Aetna Better Health of PA, Inc. v. PA DHS

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Aetna Better Health of :
Pennsylvania, Inc., :
Petitioner :
:
v. :
:
Pennsylvania Department :
of Human Services, : No. 652 M.D. 2020
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
Aetna Better Health of Pennsylvania, Inc. (Aetna) has filed a petition
for review of a Final Determination by the Secretary of Human Services (Secretary)1
of the Pennsylvania Department of Human Services (Department) denying Aetna’s
bid protests on Request for Applications 07-19 (RFA) relating to the
Commonwealth’s HealthChoices Medicaid (HealthChoices) Program.
Alternatively, Aetna’s petition seeks review in our original jurisdiction, requesting
1
At Aetna’s request, the Secretary of Human Services (Secretary) of the Department of
Human Services (Department) appointed a designee, for purposes of the Final Determination, who
had no connection with or previous knowledge of this matter. That designee was Jonathan Rubin,
Deputy Secretary of the Department’s Office of Children, Youth and Families. Pet. for Review,
Ex. 1 (Final Determination) at 6-7 & 15. For ease of reference, this opinion refers to the designee
as the Secretary and the designee’s Final Determination as that of the Secretary.
a declaratory judgment and mandamus relief regarding any debriefing issues the
Secretary ruled were not proper grounds for bid protests. Several other applicants
under the RFA have intervened in this matter. The Department and some of the
intervenors have filed preliminary objections to Aetna’s original jurisdiction claim.
The parties have briefed and argued both the appellate issues and the preliminary
objections, and both are presently ready for disposition. For the reasons discussed
below, we sustain the preliminary objections in part, dismiss them in part as moot,
and affirm the Secretary’s Final Determination.
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. Aetna is one of those
MCOs. It has provided administration by contract with the Department in two zones
since 2010 and in all five zones since 2012.
A. RFPs 06-15 and 06-15 (Reissued)
In September 2015, the Department issued Request for Proposals (RFP)
06-15 for new contracts for administration of the HealthChoices Program in all five
zones. Aetna, which was already administering the program as an MCO, submitted
proposals for all five zones. However, the Department did not select Aetna to
negotiate for new contracts.
2
Aetna claims that in evaluating applications under RFP 06-15, the
Department stated it applied what it called a “heritage factor” in evaluating the
proposals by all applicants. 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 4-5, 2016
Pa. Commw. Unpub. LEXIS 1120 at *4-5 (unreported). The Department applied
the heritage factor to favor any existing applicant having at least a 25% market share
of Medicaid participants, reasoning that the disruption likely to arise from cessation
of such an applicant’s services would outweigh some shortfall in the rest of the
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.
Aetna describes the heritage factor as a “secret criterion” used to
deprive Aetna of new contracts and to favor other MCOs despite Aetna’s higher
proposal scores. Pet. for Review at 4, ¶ 13. Aetna therefore filed a bid protest. The
Department responded by asserting that Aetna could not protest based on that issue.
Aetna then filed a petition for review. This Court enjoined the RFP 06-15
procurement and ordered that if the Department chose to review Aetna’s bid protest,
that review should be by an independent hearing officer not employed by the
Department and not connected to the RFP. See Aetna Better Health, slip op. at 32.
The Department then withdrew RFP 06-15 and reissued it as “RFP 06-
15 (Reissued).” Aetna again submitted a proposal, and the Department again did not
select Aetna for negotiations regarding a contract in any zone. Whether the
Department again applied the heritage factor is unclear. However, Aetna claims the
Department “secretly structured the evaluation criteria and formulas in a manner
designed to achieve a predetermined result, to favor the very same MCOs that
received contracts with the original RFP only through application of the [h]eritage
3
[f]actor.” Pet. for Review at 5, ¶ 20. Aetna also alleges the Department “had secret
discussions” with another MCO about modifying its bid proposal in order to pass
the Department’s readiness review procedure. Id. at 6, ¶ 22.
Aetna and other applicants filed bid protests to RFP 06-15 (Reissued),
which the Department denied. This Court reversed the Department, concluding that
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).
B. The RFA
In October 2019, the Department issued the RFA in a third attempt to
seek new contracts regarding administration of the HealthChoices Program. Aetna
submitted an application for all five zones. The Department did not select Aetna for
negotiations in any zone. Aetna received the lowest score of all applicants, although
its scores had been among the highest for RFP 06-15.
Aetna requested debriefing as permitted by Section I, Paragraph 25 of
the RFA. See Reproduced Record (RR) 66a-67a (RFA at 15-16, ¶ I-25). The
Department provided debriefing documents consisting of a redacted Selection
Memorandum and another document setting forth some, but not all, of the
Department’s determinations concerning the strengths and weaknesses of Aetna’s
application. The Department refused to provide any other applicants’ raw scores,
2
62 Pa. C.S. §§ 101-2311.
4
comparative analysis of the applicants, or information about other MCOs’
applications. Allegedly departing from past practice, the Department also declined
to provide an interactive debriefing conference. The Department did allow Aetna to
submit written questions but had not answered them as of the date of filing of the
petition for review. Aetna asserts that it needed answers to its questions in order to
determine whether it had grounds for additional bid protests.
