Mount Auburn Hospital v. Commerce Insurance Company.

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28,
as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties
and, therefore, may not fully address the facts of the case or the panel's
decisional rationale. Moreover, such decisions are not circulated to the entire
court and, therefore, represent only the views of the panel that decided the case.
A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25,
2008, may be cited for its persuasive value but, because of the limitations noted
above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260
n.4 (2008).

COMMONWEALTH OF MASSACHUSETTS

APPEALS COURT

24-P-420

MOUNT AUBURN HOSPITAL

vs.

COMMERCE INSURANCE COMPANY.

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

The defendant, Commerce Insurance Company (Commerce),

appeals from (1) two decisions of the Appellate Division of the

District Court that ordered summary judgment on liability for

the plaintiff, Mount Auburn Hospital (MAH); and (2) two

resulting money judgments that, on remand, the District Court

entered in MAH's favor against Commerce. MAH brought the claims

at issue under G. L. c. 90, § 34M, to recover personal injury

protection (PIP) payments for the full amount MAH billed for

medical services it rendered to two of Commerce's insureds. MAH

had previously entered into an agreement with a third party

under which MAH agreed to accept only ninety-five percent of its

billed charges as full payment for its provision of certain
covered services. The Appellate Division concluded, however,

that MAH's agreement and related contracts do not relieve

Commerce of its obligation to pay one hundred percent of MAH's

charges for the services rendered to Commerce's insureds. We

conclude otherwise: MAH's agreement bound it to accept ninety-

five percent payment from Commerce. We therefore reverse.1

Background. Although the relevant contracts are complex,

the parties' dispute is quite narrow. We set forth only the

minimum background necessary to frame the issue before us.

1. Facts and procedure. In 2017, MAH provided medical

services to two persons entitled to PIP benefits under

automobile insurance policies issued to them by Commerce.

Significantly for present purposes, neither person was then an

employee, either of Commerce or apparently of any other

employer. Commerce paid MAH ninety-five percent of the amounts

that MAH billed for the services MAH provided to each insured.

MAH then brought small claims actions against Commerce to

recover the remaining amounts billed. The cases were removed to

the District Court's regular civil docket, and MAH filed amended

1 We acknowledge the amicus brief filed by CCC Intelligent
Solutions Inc., which acquired Auto Injury Solutions, Inc.; as
described infra, Auto Injury Solutions is a party to one of the
contracts at issue.

2
complaints.2 A judge ordered summary judgment for Commerce in

both cases. MAH appealed to the Appellate Division, which

issued a consolidated opinion concluding that MAH was entitled

to summary judgment on liability on its claims under G. L.

c. 90, § 34M.3 The cases were returned to the trial court to

determine damages. Money judgments then entered for MAH in both

cases, and Commerce appealed.4 Contemporaneous with this

decision, we have ordered the appeals consolidated.

2. The relevant agreements. In 2007, MAH entered a

preferred provider agreement with Prime Health Services, Inc.

(Prime). In the agreement, which the parties refer to as a PPO

agreement, Prime refers to itself as a PPO, and we adopt both

2 The amended complaints asserted claims under G. L. c. 90,
§ 34M; G. L. c. 175, § 113C; G. L. c. 93A; and G. L. c. 176D.

3 The Appellate Division affirmed the summary judgments for
Commerce on the G. L. c. 93A claims, did not address MAH's claim
under G. L. c. 175, § 113C, and declined to reach MAH's claim
under G. L. c. 176D. None of those claims are at issue in the
present appeal.

4 Although it might be questioned whether these appeals
should have come directly here rather than first to the
Appellate Division, the same occurred in Cummings Props., LLC v.
National Communications Corp., 449 Mass. 490, 493-494 (2007),
where the Supreme Judicial Court, without comment, reached the
merits of the appeal. We reach the merits here, too, seeing
nothing to be gained by requiring another trip to the Appellate
Division, which has already expressed its view on the sole issue
before us.

