Pennsylvania Chiropractic Federation v. Foster

• Decision Date: 05 December 1990
• Citation: 136 Pa.Cmwlth. 465,583 A.2d 844
• Court: Pennsylvania Commonwealth Court
• Parties: PENNSYLVANIA CHIROPRACTIC FEDERATION, George R. Coder, D.C., Chairman of the Board, Pennsylvania Chiropractic Federation, Patrick A. Good, D.C., President, Pennsylvania Chiropractic Federation et al., Petitioners, v. Constance B. FOSTER, Insurance Commissioner of the Commonwealth of Pennsylvania, Respondent.

Page 844

583 A.2d 844

136 Pa.Cmwlth. 465

PENNSYLVANIA CHIROPRACTIC FEDERATION, George R. Coder, D.C.,

Chairman of the Board, Pennsylvania Chiropractic Federation,

Patrick A. Good, D.C., President, Pennsylvania Chiropractic

Federation et al., Petitioners, v. Constance B. FOSTER, Insurance Commissioner of the

Commonwealth of Pennsylvania, Respondent.

Commonwealth Court of Pennsylvania.

Argued Sept. 12, 1990.

Decided Dec. 5, 1990.

Gregory R. Neuhauser, with him, Kevin J. McKeon, Malatesta, Hawke & McKeon, Harrisburg, for petitioners.

Richard J. Enterline, Asst. Counsel, with him, Victoria A. Reider, Deputy Chief Counsel, and Linda J. Wells, Chief Counsel, Harrisburg, for respondent.

Before CRAIG, President Judge, and DOYLE, COLINS, PALLADINO, SMITH, KELLEY and BYER, JJ.

PALLADINO, Judge.

Presently before this court are the preliminary objections (P.O.'s) of the Insurance Commissioner (Commissioner) to the petition for review (Petition) of the Pennsylvania Chiropractic Federation, three licensed chiropractors and Peter Hickok, a chiropractic patient (Hickok), (collectively, Petitioners) filed in our original jurisdiction.

The Petition is in the nature of a complaint in equity for declaratory and injunctive relief, and contains the following general allegation. The Act of February 7, 1990, P.L. 11 (Act 6) impacts upon Petitioners by amending Section 1797 of the Motor Vehicle Financial Responsibility Law (Law), 75 Pa.C.S. § 1797. The relevant part of amended section 1797 provides as follows:

(a) General rule.-- A person or institution, providing ... [medical services] to an injured person for an injury covered by ... [automobile insurance] ... shall not require ... payment for the [services] in excess of 110% [of the Medicare reimbursement allowances]; ... or the provider's usual and customary charge, whichever is less. The General Assembly finds that the [Medicare reimbursement allowances] ... are an appropriate basis to calculate payment for [medical services] for injuries covered by [automobile insurance].... If acute care is provided in an acute care facility to a patient with an immediate life-threatening or urgent injury by a Level I or Level II trauma center ... or a major burn injury patient by a burn facility ..., the amount of the payment may not exceed the usual and customary charge. Providers subject to this section may not bill the insured directly but must bill the insurer for a determination of the amount payable. The provider shall not bill or otherwise attempt to collect from the insured the difference between the provider's full charge and the amount paid by the insurer.

(b) Peer review plan for challenges to reasonableness and necessity of treatment.--

(1) Peer review plan.-- Insurers shall contract jointly or separately with any peer review organization [PRO] established for the purpose of evaluating [medical services] provided to injured persons. Such evaluation shall be for the purpose of confirming that such [services] conform to the professional standards of performance and are medically necessary.

....

(5) PRO determinations in favor of provider or insured.-- If a PRO determines that [medical services] were medically necessary, the insurer must pay to the provider the outstanding amount plus interest at 12% per year on any amount withheld by the insurer pending PRO review.

....

(7) Determinations in favor of insurer.-- If it is determined by a PRO ... that a provider has provided unnecessary [medical services] or that future [medical services] will be unnecessary, or both, the provider may not collect payment for the medically unnecessary [services]. If the provider has collected such payments, it must return the amount paid plus interest at 12% per year within 30 days. In no case does the failure of the provider to return the payment obligate the insured to assume responsibility for payment for the [services].

