PA Health & Wellness, Inc. v. DHS ( 2021 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Pennsylvania Health and :
Wellness, Inc., :
Petitioner :
:
v. :
:
Department of Human Services, : Nos. 1107 C.D. 2020 & 2 C.D. 2021
Respondent : Argued: October 18, 2021
BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE FIZZANO CANNON FILED: November 17, 2021
Pennsylvania Health & Wellness, Inc. (PHW) has filed petitions for
review of two Final Determinations (jointly, Final Determination) by the Secretary
of Human Services (Secretary)1 of the Pennsylvania Department of Human Services
(Department) denying PHW’s bid protests under Request for Applications 07-19
(RFA) relating to the Commonwealth’s HealthChoices Medicaid (HealthChoices)
Program. The petitions have been consolidated for disposition by this Court. On
review, we affirm the Secretary’s Final Determination.
1
For purposes of the Final Determination, the Secretary of Human Services (Secretary) of
the Department of Human Services (Department) appointed a designee, Jonathan Rubin, Deputy
Secretary of the Department’s Office of Children, Youth and Families. Final Determination,
October 20, 2020 (Final Determination 1) at 23. For ease of reference, this opinion refers to the
designee as the Secretary and the designee’s Final Determination as that of the Secretary.
I. Background
HealthChoices is a managed care program for Medicaid recipients.
Managed care organizations (MCOs) administer the HealthChoices Program in five
Pennsylvania zones – Northeast, Southeast, Lehigh-Capital, Northwest, and
Southwest. The Department contracts with multiple MCOs to administer
HealthChoices Program benefits and services in each zone.
PHW is a wholly-owned subsidiary of Centene Corporation, the largest
Medicaid MCO in the United States. Since its founding in 2015, PHW has
participated in all of the Department’s procurement processes regarding the
HealthChoices Program. PHW has served as a contracted MCO in a separate
program, Community HealthChoices (CHC), since January 2018.
In September 2015, the Department issued Request for Proposals (RFP)
06-15 to begin the process of entering into new contracts for administration of the
HealthChoices Program in all five zones. PHW submitted a proposal for all five
zones. In April 2016, the Department accepted PHW for negotiations to provide
service in three zones. However, in a lawsuit by another applicant, this Court
enjoined negotiation or implementation of contract awards on RFP 06-15, based on
the Department’s use of an undisclosed “heritage factor” in its evaluations that
favored MCOs with current contracts. See Aetna Better Health of Pa., Inc. v. Dep’t
of Hum. Servs. (Pa. Cmwlth., No. 351 M.D. 2016, filed July 19, 2016), slip op. at
32, 2016 Pa. Commw. Unpub. LEXIS 1120 (unreported).
The Department then withdrew RFP 06-15 and reissued it as “RFP 06-
15 (Reissued).” PHW again submitted a proposal for all five zones. In November
2016, the Department accepted PHW for negotiations in all 5 zones. However, the
Department rescinded its selections the next day because of a scoring error and then
2
rescored the proposals. In December 2016, the Department notified PHW of its
acceptance for negotiations in three zones. However, in April 2018, all negotiations
were cancelled after successful protests of RFP 06-15 (Reissued), where this Court
concluded that the Department’s discussions with MCOs about bid modifications
and readiness review violated the RFP and the Commonwealth Procurement Code
(Procurement Code)2 because only the Department’s designated Issuing Officer,
Karen Kern (Kern), may engage in such discussions. UnitedHealthcare of Pa., Inc.
v. Dep’t of Hum. Servs. (Pa. Cmwlth., No. 790 C.D. 2017, filed Apr. 10, 2018), slip
op. at 27, 2018 Pa. Commw. Unpub. LEXIS 212, at *31-32 (unreported).
Meanwhile, in January 2018, after being selected under a separate
March 2016 RFP, PHW began providing services in the Department’s CHC
Program, which serves participants with dual eligibility for Medicaid and Medicare.
PHW developed a network of providers and partners with community groups to
serve participants in the CHC Program.
In October 2019, the Department issued the RFA in a third attempt to
seek new contracts regarding administration of the HealthChoices Program. PHW
submitted an application for four zones. The Department did not select PHW for
negotiations in any of those zones. PHW filed five bid protests; four were
consolidated and the fifth proceeded separately.
