WAYNE COUNTY HOSPITAL, INC. D/B/A WAYNE COUNTY HOSPITAL APPELLANT
WELLCARE HEALTH INSURANCE COMPANY OF KENTUCKY, INC. D/B/A WELLCARE OF KENTUCKY, INC. APPELLEE
FROM JEFFERSON CIRCUIT COURT HONORABLE JUDITH E.
MCDONALD-BURKMAN, JUDGE ACTION NO. 16-CI-001550
FOR APPELLANT: Stephen R. Price, Sr. John W. Woodard, Jr.
FOR APPELLEE: Pierre H. Bergeron F. Maximilian Czernin
BEFORE: CHIEF JUDGE CLAYTON; DIXON AND JONES, JUDGES.
CLAYTON, CHIEF JUDGE.
County Hospital, Inc. ("Hospital") appeals the
Jefferson Circuit Court's order granting WellCare
Insurance Company of Kentucky, Inc. d/b/a WellCare of
Kentucky's ("WellCare") Kentucky Rules of Civil
Procedure (CR) 12.02 motion dismissing its complaint. The
trial court held that the Hospital failed to exhaust its
administrative remedies when it did not avail itself of
WellCare's internal procedures to file a grievance or
appeal a payment issue.
careful consideration, we affirm.
case is a breach of contract case wherein the Hospital
claimed that WellCare had not reimbursed the Hospital for
medical services provided in the emergency room. According to
the Hospital, these services, which were provided to members
of WellCare's Medicaid managed care program, were not
being properly reimbursed in contravention of the Provider
Agreement and applicable law. The Hospital's complaint
alleged breach of contract, failure to pay the minimum rates
required by Kentucky Revised Statutes (KRS) 216.380(13), and
violations of Kentucky's Prompt Pay and Unfair Claims
Settlement statutes. The complaint also sought declaratory
and injunctive relief.
Hospital is a 25-bed facility in Monticello, Kentucky, that
provides inpatient and outpatient services to Medicaid
beneficiaries. Under federal and state law, the hospital has
been designated as a "Critical Access Hospital"
("CAH") because it is located in a rural area where
access to health care services is limited.
November 1, 2011, the Kentucky Medicaid program transitioned
from a traditional "fee-for-service" to a managed
care model throughout the entire state. WellCare successfully
bid to be one of three Managed-Care Organizations
("MCO") and entered into a contract with the
Commonwealth to manage care for Kentucky Medicaid
beneficiaries. Administered jointly by the federal and state
governments, the Medicaid program provides healthcare
benefits to low income individuals and families. To receive
Medicaid funding, participating states must comply with
federal statutory and regulatory requirements. See
42 U.S.C. §§ 1396a(a) and (b).
set up its network of provider hospitals and arranged to pay
the Hospital an agreed-upon percentage of the rates paid
under Medicaid's "fee-for-service" plan.
WellCare paid the Hospital for outpatient services provided
in the emergency room at agreed upon contract rates and in
compliance with statutory minimums for CAHs under KRS
216.380(13). The dispute began after one year elapsed when
emergency room services provided to WellCare members at the
Hospital were no longer reimbursed in this manner.
September 2012, whenever the Hospital submitted emergency
room claims to WellCare, it no longer paid all the claims 101
percent of costs as allegedly required by the contract and
Kentucky law. Instead, WellCare used a "proprietary
algorithm" to decide whether services were "medical
necessary," and covered under its plan. Sometimes
WellCare paid a $50 triage fee, and sometimes it paid
Hospital filed its complaint on April 4, 2016. WellCare filed
a motion to dismiss the complaint which the trial court
granted on December 8, 2016, on the grounds the Hospital
failed to exhaust WellCare's internal grievance process
prior to filing the lawsuit. Thereafter, the Hospital filed a
motion to alter, amend or vacate the trial court's order.
The trial court summarily denied this motion on July 12,
2017, because the Hospital did not raise any facts or
arguments that were not previously argued.
Hospital now appeals both orders.
court should grant a motion to dismiss for failure to state a
claim upon which relief can be granted only if it
"appears the pleading party would not be entitled to
relief under any set of facts which could be proved in
support of [the] claim." Pari-Mutuel Clerks'
Union of Kentucky, Local 541, SEIU, AFL-CIO v. Kentucky
Jockey Club, 551 S.W.2d 801, 803 (Ky.
1977). "In making this decision, the circuit court
is not required to make any factual determination; rather,
the question is purely a matter of law." James v.
Wilson, 95 S.W.3d 875, 883-84 (Ky. App. 2002). Further,
under CR 12.02, a reviewing court owes no deference to a
trial court's determination; instead, an appellate court
reviews the issue de novo. Fox v. Grayson,
317 S.W.3d 1, 7 (Ky. 2010) (footnotes omitted).
this standard in mind, we turn ...