Emergency Health Care at Willowbrook, LLC et al v. UnitedHealthcare of Texas, Inc. et al
Filing
36
MEMORANDUM OPINION AND ORDER granting in part and denying in part 24 MOTION for Summary Judgment (Signed by Judge Sim Lake) Parties notified. (aboyd)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
EMERGENCY HEALTH CENTRE AT
WILLOWBROOK, L.L.C. and
EMERGENCY WILLOWBROOK, P.A.,
Plaintiffs,
§
§
§
§
§
§
§
§
v.
UNITEDHEALTHCARE OF TEXAS,
INC. and UNITEDHEALTHCARE
INSURANCE COMPANY,
CIVIL ACTION NO. H-10-4559
5
§
§
5
Defendants.
§
MEMORANDUM OPINION AND ORDER
Pending before the court is a motion for partial summary
judgment (Docket Entry No. 24) filed by defendants UnitedHealthcare
of
Texas,
Inc.
and
(collectively: "UHC").'
UnitedHealthcare
Insurance
Company
Plaintiffs Emergency Health Centre at
Willowbrook, L.L.C. ("EHC") and Emergency Willowbrook, P.A. ("PA")
For the
(collectively: "Plaintiffs") responded2 and UHC r e ~ l i e d . ~
'~efendants' Motion for Partial Summary Judgment and Brief in
Support ("UHCfs Motion"), Docket Entry No. 24.
'plaintiffsr Response in Opposition to Defendant's Motion for
Summary Judgment and Brief in Support, Objections and Motion to
Strike Defendants'
Summary Judgment Evidence
("Plaintiffsr
Response"), Docket Entry No. 27.
3~efendants' Reply in Support of Motion for Partial Summary
Judgment and Brief in Support ( "UHCfs Reply") , Docket Entry No. 28.
reasons stated below, the court will grant in part and deny in part
UHC's Motion.
I.
The Plaintiffs' Alleaations and Causes of Action
The Plaintiffs allege that EHC "conduct[s] business as a
freestanding emergency department or comparable f a ~ i l i t y , " ~
that PA
"provides emergency medical care to patients through physicians
licensed to practice medicine within the State of T e ~ a s , " ~ that
and
UHC is composed of insurance companies whose members have been
treated at EHC.'
EHC makes the following allegations regarding
UHCrs payment for services rendered to UHC members:
Initially, beginning in September 2007 when the EHC was
formed, UHC paid EHC and P.A. for treating emergency
medical conditions at a rate comparable to a hospital
emergency department and paid reasonable and customary
charges and professional fees for emergency medical
services. UHC, however, unilaterally later decided that
EHC and P.A. should receive either a reduced payment or
no payment at all for their facility or emergency
services .'
The Plaintiffs allege that UHC's refusal to reimburse them violates
Texas law.8
4Plaintiffs' Original Petition, Exhibit
Removal, Docket Entry No. 1-1, p. 2 ¶ 2.
3
to
Notice
of
Plaintiffs seek "the reasonable, usual and customary charges
for treating UHCsr Plan members for emergency medication conditions
comparable
to
a
hospital
or
hospital
affiliated
emergency
department. "' Plaintiffs allege violations of the Texas Insurance
Code, the Texas Prompt Pay Act and Texas Insurance laws, and
quantum meruit. l o
A.
Count One: Insurance Code Violations ("Chapter 541 Claims")
Plaintiffs
allege
that
UHC's
actions
provisions of the Texas Insurance Code.
violate
various
Specifically, Plaintiffs
allege violations of the following statutes (as summarized by the
court) :
1.
Tex. Ins. Code § 541.051
concerning a policy);
2.
Tex. Ins. Code § 541.052 (on misrepresentations
regarding the business of insurance);
3.
Tex. Ins. Code § 541.060 (on misrepresentations
regarding coverage to a claimant);
4.
Tex. Ins. Code 5 541.061 (on untrue or misleading
statements) ; and
5.
Tex. Bus. & Comm. Code
practices) .l1
§
(on misrepresentations
17.46 (on deceptive trade
In the section of the Original Petition setting out the factual
basis for the Plaintiffs' causes of action, the Plaintiffs allege
that "UHCsr acts, omissions and continued refusal to make payment
to EHC and P.A. for the valid covered claims violates the Texas
Insurance Code
§
1271.155 Emergency Care and constitutes a false or
misleading act or practice in the business of insurance. " I 2
The
Plaintiffs further allege that "the actions of UHC in refusing to
make payments to EHC and P.A. [vliolate the provisions of the Texas
Insurance Code, Chapter 1301 et. seq."13
B.
Count Two: Violations of the Texas Prompt Pay Act and Texas
Insurance Laws ("Prompt Pay Act Claim")
Plaintiffs allege
that
delayed payments of EHC's
medical care."I4
§
1301.069 of
"UHC has
intentionally denied or
and P.A.'s clean claims for emergency
Plaintiffs allege that they are covered by
the
Texas
Insurance Code,
which
provides
following:
The provisions of this Chapter relating to prompt payment
by an insurer of a physician or health care provider and
to verification of medical care or health care services
apply to a physician or provider who:
(1) is not a preferred provider included in the
preferred provider network; and
the
(2) provides to an insured[ : 1
([A]) care related to an emergency or its
attendant episode of care as required by
[s]
tate or [f]
ederal law.15
C.
