Cecile E. Young, in her official capacity as Executive Commissioner of Texas Health & Human Services Commission, Molina Healthcare of Texas, Inc., and Aetna Better Health of Texas, Inc., Appellants, v. Cook Children‘s Health Plan, Texas Children‘s Health Plan, Superior HealthPlan, Inc., and Wellpoint Insurance Company, Appellees.
No. 15-24-00114-CV
In the Court of Appeals for the Fifteenth District of Texas
7/10/2025
Appeal from the 455th Judicial District Court, Travis County, Texas, Trial Court Cause No. D-1-GN-24-003839, Hon. Laurie Eiserloh, Presiding
Karen D. Walker
Pro Hac Vice Motion Pending
karen.walker@hklaw.com
Tiffany Roddenberry
Pro Hac Vice Motion Pending
tiffany.roddenberry@hklaw.com
HOLLAND & KNIGHT LLP
315 S. Calhoun Street, Suite 600
Tallahassee, Florida 32301
(850) 425-5612 (telephone)
(850) 224-8832 (facsimile)
Richard B. Phillips, Jr.
Texas Bar No. 24032833
rich.phillips@hklaw.com
HOLLAND & KNIGHT LLP
One Arts Plaza
1722 Routh Street, Suite 15500
Dallas, Texas 75201
(214) 964-9500 (telephone)
(214) 964-9501 (facsimile)
Counsel for Appellee Superior HealthPlan, Inc.
| Index of Authorities | iii |
| Introduction | 1 |
| Factual and Procedural Background | 5 |
| 1. HHSC‘s RFP | 5 |
| 2. The Intended Contract Awards and the Resulting Disruption of Healthcare for More than 1.5 Million Vulnerable Texans | 8 |
| 3. HHSC‘s Wrongful Disclosure | 9 |
| 4. The Executive Commissioner Is Poised to Further Her Unlawful Conduct through Administration of the STAR Kids RFP | 12 |
| 5. The Executive Commissioner‘s Ultra Vires Actions | 13 |
| 6. The Trial Court‘s Temporary Injunction | 19 |
| Argument | 23 |
| 1. This Court has authority to enjoin further action by the Executive Commissioner pending resolution of this appeal | 23 |
| 2. The Court should reinstate the trial court‘s injunction pending resolution of this appeal | 25 |
| A. The trial court correctly found that Appellees established a probable right to relief. | 25 |
| B. A temporary order is necessary to prevent irreparable harm to Superior. | 27 |
| C. Without a temporary order, Superior‘s claims could be rendered moot. | 29 |
| D. A temporary order will preserve the status quo pending appeal. | 31 |
| Conclusion and Prayer | 33 |
| Certificate of Conference | 35 |
| Certificate of Compliance | 35 |
Cases
In re Abbott, 645 S.W.3d 276 (Tex. 2022) 24
In re Geomet Recycling LLC, 578 S.W.3d 82 (Tex. 2019) (orig. proceeding) passim
In re Newton, 146 S.W.3d 648 (Tex. 2004) (orig. proceeding) 31
In re State, 711 S.W.3d 641 (Tex. 2024) 24, 25
In re Tex. Educ. Agency, 619 S.W.3d 679 (Tex. 2021) (orig. proceeding) 23, 30
Tex. Educ. Agency v. Houston Indep. Sch. Dist., 609 S.W.3d 569 (Tex. App.—Austin 2020, no pet.) 24, 29
Transp. Co. of Tex. v. Robertson Transports, Inc., 261 S.W.2d 549 (Tex. 1953) 31
Statutes
Acts 2023, 88th Leg., R.S., Ch. 769, sec. 1.01 2
Regulations
Rules
The notice of appeal filed by Appellant Cecile E. Young, in her official capacity as Executive Commissioner of the Texas Health and Human Services Commission (“HHSC“) automatically superseded the trial court‘s temporary injunction.1 Under
Superior is a managed care organization (“MCO“) that brought an ultra vires suit against the Executive Commissioner. Appellees Cook Children‘s Health Plan, Texas Children‘s Health Plan, and Wellpoint Insurance Company filed separate ultra vires suits against the Executive Commissioner. The trial court consolidated the four suits into a single case.2 The consolidated suits arise from the Executive Commissioner‘s failure to comply with law in procuring managed care services for the State of Texas Access Reform (“STAR“) Medicaid program and the Children‘s
- The intended contract awards do not “give preference to organizations that have significant participation in the organization‘s provider network from each health care provider in the region who has traditionally provided care to Medicaid and charity care patients” as required by
Texas Government Code section 533.003(a)(1) ;3 - The intended contract awards do not give preference to organizations that have successfully implemented quality initiatives as required by
Texas Government Code section 536.052(d) ;4 - HHSC did not document all relevant factors identified in
Texas Government Code section 2155.144(c) in determining the intended contract awards, including, but not limited to, quality and past performance, as required byTexas Government Code section 2155.144(d) ; and
The intended award of “mandatory” non-Medicaid CHIP contracts violates Texas Government Code section 533.004 ,5 which applies to only Medicaid contracts and also violatesTexas Health & Safety Code section 62.155 , which requires competitive procurement of CHIP contracts.
