Tex. Med. Res. v. Molina Healthcare of Tex., 21-0291

• Docket Number: 21-0291,22-0138
• Decision Date: 13 January 2023
• Parties: Texas Medicine Resources, LLP; Texas Physician Resources, LLP; and Pediatric Emergency Medicine Group, LLP, Petitioners, v. Molina Healthcare of Texas, Inc., Respondent UnitedHealthcare Insurance Company; UnitedHealthcare of Texas, Inc., Appellants, v. ACS Primary Care Physicians Southwest, P.A.; Hill County Emergency Medical Associates, P.A.; Longhorn Emergency Medical Associates, P.A.; Central Texas Emergency Associates, P.A.; Emergency Associates of Central Texas, P.A.; Emergency Services of Texas, P.A., Appellees
• Court: Texas Supreme Court

Texas Medicine Resources, LLP; Texas Physician Resources, LLP; and Pediatric Emergency Medicine Group, LLP, Petitioners, v. Molina Healthcare of Texas, Inc., Respondent UnitedHealthcare Insurance Company; UnitedHealthcare of Texas, Inc., Appellants, v. ACS Primary Care Physicians Southwest, P.A.; Hill County Emergency Medical Associates, P.A.; Longhorn Emergency Medical Associates, P.A.; Central Texas Emergency Associates, P.A.; Emergency Associates of Central Texas, P.A.; Emergency Services of Texas, P.A., Appellees

Nos. 21-0291, 22-0138

Supreme Court of Texas

January 13, 2023

Argued September 20, 2022

On Certified Question from the United States Court of Appeals for the Fifth Circuit

NATHAN L. HECHT CHIEF JUSTICE

Three sections of the Texas Insurance Code we refer to as the Emergency Care Statutes require a health-insurance company to pay a non-network physician for emergency care rendered to the company's insureds "at the usual and customary rate".^[1] Recent amendments to Chapter 1467 of the Code provide a mandatory arbitration process for resolving payment disputes accruing on or after January 1, 2020.^[2] Two cases before us present the question whether the Code authorizes a private cause of action by a physician against an insurer for payment of claims that accrued prior to 2020. The answer is no. We also hold that the physician-plaintiffs' claims for recovery in quantum meruit and for unfair settlement practices^[3] fail as a matter of law.

In No 21-0291, Texas Medicine Resources, LLP v. Molina Healthcare of Texas, Inc., we affirm the judgment of the court of appeals. In No. 22-0138, UnitedHealthcare Insurance Co. v. ACS Primary Care Physicians Southwest P.A., we answer the certified question no.

I

Unlike other medical specialists, emergency-medicine doctors are required by law and ethics to provide emergency care to any patient regardless of the patient's insurance status or ability to pay. In each of the cases before us, groups of emergency-medicine doctors outside an insurer's provider network sued the insurer, alleging that it did not pay them at the usual and customary rates for treating its insureds.^[4]

A

Section 1271.155(a) of the Insurance Code states that "[a] health maintenance organization shall pay for emergency care performed by non-network physicians or providers at the usual and customary rate or at an agreed rate."^[5] Subsection (e) provides that an HMO "shall comply" with (a) "regardless of whether the physician or provider furnishing the emergency care has a contractual or other arrangement" with the insurer.^[6] Other sections of the Code address the same directive to insurers that offer exclusive provider benefit plans, or EPOs,^[7] and to those that offer preferred provider benefit plans, or PPOs.^[8] In the underlying lawsuits, the Doctors allege that the defendants underpaid them for emergency care provided to thousands of the defendants' insureds and assert claims for damages under the Emergency Care Statutes. All claims asserted by the Doctors are for care provided before January 1, 2020.

B

Enacted in 2009, Chapter 1467 of the Insurance Code is titled Out-of-Network Claim Dispute Resolution.^[9] But for the first ten years of its existence, the chapter's scope was quite limited. The only dispute resolution process set forth in it was a mediation for balance-billing disputes between an individual enrolled in one of a few enumerated types of plans and the out-of-network provider that billed the individual.^[10] The original version of Chapter 1467 did not address disputes between providers and insurers at all.

