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April 30, 1998

UTICA-WATERTOWN HEALTH INSURANCE COMPANY, INC., f/k/a Blue Cross and Blue Shield of Utica-Watertown, Inc., Defendant.

The opinion of the court was delivered by: HURD



 Plaintiff initiated this lawsuit on his own behalf and on behalf of all others similarly situated, pursuant to the Employee Retirement Income Security Act, as amended ("ERISA"), 29 U.S.C. §§ 1001-1461. Partial summary judgment was granted in favor of the plaintiff on the issue of liability and he was granted a permanent injunction. See Cavallo v. Utica-Watertown Health Ins. Co., 985 F. Supp. 72 (N.D.N.Y. 1997). His claims for compensatory damages, an accounting, formation of a constructive trust, attorneys fees, and costs were reserved pending further proceedings. Id. Familiarity with the prior decision, id., is assumed.

 Defendant Utica-Watertown Health Insurance Company, Inc. ("Blue Cross" or "defendant") currently seeks reconsideration of the decision granting partial summary judgment pursuant to Local Rule 7.1(g) and alteration or amendment of that judgment pursuant to Federal Rule of Civil Procedure 59. Plaintiff has moved for class certification pursuant to Federal Rule of Civil Procedure 23. Oral argument on these motions was held on February 12, 1998, in Utica, New York, and decision was reserved.

 On December 2, 1997, defendant filed an appeal of the prior decision, 985 F. Supp. 72, to the Court of Appeals for the Second Circuit. The appeal was withdrawn by stipulation of the parties, without prejudice to reinstate within thirty days of issuance of a Decision and Order in the pending motion for reconsideration. (See Mandate, Docket No. 57.)


 A. Reconsideration

 Defendant argues that the finding that it breached its fiduciary duty under ERISA and the resultant grant of partial summary judgment in favor of plaintiff was based upon an erroneous interpretation of the New York Prospective Hospital Reimbursement Methodology ("NYPHRM"), N.Y. Pub. Health Law § 2807-c. *fn1" The interpretation at issue is the finding that the hospital charges to a patient-Blue Cross subscriber cannot exceed the case based payment per discharge for the applicable diagnosis related group ("DRG Rate") upon which Blue Cross's payment to the hospital is based. This specific point of NYPHRM interpretation was not previously briefed by the parties. In the interest of justice, therefore, that interpretation will be reconsidered taking into consideration the briefing of the parties in order to determine if alteration or amendment of the judgment is appropriate.

 B. Alteration or Amendment of Judgment

 Alteration or amendment of a prior decision is warranted only where controlling law has changed, new evidence is available, and/or clear error must be corrected or manifest injustice prevented. Bartz v. Agway, Inc., 849 F. Supp. 166, 167 (N.D.N.Y. 1994)(citations omitted). In this case, Blue Cross argues that it was clear error to interpret NYPHRM as limiting plaintiffs hospital charges to the DRG Rate. Blue Cross further argues that this interpretation provided the underpinning for the grant of partial summary judgment. *fn2" Finally, Blue Cross argues that absent bad faith or gross negligence it should not be found to have breached ERISA. Plaintiff argues in opposition that the statute language is clear and unambiguous, and that any interpretation contrary to the clear language can not properly be based upon "subsequent legislative history."

 1. NYPHRM Interpretation

 A brief iteration of NYPHRM sets the analytic context. NYPHRM sets the rates at which hospitals are paid for services, in an effort to control costs. Brief for Petitioners Mario M. Cuomo, et al., 1994 WL 646144, at *2-3, New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 115 S. Ct. 1671, 131 L. Ed. 2d 695 (1995). The rates are determined, in relevant part, by the category into which the payor falls. Id., at *4-5. Cost savings to hospitals and positive social policy outcomes justify the differential in the rates among the payor categories. Id., at *3. Blue Cross falls within the category of payors whose payments to hospitals for inpatient services is based upon the DRG Rate. *fn3" § 2807-c(1)(a). So-called commercial payors reimburse hospitals at the DRG Rate plus 13% ("Commercial Rate"). § 2807-c(1)(b). Charge-based payors reimburse hospitals based upon the actual hospital charges, which cannot exceed 120% of the Commercial Rate. § 2807-c(1)(c). Actual hospital charges may be more or less than the DRG Rate. See 985 F. Supp. at 81 n.19.

 When NYPHRM was initially promulgated, DRG Rate payors such as Blue Cross, Commercial Rate payors, and both payors' subscribers paid coinsurance based upon the rates set by § 2807-c(1)(a)-(b). Subscribers complained, however, because they could not pay based upon actual hospital charges when those charges were less than the DRG-based rate. (See Gahan Aff. at P 4; Laks Aff. at P 9-10.) NYPHRM now requires a patient's coinsurance to be calculated based upon the hospital's charges, N.Y. Pub. Health Law § 2807-c(11)(n), but does not permit payors in the DRG Rate and the Commercial Rate categories to pay based upon hospital charges if that amount is lower than the rate calculated based upon the DRG, § 2807-c(1)(b). Moreover, hospital charges are limited to 120% of the Commercial Rate, in order to protect subscribers from price-gouging by hospitals. (See Gahan Aff. at P 4; Fitzgerald Aff. at P 6-8; Laks Aff. at P 12-13.)

 It was previously found that § 2807-c(12) *fn4" further limits hospital charges for Blue Cross and HMOs to the DRG Rate. See 985 F. Supp. at 81; supra note 3. Defendant argues that "hospital charges" referred to in § 2807-c(12) has no bearing on the "hospital charges" referred to in § 2807-c(11). Defendant supports this argument with two points. First, it suggests that if subdivision 12 requires "hospital charges" to be capped at the DRG Rate, then the cap for hospital charges of 120% of the Commercial Rate set by subdivision 11 would be meaningless. Accordingly, "hospital charges," as used in subdivision 12, must mean something other than the amount charged by the hospital for services, upon which the subscriber's coinsurance is based. Defendant asserts that this interpretation reflects the "clear language of the statute." Second, defendant states that subdivision 12 embodies a "rate mandate" precluding hospitals from balance-billing *fn5" Blue Cross subscribers, but in no way affects the amount upon which a subscriber's coinsurance is based.

 Resolution of defendant's argument thus depends upon the meaning given to "hospital charges" as used in subdivision 11, and "hospital charges" in subdivision 12. Defendant's argument that "hospital charges" has one meaning in subdivision 11 and another, different, meaning in subdivision 12 must be rejected as contrary to the plain meaning of the statute.

 Interpretation of a statute begins with a literal reading of its words, as an indication of the intent of the legislature. N.Y. Statutory Construction Law § 92(b) (McKinney's 1971); *fn6" Landreth Timber Co. v. Landreth, 471 U.S. 681, 685, 85 L. Ed. 2d 692, 105 S. Ct. 2297 (1985); C-TC 9th Avenue Partnership v. Norton Co., 113 F.3d 1304, 1308 n.2 (2d Cir. 1997); United States v. Collado, 106 F.3d 1097, 1101 (2d Cir. 1997); Albano v. Kirby, 36 N.Y.2d 526, 529-30, 369 N.Y.S.2d 655, 330 N.E.2d 615 (1975). "Where the words of a statute are free from ambiguity and express plainly, clearly and distinctly the ...

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