HHSC‘s STAR & CHIP procurement was also fatally compromised by the improper disclosure of proposals to third parties, including counsel for a rival bidder, during the procurement. The disclosure created an unlevel playing field that destroyed the procurement‘s integrity. If the Executive Commissioner authorizes HHSC to proceed with the intended contract awards, a majority of STAR & CHIP members (more than 1.5 million of Texas‘s most vulnerable residents including pregnant women and children) will lose their current health plan.
After a three-and-a-half-day evidentiary hearing, the trial court denied the Executive Commissioner‘s plea to the jurisdiction, thereby rejecting the Executive Commissioner‘s assertion that the trial court lacked jurisdiction to hear the matter. The court also temporarily enjoined the Executive Commissioner from signing, executing, or taking any other action to implement the intended contract awards under
The Executive Commissioner‘s appeal of the Temporary Injunction supersedes the injunction.
FACTUAL AND PROCEDURAL BACKGROUND
1. HHSC‘s RFP
In December 2022, HHSC issued the RFP soliciting proposals from MCOs for STAR & CHIP managed care services in all 13 service areas (“SAs“) throughout the State.7 The RFP capped the number of MCOs that would be awarded STAR & CHIP contracts in each SA and the number of STAR & CHIP contracts that could be awarded to an MCO.8 The RFP mandated that a respondent submit a single proposal for all SAs without differentiation by SA.9 It also required respondents to designate and rank in order the SAs in which they wanted to provide services.10
The RFP describes a multistage process that started with an initial compliance screening and scoring of responses to technical questions.12 After the technical questions were scored, respondents in the competitive range were invited to participate in oral presentations, which were also scored.13 Under the RFP, all respondents with a valid
The RFP arbitrarily capped the number of MCO contracts in each SA and limited the number of SAs that an MCO could be awarded under the RFP to seven.19 The RFP sets forth a methodology for determining SA assignments, which equate to contract awards.20 Under the RFP‘s formulaic approach:
- in each SA where only one respondent has a validated
section 533.004 mandatory contract claim, that respondent will be assigned to the SA without any consideration or reference to scores; - in each SA where more than one respondent has a validated
section 533.004 mandatory contract claim, the respondent with the highest final weighted score of those respondents with a validatedsection 533.004 claim in the SA will be assigned to the SA, and all other respondents with a validatedsection 533.004 claim will be considered in the same manner as respondents without a validatedsection 533.004 claim;21 and - after assignment of respondents with validated
section 533.004 mandatory contract claims, respondents will be assigned to SAs in descending order based on each respondent‘s final weighted score until the maximum number of MCOs per SA has been assigned, using each
The RFP requires HHSC to certify that each respondent recommended for an award is “reasonably able to fulfill the terms of the Contract, as required by
2. The Intended Contract Awards and the Resulting Disruption of Healthcare for More than 1.5 Million Vulnerable Texans
In March 2024, HHSC, under the Executive Commissioner‘s direction, issued notice of the intended contract awards from the RFP.26 These intended
3. HHSC‘s Wrongful Disclosure
The procurement was also fundamentally flawed because HHSC erroneously disclosed proposals (including Superior‘s) to third parties, including one of Superior‘s competitors, while the procurement was ongoing.30 This wrongful disclosure
In August 2023, months before issuing notice of the intended contract awards, HHSC erroneously disclosed the proposals to third parties.33 The proposals were disclosed to legal counsel for Aetna, a respondent to the RFP. The disclosure happened during the evaluation of proposals and before Aetna‘s oral presentation.34 In January 2024, months after wrongfully disclosing the proposals (and before issuing the notice of intended contract awards), HHSC recognized its error. It emailed the recipients of the erroneously disclosed proposals asking that the proposals be destroyed, but this attempted cure was too late.35 Moreover, HHSC did not confirm, and does not know, whether all the copies were destroyed.36
This improper disclosure of the proposals to Aetna destroyed the integrity of the procurement and created an unlevel playing field where Aetna enjoyed an unfair
HHSC‘s release of the proposals before the oral presentations and while the evaluation was ongoing irretrievably compromised the procurement‘s integrity.42
4. The Executive Commissioner Is Poised to Further Her Unlawful Conduct through Administration of the STAR Kids RFP
In May 2024, HHSC issued Request for Proposals No. HHS0013071 (the “STAR Kids RFP“) seeking bids for STAR Kids, a separate Texas Medicaid managed care program that provides benefits to disabled children and young adults.44
