P.T. Today v. Com'R of Fin. & Ins. Services

• Decision Date: 28 February 2006
• Docket Number: Docket No. 259964.
• Citation: P.T. Today v. Com'R of Fin. & Ins. Services, 715 N.W.2d 398, 270 Mich. App. 110 (Mich. App. 2006)
• Parties: P.T. TODAY, INC., Brad Putvin, Gordon Allen, Michael Beauvais, Elaine Cooper, William Roth, Lana Baum, Timothy Bondy, David Gilboe, Diana Inch, Sandra Jenkins, Richard Feby, Mary Ann Koenig, Jeffrey Green, Osa Jackson-Wyatt, Richard Kohler, Jerome Malone, Sheila Isles, Parul Shah, and Martin Katenberg, Plaintiff-Appellants, and Barbara Johnson, Robert Baker, Karen Lehman Borin, Margaret Kamenec, Terence Heaton, Teresa Herrlinger, Richard Milder, Jim Simpson, Janet Wiseniewski, Timothy Stegeman, Mark Beissel, Barbara Herzog, and John Czarnecki, Plaintiffs, v. COMMISSIONER OF the OFFICE OF FINANCIAL AND INSURANCE SERVICES and Blue Cross Blue Shield of Michigan, Defendants-Appellees, and Attorney General, Intervening Appellee.
• Court: Court of Appeal of Michigan

715 N.W.2d 398

270 Mich. App. 110

P.T. TODAY, INC., Brad Putvin, Gordon Allen, Michael Beauvais, Elaine Cooper, William Roth, Lana Baum, Timothy Bondy, David Gilboe, Diana Inch, Sandra Jenkins, Richard Feby, Mary Ann Koenig, Jeffrey Green, Osa Jackson-Wyatt, Richard Kohler, Jerome Malone, Sheila Isles, Parul Shah, and Martin Katenberg, Plaintiff-Appellants, and Barbara Johnson, Robert Baker, Karen Lehman Borin, Margaret Kamenec, Terence Heaton, Teresa Herrlinger, Richard Milder, Jim Simpson, Janet Wiseniewski, Timothy Stegeman, Mark Beissel, Barbara Herzog, and John Czarnecki, Plaintiffs, v.COMMISSIONER OF the OFFICE OF FINANCIAL AND INSURANCE SERVICES and Blue Cross Blue Shield of Michigan, Defendants-Appellees, and Attorney General, Intervening Appellee.

Docket No. 259964.

Court of Appeals of Michigan.

Submitted December 13, 2005, at Lansing.

Decided February 28, 2006, at 9:10 a.m.

Released for Publication May 11, 2006.

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Linda Fausey, P.C.(by Linda S. Fausey), Lansing, and Sheldon Miller & Associates(by Sheldon Miller), Southfield, for P.T. Today, Inc.; and the individualplaintiffs.

Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and William A. Chenoweth, Assistant Attorney General, for the Commissioner of the Office of Financial and Insurance Services.

Dickinson Wright, P.L.L.C.(by Joseph A. Fink, David C. Coey, and Jason J. Paupore), Lansing, for Blue Cross Blue Shield of Michigan.

Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and Joseph E. Potchen and Ann M. Sherman, Assistant Attorneys General, for the Attorney General.

Before: SMOLENSKI, P.J., and SCHUETTE and BORRELLO, JJ.

PER CURIAM.

Plaintiffs appeal as of right the trial court's grant of summary disposition in favor of defendants in this case, which stems from their protracted challenges of administrative decisions by the Commissioner of the Office of Financial and Insurance Services and the Attorney General, as well as alleged tortious conduct by Blue Cross Blue Shield of Michigan (BCBSM).We affirm.

I.FACTS

A.Overview

PlaintiffP.T. Today, Inc., is a nonprofit corporation whose members, several of whom are individual plaintiffs, are licensed independent physical therapists; these individuals own and operate freestanding physical therapy clinics in Michigan.The Michigan Commissioner of the Office of Financial and Insurance Services(Commissioner)¹ is empowered to regulate BCBSM under 1980 PA 350, the Nonprofit Health Care Corporation Reform Act (the Act), MCL 550.1101 et seq.²BCBSM is a nonprofit, charitable health care corporation that operates pursuant to this act.

In this multicount action, plaintiffs sought (1) to compel the Commissioner to engage in several specific regulatory enforcement actions against BCBSM for creating and facilitating fraudulent business arrangements, (2) declaratory judgments delineating the Commissioner's enforcement duties under the Act, and (3) damages from BCBSM for its alleged tortious interference with a business interest through these fraudulent business arrangements.Additionally, plaintiffs sought to join the Attorney General as a partydefendant for (1) a declaratory judgment that the Attorney General is required to engage in particular enforcement activities against BCBSM under the Act and (2) a writ of mandamus compelling the Attorney General to engage in these activities.

This case is but one of plaintiffs' challenges to the regulatory posture of the Commissioner and the business practices of BCBSM.Consequently, we summarize these related, yet distinctive, cases in part I(C) of this opinion, "Related Litigation."These cases often proceeded simultaneously; for the purposes of clarity, we discuss each case chronologically and note when the proceedings interacted.Additionally, this appeal concerns the intricacies of part 5 of BCBSM's enabling act, MCL 550.1501 et seq.As a result, we describe part 5 of the Act to aid in understanding the procedural history of this appeal in part I(B) of this opinion, "The Provider Class Plan Review Process."Finally, part I(D) of this opinion summarizes the procedural history of this case.