Count Three: Quantum Meruit
Plaintiffs allege that
\\
[f] ailure to allow Plaintiffs to
recover for the reasonable value of their services and supplies
would result in the unjust enrichment of Defendants."16 Plaintiffs
therefore seek "to
recover in quantum meruit
for the usual,
reasonable and customary emergency medical services and supplies
provided to the Defendantsf Plan Members which Defendants knowingly
and willingly refused to pay or underpaid even though the services
and supplies provided to each Plan Member were beneficial, and of
substantial value."17
Summarv Judgment Standard
11.
Summary judgment is appropriate if the movant establishes that
there is no genuine dispute about any material fact and the movant
is entitled to judgment as a matter of law. Fed. R. Civ. P. 56 (a).
Disputes about material facts are "genuine" if the evidence is such
that a reasonable jury could return a verdict for the nonmoving
-
1
5
-
-
at ~6-7 9 14 (quotinq Tex. Ins. Code 5 1301.069).
1
6
&
at 11-12
1
7
&
at 11
¶
¶
26.
26.
party.
(1986).
Anderson v. Libertv Lobby, Inc., 106 S. Ct. 2505, 2511
The Supreme Court has interpreted the plain language of
Rule 56(c) to mandate the entry of summary judgment "after adequate
time for discovery and upon motion, against a party who fails to
make a showing sufficient to establish the existence of an element
essential to that party's case, and on which that party will bear
the burden of proof at trial."
S. Ct. 2548, 2552 (1986).
Celotex Corp. v. Catrett, 106
In reviewing the evidence "the court
must draw all reasonable inferences in favor of the nonmoving
party, and it may not make credibility determinations or weigh the
evidence."
Reeves v. Sanderson Plumbins Prods., Inc., 120 S. Ct.
2097, 2110
(2000).
discharged by
"[Tlhe burden on the moving party may be
'showingr-that is, pointing out to the district
court-that there is an absence of evidence to support the nonmoving
partyrs case."
Celotex, 106 S. Ct. at 2554; see also Bustos v.
Martini Club Inc., 599 F.3d 458, 468 (5th Cir. 2010) ("On summary
judgment, once the moving party establishes that there are no
factual issues, the burden shifts to the nonmoving party to produce
evidence that a genuine issue of material fact exists for trial.
The nonmoving party must then 'go beyond the pleadings,' and by
affidavits or other
competent summary judgment evidence
cite
'specific factsr that show there is a genuine issue for trial.")
(internal citations omitted).
111.
UHCrs Motion f o r P a r t i a l Summarv J u d-m e n t
UHC limits its summary judgment motion to the claims brought
by EHC and by PA regarding emergency services.
UHC does not seek
summary judgment on claims brought by PA regarding non-emergency
services or on the counterclaims brought by UHC.18 UHC lists the
relief it seeks by summary judgment as follows:
(i) against Plaintiffs on their Chapter 1301 claim,
inasmuch as the subject services were not required
by state or federal law, rendering the statute
inapplicable;
(ii) that EHC take nothing, as it was not a licensed
hospital, was not entitled to facility fees without
a licensing, though all of its claims are for
facility fees;
(iii)that Plaintiffs were out-of-network providers;
claims for benefits under the plans were not
subject to an in-network level of benefits by
virtue of the Texas Insurance Code or otherwise
because EHC was not a "licensed emergency facility
or comparable facility";
(iv) that ERISA preempts Plaintiffs' Texas Insurance
Code and quantum meruit claims for ERISA-governed
plans,
including but not
limited to those
identified in the Notice of Removal; and
(v) that Plaintiffs' quantum meruit claims fail under
state law because the services were not rendered to
UHC .
1 8 ~ ~ ~ ' s
Motion, Docket Entry No. 24, p. 3 n.2 ("This motion
seeks partial summary judgment insasmuch as it does not address (i)
UHC's counterclaim against Plaintiffs or (ii) P A r s claims for
professional fees to the extent they are based on non-emergency
services." ) .
Although
a number
of the arguments advanced by
UHC
and the
Plaintiffs are relevant to more than one of the Plaintiffs' causes
of action, the court's opinion will only address the arguments that
are necessary to decide the propriety of each cause of action.20
Whether UHC should be granted summary judgment on the Prompt Pay
Act claims can be decided on the basis of whether the Plaintiffs
were required under state or federal law to provide the emergency
services.
Whether UHC should be granted summary judgment on the
Chapter 541 claims can be decided partly on the basis of whether
EHC was a comparable facility and partly on the basis of whether
EHC was a provider. Whether UHC should be granted summary judgment
on the quantum meruit claim can be decided on basis of whether
ERISA preempts this claim.
A.
The Prompt Pay Act Claim
The Plaintiffs can recover under the Prompt Pay Act only if
the services in question were required by state or federal law.
Insurers who receive claims from "preferred providers" are required
to make determination and payment on a claim within a set period of
time.
Tex. Ins. Code
§
1301.103 (version effective September 1,
2005, to August 31, 2011).
The scope of this requirement is
expanded beyond preferred providers in the following section:
*'~ny argument made by either party but not addressed in the
analysis that follows was judged by the court to be either
unnecessary to the disposition of UHC's Motion or to lack
sufficient merit to warrant discussion.
