Newark, NJ- LAWFUEL – The Law News Network -Lawyers from the litigation practice of Kirkpatrick & Lockhart Nicholson Graham (K&LNG) represented Robert Wood Johnson University Hospital at Rahway (RWJUH at Rahway) in a contract dispute with Horizon Blue Cross Blue Shield of New Jersey, in which the New Jersey Appellate Division ruled in the hospital’s favor on January 3, 2005.
The dispute arose after RWJUH at Rahway ended its Horizon contract, the terms of which designated the hospital a healthcare provider to Horizon subscribers because reimbursement rates failed to meet the hospital’s cost of treatment. In accordance with the contract, the hospital provided continuity of care for patients for a specified period. Horizon, however, reimbursed the hospital at only below-cost contract rates–as opposed to the required cost-covering market rates–for the patient care provided during the continuity period after the contract was terminated. As a result, RWJUH at Rahway was deprived of approximately two million dollars to which it is entitled.
In her original ruling, the Commissioner of the New Jersey Department of Banking and Insurance found that the New Jersey Health Services Corporation Act (HSCA) required RWJUH at Rahway to accept the lower reimbursement rates. Reversing that administrative decision, the New Jersey Appellate Division held that the Commissioner’s erroneous ruling “negated the parties’ negotiated agreement and constituted a rewriting of the contract to Horizon’s advantage. The Commissioner thus deprived Rahway of the benefit of its bargain.”
Anthony P. La Rocco, a partner in the litigation practice of K&LNG who represents RWJUH at Rahway, commented, “We are delighted with the outcome of this crucial case. This win for healthcare providers and their patients arises in an ongoing policy context: in the last year, the State Legislature and physicians in the courts have focused the public’s attention on below-cost reimbursement practices and combative contract terminations of health insurers.”
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