 and [t]itle 42 as set forth in § 42-14-5(d).

"(f) To provide analysis of the Rhode Island Affordable Health Plan Reinsurance Fund. . . .

"(g) To analyze the impact of changing the rating guidelines and/or merging the individual health insurance market as defined in chapter 27-18.5 and the small employer health insurance market as defined in chapter 27-50 . . ." Sec. 42-14.5-3.

The health insurance commissioner was authorized to discharge these powers and duties in order to:

"(a) Guard the solvency of health insurers; (b) Protect the interests of consumers; (c) Encourage fair treatment of health care providers; (d) Encourage policies and developments that improve the quality and efficiency of health care service delivery and outcomes; and (e) View the health care system as a comprehensiveentity and encourage and direct insurers towards policies that advance the welfare of the public through overall efficiency, improved health care quality, and appropriate access." Sec. 42-14.5-2.

Also in 2004, the General Assembly enacted chapter 19.2 of title 27, entitled Nonprofit Hospital and Medical Corporations, which specifically addressed the administration of Blue Cross. In drafting the legislation, the General Assembly expressly found that it was in the best interest of the residents of Rhode Island:

"(1) To strengthen and reform the governance structure of nonprofit hospital service and/or medical service corporations;

"(2) To ensure a diverse, independent and publicly accountable board of directors;

"(3) To prohibit certain activities which may allow self-interest to compromise undivided loyalty to the public interest mission for which such corporations were established; and

"(4) To require adoption of principles and procedures to keep such corporations aligned with their public interest mission." Sec. 27-19.2-1.

For that reason, the General Assembly charged Blue Cross with the following mission statement:

"(1) To provide affordable and accessible health insurance to insureds, including those persons insured by an affiliate or subsidiary of said plan;

"(2) To assist and support public and private health care initiatives for individuals without health care insurance;

"(3) To promote integration, efficiency and coherence of a statewide health care system that meets the needs of all Rhode Island residents;

"(4) To contribute through its operations, procedures and investments to the improvement of medical and prevention services delivered in Rhode Island; and"(5) To provide affordable and accessible health insurance to a comprehensive range of consumers, including business owners, employees and unemployed individuals." Sec. 27-19.2-3.

In accordance with that mission, the General Assembly required Blue Cross to:

"(1) Offer products in the small group;

"(2) Offer products in the individual market, with at least one 30-day open enrollment period every twelve (12) months;

"(3) Employ pricing strategies that enhance the affordability of health care coverage; and

"(4) Protect the financial condition of the nonprofit hospital and/or medical service plan." Sec. 27-19.2-10.

IIFacts and Travel

CNE is a Rhode Island healthcare system comprised of Women & Infants Hospital of Rhode Island, Butler Hospital, Kent County Memorial Hospital, and VNA of Care New England. See Delmonico Aff. ¶ 3. Blue Cross is a taxable nonprofit corporation that contracts with healthcare providers to provide healthcare services to subscribers of its insurance plans. Id. ¶ 9.

In mid-2008, Blue Cross and CNE began renegotiating the terms of their 2004 participation...