The provisions of this chapter relating to prompt payment
by an insurer of a physician or health care provider and
to verification of medical care or health care services
apply to a physician or provider who:
(1) is not a preferred provider included in the
preferred provider network; and
(2) provides to an insured:
(A) care related to an emergency or its
attendant episode of care as required by state
or federal law; or . . . .
Tex. Ins. Code
§
1301.069.
Because it is undisputed that EHC and
the physicians in the PA were not preferred providers, EHC and PA
can recover under
§
1301.103 only by virtue of
§
1301.069. Section
1301.069, in turn, would only provide EHC and PA relief if the care
in question was "required by state or federal law."
1.
Whether the Care Was Required by Federal Law
Plaintiffs do not allege any state law that required them to
provide the emergency medical services, although in their Original
Petition the Plaintiffs allege that they abided by the Emergency
Medical Treatment and Active Labor Act ("EMTALA").21 UHC argues
that EHC was not required to provide the emergency services under
EMTALA.22
EMTALA
requires
a
hospital
experiencing a medical emergency.
to
42 U.S.C.
care
§
"~laintiffs' Original Petition, Exhibit
Removal, Docket Entry No. 1-1, p. 4 ¶ ¶ 9-10.
for
1395dd.
3
2 2 ~ ~ Motion, Docket Entry No. 24, pp. 6-7.
~ ' s
to
patients
UHC cites
Notice
of
a First Circuit case for the proposition that "even though a clinic
or another office purports to offer 24-hour emergency care, if the
facility does not meet the statutory definition of 'hospital,'
EMTALA
does
not
apply. "23
The
First Circuit
identified the
statutory definition of hospital as that contained in 42 U.S.C.
1395x(e).
Rodrisuez, 402 F.3d at 48 ("As an amendment to the
Social Security Act, EMTALA incorporates the Act's definition of a
'hospital.
") ;
accord Williams v. Womenrs Healthcare, 2010 WL
4628095, at *3 (M.D. Ala. November 8, 2010) (noting that a hospital
must meet the definition of hospital in 42 U.S.C.
to be subject to EMTALA).
§
1395x in order
The definition of hospital set out in
§
1395x(e) has many parts, including the requirement that
in the case of an institution in any State in which State
or applicable local law provides for the licensing of
hospitals, (A) is licensed pursuant to such law or (B) is
approved, by the agency of such State or locality
responsible for licensing hospitals, as meeting the
standards established for such licensing.
42 U.S.C.
§
1395x(e) (7).
UHC argues that " [b]
ecause EHC does not assert and cannot show
that it was licensed as a hospital, EHC was not required by EMTALA
to provide the emergency care at issue here.'Iz4 The Plaintiffs do
not respond to UHCrs argument, and the Plaintiffs acknowledge that
2 - at 7 (citing Rodrisuez v. Am. Int'l Ins. Co., 402 F.3d
3~d.
45, 48 (1st Cir. 2005)) .
EHC was not licensed.25 EHC does not allege, either in its Original
Petition or in its Response to UHCfs Motion, that it was approved
by the relevant state agency as meeting the licensing requirements.
Since EHC was not licensed, and does not argue or allege that it
was approved by the relevant state agency as meeting the licensing
standards, the court concludes that EHC was not required by EMTALA
to provide the emergency medical services at it issue in this case.
2.
Conclusion
The Plaintiffs can recover on their Prompt Pay Act claim only
if they prove that they were required by state or federal law to
provide the services. Because the court concludes that EHC was not
required by the only federal law invoked in EHCfs petition and
because EHC has not alleged that there was a state law requiring
the
services,
the
court will
grant
summary
judgment
on
the
Plaintiffsf Prompt Pay Act claim.
B.
T h e C h a p t e r 541 C l a i m
The Plaintiffsf Chapter 541 cause of action concerns whether
UHC should have paid EHC a facility fee for the emergency services
pr~vided.'~EHC pleads that UHC was required to pay the fee under
2
5
~ s ~ Response,
~
f
Docket Entry No. 27, p. 11 ("[Nlo such
licenses were required or obtainable by EHC during the relevant
time periods to this matter.").
'H
%C
notes that "there are two components to payments for
(continued.. . )
§§
1301.069 and 1271.155.*'
Section 843.002 (24) defines "provider" for the purposes of the
application of
§
1271.155.
Tex. Ins. Code
§
1270.001.
Section
1301.001 (1-a) defines "health care provider" for the purposes of
the application of
§
1301.069. Both statutory definitions require
that the entity be "licensed or otherwise authorized."
If EHC was
not "licensed or otherwise authorized," it was not a "provider" for
the purposes of
Section
§§
1301.069 and 1271.155.
1301.069 requires UHC to pay EHC for emergency
§
services only if EHC qualified as a provider.
applies only to providers
The statute clearly
(and physicians); it states that the
chapter "appl [iesl to a physician or provider."
5 1301.069.
It is less clear whether
§
Tex. Ins. Code
1271.155 requires an
insurer only to reimburse providers or if the statute also requires
an
insurer
to
reimburse
a
"comparable
facility".
