The Texas Supreme Court issued two opinions with today’s orders list. It chose four new
did not select any new cases for oral argument.
The Court will hear oral argument next Tuesday in IN THE INTEREST OF E.C.R., A CHILD, No. 12-0744
. This is the only case that was given an April argument date, due to the time-sensitive subject matter. Other cases in which review has been granted are waiting for argument dates in the fall.
Texas’s Prompt Pay law does not protect hospitals in disputes against HMO network providers
The medical services that led to this payment dispute were accumulated beginning in the 1990s. At that time, Aetna delegated its HMO care through a third party (called “Management Services” in the opinion) that, in turn, entered contracts with each of these hospitals. Management Services hit financial troubles in 2000 and was, shortly thereafter, removed from Aetna’s system.
Ultimately, the hospitals billed $13 million that the middleman refused to pay. They then brought suit directly against Aetna under Texas’s prompt-pay law that applies to insurers.
With today’s opinion by Justice Willett, the Supreme Court holds that the statute does not apply here because there was no direct contractual privity between Aetna and the hospitals for this care. The Court’s reasoning was based on the text, as well as a subsequent amendment to the statute. The Court rejected the hospitals’ argument that the statute applied to the whole web of agreements involved in HMO care rather than requiring direct privity between two parties. The Court pointed to statutory language that payment amounts should be “in accordance with the contract between the physician or provider and the health maintenance organization.” Because there was no direct “contract between” these litigating parties, the Court held, the statute did not apply.
More interesting to appellate advocates may be the Court’s reliance on the subsequent history of the statute as an interpretative aid about what a prior Legislature had meant:
… a 2001 amendment to the Prompt Pay Statute, though inapplicable here, is instructive, and underscores Aetna’s nonliability for its delegated network’s failure to pay the Hospitals. Specifically, the Legislature in 2001 gave the Insurance Commissioner the discretionary authority to compel an HMO to “reassum[e] the functions delegated to the delegated entity, including claims payments for services previously rendered to enrollees of the health maintenance organization . . . .” Tellingly, the 2001 change provides administrative relief in situations like this, but it nowhere grants providers a private action against HMOs. It authorizes administrative intervention but not private litigation. As the Legislature is presumed to know its previous enactments, we read statutes not in a vacuum but contextually, and the implication of this 2001 amendment is significant: There would be no need for the Legislature to impose such a duty on HMOs (notably, one triggered solely by discretionary administrative action) if the pre-2001 statute already imposed that duty (actionable by private lawsuit).
The lesson for advocates is that sometimes even a Justice with no love for legislative history arguments can be moved by one. And the lesson for lobbyists is that your success in lobbying today — like reaching a compromise that could get hospitals paid in the most egregious cases with no litigation expenses — might inadvertently be creating “instructive” evidence that cuts against your clients in the future.
Reasoning from the “subsequent history” of a law is tricky because it’s guessing not what the Legislature was voting for, but what it was voting against. Commonly, people argue that a subsequent amendment confirms what an ambiguous law meant before. In that case, the Legislature is rejecting the ambiguity.
Here, the opinion reasons that by adding an administrative remedy in 2001, the Legislature confirmed that there had been no private claim before. This presumes that the Legislature’s goal was to expand relief to hospitals through this administrative process, rather than limiting litigation costs (another common legislative goal). That may be so, based on this legislative history. But it is analytically a question of legislative history and purpose — one that lobbyists and legislators should be attentive to when explaining the purpose behind these amendments.
A no-evidence case about child support
When is a trial court’s award of back child support so low that there is “no evidence” to support it?
In Office of the Attorney General v. Burton, 369 S.W.3d 173 (Tex. 2012) (per curiam), the Court held that a zero-dollar award was impermissible when the record contained admissions from the father that he was at least somewhat behind on payments. As a threshold matter, the Supreme Court held that the award should be evaluated under the Court’s usual rules for no-evidence review. In Burton, that meant that the issue could be raised for the first time on appeal.
Fast forward to today. In VILMA GRANADO v. PEDRO C. MEZA, No. 11-0976
, the Supreme Court held that there was “no evidence to support the trial court’s specific finding of $500 in arrearages.”
Like Burton, this case also involved an incomplete record. In Burton, the record was missing certain Social Security information that the trial court determined was necessary to compute a precise number. Here, the record was missing some Office of the Attorney General child-support records that had (due to an office error) been frozen when the child was only six and the total obligation had still been below $500.
As the Supreme Court relates, the father here “admitted his total obligation was $11,200″ and had paid some unspecified amount. The Court said that although the OAG records reflected a total unpaid amount of $500 when the child was 6, that total was “no evidence” of the total obligation when the child turned 18. The Court therefore reversed and remanded to the trial court for further proceedings.