Aetna filed several bid protests regarding the RFA and later
consolidated them. Aetna asserted the Department erred by failing to select Aetna
as qualified, responsible, and capable of providing services in each zone. Aetna also
claimed the Department violated the RFA by (1) changing its readiness review
process to allow applicants to self-certify their readiness to perform contracts, (2)
engaging in improper communications with other applicants concerning a proposal
by UnitedHealthcare of Pennsylvania (United) for a regional council, (3) selecting
UPMC for You, Inc. (UPMC) for negotiations although UPMC’s application did not
comply with the RFA’s work stoppage provision,3 and (4) providing inadequate
debriefing. Aetna requested an evidentiary hearing on its bid protests, but the
Secretary denied Aetna’s request.
C. The Final Determination
On December 4, 2020, the Secretary issued the Final Determination
denying Aetna’s bid protests. The Secretary concluded the Department’s evaluation
3
The draft contract in Appendix A to the RFA contained a provision that precluded a
contracting MCO from including in its provider network any provider that had experienced a work
stoppage in the past five years, unless the provider could produce an executed collective bargaining
agreement (CBA) or labor peace agreement. Aetna alleged that a hospital in UPMC’s provider
network had experienced such a work stoppage. Aetna contended the draft contract provision in
Appendix A to the RFA constituted a requirement that UPMC submit proof of a CBA or labor
peace agreement as part of its application.
5
and selection were not clearly erroneous, arbitrary, capricious, contrary to law, or an
abuse of discretion. Pet. for Review, Ex. 1 (Final Determination) at 7.
First, the Secretary rejected Aetna’s assertion that the Department
should have selected Aetna as qualified, responsible, and capable of providing
services in each zone. The Secretary reasoned that even assuming Aetna to have the
qualifications it asserted, Aetna failed to offer evidence that the selected applicants
“were not more advantageous or more qualified.” Final Determination at 7-8.
Next, the Secretary concluded Aetna failed to sustain its burden of
establishing its claim that the Department violated the RFA by changing its readiness
review process to allow applicants to self-certify their readiness to perform contracts.
Final Determination at 8. The Secretary found Aetna’s contention was speculative
because Aetna merely asserted that United had been told the readiness review
process “may” be bypassed in favor of self-attestations. Id.; Bid Protest 8/8/20, RR
121a-22a. Moreover, the Secretary observed that the RFA did not specify the
method of readiness review the Department would use, so even if Aetna’s claim
about the statement made to United was true, the alleged change in the readiness
review would not have violated the RFA. Final Determination at 9.
The Secretary likewise rejected Aetna’s assertion that the Department
engaged in improper communications with other applicants concerning United’s
proposal of a regional council. The Secretary found the communications at issue
related to current contract issues, not to applications submitted under the RFA, so
they were not improper or violative of the RFA. Id. at 10.
The Secretary concluded that Aetna had also failed to establish that
UPMC’s application did not comply with the work stoppage provision in the draft
agreement at Appendix A of the RFA. Aetna contended UPMC’s provider network
6
included a hospital that had experienced a work stoppage within the past five years,
but UPMC failed to submit a signed CBA or labor peace agreement with its
application, in violation of the RFA. The Secretary rejected this contention as
untimely, but more importantly, found the work stoppage provision was not part of
the RFA. Rather, because it was part of a sample contract attached in Appendix A
to the RFA, it did not apply to all applicants or even to those selected for
negotiations. It was subject to change, and moreover, even if it remained in the final
contract, the requirement would apply only when a final agreement was signed.
Final Determination at 11.
Additionally, the Secretary rejected Aetna’s assertion that the
Department’s debriefing was inadequate. The Secretary opined that bid protests
under the Procurement Code must relate to the solicitation or award of a contract,
not to the manner of debriefing provided. Final Determination at 12. Nonetheless,
the Secretary addressed the substance of Aetna’s argument and found it without
merit. The Secretary observed that the RFA expressly provided that the purpose of
debriefing was to help an applicant understand some of the strengths and weaknesses
of its application and that no information would be given comparing other
applications. Id. Because the Department’s debriefing provided information on
some strengths and weaknesses of Aetna’s application and the Department was not
required to provide comparative information, the Secretary concluded the debriefing
complied with the RFA. Id.
Finally, the Secretary concluded Aetna was not entitled to additional
information it requested, such as additional scoring information concerning Aetna
and the other applicants. Id. at 13. First, the Procurement Code provides no right to
request documents or discovery. Id. (citing UnitedHealthcare of Pa., Inc. v. Dep’t
7
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, 62 Pa. C.S. § 1711.1(d), “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). Further, the Secretary did not
need to review any additional information in order to make a determination. In that
regard, the Secretary explained that Aetna’s request for an evidentiary hearing was
refused because the existing record was sufficient to allow a decision and there were
no “material” facts in dispute. Final Determination at 13-14.