Section
( . . .continued)
services provided in licensed hospital emergency rooms: a
'facility' fee and a 'professional' fee. EHC submitted claims for
facility fees to UHC, and PA submitted claims for professional
fees." UHCfs Motion, Docket Entry No. 24, p. 1. The briefing of
the parties is restricted to the question of whether summary
judgment is appropriate on the Chapter 541 cause of action only
insofar as that count involves payments allegedly due to EHC. Any
claims for payments allegedly due to PA have not been addressed.
The court will therefore restrict its analysis to the question of
whether the Chapter 541 cause of action regarding claims submitted
by EHC should survive, and leave undisturbed the Chapter 541 cause
of action regarding any claims submitted by PA.
26
27~laintiffs' Original Petition, Exhibit 3
Removal, Docket Entry No. 1-1, pp. 5-7 ¶ ¶ 13-14.
to Notice
of
1271.155 (a) is restricted in relevant part to "providers," but
§
1271.155(b)(3) uses the term "comparable facility."
(a) 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.
(b) A health care plan of
organization must provide the
emergency care:
a health maintenance
following coverage of
(2) necessary emergency care shall be provided to
covered enrollees, including the treatment and
stabilization of an emergency medical condition;
and
(3) services originated in a hospital emergency
facility or comparable facility following treatment
or stabilization of an emergency medical condition
shall be provided to covered enrollees as approved
by the health maintenance organization, subject to
Subsections (c) and (d).
Tex. Ins. Code
§
1271.155 (version effective April 1, 2005, to
February 28, 2010) . 2 8
From the face of the statute it is unclear whether the
restriction to providers in
of the subsections that
§
1271.155(b)(3) set out
§
1271.155 (a) limits the applicability
follow it, or
if
§
1271.155 (a) and
independent legal requirements with
independent criteria of applicability.
In the latter case an
he court's analysis tracks the arguments of the parties in
focusing on § 1271.155 (a) and § 1271.155 (b)(3), but if
§ 1271.155(b)(2) were the crucial provision, the analysis would be
no different, as "emergency care" is defined as "health care
services provided in a hospital emergency facility or comparable
facility to . . . . "
Tex. Ins. Code § 843.002 (7) (version
effective September 1, 2003, to March 31, 2009).
insurer would be required to reimburse an entity that qualified as
a
"comparable
"provider."
facility"
even
though
that
entity
was
not
a
The parties do not directly and adequately address
this question,29 and the court has found no cases construing this
statute in detail.
Because UHC as the movant bears the burden of
proving that it is entitled to summary judgment, the court will
assume, without deciding, that
§
1271.155 requires an insurer to
reimburse an entity providing services if that entity is either a
provider or a comparable facility. Given the briefing in this case
and the difficulty of interpreting
§
1271.155, the court will grant
summary judgment against EHC on its Chapter 541 claims only if UHC
has established that there is no question of fact that EHC was
neither a provider nor a comparable facility.
"UHC asserts, without supporting argument, that the provider
requirement is a threshold for the applicability of the rest of the
section: "Of course, the services must be rendered by a licensed
physician or provider to qualify in the first place, as set out
above. In addition, the 'emergency carer must have been health
care services provided in a hospital emergency facility or
comparable facility." UHCfs Motion, Docket Entry No. 24, p. 12
(internal quotation marks and emphasis omitted) ; accord UHC' s
Reply, Docket Entry No. 28, p. 7 ("The overarching problem with
Plaintiffsr argument is that they substitute the term 'comparable
facilityr (where the services are provided) for the term 'providerr
(whose emergency services must be covered).
EHC must be a
'provider' for its charges to be entitled to coverage in the first
place.").
1.
Was EHC a Comparable Facility?
UHC presents multiple interlocking arguments that EHC was not
a "comparable facility."
The court has carefully examined these
arguments and the legal authority cited in support, and concludes
that
the
arguments,
both
individually
and
collectively,
are
insufficient to satisfy UHC1s burden on summary judgment.
First, UHC argues that the amendments to Chapter 130130 made
after the services in question were rendered show that entities
such as EHC are not entitled to a facility fee.
Before March 1, 2010, 5 1301.155 covered only emergency
care provided "in a hospital emergency facility or
comparable facility." However, effective March 1, 2010,
"freestanding emergency medical care facilit[ies]" were
added to the list of places where "emergency care" is
rendered. At the same time these revisions were made,
the legislature set up a comprehensive licensing and
regulatory regime for freestanding emergency medical care
facilities.31
UHC then cites a Texas case stating that "[wlhen the legislature
enacts an amendment, we may presume that it thereby intended to
change the original act by creating a new right."
Ford Motor Co.
v. Motor Vehicle Bd., 21 S.W.3d 744, 763 (Tex. App.-Austin 2000,
3 0 ~ h court notes that a similar amendment to § 1271.155 became
e
effective on March 1, 2010, by the same act of the Texas
legislature. Act of June 19, 2009, 81st Leg., R.S., 2009 Tex.
Sess. Law Serv. Ch. 1273.
3
1
omitted) .
~
s ~Motion, Docket Entry No. 24, p. 14 (internal citations
~
r
UHC argues that "if the old statutory scheme
pet. denied).32
already appliedto freestanding, non-hospital, unlicensed emergency
clinics
like
EHC,
there
would
have
been
no
need
for
the
amendments."33
In articulating the rule of interpretation emphasized by UHC,
the Ford Motor court cited a case that, in turn, relied on a
prominent treatise on statutory construction.
