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United Healthcare Services, Inc. v. Mayor and City Council of Baltimore

United States District Court, D. Maryland

September 29, 2017

UNITED HEALTHCARE SERVS., INC Plaintiff
v.
MAYOR AND CITY COUNCIL OF BALITMORE, Defendants

          MEMORANDUM

          James K. Bredar, Judge.

         Plaintiff United Healthcare is a health care corporation with its principle place of business in Minnesota. Plaintiff filed this lawsuit against the Mayor and City Council of Baltimore (“the City”) alleging violations of due process and equal protection under 42 U.S.C. § 1983, and violations of the City's procurement laws and regulations in connection with the City's decision not to select Plaintiff's bid for provision of medical administration services. Plaintiff now seeks a Temporary Restraining Order (“TRO”), asking the Court to stop the City from implementing contracts with the entities whose bids it did select. For the reasons set forth in this memorandum, the Court will deny the Plaintiff's motion for a TRO by accompanying order.

         I. Background

         The City, through its Bureau of Purchasing (“BOP”) issued a Request for Proposals for Medical Administration Services for HMO & PPO Plans (“RFP”) in early 2017. (Pls. Verified Compl. and Application for Temp. Restraining Order, Prel. Inj., and Perm. Inj. ¶ 8, hereinafter “Compl. and TRO”, ECF No. 6.) This RFP called for bids to provide “medical administration services to City employees, retirees, and their dependents.” (Id.) The RFP also contained numerous instructions, guidance, and rules for submitting bids. For instance, the RFP stated, under the “METHOD OF AWARD” section, that an

“[a]ward, if made, will be made to the responsive and responsible Proposer(s) for each plan . . . meeting the specifications, terms and conditions and that receives the highest combined evaluation score for Technical and Price Score, as determined by the Evaluation Committee (Committee) and approved by the Board.”

(RFP Part 1, Compl. and TRO Ex. 1, ECF No. 6-1 5.) The RFP also had goals for Minority and Woman owned Business participation among the bidders' subcontractors, set at 11% Minority Business Enterprises (“MBE”) and 4% Woman Business Enterprises (“WBE”). (Id. 16.) It contained explanations of how the Technical and Price Scoring would be calculated, including what percentage of the Technical Scoring would come from a “Network Access” score. (See id. at 6-7.)

         In addition to these rules and regulations, there are also Baltimore City Code (“City Code”) provisions that apply to contract bids for City projects. See generally Baltimore City Code Art. 5. Of particular importance, the City Code contains provisions regarding Minority and Women's Business Enterprises and contract bids. See Id. §28, Part V. For contracts over $50, 000 (such as the Medical Administration Services contracts at issue[1]), an RFP must require bidders “to include in [their] bids a certified business enterprise participation affidavit in which the bidder commits to utilize certified business enterprises in a percentage that equals or exceeds the applicable goals.” Id. §28-48(b)(1). Furthermore, any bid “that does not include the certified business participation affidavit is non-responsive.” Id. §28-48(b)(2). This provision does not say when the affidavit must be sent or received, only that it must be “include[d]” in the bid for it to be considered “responsive.” A later section, however, provides that RFPs must require bidders to “make good faith efforts before the . . . submission of proposals to meet the contract goal, ” presumably referring to the goal set for MBE/WBE participation. Id. §28-53.

         Plaintiff submitted its bid for the HMO, PPO, and Vision portions of the proposal on April 5, 2017 and was notified on August 1 that the City intended to award those contracts to other bidders. (Compl. and TRO ¶¶ 9, 19.) According to the Plaintiff, there were several problems with the City's selections and selection process. First, at the time of the proposed selection, the selected bidders did not meet the MBE/WBE requirements. Carefirst, who prevailed over United for the PPO contract, was 0.61% shy of the necessary 4% for WBE participation. (Recommendations for Contract Awards/Rejections, Compl. and TRO Ex. 9 2, ECF No. 6-9.) Aetna, who beat United for the HMO contract, was 1.41% shy of the necessary MBE participation. (Id. at 3.) NVA, who prevailed over United for the Vision contract, had no MBE participation, but met the WBE participation goal. (Id. at 4.) NVA's sole MBE subcontractor was not certified to work with Baltimore City. (Id.) The City, after a protest from Plaintiff, allowed each of these bidders ten days to come into compliance with the MBE/WBE requirements, and as of September 18, 2017, all of them apparently did. (See Def.'s Opp'n to Pl.'s Mot. Temp. Restraining Order Ex. 3, ECF No. 14-3.) Plaintiff maintains, however, that because these bidders came into compliance after their selection, Plaintiff was treated unfairly and was, in fact, the only technically “responsive” bidder under the RFP and City Code.

         Plaintiff also alleges impropriety surrounding the computation of the Technical Scoring. In order to determine the Network Access, which was factored into the Technical Scoring, bidders were told to identify which health care providers were within their networks on a “disruption report.” (Compl. and TRO at ¶¶ 14-15.) It appears that BOP double counted certain providers in this disruption report. (Compl. ¶ 15; Compl. Ex. 4, ECF No. 6-4.) As a result, if a bidder had access to that provider they would essentially receive double the points, and a bidder without access to that provider would have that loss counted against them twice. This, Plaintiff claims, taints the computation of the Technical Score, which is a key criteria for selection.

         At bottom, Plaintiff believes that it was the only bidder to fully comply with the RFP and the City Code, and was the only “responsive” bidder. As a result, Plaintiff is seeking a preliminary injunction to prevent the City from continuing its implementation of the contracts awarded to the other providers. (Compl. and TRO at ¶ 25.) In the interim, Plaintiff seeks the extraordinary remedy of a TRO to prevent the City from continuing its implementation of those contracts, arguing that to wait until trial and a decision on the merits would render this action pointless.

         II. Analysis

         The City contends that Plaintiff lacks standing to bring this action because “there is no private right of action for a disappointed bidder” and Plaintiff does not, and cannot, allege taxpayer standing. (Def.'s Opp'n to Mot. for TRO 5-6.) The City has also responded to the merits of Plaintiff's request for a TRO. The Court will first address the question of standing and then proceed to the merits of issuing a TRO.

         a. Standing

         The City asserts that there is no private right of action available to Plaintiff and that Plaintiff cannot rely on taxpayer standing. While both arguments have some merit, the Court is ultimately not ...


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