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Gaube v. Landmark Medical Center

Superior Court of Rhode Island, Providence

January 7, 2015

GARY J. GAUBE, Chief Executive Officer and Trustee, Plaintiff,
v.
LANDMARK MEDICAL CENTER, Defendant. GARY J. GAUBE, Chief Executive Officer and Trustee, Plaintiff,
v.
LANDMARK HEALTH SYSTEMS, INC., Defendant. RICHARD R. CHAREST, Chief Executive Officer, Plaintiff,
v.
NORTHERN RHODE ISLAND REHAB MANAGEMENT ASSOCIATES, L.P., Defendant.

Providence County Superior Court

Gary J. Gaube Richard S. Mittleman, Esq.

Prime Healthcare Services-Landmark, LLC William M. Dolan, III, Esq., Nicholas L. Nybo, Esq., Stephen DelSesto, Esq.

Neighborhood Health Plan of Rhode Island, Douglas J. Emanuel, Esq., Don E. Wineberg, Esq., Robert D. Fine, Esq.

Executive Office of Health & Human Services. Deborah A. George, Esq., Jacqueline G. Kelley, Esq.

Counsel for the Special Master. James G. Atchison, Esq.

Blue Cross & Blue Shield, Joseph M. DiOrio, Esq.

Other Counsel and Interested Parties: Preston W. Halperin, Esq., Cynthia J. Warren, Esq., Stephen D. Zubiago, Esq., W. Mark Russo, Esq., Richard L. Gemma, Esq., Armando E. Batastini, Esq., Christopher Callaci, Esq., John E. Zummo, Normand G. Benoit, Esq., Vincent A. Indeglia, Esq., Gerald J. Coyne, Esq., James R. Lee, Esq., M. Morrissey, Esq., Jodi Bourque, Esq., Kimberly McNulty, John A. Tarantino, Esq., Patricia K. Rocha, Esq., John P. McCoy, Esq., Raymond Rusin, Gerard Bielak, Maria L. Marzahl, Edward D'Arezzo, G. Mercurio, Scott B. Adams, Glenn R. Friedemann, Esq., Kathryn D. Ryan, Esq., Joseph Avanzato, Esq., Joseph D. Whelan, Esq., M. Thomas, Richard J. Land, Esq., Peter J. Furness, Esq., Patrick A. Rogers, Esq., Richard R. Beretta, Esq., Charles L. Glerum, Esq., Patricia K. Rocha, Esq., Brooks R. Magratten, Esq., P. Cacioppo, S. Michael Levin, Esq., D. Milia, Stephen A. Morris, Esq., Robert A. Migliaccio, Esq., Michael G. Tauber, Esq., Patricia Emsellem, Harmony Conti Bodurtha, Esq., Justin T. Shay, Joseph G. Miller, Esq., Redha Savitala, Esq., Stephen J. MacGillivray, Esq., Cameo Kaisler, Esq., M. Miller, R. Berlet, Richard Myrus, Esq., Bill Fischer, Gardner H. Palmer, Jr., Esq., Jeffrey S. Brenner, Esq., J. Cullen, Richard Charest, C. Vitale, G. Harrington, D. Lancia, Geoffrey J. Coffman, David Gifford, Joshua Nemzoff, Michael Dexter, K. Ragosta, J. Thompson, William S. Fish, Esq., Stephanie Peltier, Joseph McSherry, Jonathan N. Savage, Esq., A. Durette, D. Smith, Jeffrey F. Chase-Lubitz, Esq., J. Zaccagnin.

DECISION

SILVERSTEIN, J.

Before the Court for decision[1] is Prime Healthcare Services-Landmark, LLC's (Prime) Motion to Enforce the Court's November 26, 2013 Order Granting Special Master's Petition to Sell Assets to [Prime] Free and Clear of Liens, Claims and Encumbrances (the Motion to Enforce) pursuant to Super. R. Civ. P. 7(b)(1) (Rule 7(b)(1)). Prime seeks an order from this Court decreeing that Prime is not bound to abide by the Medicaid managed care payment rates established under G.L. 1956 § 40-8-13.4 set forth in a contract between Prime and Neighborhood Health Plan of Rhode Island (NHPRI). By way of a motion to intervene (granted by the Court at the hearing on the Motion to Enforce on December 1, 2014), the Executive Office of Health and Human Services for the State of Rhode Island (EOHHS) filed an objection to Prime's Motion. NHPRI has relied on and joined in EOHHS' objection. While Prime argues the Court's November 26, 2013 Order (the Order) does not require it to be bound by any contracts rejected by the Special Master (including, inter alia, previously agreed Medicaid rates between NHPRI and Landmark Medical Center (LMC)), the fundamental issue before the Court is whether Prime is nonetheless required to conform to the rate methodology formulated pursuant to § 40-8-13.4 and implemented and enforced by EOHHS.

I Facts and Travel

LMC operated a hospital principally located in Woonsocket, Rhode Island and, along with Northern Rhode Island Rehab Management Associates, L.P. d/b/a Rehabilitation Hospital of Rhode Island (RHRI) and Landmark Health Systems, Inc. (LMS) (collectively Landmark), filed for the appointment of a Special Master on June 26, 2008. NHPRI is a Rhode Island not-for-profit corporation licensed by the Rhode Island Department of Business Regulation that operates a licensed health maintenance organization (HMO). EOHHS-a statutorily constructed executive agency[2]-contracts with NHPRI to provide health insurance coverage to Medicaid-eligible individuals.

Rhode Island provides for the payment of in-state and out-of-state hospital services for eligible Medicaid recipients via two main types of health care delivery systems: fee for service Medicaid, which is non-managed care, and Medicaid managed care, in which the State contracts with a health care insurer (in this case, EOHHS contracted with NHPRI) for that insurer to pay monthly capitated amounts to health care providers (such as LMC) for the various Medicaid services. Pursuant to a Hospital Agreement between NHPRI and LMC dated August 1, 2007, the parties agreed to certain hospital payment rates for Medicaid managed care. Up until 2009, there was no set limit on fee for service Medicaid or Medicaid managed care payment rates.

Thereafter, the Special Master began a search for a new operator and owner of Landmark. In September of 2012, Prime and the court-appointed Special Master for Landmark executed an Asset Purchase Agreement (APA)-subsequently approved by the Court on October 18, 2012- whereby Prime agreed to purchase substantially all of the assets[3] owned by Landmark. The sale of Landmark's assets to Prime by the Special Master was expressly ...


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