The STAR Kids RFP is nearly identical to the STAR & CHIP RFP.45 HHSC developed the process for the STAR & CHIP procurement and the STAR Kids procurement together. An HHSC representative testified at the injunction hearing that HHSC is using the same process for the STAR Kids RFP that it used for the STAR & CHIP RFP.46 In fact, the representative confirmed that in the STAR Kids RFP, HHSC will treat the statutory preferences the same as it did in the STAR & CHIP RFP—in other words, HHSC will fail to apply the statutorily required preferences.47
5. The Executive Commissioner‘s Ultra Vires Actions
Appellees established that the Executive Commissioner has acted and will act ultra vires in at least the following ways:49
First, in determining the intended contract awards, HHSC, under the Executive Commissioner‘s direction, failed to “give preference to organizations that have significant participation in the organization‘s provider network from each health care provider in the region who has traditionally provided care to Medicaid and charity care patients” as required by
Second, in determining the intended contract awards, HHSC, under the Executive Commissioner‘s leadership, failed to give preference to organizations that have successfully implemented quality initiatives or meet quality of care and cost-
Third, HHSC, under the Executive Commissioner’s direction, is proposing to unlawfully award CHIP contracts to respondents that HHSC has determined meet the requirements for a mandatory contract under
In response to a protest to the STAR & CHIP RFP submitted by Wellpoint (formerly Amerigroup) before the proposal deadline, HHSC considered amending the RFP to provide for mandatory contract awards only for STAR Medicaid contracts, with CHIP awards being determined based on scoring.63 But HHSC denied the protest and did not to amend its process.64 By allowing HHSC to move forward
Fourth, the intended contract awards, if finalized, will violate
Fifth, the Executive Commissioner intends to award contracts that do not comply with HHSC‘s obligation under
Sixth, HHSC‘s wrongful disclosure of the proposals, including to Aetna‘s legal counsel, destroyed the procurement‘s integrity and created an unlevel playing field resulting in intended contract awards procured through a process that does not provide fair consideration of proposals as required by
Seventh, the intended contract awards will violate
Under the intended contract awards, the Executive Commissioner will fail to implement STAR by contracting with MCOs to improve Texans’ health by promoting continuity of care and ensuring high quality health care services in the recipient‘s local community as required by
6. The Trial Court‘s Temporary Injunction
Following an evidentiary hearing that lasted three-and-a-half-days with 11 witnesses (including the Executive Commissioner) testifying, the trial court denied the
The trial court found that “[Appellees] have established a cause of action against [the Executive Commissioner] and a probable right to the relief sought on their claims that [the Executive Commissioner] has violated and, unless enjoined, will continue to violate statutory and regulatory requirements applicable to the RFP.”75 The court specifically found that “[Appellees] have established that [the Executive Commissioner] has violated and will continue to violate the Texas Government Code, Texas Health and Safety Code, and Texas Administrative Code in procuring managed care contracts for STAR & CHIP in Texas.”76 The court determined that “sovereign immunity does not bar [Appellees‘] claims or deprive the [trial court] of subject-matter jurisdiction” because “[Appellees] properly seek only
The court also made specific findings about the ways the Executive Commissioner has and will continue to act ultra vires unless enjoined.78
The court also found that each Appellee would suffer irreparable harm without injunctive relief.79 Superior‘s harm includes loss of members even before the implementation of the proposed contracts, loss of employees because of the uncertainty created by the intended contract awards, loss of providers participating in Superior‘s network because of the uncertainty and lack of leverage in provider negotiations, loss of investments in strategic partnerships intended to scale over time, and a decrease in Superior‘s ability to continue to offer the same level of service in the time leading up to implementation of the proposed contracts.80 The court found that money damages would not be adequate compensation because the harms cannot be
The Executive Commissioner appealed the denial of her plea to the jurisdiction and the grant of the temporary injunction. On a joint motion by the Executive
Argument
1. This Court has authority to enjoin further action by the Executive Commissioner pending resolution of this appeal.
Texas Rule of Appellate Procedure 29.3 authorizes this Court to “make any temporary orders necessary to preserve the parties’ rights until disposition of the appeal.”