D. Aetna’s Petition for Review
Aetna thereafter filed its petition for review in this Court. According
to Aetna, the Secretary rejected Aetna’s arguments in a conclusory fashion without
addressing their substance. Further, the Secretary resolved disputes of fact without
a hearing and without any evidentiary basis. Aetna posits that the Secretary applied
a “double standard” by ruling Aetna’s reliance on statements of other bidders to be
“speculative” while finding the Department’s reliance on such statements to be
dispositive and conclusive. Pet. for Review at 9, ¶ 39.
Gateway Health Plan, Inc. (Gateway), Geisinger Health Plan, Inc.
(Geisinger), Health Partners Plans (Health Partners), Pennsylvania Health &
Wellness, Inc. (PHW), United, UPMC, and Vista Health Plan, Inc., AmeriHealth
Caritas Health Plan, and Keystone Family Health Plan (collectively, Vista)
8
intervened. The Department, Geisinger, Health Partners, and UPMC filed
preliminary objections to Aetna’s original jurisdiction claims.4 This Court directed
the parties to brief both the appellate issues and the preliminary objections and
ordered joint argument.
II. Issues
A. Appellate Jurisdiction
In its petition for review filed in our appellate jurisdiction, Aetna argues
the Department deprived Aetna of meaningful bid protests by providing incomplete
debriefing. In addition, the Secretary improperly disposed of disputed factual issues
without an evidentiary hearing. On the merits of its bid protests, Aetna contends the
Department engaged in improper communications with other MCOs, and the
Secretary erred by finding the Department did not have such communication. Aetna
asserts further that the Department improperly selected UPMC to negotiate for
contracts although UPMC’s application did not conform to RFA requirements.
Aetna argues the Department also violated the RFA by departing from its past
readiness review of applicants and allowing applicants to self-attest their readiness
to perform contracts. Aetna asks this Court to order the Department to cancel the
RFA and rescind any related notices of selection. Alternatively, Aetna asks this
Court to remand this matter to the Department with a directive to vacate the Final
Determination, provide proper debriefing, and allow Aetna to supplement its bid
protests based on new information acquired in further debriefing.
4
Gateway and United filed answers to the original jurisdiction claims, and Vista filed an
answer with new matter. Those pleadings are not at issue here.
9
B. Original Jurisdiction Petition and Preliminary Objections
In the alternative, Aetna contends that even if the Secretary otherwise
correctly found no grounds for Aetna’s bid protests, the Department’s incomplete
debriefing conferred on Aetna a right to file an action in this Court’s original
jurisdiction. Aetna claims the Department violated Aetna’s rights under the
Procurement Code to a debriefing that would facilitate a meaningful review of
Aetna’s bid protests. Aetna seeks a declaration that the Department violated the
Procurement Code and a writ of mandamus commanding the Department to comply
with the Procurement Code.
As stated above, the Department, Geisinger, Health Partners, and
UPMC filed preliminary objections to Aetna’s original jurisdiction claims. The
Department, joined by Geisinger, asserts that the Procurement Code is the
mandatory and exclusive remedy for disappointed bidders and offerors, as well as
prospective bidders and offerors; that any waiver of sovereign immunity relating to
bid protests is limited to challenges provided in the Procurement Code; and that
Procurement Code challenges lie solely in this Court’s appellate, not original,
jurisdiction. See 62 Pa. C.S. § 1711.1(l) (“This section shall be the exclusive
procedure for protesting a solicitation or award of a contract by a bidder or offeror,
a prospective bidder or offeror or a prospective contractor that is aggrieved in
connection with the solicitation or award of a contract.”). Health Partners and
UPMC assert similar preliminary objections. UPMC adds that Aetna’s original
jurisdiction claims arise solely under the Procurement Code, but rights under the
Procurement Code are expressly in this Court’s appellate jurisdiction. Health
Partners similarly argues that Aetna cannot assert both appellate and original
jurisdiction claims on the same grounds.
10
Health Partners and UPMC also point out that Aetna has sought
documents related to its bid protests by submitting document requests under the
Right-to-Know Law (RTKL).5 Health Partners suggests that seeking the same
documents in its original jurisdiction claim before this Court constitutes an improper
collateral attack on the determination issued by the Office of Open Records6
concerning the RTKL request. UPMC similarly asserts that Aetna cannot merge the
appeal of its RTKL proceeding with its bid protest litigation.
UPMC further objects that because the Final Determination addressed
and rejected Aetna’s debriefing complaints, mandamus will not lie. In addition,
there is no right to a specific form of debriefing conferred by statute. Finally, UPMC
posits that a petitioner cannot seek review in both this Court’s appellate and original
jurisdiction in one petition.
