File: 051579FH - From documents transmitted: 08/09/2007
AFFIRM and Opinion Filed August 9,
2007
In The
Court of Appeals
Fifth District of Texas at Dallas
............................
No. 05-05-01579-CV
............................
METHODIST HOSPITALS OF DALLAS, Appellant
V.
AMERIGROUP TEXAS, INC. f/k/a AMERICAID TEXAS, INC., Appellee
.............................................................
On Appeal from the 134th District Court
Dallas County, Texas
Trial Court Cause No. 04-03245-G
.............................................................
On Motion for Rehearing
.............................................................
OPINION
Before Justices Moseley, Bridges, and Smith See Footnote 1
Opinion By Justice Bea Ann Smith
To address concerns raised in Appellant's Motion for Rehearing, we withdraw
our earlier opinion. This is now the opinion of the court. The Motion for Rehearing is overruled.
In this case, we are asked to construe the terms of two contracts executed
under the state Medicaid managed
care program to determine whether appellee, a Medicaid HMO, was
contractually obligated to pay for healthcare services provided by
Methodist Hospitals of Dallas (Methodist). In nine issues, Methodist
contends that the trial court erred when it denied Methodist's motion
for summary judgment and granted summary judgment for Amerigroup Texas,
Inc. (Amerigroup). Methodist insists that Amerigroup was liable for
payment under the terms of both its provider contract with Methodist
and its contract with the Texas Health and Human Services Commission. See Footnote 2 Methodist asserts five
grounds in support of its contention: (1) the summary judgment evidence does not establish that
the patient, Felicia Carraway, lost her Medicaid eligibility on December 31, 2001, or on the date
she became eligible for Supplemental Security Income (SSI); See Footnote 3 (2) the
distinction between Medicaid eligibility under the Temporary Assistance for Needy Families
program (TANF) See Footnote 4 and traditional Medicaid based on SSI eligibility is
immaterial; (3) even if there was a gap in the patient's Medicaid eligibility, Amerigroup was still
responsible for payment under various terms of the contracts; (4) Amerigroup was bound by the
Commission's initial determination that Amerigroup was responsible for payment; and (5) the
payment that Methodist received from the State does not discharge Amerigroup's liability.
Methodist further asserts that Amerigroup breached a statutory obligation to promptly pay
claims, and is therefore liable for the full amount for services rendered by Methodist in the
amount of $1,840,734. Alternatively, Methodist contends that Amerigroup is liable under its
contract with Methodist for $1,351,817, the contract rate for the charges billed. See
Footnote 5 The distinction between mandatory and voluntary participation
in the HMO, as defined in the federal waiver controlling the state's eligibility determinations, is
critical to our analysis. Only specifically defined categories of persons are eligible for mandatory
participation in an HMO. The patient was qualified for mandatory participation in Amerigroup
when she entered the hospital on December 19, 2001. Later that month, when Carraway
became eligible for SSI, she was disqualified under federal law from mandatory membership in
the HMO. The Commission has the sole authority to make Medicaid HMO eligibility
determinations and to designate those persons who qualify as mandatory enrollees in the HMO.
Once the Commission determined that the patient was ineligible for mandatory participation in the
HMO, Amerigroup was no longer obligated to pay for her medical expenses unless another
contractual term applied to continue the obligation. The contractual term on which Methodist
relies, however, does not produce a different result. The term only applies if the patient's
eligibility for Medicaid continues without interruption, and Carraway's eligibility terminated on
December 31, 2001, creating a gap in coverage from January1-8, 2002. Because we conclude
that the Commission has the statutory and contractual authority to determine Medicaid eligibility
within the limitations imposed by federal law, and because the contractual provisions upon which
Methodist relies do not apply, we affirm the summary judgment entered by the trial court.