The Secretary disposed of the bid protests in two determinations issued
October 23, 2020 (Final Determination 1), and December 18, 2020 (Final
Determination 2).3
2
62 Pa. C.S. §§ 101-2311.
3
Final Determination 2 incorporated by reference all arguments asserted in PHW’s fifth
bid protest that had already been addressed in Final Determination 1. Br. of Pet’r, Ex. B, Final
3
In the Final Determination, the Secretary rejected PHW’s argument that
the Department was biased against PHW because of PHW’s expressions of concern
regarding pricing issues in its CHC contract. Br. of Pet’r, Ex. B (Final
Determination) at 7-8. The Secretary also rejected PHW’s contention that the
Department improperly based its evaluation of PHW’s application on undisclosed
criteria. Id. at 8-9 & 15-20. The Secretary further determined PHW had failed to
prove its assertion that the Department had improper contacts with applicants
concerning the RFA after the application due date. Id. at 10-11. The Secretary
likewise concluded PHW had not established that the Department changed its
readiness review process or that the alleged change would have violated the RFA.
Id. at 11-12. Additionally, the Secretary rejected PHW’s argument that the
Department’s debriefing documents showed it misread PHW’s application and
evaluated competing applicants inconsistently. Id. at 14-15 & 20-22. Finally, the
Secretary refused PHW’s request for an evidentiary hearing, finding the record was
sufficient to allow issuance of a determination. Id. at 23.
PHW then filed its petitions for review. Several other applicants have
intervened in this matter.4 Briefing and argument are complete and the consolidated
petitions are ready for disposition.
Determination 2 at 5. PHW has not raised here any issues the Secretary addressed separately in
Final Determination 2. Therefore, for convenience, this opinion addresses all issues in relation to
Final Determination 1. We note that Final Determination 1 also included some issues that PHW
has not raised in its petition for review before this Court and that are not addressed here.
4
The intervenors are Aetna Better Health of Pennsylvania, Inc., Gateway Health Plan, Inc.,
Geisinger Health Plan, Inc., Health Partners Plans, UnitedHealthcare of Pennsylvania, Inc., UPMC
For You, Inc., and (jointly) Vista Health Plan, Inc., AmeriHealth Caritas Health Plan, and
Keystone Family Health Plan.
4
II. Issues
On appeal,5 PHW argues the Final Determination was arbitrary and
capricious and an abuse of discretion, and the Department failed to comply with the
RFA, the Procurement Code, and the Procurement Handbook.6
First, PHW alleges bias by the Department. PHW asserts that it has a
successful record of providing CHC Program services in Pennsylvania, but the
Department became critical of PHW as an MCO after PHW complained about CHC
rates and eligibility during the period when the Department was considering
applications under the RFA in the first half of 2020. PHW provided a sworn
declaration that it received what it considered to be “veiled threats” from the former
Deputy Secretary of the Department’s Office of Long-Term Living (OLTL)
implying that continuing its complaints could hurt its position as an applicant under
the RFA. Br. of Pet’r at 15-16 (citing Reproduced Record (RR) 66a-67a).
According to PHW, the Secretary applied an incorrect legal standard by imposing
on PHW the burden of proving bias. PHW insists the Secretary failed to recognize
evidence that corroborated PHW’s sworn declaration regarding the alleged threat.
The Secretary also failed to include any findings of fact on this issue in the Final
5
We will affirm the purchasing agency’s determination unless the determination was
arbitrary and capricious, an abuse of discretion, or contrary to law. 62 Pa. C.S. § 1711.1(i). An
error of law occurs where an agency interprets its governing statutes, regulations, or orders
contrary to their clear and plain meaning or fails to follow its own regulations and procedures.
See, e.g., The People’s Nat. Gas Co. v. Pa. Pub. Util. Comm’n, 542 A.2d 606, 608 (Pa. Cmwlth.
1988), aff’d, 567 A.2d 642 (Pa. 1989).
6
The Procurement Handbook can be found online at https://www.dgs.pa.gov/Materials-
Services-Procurement/Procurement-Handbook/Pages/default.aspx (last visited Nov. 16, 2021).
5
Determination. PHW contends the Secretary’s refusal to hold an evidentiary hearing
on the bias issue7 was arbitrary and capricious and violated the Procurement Code.
PHW also asserts that the Department improperly used an unstated
evaluation criterion that unfairly benefitted incumbent applicants. Although PHW
does not argue that the Department applied the heritage factor as such, PHW argues
the Department still erred because it nonetheless assessed applicants’ experience as
current contracting MCOs in evaluating the applications.