III. Discussion
A. Appellate Issues7
1. Debriefing
Aetna first asserts on appeal, as it argued in its original jurisdiction
claim, that the Department’s allegedly incomplete debriefing deprived Aetna of
5
Act of February 14, 2008, P.L. 6, 65 P.S. §§ 67.101-67.3104.
6
UPMC states that Aetna filed a separate appeal from the determination by the Office of
Open Records, but that appeal was stricken as inoperative because reconsideration was granted.
See Preliminary Objections of UPMC at 2 n.2.
7
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).
11
meaningful bid protests. Aetna insists the Department must provide additional
debriefing. In that regard, Aetna cites GTECH Corp. v. Department of Revenue, 965
A.2d 1276, 1288 (Pa. Cmwlth. 2009) (agency cannot deny a bidder its right to a
debriefing and provide such a right only “after the time has passed for a meaningful
hearing”). Aetna further observes that the Department opposed Aetna’s initial
protest on the basis that Aetna had “not yet had its debriefing” and therefore could
not show it should have been selected for negotiations. Pet. for Review at 13, ¶ 60.
Aetna suggests that a meaningful debriefing requires access to information on all,
not just some, of Aetna’s strengths and weaknesses, as well as comparisons to other
applicants. According to Aetna, past debriefings have provided MCOs with
information leading to procurement nullifications.
The Procurement Code contains no debriefing requirement. See
generally 62 Pa. C.S. §§ 101-2311. Aetna’s entitlement to additional debriefing
information therefore depends on the provisions of the RFA and the
Commonwealth’s Procurement Handbook. See RR 66a-67a (RFA at 15-16, ¶ I-25);
Procurement Handbook, Pt. I, Ch. 6, § A, ¶ 14.8 Contrary to Aetna’s contention, we
conclude that neither of these authorities supports Aetna’s demand for additional
debriefing.
a. Debriefing Requirements of the RFA
A Commonwealth purchasing agency is bound by the express
provisions of its RFP. 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 (Pa. 1980)). Aetna contends the
8
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).
12
Department’s debriefing did not comply with the requirements of the RFA. We
disagree.
The RFA contained a paragraph titled “Debriefing Conference” that
provided:
Upon notification of selections for negotiations,
those Applicants whose applications were not selected will
be given the opportunity to be debriefed. The purpose of
the debriefing is to assist the Applicant in understanding
some of the strengths and weaknesses of certain aspects of
its application. The Department will schedule the
debriefing at a mutually agreeable time. The Department
will not compare the Applicant with other Applicants
during the debriefing, other than the position of the
Applicant’s application in relation to all other Applicant
applications. An Applicant’s exercise of the opportunity
to be debriefed does not constitute nor toll the time for
filing a protest (see Section I-26 of this RFA).
RR 66a-67a (RFA at 15-16, ¶ I-25) (emphasis added). The provisions of this
paragraph of the RFA are consistent with those of the Procurement Handbook
discussed in the next subsection.
We discern no language in the “Debriefing Conference” provision of
the RFA that would support Aetna’s assertion that it is entitled to more debriefing
than it has already received. Aetna acknowledges that the Department provided
information concerning some of the strengths and weaknesses of its application. By
the RFA’s express terms, the Department’s debriefing had to provide information
only about some, not all strengths and weaknesses. Aetna’s argument to the contrary
has no support in the RFA. Similarly, the RFA does not entitle Aetna to comparative
information concerning other applicants, in light of the RFA’s express statement that
the Department would not compare applicants during the debriefing. Finally,
Aetna’s complaint about the Department’s purportedly improper delay in debriefing
13
is not consistent with the RFA’s language, which stated only that the debriefing
would be scheduled at a mutually convenient time and which further provided that
an applicant’s pursuit of a debriefing would not toll the deadline to file a bid protest.
Accordingly, we reject Aetna’s assertion that the Department failed to
comply with the RFA’s debriefing requirements.
b. Debriefing Requirements of the Procurement Handbook
Part I, Chapter 6, Section A, Paragraph 6 of the Procurement Handbook
sets forth the Department’s debriefing responsibilities. Procurement Handbook, Pt.
I, Ch. 6, § A, ¶ 14. Aetna cites the Procurement Handbook’s debriefing provision
as support for its demand for additional debriefing. However, the Procurement
Handbook, like the RFA, provides no right to the additional information Aetna
seeks.
Aetna suggests the Department’s delay in providing full debriefing
should eliminate any timeliness issue regarding any of its bid protests. The
Procurement Handbook, however, similar to the RFA, expressly states: “An
offeror’s exercise of the opportunity to be debriefed does not constitute nor toll the
time for filing a protest.” Procurement Handbook, Pt. I, Ch. 6, § A, ¶ 14(a). Accord
BosWell Pharmacy Servs., LLC v. Dep’t of Corr. (Pa. Cmwlth., No. 1532 C.D. 2008,
filed Apr. 30, 2009), slip op. at 2, 2009 Pa. Commw. Unpub. LEXIS 216, at *2
(unreported)9 (where delay occurred in obtaining debriefing hearing, disappointed
bidder filed bid protest within seven days and later amended it).