BACKGROUND
A. Regulatory Framework.
The Medicaid statute, Subchapter XIX of the Social Security Act, established
a cooperative plan between the federal government and the states to provide medical services
to certain defined categories of low-income individuals. 42 U.S.C. §§ 1396-1396v. The
program is jointly funded by the federal and state governments and is administered by the states
pursuant to federal guidelines. See generally 42 U.S.C. §§ 1396a, 1396b; 42 C.F.R. §
430.0-.25 (2005). To qualify for federal funding, a state must have its own Medicaid plan
approved by the Health Care Financing Administration (HCFA) of the United States
Department of Health and Human Services. 42 U.S.C. §1396; 42 C.F.R. § 430.10. State
Medicaid programs are required to follow fundamental principles set forth in the Social Security
Act and comply with all mandates related to eligibility and covered services. Frew v. Hawkins,
540 U.S. 431, 434 (2004) (once a state elects to join the program it
must administer a plan that meets federal requirements). One of the
fundamental federal requirements is freedom of choice; Medicaid
recipients must be allowed to select any health care provider who meets
program standards and elects to provide services. See 42 U.S.C. § 1396a(a)(23); 42 C.F.R. §
431.51(b)(1)(i). States seeking to limit a recipient's freedom of choice must obtain a specific
exemption in a waiver granted by the Centers for Medicare and Medicaid Services (CMS). See
42 U.S.C. § 1396n(b); see also 42 C.F.R. § 430.25(b) (stating that “waivers are intended to
provide the flexibility needed to try new or different approaches to efficient and cost-effective
delivery of health care services, or to adopt their programs to the special needs of particular
areas or groups of recipients”).
B. The Texas Medicaid Plan.
Texas has elected to participate in the federal Medicaid program. See Tex.
Hum. Res. Code Ann. § 32.001 (Vernon 2006). The Commission is charged with the chief
responsibility for the Medicaid program in Texas. Tex. Gov't Code Ann. § 531.021 (Vernon
Supp. 2006). In order to streamline the program, Texas instituted the State of Texas Access
Reform Program (STAR). STAR
allows the Commission to contract with managed care organizations See Footnote 6
to provide health care services to
certain Medicaid recipients. Because STAR restricts the ability of
Medicaid recipients to select their health care provider, the
Commission was required to obtain a waiver of the federal freedom-
of-choice requirement.
Under the waiver, only expressly enumerated categories of Medicaid-eligible
persons may legally be deprived of their freedom of choice and be deemed a “mandatory”
member of a specific Medicaid HMO. Persons eligible to receive TANF may be designated as
mandatory participants in a Medicaid HMO. The waiver identifies other categories of
Medicaid-eligible persons who may elect to participate in a Medicaid HMO, but who are not
required to do so. These optional participants are defined in the waiver as “voluntary”
members of the HMO. Persons who are eligible to receive SSI are among those designated as
voluntary participants. Unlike persons eligible for Medicaid under TANF, persons eligible for
Medicaid under SSI cannot be compelled to join an HMO.
The contracts at issue in this case further distinguish between mandatory and
voluntary participation. Mandatory members are entitled to receive full health care services, for
which Amerigroup receives a monthly capitation payment. Voluntary members receive only
administrative services, for which Amerigroup receives a nominal monthly fee. Amerigroup is not
obligated to pay for the medical expenses of these voluntary members.
The Commission pays Medicaid providers like Methodist on a traditional
fee-for-service basis (at a
substantially lower rate of reimbursement) or it pays a capitation rate
to an HMO which in turn reimburses the provider at a higher rate, still
discounted from the full cost of services. See Footnote 7 A capitation payment is a fixed sum that is paid
monthly to an HMO on a per-member basis, regardless of the amount of services used by that
member. Capitation payments are described as “full risk” because the HMO bears the risk that
the capitated payment received for an insured may be insufficient to cover the cost of that
insured's medical needs for any given month. David M. Studdert, Direct Contracts, Data
Sharing and Employee Risk Selection: New Stakes for Patient Privacy in Tomorrow's
Health Insurance Markets, 25 Am. J. Law & Med. 233, 236 (1999) (discussing full risk
payments). This method of financing distinguishes managed-care service plans from traditional
fee-for-service arrangements where the provider is reimbursed according to a fee schedule
established by the Commission. See Equal Access for El Paso, Inc. v. Hawkins, 428 F.
Supp. 2d 585, 593-94 (W.D. Tex. 2006).
In this instance, Amerigroup paid Methodist a higher rate for services rendered
to Carraway from December 19-31,
2001. Methodist was paid at the lower traditional Medicaid rate for
services rendered to Carraway from January 1, 2002 until her death in
2004. Methodist seeks to recover the higher rate of reimbursement from
Amerigroup for all services rendered to Carraway based on Amerigroup's
contractual obligation to pay for all services once a mandatory
participant is admitted to the hospital, unless the patient becomes
ineligible for Medicaid. “Ineligibility” occurs when there is either a
complete loss of eligibility, or a temporary loss of eligibility that
results in a gap in coverage. Methodist contends that Amerigroup is
liable because Carraway never became ineligible for Medicaid, either
permanently or because of a gap in coverage.
