In November 2017, ACS Primary Care Physicians Southwest PA and Emergency Services of Texas (affiliates of physician led TeamHealth), filed a lawsuit in Houston, Texas alleging that Molina Healthcare, Inc. and Molina Healthcare of Texas, Inc. failed to pay the usual and customary rates for out-of-network services.[1] ACS and Emergency Services of Texas sought more than $100 million in damages. [2] The trial commenced on June 21, 2021.

By all reports, Plaintiff’s closing argument was inflammatory at best. According to ACS’ counsel’s website, the jury heard the following during the closing argument:

“What they have done to the government, what they have done to their members and what they have done to us … there’s been no consequence for their actions, until now,” […] “You are the tip of the spear. You have the ability to tell every one of these insurance companies watching, ‘Not here. Not in Texas. We don’t treat each other like this.’”

Jurors were told that the case was being watched nationally by emergency room doctors and nurses and by insurance companies elsewhere who have tried to get around paying the going rate.[3] Counsel for Plaintiff “called Molina ‘evil’ and encouraged the jury to ‘stick it to them’ with a $100 million punitive damages award.”[4]

On June 24, 2021 (after more than three years of litigation), a jury returned a verdict in favor of ACS and Emergency Services of Texas in the amount of $19.1 million — $1.58 million in actual damages and $17.5 million in punitive damages. The jury found that Molina Healthcare of Texas knowingly engaged in unfair or deceptive practices by failing to pay the usual and customary rates as required by the Texas Insurance Code.[5]

Molina will likely appeal the case. Because the record is not publicly available, we cannot speculate on what grounds Molina will appeal.

This particular case, however, is one of many and while it makes for a good headline, the case and Molina’s appeal of it may not matter. On June 23, 2021 (one day before the jury verdict), Texas Medicine Resources, LLP, Texas Physician Resources, LLP, and Pediatric Emergency Medicine Group, LLP filed a Petition for Review in the Texas Supreme Court. The Petition presents four issues:

• Section 1271.155 of the Texas Insurance Code provides that HMOs “shall pay” emergency-care doctors “the usual and customary rate” for out-of-network care. Are emergency-care doctors entitled to bring a claim under Section 1271.155 for payment at “the usual and customary rate”?
• When emergency-care doctors provide out-of-network care to an HMO’s members, they fulfill the HMO’s statutory obligation to provide medical care to its members. Are emergency-care doctors entitled to seek reasonable compensation based in quantum meruit?
• Chapter 541 of the Texas Insurance Code provides that “person[s]” injured by an HMO’s unfair settlement practices may bring suit. Are emergency-care doctors entitled to bring a claim under Chapter 541, either as injured “persons” or by virtue of patient assignments?
• Chapter 843 of the Texas Insurance Code requires that insurers timely reimburse doctors’ claims. Are emergency-care doctors entitled to bring a payment claim under Chapter 843? [6]

The Petitioners did not brief issues three or four in the Petition for Review. The Petitioners requested review for two reasons:

To resolve a split among Texas courts by clarifying that emergency-care doctors may sue an HMO that fails to reimburse at the “usual and customary rate” under the Texas Insurance Code.

and

To clarify that […] the “benefit” requirement of a quantum-meruit claim is satisfied when doctors discharge an HMO’s duty to provide emergency healthcare to its members.[7]

Put simply, the Petitioners are asking the Texas Supreme Court to determine whether emergency-care doctors can sue insurance companies if they do not pay the usual and customary rate for out-of-network claims. The Petitioners want the Texas Supreme Court to decide if they can sue under the Texas Insurance Code and/or on the common-law ground of quantum meruit (a promise implied in law to pay for beneficial services rendered and knowingly accepted).[8]

If the Texas Supreme Court accepts the case and says emergency-care doctors cannot sue insurance companies under either law, the emergency-care doctors’ alternative is to sue the patient. Suing a patient is much less palatable than suing an insurance company. However, requiring an emergency-care doctor to sue a patient is a much better healthcare cost control mechanism than allowing them to sue the insurance company. With the proper advocacy, a patient is in an excellent position to control their healthcare costs and ensure that providers are reimbursed a fair amount.

With a split in the Texas Court of Appeals and the importance of the topic of healthcare – will the Texas Supreme Court accept the Petition for Review? And, if so, what message will the Court send to providers, insurers and patients? Updates will follow as additional briefs are filed and the Texas Supreme Court decides the Petition’s fate.

[1] The ACS Primary Care Physicians PA, et al. v. Molina Healthcare, Inc., et al. case records are currently designated confidential and are not publicly available on the Harris County District Clerk’s website. Therefore, the information relating to the case is based on the resources cited and not a review of the docket.

[2] Michelle Casady, Jury Awards $19M to Doc Staffing Co. In Reimbursement Row (June 24, 2021, 7:15 PM) https://www.law360.com/articles/1397303/jury-awards-19m-to-doc-staffing-co-in-reimbursement-row

[3] Houston Jury Sends U.S. Insurance Companies a Strong Message on behalf of Emergency Room Doctors (June 26, 2021) https://azalaw.com/houston-jury-sends-u-s-insurance-companies-a-strong-message-on-behalf-of-emergency-room-doctors/ (citing Law360’s coverage).

[4] See Jury Awards $19M to Doc Staffing Co. In Reimbursement Row.

[5] Id.

[6] Texas Medicine Resources, LLP, et al. v. Molina Healthcare of Texas, Inc., Supreme Court of Texas Case No. 21-0291, Petition for Review, at p. ix (https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=d5e2c389-5d1d-4d56-8d6d-b1cfcc91eab0&coa=cossup&DT=BRIEFS&MediaID=eefc3dba-91d1-4e26-a450-3c582d320bd4).

[7] Id. at pp. 2-4.

[8] In re Kellogg Brown Root, Inc., 166 S.W.3d 732, 740 (Tex. 2005).