Dallas Medical Center, LLC v. Molina Healthcare of Texas, Inc.

CourtCourt of Appeals of Texas
DecidedNovember 2, 2021
Docket05-19-01583-CV
StatusPublished

This text of Dallas Medical Center, LLC v. Molina Healthcare of Texas, Inc. (Dallas Medical Center, LLC v. Molina Healthcare of Texas, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dallas Medical Center, LLC v. Molina Healthcare of Texas, Inc., (Tex. Ct. App. 2021).

Opinion

AFFIRMED and Opinion Filed November 2, 2021

S In The Court of Appeals Fifth District of Texas at Dallas No. 05-19-01583-CV

DALLAS MEDICAL CENTER, LLC D/B/A DALLAS MEDICAL CENTER, PRIME HEALTHCARE SERVICES–MESQUITE, LLC D/B/A DALLAS REGIONAL MEDICAL CENTER, AND KNAPP MEDICAL CENTER, Appellants V. MOLINA HEALTHCARE OF TEXAS, INC., Appellee

On Appeal from the 193rd Judicial District Court Dallas County, Texas Trial Court Cause No. DC-18-06920

MEMORANDUM OPINION Before Justices Osborne, Pedersen, III, and Reichek Opinion by Justice Reichek The case before us is the second appeal involving Molina Healthcare of Texas,

Inc. and its alleged failure to properly reimburse out-of-network providers for

emergency and other medical services to its insureds. Earlier this year, we issued

Texas Medicine Resources, LLP v. Molina Healthcare of Texas, Inc., 620 S.W.3d

458 (Tex. App.—Dallas 2021, pet. filed), which involved physician groups asserting

a private right of action to enforce the payment obligations set out in the Texas

Insurance Code. We concluded no such private right of action existed under the statute and affirmed the trial court’s dismissal of the physicians’ statutory and

equitable claims for lack of subject matter jurisdiction. Tex. Med., 620 S.W.3d at

472.

In this appeal, the providers are a group of out-of-network hospitals that allege

they provided emergency and other medical services to Molina’s insureds and were

not properly reimbursed. They seek payment under the insurance code and an

administrative regulation as well as asserting equitable and contractual theories. The

question before us is whether these claims remain viable after our holding in Texas

Medicine. For reasons set out below, we conclude they are not. We therefore

conclude the trial court did not err in granting the plea to the jurisdiction and

dismissing the claims.

FACTUAL BACKGROUND

Plaintiff/appellants Dallas Medical Center, LLC d/b/a Dallas Medical Center,

Prime HealthCare Services–Mesquite, LLC d/b/a Dallas Regional Medical Center,

and Knapp Medical Center (collectively, “Hospitals”) are general acute care

hospitals that provide emergency and non-emergency medical services to patients

without regard to a person’s insurance coverage or ability to pay.

Defendant/appellee Molina is an insurance company authorized to operate as a

Health Maintenance Organization (HMO) and Managed Care Organization (MCO)

pursuant to Texas law. Molina offers HMO health benefit plans through the federal

Affordable Care Act exchange (the Molina Marketplace benefit plans) and MCO

–2– Medicaid managed care benefit plans to Medicaid-eligible individuals (Medicaid

plans).

For both Marketplace and Medicaid plans, Molina uses in-network healthcare

providers who agree to pre-negotiated, discounted rates. Hospitals were in-network

providers until October 16, 2016, when they terminated their contracts and became

out-of-network providers. As out-of-network providers, Hospitals do not have a

contract with Molina setting out an agreed rate or rates for the provisions of medical

services. All of the claims here involve out-of-network services provided to

Molina’s insureds (also referred to as “members”) under either a Molina

Marketplace or Medicaid plan.

Texas has statutes and administrative regulations regarding payment of out-

of-network providers of emergency and other authorized services to an insured. The

Texas Insurance Code obligates HMOs, such as Molina, to “pay for emergency care

performed by non-network physicians or providers at the usual and customary rate

or at an agreed rate.” TEX. INS. CODE ANN. § 1271.155(a). The Texas Administrative

Code obligates MCOs, such as Molina, to reimburse an out-of-network, in-area

service provider for emergency and authorized services at “the Medicaid [Fee For

Service] rate in effect on the date of the service less five percent, unless the parties

agree to a different reimbursement amount.” See 1 TEX. ADMIN. CODE §

353.4(f)(2)(A). Collectively, the parties refer to these provisions as the “Emergency

Care Laws.”

–3– In this lawsuit, Hospitals assert they provided out-of-network emergency care

and other medical services to hundreds of Molina’s insureds, submitted claims to

Molina reflecting charges for those services, but “[d]espite state law and contractual

provisions requiring Molina to pay out-of-network providers for all emergency and,

in certain conditions, non-emergency services provided to their members,” Molina

refused to “fully and properly pay” for the claims. Instead, they allege, Molina paid

less than 10% of their charges for the services they provided. Hospitals filed this

lawsuit to recover for all services provided to Molina’s insureds through December

31, 2018. The live petition alleged the following:

Count 1: Violation of section 353.4 of Title 1 of the Texas Administrative Code, seeking to recover the difference between the amount paid, if any, and the Medicaid Fee for Service rates in effect on date of service less 5% for services provided under the Molina Medicaid plan;

Count 2: Violation of section 1271.155 of the Texas Insurance Code, seeking to recover the difference between the amount paid, if any, and the “usual and customary” rate for services provided under the Marketplace plans, as well as prompt pay penalties, interest, and attorney’s fees under sections 843.342 and 843.343 of the insurance code;

Counts 3 and 5: Unjust enrichment and quantum meruit, alleging Hospitals “conferred a benefit” on Molina and its insureds by “providing valuable medical services.” Hospitals seek restitution and damages for unjust enrichment. As for quantum meruit, they seek the “value” of the services as defined under section 353.4 of the administrative code and section 1271.155 of the insurance code;

Count 4: Breach of contract as assignees of Molina insureds’ contractual rights, seeking damages for Molina’s failure to “fully, properly, and timely pay” for medical services provided, including

–4– penalties and attorney’s fees under section 542.060 of the insurance code (prompt payment of claims);

Count 6: Declaratory judgment, declaring the proper method for calculating the “usual and customary rate” under section 1271.155 for out-of-network emergency services rendered to Molina’s insureds and the rate Molina is required to pay for such services rendered in the future (on and after January 1, 2019);

Count 7: Attorney’s fees under chapters 37 and 38 of the Texas Civil Practice and Remedies Code in connection with the claims for declaratory relief and breach of contract, respectively.

Molina filed an amended answer and counterclaim, generally denying all

claims and alleging claims for declaratory relief and attorney’s fees. Subsequently,

Molina filed a plea to the jurisdiction asserting that Hospitals lacked standing to

assert any of their claims. In particular, Molina asserted that Hospitals do not have

a private right of action under either section 1271.155 of the insurance code or

section 353.4 of the administrative code, and Hospitals’ ability to assert the

remaining claims are necessarily dependent on standing under those provisions.

Thus, Molina asserted the trial court should dismiss the claims for lack of subject

matter jurisdiction.

Following a hearing, the trial court agreed with Molina, granted the plea, and

dismissed the Hospitals’ claims with prejudice. Thereafter, Molina nonsuited its

counterclaims.

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