C. The Lawsuit.
Amerigroup, a managed care organization, became a Medicaid HMO
participating in STAR pursuant to a 1999 contract with the Commission (the Commission
Contract). In the same year, Amerigroup also contracted with Methodist to pay for services
rendered to the mandatory members of the Amerigroup HMO (the Provider Contract).
Because Carraway was receiving TANF, she lost her ability to choose her
healthcare provider, and the federal waiver permitted the Commission to enroll her as a
mandatory participant in an HMO. On February 1, 2000, the Commission designated
Carraway a mandatory member of Amerigroup. On December 19, 2001, Carraway was
admitted to Methodist Hospital suffering from renal disease. She went into septic shock and
cardiopulmonary arrest and lapsed into a coma from which she never emerged. Carraway
remained hospitalized at Methodist until her death on January 27, 2004.
At some point in December 2001, Carraway voluntarily withdrew from TANF.
Consequently, on December 31, 2001, the Commission removed her from the Medicaid
eligibility rolls.
The Commission was unaware that Carraway had earlier applied for SSI on
February 20, 2001. On January 8, 2002, the Commission received notice that the Social
Security Administration (“Social Security”) had certified Carraway as eligible to receive SSI
benefits; it also made her SSI eligibility retroactive to the month she applied for benefits. As an
SSI recipient, effective February 1, 2001, Carraway could only be classified as a voluntary
member of Amerigroup.
After Carraway's hospitalization on December 19, 2001, Methodist began to
bill Amerigroup for the medical expenses she incurred. In February 2002, the Commission
notified Amerigroup that it was no longer responsible for Carraway's medical expenses. In
November 2002, Methodist officially requested the Commission to reconsider who was
responsible for payment of Carraway's expenses after December 31, 2001. Revisiting the issue,
the Commission reversed its earlier decision and concluded that Amerigroup was responsible for
all medical services provided to Carraway after she was admitted. Based on this determination,
Amerigroup paid Methodist $349,067.43 for services provided to Carraway through August 28,
2002. But that was not the end of this complex dispute.
On January 15, 2003, Amerigroup reconsidered its position and advised
Methodist that it would not be
liable for any medical services rendered after Carraway was removed as
a mandatory participant on December 31, 2001. Therefore, all but
$19,374.00 of its payment had been made in error. See Footnote 8 In response to Amerigroup's
adjusted payment, Methodist again requested the Commission to investigate. In March 2003,
the Commission reversed itself and concluded that Amerigroup was not obligated to pay for
services rendered to Carraway after December 31, 2001.
Specifically, the Commission found that because Carraway voluntarily
withdrew from TANF, she was properly removed from the Medicaid eligibility rolls as of
midnight on December 31, 2001. Although Carraway regained Medicaid eligibility when she
was certified as SSI eligible on January 8, 2002, there was a gap in Carraway's Medicaid
eligibility in the eight-day interim between January 1 and January 8. Therefore, the Commission
concluded that Amerigroup was not responsible for any of Carraway's medical expenses
incurred after December 31, 2001. Instead, the Commission found that the State was
responsible for Carraway's medical expenses under traditional Medicaid and advised Methodist
that it should submit a claim to National Heritage Insurance Company See Footnote 9
(NHIC). Methodist submitted a claim, and on June 2, 2003, NHIC paid $436,800 to
Methodist. See Footnote 10
Methodist initiated this action against Amerigroup and asserted, inter alia, that
Amerigroup breached both its Provider Contract and its Commission Contract when it failed to
pay for Carraway's medical care after December 31, 2001. See Footnote 11 Both
parties moved for summary judgment. The trial court granted summary judgment on behalf of
Amerigroup and denied Methodist's motion. This appeal followed.