Yet from the beginning, Chapter 1467 has included a standard remedies-not-exclusive provision in Section 1467.004. The original language is still in effect:

§ 1467.004. Remedies Not Exclusive

The remedies provided by this chapter are in addition to any other defense, remedy, or procedure provided by law, including the common law.^[11]

In 2019, the Legislature added Subchapter B-1, which includes a mandatory binding arbitration process for disputes between an insurer and an out-of-network emergency-care physician over the amount the insurer must pay the physician for care rendered to an individual enrolled in the insurer's plan.^[12] These new provisions:

• explain how the provider or insurance company requests arbitration^[13] and how the arbitrator will be selected;^[14]

• limit the scope of arbitration to "the reasonable amount" owed the provider for the services rendered;^[15]

• list ten categories of technical information that the arbitrator must consider in calculating the reasonable payment amount;^[16]

• provide for procedures;^[17] and

• authorize a suit for judicial review in which the arbitrator's decision is reviewed by the court without a jury under the substantial evidence standard.^[18]

New Section 1467.085(a) reinforces the mandatory nature of the arbitration process by clarifying that notwithstanding the remedies-not-exclusive provision in Section 1467.004, an out-of-network provider cannot file suit until the arbitration is completed:

§ 1467.085 Effect of Arbitration and Applicability of Other Law

(a) Notwithstanding Section 1467.004, an out-of-network provider or health benefit plan issuer or administrator may not file suit for an out-of-network claim subject to this chapter until the conclusion of the arbitration on the issue of the amount to be paid in the out-of-network claim dispute.^[19]

The arbitration process applies only to healthcare services rendered on or after January 1, 2020.^[20] All parties agree that it does not apply to the Doctors' claims here because the claims are for services rendered before January 1, 2020. They also agree that the new arbitration process would apply to the Doctors' claims if they were for services rendered on or after that date.

C

The two cases before us arrived by different paths.

In Molina, the Doctors^[21] sued Molina Healthcare of Texas, Inc., an HMO, in state district court. The Doctors allege that they provided emergency care to more than 3,800 of Molina's insureds between January 1, 2017, and the end of 2019 and that "on average, Molina has reimbursed less than 15% of [the Doctors'] usual and customary charges." The Doctors allege two sets of claims under the Insurance Code: (1) claims under Sections 1271.155 and 1301.0053, for failing to pay the Doctors' usual and customary rates; and (2) claims under Section 541.060, for engaging in unfair settlement practices.^[22] They also allege a common law claim for quantum meruit. They seek damages, including statutory penalties, and "a declaration that the rate that the jury determines to be the usual and customary rate for the past healthcare claims asserted . . . [will be] the usual and customary rate that Molina [will be] required to pay" to the Doctors for emergency care rendered in the future.

Molina removed the case to federal court, but it was remanded. Molina then filed a plea to the jurisdiction. Though Molina phrased its arguments in terms of standing and justiciability, the thrust of its plea was that the Emergency Care Statutes do not create a private right of action and that the Doctors' other claims also fail as a matter of law. After a hearing, the trial court granted the plea and dismissed all the Doctors' claims. The court of appeals affirmed.^[23] In UnitedHealthcare, the Doctors^[24] sued UnitedHealthcare Insurance Company, which provides PPOs and other plans, and UnitedHealthcare of Texas, Inc., an HMO, in state district court initially. They assert a claim for thousands of violations of the Emergency Care Statutes arising out of care rendered from January 2016 through the end of 2019. The Doctors in this case also assert a quantum meruit claim and a claim for breach of an implied contract.

UnitedHealthcare removed the case to federal court and then moved for dismissal under Federal Rule of Civil Procedure 12(b)(6) for "failure to state a claim upon which relief can be granted".^[25] The district court granted the motion with respect to the Doctors' implied-contract and quantum meruit claims.^[26] With respect to the claims under the Emergency Care Statutes, the court also dismissed the claims under the PPO statute, Section 1301.155(b), because it had determined in earlier proceedings on the Doctors' motion to remand that the PPO claims were completely preempted by ERISA.^[27] The court denied the motion with respect to the other Emergency Care Statute claims.^[28] The district court then granted UnitedHealthcare's motion for a permissive interlocutory appeal under 28 U.S.C. § 1292(b) of the issues arising under the Emergency Care Statutes.^[29]

On the Doctors' motion, the U.S. Court of Appeals for the Fifth Circuit certified the following question to this Court:

Do §§ 1271.155(a), 1301.0053(a), and 1301.155(b) of the Texas Insurance Code authorize Plaintiff Doctors to bring a private cause of action against UHC for UHC's failure to reimburse Plaintiff Doctors for out-of-network emergency care at a "usual and customary" rate?^[30]

No other issue raised in this case is before us.

We granted Molina's petition for review and accepted the certified question. Because each case presents the same question under the Emergency Care Statutes, and the Doctors are represented by the same counsel in each case, we consolidated the cases for oral argument.

II

The first and main issue-raised in both cases-is whether the Insurance Code authorizes a private action by an emergency-medicine physician against an insurer for payment of the usual and customary rate for services rendered before 2020 to the insurer's enrollees. Because the Emergency Care Statutes are worded similarly, and no party argues that our answer might be different for one...