3
terms herein.5 As succinctly described by the Appellate

Division, the PPO agreement requires MAH "among other things, to

accept as full payment 95% of its bills for covered services

rendered by Prime's network of insurance company payors of

which, by means of other agreements, Commerce [is] one."

One of those "other agreements" is Prime's 2015 network

access agreement (NAA) with Auto Injury Solutions, Inc. (AIS),

by which Prime gave AIS access to Prime's PPO network of

providers at the rate Prime had negotiated. The second "other

agreement[]" is AIS's 2012 PPO master services agreement (MSA-

PPO) with Commerce, under which AIS allowed Commerce to share in

AIS's PPO network access. Those agreements, whether separately

or together, appear to constitute a "payor program" as defined

in the PPO agreement, and the parties here agree that Commerce

has such a program.6

5 The parties do not address, and we express no view on,
whether Prime is a PPO, MAH is a preferred provider, or any of
the contracts at issue creates a preferred provider organization
or PPO arrangement, as those terms are defined in State law.
See, e.g., G. L. c. 176I, §§ 1-13.

6 MAH's brief refers to payments to it for covered services
"for which Commerce is liable under its (Commerce's) 'Payor
Program,'" and, as reflected in the Appellate Division's
decision, MAH previously cited the NAA between Prime and AIS as
such a program. Commerce's brief also asserts that the MSA-PPO
agreement between it and AIS is a payor program.

4
MAH's PPO agreement with Prime binds MAH, when furnishing

"covered services" to "covered persons," to accept compensation

at the rate of ninety-five percent of its submitted billed

charges.7 Prime's NAA with AIS and AIS's MSA-PPO with Commerce

also use those terms. The scope of MAH's rights and duties vis-

à-vis Commerce thus turns in part on the meaning of the terms

"covered services" and "covered person."

The term "covered services" itself is not in dispute. The

PPO agreement defines "covered services" to mean "those group

health, workers' compensation, or first party auto medical

liability, or additional network services offered by PPO, which

covered persons are entitled to receive through participating

providers as defined under the payor program" or under

applicable laws, rules, or regulations. This is not

inconsistent with the NAA and the MSA-PPO, both of which define

"covered services" in a manner that includes health care

7 For ease of reading, we omit herein the capitalization of
these and other terms as they appear in the agreements at issue.
As MAH's brief states, parties often capitalize contract terms
in order to indicate that such terms are intended to have the
meaning defined elsewhere in the contract or in some other
document to which reference is made. None of the contracts at
issue here expressly so states, nor do the contracts define all
of the terms they capitalize. Nevertheless, where we use a term
that is both capitalized and defined by one of the contracts
involved here, and that definition is important to understanding
the narrow legal question before us, we include the definition.

5
services provided to "covered persons" under an automobile

insurance policy.

Critically, however, the agreements define "covered person"

differently. The PPO agreement defines the term to mean "any

employee who is entitled to receive covered services under payor

programs" (emphasis added). The NAA, in contrast, defines

"covered person" more broadly, to mean "any person who is

entitled to receive covered services under an automobile medical

liability, automobile no-fault, or general liability program"

(emphasis added).8

Which definition of "covered person" governs? MAH relies

on the one found in its PPO agreement with Prime -- the

definition that requires a person to be an employee to be a

covered person. In MAH's view, Commerce's insureds are not

"covered persons" unless they are employees, so Commerce must

pay one hundred percent of the amounts MAH charges for services

to nonemployee insureds.

Commerce, on the other hand, points to § 8.6 of the PPO

agreement (§ 8.6), entitled "Interpretation," which provides, in

8 The MSA-PPO, similarly, defines "covered person" to mean
"an individual insured or a claimant under a policy," elsewhere
defined to mean an automobile insurance policy issued by a
client such as Commerce. For simplicity, however, our
discussion focuses on the definition in the NAA, in part because
MAH has specifically acknowledged that the NAA creates a "payor
program" within the meaning of the PPO agreement. See note 6,
supra.