STANDARD OF REVIEW
The standard of review in a traditional summary judgment case is
well-established. See Tex. R. Civ. P. 166a(c); Black v. Victoria Lloyds Ins. Co., 797 S.W.2d
20, 23 (Tex. 1990). When, as here, both parties move for summary judgment, each party bears
the burden of establishing that it is entitled to judgment as a matter of law; neither party can
prevail because of the other's failure to discharge its burden. City of Garland v. Dallas
Morning News, 960 S.W.2d 548, 552 (Tex. App.-Dallas 1998) (en banc), aff'd, 22 S.W.3d
351 (Tex. 2000). We review summary judgment evidence presented by both parties and
determine all questions presented. Id. at 356. When the trial court's order granting summary
judgment does not specify the grounds upon which it was granted, we will affirm the judgment if
any of the theories advanced are meritorious. Carr v. Brasher, 776 S.W.2d 567, 567 (Tex.
1989).
DISCUSSION
A. Loss of Medicaid Eligibility Under the Contract.
In
its first issue, Methodist asserts that Amerigroup remained liable for
services rendered to Carraway after December 31, 2001, because Carraway never lost her Medicaid
eligibility. The loss of Medicaid eligibility is material because paragraph 6.3.2 of the Commission
Contract provides:
Inpatient Admission After Enrollment in HMO.
HMO is responsible for all charges until the member is discharged
from the hospital/facility or until the Member loses Medicaid eligibility.
Methodist insists that
Carraway did not lose her Medicaid eligibility but moved seamlessly from TANF-based eligibility to SSI-based eligibility. See
Footnote 12 According to Methodist, the phrase “Medicaid eligibility” means eligibility
under any program. Thus, even if Carraway lost her TANF- based eligibility on December 31,
2001, she remained eligible for Medicaid as an SSI beneficiary; therefore there was no loss of
Medicaid eligibility under the terms of the Commission Contract. Methodist contends Carraway
was retroactively eligible for Medicaid on February 20, 2001, the date on which the Commission
registered Social Security's her eligibility for SSI benefits. See Footnote 13
Alternatively, Methodist contends that Carraway's eligibility for benefits should not be measured
using the January 8, 2002 date the Commission registered Social Security's certification of
Carraway's eligibility for SSI. Instead, Methodist urges the time period is correctly measured
using the December 27, 2001 date on which Social Security made its initial determination
concerning Carraway's eligibility. Using either the February 20, 2001, retroactive effective date
or the December 27, 2001, initial determination date, Methodist maintains there was no loss of
Medicaid eligibility. We disagree.
The distinction between eligibility based on TANF and eligibility based on SSI
is critical because the federal waiver precludes the mandatory enrollment of SSI recipients in an
HMO. The
Commission's discretion to administer the state Medicaid program is qualified by the
requirement that a state opting to participate in Medicaid must comply with federal law. See
Wilder v. Virginia Hosp. Assoc.,
496 U.S. 498, 502 (1990). Eligibility determinations must comply with
the limited exceptions delineated in the federal waiver. In paragraph
6.6 of the Provider Contract, the parties acknowledge that the
transactions contemplated under the agreement may be subject to
regulation by the state and federal government. Paragraph 6.6 further
provides that “[e]ach party shall carry out all activities . . . in
conformance with all applicable federal, state and local laws, rules
and regulations. . . .” In paragraph 2.2 of the Provider Contract,
Methodist acknowledges that the services provided under the agreement
are funded by Medicaid and that it is “subject to all state and federal
laws, rules and regulations . . . that apply to persons or entities
receiving state and federal funds.” Under the terms of the federal
waiver, once Carraway became eligible for SSI, she was disqualified
from mandatory participation in the Amerigroup HMO. Although Carraway
remained Medicaid-eligible based on her eligibility for SSI, she could
no longer be enrolled as a mandatory member of an HMO.
When the relevant portions of the state and federal rules and statutes and the
federal waiver are read in conjunction with the Commission Contract and the Provider Contract,
it is clear that Carraway's SSI-based eligibility, regardless of the date from which it is measured,
is not the type of Medicaid eligibility paragraph 6.3.2 of the Commission Contract is intended to
include. See Dallas Cent. Appraisal Dist. v. Cunningham, 161 S.W.3d 293, 295 (Tex.
App.-Dallas 2005, no pet.) (statutes are to be considered as a whole to harmonize all
provisions); Tex. Gov't Code Ann. § 311.021 (Vernon 2005) (statutory construction involves
presumption that just and reasonable result intended); United Protective Servs., Inc. v. West
Village Ltd. Partnership, 180 S.W.3d 430, 432 (Tex. App.-Dallas 2005, no pet.) (written
contracts are construed to ascertain true intentions of parties expressed in the instrument).