21 S.W.3d at 763
(citing Durish v. Channelview Bank, 809 S.W.2d 273, 277
App.-Austin
1991, writ denied)
Construction
§
(Tex.
(citing 1A Sutherland Statutory
22.30, at 265 (4th ed. 1985)).
The current version
of the treatise states:
An amendment of an unambiguous statute indicates a
purpose to change the law, whereas no such purpose is
indicated by the mere fact of an amendment of an
ambiguous provision.
1A Sutherland Statutorv Construction
§
22:30 (7th ed. 2011).
The
court concludes the term "comparable facility" is ambiguous. It is
not defined in the relevant chapter, and the plain meaning of the
term
admits
of
interpretations.
widely
divergent,
and
even
contrary,
Because the term is ambiguous, it is not clear
whether the Texas legislature was creating a new right or merely
interpreting the existing version of the relevant statutes.
The
court therefore declines to infer from the statutory amendments
3 2 ~ i t e d UHC's Motion, Docket Entry No. 24, pp. 14-15.
in
331d. 15.
at
that
freestanding
emergency
facilities,
and
EHC,
were
not
comparable facilities before the amendments.
Second, UHC argues that statutory definitions of "health care
facility" in other contexts require the entity to be licensed.
[Slimilar laws in other contexts specifically define the
term "health care facility," and unlicensed urban clinics
like EHC are not on the list. See, e.g., Tex. Health &
Safety Code 5 108.002 ( [lo]) . In another statute, the
legislature passed a law specifically requiring a license
before credentialing a provider as an authorized "health
. 28 Tex. Admin. Code
care
facility [I "
§ 0
82 (a)(1)E . The provisions requiring "health care
providers" to be licensed or otherwise authorized under
Chapter 1301 and the HMO Act should be construed the same
way when applied to EHC. See Tex. Govft Code 5 311.023
(in construing a statute, whether ambiguous or not, the
Court may consider common law and statutory provisions on
the same or similar subjects) . 3 4
The court is not persuaded that the statutes cited by UHC are
sufficient to restrict the understanding of "health care facility"
to facilities with licenses.
Section 108.002(10) of the Health
&
Safety Code provides that a birthing center and a free-standing
imaging center both qualify as a "health care facility," and UHC
has not established that an entity must be licensed to be a
birthing center or a free-standing imagining center. The provision
from the Administrative Code cited by UHC provides that "the
credentialing process for health care facilities"
"evidence
§
of
state
10.82 (a)(1)(E).
licensure."
28
Tex.
must include
Admin.
Code
But the language of this statute does not
3 4 ~ ~ Reply, Docket Entry No. 28, pp. 10-11.
~ ' s
-17-
foreclose the possibility that an entity could be a "health care
facility" and not be credentialed for the program dealt within this
chapter. Moreover, the section of the Government Code cited by UHC
provides that, "[iln construing a statute
consider
. . .
Tex. Gov. Code
. . .
a court may
(4) common law or former statutory provisions."
§
311.023.
The statutes cited by UHC are current
statutory provisions, not "former statutory provisions."
The two
statutes dealing with the term "health care facility" do not
warrant the conclusion that an entity needs a license to be a
"comparable facility."35
Third, UHC argues that it would be "contrary to the rationale"
behind the statutory provisions to consider EHC a comparable
facility.36
The rationale behind treating out-of-network services the
3 5 ~ its initial Motion, UHC also emphasizes the importance of
n
letters written by a Texas Department of Insurance official, one of
which states that "although carriers are required to pay for outof-network emergency care services, carriers are not required to
pay for services performed by an unlicensed entity.
As such,
carriers are not required to pay facility charges billed by
freestanding emergency centers that do not have a license from the
Department of State Health Services." UHCrs Motion, Docket Entry
No. 24, p. 4 (emphasis omitted) (quoting January 19, 2006, Letter
from Jennifer Ahrens to John Oates, Exhibit A to UHCfs Motion,
Docket Entry No. 24-1, p. 2) . UHC has not established the process
that produced these letters, and therefore has not established that
they are binding on the court or even entitled to deference. The
Plaintiffs have moved to strike these letters.
Plaintiffs'
Response, Docket Entry No. 27, p. 10. Because the court will not
rely on these letters, the Plaintiffsf motion to strike will be
denied as moot.
3
6
~
s ~ Motion, Docket Entry No. 24, p. 13.
~
r
same as in-network services in the context of an
emergency finds expression in § 1301.069 - when emergency
care is legally mandated such that one cannot pick his
patients based on ability to pay, it makes sense to treat
him the same as a "preferred provider" that has an innetwork contract with the in~urer.~'
UHC argues that "EHC was not comparable to a 'hospital emergency
facility' in all the ways that matter" since EHC was not licensed
or regulated like a hospital and EHC was not required to provide
emergency medical services like a h~spital.~'
Assuming that UHC' s premises in this argument are all true,
UHC' s
argument
identifies
two
relevant
considerations
differentiating EHC from a hospital: licensing/regulation and the
requirement to provide
services.
However, EHC
has provided
competent summary judgment evidence supporting the comparability of
EHC
to a hospital.
Attached to Plaintiffs'
affidavit, supported by
exhibits, given by
Response
the
is an
former Chief
Executive Officer of EHC,39 containing the following statement:
EHC began operations in 1997 when it opened its
freestanding emergency medical center in an approximate
15,000 square foot facility with 2 major treatment rooms,
5 mid-level treatment rooms and 7 minor treatment rooms.
