**This article was originally written on Law360 By Dan Packel
Law360, Philadelphia (October 18, 2017, 5:21 PM EDT) — Lawyers for a set of health insurance providers on Wednesday challenged Pennsylvania’s Department of Human Services’ handling of a $12 billion procurement process to administer the state’s Medicaid program before the state’s Commonwealth Court, focusing on an allegedly improper meeting that bid winner Centene Corp. held with department executives.
In three connected appeals with arguments that sprawled over two hours, Aetna Better Health of Pennsylvania Inc.,UnitedHealthcare of Pennsylvania and Vista Health Plan Inc. told an en banc panel of the court that the circumstances of the meeting — which occurred after DHS scored the proposals but before awards were announced — violated state law. United and Aetna previously held contracts to cover physical health under Pennsylvania’s HealthChoices program in some or all of the state’s five zones, but both were shut out of the most recent procurement, which was announced in January.
The challengers argue that at the Dec. 19, 2016 meeting, Centene subsidiary Pennsylvania Health and Wellness, which had qualified through the request for proposal process to serve as a managed care organization in all five zones, struck a side deal with DHS and agreed to operate in three of the state’s zones. They emphasize that Centene was alone among the bidders in gaining such a meeting.
While the attorneys also flagged a number of other issues about the procurement process, the judges on the panel were eager to direct their attention to the special meeting. As soon as Alston & Bird LLP attorney Jeff Belkin, representing UnitedHealth, started his argument, Judge Anne Covey immediately presented him with a loaded question.
“Can you draw an analogy to having an ex parte communication with a judge?” she asked, and the judges did not wait for an answer, pushing hard at three separate DHS attorneys’ efforts to defend the meeting.
Attorney Doris Leisch argued that DHS Deputy Secretary Leesa Allen was justified in scheduling the 30-minute meeting with two out-of-state top executives from Centene in Harrisburg, Pennsylvania, because the company had never operated in the state before. She said the department wanted to make sure that Centene, which had recently secured contracts to handle another arm of the state’s Medicaid program, could also successfully operate the Physical HealthChoices Program in all five of the states’ zones.
“If Centene was given an opportunity to revise its offer, why not the other parties?” asked Judge Patricia McCullough.
“It seems you’re going back and bending over backwards for Centene because there was a concern that the commonwealth would look bad because Centene wasn’t ready to go,” Judge Covey said shortly afterwards.
Leisch responded that the motivation for the meeting was not to make the state look good, but rather to “make sure that the people we are responsible for do not get lost in the shuffle.”
But the tough questions continued for DHS attorney Sallie Rodgers, who justified the meeting by pointing to an “extremely abbreviated timeline” for implementing the program.
“If we offered all the zones, Centene might have trouble ramping up,” she said.
Judge Kevin Brobson followed by suggesting this uncertainty about the organization’s abilities indicated the meeting was in violation of state law.
“The statute says you can only have a meeting with a responsible operator,” he said. “It seems to me that you had a meeting about whether they can deliver what they’ve offered. That means they’re not a responsible operator.”
Then Judge Joseph Cosgrove likened the meeting to a coaching session at ringside: “Are you ready for the fight? Go out there champ and do it!”
Kleinbard LLC attorney Matt Haverstick, representing Centene, denied that any changes were made or agreements were struck at the December meeting, arguing that it was permitted under the state’s procurement code. But the judges also turned their attention to the affidavits provided by DHS and Centene to the DHS hearing officer who handled the challengers’ protest to the bid awards.
President Judge Mary Hannah Leavitt and Judges Covey and Brobson voiced skepticism about the representations in the affidavits, saying the challengers were in no position to refute them.
“If it looks bad and it smells bad, it must be bad,” Judge Covey said of the meeting.
Haverstick then responded that if the meeting was bad, the court could give Centene all five zones, before being rebuffed by Judge Brobson.
“The procurement code doesn’t work that way,” he said.
“Okay, I agree with you,” Haverstick responded to laughter.
In addition to concerns about the meeting, Aetna highlighted concerns that DHS did not appoint a neutral hearing officer to evaluate its bid protest, as well as an earlier effort in which the agency allegedly distorted the procurement process by tweaking the formula to meet preordained ends.
All this, Elliott Greenlelaf PC attorney Mark Schwemler argued, mandated starting the procurement process again from scratch.
Aetna is represented by Mark Schwemler of Elliott Greenleaf PC.
United is represented by Jeff Belkin of Alston & Bird LLP.
Pennsylvania Health & Wellness is represented by Matt Haverstick of Kleinbard LLC
Vista Health Plan is represented by Thomas Leonard of Obermayer Rebmann Maxwell & Hippel LLP
DHS is represented by attorneys Doris Leisch, Sallie Rodgers and Kathleen Grogan.
The cases are Aetna Better Health of Pennsylvania Inc. v. Commonwealth of PA, Department of Human Services, case number 274 MD 2017; UnitedHealthcare of Pennsylvania Inc. v. Department of Human Services, case number 790 CD 2017 and Vista Health Plan, Inc. v. Department of Human Services, case number 820 CD 2017; all in the Commonwealth Court of Pennsylvania.
–Editing by Alanna Weissman.
Original source: https://www.law360.com/pennsylvania/articles/974663