According to PHW, the Final Determination was also arbitrary and
capricious because the Department evaluated applicants’ strengths and weaknesses
in a non-uniform manner and misread PHW’s application. Specifically, both PHW
and a competing applicant, Aetna Better Health of Pennsylvania, Inc. (Aetna),
regularly post preferred drug lists on their websites, but Aetna received a “strength”
notation on a debriefing document from the Department for doing so and PHW did
not; and both PHW and Aetna use subcontracts for various management services,
but Aetna received only a “minor weakness” from the Department for doing so,
while PHW received a “weakness” notation.
PHW further contends that the Department improperly engaged in
communications with other applicants related to the RFA. PHW argues such
communications violated the non-contact provision of the RFA.
Finally, PHW asserts that the Department acted arbitrarily and
capriciously by abandoning its prior readiness review process in favor of self-
attestations of readiness by applicants and by engaging in improper communications
with other applicants concerning the RFA, in violation of the RFA.
7
As discussed further below, the Secretary observed that the Deputy Director was not on
the Department’s application evaluation committee; further, the Secretary implicitly determined
that any perceived threat was insufficient to require a hearing, because no material fact was at
issue. See Pet. for Review, Ex. A (Final Determination 1) at 7 & 23.
6
PHW seeks cancellation of the RFA and asks this Court to order the
Department to rescind its notices of selection and reissue the RFA fairly.
Alternatively, PHW asks us to remand this matter to the Department with directives
to vacate the Final Determination, provide requested documents to PHW, and then
either allow PHW to supplement its bid protests or provide PHW with a full
evidentiary hearing.
III. Discussion
A. Bias
First, PHW alleges the Department was biased against it. PHW claims
it has a successful record of providing CHC services in Pennsylvania, but the
Department became critical of PHW as an MCO after PHW complained about CHC
rates and eligibility issues during the period when the Department was considering
applications under the RFA in the first half of 2020. PHW provided a sworn
declaration asserting that it received “veiled threats” that continuing its complaints
could hurt its position as an applicant under the RFA. Br. of Pet’r at 15-16 (citing
RR 66a-67a). However, the Secretary determined PHW had failed to prove bias.
PHW suggests the Secretary erred by imposing on PHW the burden of
showing bias by the Department. We discern no merit in this argument. As the
Secretary correctly explained:
“Where bids for public work are invited and
received . . . , there is a presumption, in the absence of
fraud or collusion, that the public officials charged with
the duty of awarding a contract thereunder acted in good
faith and in the best interests of the governmental agency
in making the award.” McIntosh Rd. Materials Co. v.
Woolworth, 74 A.2d 384, 393 (Pa. 1950). The
determinations an agency makes to use competitive sealed
proposals and in selecting offerors to proceed to
7
negotiations after a competitive procurement process are
final and conclusive unless they are clearly erroneous,
arbitrary, capricious, or contrary to law. 62 Pa. C.S. § 561.
. . . As the protesting party, PHW has the burden of
demonstrating that the Department abused its discretion.
See Stanton-Negley Drug Co. [v. Dep’t of Pub. Welfare,
943 A.2d 377, 387 (Pa. Cmwlth. 2008)]; A. Pickett
Constr., Inc. v. Luzerne Cnty. Convention Ctr. Auth., 738
A.2d 20, 26-27 (Pa. Cmwlth. 1999); J.J.D. Urethane Co.
v. Montgomery Cnty., 694 A.2d 368, 370 (Pa. Cmwlth.
1997) (citing Hibbs v. Arensberg, 119 A. 727, 728 (Pa.
1923)).
Final Determination 1 at 5. PHW does not allege fraud or collusion. In light of the
general presumption that the Department acted in good faith in the selection process,
as well as the general principle that an applicant in a bid protest has the burden of
proof, we conclude the Secretary did not err in imposing on PHW the burden to
prove bias by the Department.
The Secretary determined that PHW failed to meet its burden of proving
bias. The Secretary reasoned:
PHW believes that the Department retaliated against it due
to its complaints regarding the [CHC] [P]rogram operated
by the [OLTL]. [PHW First Protest] at 10-12, 19. PHW
cites comments made by the former Deputy Secretary of
[the] OLTL that PHW would need to decide how much its
complaints regarding the CHC rates was [sic] worth to it,
which PHW interpreted as implying that its prospects in
the procurement process for Commonwealth contracts
would be affected if it continued to raise concerns
regarding CHC. See PHW First Protest, Exhibit E; PHW
First Protest, Exhibit F. PHW argues this supports a
“logical inference” that PHW’s non-selection was the
result of bias and retaliation due to its criticism of the CHC
[P]rogram. PHW First Protest, p. 19. PHW further asserts
that its selection under prior procurements for the
HealthChoices . . . [P]rogram and its performance in the
CHC [P]rogram is [sic] probative of the Department’s bias
8
and retaliatory motive. PHW First Protest, p. 19; PHW
Reply to First Protest, p. 12.
