Health Care Service Corp. v. East Texas Medical Center

495 S.W.3d 333, 2016 WL 786783, 2016 Tex. App. LEXIS 4538
CourtCourt of Appeals of Texas
DecidedApril 29, 2016
DocketNO. 12-15-00287-CV
StatusPublished
Cited by22 cases

This text of 495 S.W.3d 333 (Health Care Service Corp. v. East Texas Medical Center) 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
Health Care Service Corp. v. East Texas Medical Center, 495 S.W.3d 333, 2016 WL 786783, 2016 Tex. App. LEXIS 4538 (Tex. Ct. App. 2016).

Opinion

OPINION ON REHEARING

JAMES T. WORTHEN, Chief Justice

Blue Cross and Blue Shield of Texas, a Division of Health Care Service Corporation (BCBS), seeks to dissolve a temporary injunction requiring it to place East Texas Medical Center (ETMC) in its preferred [336]*336provider network (PPO). After this court issued its opinion in this case, ETMC filed a motion for rehearing. We withdraw the opinion and judgment dated February 29, 2016, and issue this opinion and judgment in its stead. The motion for rehearing is overruled. We dissolve the temporary injunction and remand this case to the trial court for further proceedings.

Background

ETMC is the only not for , profit, full service, acute care hospital in the State of Texas that is not in BCBS’s PPO network. ETMC has annually sought to become a member of BCBS’s PPO network since 1993, but has been continually rebuffed by BCBS. On June 2, 2015, ETMC filed suit against BCBS seeking damages for breach of its duties to ETMC and for interference with prospective business relations and economic advantage.1 The trial court set the case for trial in November 2016.

On July 30 and September 24, 2015, respectively, Moody’s Investor Services and Fitch Ratings downgraded ETMC’s bond ratings. Both Moody’s and Fitch stated ETMC’s “outlook remains negative.” Both rating agencies described declining revenues and patient volumes as the reason for their downgrades. Specifically, Moody’s stated that these declines were “amplified by ETMC’s longstanding out-of-network status with all major commercial insurance companies.”

Following these two bond downgrades, ETMC filed an amended petition seeking a temporary injunction requiring BCBS to put ETMC in its PPO network. On November 10, the trial court held a six hour hearing on this request. ETMC’s balance sheet, part of the documentary evidence admitted at the hearing, showed ETMC had $286,857,000.00 cash and cash equivalents on hand as of September 30, 2015. Further evidence showed ETMC had a $140,594,000.00 cash surplus above its bond covenant requirement.2

Byron Hale, chief financial officer for ETMC, testified that ETMC lost $16,000,000.00 dollars in FY 2015. He testified that- ETMC would not be able to continue its current level of services unless the trial court required BCBS to put ETMC-in its PPO network immediately. Dr. Steven Rydzak, chairman of ETMC’s department of medicine and a member of its board of directors, testified that “⅛⅛ inevitable that ETMC Tyler will fail unless relief' is imminent.” Immediately upon conclusion of the hearing, the trial court rendered an'order granting the temporary injunction, which in pertinent part states as follows:

.. .Without immediate access to privately-insured patients under the Blue Cross PPOs, ETMC will be unable to maintain its current level of comprehensive medical care services to the community before a trial on the merits. Thus, without injunctive relief, ETMC will be unable to fulfill its mission of continuously striving to bring an unmatched spirit of excellence to the art and science of healthcare, the success of which is measured by ETMC’s impact on the quality of life for the people and communities in East Texas. ETMC’s closure, or significant reduction in the services it provides, [337]*337would result in irreparable injury and extreme hardship to East Texas patients who would have fewer health care options and no access to the services which only ETMC provides in the area. Accordingly, the evidence demonstrates and the Court finds that this temporary injunction is necessary to prevent irreparable harm and extreme hardship to ETMC and members of the public.
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ACCORDINGLY, IT IS ORDERED that the application is GRANTED. Blue Cross and-its agents, employees, independent contractors, attorneys, representatives and persons or entities in active concert or participation with Blue Cross who receive actual notice of this order by personal service or otherwise, are ordered to desist and refrain from breaching Blue Cross’ duties to ETMC by taking the following actions until the Court enters a final judgment in this case:
1. Cease and desist from excluding ETMC from the Blue Cross PPOs by allowing ETMC’s immediate and full participation in Blue Cross’s 'Blue Options and Blue Choice PPO networks at rates identical to those in force in the Hospital Agreement for Traditional Indemnity Business in effect between ETMC and Blue Cross (effective August 15, 2012, as amended effective September 15, .2015), attached as Exhibit A to this Order, until new PPO agreements are negotiated and signed;
2. Cease and desist from excluding ETMC from, its electronic preferred provider directories by listing ETMC as an in-network provider; and
3. Cease and desist from restricting ETMC’s right and ability to market itself as an in-network preferred provider in Blue Cross’s Blue Options and Blue Choice PPO networks.

BCBS timely filed an* accelerated appeal of the temporary injunction to this court.

Issue Presented

BCBS argues, in one issue that ETMC failed to produce probative evidence establishing a probable, imminent, and irreparable injury before the scheduled trial on the merits in November 2016. Therefore, BCBS argues that the trial court abused its discretion when it impermissibly altered the status quo between the parties by granting the temporary injunction.

Temporary Injunction

To obtain a temporary injunction, the applicant must plead and prove three specific elements: (1) a cause of action against the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex.2002). A temporary injunction’s purpose is to preserve the status quo of the litigation’s subject matter pending a trial on the merits. Id. In this context, the status quo is the last, actual, peaceable, noncontested status between the parties to the controversy that preceded the pending suit. See In re Newton, 146 S.W.3d 648, 651 (Tex.2004); Cannan v. Green Oaks Apts., Ltd., 758 S.W.2d 753, 755 (Tex.1988).

There are two general types of temporary injunctions: prohibitive and mandatory. RP & R, Inc. v. Territo, 32 S.W.3d 396, 400 (Tex.App.-Houston [14th Dist.] 2000, no pet.). A prohibitive injunction forbids conduct, and a mandatory injunction requires it. Lifeguard Benefit Servs. v. Direct Med. Network Sols., Inc., [338]*338308 S.W.3d 102, 112 (Tex.App.-Fort Worth 2010, no pet.). A preliminary mandatory injunction is proper only if a mandatory order is necessary to prevent irreparable injury or extreme hardship. Iranian Muslim Org. v. City of San Antonio, 615 S.W.2d 202, 208 (Tex.1981).

Standard of Review

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Cite This Page — Counsel Stack

Bluebook (online)
495 S.W.3d 333, 2016 WL 786783, 2016 Tex. App. LEXIS 4538, Counsel Stack Legal Research, https://law.counselstack.com/opinion/health-care-service-corp-v-east-texas-medical-center-texapp-2016.