Chief Justice Nathan Hecht
The Texas Supreme Court has ruled that a pre-2020 statute requiring health benefit plans to pay out-of-network emergency care providers at “usual and customary” rates does not imply a private cause of action by providers that dispute the amount of reimbursement for their services.
The Court’s decision disposes of two cases. In the first, UnitedHealthcare Insurance Company; UnitedHealthcare of Texas, Inc. v. ACS Primary Care Physicians Southwest, P.A., et al. (No. 22-0138, on appeal from the U.S. District Court for the Southern District of Texas, USDC No. 4:20-CV-1282), several out-of-network emergency-care physician groups sued UnitedHealthcare for failing to pay their “usual and customary” rates for emergent care provided to UHC’s plan enrollees on thousands of claims between 2016 and 2019 (the “emergency care statutes”). The physicians initially filed suit in state court. UHC removed the case to federal court and moved to dismiss under Rule 12(b)(6). The court denied the motion as to the emergency care statute claims. UHC sought immediate interlocutory relief from the Fifth Circuit on two issues: (1) whether the emergency care statutes provide for an implied private right of action; and (2) if so, whether ERISA § 514 preempts such claims. The Fifth Circuit subsequently certified those questions to SCOTX.
In the second case, Texas Medicine Resources, LLP; Texas Physician Resources, LLP; and Pediatric Emergency Medicine Group, LLP v. Molina Healthcare of Texas, Inc. (No. 21-0291), doctors sued an HMO for not paying their usual and customary rates for emergency care provided to more than 3,800 of the HMO’s insureds. They also sued for unfair settlement practices under § 541.060, Insurance Code, quantum meruit, and a declaratory judgment. Molina moved to dismiss on the basis that the applicable Insurance Code provisions did not create a private right of action. The trial court dismissed the doctor’s claims, and the Dallas Court of Appeals affirmed. SCOTX consolidated the case with the Fifth Circuit certified questions.
In an opinion by Chief Justice Hecht, SCOTX held that §§ 1271.155(a), 1301.0053(a), and 1301.155(b) of the Texas Insurance Code do not imply a private cause of action for a health insurer’s failure to reimburse providers for out-of-network emergency care at a “usual and customary” rate. The decision turned on the Court’s precedent established by Brown v. De La Cruz, 156 S.W.3d 560, 563 (Tex. 2004), which stands for the proposition that “the existence of a private cause of action must be clearly implied in the statutory text.” Brown involved a section of the Property Code that required a seller of residential property to transfer a deed to a buyer within 30 days of the sale, subject to penalty. The statute, however, did not specify who was entitled to collect the penalty. The Legislature amended the statute in 2001 to give a purchaser a cause of action to collect the penalty, but the Court ruled that the prior statute did not imply the existence of such an action.
Similar to Brown, the Legislature amended the emergency care statutes in 2019 to provide an arbitration process followed by substantial evidence judicial review to resolve reimbursement disputes between health insurers and out-of-network emergency-care physicians. Prior to 2019, the statute did not speak to such disputes at all. Both sides in this case agreed that the 2019 amendments apply to post January 1, 2020 claims, but the doctors argued that the prior statute implied a damages claim because it “creates a compensation requirement (‘shall pay’), identifies who is entitled to compensation (‘non-network physicians or providers’), and identifies the measure of compensation (‘usual and customary rate’).” They derived this argument from SCOTX’s ruling in Beaumont v. Bouillon, 896 S.W.2d 143 (Tex. 1995), which found a textual basis for a private action for compensation in takings claims while rejecting a private action for First Amendment speech and petition claims. SCOTX based this distinction on the history of the takings clause (going back to Magna Carta) and the clear intent of the framers to impose liability for a taking to property owners. In the absence of such intent, the Court opined, separation of powers dictates that courts should not imply private rights of action.
The Court likewise rejected the doctors’ argument that by adding the arbitration language to the statute in 2019, the Legislature must have understood the prior statute to imply a private cause of action and that the 2019 amendments operated “retroactively.” But, as the Court pointed out, the 2019 amendments did not create a private right of action, but an arbitration proceeding with judicial review under a substantial evidence standard. “Indeed,” Chief Justice Hecht noted, “if Chapter 1467 tells us anything about the 86th Legislature’s intent, it is that determining the amount that an out-of-network provider should be paid by an insurer is a technical exercise to be performed by a subject-matter expert—not an issue to be decided by a jury of laymen.” The Court further rejected the doctors’ quantum meruit claim for the simple reason that when doctors provide emergency care, they do so for the benefit of the HMO’s insureds, not the HMO. As to the unfair settlement practices claim, the doctors’ argument has the same problem. They are not “insureds or beneficiaries” and thus do not fall under § 541.060. As the Chief put it, “ in light of our holding that the Doctors cannot recover the difference between the payment they received and the amount they claim is the usual-and-customary rate by suing under the Emergency Care Statutes directly, it would be odd indeed if they could potentially recover three times that amount by pleading the same claim under Chapter 541.” Moreover, Chapter 541 claims are both personal and punitive and cannot be assigned, as a claim running with property may be.
Finally, the Court added an interesting and, we think, significant appendage to the opinion explaining why the characterization of the case by the HMOs and the courts below as raising a standing question was incorrect. Standing, as the Court notes, goes to the subject matter jurisdiction of the court. “A challenge to a party’s standing is an attack on the party’s ability under the United States and Texas Constitutions to assert a claim,” the Court stated. “The constitutional requirements of standing are (1) a concrete, particularized, actual or imminent injury; (2) that is traceable to the defendant’s conduct; and (3) that would be redressed by a favorable decision” (citations omitted). Standing may be challenged by a plea to the jurisdiction. But this case involves whether the plaintiff can go forward with a lawsuit on the merits, that is, whether a particular statute does nor does not allow the plaintiff’s cause of action to succeed. Consequently, the proper responsive motions should have been a traditional motion for summary judgment or a Rule 91a motion to dismiss for failure to state a claim.
It’s safe to say that this Court will not read language into a statute. It’s up to the Legislature to put it there. By the same token, the Court’s strong separation of powers philosophy continues to produce opinions that demarcate the constitutional boundaries of a court’s subject matter jurisdiction (i.e., the constitutional standing doctrine). That should be comforting to TCJL members that have to defend lawsuits searching for statutory liability, as well as those seeking damages without actual injury.