The facility was open 24 hours a day, 7 days a week and
was staffed by board certified emergency room doctors and
ER trained nurse practitioners. The facility had full
lab
capabilities
and
radiology/imaging
capabilities. . . . The Centre obtained The Joint
39~ffidavit Dick McNairy, attached to EHC' s Response, Docket
of
Entry No. 27-1, p. 1.
Comrnissionfs Evidence of Standards Compliance, its
Certificate of Accreditation for Clinical Laboratory
License for examinations or procedures from the Centers
for Medicare & Medicaid Services and the Department of
State Health Services Certificate of X-Ray License. . . .
EHC complied with the requirements of the Emergency
Medical Treatment and Active Labor Act (EMTALA) and
operated as any other hospital based emergency room.40
The Plaintiffs argue that these facts show that EHC was comparable
UHC has
to a hospital, and was therefore a comparable fa~i1it-y.~'
not
established
that
the points
of
differentiation
that UHC
emphasizes (licensing/regulations and requirement to treat) are the
relevant considerations and that the points of comparability that
the Plaintiffs emphasize (facts concerning the operation of EHC and
its capabilities) should be disregarded.
The facts alleged in the
McNairy affidavit are sufficient to establish a fact-question on
whether EHC was comparable to a hospital as contemplated in the
relevant statutes.
The court concludes that there remains a material question of
fact regarding whether EHC was a comparable facility under the
meaning of Tex. Ins. Code
§
1271.155. The court will deny summary
judgment on the Plaintiffsf Chapter 541 cause of action insofar as
it relies on 5 1271.155.
41~laintiff'sResponse, Docket Entry No. 27, pp. 12-14.
2.
Was EHC a Provider?
Insofar as the Plaintiffs' Chapter 541 cause of action relies
on
§
1301.069, the Plaintiffs can avoid summary judgment only if
there is a fact question regarding whether EHC was a " p r o ~ i d e r . " ~ ~
As the court explained above, to be a "health care provider," EHC
would have to be "licensed or otherwise authorized."
Code
§
1301.001 (1-a).
Tex. Ins.
There is no dispute that EHC was not
licensed. EHC's contention that it was a provider therefore turns
on whether it was "otherwise authorized." The court concludes that
McNair' s a£fidavit and its exhibits are insufficient to create a
fact question whether EHC was "otherwise authorized."
UHC argues that to be "otherwise authorized" an entity must be
authorized by the state .43 The Plaintiffs' argument that it met the
statutory definitions
provider
premised
its contention
that it qualified as a "comparable facility."
[Freestanding emergency centers] that satisfy the
definition of comparable facility are "otherwise
authorized" to provide health care services by Insurance
Code §§ 1271.155 and 1301.155 and their predecessors. It
would make no sense for the legislature to require that
a comparable facility be paid for providing emergency
health care services, and to then conclude that a
comparable facility is not authorized to provide
emergency care.44
The contradiction urged by the Plaintiffs does not exist in the
-
42
-
See supra p. 12.
4 3 ~ ~ ~ r sDocket Entry No. 28, pp. 11-12.
Reply,
44~laintiffsr
Response, Docket Entry No. 27, p. 26.
-21-
context of
1301.069, which only refers to providers and not to a
§
comparable facility.
It is true that Section 1301.155 (defining
"emergency care") is referenced in
1301.053
§
(requiring that
insurers pay for emergency care) and uses the term "comparable
facility." Tex. Ins. Code
§
1301.155 (effective April 1, 2005, to
February 28, 2010). However, the text of
§
1301.0053 restricts its
requirements to "nonpreferred providers" and the text of
expands the
§
§
1301.069
1301.0053 requirements to "a physician or provider. " 4 5
The court concludes that the most natural reading of "otherwise
authorized" is that the entity must be authorized by the state to
carry on its medical activities.
The only summary judgment evidence advanced by the Plaintiffs
on this question is in the McNair affidavit and its exhibits.
McNair stated that
The Centre obtained The Joint Commission's Evidence of
Standards Compliance, its Certificate of Accreditation
for Clinical Laboratory License for examinations or
procedures from the Centers for Medicare & Medicaid
Services and the Department of State Health Services
Certificate of X-Ray License.4 6
Since
the
Joint
Commission
is not
a
governmental
body,
any
authorization it may have conferred is not relevant to whether EHC
45~he
court also notes that § 1301.0053 was not in effect
during time period relevant to the Plaintiffs claims, but was
rather added by Act of June 17, 2011, 82st Leg., R.S., 2011 Tex.
Sess. Law Serv. Ch. 288.
4 6 ~ idavit of Dick McNairy, attached to EHCfs Response, Docket
ff
Entry No. 27-1, p. 1.
was a provider.47
The two other instances of accreditation or
registration both appear to be by government entities, but both are
for very limited purposes. The first consists of accreditation and
registration certificates for the laboratory at EHC~'and the second
is a certificate authorizing the use of X-Ray eq~ipment.~' These
authorizations are insufficient to raise a fact question as to
whether EHC as a general medical facility was authorized to conduct
the range of its medical services.