6
its entirety, "In the event of a conflict between the language

of this agreement and any payor program, the language of the

payor program shall prevail with respect to the terms applicable

to that payor program." Commerce argues that, because the NAA

constitutes a payor program, see notes 6 and 8, supra, and

because the NAA defines "covered person" in a manner that is not

limited to employees, the PPO agreement conflicts with the NAA.

Thus, the PPO agreement's § 8.6 causes the NAA's broader

definition to govern. Under that definition, Commerce is

entitled to pay MAH at the ninety-five percent rate for its

insureds, regardless of whether they are employees.

Discussion. We construe the PPO agreement according to

usual principles of contract interpretation, see Starr v.

Fordham, 420 Mass. 178, 190 (1995), including that "no part of

the contract is to be disregarded." Id., quoting Boston

Elevated Ry. v. Metropolitan Transit Auth., 323 Mass. 562, 569

(1949). "[A] contract should be construed to give it effect as

a rational business instrument and in a manner which will carry

out the intent of the parties" (quotation and citation omitted).

Starr, supra at 192.

MAH's principal argument is that the PPO agreement's

narrower definition of covered person is clear and unambiguous.

In variations on this theme, MAH asserts that the PPO agreement

is a fully-integrated agreement and that, because MAH is not a

7
party to the NAA, which was not executed until long after MAH

executed the PPO agreement, MAH cannot be bound by the NAA. MAH

concludes that adopting Commerce's interpretation of § 8.6 of

the PPO agreement, under which the NAA's broader definition of

covered person controls, would impermissibly rewrite the PPO

agreement.

We agree with MAH's premises but not its conclusions. The

PPO agreement's definition is indeed unambiguous (for present

purposes), the PPO agreement is integrated, and MAH is not a

party to the later-executed NAA. But MAH's argument fails to

reckon with § 8.6, which (1) is just as much a part of the PPO

agreement as the definition of covered persons, (2) contains no

ambiguity identified by MAH, and (3) must also be given effect.

See Starr, 420 Mass. at 190, 192.

1. Effect of § 8.6 in furthering PPO agreement's purposes.

The PPO agreement expressly contemplates that Prime would be

marketing MAH's services in the future to "PPO clients," such as

third-party administrators (like AIS), insurers, or payors (like

Commerce). Under the PPO agreement, to create payor programs,

Prime would enter into future contracts, the terms of which were

not known with certainty at the time. The PPO agreement's

second recital states that "[MAH] wishes to contract with

Prime . . . to participate in the PPO network and to assist

[Prime] in promoting [MAH's] services to [Prime's] clients."

8
Under § 1.19 of the PPO agreement, Prime's clients "will be

(1) a third party administrator needing access to a contracted

network to use in conjunction with their clients [or] (2) an

insurance company who needs access to a healthcare network for

their policyholders to access . . . ." And § 3.1 of the PPO

agreement provides, "[Prime] agrees to enter into agreements

with payors that include appropriate incentives for covered

persons to utilize participating providers such as

[MAH] . . . ."9

In light of MAH's acknowledgment that obtaining the

benefits of the PPO agreement would require payor programs to be

established under future contracts, it was entirely rational for

MAH to agree in § 8.6 that, in the event of a conflict between

the PPO agreement and one of those other contracts, the other

contract would control. See Starr, 420 Mass. at 192 (contract

to be construed as rational business instrument to carry out

parties' intent). Notably, the PPO agreement's integration

clause, on which MAH relies, provides that the PPO agreement,

9 Similarly, § 3.2 provides that Prime "and/or" its clients
"will contract" for "the full range of UR [utilization review]
program services"; "[s]ervices selected by payor will be set
forth in the payor program"; and "[MAH] agrees to make best
efforts to comply with UR program requirements." In the same
vein, under § 3.7, MAH "agrees to make reasonable efforts to
comply with . . . those [Prime] and payor protocols, policies
and programs as set forth in this agreement or payor manuals or
handbooks to be provided by payor."

