MHA,LLC v. UNITED HEALTH GROUP
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0026-16T4
MHA, LLC, d/b/a MEADOWLANDS
HOSPITAL MEDICAL CENTER,
Plaintiff-Appellant,
v.
UNITED HEALTH GROUP, INCORPORATED,
UNITED HEALTHCARE INC., UNITED
HEALTHCARE SERVICES, INC.,
AMERICHOICE OF NEW JERSEY, INC.,
d/b/a UNITED HEATLTHCARE COMMUNITY
PLAN IN NEW JERSEY, OXFORD HEALTH
PLANS, INC., OXFORD HEALTH PLANS LLC,
OXFORD HEALTH PLANS (NJ), INC., a/k/a
OXFORD HEALTH PLANS OF NEW JERSEY, INC.,
HEALTH NET OF THE NORTHEAST, INC.,
and HEALTH NET OF NEW JERSEY INC.
Defendants-Respondents.
__________________________________
Argued November 29, 2017 – Decided January 26, 2018
Before Judges Fuentes, Koblitz and Manahan.
On appeal from Superior Court of New Jersey,
Law Division, Bergen County, Docket No. L-
6738-13.
Anthony Argiropoulos argued the cause for
appellant (Epstein Becker & Green, PC,
attorneys; Anthony Argiropoulos, of counsel
and on the brief; William Gibson, on the
briefs).
Francis X. Manning argued the cause for
respondents (Stradley Ronon Stevens & Young,
LLP, attorneys; Francis X. Manning, of counsel
and on the brief; Marissa Parker, on the
brief).
PER CURIAM
MHA, LLC (MHA) appeals from an order of the Law Division
confirming an arbitration award in favor of United Health Group,
Inc. (United). We affirm.
We recite the following facts and procedural history. MHA
purchased Meadowlands Hospital Medical Center (hospital) from
Liberty Health Systems (Liberty), a non-profit entity, by way of
an asset purchase agreement on December 7, 2010. Under Liberty's
ownership, the hospital participated in United's insurance
provider networks.
In order to acquire the hospital, MHA was required to obtain
a Certificate of Need (Certificate) through the Department of
Health1 (Department) and receive approval for the transaction from
the New Jersey Superior Court. These prerequisites were in
accordance with the Community Health Care Assets Protection Act.
1
The Department was then known as the Department of Health and
Senior Services.
2 A-0026-16T4
During public hearings, community members expressed concern
whether MHA would adhere to its stated intention to continue the
hospital's status as an in-network provider with United and other
health insurance carriers. At the time of the acquisition, there
was a growing healthcare trend in New Jersey that for-profit
hospitals would exit insurance networks and charge increased, out-
of-network rates.
On November 1, 2010, the Department approved MHA's
Certificate application subject to conditions. In order to address
concerns regarding continued network participation, the Department
imposed "Condition 16," which states:
16. MHA LLC must make a reasonable attempt
to continue the current commercial insurance
contracts of the [hospital] that are in effect
for at least [one] year after licensure and
report annually on payor mix. If MHA LLC
provides notice to terminate such contracts
at any time, MHA LLC shall meet with the
Department [of Health] to discuss public
notice and access.
a. MHA LLC shall endeavor to maintain
existing HMO insurance coverage at the
[hospital] for the first year following
acquisition, including, but not limited to
good faith negotiations. If MHA LLC provides
notice to terminate any HMO contracts at any
time, MHA LLC shall in advance meet with
representatives from the Departments of
Banking and Insurance and Health and Senior
Services to discuss the intent to terminate
such contract and documenting how it will
provide notice to patients and providers.
3 A-0026-16T4
On December 1, 2010, the Law Division issued an order
approving the sale. The court's order also imposed conditions,
including one identical to Condition 16.
MHA signed two new Facility Participation Agreements (FPA)
with United on September 22, 2011, which became effective on
November 1, 2011.2 The FPAs imposed future health cost rates but
did not address the rates for claims in the first eleven months
of MHA's ownership of the hospital, specifically between December
7, 2010 and October 31, 2011.
On January 27, 2012, MHA sent a written notice to United
contending that during the eleven-month time period the hospital
was not a participating provider in United's networks. According
to MHA, United's treatment of the hospital as an in-network
facility during that period resulted in underpayments to MHA of
more than $28 million. United responded by stating:
The contention that MHA did not assume any of
the Agreements upon its acquisition of Liberty
Riverside Healthcare, Inc. and thus is not
bound by them is erroneous. Both State
regulators and the Superior Court of New
Jersey imposed several conditions on the
acquisition, including that MHA was to
maintain and continue all of [the hospital]'s
in-force commercial and HMO insurance
contracts for at least one year after the
2
One of the Agreements governed services provided to patients who
had health benefits through Medicaid and the other governed
services provided to patients through commercial insurance or
individual health benefit plans.
4 A-0026-16T4
acquisition. This condition supersedes MHA's
attempt to now reject the Agreements outright,
even if based upon the language of its asset
purchase agreement.