About a year ago, the Texas Supreme Court provided additional guidance about the standards for temporary orders under
The Court observed that some preliminary inquiry into the merits may be necessary because “‘just relief’ that ‘preserve[s] the parties’ rights’ cannot be afforded without some consideration of the merits.” Id. The merits should not be “definitively decided,” but the Court should make a preliminary inquiry into the merits of the parties’ positions. Id. “Another essential consideration attendant on any request for injunctive relief, including in this posture, is the injury that will befall either party depending on the court‘s decision.” Id. The Court may also consider “other case-specific equitable considerations that bear on its exercise of discretion.” Id.
2. The Court should reinstate the trial court‘s injunction pending resolution of this appeal.
A. The trial court correctly found that Appellees established a probable right to relief.
As an initial matter, the merits of Superior‘s and the other Appellees’ positions warrant relief under
As detailed on pages 13-23, above, during the multi-day hearing, the trial court heard evidence and made findings that HHSC did not ask respondents for information necessary to apply the mandatory statutory preferences, did not train the evaluators about the existence of preferences or instruct them to consider the preferences, and did not consider available information about the respondents’ existing provider networks or implementation of quality initiatives. The proposed awards also improperly tie mandatory contracts under
B. A temporary order is necessary to prevent irreparable harm to Superior.
The Texas Supreme Court has held that
Superior also presented evidence that it will begin losing membership immediately if the contracts are executed, even though the new STAR & CHIP contracts are not scheduled to be operational for some time.92 Providers are already informing Superior‘s members that Superior will no longer be providing STAR & CHIP services in certain areas of the state and are encouraging members to switch plans.93 The confusion among providers and members alike will only worsen if the contract awards are executed notwithstanding the pending challenge to their legality.94
C. Without a temporary order, Superior‘s claims could be rendered moot.
Another consideration in granting temporary relief under
Here, without temporary relief, Superior may lose its ability to meaningfully challenge the Executive Commissioner‘s actions. If the Executive Commissioner is permitted to execute any STAR & CHIP contracts pursuant to the RFP while the appeal is pending, Superior could be deprived of its primary remedy: a declaration that the Executive Commissioner will act ultra vires should she execute or attempt to implement the contract awards and an injunction to prevent that ultra vires action. Similarly, if the Executive Commissioner continues processing the STAR Kids RFP, Superior could be deprived of available remedies for the ultra vires actions in the STAR Kids RFP if HHSC executes STAR Kids contracts before this appeal is decided. Thus, any meaningful challenge to the Executive Commissioner‘s actions requires that she be temporarily enjoined from taking any steps to award or execute the proposed contracts or to continue processing the Star Kids RFP until Superior‘s claims are fully adjudicated.
Appellate courts have “great flexibility in preserving the status quo based on the unique facts and circumstances presented.” Geomet, 578 S.W.3d at 89. The Texas Supreme Court defines “the status quo” as “the last, actual, peaceable, non-contested status which preceded the pending controversy.” In re Newton, 146 S.W.3d 648, 651 (Tex. 2004) (orig. proceeding). “If an act of one party alters the relationship between that party and another, and the latter contests the action, the status quo cannot be the relationship as it exists after the action.” Universal Health Servs. v. Thompson, 24 S.W.3d 570, 577 (Tex. App.—Austin 2000, no pet.) (quoting Benavides Indep. Sch. Dist. v. Guerra, 681 S.W.2d 246, 249 (Tex. App.—San Antonio 1984, writ ref‘d n.r.e.)). Moreover, “where an order is entered by a Board or Commission of this State in opposition to the objections and contentions of a party whose justiciable interests are adversely affected thereby, the ‘status quo’ would be the state of affairs as they existed immediately prior to the time the order was entered.” Tex. State Bd. of Examiners in Optometry v. Lane, 349 S.W.2d 763, 765 (Tex. App.—Fort Worth 1961, no writ) (citing Transp. Co. of Tex. v. Robertson Transports, Inc., 261 S.W.2d 549 (Tex. 1953)).
Here, the status quo is that the Executive Commissioner has not executed the STAR & CHIP contracts that are the subject of HHSC‘s intended contract awards
This case is similar to Texas Health & Human Services Commission v. Sacred Oak Medical Center, LLC, No. 03-21-00136-CV, 2021 WL 2371356, at *7 (Tex. App.—Austin June 9, 2021) (order on motion for temporary relief). In Sacred Oak, HHSC issued an order “denying Sacred Oak‘s renewal application for the license for its psychiatric hospital and requiring it to cease operations immediately.” Id. at *1. The trial court entered a temporary injunction that prohibited HHSC from enforcing its order and required it “to restore Sacred Oak to the operational status quo that existed prior to [the Commission‘s] enforcement of the Order.” Id. After HHSC appealed, the court of appeals granted temporary relief under
Conclusion and Prayer
The trial court correctly concluded that Superior has a probable right to relief on the merits of its claims because the Executive Commissioner acted and intends to continue to act ultra vires in the procurement process. The trial court also correctly concluded that Superior and the other Appellees face imminent and irreparable harm that warrants temporary injunctive relief. The trial court‘s injunction was automatically superseded when the Executive Commissioner filed her notice of appeal. To preserve Superior‘s ability to obtain effective relief, Superior requests that the Court grant temporary relief reinstating the trial court‘s Temporary Injunction. Superior further requests general relief.
