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Practice Sues Over Provider Network Fees

Deborah Elkins//May 30, 2016

Practice Sues Over Provider Network Fees

Deborah Elkins//May 30, 2016

A medical practice providing laboratory di­agnostic services did not waive its right to sue defendant Anthem Health Plans for breach of contract for defendant’s implementation of a Phased-in Rates Amendment to the practice’s contract as part of a preferred-provider net­work, whose terms still allowed either party to terminate the contract when they could not agree on rates; however, the Norfolk Circuit Court grants summary judgment to Anthem on its counterclaim.

The court concludes Dominion Pathology Laboratories PC did not waive its rights to claim a breach of contract. In Virginia, waiver is an intentional relinquishment of a known right, requiring knowledge of the facts basic to exercise the right and the intent to relinquish that right. Despite the requirement of a know­ing waiver, Virginia law allows a party to enter into a general release of claims and absorb the risk of having “inferior knowledge” by agree­ing to release any and all claims, whether known or unknown.

The court finds, and Dominion acknowledg­es, that there is no question Dominion knew of its rights under the contract and under the law. In several of its communications with An­them regarding the negotiation of the Phased-In Rates Amendment, Dominion noted that it was considering not accepting the Amend­ment and instead leaving the Anthem Pre­ferred Provider Network. Dominion likewise was well aware of its right to sue Anthem for breach of contract if it believed Anthem had violated its terms, as evidenced by the numer­ous references to considering litigation sent to Anthem.

Anthem argues that because Dominion, de­spite knowledge of its rights, nevertheless exe­cuted the final version of the Phased-In Rates Amendments, it impliedly waived its rights to bring suit. The court finds that, given Domin­ion’s statements and its actions, Anthem could not reasonably have been “lulled” into a false sense of security. Dominion made its intention not to waive its rights to litigation clear to An­them even as late as 4:07 p.m. on Dec.17, 2014, when Dominion advised that it had decided to remain “in-network” with Anthem, but “may file for a Declaratory Judgment.”

The parties were free to negotiate for a gen­eral release from all claims, but Anthem failed to negotiate for such a waiver. The court finds Dominion did not intend to relinquish its right to pursue a breach of contract claim, and in fact went to great lengths to make it clear to Anthem that it was not waiving any rights.

No estoppel

Dominion also is not estopped from mak­ing claims arising from the Amendment. It is apparent from the communications between the parties, as well as Anthem’s privilege log, that litigation should have been reasonably anticipated, and was in fact anticipated by An­them’s legal team. Therefore, there could be no reasonable reliance on any representations made by Dominion in executing the Amend­ment.

Anthem had the right to present Dominion with changes to the agreement and terminate the contract if Dominion did not agree. Instead of exercising its rights under the agreement, Anthem engaged in negotiation with Domin­ion over several months.

Dominion argues that public policy pre­cludes the court from enforcing the Termina­tion Without Cause contract provision. The public policy to which Dominion refers is that favoring non-discrimination in provider net­works. Virginia’s Any Willing Provider statute, Va. Code § 38.2-3407(B), and Section 2706 of the federal Affordable Care Act both contain provisions prohibiting insurance carriers from discriminating against providers.

The court first notes that the Virginia Any Willing Provider statute does not mandate non-discriminatory terms and conditions, but prohibits unreasonable discrimination against or among providers. Moreover, the provision states that either party may terminate the agreement.

The court does not find persuasive Domin­ion’s argument that the Termination Without Cause provision is void as contrary to public policy. Likewise, the court will not invalidate the Termination Without Cause provision as violating the Any Willing Provider stat­ute. The language of the Phased-In Rebates Amendment explicitly sets the rates through Feb. 1, 2017. The court interprets the new rate allowance to ensure Dominion that their new rate would remain in effect at least until Feb. 1, 2017 unless Anthem or Dominion decid­ed to terminate the agreement. Absent from the amendment is any language changing or modifying the right of Anthem to terminate without cause.

The court overrules Anthem’s special pleas of waiver and estoppel and grants its motion for summary judgment on its counterclaim.

Dominion Pathology Laboratories PC v. An­them Health Plans of Va. Inc. (Atkins) No. CL 15-2273-01, May 17, 2016; Norfolk Cir.Ct.; Jef­frey L. Stredler for Anthem; W. Edgar Spivey, John C. Lynch for the parties. VLW 016-8-066, 10 pp.

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