9
along with any subsequent amendments, "constitutes the entire

understanding and agreement of the parties hereto and supersedes

any prior written or oral agreement pertaining to the subject

matter of this agreement" (emphasis added). This language does

not bar application of the terms of the contemplated future

payor programs. And § 8.6 is part of the "entire understanding

and agreement" and expressly makes those later-established terms

controlling in the event of a conflict.10

We reject MAH's claim that there is no conflict between the

terms of the agreements and so § 8.6 is irrelevant here. The

PPO agreement requires a covered person to be an employee; the

NAA does not. The result here would differ depending on which

definition applies. That is a conflict. Similarly, MAH's

observation that the PPO agreement could have omitted the word

"employee" from the definition of covered person, but did not do

so, is beside the point. The question before us is not what

that definition means, but whether § 8.6 requires that it yield

to the later-adopted and conflicting definition in the NAA.

10Confirming that different mechanisms were available for
resolving conflicts with other agreements, § 7.13 of the NAA
between Prime and AIS provides, "This agreement references and
requires the creation of other agreements, particularly
participation agreements, as defined herein. To the extent that
a conflict arises between the provisions of such agreements and
this agreement, the provisions of this agreement shall control."
The PPO agreement between MAH and Prime is a "participation
agreement" as defined both by § 1.11 of the PPO agreement and by
§ 1.7 of the NAA.

10
MAH next contends that it cannot be bound by "essential and

material terms of a contract to which [it] has not agreed."

Walsh v. Telesector Resources Group, Inc., 40 Mass. App. Ct.

227, 233 (1996). To the contrary, however, MAH did agree,

through § 8.6, to be bound by the terms of future contracts to

which it would not be a party. Nothing in § 8.6 carves out an

exception for conflicts with those terms of the PPO agreement

that MAH may deem essential or material. MAH offers no

definition, let alone one agreed to by the parties, of which

terms might meet those criteria.

No doubt MAH took some risk by agreeing to be bound by

terms that did not yet exist and that it might have no role in

negotiating. But that risk gave Prime additional flexibility in

marketing MAH's services to insurers and third-party

administrators, who would send more patients to MAH, or

participate in Prime's billing and claims processing system for

efficient payments to MAH for patients who obtain treatment

there, or both. And the risk MAH took was not unlimited; § 6.1

of the PPO agreement gives MAH the right to terminate the

agreement at any time, without cause, on ninety days' notice.

MAH further argues that construing § 8.6 to allow a future

agreement's definition of covered services to control over the

PPO agreement's definition would render the PPO agreement so

uncertain and indefinite, as to a material and essential term,

11
as to render it unenforceable. MAH relies on the principle that

"[a]ll the essential terms of a contract must be definite and

certain so that the intention of the parties may be discovered,

the nature and extent of their obligations ascertained, and

their rights determined." Cygan v. Megathlin, 326 Mass. 732,

733–734 (1951).

But Cygan itself expressly recognizes that whether any

particular term is essential to a contract's enforceability

depends on the circumstances:

"A contract is not to be struck down because one of its
material provisions is stated in broad and general terms
if, when applied to the transaction and construed in the
light of the attending circumstances, the meaning to be
attributed to it can be interpreted with reasonable
certainty so that the rights and obligations of the parties
can be fixed and determined."

Cygan, 326 Mass. at 734. Thus, case law "has gone far in

enforcing contracts where the consideration to be paid by one

party to the other was expressed as a fair and equitable share

of the profits [or] a sum which would be right and

satisfactory," rather than as a strictly mathematical amount or

calculation (citations omitted). Id. "If parties specify

formulae and procedures that, although contingent on future

events, provide mechanisms to narrow present uncertainties to

rights and obligations, their agreement is binding." McCarthy

v. Tobin, 429 Mass. 84, 87 (1999), quoting Lafayette Place

Assocs. v. Boston Redev. Auth., 427 Mass. 509, 518 (1998), cert.

