Fifty-six Texas emergency medical physician groups will get to pursue legal claims that two dozen Blue Cross Blue Shield insurance plans underpaid them for treating patients.
A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit ruled Friday that a Texas federal judge wrongly dismissed hundreds and hundreds of claims for tens of millions of dollars by ER doctors from Texarkana to Port Arthur and from Collin County to Odessa.
The Fifth Circuit decision was a major victory for lawyers at King & Spalding and Winstead who have been litigating on behalf of the physician groups since they filed the original lawsuit in 2018.
“The Physician Groups alleged that they were owed payments based on patients’ assignments of rights under the Blue Plans to the Physician Groups prior to treatment,” Judge Stephen Higginson of the Fifth Circuit wrote in the unanimous opinion. “The district court granted summary judgment on all claims for a variety of independent and overlapping reasons related to the different forms and language of the relevant plans. In so doing, the district court ignored the Physician Groups’ arguments about ambiguities in contract language and applied the wrong legal standard in determining whether assignments to the Physician Groups were valid.”
The case, Angelina Emergency Medical Associates v. Blue Cross and Blue Shield of Alabama, will now head back to the Northern District of Texas for pretrial proceedings.
Hospitals across the U.S. have two ways to staff their emergency rooms: directly employing physicians or contracting with third-party physician groups.
“The Physician Groups’ position is straightforward: the plans should pay them what the law requires them to,” lawyers for King & Spalding wrote in their brief to the Fifth Circuit. “Instead, the [Blue Cross] plans systematically, continually, and repeatedly paid the Physician Groups far less, resulting in tens of thousands of underpaid claims.”
Lawyers for the doctors argued that U.S. District Judge Brantley Starr’s summary-judgment order in 2023 “effectively granted the plans carte blanche to shortchange the Physician Groups based on a fundamental misunderstanding of how hospitals function.”
The district court’s order dismissing the doctors’ claims by demanding “great specificity” on the patients assigning their insurance benefits to the emergency provider “all but presumes a world where lawyers are standing by to draft assignments at the emergency room intake desk or the patient’s bedside before each new physician encounter.”
“That approach risks upending how hospitals function and rendering the Fifth Circuit an outlier in how these everyday payment transactions are formalized,” lawyers for King & Spalding argued.
The district court also ruled that the emergency physicians failed to exhaust their claims efforts through the contractually agreed administrative appeals process.
But lawyers for the doctors countered that their members “did not slumber on their rights after receiving the Plans’ underpayments.”
“They used the administrative appeal process to which the Plans specifically directed them — submitting detailed appeals to the Texas Blue plan (BCBSTX) and explaining that the law required additional payment,” King & Spalding lawyers argued. “The Plans, through their agent BCBSTX, often ignored those appeals, and when they did bother to respond, they brushed off the appeals without any meaningful response. The district court blessed that practice, too, ruling that the appeals undertaken at the Plans’ express direction nevertheless failed to satisfy administrative-exhaustion requirements.”
“The district court’s order imposes improper, onerous, and in some instances impossible administrative requirements both before treatment when hospitals collect assignments of healthcare benefits on behalf of physicians) and after (when physicians seek remedies, including litigation like this, for underpayment,” lawyers for the doctors wrote. “If allowed to stand, the order will increase red tape for patients seeking emergency medical care and the physicians caring for them. And it will reward plans for stonewalling — or, worse yet, affirmatively misleading — providers about the byzantine claim-appeal process designed by the plans.”
The Fifth Circuit sided with the doctors.
“The Physician Groups allege that BCBSTX did one of three things in response to each of the appeals,” Judge Higginson wrote. “First, they occasionally replied with generic statements that did not explain the underpayment or point to provisions justifying the underpayment, stating simply that ‘our records indicate that the claim disposition was based on the member’s benefit coverage.’ Second, they physically mailed back the appeal documents with no other response. Or third, they failed to respond at all. The Physician Groups also claim that BCBSTX sometimes directed them to the out-of-state Blue Plan, but those Plans then referred the Groups back to BCBSTX.”
Fifth Circuit Judges Jerry Smith and Dana Douglas joined Judge Higginson in the opinion.
The lawyers representing the physician groups include Anne Voigts, James Boswell III, Jennifer Lewin and Ashley Parrish of King & Spalding and Toby Galloway of Winstead.
The two dozen BCBS plans are represented by Maria Wyckoff Boyce of the Houston office of Hogan Lovells; Mark Dyer of the Dallas firm Martin, Disiere, Jefferson & Wisdom; Sarah Cummings of the Dallas office of Reed Smith; Amy Anderson and Covert Geary of Jones Walker; and Jonathan Herman, Charles Hill and Joel Mintzer of the Herman Law Firm in Dallas.
The case is Angelina Emergency Medical Associates v. Blue Cross and Blue Shield of Alabama, Fifth Circuit, Case No. 24-10306.