The court concludes that the
Plaintiffs have failed to raise a fact question regarding whether
EHC was "otherwise authorized" and therefore a "provider," as
required to recover under Chapter 541 based on
§
1301.069.
The
court will enter summary judgment against the Plaintiffs on the
Chapter 541 claims insofar as those claims implicate Chapter 1301.
C.
ERISA Preemption Plaintiffsr Claims
The Employee Retirement Income Security Act ("ERISA") preempts
certain state law claims.
4 7 ~ ~ h i b A tto Affidavit of Dick McNairy, attached to EHCrs
i
Response, Docket Entry No. 27-1, p. 4 ("The Joint Commission is an
independent, not-for-profit, national body that . . . . " ) .
e.s., Centers for Medicare & Medicaid Services, Certificate
of Accreditation, Exhibit B to Affidavit of Dick McNairy, attached
to EHC' s Response, Docket Entry No. 27-1, p . 6.
48
49~epartment
of State Health Services, Certificate of X-Ray
Registration, Exhibit E to Affidavit of Dick McNairy, attached to
EHC's Response, Docket Entry No. 27-1, p. 9. UHC correctly notes
that the X-Ray certificate "belongs to a non-party-entity, Imaging
Willowbrook, LLC." UHC1s Reply, Docket Entry No. 28, p. 3.
Except as provided in subsection (b) of this section,
the provisions of this subchapter and subchapter I11 of
this chapter shall supersede any and all State laws
insofar as they may now or hereafter relate to any
employee benefit plan.
29 U.S.C.
§
1144.
The Fifth Circuit has set out a two-part test
for whether a claim is preempted by ERISA under
§
1144(a):
A defendant pleading preemption must prove that: (1)
the claim addresses an area of exclusive federal
concern, such as the right to receive benefits under
the terms of the Plan; and (2) the claim directly
affects the relationship among traditional ERISA
entities-the employer, the plan and its fiduciaries,
and the participants and beneficiaries.
Bank Of Louisiana v. Aetna U.S. Healthcare Inc. , 468 F.3d 237,
242 (5th Cir. 2006) (internal quotation marks omitted).
The Plaintiffs' Chapter 541 Claims
1.
There is a relevant exception to the general ERISA preemption
doctrine.
ERISA' s "Savings Clause"
provides that
"
[elxcept as
provided in [the "Deemer Clause"], nothing in this subchapter shall
be construed to exempt or relieve any person from any law of any
State
which
29 U.S.C.
§
regulates
insurance,
1144 (b)(2)(A).
ERISA's
banking,
or
securities."
Deemer Clause limits the
exception provided in the Savings Clause:
Neither an employee benefit plan . . . nor any trust
established under such a plan, shall be deemed to be an
insurance company or other insurer, bank, trust company,
or investment company or to be engaged in the business
of insurance or banking for purposes of any law of any
State purporting to regulate insurance companies,
insurance contracts,
investment companies.
29 U. S.C.
§
1144 (b)(2)(B).
banks,
trust
companies,
or
The Supreme Court had held that only
insured plans are exempted from ERISA preemption by the Savings
Clause, and that the Deemer Clause preserves ERISA preemption for
self-funded plans.
FMC Corp. v. Hollidav, 111 S. Ct. 403, 409
(1990)
UHC argues that all of the Plaintiffsr claims under the Texas
Insurance Code are preempted because "Plaintiffs' claims are based
on the notion that UHC should have paid benefits for its insureds
and plan members. ""
UHC has not adequately addressed whether the
Savings Clause exception applies to the claims at issue in this
case.
UHC alleges that "of the 23,091 claim lines of data on
claims for benefits submitted by Plaintiffs, which Defendants
recently produced, 16,000 were for self-funded plans.""
Elsewhere
in the same footnote, UHC refers to its Notice of Removal (Docket
5 0 treatise makes the point clearly: "The ERISA deemer clause
~
has served as a basis for courts to draw a distinction, for the
purposes of ERISA preemption, between employee welfare benefit
plans that offer benefits through insurance (i.e., 'insuredr plans)
and employee welfare plans through which benefits are paid directly
by the plan sponsor i e , 'self-funded' plans) . While insured
plans are generally subject to state insurance regulation by
operation of the ERISA savings clause, self-funded plans are exempt
from state insurance regulation by operation of the ERISA deemer
clause." Samantha E. McMillan, ERISA: A Comprehensive Guide § 9.04
(Paul J. Schneider & Brian M. Pinheiro, eds., 4th ed. 2012).
5 1 ~ ~ ~ r s Docket Entry No. 24, p. 19.
Motion,
Entry No. 1) and its Unopposed Motion to Seal (Docket Entry No. 2),
which has spreadsheets of the claims filed as well as summary plan
descriptions
for
certain plans,
with
a
supporting affidavit
identifying certain of the plans as self-funded.53
The court concludes that UHC has failed to establish that
ERISA preempts the Plaintiffsf Texas Insurance Code Claims.
UHC
provides no support for its allegation that 16,000 claim lines of
data concern self-funded plans.
And while UHC has provided some
evidence that the specific plans identified in the affidavit were
self-funded, the evidence highlighted in UHCfs briefing is not
sufficient to support a finding of preemption.
Moreover, UHC has
not established that the Plaintiffs Chapter 541 cause of action
addresses "an area of exclusive federal concern, such as the right
to receive benefits under the terms of the Plan."