Amerigroup's contractual obligation to pay for medical services depends on
Carraway's status as a mandatory member of the HMO. Under paragraph 6.1.1 of the
Commission Contract, Amerigroup is only obligated to pay for covered services “provided to
mandatory-enrolled members for whom [Amerigroup] is paid a capitation payment.” Paragraph
6.2 of the Commission Contract provides that “HMO is responsible for providing all covered
services to each eligible
Member . . . .” Under the Commission Contract, a “member” is a person who: (1) is entitled
to benefits under Medicaid; (2) is in a Medicaid eligibility category included in the STAR
program; and (3) is enrolled in the STAR program. When an HMO provides healthcare service
pursuant to a contract requiring a federal waiver, the plan is included in the STAR program. See
Tex. Admin. Code § 353.2 (57) (2006). As an SSI beneficiary, Carraway was not in a
Medicaid eligibility category included in the STAR program, and was therefore ineligible to be a
mandatory member of the HMO. The specific sections of the Commission Contract describing
eligibility and mandatory enrollment control the general provisions of paragraph 6.3.2 concerning
liability. See Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133-134 (Tex. 1994)
(discussing rule of contract construction that the specific controls the general). When provisions
of a contract appear to conflict, we will endeavor to harmonize the provisions to reflect the true
intentions of the parties. See Edlund v. Bounds, 842 S.W.2d 719, 726 (Tex. App.-Dallas
1992, writ denied). The Commission found Carraway's eligibility ended January 1, 2001. The
Commission certified Carraway's eligibility for SSI benefits on January 8, 2001. As a result , the
Commission disenrolled Carraway from mandatory membership in the Amerigroup HMO. The
Commission has the exclusive statutory and contractual authority to make enrollment and
eligibility decisions. When the Commission found Carraway was no longer eligible to be a
mandatory member of the HMO, Amerigroup was no longer contractually obligated to pay her
medical expenses.
B. Retroactive Disenrollment from the HMO.
A recently decided opinion from our sister court in Austin supports the
Commission's determination that federal law precluded Carraway's mandatory membership in
the HMO once she lost her TANF-eligibility. See Hawkins v. El Paso First Health Plans,
Inc., 214 S.W.3d 709 (Tex.App.-Austin 2007, pet. filed) In Hawkins, the court affirmed a
declaratory judgment that Medicaid beneficiaries who are eligible for SSI and who reside in any
Texas County outside of Harris County . . . if enrolled in a STAR [HMO] at the time the SSA
makes its determination, must be disenrolled from the STAR [HMO] retroactive to the date the
beneficiary became eligible for SSI so that they may [elect whether to voluntarily participate in a
STAR HMO]. Id. at 723. Hawkins involved infants, normally enrolled at birth in their mothers'
Medicaid HMO, who became eligible for SSI because of their low birth weight. Under federal
law, the infants were precluded from receiving Medicaid benefits from their mothers' HMO
because as SSI recipients they could only participate in the HMO as voluntary members; hence
the HMO was not obligated to pay their medical expenses. See Footnote 14 Id. at
721-722. The Hawkins court held that an SSI-eligible infant could not qualify as a mandatory
member of a Medicaid HMO because federal law does not permit a state to take away an SSI
recipient's freedom to choose a health care provider. Here, the effect of federal law is the same:
once Carraway became eligible for SSI, she no longer qualified for mandatory participation in an
HMO. Thus, the Commission properly found that Amerigroup was no longer obligated to pay
her medical expenses after December 31, 2001.
Amerigroup argued in the trial court that it was not responsible for any of
Carraway's medical expenses because she was deemed retroactively eligible for SSI effective
February 2001, a date that preceded her December 2001 hospital admission. We need not
address the issue of retroactive disenrollment here. On appeal, Amerigroup is not contesting its
obligation to cover Carraway's medical expenses incurred from December 19-31, 2001.
Therefore, we need not decide the issue of retroactive disenrollment or its consequences for this
dispute.
C. Hearsay.
Methodist next asserts that Amerigroup is liable under paragraph 6.3.2 of the
Commission Contract because the evidence Amerigroup submitted to establish the
Commission's eligibility determination was hearsay. The evidence about which Methodist
complains consists of two e-mails from the Commission and a letter from the assistant general
counsel of the Commission. Although Methodist objected on the basis of hearsay, it failed to
obtain a ruling. It is well-established that in the absence of an objection, hearsay may be
competent summary judgment evidence. See Tex. R. Evid. 802 (stating that hearsay not
objected to has probative value); Dolenz v. A.B., 742 S.W.2d 82, 83-84, n.2 (Tex.