B.The Provider Class Plan Review Process

The Nonprofit Health Care Corporation Reform Act, MCL 550.1101 et seq., provides for the comprehensive regulation of BCBSM, a charitable health insurance organization—as well as Michigan's largest provider of health insurance.Part 5 of the Act, MCL 550.1501 et seq., controls how BCBSM reimburses health care providers (providers).MCL 550.1502 provides that BCBSM may create "provider class plans"(PCPs) that govern its contracts with medical service providers of like kind.³BCBSM initiates the PCP approval process by preparing a proposed PCP, which must explain how it meets the goals outlined in MCL 550.1503(uniform reporting by providers) and MCL 550.1504(access, quality, and cost containment).The proposed PCP must also include the contracts that providers, like plaintiffs, would be required to sign under the PCP, as well as details regarding reimbursement arrangements under the proposed PCP.MCL 550.1506(1).Additionally, BCBSM must "establish and implement procedures to obtain advice and consultation from a provider class" when creating, modifying, or reviewing a PCP.MCL 550.1505.Finally BCBSM may only file a plan at certain times.⁴MCL 550.1506.

MCL 550.1506(1) then requires BCBSM to submit the proposed PCP to the Commissioner for review.MCL 550.1506(2) provides that the Commissioner then conduct a limited review of the PCP, during which the Commissioner "shall examine the plan and shall determine only if the plan contains a reimbursement arrangement and objectives for each goal provided in [MCL 550.1504]."(Emphasis added.)If the Commissioner finds that BCBSM's proposed plan is incomplete, BCBSM must submit a revised PCP in 15 days.MCL 550.1506(3) and 550.1507.In other words, the Commissioner reviews the PCP for completeness, rather than for its ability to achieve the Act's goals for PCPs outlined in MCL 550.1504.BCBSM may modify a PCP placed in effect and "retained" for the Commissioner's records at any time, except for the 180-day period after which the Commissioner declares a PCP "not retained" under MCL 550.1509.MCL 550.1508.The only preconditions to such an amendment are that it was prepared after consultation with affected providers and subscribers, MCL 550.1508(2), and that it "has been filed with and is agreed to by the commissioner,"MCL 550.1508(1).

After a PCP has been in place for two years,⁵ the Commissioner may review it for achievement of the PCP goals listed in MCL 550.1504.MCL 550.1509.When reviewing a PCP under MCL 550.1509, the Commissioner may consider annual reports by BCBSM; demographic, epidemiological, and long-term economic trends; sudden changes in circumstances; statutory changes; administrative and judicial decisions; changes in health care practices and technology; and comments from the affected provider group.MCL 550.1509(4).The Commissioner then evaluates whether the PCP meets the goals outlined in MCL 550.1504(1):

(a) There will be an appropriate number of providers throughout this state to assure the availability of certificate-covered health care services to each subscriber.

(b) Providers will meet and abide by reasonable standards of health care quality.

(c) Providers will be subject to reimbursement arrangements that will assure a rate of change in the total corporation payment per member to each provider class that is not higher than the compound rate of inflation and real economic growth.

After building a record under MCL 550.1509 and considering the goals stated in MCL 550.1504(1), the Commissioner makes one of three rulings:

(1) that the PCP meets all the goals (thus retaining the PCP), MCL 550.1510(1)(a);

(2) that "although the provider class plan does not substantially achieve 1 or more of the goals of the corporation, a change in the provider class plan is not required because there has been competent, material, and substantial information obtained or submitted to support a determination that the failure to achieve 1 or more of the goals was reasonable. . . ."(thus retaining the PCP), MCL 550.1510(1)(b); or

(3) that the PCP failed to meet the Act's goals (thus declaring the PCP "not retained"), MCL 550.1510(1)(c).

Subscribers (the insureds of BCBSM), BCBSM, the Attorney General, and organizations representing affected provider classes (such as PT Today) have the right to appeal certain determinations of the Commissioner, including determination reports issued pursuant to MCL 550.1509.MCL 550.1515.All appeals under part 5 are considered by an independent hearing officer (IHO).⁶MCL 550.1515(3) outlines the scope of the IHO's review of a determination report by the Commissioner:

In an appeal pursuant to this section, the relief available to a person, and the decision of an independent hearing officer hearing an appeal, shall be limited to the following:

(a) Affirming or reversing a determination of the commissioner under [MCL 550.1509(1)] and [MCL 550.1510(1)].

(b) Determining, based on the information and factors described in [MCL 550.1509(4)] and the standards prescribed in [MCL 550.1516], 1 of the following:

(i) That the provider class plan prepared by the corporation under [MCL 550.1511(1)] was prepared in compliance with that section and shall be retained as provided in [MCL 550.1506(4)].

(ii)That the provider class plan prepared by the commissioner under [MCL 550.1513(2)(a)] was prepared in compliance with that section and shall be retained as provided in [MCL 550.1506(4)].

(iii)That a provider class plan described in subparagraph (i) or (ii) was not prepared in compliance with [MCL 550.1511(1)] or [MCL 550.1513(2)(a)], respectively, and shall not be...