Com. v. Mercy Hospital

• Decision Date: 23 January 1974
• Citation: 306 N.E.2d 435,364 Mass. 515
• Parties: COMMONWEALTH v. MERCY HOSPITAL et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 435

306 N.E.2d 435

364 Mass. 515

COMMONWEALTH v. MERCY HOSPITAL et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Nov. 6, 1973.

Decided Jan. 23, 1974.

Lawrence T. Perera (Robert L. Klivans, Boston, with him), for intervener, Massachusetts Blue Cross, Inc.

James B. Krumsiek, Springfield, for Holyoke Hospital and another (William K. Danaher, Jr., Springfield, for Ludlow Hospital, William E. Dwyer, Northampton, for Cooley Dickinson Hospital, and William C. Flanagan, Springfield, for Mercy Hospital and another, with him).

Melville Chapin, Boston (Ralph E. Duerre, Cambridge, with him), for Massachusetts Eye & Ear Infirmary.

Before TAURO, C.J., and REARDON, QUIRICO and KAPLAN, JJ.

REARDON, Justice.

This bill in equity for declaratory relief requires an inquiry into the meaning of St.1972, c. 703, which amended G.L. c. 176A, § 1. Statute 1972, c. 703, regulates the relationship between hospitals in the Commonwealth and nonprofit hospital service corporations following the expiration or reimbursement agreements which the General Laws envision as the usual mode of defining that relationship. The Attorney General of the Commonwealth brought this suit on behalf of the citizens of the Commonwealth. Massachusetts Blue Cross, Inc. (Blue Cross), a nonprofit hospital service corporation organized under G.L. c. 176A, is an intervener. The defendants and the intervener Massachusetts Eye and Ear Infirmary (hospitals) are duly incorporated and licensed nonprofit hospitals.

Until September 30, 1972, a contract existed between Blue Cross and the hospitals pursuant to G.L. c. 176A, § 1. That agreement, HA--24--C, governed the manner and amount of payments by Blue Cross to the hospitals for services furnished to Blue Cross subscribers. In the summer of 1972 the Legislature apparently believed that Blue Cross and the hospitals were unlikely to agree on a new contract before the expiration of HA--24--C on September 30, and that on such expiration all the hospitals in the State would become 'non-participating' within the meaning of G.L. c. 176A, § 1. Under the earlier provisions of G.L. c. 176A, reimbursable services in nonparticipating hospitals in the Commonwealth were available 'only in the event of accident, emergency illness or quarantinable disease.' G.L. c. 176A, § 1, as amended through St.1968, c. 432, § 1. Faced with a potentially catastrophic reduction in the provision of health care services for approximately 3,200,000 Blue Cross subscribers and dependents, the Legislature enacted St.1972, c. 703, as an emergency act replacing the limitations on reimbursing nonparticipating hospitals mentioned. The act took effect on signature by the Governor who described the emergency preamble as: 'In order to prevent any lapse in the payments to hospitals by hospital service corporations.' The statute reads as follows: 'Nothing in this chapter shall prevent such a corporation from reimbursing a subscriber for services received in a non-participating hospital within or outside the commonwealth in the event of accident, illness or maternity or, upon the written direction of the subscriber, from making payment to said hospital for such services; provided, however, that the amount of such reimbursement and payment to any such hospital within the commonwealth shall conform with such method of payment and guarantee of benefits as shall have been in effect pursuant to section five of this chapter immediately prior to the expiration of the then most recent contract between said hospital and said corporation and shall be based upon the charges of the hospital in effect on such date.' Blue Cross and the hospitals put different interpretations on the statute. Blue Cross took the position that the statute required the hospitals to accept as full payment for services rendered to subscribers payments by Blue Cross based on hospital charges in effect on September 30, 1972, and that the hospitals were prohibited from seeking direct payment from individual subscribers for either the full charges or for any excess claimed over the Blue Cross payment. The hospitals held, on the other hand, that on the expiration of the contract they were free to place initial and primary responsibility for bills on individual subscribers, and that they were not required to accept Blue Cross payments as either full or partial payment for services provided subscribers but that they could accept such payments on account, collecting the difference between the payment received and new higher charges directly from the subscribers. The Commonwealth brought this bill in the county court of the Supreme Judicial Court. On October 26, 1972, the single justice issued an order temporarily restraining the hospitals 'from refusing to accept as payment for hospital services rendered the written directions of the subscribers to Massachusetts Blue Cross, Inc. to make payments . . . for said services . . ..' After the parties filed a statement of agreed facts the single justice, on November 13, 1972, entered a memorandum and an order for final decree. ¹ Under that ruling the hospitals were declared free to refuse to accept any payment from Blue Cross in satisfaction of the bills for services furnished subscribers. The single justice also held, however, that any payments accepted from Blue Cross must be regarded as payment in full. A hospital could seek a greater amount directly from the subscriber if no payment had been accepted from Blue Cross but not if it had been so paid. A final decree was entered on December 6, and seasonable claims of appeal were filed. With one modification we affirm the decree of the single justice.

1. We deal first with Blue Cross's contention that St.1972, c. 703, obliges the hospitals to accept payments from Blue Cross as payments in full for services performed for subscribers. By its plain terms the statute, with the exception discussed below, places no obligations whatsoever on the hospitals. Indeed, G.L. c. 176A nowhere directly creates such responsibilities. That chapter provides only that hospital service corporations may enter into contracts with hospitals, and it is these contracts which explicitly define the obligations of hospitals to Blue Cross and its subscribers. Like its predecessor provisions, St.1972, c. 703, merely permits Blue Cross to make reimbursement payments outside such a contractual relationship under prescribed conditions. While St.1972, c. 703, greatly expanded the hospital services for which such reimbursement would be allowed, we cannot attribute to the Legislature an intention to alter the basic contours of the relationship laid down between nonparticipating hospitals and Blue Cross. To do so would be to fly in the face of the Legislature's retention of the very same words which introduced the prior provision: 'Nothing in this section shall prevent such a corporation from reimbursing a subscriber for services received in a non-participating hospital,' followed by the limitations imposed on such payments. This language plainly evinces an intention to regulate a relationship which is voluntary on both sides. We will not enlarge the statute to create a new duty on hospitals to maintain any relationship with Blue Cross if they deal with subscribers. See Martinelli v. Burke, 298 Mass. 390, 392, 10 N.E.2d 113 (1937).

2. The hospitals argue that if they do accept reimbursement payments from Blue Cross the statute requires the amounts paid to be based on the hospital's higher charges current at the time the subscriber is a patient. They reach this surprising interpretation by construing the last phrase of St.1972, c. 703, 'based upon the charges of the hospital in effect on such date' as referring to the date on which the services were rendered. Such an interpretation is inconsistent with the plain meaning of the statute. The statute calls for the 'method of payment' in use 'immediately prior to the expiration of the then most recent contract' which all parties agree to be application of a 'cost to charges ratio' to actual hospital charges. ² The statute then specifies the raw data to be used with such method as 'the charges of the hospital in effect on such date.' It takes little ratiocination to discover that 'such date' must refer to some time previously mentioned in the statute. Cf. Calcagno v. P. H. Graham & Sons Co. Inc., 313 Mass. 364, 47 N.E.2d 857 (1943). Since only one time is referred to in the statute, that 'immediately prior to the expiration of the then...