App.-Dallas 1987, writ denied) (failure to object waives complaint of inadmissible evidence on
appeal). When a party makes a hearsay objection, but fails to obtain a ruling, the right to
challenge the evidence on appeal is waived. See St. Paul Ins. Co. v. Mefford, 994 S.W.2d
715, 721 (Tex. App.-Dallas 1999, pet. denied); Dolcefino v. Randolph, 19 S.W.3d 906, 926
(Tex. App.- Houston[14th Dist.] 2000, pet. denied). Because Methodist failed to obtain a ruling
on its objection, it waived its right to complain about the evidence. We turn now to whether the
evidence establishes a loss of Medicaid eligibility under the Commission Contract.
D. The Commission's Eligibility Determinations.
The first e-mail from the Commission dated February 22, 2001, was written in
response to Amerigroup's inquiry
about the impact of Carraway's loss of TANF eligibility on its
obligation to pay for Carraway's medical expenses after December 31,
2001. Citing to paragraph 6.3.2 of the Commission Contract, the e-mail
stated:
Carraway . . . lost Medicaid eligibility as of January 1, 2002. When she reenrolled as an
Amerigroup member effective 01 February 2001, it was as a voluntary SSI risk group
member. This means that after 01/01/02, providers should bill NHIC . . . .
Methodist subsequently requested an investigation. In response, on December
9, 2002, the Commission decided that there had been no loss of Medicaid eligibility and
Amerigroup was responsible for charges incurred after December 31, 2001. This determination,
however, was based on a review of the incorrect version of the Commission Contract, which
defined a loss of Medicaid eligibility differently than the controlling version of the Commission
Contract. See Footnote 15
When the Commission reconsidered its December 2002 decision, it
determined it had made a mistake.
In an e-mail dated March 4, 2003, the Commission announced that
Amerigroup was not responsible for Carraway's medical expenses after
January 1, 2002. This decision was communicated again on May 22, 2003,
in a letter to Methodist's counsel from the assistant general counsel
for the Commission. The letter stated that Carraway was properly
removed from the Medicaid eligibility rolls as of midnight December 31,
2001 and had a “real time” loss of Medicaid eligibility as of January
1, 2002 until January 8, 2002, the date that she was certified by
Social Security to be SSI eligible. Therefore, the Commission
determined that NHIC, not Amerigroup, was the party responsible for
payment of her medical expenses after December 31, 2001.
There is no question that the Commission had the statutory and contractual
authority to determine Carraway's Medicaid eligibility. See 1 Tex. Admin. Code § 353.403(b);
see also, 42 U.S.C. § 1396a(a)(5) (determination of Medicaid eligibility shall be made by State
or local agency). Under the terms of paragraph 14.2.1 of the Commission Contract, the
Commission has the right and responsibility to enroll and disenroll eligible individuals in the
STAR program. Paragraph 14.1.1 provides that the Commission will identify Medicaid
recipients who are eligible for participation. Under paragraph 14.1.2.2, adults who are receiving
TANF are eligible to be mandatory participants. Under paragraphs 14.1.3 and 14.1.3.1, SSI
recipients may only elect to participate as voluntary members in the HMO; under the federal
waiver they are not eligible to be mandatory members. The Commission properly disenrolled
Carraway as a mandatory member: Amerigroup is contractually obligated to accept the
Commission's eligibility determinations.
The Commission also determined Carraway lost her Medicaid eligibility on
December 31, 2001. The resulting loss of TANF-based Medicaid eligibility meant Carraway
was not eligible for mandatory STAR participation under the federal waiver. Despite the
language of paragraph 6.3.2 of the Commission Contract, her change in status to a voluntary
member required that she be disenrolled as a mandatory member. Consequently, the
Commission properly concluded Amerigroup was not contractually responsible for Carraway's
medical expenses after December 31, 2001.