Respectfully submitted,
HOLLAND & KNIGHT LLP
By: /s/ Richard B. Phillips, Jr.
Richard B. Phillips, Jr.
Texas Bar No. 24032833
rich.phillips@hklaw.com
One Arts Plaza
1722 Routh Street, Suite 15500
Dallas, Texas 75201
(214) 964-9500 (telephone)
(214) 964-9501 (facsimile)
Karen D. Walker
Pro Hac Vice Motion Pending
karen.walker@hklaw.com
Tiffany Roddenberry
Pro Hac Vice Motion Pending
tiffany.roddenberry@hklaw.com
315 S. Calhoun Street, Suite 600
Tallahassee, Florida 32301
(850) 425-5612 (telephone)
(850) 224-8832 (facsimile)
ATTORNEYS FOR APPELLEE
SUPERIOR HEALTHPLAN, INC.
CERTIFICATE OF CONFERENCE
Under
/s/ Richard B. Phillips, Jr.
Richard B. Phillips, Jr.
CERTIFICATE OF COMPLIANCE
I certify that this Motion contains 6,891 words, excluding the portions of the Motion exempted by
/s/ Richard B. Phillips, Jr.
Richard B. Phillips, Jr.
Ex. A
COOK CHILDREN‘S HEALTH PLAN; TEXAS CHILDREN‘S HEALTH PLAN; SUPERIOR HEALTHPLAN, INC.; and WELLPOINT INSURANCE COMPANY, Plaintiffs, v. CECILE ERWIN YOUNG, in her official capacity as Executive Commissioner of the Texas Health and Human Services Commission, Defendant.
CAUSE NO. D-1-GN-24-003839
IN THE DISTRICT COURT TRAVIS COUNTY, TEXAS 353rd JUDICIAL DISTRICT
OCT 04 2024
Judge Laurie Eiserloh
TEMPORARY INJUNCTION AND ORDER DENYING DEFENDANT‘S PLEA TO THE JURISDICTION
Before the Court are the Applications for Temporary Injunction (the “Applications“) filed by Plaintiffs Cook Children‘s Health Plan (“Cook Children‘s“), Texas Children‘s Health Plan (“TCHP“), Superior HealthPlan, Inc. (“Superior“), and Wellpoint Insurance Company (“Wellpoint,” and collectively, “Plaintiffs“); and the Plea to the Jurisdiction (the “Plea“) filed by Defendant Cecile Erwin Young (“Defendant“), in her official capacity as Executive Commissioner of the Texas Health and Human Services Commission (“HHSC“). After considering Plaintiffs’ Applications and Defendant‘s response; Defendant‘s Plea and Plaintiffs’ responses; the pleadings and attached evidence in these consolidated cases (Nos. D-1-GN-24-003839, D-1-GN-24-003874, D-1-GN-004059, and D-1-GN-24-004327); the parties’ prehearing briefing; the evidence admitted in the record and adduced at the hearing held on September 30, October 1, October 2, and October 3, 2024; the applicable authorities; the arguments of counsel, and all other matters properly before the Court, the Court DENIES Defendant‘s Plea and GRANTS Plaintiffs’ Applications.
The Court makes the following findings:
- The Court has subject-matter jurisdiction over the claims in these consolidated cases because Plaintiffs have alleged and offered evidence demonstrating that Defendant will act ultra vires in awarding, executing, and implementing the contracts arising out of Request for Proposals No. HHS0011152 (the “RFP” or “STAR & CHIP RFP“) because she has acted ultra vires in administering the RFP. Plaintiffs properly seek only prospective relief—specifically, injunctive relief prohibiting Defendant from awarding, executing, or otherwise implementing the intended RFP contracts and thus preventing further unlawful acts in connection with Defendant‘s procurement or contracting processes, as well as accompanying declaratory relief. Accordingly, sovereign immunity does not bar Plaintiffs’ claims or deprive the Court of subject-matter jurisdiction.
The Court has personal jurisdiction over the parties in these consolidated cases. - Venue is proper in this Court.