Further, both the Certificate of Need
approval letter and [c]ourt [o]rder require
MHA to involve State regulators if it
attempted to terminate any of the Agreements.
We are unaware of any notice of termination
under any of the Agreements or of any effort
by MHA to meet or communicate with the State
about such intended or expected action.
Thereafter, in August 2013, MHA filed a complaint in the Law
Division seeking to recover those amounts it alleged were due for
medical billing claims that United either failed to pay or
underpaid.
The matter was removed to federal court, and was thereafter
remanded to the Law Division. United then moved to compel MHA to
arbitrate its claims pursuant to the parties' arbitration
agreements and to stop MHA from balance billing its network's
members. The Law Division, by separate orders, compelled MHA to
arbitrate its claims and enjoined it from balance billing.
MHA filed a demand for arbitration with the American
Arbitration Association (AAA). The parties agreed to bifurcate
the arbitration proceedings. The first phase would focus on two
discrete threshold issues: (1) whether MHA was "in-network" with
United between December 7, 2010 and November 1, 2011; and (2)
whether the FPA barred MHA from seeking payment from United for
5 A-0026-16T4
services the hospital performed between December 7, 2010 and
November 1, 2011.
On October 30, 2015, MHA instituted another action against
United in federal court, seeking damages on "pre-contract, out-
of-network claims" based on a theory of patient assignments. MHA
then moved to stay the arbitration proceedings on the threshold
issues, which United opposed. The arbitration panel (panel) denied
MHA's request. The panel noted that it "should proceed with
deciding the threshold issues because that is what MHA necessarily
contemplated when it agreed in October 2014 that the arbitration
should be bifurcated."
After several continuances, the panel held evidentiary
hearings on May 3 and 4, 2016. The arbitration proceedings were
plenary in nature. Prior to the hearing, the parties exchanged
thousands of documents, took seven depositions, and filed pre-
hearing briefs. At the hearing, the parties gave opening
arguments, presented testimony of 6 witnesses, including an
expert, introduced into evidence 185 joint exhibits, presented
closing arguments and submitted post-hearing briefs.
As part of its argument, MHA relied upon a 2012 letter from
the Department discussing the hospital's network status, which was
in response to a letter from MHA relating to a similar dispute
between MHA and Aetna. The Department's letter stated:
6 A-0026-16T4
Condition 16 required MHA to make a
"reasonable attempt" to reach an agreement
with all insurers with which [the hospital]
had contracts with at the time of the
[Certificate] approval. At the time of the
[Certificate] approval, it was expected that
MHA and all insurers could reasonably
negotiate a mutually satisfactory longer term
settlement. The Condition was not meant to
impose any agreement on either [the hospital]
or any insurer but rather evidence a goal for
continuity for patients.
On June 22, 2016, the panel found in United's favor on both
threshold issues. As to the first issue, the panel concluded that
"the effect of Condition 16 was to maintain the existing
relationship of [the hospital] as an in-network provider of United
until MHA either terminated the existing agreements consistent
with the notice requirements of Condition 16, or reached
superseding agreements with United."
The panel afforded the 2012 letter "little weight because it
is out of context, involves another insurer and comes nearly two
years after the [Certificate] was issued to MHA." The panel
reasoned that its interpretation of Condition 16 did not contradict
the Department's interpretation in the 2012 letter.
Regarding services performed during the eleven-month period,
the panel held that "[b]ased on the clear language of Article VII
[of the FPAs, the hospital] is time-barred from pursuing claims
7 A-0026-16T4
arising during the period from December 1, 2010 to November 1,
2011."
United filed a motion to confirm the award in the Law Division
and, over MHA's opposition, the Law Division confirmed the award
without oral argument by order dated August 22, 2016. On August
30, 2016, MHA filed a notice of appeal.
While the appeal was pending, MHA obtained another letter
from the Department, dated October 20, 2016, concerning Condition
16. Utilizing this letter as the predicate, MHA contended
Condition 16 constituted a basis for altering both the dispute and
the award. In furtherance of their contention, MHA filed three
motions. The first motion, filed in the Law Division, sought to
vacate the order confirming the award. The second motion, filed
in this court, sought to supplement the record. The third motion,
filed in the AAA, sought reconsideration of the award. MHA
withdrew its Law Division motion. We denied MHA's motion to
supplement the record by order dated December 1, 2016. The panel
denied MHA's motion for reconsideration by order dated December
9, 2016.
In reaching its decision on the reconsideration motion, the
panel stated, "even if [the Department]'s letter carried the weight
and had the effect that MHA claims, the [p]anel's decision on
threshold issue one would be the same," and that "through their
8 A-0026-16T4
course of conduct and representations, the parties agreed to extend
the Liberty contracts until they reached new FPAs." Specifically,
the panel held:
Contrary to MHA's assertion, this finding was
not "inextricable from the [p]anel's earlier
conclusion that Condition 16 of the
[Certificate] extended the Liberty
contracts." It was an independent basis that
relied on the parties' course of conduct,
their representations to each other, their
understandings, and MHA's contrasting
dealings with other health insurers and their
insureds.