Methodist advances additional variations of its argument that Carraway did not
become ineligible for Medicaid on December 31. First, it claims that voluntary withdrawal from
TANF does not necessarily constitute a loss of Medicaid eligibility. Similarly, Methodist argues
that if TANF benefits are denied or withdrawn, states are prohibited from terminating Medicaid
eligibility until all possible avenues have been explored and exhausted. These arguments are
misplaced. The question of whether the Commission made an erroneous eligibility determination
is not at issue here. Amerigroup was contractually bound to accept the Commission's eligibility
determinations. Moreover, paragraph 6.6 of the Provider Contract states:
In the event that any action of a governmental authority impairs, limits, or delays
Americaid's performance of any obligation hereunder, Americaid shall be excused from
such performance, and Americaid's failure to perform such obligation for such reason shall
not constitute a breach of this Agreement. See Footnote 16
Once the Commission determined Carraway's ineligibility to participate in
STAR, Amerigroup's payment obligations ceased. By the terms of the contract, Amerigroup
could not have breached its contract by declining to treat Carraway as a mandatory member
once she was ineligible for this status under federal law.
E. The Commission's Reconsideration of Its Initial Decision.
Methodist concedes that the Commission has the sole authority for making
eligibility determinations and acknowledges that Amerigroup is contractually bound to accept the
Commission's decision as final. But in its sixth issue, Methodist argues that the Commission's
initial December 8 decision is the only binding determination the Commission made. We
disagree.
Methodist has not identified any reason why the Commission lacked the power
or authority to reconsider its own decisions. Methodist's own actions undermine its argument,
since Methodist made two of the three informal requests for the Commission to reconsider its
investigation. The May 2003 letter from the Commission's counsel was written in response to
Methodist's informal request for reconsideration of the Commission's prior decision. Methodist
cannot be heard to argue that the Commission only had authority to reconsider Amerigroup's
liability if it agreed with Methodist's position.
Methodist's
assertion that the Commission's reconsideration of its initial decision lacked sufficient formality to be binding is equally unpersuasive. As the May 22, 2003
letter explained, the Commission's review of concerns raised by Medicaid managed-care
providers is an informal process. Methodist tacitly acknowledged as much by requesting the
informal investigations. Methodist has not identified any specific formal process that the
Commission was required but failed to follow. On the record presented, we conclude that the
Commission was not prohibited from reconsidering its determinations about the eligibility of
Carraway or the obligation of Amerigroup for her medical expenses. This is a case of first
impression. The Commission acted within its authority to reconsider its initial determinations of
the parties' contractual obligations in light of the complex interaction of state and federal
regulations. Methodist's sixth issue is resolved against it.
F. Liability Under the Contracts.
In its seventh and eighth issues, Methodist asserts that Amerigroup is liable
because
Carraway was a covered person receiving covered services under the Provider Contract.
Consequently, Methodist argues
Amerigroup was liable for Carraway's medical expenses under the
continuation of care provision of the Provider Contract. A “covered
person” is defined as a Medicaid enrollee for whom the Commission has
agreed to pay for covered services. “Covered services” are limited to
health care services that covered persons are entitled to receive.
Based on the Commission's determination, after December 31, 2001,
Carraway was not a covered person receiving covered services. The
Commission determined Carraway was not eligible for mandatory
enrollment in the HMO after that date, and the HMO only pays for health
care services provided to mandatory enrollees. Healthcare services
provided to voluntary enrollees are reimbursed under the traditional
fee-for-service Medicaid program. Methodist's reliance on the
continuation of care provision of the contract is also flawed. Under
this provision, Amerigroup may be responsible for expenses incurred by
a “covered person of special circumstance.” But this provision only applies to covered persons. See Footnote 17
Furthermore, Methodist has contractually waived the right to proceed against
Amerigroup when the Commission makes coverage decisions with which it disagrees.
Paragraph 2.21 of the Provider Contract states:
Hospital waives and shall not have any cause of action . . . against Amerigroup . . . and
hereby releases . . . all claims, demands, obligations, liabilities and causes of action of every
nature whatsoever, relating to, arising out of, or resulting from Amerigroup's compliance with
its obligations to [the Commission] to deny or limit Hospital's reimbursement for services to
Covered Persons.
Methodist
has contractually waived its right to complain about the Commission's coverage decision. Methodist's seventh and eighth issues are resolved against it.
