PA Commonwealth Court Invalidates DHS CHC Procurement

The following information is courtesy of the Wojdak Government Relations Team. Please be aware that this is simply a summary and is not a legal opinion. For additional information or legal analysis, please contact a lawyer.

The Pennsylvania Commonwealth Court issued two coordinated decisions that invalidate the Department of Human Services’ Community HealthChoices (CHC) procurement (RFA 31-22).

• Gateway Health Plan v. DHS
• UnitedHealthcare v. DHS (note that in this decision, the court simply affirmed the Court’s reasoning in Gateway).

What the Court Decided

The Court found that DHS failed to demonstrate that it conducted required zone-specific evaluations for each of the five CHC regions, despite the RFA explicitly requiring that approach. All applicants received identical scores across all zones — an outcome the Court described as statistically implausible and inconsistent with prior procurements.

Because DHS did not follow the RFA’s mandatory evaluation structure and failed to provide a rational explanation for the scoring results, the Court held that the procurement was arbitrary, capricious, and contrary to law. As such, the Court reversed DHS’s determinations and cancelled the CHC award in its entirety.

Operational Implications

1. DHS cannot move forward with negotiations or implementation under the cancelled award.
2. Current CHC contracts are expected to remain in place pending DHS next steps.
3. DHS must now choose whether to re-issue a corrected RFA, re-evaluate submissions (unlikely given the Court’s findings), or appeal.
4. Plans should expect a period of operational status quo while DHS evaluates its path forward.
5. The decision may influence how DHS structures future procurements, particularly around. evaluation transparency

Potential Legal Next Steps

If DHS appeals:

1. DHS may petition the Pennsylvania Supreme Court for allowance of appeal.
2. DHS may seek a stay of the Commonwealth Court’s order.
3. If a stay is granted, DHS could resume work with selected plans during the appeal.
4. If no stay is granted, the procurement remains cancelled during the appellate process.

If DHS does not appeal:

1. DHS will need to restart the procurement — likely through a revised RFA or new competitive process.
2. A new procurement timeline would likely extend many months.