Methodist Hospitals of Dallas v. Amerigroup Texas, Inc.

231 S.W.3d 483, 2007 WL 2325513
CourtCourt of Appeals of Texas
DecidedSeptember 13, 2007
Docket05-05-01579-CV
StatusPublished
Cited by8 cases

This text of 231 S.W.3d 483 (Methodist Hospitals of Dallas v. Amerigroup 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
Methodist Hospitals of Dallas v. Amerigroup Texas, Inc., 231 S.W.3d 483, 2007 WL 2325513 (Tex. Ct. App. 2007).

Opinion

OPINION

Opinion by

Justice BEA ANN SMITH.

To address concerns raised in Appellant’s Motion for Rehearing, we withdraw our earlier opinion. This is now the opinion of the court. The Motion for Rehearing is overruled.

In this case, we are asked to construe the terms of two contracts executed under the state Medicaid managed care program to determine whether appellee, a Medicaid HMO, was contractually obligated to pay for healthcare services provided by Methodist Hospitals of Dallas (Methodist). In nine issues, Methodist contends that the trial court erred when it denied Methodist’s motion for summary judgment and granted summary judgment for Ameri-group Texas, Inc. (Amerigroup). Methodist insists that Amerigroup was liable for payment under the terms of both its provider contract with Methodist and its contract with the Texas Health and Human Ser *485 vices Commission. 2 Methodist asserts five grounds in support of its contention: (1) the summary judgment evidence does not establish that the patient, Felicia Carra-way, lost her Medicaid eligibility on December 31, 2001, or on the date she became eligible for Supplemental Security Income (SSI); 3 (2) the distinction between Medicaid eligibility under the Temporary Assistance for Needy Families program (TANF) 4 and traditional Medicaid based on SSI eligibility is immaterial; (3) even if there was a gap in the patient’s Medicaid eligibility, Amerigroup was still responsible for payment under various terms of the contracts; (4) Amerigroup was bound by the Commission’s initial determination that Amerigroup was responsible for payment; and (5) the payment that Methodist received from the State does not discharge Amerigroup’s liability. Methodist further asserts that Amerigroup breached a statutory obligation to promptly pay claims, and is therefore hable for the full amount for services rendered by Methodist in the amount of $1,840,734. Alternatively, Methodist contends that Amerigroup is liable under its contract with Methodist for $1,351,817, the contract rate for the charges billed. 5

The distinction between mandatory and voluntary participation in the HMO, as defined in the federal waiver controlling the state’s eligibility determinations, is critical to our analysis. Only specifically defined categories of persons are eligible for mandatory participation in an HMO. The patient was qualified for mandatory participation in Amerigroup when she entered the hospital on December 19, 2001. Later that month, when Carraway became eligible for SSI, she was disqualified under federal law from mandatory membership in the HMO. The Commission has the sole authority to make Medicaid HMO eligibility determinations and to designate those persons who qualify as mandatory enroll-ees in the HMO. Once the Commission determined that the patient was ineligible for mandatory participation in the HMO, Amerigroup was no longer obligated to pay for her medical expenses unless another contractual term applied to continue the obligation. The contractual term on which Methodist relies, however, does not produce a different result. The term only applies if the patient’s eligibility for Medicaid continues without interruption, and Carra-way’s eligibility terminated on December 31, 2001, creating a gap in coverage from January 1-8, 2002. Because we conclude that the Commission has the statutory and contractual authority to determine Medicaid eligibility within the limitations imposed by federal law, and because the contractual provisions upon which Methodist relies do not apply, we affirm the summary judgment entered by the trial court.

*486 BACKGROUND

A. Regulatory Framework.

The Medicaid statute, Subchapter XIX of the Social Security Act, established a cooperative plan between the federal government and the states to provide medical sendees to certain defined categories of low-income individuals. 42 U.S.C. §§ 1396-1396v. The program is jointly funded by the federal and state governments and is administered by the states pursuant to federal guidelines. See generally 42 U.S.C. §§ 1396a, 1396b; 42 C.F.R. § 430.0-.25 (2005). To qualify for federal funding, a state must have its own Medicaid plan approved by the Health Care Financing Administration (HCFA) of the United States Department of Health and Human Services. 42 U.S.C. § 1396; 42 C.F.R. § 430.10. State Medicaid programs are required to follow fundamental principles set forth in the Social Security Act and comply with all mandates related to eligibility and covered services. Frew v. Hawkins, 540 U.S. 431, 434, 124 S.Ct. 899, 157 L.Ed.2d 855 (2004) (once a state elects to join the program it must administer a plan that meets federal requirements). One of the fundamental federal requirements is freedom of choice; Medicaid recipients must be allowed to select any health care provider who meets program standards and elects to provide services. See 42 U.S.C. § 1396a(a)(23); 42 C.F.R. § 431.51(b)(1)®. States seeking to limit a recipient’s freedom of choice must obtain a specific exemption in a waiver granted by the Centers for Medicare and Medicaid Services (CMS). See 42 U.S.C. § 1396n(b); see also 42 C.F.R. § 430.25(b) (stating that “waivers are intended to provide the flexibility needed to try new or different approaches to efficient and cost-effective delivery of health care services, or to adopt their programs to the special needs of particular areas or groups of recipients”).

B. The Texas Medicaid Plan.

Texas has elected to participate in the federal Medicaid program. See Tex. Hum. Res.Code Ann. § 32.001 (Vernon 2006). The Commission is charged with the chief responsibility for the Medicaid program in Texas. Tex. Gov’t Code Ann. § 531.021 (Vernon Supp.2006). In order to streamline the program, Texas instituted the State of Texas Access Reform Program (STAR). STAR allows the Commission to contract with managed care organizations 6 to provide health care services to certain Medicaid recipients.

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Cite This Page — Counsel Stack

Bluebook (online)
231 S.W.3d 483, 2007 WL 2325513, Counsel Stack Legal Research, https://law.counselstack.com/opinion/methodist-hospitals-of-dallas-v-amerigroup-texas-inc-texapp-2007.