International Medical Centers, Inc., In re, s.90-2576

• Decision Date: 11 June 1992
• Docket Number: 90-3721,Nos.90-2576,90-2939 and 90-3036,s.90-2576
• Citation: 604 So.2d 505
• Parties: 17 Fla. L. Weekly D1485 In re the Receivership of INTERNATIONAL MEDICAL CENTERS, INC., a Florida corporation. STATE of Florida, DEPARTMENT OF INSURANCE v. STATE MUTUAL LIFE ASSURANCE CO. OF AMERICA. In re the Receiverships of SUNSHINE HEALTH PLAN, INC. and Suncoast Health Plan, Inc., Florida corporations. The STATE of Florida, DEPARTMENT OF INSURANCE, and North Brevard County Hospital District, d/b/a Jess Parrish Memorial Hospital, and Wuesthoff Memorial Hospital, Inc., Appellants, v. PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Appellee.
• Court: Florida District Court of Appeals

Page 505

604 So.2d 505

17 Fla. L. Weekly D1485

In re the Receivership of INTERNATIONAL MEDICAL CENTERS,

INC., a Florida corporation.

STATE of Florida, DEPARTMENT OF INSURANCE v. STATE MUTUAL LIFE ASSURANCE CO. OF AMERICA.

In re the Receiverships of SUNSHINE HEALTH PLAN, INC. and

Suncoast Health Plan, Inc., Florida corporations.

The STATE of Florida, DEPARTMENT OF INSURANCE, and

North Brevard County Hospital District, d/b/a Jess Parrish

Memorial Hospital, and Wuesthoff Memorial Hospital, Inc., Appellants, v. PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Appellee.

Nos.90-2576, 90-3721, 90-2939 and 90-3036.

District Court of Appeal of Florida First District.

June 11, 1992.

Rehearings Denied July 30, 1992.

Ben H. Wilkinson, C. Timothy Gray and William Vandercreek of Pennington, Wilkinson, Dunlap & Camp, and Dennis K. Threadgill and Mary Spain Pope of Dept. of Ins., Div. of Rehabilitation & Liquidation, Tallahassee, for appellant Department of Ins.

Jeffrey G. Thompson of Westman, Lintz, Watson, Thompson, Soileau & Celio, Cocoa, for appellant North Brevard.

George A. Vaka of Fowler, White, Gillen, Boggs, Villareal & Banker, Tampa, for appellee Provident Life.

John K. Aurell, Robert L. Hinkle and Ricky L. Polston of Aurell, Radey, Hinkle & Thomas, Tallahassee, for appellee State Mut.

Gregory M. Luce of Fulbright & Jaworski, Washington, D.C., and Philip S. Parsons and Cindy L. Bartin of Landers & Parsons, Tallahassee, for amicus Providers. ¹

Stephen K. Boone and John S. Koda, Venice, and William A. Bell, Tallahassee, and Philip A. Allen, III, Jody Lehman and James A. Weinkle of Mershon, Sawyer, Johnston, Dunwody & Cole, Miami, for amicus Florida Hosp. Ass'n.

Stuart Gerson, Asst. Atty. Gen., J. Christopher Kohn, James A. Gresser and Andrea J. Larry, Dept. of Justice, Washington, D.C., for amicus U.S.

KAHN, Judge.

Appellants, in these four consolidated cases, ² challenge circuit court orders granting summary judgment for reinsurers Provident Life and Accident Insurance Company (Provident) and State Mutual Life Assurance Company of America (State Mutual), denying the motions for summary judgment filed by health care providers and dismissing the second amended complaint of the Department of Insurance. The issue in all four cases is whether the circuit court erred in interpreting the term "unaffiliated provider" in health maintenance organization (HMO) insolvency endorsements as providers without contracts. The State Mutual case also raises a second issue regarding the validity of its Endorsement No. 3 which defined the term "unaffiliated provider." ³ The reinsurance agreements in the Provident cases do not have any endorsements defining the term "unaffiliated provider."

This appeal is the result of the collapse of three separate HMOs. The three HMOs are International Medical Centers, Inc. (IMC), a Miami based HMO with about 175,000 members, many of whom are on medicare; Sunshine Health Plan, Inc. (Sunshine), an HMO operating in Brevard, Volusia and Flagler counties; and Suncoast Health Plan, Inc. (Suncoast), an HMO operating in Sarasota and Manatee counties. Appellee State Mutual Life Assurance Company of America (State Mutual) was the reinsurer of IMC and appellee Provident Life & Accident Insurance Company, Inc. (Provident) was the reinsurer of the other two HMOs. All three of the reinsurance agreements between the HMOs and the reinsurers included a provision requiring the reinsurer, in the event of the HMO's insolvency, to provide payment to "unaffiliated providers." ⁴

There is substantial dispute as to the definition of "unaffiliated provider." Each of the HMOs utilized three classes of health care providers from whom HMO members could obtain health care. One group of providers had "affiliated provider contracts" which established procedures, practices and policies which the provider agreed to follow. The providers who had affiliated provider contracts were paid a capitated amount for providing primary health care services to the IMC members assigned to the affiliated provider's clinic and were responsible for providing and paying for all physician services including specialists from the monthly capitation payment. They thereby shared in the HMO's profits or losses depending upon the costs of providing services to HMO members assigned to his or her clinic in relation to the capitation payment. The second class of providers had contracts with the HMO to furnish the necessary medical services at a pre-established rate but did not have "affiliated provider contracts" with the HMO. The third category of providers were those without any type of contract. HMO members used them in cases of emergency, when they were out of town or when they needed a specialist not within the HMO's network.

