UPMC attorney lashes out at Highmark over agreement’s end date
HARRISBURG — Pennsylvania State Attorney General Josh Shapiro has no right to “gut” and rewrite a five-year agreement between UPMC and Highmark by changing its June 30 expiration date, UPMC’s top legal executive testified Tuesday in Commonwealth Court.
“A deal is a deal,” UPMC Chief Legal Officer Thomas McGough said on the second day of a two-day hearing. “The public interest was captured in the deal, in the core principles. You can’t just toss aside a deal that the commonwealth made.”
The 2014 state-brokered consent decree at the center of Shapiro’s showdown against UPMC originally aimed to smooth the transition for consumers when UPMC and Highmark refused to agree on a contract. The UPMC-Highmark split threatened to cut off affordable access to both systems for hundreds of thousands of Western Pennsylvanians.
Shapiro wants to extend the consent decree’s end date.
Judge Robert Simpson must decide whether the end date can be changed, or at least postponed, so Shapiro’s broader case against UPMC can go on.
McGough, a witness for UPMC and lead negotiator when the agreement was drafted, said it’s “inconceivable” that state mediators quietly folded in a clause with such broad powers the night before officials planned to laud the UPMC-Highmark deal at a June 2014 news conference in the state Capitol.
In the final draft, sent about 9 p.m. the night before the scheduled news conference, the “modification” clause was tacked on along with definitions and other contract language. It allows for UPMC, Highmark or the state to ask the court for changes that benefit the public.
McGough said UPMC did not object because it viewed the clause as an option for making “minor and moderate” revisions. He welcomed the addition as a tool to correct any mistakes made while negotiators were working at “warp speed” to strike a deal.
But McGough said he never believed that clause could apply to the end date — and he doesn’t think that state mediators or Highmark officials actually did either.
“I can’t believe they did,” McGough said. “To me, that would be fraud.”
In the months and days leading up to signing the deal, UPMC twice rejected and crossed out a proposed explicit “extension” clause — which did not make it into the final documents. UPMC further added a line saying, “The decree is not a contract extension and should not be characterized as such.”
“To consciously put back into an agreement a provision that had been explicitly negotiated out just 24 hours before … it’s inconceivable to me,” McGough said.
McGough further said that in his decades of legal work, he’s never seen a modification clause used to nullify an agreement’s end date.
“You can’t use a modification clause to scrap the core principles of an agreement and impose a completely different agreement on the parties,” McGough said.
On Monday, witnesses from the Attorney General’s Office and from Highmark argued otherwise. Officials from both said they never knew of any limitations on the modification provision, and that UPMC never asked for a “carve-out” to exclude the end date from possible changes.
“If you want to make a change to an agreement, you must speak up,” executive Deputy Attorney General Jonathan Goldman said.
Highmark spokesman Aaron Billger said in a statement that this week’s case “clearly demonstrated that modification of the consent decree was always intended for the best interest of the community.”
Highmark — which stands to benefit financially from Shapiro’s efforts — supports the attorney general in his broader quest to force UPMC to contract with any willing insurer, among other demands. Shapiro has vowed to wage legal war against UPMC for as long as it takes to hold the nonprofit accountable for acting like a charity.
McGough said that Shapiro’s push is creating unnecessary confusion for consumers.
The whole point of the 2014 agreement — and millions of dollars allocated to related consumer education — was to “get people used to the idea that this (UPMC-Highmark split) was going to happen, it was going to happen in five years, and it would be over in five years,” McGough said.
“The transition needs a beginning and an end date,” McGough said, “and any fuzziness about that end date is counter-productive — and a lot of confusion about that end date is destructive.”
The Attorney General’s Office and UPMC have said they plan to appeal to the state Supreme Court if they lose this week’s case.
Simpson plans to issue a ruling Friday.
Natasha Lindstrom is a Tribune-Review staff writer. You can contact Natasha at 412-380-8514, [email protected] or via Twitter .