PHW has failed to meet its burden of establishing
that the Department acted with any improper bias or
retaliatory motive. The former Deputy Secretary [of the
OLTL] was not a member of the evaluation committee, did
not participate in the evaluations of the applications, and
was not involved in the procurement process.
[Department’s Office of Medical Assistance Programs’]
Response to Second Protest, Exhibit 3. He also did not
have any authority over the HealthChoices . . . Program.
Id. Any statements he may have made, and PHW’s
interpretation of those statements, is [sic] insufficient to
show he represented the evaluation committee or the
Department as a whole, such that his views demonstrated
a bias or retaliatory motive in the procurement process
undertaken here.
Final Determination 1 at 7. We agree with the Secretary’s cogent analysis.
PHW argues the Secretary should nonetheless have held an evidentiary
hearing on the bias issue. We disagree. Section 1711.1(e) of the Procurement Code
provides: “The head of the purchasing agency or his designee shall review the
protest and any response or reply and may request and review such additional
documents or information he deems necessary to render a decision and may, at his
sole discretion, conduct a hearing. . . .” 62 Pa. C.S. § 1711.1(e) (emphasis added).
Section 1711.1(e) further directs the head of the purchasing agency to “provide to
the protestant and the contracting officer a reasonable opportunity to review and
address any additional documents or information . . . ,” but it does not state that the
agency must allow a protestant to address documents or other information by means
of testimony at a hearing. Id.; see also BosWell Pharm Servs., LLC v. Pa. Dep’t of
Corr. (Pa. Cmwlth., No. 1532 C.D. 2008, filed April 30, 2009), slip op. at 5 n.5,
9
2009 Pa. Commw. Unpub. LEXIS 216, *6 n.5 (unreported)8 (whether to hold a
hearing is within the presiding officer’s discretion; “[b]ecause a request for
proposals and bids are [sic] submitted ‘on paper,’ the usual practice is that the bid
protest be resolved without a hearing as a bid protest cannot be used to supplement
a bidder’s or offeror’s proposal”). The Secretary concluded the existing record
contained all the information required in order to render the Final Determination.
We discern no abuse of discretion in that conclusion.
Here, moreover, the Secretary evidently concluded any disputed issues
concerning bias were not material. See Final Determination 1 at 23 (citing BosWell,
slip op. at 5 n.5, 2009 Pa. Commw. Unpub. LEXIS 216, at *6 n.5 (there is no abuse
of discretion in declining to hold a hearing where the bid at issue is defective as a
matter of law)). We agree. As quoted above, the Secretary determined that the
former Deputy Secretary of the OLTL had no connection with the application,
evaluation, or selection process regarding the RFA. Therefore, even assuming that
the former Deputy Secretary made the statements PHW attributes to him, he could
not have influenced the selection process, and his statements did not indicate any
bias on the part of the Department as a whole or its selection committee. Thus, any
dispute of fact concerning the alleged statement was immaterial and did not support
the need for an evidentiary hearing.
B. Fairness Issues in Evaluations
A purchasing agency has significant discretion in its decisions on bid
protests; however, “[w]hen there is no rational support in the record for a finding of
8
Unreported opinions of this Court issued after January 15, 2008 may be cited as
persuasive authority pursuant to Section 414(a) of this Court’s Internal Operating Procedures. 210
Pa. Code § 69.414(a).
10
fact, there has been a manifestly unreasonable error in judgment and, therefore, an
abuse of discretion.” Computer Aid, Inc. v. Dep’t of Pub. Welfare (Pa. Cmwlth., No.
553 C.D. 2011, filed July 6, 2011), slip op. at 12, Pa. Commw. Unpub. LEXIS 532,
at *18 (unreported) (citing Allegheny Cnty. v. Golf Resort, Inc., 974 A.2d 1242 (Pa.
Cmwlth. 2009), and Rosing, Inc. v. Pa. Liquor Control Bd., 690 A.2d 758, 760 (Pa.
Cmwlth. 1997)). PHW raises several factual challenges to the Final Determination.
We address each in turn.
