UPMC stayed mum on wording, AG says

Commonwealth Court hearing opens

HARRISBURG — The state attorney general’s office opened a Commonwealth Court hearing Monday by saying that Pittsburgh-based health care giant UPMC had done nothing to change language allowing future modifications of consent decrees governing its divorce from its Pittsburgh rival Highmark.

The 2014 agreements authorize the Pennsylvania attorney general to extend the terms past their stated expiration date of June 30, 2019, Executive Deputy Attorney General Jonathan Goldman told the court in opening arguments in Harrisburg.

That date marks the last day that patients insured by Highmark will have in-network — and therefore lower cost — access to UPMC doctors and hospitals.

The attorney general wants to extend the agreements indefinitely as part of a four-count civil lawsuit filed against UPMC in February, which also

alleges the health care giant violated its mission as a charitable nonprofit by restricting access to its services.

“UPMC never negotiated for a carve-out to exclude the termination date from modification — they never did it,” Mr. Goldman said. “Silence is not enough — if you want to make a change to an agreement, you have to speak up and actually make that change.”

Commonwealth Court scheduled two days of hearings into the single issue of whether the option for modification of the consent decrees — identical agreements signed by all parties — was ever intended to mean indefinite extension.

The state attorney general’s office rested its case Monday with Highmark chief legal counsel Thomas L. VanKirk testifying that he understood there was wide latitude to modify the agreements, including the expiration date, as long as it served the public interest as interpreted by the court when the decrees were signed in 2014.

“I didn’t see any limitation subject to the public interest,” Mr. VanKirk said under cross-examination by UPMC attorney Stephen Cozen, founder of the Philadelphia firm of Cozen O’Connor.

The hearing continues Tuesday with UPMC presenting its case for the June 30 expiration.

Commonwealth Court this year ruled the end date was June 30. But on appeal, the state Supreme Court returned the case to Commonwealth Court for interpretation of the run-out clause, saying the agreement language was ambiguous.

A ruling by Commonwealth Court Judge Robert Simpson, who is hearing the arguments, is expected Friday. That is unlikely to be the final word — another appeal to the state Supreme Court is anticipated, regardless of the victor.

In opening arguments, UPMC attorney Leon F. DeJulius from the law firm of Jones Day challenged the attorney general’s authority to extend the agreement, saying the UPMC board voted in 2013 not to renew a provider contract with rival Highmark. Moreover, Highmark and UPMC regularly advertised the end of the agreement as June 30.

“No one told UPMC that the modification provision could be used to annul the agreement that they just signed,” Mr. DeJulius said. “To believe the attorney general, one has to believe that UPMC management went directly against the board’s wishes.”

The consent decrees were intended to “transition to a new world” in which UPMC and Highmark would no longer work as business partners, Mr. DeJulius said.

Last week, UPMC relented on some of the most contentious parts of the dispute by announcing that it would open Hillman Cancer Center, Western Psychiatric Institute and Clinic, and UPMC Children’s Hospital of Pittsburgh to in-network access to Highmark members after agreements for those institutions expire.

But Executive Deputy Attorney General James Donahue said Monday that UPMC offers a number of medical services that are not provided elsewhere in Western Pennsylvania, spurring the attorney general’s interest in the split.

UPMC has not promised access to other unique medical services, including eye care.

“There are a number of services that UPMC provides that other providers don’t provide in Western Pennsylvania,” Mr. Donahue testified. “Our concern was that UPMC and Highmark could potentially bankrupt somebody or kill somebody” through exorbitant billing or a breakdown in medical care.

Other consent decrees reached between the attorney general’s office and UPMC have clauses that allow modification, Mr. Donahue said under crossexamination by Mr. Cozen.

But Mr. Donahue also testified that the UPMC case represents the first time in his 34-year career with the attorney general’s office that extension of a consent decree has been sought.

Part of the remedy that the attorney general’s office is seeking is a mandate that UPMC reach a contract to accept coverage by any accredited insurer — something that has never been tried, legal experts say.

In a brief news conference following the hearing, attorney general spokesman Joe Grace said that the office was in it for the long game with UPMC.

“No matter what happens this week, we’re not going away,” Mr. Grace said.