- Through the RFP, Defendant sought to procure managed care services for the State of Texas Access Reform (“STAR“) Medicaid program and the Children‘s Health Insurance Program (“CHIP,” and together with STAR, “STAR & CHIP“).
- Plaintiffs allege that Defendant administered the RFP in a manner that violates Texas law and that, consequently, any award, execution, or implementation of the intended STAR & CHIP managed care contracts that Defendant announced on March 7, 2024, will constitute ultra vires acts.
- Plaintiffs have established a cause of action against Defendant and a probable right to the relief sought on their claims that Defendant has violated and, unless enjoined, will continue to violate statutory and regulatory requirements applicable to the RFP.
Specifically, Plaintiffs have established that Defendant has violated and will continue to violate the Texas Government Code ,Texas Health and Safety Code , andTexas Administrative Code in procuring managed care contracts for STAR & CHIP in Texas, and that any award, execution, or implementation of Defendant‘s intended contract awards would be unlawful, because:- Defendant‘s intended contract awards will fail to give preference to managed care organizations (“MCOs“) that have significant participation in their provider networks from each healthcare provider in the region who has traditionally provided care to Medicaid and charity care patients as required by
Texas Government Code § 533.003(a)(1) ; - Defendant‘s intended contract awards will fail to give preference to MCOs that have successfully implemented quality initiatives as required by
Texas Government Code § 536.052(a) and(d) ; - Defendant has failed to develop and implement the cost-efficiency and quality of care benchmarks mandated by
Texas Government Code § 536.052(b) despite being subject to an obligation to do so for over a decade. Defendant‘s intended contract awards will likewise fail to give preference to MCOs that have met such benchmarks as required byTexas Government Code § 536.052(d) ; - Defendant‘s intended contract awards will fail to consider MCOs’ past performances as required by
Texas Government Code § 2155.144 ; - Defendant‘s intended contract awards will fail to evaluate and certify that MCOs are reasonably able to fulfill the terms of the STAR contract as required by
Texas Government Code § 533.0035 and to review MCOs to confirm their ability to fulfill the requirements of the CHIP contract as required byTexas Health & Safety Code § 62.051(e) ; - In August 2023 and again in October 2023, Defendant wrongfully disclosed the RFP proposals of Plaintiffs and other respondents—with the August disclosure recipients including legal counsel for Aetna, one of the competing respondents, while the procurement was ongoing and prior to completion of the oral presentations—thus, destroying any integrity of the procurement process and creating an unlevel playing field that cannot ensure fair consideration of all proposals and is far from consistent, uniform, and transparent as required by
1 Texas Administrative Code §§ 391.101 and391.209 ; - Defendant‘s intended contract awards will fail to implement the Medicaid managed care program in a manner that improves the health of Texans by promoting
continuity of care and provides a medical home for recipients as required by Texas Government Code § 533.002 ; - Defendant‘s intended contract awards will fail to reduce administrative and other nonfinancial barriers for recipients as required by
Texas Government Code § 533.002 ; - Defendant‘s intended contract awards will fail to consider the need to use different managed care plans to meet the needs of different populations as required by
Texas Government Code § 533.003(a)(3) ; - Defendant‘s intended contract awards will unlawfully award mandatory CHIP contracts to MCOs to which Defendant intends to award mandatory STAR contracts in violation of
Texas Health and Safety Code §§ 62.055 and62.155 ; - Defendant‘s intended award of mandatory CHIP contracts will fail to give consideration to statutorily required factors, including those under
Texas Government Code § 533.003 , in violation ofTexas Government Code § 533.004(a) ; - Defendant‘s continuing practice of denying relevant information about a procurement to bidders until after the deadline to submit a bid protest violates the Due Course of Law provision of
Article I, Section 13 of the Texas Constitution by not providing a meaningful bid protest process after promising one in1 Texas Administrative Code Chapter 391 ; and - Defendant‘s continuing practice of refusing to consider as untimely any information submitted in supplemental protests and/or after the protest filing deadline is inconsistent with the procedural protections promised to protestants in bid protest rules that require consideration of a protest or appeal submitted after the filing deadline when good cause for delay is shown under
1 Texas Administrative Code § 391.307(d)(1) .
- Defendant‘s intended contract awards will fail to give preference to managed care organizations (“MCOs“) that have significant participation in their provider networks from each healthcare provider in the region who has traditionally provided care to Medicaid and charity care patients as required by
- These statutory and regulatory violations, each singly and together collectively, have resulted in intended contract awards that will be invalid and unlawful, and the further execution and implementation of such intended contract awards will be ultra vires acts.