9
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).
14
Aetna also complains that rather than an interactive conference, it
received only a reading of prepared debriefing materials and a copy of what was
read. The Procurement Handbook, however, confers no right to an interactive
conference. To the contrary, it explains: “The debriefing should be written
beforehand and read to the offeror during the debriefing conference. . . . The issuing
office may provide a copy of the debriefing notes that are read to the offeror.”
Procurement Handbook, Pt. I, Ch. 6, § A, ¶ 14(c) (emphasis added).
Further, Aetna complains that it was allowed only to submit questions
in writing. However, the Procurement Handbook does not confer any right to ask
questions verbally, or, in fact, at all; nor does it require the Department to answer
any questions submitted to it. The Procurement Handbook states merely: “It is in
the agency’s best interest to record all questions asked and responses given during
the conference.” Procurement Handbook, Pt. I, Ch. 6, § A, ¶ 14(c). Requiring
submission of questions in writing is a reasonable means of assuring that all
questions and the Department’s answers, if any, are memorialized.10 The
Department’s interest in doing so is all the more obvious in light of Aetna’s history
of filing multiple bid protests concerning the evaluation process relating to the
Department’s two previous attempts to select MCOs for its upcoming new contracts
to administer the HealthChoices Program. Those previous protests gave the
Department reason to expect that it would likely be called on to explain and
10
In that regard, Aetna complained at oral argument that the Department failed to include
Aetna’s written questions in the record, allegedly hampering Aetna’s ability to support its case on
appeal to this Court. However, the record on review of a governmental determination consists
only of the determination to be reviewed, the findings or report on which the determination is
based, and “the pleadings, evidence and proceedings before the government unit.” Pa. R.A.P.
1951(a). Aetna has not contended that its written questions were part of the record before the
Secretary. Moreover, Aetna presumably had possession of a copy of its own questions submitted
to the Department and could have asked this Court to order the Department to include them in the
record if the questions were important to Aetna’s case on appeal. See Pa. R.A.P. 1951(b).
15
document its evaluation and selection process, including its post-selection
debriefings.
Aetna also insists it should have access to comparative evaluation
information concerning other applicants. The Procurement Handbook, like the RFA,
provides to the contrary, expressly stating: “The debriefing should not compare the
[applicant] to any other [applicant]. . . . At the discretion of the issuing office, the
debriefing may point out key differences between the successful [applicant] and the
[applicant] being debriefed.” Procurement Handbook, Pt. I, Ch. 6, § A, ¶ 14(d)
(emphasis added).
Finally, Aetna complains that the selection memorandum it received
from the Department contained redactions. In that regard, the Procurement
Handbook expressly states that on request, the Department shall provide “[t]he
Recommendation for Contractor Selection memorandum, successful proposal and
contract, with any non-public information redacted . . . .” Procurement Handbook,
Pt. I, Ch. 6, § A, ¶ 14(e). Aetna does not assert that the redactions at issue shielded
any public information from disclosure.11
In short, there is no support for any additional debriefing rights in the
Procurement Code, the RFA, or the Procurement Handbook. We conclude that the
Secretary properly found the Department complied with its debriefing requirements.
2. Communications with Applicants
Aetna next 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). Specifically, the RFA provides that all
11
To the extent Aetna may have asserted in its RTKL request that it was seeking public
information, that request and any related legal or factual issues are not before us in this matter.
16
communications with applicants will be through Kern as the Department’s
designated Issuing Officer. RR 52a, 57a & 64a (RFA at 1, 6 & 13, §§ I-2, I-6 & I-
20). Aetna alleges that other Department personnel met with 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 the Department did
not have such communication with United. Aetna 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. Aetna also points out that the
Department emailed United on June 8, 2020, to schedule a meeting concerning
“regional collaborations,” purportedly referring 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. We disagree.
Contrary to Aetna’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 Pet. for Review, Ex. 10. Rather, as the
Secretary correctly found, the agenda items facially related only to current contract
management issues. Id. 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
email referred to collaborations to be pursued under current contracts. Final
Determination at 10. Moreover, the RFA expressly provided:
17
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 63a (RFA at 12, § I-17.B). The Department was free to use United’s regional
council idea in the course of current contract management. Thus, the Secretary did
not err in concluding that Aetna failed to demonstrate any improper communications
by the Department.