Thereafter, the Petition states six counts for relief, which we summarize as follows:

(1) That Act 6 violates the single subject requirement of Article III, Section 3 of the Constitution of Pennsylvania; (2) That Act 6 unconstitutionally delegates authority to Peer Review Organizations (PRO's);

(3) That the ban on direct billing and the caps on medical service charges within Act 6 violate Petitioners' due process rights because they are not rationally related to the goal of reducing the cost of insurance;

(4) That Act 6 violates Petitioners' equal protection rights because it distinguishes between providers generally and acute care and burn facilities without a rational or reasonable basis;

(5) That Act 6 violates Petitioners' due process rights because its limitations, prohibitions and methodology for payment are not stated with a reasonable degree of clarity; and

(6) That Act 6 violates Petitioners' equal protection and due process rights because, without a rational or reasonable basis, it distinguishes between providers and insurers by setting a 30 day time limitation for providers to return overpayments without setting a time limitation for insurers to pay withheld treatment charges.

The Petition prays this court to declare the relevant portions of Act 6 unconstitutional and to enjoin its enforcement.

The Commissioner filed P.O.'s to the Petition raising the following issues for our consideration: (1) whether, as to count 1 of the Petition, Petitioners failed to state a violation of the single subject requirement; (2) whether, as to counts 2 through 6, Petitioners failed to state equal protection and due process violations because there is a lack of state action; (3) whether, as to counts 2, 3, 5 and 6, Petitioners failed to state a violation of due process because they have no protected properly interest; (4) whether, as to count 2, Petitioners failed to state a violation of either Article II, Section 1 or due process because of the delegation of authority to PRO's; (5) whether, as to all the counts, Petitioners failed to state a "case or controversy" as required for declaratory relief; (6) whether, as to all the counts, Petitioners failed to state a cause of action because the challenged provisions of Act 6 are rationally related to a legitimate state interest; (7) whether Petitioner Peter Hickok lacks standing as to all the counts; (8) whether Petitioners lack standing as to the equal protection claim of count 4; and (9) whether Petitioners' complaint must be dismissed for failure to join indispensable parties.

As to the first issue, the Commissioner's preliminary objection is in the nature of a demurrer. When ruling on a demurrer, this court must accept as true all well-pleaded allegations in the complaint and all inferences reasonably deduced therefrom. Pennsylvania Medical Providers Association v. Foster, 136 Pa.Commonwealth Ct. 232, 582 A.2d 888 (1990) (PMPA). We will sustain a demurrer only when it appears with a certainty that the law permits no recovery if the facts are as pleaded. Id.

Petitioners contend that Act 6 contains a number of unrelated subjects ¹ in violation of Article III, Section 3 of the Pennsylvania Constitution, which states:

§ 3. Form of bills

No bill shall be passed containing more than one subject, which shall be clearly expressed in its title, except a general appropriation bill or a bill codifying or compiling the law or part thereof.

The Commissioner asserts that all the provisions of Act 6 relate to insurance and that Act 6 constitutes a comprehensive effort to attack the roots and problems in automobile insurance.

The purpose of Article III, Section 3 is to provide full notice and publicity to all proposed legislative enactments and to prevent the passage of "sneak" legislation. Singer v. Sheppard, 33 Pa.Commonwealth Ct. 276, 381 A.2d 1007 (1978). In Singer, this court dismissed a challenge to the now repealed Pennsylvania No-fault Motor Vehicle Insurance Act, ² which broadly restructured many aspects of motor vehicle insurance in the Commonwealth and necessarily contained many subjects. However, because the many subjects were all germane to the general subject of the act, there was no violation of Article III, Section 3. Id., at 290, 381 A.2d at 1013.

In the present case, although Petitioners allege that the subjects of Act 6 are not germane to a single subject, this court can review the content of Act 6 and decide as a matter of law whether the contents are germane to a single subject. Act 6 contains amendments to the Crimes Code, Judicial Code, and Vehicle Code, and we note that these amendments are all related to the single purpose of restructuring the regulation of motor vehicle insurance in the Commonwealth and reducing the cost of insurance to policy holders. This single purpose is clear from the title of Act 6 and from a reading of the text, obviating any concern that the Act contains "sneak" legislation. Accordingly, we sustain the Commissioner's preliminary objection that Petitioners failed to state a violation of Article III, Section 3.

As to the second issue, the Commissioner asserts that the Petition raises due process and equal protection objections to the conduct of PRO's under Act 6. The Commissioner contends that PRO's are private entities and that their actions do not constitute state actions. Consequently, the PRO's actions are not subject to constitutional due process and equal protection constraints.

Petitioners allege that Section 1797 violates their due process and equal protection rights. The Commissioner has the obligation to implement this section. Obviously, the Commissioner is a state actor subject to due process and equal protection constraints. The Commissioner's P.O. asserting a lack of state action is overruled.

As to the third issue, the Commissioner asserts that Petitioners, who represent medical service providers and a medical service recipient, have no property interest affected by Section 1797. The Commissioner argues that the providers can treat whomever they choose and can...