Missouri Consol. Health Care Plan v. BlueCross BlueShield of Missouri
| Decision Date | 12 January 1999 |
| Docket Number | No. WD,WD |
| Citation | 985 S.W.2d 903 |
| Parties | MISSOURI CONSOLIDATED HEALTH CARE PLAN, Respondent, v. BLUECROSS BLUESHIELD OF MISSOURI, et al., Defendants, Prudential Health Care Plan, Inc., Appellant. 56057. |
| Court | Missouri Court of Appeals |
Keith W. Brunstrom, Jefferson City, MO, Attorney for Respondent.
John Michael Hessel, St. Louis, MO, Attorney for Defendants.
Richard J. Pautler, St. Louis, MO, Attorney for Appellant.
Before ULRICH, P.J., and EDWIN H. SMITH and HOWARD, JJ.
Prudential Health Care Plan, Inc. (Prudential), appeals the partial summary judgment of the circuit court for the respondent, Missouri Consolidated Health Care Plan (MCHCP), on its claim of anticipatory breach of contract wherein it requested injunctive relief and specific performance. In requesting this relief, MCHCP alleged in its petition that, under the terms of the parties' extended contracts governing calendar year 1997, one obligating Prudential to provide HMO medical services for covered Missouri state employees in the East Region of Missouri and the other obligating it to provide services for the West Region, it had a right to unilaterally extend the contracts for one year to cover the 1998 calendar year, while limiting any rate increase to no more than the annual percentage increase in the medical care component of the consumer price index for all urban consumers for the year ending the previous April (the CPI cap).
Prudential raises two points on appeal. In both points, it claims that the trial court erred in granting partial summary judgment to MCHCP on the issue of the CPI cap's applicability because it was not entitled to judgment as a matter of law in that the clear and unambiguous language of the contracts did not reflect an intent of the parties to apply the CPI cap to extensions of single-year contracts, such as the ones in question in the case at bar. In Point I, it claims that the clear and unambiguous language of the contracts provided that the CPI cap applied only to multiple-year rate guarantee contracts (multiple-year contracts), not extensions of single-year contracts. In Point II, it claims, as an alternative to its claim in Point I, that, at the very least, the contract language in question was ambiguous as to whether the CPI cap applied to extensions of single-year contracts and, therefore, the contracts should be construed against MCHCP as the drafter, defeating MCHCP's motion for summary judgment and requiring summary judgment for it.
We reverse and remand.
MCHCP is a public corporation created by the State of Missouri and subject to Chapter 103. It provides coverage for medical expenses for state officers, employees, retirees, and their dependents, and for officers, employees, retirees, and their dependents of participating member agencies. It does so by contracting for such coverage through private managed care companies such as Prudential. Prudential is a private Texas corporation authorized to do business in Missouri. It is in the business of providing managed health care services.
In August 1993, Prudential initially contracted with MCHCP to provide HMO medical services for covered insureds in the East and West Regions of Missouri for 1994. This contract, like all future contracts between the parties, was based upon a Request for Proposal (RFP) prepared and issued by MCHCP. Each RFP contained the terms of a proposed contract. Each bidder generally adopted the terms of the RFP in offering to provide coverage for a fixed price in one or more regions of Missouri designated by the MCHCP, although a bidder could negotiate for amendments.
Each of the RFP's, beginning in 1993 and continuing through 1995, contained a provision allowing MCHCP to extend the contract for a single year at a time up to four years, and that, with one exception, "all terms, conditions and provisions of the original contract [were to] remain the same and apply during the extension period." The exception applied to the price to be paid by MCHCP during any extension period. In this respect, the RFP's provided that six months prior to expiration of the initial contract period, the provider would submit proposed prices for the upcoming year, and that any increase over the initial price would be supported by a showing of adverse claims experience. The exception further provided that "[i]n addition, such prices and extension terms shall be subject to negotiation between MCHCP and parties to the contract" and that if the price increases requested by the provider were unacceptable to MCHCP, it could solicit competitive proposals. If the provider did not submit a proposed increase six months prior to expiration, then the initial price would be in effect for the extension period.
