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PENNSYLVANIA DENTAL ASSOCIATION v. COMMONWEALTH PENNSYLVANIA (09/24/85)

decided: September 24, 1985.

PENNSYLVANIA DENTAL ASSOCIATION, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, INSURANCE DEPARTMENT; MEDICAL SERVICE ASSOCIATION OF PENNSYLVANIA, D/B/A PENNSYLVANIA BLUE SHIELD, RESPONDENTS



Original and appellate jurisdiction in case of Pennsylvania Dental Association v. Commonwealth of Pennsylvania, Insurance Department; Medical Service Association of Pennsylvania, d/b/a Pennsylvania Blue Shield.

COUNSEL

John G. Milakovic, with him, Jeffrey W. Davis and Thomas A. Beckley, Beckley & Madden, for petitioner.

Beth C. Sheligo, Assistant Counsel, with her, Hannah Leavitt, Chief of Litigation and Paul Laskow, Chief Counsel, for respondent, Insurance Department, Commonwealth of Pennsylvania.

William H. Wood, with him, Thomas E. Wood, Keefer, Wood, Allen & Rahal, for respondent, Pennsylvania Blue Shield.

Judges Williams, Jr., and Palladino, and Senior Judge Barbieri, sitting as a panel of three. Opinion by Senior Judge Barbieri. Judge Williams, Jr. did not participate in the decision in this case.

Author: Barbieri

[ 92 Pa. Commw. Page 79]

The Pennsylvania Dental Association (PDA) filed a petition for review invoking this Court's original and appellate jurisdiction. The PDA seeks our review of the Insurance Department's (Department) approval of a rate increase requested by Pennsylvania Blue Shield (Blue Shield) and a writ of mandamus directing the Department to reverse or rescind its approval of Blue Shield's request for a rate increase, to conduct a formal hearing as to Blue Shield's request, and to obtain and consider additional specific information regarding the request and the consequences of approving the request. In response, the Department and Blue Shield have filed preliminary objections and a motion to quash.

[ 92 Pa. Commw. Page 80]

On December 22, 1983, Blue Shield submitted to the Department for approval its Filing No. 10-W-1983, pursuant to 40 Pa. C.S. ยง 6329(a) governing rates and contracts of professional health services plan corporations. By that filing Blue Shield sought leave to adjust the "profiles" it uses to calculate payments to health service doctors*fn1 who provide services to Blue Shield subscribers. Blue Shield proposed to constrain the incremental increase resulting from the requested profile update by freezing one profile, or one measure of reimbursement, at the present level (based on 1981 charge data) and by placing a cap on another so that the incremental increase in benefit payout by Blue Shield to participating doctors would not exceed 5.5%.

The Department set a public hearing on Blue Shield's filing for February 7, 1984 and published notice thereof in the Pennsylvania Bulletin on January 7, 1984. The notice invited interested parties to submit comments, objections, and suggestions regarding the filing to the Department in writing. At the public hearing on February 7, 1984, representatives of the Department directed various questions regarding the filing to Blue Shield's representatives, and also entertained comments from other parties, including the PDA. At that hearing, the PDA urged the Department to compel the production of certain documents from Blue Shield, to convene a formal hearing, and to grant PDA formal status as an intervenor. The Department orally denied these requests.

On March 7, 1984, the Department approved Blue Shield's filing. This approval was effected by affixing

[ 92 Pa. Commw. Page 81]

    an "approved" stamp, together with the signature of the reviewing officer, to the original filing. No written decision was issued.

In its brief in opposition to the respondents' preliminary objections, the PDA asserts that, because the Department did not acquire and review economic data held by Blue Shield regarding the estimated rate of increase in actual doctors' charges, the estimated effect on premiums, and the estimated effect on participation rates, the Department failed in its statutory duty to arbitrate economic disputes between Blue Shield and the PDA members. The PDA asserts that, as a purchaser of a Blue Shield medical program, it has a vested property interest in assuring that payments to doctors are not inadequate so that there will be a sufficient number of participating doctors, and that the PDA's member-dentists have vested property interests in participating with Blue Shield under adequate, fair, and non-arbitrary payments terms. According to the PDA, those vested property interests entitled the PDA to greater procedural due process than it received. Thus, the PDA requests a writ of mandamus directing the Department to (1) reverse and/or rescind its approval of Blue Shield's request, (2) conduct a formal hearing as to Blue Shield's request, (3) obtain and consider additional specific information as to the rationale and effects of Blue Shield's suggested profile update, and (4) grant PDA's petition to intervene. The Department and Blue Shield have filed a preliminary objection in the nature of a demurrer averring that the PDA has not stated a cause of action upon which relief can be granted.

Preliminarily, we must point out that a mandamus action is an inappropriate vehicle to obtain rescission of a departmental ...


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