Louisiana, 468 F.3d at 242.
Bank of
The court will therefore deny UHC
summary judgment on its contention that the Plaintiffs Texas
Insurance Code causes of action are preempted by ERISA.
UHCfs Reply, Docket Entry No. 28, p. 17 ("Rather than
burden the record with thousands of claims and potentially hundreds
of plans, UHC sought a ruling on three exemplar claims under two
such plans. . . . Because the Texas Insurance Code does not apply
to self-funded plans, at a minimum the Court should grant summary
judgment that Plaintiffs take nothing on their Insurance Code
claims as to self-funded plans.").
53&;
2.
The Plaintiffsr Ouantum Meruit Claim
A panel of the Fifth Circuit has held that a quantum meruit
claim was preempted:
Those claims
[including quantum meruit], if not
preempted, would allow any provider who has provided care
for which the ERISA plan denied coverage to challenge the
ERISA plan's interpretation of its policies in state
court. That outcome would run afoul of Congress's intent
that the causes of action created by ERISA be the
exclusive means of enforcing an ERISA plan's terms, and
permit state law to interfere with the relations among
ERISA entities.
Access Mediquip L.L.C. v. UnitedHealthcare Ins. Co., 662 F.3d 376,
386-87 (5th Cir. 2011) reh'q en banc qranted, 678 F.3d 940 (5th
Cir. 2012) .
In bringing their quantum meruit claim the Plaintiffs are
challenging UHCfs interpretation of its policies in denying claims
submitted by the Plaintiffs for care they provided.
In arguing for
the viability of their quantum meruit claim, Plaintiffs argue that
UHC issued insurance policies or plans, or provided third
party
administration on
claims which
UHC,
for
consideration, assumed the risk of payment on behalf of
the patients. UHC promised to pay a sum of money if a
specific contingent event occurred (i.e., services were
provided) .54
Because the Plaintiffs' quantum meruit claim relies on the alleged
violation of a promise made in an ERISA plan, the Plaintiffs are
using the quantum meruit claim to challenge the right to receive
benefits under the plan and to affect the relationship among ERISA
-
- -
54~laintiffs'
Response, Docket Entry No. 27, p. 36.
entities.
The Plaintiffs ask the court to allow them to amend
their Original Petition to plead a cause of action under ERISA, in
the event that the court finds any of their claims preempted.55 But
the Plaintiffs have not indicated what claim they would bring under
ERISA and have therefore not established that granting leave to
amend would be appropriate.
The court will therefore dismiss
Plaintiffsf quantum meruit cause of action because it is preempted
by ERISA.5 6
Conclusion and Order
For the reasons stated above, the court GRANTS IN PART AND
DENIES IN PART Defendantfs Motion for Partial Summary Judgment and
Brief in Support (Docket Entry No. 24):
1.
The Plaintiffs' cause of action identified as "Count Two:
Violations of the Texas Prompt Pay Statute and Texas
Insurance Laws" in Plaintiffs' Original Petition (Docket
Entry No. 1-1, pp. 10-11, ¶ ¶ 23-25) is DISMISSED WITH
PREJUDICE ;
2.
The Plaintiffs' cause of action identified as "Count One:
Insurance Code Violations" in Plaintiffsf Original
Petition (Docket Entry No. 1-1, pp. 8-10, ¶ ¶ 18-22),
insofar as it relies on violations of Chapter 1301 of the
Texas Insurance Code and insofar as it concerns payments
allegedly due to EHC only, is DISMISSED WITH PREJUDICE.
Insofar as Count One relies on alleged violations of
Chapter 1271 of Texas Insurance Code, summary judgment is
56~ecause
the court concludes that the quantum meruit claim is
preempted, the court does not reach U H C r s argument that the quantum
meruit claim fails on the merits.
UHCfs Motion, Docket Entry
No. 24, pp. 20-21.
I n s o f a r a s C o u n t One r e l a t e s t o PA, r a t h e r t h a n
summary j u d g m e n t i s DENIED.
DENIED.
EHC,
3.
The P l a i n t i f f s ' c a u s e o f a c t i o n i d e n t i f i e d a s "Count
T h r e e : Quantum M e r u i t " i n P l a i n t i f f s ' O r i g i n a l P e t i t i o n
( D o c k e t E n t r y No. 1-1, p p . 11-12, ¶ 2 6 ) i s DISMISSED WITH
PREJUDICE.
4.
The P l a i n t i f f s ' m o t i o n t o s t r i k e ( D o c k e t E n t r y No. 2 7 , p .
1 0 , ¶ 1 0 ) i s DENIED as moot.
5.
The c o u r t c o n c l u d e s t h a t t h i s c a s e i s a p p r o p r i a t e f o r
mediation. I f t h e p a r t i e s a r e unable t o s e t t l e t h e case
w i t h i n t h e next t h i r t y days t h e y w i l l provide t h e c o u r t
t h e name a n d a d d r e s s o f a n a g r e e d m e d i a t o r .
Any r e l i e f n o t e x p r e s s l y g r a n t e d i s DENIED.
e
SIGNED a t H o u s t o n , T e x a s , on t h i s 3 1 s t d a y o f A u g u s t , 2 0 1 2 .
SIM LAKE
U N I T E D STATES DISTRICT J U D G E
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