A Texas appeals court has rejected a Houston health maintenance organization’s argument that it has immunity protection from a health services company’s lawsuit, which alleges breach of contract and underpayments in thousands of health care claims.
The 14th Court of Appeals in Harris County ruled against Community Health Choice Inc. this week, agreeing with a trial court that Community Health lacked either common law immunity or statutory immunity to shield itself from the lawsuit brought by ACS Primary Care Physicians Southwest.
ACS provides physician services to hospitals offering emergency care in the Houston area. The corporation sued Community Health in 2019, contending that the HMO’s reimbursement amounts for services was well below customary rates for more than 16,000 health care claims.
Community Health was created by the Harris Health System, a government entity that provides hospital care to low-income residents, according to the appeals court opinion. Community Health’s designated role was that of a charitable entity providing health care services, resources for such services and providing “ancillary support services” in the district, the opinion says.
In court filings, Community Health argued that under the Texas Insurance Code, its immunity protections barred ACS’s lawsuit. But the appeals court cited a Texas Supreme Court opinion concluding that claims of governmental immunity protections must ordinarily come from “a political subdivision” and that a health maintenance and charitable organization cannot be classified as such an entity.
“The parties did not produce any evidence suggesting any key government services are disrupted by funds Community Health will spend on the underlying litigation,” the appeals court said, noting that Community Health is not solely dependent on public funds since it has the power to solicit grants and contributions.
“Therefore, public (fiscal) concerns do not warrant an extension of immunity in these circumstances,” the court stated.
The 3-1 decision, however, also included a dissent from Justice Randy Wilson, who pointed to another Texas Supreme Court decision that concluded a health care services center was in fact a unit of local government and entitled to legal immunity as a result of a statute.
Community Health’s immunity from tort claims were not formally waived under the Texas Health and Safety Code, according to Wilson’s dissent.
“Because ACS did not carry its burden of affirmatively demonstrating the trial court’s jurisdiction by alleging a valid waiver of the Community Health Parties’ governmental immunity as to the unfair settlement claims, the trial court erred in denying the Community Health Parties’ plea to the jurisdiction,” the dissenting opinion states.