1. Favoritism toward Incumbents
PHW observes that previously, in connection with RFP 06-15, the
Department admittedly applied a “heritage factor” in evaluating the proposals by all
applicants. See Aetna Better Health, slip op. at 4-5, 2016 Pa. Commw. Unpub.
LEXIS 1120, at *4-5. The Department applied the heritage factor to favor any
incumbent applicant having at least a 25% market share of Medicaid participants in
a serviced zone; the Department reasoned that the disruption likely to arise from
cessation of such an incumbent’s services would outweigh some shortfalls in the rest
of the incumbent applicant’s evaluation scores. Id. However, the Department did
not disclose in the RFP that it would be applying the heritage factor as part of its
evaluation process. On review of the Department’s denial of bid protests, this Court
expressed concern about the undisclosed criterion, enjoined the RFP 06-15
procurement, and ordered that if the Department chose to review Aetna’s bid protest,
that review should be performed by an independent hearing officer not employed by
the Department and not connected to the RFP. See Aetna Better Health, slip op. at
32.
11
Here, PHW argues the Department again rewarded incumbent status, in
violation of the RFA. Br. of Pet’r at 35-36. The Secretary, however, found that
PHW failed to establish that the Department acted improperly by considering
incumbency in its evaluations of applications under the RFA. Final Determination
1 at 15. We discern no error in this conclusion.
PHW points to debriefing documents provided by the Department to
Aetna that listed among Aetna’s strengths its history of services through
HealthChoices, its existing personnel in place in all five zones, and its familiarity
with agreement and collaboration requirements. Br. of Pet’r at 36 (quoting RR
3487a & 3492a). However, these evaluations of strengths do not support PHW’s
position for two reasons. First, Aetna, like PHW, was not selected for negotiations
in any zone, so PHW has not shown that Aetna (or any other applicant) received any
advantage from the supposedly unfair evaluation of its strengths. More importantly,
there is a significant distinction between the general consideration of Aetna’s
experience reflected in the debriefing document cited by PHW and the Department’s
previous use of the heritage factor, which allegedly overrode inadequate scores
based solely on an applicant’s specific market share in the HealthChoices Program.
The RFA stated that evaluations would take into account the applicants’ relevant
experience, and that is what the debriefing document reflects here. PHW points to
no reason why the Department may not consider such experience, which is
undeniably relevant. We agree with the Secretary that the Department did not
improperly favor incumbent contractors merely by considering all of the applicants’
relevant experience, including experience in the HealthChoices Program.
12
2. Non-Uniform Evaluations of Strengths and Weaknesses
PHW alleges there were discrepancies in the Department’s assessment
of strengths and weaknesses from applicant to applicant that the Secretary failed to
recognize. PHW relies on its comparison of the debriefing documents the
Department provided to PHW and Aetna. PHW charges that the “sheer number” of
such discrepancies “suggests” the Department “likely” failed to provide sufficient
uniformity in its evaluations. Br. of Pet’r at 42.
However, in its brief, PHW points to only two alleged discrepancies in
the debriefing documents.9 First, it contends Aetna received a “strength” designation
for posting preferred drug lists on its website, but PHW did not receive a “strength”
for posting its own preferred drug list on its website and in its member portal. Br.
of Pet’r at 41. Second, PHW states that Aetna received only a “minor weakness” for
using subcontractors to manage its vision, dental, pharmacy, chiropractor,
information technology, and care management services, while PHW received a
“weakness” for using subcontractors for its vision, dental, pharmacy, and radiology
services. Id. PHW fails to explain how these alleged discrepancies prejudiced it,
particularly considering that Aetna scored lower then PHW in the Department’s
evaluation and was not selected for negotiations in any zone. See id. at 19-21 (listing
applicants’ comparative evaluation scores). PHW’s bare averment of numerous
discrepancies, based on debriefing documents prepared after selections under the
RFA were complete, is insufficient to demonstrate that the Department acted
arbitrarily or capriciously in its comparative evaluations.
We observe further that the Department provided 10 pages of strengths
and weaknesses in its debriefing document. See RR 2235a-44a. The two minor
9
PHW made additional arguments before the Secretary but has not raised them here.
13
discrepancies cited by PHW are not substantial in light of the length of the document.
This is particularly so because, as stated in both the RFA and the Procurement
Handbook, debriefing documents are merely intended to help unsuccessful
applicants understand “some” – not all – of the reasons for their rejection. See RR
141a (RFA at 15 § I-25); Procurement Handbook Pt. I Ch. 6 § B.14.b. Thus, two
competing applicants may be adjudged as weak regarding the same factor during
evaluations, but that specific weakness may not necessarily appear in both
applicants’ debriefing documents prepared after the fact.