- Furthermore, Defendant is currently evaluating bids for STAR Kids, a separate Texas Medicaid managed care program, through Request for Proposals No. HHS0013071 (the “STAR Kids RFP“). The procurement processes in the STAR & CHIP RFP and the STAR Kids RFP are substantively identical. Plaintiffs have demonstrated that Defendant has no intention of
voluntarily correcting her course of action for future procurements, including altering the processes and procedures used in administering the STAR Kids RFP. The resulting STAR Kids contract awards will therefore also violate statutory and regulatory requirements and be ultra vires. - Plaintiffs have established a probable right to relief and that Defendant‘s award, execution, and implementation of the intended, unlawfully procured STAR & CHIP contracts will, if not enjoined, cause Plaintiffs to suffer imminent and irreparable injury.
- Cook Children‘s has established that execution and implementation of the contracts would result in irreparable harm to Cook Children‘s because:
- The loss of STAR & CHIP contracts threatens Cook Children‘s financial viability and might lead to the forced wind-down of the entity;
- Cook Children‘s participation in the STAR Kids program is in jeopardy because the larger STAR & CHIP contracts provide economies of scale to limit losses from STAR Kids;
- Cook Children‘s 100,000-plus STAR & CHIP members will be forced to change to different health plans from different companies, risking disruption to the members’ healthcare and their access to their current primary care providers, specialty care providers, or both;
- Cook Children‘s has suffered immediate operational disruptions, including hiring difficulties and the delay of needed internal projects;
- Cook Children‘s can no longer negotiate a new pharmacy benefits contract alongside other Texas-only Medicaid plans and consequently will need to pay more for pharmaceuticals;
- Cook Children‘s 375 employees are at risk of losing their jobs—both the 70% of employees who focus on STAR & CHIP and the 30% who focus on STAR Kids; and
- New STAR & CHIP entrants in the Tarrant Service Area will likely poach Cook Children‘s experienced employees before the new contracts go into effect—thus threatening Cook Children‘s STAR & CHIP operations while it is still required to provide services under its current contracts.
- TCHP has established that execution and implementation of the contracts would result in irreparable harm to TCHP because:
TCHP‘s 425,000 STAR & CHIP members will be forced to change their health plans, impacting their access to care; - TCHP has suffered and will continue to suffer disruptions in workforce—threatening the future viability of the health plan—as employees voice concern about job security in light of the intended contract awards;
- TCHP‘s 650 employees are at risk of losing their jobs, impacting the financial health of its entire Texas Children‘s Health Care System beyond that of the health plan;
- TCHP has already suffered and will continue to suffer the poaching of its well-trained employees by other MCOs—further endangering its operations while it remains under contract with HHSC;
- TCHP will lose members and providers, further threatening the viability of the health plan and confusing members and providers;
- TCHP has and will suffer damage to its reputation and goodwill; and
- TCHP‘s participation in the STAR Kids program is at risk because the larger STAR & CHIP contracts are needed to provide economies of scale to limit losses from STAR Kids. If TCHP loses its STAR Kids contract, its 26,000 STAR Kids members would need to change their health plans, thereby adversely impacting those members’ access to care, adversely impacting TCHP‘s workforce, adversely impacting TCHP‘s ability to operate and damaging TCHP‘s reputation and goodwill.
- Superior has established that execution and implementation of the contracts would result in irreparable harm to Superior because:
- Superior will experience a reduction in the number of STAR & CHIP members it serves today, forcing members to change plans even before the operational start date of the new contracts;
- Superior will need to begin reducing its workforce just as new MCO entrants and MCOs expanding their membership will seek to poach Superior‘s employees, who are already grappling with the uncertainty of their jobs in light of the intended awards;
- Providers will be less likely to contract with Superior as contract renewals are being negotiated over the next few months and Superior‘s leverage in provider contract negotiations will be substantially diminished;
- Superior has made substantial investments in partnerships that promote HHSC‘s value-based care priorities. These partnerships involve risk-sharing agreements
between Superior and the partner entities and have been built to scale over time. Superior will lose the benefit of its initial investments in these partnerships; and - Superior‘s ability to provide the same level of service currently provided under existing STAR & CHIP contracts through the August 31, 2025, expiration date will be diminished due to workforce challenges that would be caused by execution of the STAR & CHIP contracts, which will impact Superior‘s operations and cause it to suffer reputational damage.