The option of MCHCP to extend a contract was found in § 17 of the applicable RFP, which applied to single-year contracts. It stated:
The contract shall not bind, nor purport to bind, MCHCP for any contractual commitment in excess of the original contract period. Missouri Consolidated Health Care Plan shall have the right, at its sole option, to extend the contract for four (4) one-year periods, or a portion thereof. In the event that MCHCP exercises its options, all terms, conditions, and provisions of the original contract shall remain the same and apply during the extension period, with the exception identified in Section 17.1-17.2.
17.1 At least six (6) months prior to the expiration of the contract, the contractor must submit the proposed firm fixed prices that would be applicable for the new contract period if the contract is extended pursuant to this paragraph:
17.1.1 Any request for a price increase must be supported by documentation of adverse claims experience and/or any other such justification. In addition, such prices and extension terms shall be subject to negotiation between MCHCP and parties to the contract.
17.1.2 The contractor shall agree and understand that if price increases requested are determined to be excessive or otherwise unacceptable, MCHCP reserves the right to solicit competitive proposals.
17.1.3 The contractor may request from MCHCP an extension of the six (6) month requirement for submission of new firm fixed prices with documented justification provided such request is submitted at least 6 months prior to expiration of the contract. The decision of MCHCP regarding the extension of time for submitting such prices shall be final and without recourse.
17.2 Unless a request for an extension of the 6 month time requirement is received and written approval is provided by MCHCP, the contractor agrees that if price increase requests are not received by MCHCP at least six (6) months prior to the expiration of the contract, no price increase shall be granted and contract prices shall remain the same for the next full contract period.
The 1993 and the original 1994 RFP's did not make any provision for multiple-year rate guarantee contracts. However, in June of 1994, the RFP was amended to add a new provision to provide for the same. It read as follows:
19. Pricing
a. multiple year rate guarantees will be accepted; and
b. annual rate changes will be negotiated, but any increase will not exceed the adjusted annual percentage change in the medical care component of the consumer price index for all urban consumers for the previous April.
In the 1995 and 1996 RFP's, this provision was repeated as § 5.4. It read as follows:
Multiple year rate guarantees will be accepted. Annual rate changes will be negotiated, but any increase will not exceed the adjusted annual percentage change in the medical care component of the consumer price index for all urban consumers for the previous year ending the previous April.
In addition, the Pricing Page for the 1995 and 1996 RFP's contained similar language in § 3.7 or § 3.8, depending on whether the contract was for the East or West Region. The language was identical and provided:
The contractor shall agree that annual rate changes will be negotiated, but any increase will not exceed the unadjusted annual percentage change in the medical care component of the consumer price index (CPI) for all urban consumers for the year ending the previous April.
Prudential never entered into any multiple-year contracts with MCHCP.
Prudential's 1994 contract with MCHCP for the East and West Regions expired without being extended, as did the contract for 1995. MCHCP's current contracts with Prudential are extensions of the contracts based on the 1995 RFP for the East Region and the 1996 RFP for the West Region, which were extended for 1997. As to 1997 extensions, MCHCP sent a letter to Prudential on July 11, 1996, indicating that renewal rates had not been received by June 30, 1996, as required by part Three, Section 17.1 of the 1996 RFP. As a result, the letter indicated that if the contract was renewed, the contract rates for 1997 would be the same as for 1996 and would not include an increase for the CPI.
As to 1998 extensions, MCHCP sent a letter to Prudential on or about May 29, 1997, informing it that the medical component of the CPI for the year ending April 1997 would be 3.0 percent and reminding it that renewal quotes would be due by June 1997. Prudential submitted a proposed price increase of 30 percent for the 1998 contract extensions. MCHCP extended the contract for the East and West Regions for 1998, but took the position that the CPI cap applied. Prudential subsequently advised MCHCP that it would not honor the 1998 contract extensions with the cap being applied.
In August 1997, MCHCP filed an action in the Circuit Court of Cole County, Missouri, against BlueCross and BlueShield of Missouri. In December 1997, in its first amended petition, MCHCP added Prudential as a defendant, alleging anticipatory breach of contract and...
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