3. Selection of Nonconforming Applicants
Next, Aetna argues the Department improperly selected UPMC for
negotiations, because UPMC’s application did not conform to the RFA’s
requirements. Aetna posits that the RFA required an applicant to submit a signed
collective bargaining agreement (CBA) or labor peace agreement along with its
application if there had been a work stoppage by any provider in the applicant’s
network during the past five years. Pet. for Review, Ex. 14 (RFA Appendix A at
114 § V-S). Aetna contends a work stoppage occurred at a hospital in UPMC’s
network of providers, and that UPMC did not submit a CBA or labor peace
agreement for that provider.
The Secretary rejected this basis for Aetna’s protest as untimely, which
Aetna disputes by insisting there has been no showing that it was or should have
been aware of the work stoppage earlier. See Final Determination at 11. More
importantly, however, because the work stoppage issue was addressed in a sample
agreement that was Appendix A to the RFA, the Secretary concluded it was not
actually part of the RFA. Id.
18
Aetna suggests that the RFA expressly required each application to be
based on the terms and conditions of the sample agreement in Appendix A. We
agree with the Secretary that the RFA contained no such requirement. We recognize
that the RFA expressly required each application to be submitted “on the basis of the
terms and conditions set out in Appendix A,” the sample agreement. Br. of Pet’r at
57 (emphasis omitted) (quoting RR 63a-64a (RFA at 43-44, § III-8)). However,
Section I-4 of the RFA, “Type of Agreement,” stated, in pertinent part, “Please see
Appendix A for a draft Agreement”; the RFA did not state that Appendix A
contained the required final form of the agreement to be signed by selected
applicants. RR 55a (RFA at 4, § I-4) (emphasis added). Section I-11.B.1 of the
RFA, “Technical Submittal,” listed specific appendices that had to be completed,
signed, and submitted with an application; the list included Appendices C, I, J, and
L, but not Appendix A. RR 60a (RFA at 9, § I-11.B.1(b), (c) & (d)). Section I-23
of the RFA, “Applicant’s Representations and Authorizations,” likewise imposed no
requirement that an applicant provide a signed CBA or labor peace agreement as
part of its application submission. RR 65a (RFA at 14 § I-23). The Secretary
explained:
The requirement regarding work stoppages was not
contained in the RFA itself, but was included in the draft
HealthChoices Agreement, which was subject to change.
The work stoppage provision was not considered as part
of the evaluation, but was applicable only to MCOs who
were selected after the Department concluded its
evaluation. If the work stoppage requirement remains in
the executed HealthChoices Agreements, an MCO cannot
include a provider in its network that had a work stoppage
unless the provider is or becomes a signatory to a [CBA]
or labor peace agreement. As explained by UPMC, the
work stoppage occurred at a hospital within UPMC’s
system, a separate entity from the MCO. UPMC Response
to Second Protest, p. 6. Thus, UPMC was not required to
19
enter into a [CBA] or labor peace agreement to be selected
for negotiations.
Final Determination at 11. We agree with the Secretary’s interpretation of the work
stoppage provision of Appendix A to the RFA.
The Secretary also concluded the work stoppage provision did not
apply because the hospital at issue was a separate legal entity from UPMC. Aetna
counters that such separation is irrelevant because the hospital was still part of
UPMC’s provider network. Because we agree with the Secretary that the work
stoppage provision was not triggered until a contract was signed, we need not
address this argument by Aetna.
4. Self-Attestations of Readiness
Aetna observes that 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, 185 A.3d at 1240
(citing Am. Totalisator, 414 A.2d at 1041). Aetna suggests that the Department
violated the RFA by refraining from its traditional “readiness review” in favor of
allowing self-attestations of readiness from applicants. Aetna asserts that the RFA
required specific documentary submissions from applicants, stated the Department
would use a combination of desk and onsite reviews of the required deliverables,
and estimated the review process would last about six months. Aetna posits that
these provisions in the RFA constituted affirmative representations that the
Department would use its traditional readiness review. Aetna also argues that
permitting self-attestations unfairly favored applicants with less experience. Pet. for
Review at 17, ¶ 76. Aetna contends the Secretary applied a “double standard” by
finding that Aetna’s reliance on United’s statements alleging a change to self-
20
attestations by the Department was speculative. Pet. for Review at 9, ¶ 39. We
disagree.
The Secretary found Aetna did not sufficiently allege that the
Department had actually stopped using its traditional readiness review. Final
Determination at 8. The Final Determination quoted Aetna’s bid protest, which
averred only that the Department had told United there “may” be a change in the
method of readiness review, and “[t]o the extent the Department is indeed making
this change, it amounts to an impermissible re-wiring of the terms of the RFA.” Id.
(internal quotation marks omitted). The Secretary did not err in finding those
equivocal statements inadequate to aver that the Department actually implemented
such a change.
In addition, the Secretary found the RFA did not specify what type of
readiness review the Department would use. Final Determination at 9. Therefore,
even assuming the Department did change its method of readiness review, such a
change would not have violated the RFA. Id. We agree with the Secretary that the
RFA’s terms did not specify a particular form of readiness review that the
Department would apply. See id. at 8 (citing the RFA). Accordingly, we agree that
the Department could alter its prior method or methods of readiness assessment
without violating the RFA.