For these reasons, we reject PHW’s argument concerning the alleged
discrepancies in the debriefing documents.
3. Assessed Weaknesses Based on Undisclosed Criteria
As noted in the previous subsection, the Department’s debriefing
document for PHW included ten pages of strengths and weaknesses the Department
found in PHW’s application. See RR 2235a-44a. PHW takes issue with two entries
listed as weaknesses, in which the Department stated it would have liked more
detailed information from PHW. PHW argues the Department’s desire for more
detail amounted to application of undisclosed criteria added to the RFA after
applications were submitted. We disagree.
First, PHW cites the Department’s statement that it would have liked a
breakdown of estimated personnel time by zone for personnel not specifically
allocated to any zone. Br. of Pet’r at 45 (citing RR 2236a). The Secretary concluded
the Department did not err in deeming that lack of detail a weakness. Final
Determination 1 at 16. We agree. Contrary to PHW’s assertion, the Department’s
suggestion did not relate to an undisclosed criterion. In explaining the personnel
14
descriptions required in applications, the RFA specified: “If an [a]pplicant proposes
to combine or split responsibility, its [application] must clearly indicate which
individuals and offices will be responsible for each duty and function, and
demonstrate that such duties and functions will be effectively performed and
coordinated in each [z]one.” RR 150a (RFA at 24 § III-4.C) (emphasis added). In
light of this provision in the RFA, the Department’s desire for zone-specific
allocations of personnel time in the applications cannot be considered an undisclosed
criterion. Indeed, it is difficult to imagine how an applicant could fully comply with
this express requirement of the RFA without including a breakout of projected
personnel time by zone for personnel working across multiple zones.10
Second, the Department indicated PHW’s application would have been
more effective if it had included more detail about PHW’s Medicaid experience. RR
2235a. PHW’s application stated that its parent corporation, Centene Corporation,
is the national leader in Medicaid managed care. RR 2288a. The Secretary
acknowledged that statement but concluded the Department could properly require
additional detail regarding PHW’s Medicaid experience. Final Determination 1 at
14. We discern no error in the Secretary’s conclusion.
In its section regarding applicants’ corporate experience, the RFA set
forth express requirements for the content of an application:
The Applicant must describe its experience or similar
experience in providing managed care services, particularly
experience with programs similar in scope, size and complexity
to the [] HealthChoices Program. . . . Experience shown should
be work done by the individuals who will be assigned to the
10
Notably, the July 2019 projected number of Medicaid participants served in the
HealthChoices Program varied widely by zone, from a low of 157,342 in the Northwest zone to a
high of 816,467 in the Southeast zone. Reproduced Record (RR) 129a, RFA at 3. Thus, an
applicant’s allocation of personnel time to each zone might have a significant effect on the
Department’s selection of particular applicants for each zone.
15
[z]one as well as that of your company. This section of the
application must include a description of the Applicant’s:
1. Qualifications and experience with Medicaid managed
care systems;
2. Qualifications and experience operating a managed care
healthcare program . . . .
RR 149a (RFA at 23 § III-4.B) (emphasis added). These provisions required specific
information about the applicant’s experience, not merely a general indication of the
size or status of its parent corporation. In light of the RFA’s explicit provisions, the
Department reasonably anticipated receiving detailed information relating
specifically to PHW’s own experience, including that of the specific individuals who
would be working in each zone. Accordingly, we conclude the Department was not
applying an undisclosed criterion, acting arbitrarily or capriciously, or abusing its
discretion in suggesting that PHW would have been a stronger applicant if it had
offered more supportive detail about its own Medicaid experience.11
4. Alleged Misreading of PHW’s Application
PHW alleges the Department misread PHW’s application and the
Secretary failed to recognize the consequent lack of record support for the
11
In addition, PHW offers no explanation of how the size or expertise of its parent
corporation translates to specific experience of PHW, a corporation that was not formed until 2015,
has not held a HealthChoices Program contract, and has held a similar CHC Program contract only
since 2018. Moreover, PHW offers no explanation of how its parent’s experience described
“experience with programs similar in scope, size and complexity to the [] HealthChoices Program”
or “work done by the individuals who will be assigned to the [z]one as well as that of [PHW].”
