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

Court of Appeals of Texas·Decided November 2, 2021·No. 05-19-01583-CV·Published

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

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.”

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

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. The trial court subsequently made extensive findings of fact and conclusions of law to support its decision on the plea to the jurisdiction. This appeal ensued.

In seven issues, Hospitals challenge the dismissal of each of its claims for lack of standing. In an eighth issue, Hospitals argue that even if dismissal was proper, the trial court erred in dismissing the claims “with prejudice.”

DISCUSSION

A. Standard of Review

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

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