12
denied, 525 U.S. 1177 (1999). "[A] contract embodying all the

material factors for the accomplishment of a transaction

undertaken by the parties is not incomplete or indefinite

because it fails to express in terms some matters concerning the

performance of the contract and reasonably necessary for the

attainment of its object." Shayeb v. Holland, 321 Mass. 429,

431 (1947).

Here, the category of covered persons to whom MAH was

required to provide treatment and accept payment of ninety-five

percent of its billed charges was defined by the PPO agreement -

- subject to the terms of future payor programs, and further

subject to MAH's right to terminate if, among other things, MAH

found those future terms unsatisfactory. The PPO agreement

defined the types of covered services MAH would render, the

compensation it would receive for doing so, and the range of

payor programs under which patients would come to MAH -- payors

being defined by § 1.12 to include workers' compensation, group

health, and "first party auto medical liability," i.e., PIP

insurers.

Viewed within those set parameters and the scope of the PPO

agreement as a whole, the indeterminacy of the agreement here is

narrow. It concerns only the number of PIP insureds treated at

MAH for whom MAH must accept ninety-five percent payment from

their insurer, here Commerce, by virtue of the insurer's

13
participation in a payor program. MAH contends it is only those

PIP insureds who are employees; Commerce contends it includes

all of Commerce's PIP insureds, even if not employees. Notably,

when MAH entered into the PPO agreement, it could not have known

the number of such patients it would treat in either category.

And MAH's brief acknowledges that the PPO agreement's definition

of covered persons, by referring to employees, limits only the

number of patients for whom each insurer could pay at the

ninety-five percent rate. It does not limit the number of

insurers to which Prime could promote MAH's services. Thus the

total number of patients for whom MAH must accept ninety-five

percent payment is, even under MAH's interpretation, unknown.

Case law recognizes that a contract need not specify the

precise quantity of goods or services to be purchased or sold in

order to be enforceable. See, e.g., Neofotistos v. Harvard

Brewing Co., 341 Mass. 684, 686-689 (1961) (output contracts);

Associated Credit Servs., Inc. v. Worcester, 33 Mass. App. Ct.

92, 93-94 (1992) (requirements contracts). Moreover, where

parties have not agreed with respect to a term such as quantity

that is essential to a determination of parties' rights and

duties, the court will, if possible and equitable, supply a term

that is reasonable in the circumstances, in order to yield a

contract that is enforceable rather than ineffectual. See

14
Browning-Ferris Indus., Inc. v. Casella Waste Mgt. of

Massachusetts, Inc., 79 Mass. App. Ct. 300, 311-313 (2011).

Here, we need not even go so far as to supply a reasonable

term. Instead, we need only decide whether to apply the

definition of covered services agreed to by MAH in the PPO

agreement, or instead the conflicting definition in the NAA. We

have no difficulty resolving this conflict by applying § 8.6 of

the PPO agreement -- also agreed to by MAH -- to conclude that

Commerce's position prevails. Construing the PPO agreement to

require MAH to accept ninety-five percent payment for treatment

provided to all of Commerce's PIP insureds, rather than only to

that subset of Commerce's PIP insureds who are employees, does

not render the PPO agreement so indefinite as to be

unenforceable.

2. Effect of other provisions on § 8.6. MAH further

argues that other provisions of the PPO agreement preclude

Commerce's interpretation of § 8.6. First, MAH asserts that

when the parties to the PPO agreement (including MAH itself)

meant to defer to definitions in payor programs, they said so

explicitly. MAH points to the definition of covered services,

which includes the phrase "as defined under the payor program,"

although it is unclear whether that phrase modifies the term

"participating providers," the term "services," or some other

term. This single provision, however affecting a single defined

15
term, does not make § 8.6 superfluous in resolving potential

conflicts between the many other definitions in the PPO

agreement (including the definition of covered persons) and

those appearing in payor agreements.