See RR 149a (RFA at 23 § III-4.B). If there are portions of PHW’s application that it believes
provided this information, it has not cited them in its brief.
We observe further that even if the Department had erred in designating the two
weaknesses challenged by PHW, the record does not suggest that ignoring those two listed
weaknesses would have had any effect on PHW’s overall application score or its non-selection by
the Department.
16
Department’s evaluation.12 Br. of Pet’r at 46. PHW relies on the Department’s
debriefing document, which assessed a weakness in PHW’s application because
PHW’s Quality Management Director would spend only 45% of his time on quality
management-related activities. See RR 2235a. PHW insists this is a misreading of
its application and its Quality Management Director would actually spend 100% of
his time on quality management activities. Br. of Pet’r at 46. The Secretary
concluded this alleged 100% allocation of the Quality Management Director’s time
was “not evident” from PHW’s application. Final Determination 1 at 20. We agree.
PHW’s application provided a chart showing estimated time allocation
averages for its executive personnel. See RR 2288a. That chart expressly indicated
the estimated time allocation of the Quality Management Director was 10% program
management, 0% financial management, 45% quality management, 15% utilization
management, 10% data management, 10% consumer services, and 10% provider
utilization. Id. PHW offers no explanation in its brief how this stated allocation
constitutes 100% quality management. We agree with the Secretary that PHW’s
application did not make evident any allocation of time other than that set forth in
its application and cited in its brief. To the extent that PHW’s submissions to the
Secretary, which are not cited in its brief before this Court, may have included a
further explanation why it considered categories other than quality management to
be quality management-related, we also agree with the Secretary that “PHW’s
belated explanation does not render the Department’s evaluation erroneous.” Final
Determination 1 at 20.
12
PHW lists these alleged errors (as well as arguments in other parts of its brief) in what
appear to be lengthy indented block quotes, but there are no citations of the putative quotes’
origins. See, e.g., Br. of Pet’r at 45-46. The indents appear to be formatting errors. Therefore, in
analyzing the alleged errors referenced here, we assume PHW intended the internal citations
contained in the indented material to indicate the sources of the material in the text.
17
C. Communications with Applicants
When a Commonwealth purchasing agency “fail[s] to abide by the
terms of its own RFP, it lack[s] discretion to award a contract contrary to those terms,
thus warranting judicial intervention.” Seda-Cog Joint Rail Auth. v. Carload
Express, Inc., 185 A.3d 1232, 1240 (Pa. Cmwlth. 2018), aff’d, 238 A.3d 1225 (Pa.
2020) (citing Am. Totalisator Co. v. Seligman, 414 A.2d 1037, 1041 (Pa. 1980)).
PHW asserts that the Department engaged in improper communications with other
MCOs, in violation of the RFA and Section 513(f) of the Procurement Code, 62 Pa.
C.S. § 513(f). The RFA specifically provides that all communications with
applicants will be through the Department’s designated Issuing Officer. RR 127a,
132a & 139a (RFA at 1, 6 & 13 §§ I-2, I-6 & I-20). PHW alleges that other
Department personnel met with another applicant, UnitedHealthcare of
Pennsylvania, Inc. (United), on May 6, 2020, and informed United that the
Department was dropping its prior readiness review process and allowing applicants
to self-attest to their readiness to perform under contracts with the Department. The
Secretary, however, found PHW did not prove the Department had such
communication with United. PHW contends this finding was improper in light of
United’s statement alleging such communication, as well as the presence of the topic
on the meeting’s agenda. PHW also points out that the Department emailed United
on June 8, 2020, to schedule a meeting concerning “regional collaborations,” which
PHW infers is a reference to a “regional council” idea United presented in its
application; thus, Aetna reasons the email was an attempt to clarify United’s
application with regard to how it would implement the “regional council” idea. Pet.
for Review at 18-19, ¶¶ 85-87. This argument is without merit.
18
Contrary to PHW’s argument, the Secretary’s rejection of this assertion
was not arbitrary, capricious, contrary to law, or an abuse of discretion. The May 6,
2020, meeting agenda listed no discussion of the RFA readiness review process or
any other subject related to the RFA. See RR 1980a-81a. Rather, as the Secretary
correctly found, the agenda items facially related only to current contract
management issues. Id.; see also Final Determination 1 at 10. The Secretary was
not required to credit United’s bare averment that the readiness review process was
discussed.
Regarding the Department’s email of June 8, 2020, requesting a
meeting concerning “regional collaborations,” the Secretary also determined that the
email referred to collaborations to be pursued under current contracts, explaining
that such collaborations preexisted the RFA. Final Determination 1 at 10-11.
