Reed Smith Client Alerts

In Texas, out-of-network physicians and other medical providers have frequently looked to the Texas Insurance Code as the basis for lawsuits brought against insurers for alleged underpaid emergency care provided to insureds. The Texas Supreme Court just shut that door in a decision that will significantly change the landscape of Managed Care litigation in the Texas state courts. In short, the court held that there is no private cause of action for violation of the Insurance Code sections concerning emergency care payment to non-contracted providers. Further, the court rejected the ability of non-contracted providers to seek payment under a quantum meruit theory.


In Texas Medicine Resources, LLP v. Molina Healthcare of Texas, Inc., the plaintiffs were physician groups who staff emergency departments. These physicians did not contract with the defendant, an HMO, but they claimed to have provided emergency care to patients who had health care coverage through the defendant. As a result, the physicians contended that the HMO was required to, but did not, pay them “at the usual and customary rate” under Tex. Ins. Code Ann. section 1271.155(a). The physicians sued the HMO for violation of the Insurance Code, and also brought claims for quantum meruit and unfair settlement practices.

The HMO challenged the physicians’ standing to bring these claims, and the trial court agreed, dismissing the lawsuit. On appeal, the court of appeals affirmed, and the physicians sought a petition for review in the Texas Supreme Court, which the court granted.

At that same time, a similar suit (ACS Primary Care Physicians Sw., P.A. v. UnitedHealthcare Ins. Co.) was pending in federal court raising similar issues. In that case, a federal court in the Southern District of Texas considered whether out-of-network emergency care physicians could bring suit under the Texas Insurance Code sections that concern emergency care payment (sections 1271.155(a), 1301.0053(a), and 1301.155(b), which the Texas Supreme Court collectively referred to as the “Emergency Care Statutes”). Reaching a different conclusion than the lower courts in Texas Medicine Resources, the federal court denied the defendants’ motion to dismiss, but granted a request for permissive interlocutory appeal to the Fifth Circuit. While on appeal, the Fifth Circuit granted the physicians’ motion to certify a question to the Texas Supreme Court on whether these emergency care statutes authorize providers to bring a private right of action. The Texas Supreme Court accepted that certified question and consolidated the cases for argument.