5. Evidentiary Hearing Requirement
Aetna asserts it raised the following material questions of fact: the
occurrence and content of the alleged discussion between the Department and United
on May 6, 2020, concerning the readiness review; the Department’s related switch
from its prior readiness review process to self-attestation; the origin of the concept
21
of regional councils in United’s application; the Department’s alleged disclosure of
that concept to some of the other applicants; the date when Aetna knew or should
have known of the work stoppage at one of UPMC’s network provider hospitals; the
alleged failure of UPMC to provide a signed CBA or labor peace agreement
regarding that provider; and the provider’s alleged status as a separate legal entity
from UPMC, if material. Aetna contends the Secretary was required to hold an
evidentiary hearing to dispose of disputed factual issues but failed to do so. We
disagree that any evidentiary hearing was required.
First, 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, slip op. at 5 n.5, 2009 Pa. Commw. Unpub. LEXIS
216, at *6 n.5 (whether to hold a hearing is within the presiding officer’s discretion;
“[b]ecause a request for proposals and bids are 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.
22
Further, although Aetna argued it should have been allowed to
introduce evidence concerning disputed issues of fact, the Secretary evidently
concluded those issues were not material. Accord 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.
Regarding the alleged discussion of altering the readiness review
process, as well as the alleged alteration itself, we have already concluded that any
such alteration, if it occurred, would not have violated the RFA. Therefore, any
factual disputes over whether the discussion and the alteration occurred were not
material to the Final Determination.
Likewise, any disputes concerning the origin of the regional council
concept and the Department’s alleged disclosure of that concept to other applicants
were not material, because the RFA expressly provided that all ideas included in any
application belong to the Commonwealth and may be used for any purpose. In any
event, the only record evidence of any discussion was the email suggesting a meeting
to discuss regional collaborations. Aetna failed to produce any evidence that the
Department’s disclosure, if any, of the concept was related to applications under the
RFA as opposed to management of existing MCO contracts. Aetna’s bare averment
was insufficient to raise an issue of material fact.
The date when Aetna knew or should have known of the purported
work stoppage at a hospital in UPMC’s provider network, UPMC’s alleged failure
to submit a signed CBA or labor peace agreement with its application, and the
separate legal status of the hospital provider that suffered the work stoppage are
similarly immaterial. As discussed above, no CBA or labor peace agreement had to
23
be submitted with UPMC’s application; that requirement will arise, if at all, only
when UPMC actually signs an agreement based on its selection under the RFA.
Thus, it does not matter whether Aetna’s bid protest on that issue was timely,
because it was without merit in any event; and it does not matter whether the hospital
provider is a legally separate entity from UPMC, because no signed CBA or labor
peace agreement is yet required.
For all of the reasons discussed above, we conclude the Secretary’s
Final Determination was not arbitrary, capricious, or contrary to law, or an abuse of
discretion. Accordingly, we affirm the Final Determination.
B. Preliminary Objections12
In its alternate claim invoking this Court’s original jurisdiction, Aetna
contends the Department improperly failed to provide an adequate debriefing. Aetna
claims the Department violated Aetna’s rights under the Procurement Code to a
debriefing that would facilitate a meaningful review of Aetna’s bid protests. Aetna
seeks a declaration that the Department violated the Procurement Code and a writ of
mandamus commanding the Department to comply with the Procurement Code.
The Department, joined by Geisinger, preliminarily objects that the
Procurement Code is the mandatory and exclusive remedy for disappointed bidders
and offerors, as well as prospective bidders and offerors; that Procurement Code
12
In ruling on preliminary objections, we accept as true all well-pleaded material
allegations in the petition for review and all inferences reasonably deduced from those allegations.
GTECH Corp. v. Dep’t of Revenue, 965 A.2d 1276, 1285 (Pa. Cmwlth. 2009) (citing Stanton-
Negley Drug Co. v. Pa. Dep’t of Pub. Welfare, 927 A.2d 671, 673 (Pa. Cmwlth. 2007), aff’d, 962
A.2d 670 (Pa. 2009)). We need not accept as true conclusions of law, unwarranted inferences from
pleaded facts, argumentative allegations, or expressions of opinion. GTECH, 965 A.2d at 1285
(citing Stanton-Negley, 927 A.2d at 673). In order to sustain preliminary objections, it must appear
with certainty that the law will not permit recovery, and any doubt should be resolved by a refusal
to sustain them. GTECH, 965 A.2d at 1285 (citing Stanton-Negley, 927 A.2d at 673).
24
challenges lie solely in this Court’s appellate, not original, jurisdiction; and that any
waiver of sovereign immunity relating to bid protests is limited to challenges
provided in the Procurement Code. Health Partners and UPMC assert similar
preliminary objections.