Second, MAH points to the nonrecourse provision of the PPO

agreement, in which MAH agreed that payments for covered

services will come from participating payors and that "under no

circumstance, including but not limited to nonpayment," will MAH

"have any recourse against[] a covered person (as specifically

defined herein)." MAH argues that this language shows the

parties intended the PPO agreement's definition of covered

person to govern, even if other agreements might contain

conflicting definitions of the term. Assuming without deciding

that MAH's interpretation is correct -- i.e., that the phrase

"as specifically defined herein" is intended to negate the

application of § 8.6 -- the problem for MAH remains that the

phrase appears only in the nonrecourse provision. It may bar

recourse against only those covered persons who are employees,

but it does not purport to apply to other provisions, such as

the provision stating that "[f]or covered services rendered to a

covered person, [MAH] will be paid 95% of the submitted billed

charges."

Third, MAH argues that the PPO agreement "requires that

Prime give MAH notice of any changes in [p]ayor [p]rograms," and

16
that because no such notice was given, the terms of the payor

programs in which Commerce participates do not control over the

terms of the PPO agreement itself. But what the PPO agreement

provides in this regard is that "[a]ny payor programs may be

amended in any respect by [Prime] at any time by giving thirty

(30) days prior notice to [MAH]," and allows MAH thirty days

within which to object (emphasis added). MAH has not shown that

any relevant payor program in which Commerce participates has

been amended.11 For much the same reason, MAH's reliance on the

PPO agreement's requirement that "[a]ny amendment to this

agreement must be in writing and signed by both parties" is

unavailing. MAH does not point to any purported amendment to

the PPO agreement. That § 8.6 of the PPO agreement expressly

contemplates that the conflicting terms of later-executed

contracts may be binding on MAH does not convert the execution

of such contracts into an amendment of the PPO agreement itself.

3. Other issues. MAH's miscellaneous other arguments in

support of affirmance are unpersuasive. MAH first asserts that

because the copies of the NAA and the MSA-PPO appearing in the

record are redacted, we cannot properly interpret those

11MAH identified the relevant payor program as the NAA,
which was executed in 2015; Commerce relies on the MSA-PPO,
which was executed in 2012. See notes 6 and 8, supra. MAH
points to no amendment by Prime to either agreement.

17
agreements, which requires consideration of all of their

provisions. But MAH does not even hint as to how the redacted

terms might bear on any issue of interpretation relevant here.

Our own review of the context of the redacted provisions

suggests that the redactions are not relevant. If MAH had a

good-faith basis for believing otherwise, we presume that MAH

would have called the redacted provisions to the attention of

the District Court, or sought access to unredacted copies to the

extent that MAH did not already have them. Nothing in the

record suggests that MAH did so.

MAH next asserts in its brief that Commerce was not an

intended third-party beneficiary of the NAA. At oral argument,

however, MAH stated that that issue was not relevant to this

appeal. We therefore decline to resolve it. MAH also claims

that the affidavit of Eleanor Thompson submitted by Commerce to

the District Court is not relevant. We have not relied on that

affidavit in our analysis and thus need not address MAH's

objection to it. Finally, MAH asserts that its claims are not

barred by issue preclusion. Our analysis does not rely on issue

preclusion and so we need not address MAH's objection to its

application.

Conclusion. The decisions and orders of the Appellate

Division are vacated. The judgments of the District Court are

18
reversed and new judgments shall enter for Commerce Insurance

Company on all claims.12

So ordered.

By the Court (Meade, Sacks &
Hodgens, JJ.13),

Clerk

Entered: March 3, 2025.

12MAH's request for appellate attorney's fees and costs
under G. L. c. 90, § 34M, is denied.

13 The panelists are listed in order of seniority.

19