2018 Mass. App. Div. 40

November 3, 2017 - March 15, 2018

Appellate Division Southern District

Court Below: District Court, Barnstable Division

Present: Welch & Finnerty, JJ.

Judgment entered by Kirkman,J., [Note 2] in Barnstable District Court.

Francis A. Gaimari and Elizabeth H. Manos for the plaintiff.

Christopher M. Mountain for the defendant.

Michael H. Hayden for the intervener.

FINNERTY, J. Where a hospital entered into an agreement with an independent provider of disability management and cost containment services under which it agreed to accept, as full payment, a percentage of its bills paid by the manager's network of insurance company payors, it is not entitled to recovery under G.L. c. 90, §§ 34A and 34M for the balance of billed services in excess of the amount provided for under the contract. We therefore affirm the judgment of the trial court, which was entered after trial on stipulated facts.

Cape Cod Hospital ("CCH") entered into a contract with CorVel Corporation ("CorVel") on May 19, 1998, under which Travelers of Massachusetts ("Travelers") was an intended beneficiary. Travelers had its own contract with CorVel, called the CorCare PPO Access Service Agreement. Under its contract with CorVel, CCH agreed to accept a percentage of its billed charges from payors such as Travelers in full satisfaction of the same. No exclusion for PIP payments was contained in the contract. [Note 3] The contract continued in effect until it was terminated on October 22, 2013 by CCH after the events giving rise to this lawsuit.

On June 13, 2013, Timoney Davis ("Davis") was injured in a motor vehicle collision while in a motor vehicle insured by Travelers under a standard Massachusetts automobile insurance policy. CCH treated Davis for injuries he suffered, and no party disputes that the bill of $1,556.19 for its services was reasonable, necessary, and causally related to the insured event.

Pursuant to the contract, Travelers paid CCH $1,400.57, or 90% of the amount billed. CCH then brought this suit under G.L. c. 90, §§ 34A and 34M to recover $155.62.

Page 41

Because the judgment was entered on the case stated and involves the court's interpretation of the law applicable to those facts, we are not bound in our review to defer to the trial court, and our determination is made de novo. Hickey v. Pathways Ass'n, 472 Mass. 735, 743 (2015).

We agree with the well-reasoned judgment of the trial court in holding that the unambiguous language of the contract obligates CCH to "accept as payment in full for Covered Medical Services, the amounts set forth in Attachment A." Attachment A lists a reduction of 10% under "Unpriced Services."

CCH argues that the contract is not supported by consideration and is therefore void ab initio. The trial court did not reach that issue as the stipulated facts bound the hospital to the contract for purposes of the litigation. [Note 4] The record of this case likewise does not require us to reach this issue, but we do so to note our agreement with the opinion of the Western District of the Appellate Division in Innovative Physician Servs., LLC v. Premier Ins. Co. of Mass., 2017 Mass. App. Div. 145, holding that a similar PPO contract with CorVel did provide proper consideration. Id. at 146. In this contract, CorVel agreed to "promote Hospital as a preferred provider in the CorCare preferred network to all participating Payors"; and to "provide Hospital with specific instructions for identifying and administering the CorVel program for CorVel Beneficiaries"; and to "assist Hospital in expediting prompt payment of covered, compensable, and related claims and in settling payment disputes with Payors participating with CorVel." CCH's consideration argument does not address the fact that the contract applies to more than just PIP payments, and the search for consideration to support the contract must include all of it. Adequate consideration was stated in the contract here.

We agree with the trial court that nothing in G.L. c. 90, §§ 34A or 34M prohibits the contract at issue here, nor does the contract here violate G.L. c. 176D, §§ 3(4)(c) or G.L. c. 93A, nor does it make CorVel an insurer subject to the approval of the Commissioner of Insurance. [Note 5] See D'Agostino v. Federal Ins. Co., U.S. Dist. Ct., No. 12-11628 (D. Mass. March 3, 2014); Mitzan v. Medview Servs., Inc., Norfolk Superior Court, No. 98-01211 (June 16, 1999).

There is nothing unfair about CCH agreeing with CorVel to accept a discounted portion of the billed services in full satisfaction of the same. This contract operates within the insurance policy. Davis v. Allstate Ins. Co., 434 Mass. 174 (2001). Nothing has been shown to suggest that CCH was forced to enter the contract, which covers payment for all of the services it provides, which has been part of its administration for fifteen years prior to this controversy, and which was at all times subject to termination without cause by either party upon ninety days' notice.

The judgment of the trial court is affirmed, and the appeal is dismissed.


[Note 1] CorVel Corporation, intervener.

[Note 2] The Honorable J. Thomas Kirkman recused himself from this appeal, and did not participate in its hearing, review, or decision.

[Note 3] PIP refers to personal injury protection benefits provided for under the Commonwealth of Massachusetts no-fault automobile insurance policy. See G.L. c. 90, § 34A and Part 2 of the Compulsory Coverage section of the standard Massachusetts automobile insurance policy.

[Note 4] See Pereira v. New England LNG Co., 364 Mass. 109, 114 (1973), cited in note 2 of the trial court judgment.

[Note 5] General Laws c. 176D defines unfair methods of competition and unfair and deceptive acts and practices in the business of insurance.