On appeal, MHA raises the following arguments:
POINT I
THE PANEL EXCEEDED ITS POWERS AND VIOLATED NEW
JERSEY PUBLIC POLICY WHEN IT COMPELLED MHA TO
ACCEPT AN ASSIGNMENT OF THE UNITED AGREEMENT
BASED ON AN INTERPRETATION OF THE
[CERTIFICATE] THAT CONTRAVENED THE POSITION OF
[THE DEPARTMENT], THE EXPERT STATE AGENCY
CHARGED WITH SUCH INTERPRETATION AND
ENFORCEMENT. (Raised But Not Addressed In Any
Judgment, Order or Ruling Below).
A. The "Interim" Order is Ultra
Vires because even the State itself
does not have the power to assign a
contract to MHA pursuant to the
[Certificate].
B. The "Interim" Order is Ultra
Vires because it infringes upon the
Department's administrative powers
to regulate healthcare.
9 A-0026-16T4
POINT II
THE TRIAL COURT ERRED BECAUSE THE SELF-
DESCRIBED AND ADMITTEDLY "INTERIM' ORDER DOES
NOT MEET THE LEGAL CRITERIA FOR CONFIRMATION
(Raised But Not Addressed In Any Judgment,
Order or Ruling Below).
A. Confirmation of the Self-
Described And Admittedly "Interim"
Order is an Extraordinary Remedy.
B. The "Interim" Order Did Not Meet
Any of the Extraordinary Criteria
for Confirmation.
"[T]he scope of review of an arbitration award is narrow[,]"
lest "the purpose of the arbitration contract, which is to provide
an effective, expedient, and fair resolution of disputes [] be
severely undermined." Fawzy v. Fawzy,
199 N.J. 456, 470 (2009).
"Because arbitration is so highly favored by the law, the presumed
validity of the arbitration award is entitled to every indulgence,
and the party opposing confirmation has the burden of establishing
statutory grounds for vacation." Pressler & Verniero, Current
N.J. Court Rules, comment 3.3.3 on R. 4:5-4 (2018); see also Twp.
of Wyckoff v. PBA Local 261,
409 N.J. Super. 344, 354-55 (App.
Div. 2009). Further, the Court in Tretina v. Fitzpatrick & Assocs.,
135 N.J. 349 (1994),
imposed a strict standard of review of private
contract arbitration, limited by a narrow
construction of the statutory grounds stated
by . . . [N.J.S.A. 2A:23B-23] for judicial
intervention. Trentina overruled Perini Corp.
10 A-0026-16T4
v. Greate Bay Hotel & Casino, Inc.,
129 N.J.
479 (1992), which had permitted judicial
intervention for gross errors of law by the
arbitrators.
[Pressler & Verniero, comment 3.3.3 on R. 4:5-
4.]
Consequently, arbitration awards may be vacated only if:
(1) the award was procured by corruption,
fraud, or other undue means;
(2) the court finds evident partiality by an
arbitrator; corruption by an arbitrator; or
misconduct by an arbitrator prejudicing the
rights of a party to the arbitration
proceeding;
(3) an arbitrator refused to postpone the
hearing upon showing of sufficient cause for
postponement, refused to consider evidence
material to the controversy, or otherwise
conducted the hearing contrary to section 15
of this act, so as to substantially prejudice
the rights of a party to the arbitration
proceeding;
(4) an arbitrator exceeded the arbitrator's
powers;
(5) there was no agreement to arbitrate,
unless the person participated in the
arbitration proceeding without raising the
objection pursuant to subsection c. of section
15 of this act not later than the beginning
of the arbitration hearing; or
(6) the arbitration was conducted without
proper notice of the initiation of an
arbitration as required in section 9 of this
act so as to substantially prejudice the
rights of a party to the arbitration
proceeding.
11 A-0026-16T4
[N.J.S.A. 2A:23B-23(a).]
We have considered the arguments raised by MHA in light of
the record and our narrow standard of review of arbitral decisions.
We conclude that the arguments lack sufficient merit to warrant
discussion in a written opinion. R. 2:11-3(e)(1)(E). We add only
the following.
It is uncontroverted that: (1) the parties agreed by the
express terms of the contract to the arbitration of matters in
dispute; (2) the parties agreed to bifurcate and to have
specifically delineated threshold issues determined by the panel;
(3) the panel held an evidentiary hearing on the threshold issues
as agreed upon by the parties; and (4) the panel's award resolved
the threshold issues relating to MHA's network status and the
amounts payable to MHA for its services for the relevant time
period as contemplated by the parties.
In sum, MHA failed to satisfy its burden that there existed
a statutory ground for vacation of the award pursuant to
N.J.S.A.
2A:23B-23(a). As such, the confirmation of the award by the Law
Division was not erroneous.
Affirmed.
12 A-0026-16T4
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