Moreover, the RFA expressly provided:
All materials submitted with the application shall be
considered the property of the Commonwealth . . . . The
Commonwealth has the right to use any or all ideas not
protected by intellectual property rights that are presented
in any application regardless of whether the application
becomes part of an agreement.
RR 138a (RFA at 12 § I-17.B). The Department was free to use United’s regional
council idea in the course of current contract management.
The Secretary also rejected PHW’s reliance on documents obtained
from the Department through a request under the Right-to-Know Law,13 which stated
that currently-contracted MCOs that also submitted applications under the RFA
“ha[d] contact with the [D]epartment in various ways in regard to various programs.”
Final Determination 1 at 11 (internal quotation marks omitted). The Secretary
13
Act of February 14, 2008, P.L. 6, 65 P.S. §§ 67.101-67.3104.
19
concluded this statement did not establish that the Department engaged in any
improper communications concerning the RFA:
The Department was not prohibited from having
contact with MCOs with which it has current contracts for
the HealthChoices . . . Program, or any other program, as
the response references the Department’s communication
with various program offices and multiple different
programs. This is insufficient to meet PHW’s burden of
demonstrating that the Department had correspondence
with applicants regarding the RFA . . . .
Id. We again agree with the Secretary’s reasoning. The Secretary did not err in
concluding that PHW failed to demonstrate any improper communications by the
Department.
D. Self-Attestations of Readiness
PHW also suggests that the Department violated the RFA by refraining
from its traditional readiness review in favor of allowing self-attestations of
readiness from applicants. PHW also avers that the Department made this alleged
change in order to favor Geisinger Health Plan, Inc. (Geisinger), which was allegedly
unprepared for the traditional readiness review. See Final Determination 1 at 12.
The Secretary found PHW did not establish that the Department had
actually stopped using its traditional readiness review. Final Determination 1 at 12.
PHW relied on an averment by United that the Department had told United it was
considering a change in the method of readiness review. Id. The Secretary did not
err in finding that equivocal, second-hand statement inadequate to demonstrate that
the Department actually implemented such a change. Likewise, the Secretary could
reasonably conclude that a 2016 email, three years before the RFA was issued,
20
stating the change would assist unprepared MCOs, failed to indicate any intent to
assist Geisinger regarding the RFA three years later. See id.
In addition, we observe that the RFA did not specify what type of
readiness review the Department would use. See RR 139a-40a (RFA at 13-14, § I-
21). Therefore, even assuming the Department did change its method of readiness
review, such a change would not have violated the RFA. The Secretary properly
rejected PHW’s argument concerning the Department’s alleged use of self-
attestations for readiness review.
E. Request for Additional Documents
In its alternative request for relief, PHW asks us to remand this matter
to the Department with directives to vacate the Final Determination, provide
requested documents to PHW, and then either allow PHW to supplement its bid
protests or provide PHW with a full evidentiary hearing. However, nothing in the
Procurement Code entitles a bid protestant to obtain documents from the
Department. UnitedHealthcare of Pa., Inc. v. Dep’t of Hum. Servs., 172 A.3d 98,
105 (Pa. Cmwlth. 2017) (“The Procurement Code does not provide protestants a
right to production of documents or other discovery.”); see also JPay, Inc. v. Dep’t
of Corr., 89 A.3d 756, 762 (Pa. Cmwlth. 2014) (Section 1711.1(d) of the
Procurement Code “does not . . . provide a protestant with an opportunity to discover
documents but rather only provides that the contracting officer may submit a
response to the protest and documents to support the response”; moreover, the
agency is not required to provide the protestant with any of the documents discussed
in the response). Accordingly, we reject PHW’s alternative request.
21
IV. Conclusion
Based on the foregoing discussion, we affirm the Secretary’s Final
Determination.
__________________________________
CHRISTINE FIZZANO CANNON, Judge
Judges Cohn Jubelirer, Leavitt, and Crompton did not participate in the decision of
this case.
22
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Pennsylvania Health and :
Wellness, Inc., :
Petitioner :
:
v. :
:
Department of Human Services, : Nos. 1107 C.D. 2020 & 2 C.D. 2021
Respondent :
ORDER
AND NOW, this 17th day of November, 2021, the Final
Determinations of the Secretary of the Pennsylvania Department of Human Services
are AFFIRMED.
__________________________________
CHRISTINE FIZZANO CANNON, Judge