Christus Health Gulf Coast v. Aetna, Inc., 347 S.W.3d 726

Hospitals sued Aetna for prompt-pay penalties under Tex. Ins. Code art. 20A.18B for NAMM/Management Services' handling of NYLCare 65 claims; hospitals had no contract with Aetna.
Capitation payments were routed from NYLCare (Aetna) to NAMM/Management Services, which then paid the hospitals, under arrangements for NYLCare 65 enrollees.
Trial court granted summary judgment for Aetna on the hospitals' prompt-pay claim and denied the hospitals' partial summary judgment.
This Court previously remanded to address whether Aetna could be liable under the Prompt Pay Statute given lack of direct contract.
On remand, the court held that liability under the Prompt Pay Statute requires contractual privity between the HMO and the provider, so Aetna is not liable without a contract, and NAMM/Management Services are proper defendants.
The court affirmed the trial court’s ruling and rejected the hospitals’ theories based on nonprivity, intermediary delegation, or federal regulations.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does the Prompt Pay Statute require contractual privity to impose liability on the HMO?	Hospitals argue no privity needed since liability can attach for ‘billed charges’ or a contracted penalty.	Aetna argues liability only arises if there is contractual privity between the HMO and provider.	Privity required; no liability without a contract.
Who is the proper defendant when an intermediary processes claims for the HMO?	Subsection (n) makes the intermediary potentially liable, not necessarily the HMO.	Liability attaches to the HMO or the contracting intermediary as the “person” who receives claims.	Intermediaries (NAMM/Management Services) are proper defendants; Aetna not liable absent contract.
Do federal Medicare regulations or ERISA preemption alter the state-law obligation under the Prompt Pay Statute?	Federal rules require some indemnification/financial risk allocations that support the hospitals’ position.	Federal provisions do not override state-privity requirement for private suit; not dispositive here.	Federal law does not create privity-free private triggers for Prompt Pay liability.

Foley v. S.W. Texas HMO, Inc., 226 F. Supp. 2d 886 (E.D. Tex. 2002) (ERISA preemption analysis; lack of privity may limit recovery under statute)
Christus Health Gulf Coast v. Aetna, Inc., 237 S.W.3d 338 (Tex. 2007) (rejected broader theory of HMO liability; focus on contract-based liability)
Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355 (U.S. 2002) (not controlling for private mispayment claims; HMO obligations to beneficiaries remain)
Lone Star OB/GYN Assocs. v. Aetna Health Inc., 579 F.3d 525 (5th Cir. 2009) (provider standing to sue for benefits under health plans via assignee)
Hermann Hosp. v. MEBA Med. & Benefits Plan, 845 F.2d 1286 (5th Cir. 1988) (standing framework for providers to sue through patient assignments)