G. Payment.
In
its fifth and ninth issues, Methodist argues the payment it received
from the State does not discharge Amerigroup from liability, and Amerigroup breached an obligation to
promptly pay claims. Both of these issues depend on an assumption that Amerigroup was
contractually responsible for payment of these expenses. Because we have determined that
Amerigroup was not liable for Carraway's medical expenses after December 31, 2001, we
resolve Methodist's fifth and ninth issues against it.
In its remaining issues, Methodist argues Amerigroup was responsible for
payment of Carraway's medical expenses after December 31, 2001, pursuant to various other
terms of the Commission Contract. Because we conclude that the Commission properly
determined that, in light of federal law, Carraway no longer qualified as a mandatory member of
Amerigroup after December 31, 2001, and that the Commission had the authority to determine
that there was a gap in Carraway's Medicaid eligibility between January 1-8, 2002, we need not
address Methodist's remaining issues. See Carr, 776 S.W.2d at 567. We affirm the trial court's
summary judgment in favor of Amerigroup.
BEA ANN SMITH
JUSTICE, ASSIGNED
051579HF.P05
Footnote 1 The Honorable Bea Ann Smith, Justice, Court of Appeals, Third District of
Texas at Austin, Retired, sitting by assignment.
Footnote 2 At the time the contracts in this case were executed, the task of determining
Medicaid eligibility had been delegated by the Texas Health and Human Services Commission to
the Texas Department of Health (the Department). As of September 1, 2004, however, the
Commission is now the single state agency responsible for administering the Medicaid program in
Texas. Tex. Gov't Code Ann. § 531.021 (Vernon Supp. 2006). For ease of reference, the
Commission and the Department will be collectively referred to as “the Commission.”
Footnote 3 SSI is a federally funded cash assistance program for the elderly and disabled
poor. See 42 U.S.C. § 1382a.
Footnote 4 TANF (formerly Aid to Families With Dependent Children) is a federal-state
program providing cash assistance to impoverished families, usually headed by a single parent.
See 1 Tex. Admin. Code § 374.1 (2006).
Footnote 5 Under the contract between Amerigroup and Methodist, the HMO pays 75% of
billed charges, subject to a per diem cap.
Footnote 6 A managed care organization is a type of health maintenance organization
(HMO) “in which the over-all care of a patient is coordinated by or through a single
organization.” 1 Tex. Admin. Code § 353.2 (36) (2006).
Footnote 7 See note 5.
Footnote 8 It appears that Amerigroup offset $321,693.43, the difference between the
$349,067.43 it paid and the amount it thought it owed, from other payments due to Methodist.
At that time, Amerigroup did not dispute that it owed $19,374.00 for services rendered to
Carraway between December 19-31, 2001.
Footnote 9 NHIC is the claims administrator for the traditional fee-for-service Medicaid
program.
Footnote 10 The record is unclear about the time frame in which the charges covered by this
payment were incurred. By law, however, the State may only pay claims up to $200,000 per
year for individuals covered under the traditional fee-for- service Medicaid. 1 Tex. Admin.
Code § 354.1149(20) (2006).
Footnote 11 Methodist asserts that it is an intended third-party beneficiary of the
Commission Contract. See Stine v. Stewart, 80 S.W.3d 586, 591 (Tex. 2002). Amerigroup
does not dispute this contention.
Footnote 12 An individual who is eligible for SSI is automatically eligible for Medicaid. See 1
Tex. Admin. Code §358.610 (2004).
Footnote 13 Paradoxically, if this were true, Carraway would not have been a mandatory
member of the Amerigroup HMO on December 19, 2001, when she was admitted to the
hospital.
Footnote 14 Of course, the infants, like a woman in a coma, are not capable of making an
election to be a voluntary member of an HMO. Instead, they become part of the traditional
Medicaid program which reimburses the provider on a fee-for- services basis.
Footnote 15 Apparently the decision was based on an amended version of the Commission
Contract dated August 29, 2002 rather than the 1999 version of the contract that controls the
issues here. Section 14.4.1 of the applicable contract defines a temporary loss of Medicaid
eligibility as a period of six months or less. The amended version requires at least a one month
lapse in Medicaid coverage before Medicaid eligibility is deemed terminated.
Footnote 16 Amerigroup was formerly known as Americaid and executed the contract as
Americaid.
Footnote 17 Additionally, the record does not reflect that Methodist complied with the notice
provisions of this paragraph.
File Date[08/09/2007]
File Name[051579FH]
File Locator[08/09/2007-051579FH]