After the HMOs became insolvent, the reinsurers contended that only the third class of provider, providers without contracts, were unaffiliated providers afforded protection under the reinsurance agreement. The Department and many of the providers asserted that all of the providers who did not have an "affiliated provider contract" with the HMO were protected under the insolvency endorsement.

On May 4, 1987, the Florida Department of Insurance instituted receivership proceedings against each of the three HMOs and was appointed receiver of each. ⁵ In those proceedings, the Department, on its own behalf, as a named additional reinsured party under each of the three reinsurance agreements, and as a representative of a class consisting of certain hospitals and doctors that allegedly were "unaffiliated providers," filed complaints against State Mutual and Provident. The Department's claim against both reinsurers sought to require the reinsurers to pay "unaffiliated providers" under the respective reinsurance agreements. North Brevard County Hospital District d/b/a Jess Parrish Memorial Hospital (Jess Parrish) filed a separate lawsuit against Provident, as reinsurer of Sunshine and Suncoast, to collect proceeds of over $355,000 as an "unaffiliated provider." The Sunshine, Suncoast and Jess Parrish proceedings were formally consolidated and heard together with the State Mutual proceedings. Wuesthoff Memorial Hospital, Inc. (Wuesthoff) intervened in the consolidated proceedings against Provident, claiming Provident owed it an amount in excess of $336,000 based on its alleged status as an "unaffiliated provider." Both Jess Parrish and Wuesthoff had service contracts with Sunshine. Neither hospital had entered an "affiliated provider contract."

In the IMC receivership proceeding, State Mutual and the Department filed cross-motions for summary judgment on the meaning of the term "unaffiliated providers." In the three consolidated cases, Jess Parrish moved for partial summary judgment based on its position on the meaning of the term "unaffiliated providers." Provident, likewise, moved to dismiss the Department's second amended complaint and filed a motion for summary judgment against Wuesthoff and Jess Parrish based on its position on the meaning of the term. The trial court granted State Mutual's motion for partial summary judgment against the Department of Insurance and denied the Department's cross-motion for partial summary judgment against State Mutual. The court also granted Provident's amended motion for summary judgment against Wuesthoff and Jess Parrish, denied Jess Parrish's motion for summary judgment against Provident, and dismissed the Department's second amended complaint for declaratory judgment against Provident. We affirm the trial court's orders for the reasons set out in this opinion.

The trial court properly interpreted the term "unaffiliated provider" as a provider without a contract based on the history of federal and state regulation of HMOs and the common usage of the term in the HMO industry.

The terms of a statute must be given their plain meaning. See Powell v. State, 508 So.2d 1307, 1310 (Fla. 1st DCA 1987) (absent an explicit statement of legislative intent to the contrary, the words in a statute must be given their plain meaning), rev. denied, 518 So.2d 1277 (Fla.1987); National Fed. of Retired Persons v. Dep't of Insurance, 553 So.2d 1289, 1290 (Fla. 1st DCA 1989) (plain meaning of a term can be ascertained by reference to a common dictionary definition). In the present case, however, the term "unaffiliated provider" is ambiguous. ⁶ In the context of HMO insolvency endorsements, the term "unaffiliated provider" can arguably be a provider who is not owned or controlled by the HMO, i.e., a provider who does not have an "affiliated provider contract," or a provider who is not in any way associated with the HMO, i.e., a non-contract provider. Based on the ambiguity of the term, the court properly looked at the context in which section 641.285(5)(a), Florida Statutes, was written to determine the meaning of the term "unaffiliated provider." See In re Order on Prosecution of Criminal Appeals by Tenth Judicial Circuit Public Defender, 561 So.2d 1130, 1137 (Fla.1990) (where language of statute is ambiguous, the court must look beyond the language of the statute to determine legislative intent); Ison v. Zimmerman, 372 So.2d 431 (Fla.1979); Deltona Corp. v. Florida Public Service Com'n, 220 So.2d 905 (Fla.1969) (the court may look to the legislative intent and purpose of the statute where plain meaning of statute is unclear).

At the time the term "unaffiliated provider" was used in section 641.285(5)(a), there was no other reference to "unaffiliated provider" in the Florida Statutes. The only other reference to "unaffiliated provider" was found in the federal regulations. The language in section 641.285(5)(a), Florida Statutes, was taken almost verbatim from the 1975 federal regulation, 42 CFR Sec. 110.108(a)(3)(1975). ⁷ The federal regulation required federally qualified HMOs to have a "plan for handling insolvency" including continuation of benefits for the duration of the contract period for which...