Generally, a bid protest under the Procurement Code is the mandatory
and exclusive remedy for disappointed bidders and offerors, prospective bidders and
offerors, and prospective contractors to challenge the solicitation or award of a
contract.13 Stanton-Negley Drug Co. v. Pa. Dep’t of Pub. Welfare, 927 A.2d 671,
673 (Pa. Cmwlth. 2007); MSG Grp., Inc. v. Dep’t of Pub. Welfare, 902 A.2d 613,
617 (Pa. Cmwlth. 2006). Procurement Code challenges lie in this Court’s appellate,
not original, jurisdiction. See 62 Pa .C.S. §§ 1711.1(g), (l); Stanton-Negley, 927
A.2d at 673 (this Court lacks original jurisdiction over claims that could be raised
under the Procurement Code); see also Fast Enters., LLC v. Dep’t of Gen. Servs., 13
A.3d 566, 568 (Pa. Cmwlth. 2011); Pennhurst Med. Grp. v. Dep’t of Pub. Welfare,
796 A.2d 423, 426 (Pa. Cmwlth. 2002).
Our exercise of original jurisdiction in Aetna Better Health is
distinguishable. That case involved an emergency application for special relief made
necessary by the Department’s refusal to acknowledge the applicability of the
Procurement Code and its provided remedies. See id., slip op. at 1. Here, the
Secretary addressed the substance of Aetna’s debriefing argument in the Final
Determination and thus applied the remedy provided in the Procurement Code.
GTECH is similarly distinguishable. There, the Department failed to
comply with the Procurement Code’s express bid protest procedures when it did not
act on a bid protest and did not impose the automatic stay of the procurement
13
Aetna acknowledges that in GTECH, 965 A.2d at 1288, this Court rejected an argument
that denial of debriefing was not a proper ground for a bid protest. See Br. of Pet’r at 17.
25
process. See 62 Pa. C.S. § 1711.1; GTECH, 965 A.2d at 1280. This Court opined,
in dictum, that equity would fashion a remedy in our original jurisdiction where the
Procurement Code itself did not provide a mechanism to seek relief where an agency
failed to comply with the statute’s bid protest procedure. GTECH, 965 A.2d at 1288-
89. Here, by contrast, Aetna has failed to plead facts establishing a violation of the
Procurement Code, which contains no debriefing requirement. Moreover, Aetna did
receive a debriefing and has not pointed to anything in the Procurement Code that
would require the Department to provide any more information than it already has.
Accordingly, the original jurisdiction remedy discussed in GTECH has no
application to this case.
Moreover, the Procurement Code preserves sovereign immunity except
as expressly waived. 62 Pa. C.S. §§ 1702, 1711.1. Waiver of sovereign immunity
is limited to the bid protest process provided in the Procurement Code. 62 Pa C.S.
§ 1702; see also MSG Grp., Inc., 902 A.2d at 617. As discussed above, we review
bid protest determinations in our appellate jurisdiction. The Department contends,
therefore, that Aetna has pleaded no claim for relief that can be granted in our
original jurisdiction.14 We agree.
For these reasons, we sustain the preliminary objections challenging
this Court’s original jurisdiction over the petition for review. Health Partners and
UPMC also assert additional preliminary objections. Because the Department’s
preliminary objections are dispositive of Aetna’s original jurisdiction claim, we
dismiss the remaining preliminary objections as moot.
14
Health Partners also incorporated this sovereign immunity argument in its preliminary
objections.
26
IV. Conclusion
For the reasons discussed above, the Secretary’s Final Determination is
affirmed. The preliminary objections asserting that this Court lacks original
jurisdiction over Aetna’s claim are sustained. The remaining preliminary objections
are dismissed as moot.
__________________________________
CHRISTINE FIZZANO CANNON, Judge
Judges Cohn Jubelirer, Leavitt, and Crompton did not participate in the decision of
this case.
27
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Aetna Better Health of :
Pennsylvania, Inc., :
Petitioner :
:
v. :
:
Pennsylvania Department :
of Human Services, : No. 652 M.D. 2020
Respondent :
ORDER
AND NOW, this 17th day of November, 2021, the preliminary
objections of the Pennsylvania Department of Human Services (Department) and
intervenors Geisinger Health Plan, Inc., Health Partners Plans, Vista Health Plan,
Inc., AmeriHealth Caritas Health Plan, and Keystone Family Health Plan to the
Petition for Review filed by Aetna Better Health of Pennsylvania, Inc. (Aetna),
which objections assert that this Court lacks jurisdiction over Aetna’s original
jurisdiction claim included in the Petition for Review, are SUSTAINED. The
remaining preliminary objections are DISMISSED as moot.
Regarding the appellate issues raised in the Petition for Review, the
Department’s Final Determination on Aetna’s bid protests is AFFIRMED.
__________________________________
CHRISTINE FIZZANO CANNON, Judge