- Wellpoint has established that execution and implementation of the contracts would result in irreparable harm to Wellpoint because:
- Almost 380,000 current Wellpoint members will be forced to change their health plan, thus losing access to their existing Wellpoint provider network;
- Wellpoint will be forced to consider substantial reductions in and/or relocations of its existing 1,200-plus-person workforce dedicated to the Texas Medicaid programs;
- Wellpoint has already suffered and will continue to suffer the poaching of its highly trained employees by other MCOs. During the review and transition period, which HHSC has stated will take at least a full year, Wellpoint must continue to provide uninterrupted healthcare to its members, and its ability to do so will be substantially jeopardized if there are key staff vacancies;
- Wellpoint has already suffered and will continue to suffer difficulty retaining its existing, robust provider network in the impacted service areas. Maintaining its network of healthcare providers is critical to Wellpoint‘s commitment to providing high-quality, cost-efficient healthcare for the entire duration of its existing contracts. Worse yet, Wellpoint has learned that some providers are informing members that Wellpoint will no longer be providing STAR & CHIP services in impacted areas and are encouraging them to switch plans on the basis of Defendant‘s intended contract awards;
- Wellpoint has made significant investments in service areas that it will be forced to exit and has longstanding provider partnerships with alternative payment models that were developed and built to scale over multiple years. Wellpoint will lose the benefit of its investments in those service areas and partnerships.
- There is no legal remedy that can fully compensate Wellpoint for (1) the loss of its members, (2) the harm to its business resulting from the intended, unlawfully procured contract awards, and (3) the harm to its ability to compete in a fair and lawful procurement process in future procurements; and
- The harm to Wellpoint is imminent because Defendant did not follow the requirements of Texas law in procuring the STAR & CHIP contracts but
nevertheless intends to execute and begin implementing the intended, unlawfully procured contract awards. In addition, the harm to Wellpoint is imminent as Defendant does not intend to correct her unlawful course of action for future procurements or the ongoing STAR Kids RFP.
- Plaintiffs have also presented evidence that they will begin losing STAR & CHIP members now, even though operations under the intended STAR & CHIP contract awards are not scheduled to start until September 1, 2025. Providers are already informing Plaintiffs’ members that Plaintiffs will no longer be providing STAR & CHIP services in certain service areas of the state and are encouraging members to switch plans. The confusion among providers and members alike will only worsen if the intended contract awards are executed notwithstanding the pending challenge to their legality.
- Money damages are not adequate compensation because the harms Plaintiffs will suffer cannot be measured by any certain pecuniary standard. Furthermore, Plaintiffs cannot be adequately compensated in damages because Defendant is immune from suit for damages and any limited waiver of immunity is insufficient to compensate for Plaintiffs’ harms.
- The harms to Plaintiffs outweigh any potential harms to Defendant or HHSC that would result from preserving the status quo during the pendency of these consolidated cases. Neither Defendant nor HHSC would be harmed if the execution and further implementation of the intended STAR & CHIP contracts are delayed given that (1) operations under the intended contract awards are not scheduled to start until September 1, 2025, and (2) HHSC has previously delayed the RFP several times and was able to continue providing coverage through the current STAR & CHIP contracts by extending the contracts in effect at the time.
- The public will not suffer harm if a temporary injunction is granted but will suffer harm if Defendant executes and implements the intended, unlawfully procured contract awards. The intended contract awards will impose significant harm and confusion on millions of Texas‘s
STAR & CHIP members. More than 1.5 million Texans, mostly children—and 43% of the total STAR & CHIP population—will be forced to change health plans. This in turn would cause significant harms to those beneficiaries, for which there is no adequate remedy at law available against Defendant, including: - Confusion among those beneficiaries due to difficulties in informing them of the change in available health plans;
- Disruption to those beneficiaries’ access to care and continuity of care, thereby threatening the medical care and the very health and welfare of those beneficiaries; and
- Administrative burdens of finding new health plans and potentially new healthcare providers.
- The injunctive relief Plaintiffs request is narrow in scope and tailored to prohibit Defendant from continuing to act ultra vires. The balance of equities and public interest weigh in favor of granting Plaintiffs’ requested injunctive relief.
Accordingly, it is therefore ORDERED that Defendant‘s Plea to the Jurisdiction is DENIED.
It is further ORDERED that Plaintiffs’ Applications for Temporary Injunction are GRANTED. The Court ORDERS that:
- Defendant, and all other persons or entities in active concert or participation with Defendant, shall refrain from awarding, signing, entering into, executing, implementing, or otherwise taking action to effectuate or perform any contracts resulting from or in connection with the STAR & CHIP RFP or to further the procurement or contracting processes for the STAR & CHIP RFP; and
- Defendant, and all other persons or entities in active concert or participation with Defendant, shall refrain from further proceeding with the procurement of, issuing a notice of intent to award or awarding contracts under, or otherwise implementing results from the STAR Kids RFP.
IT IS FURTHER ORDERED that Plaintiffs’ bond or cash deposit in lieu of bond is set in the amount of $1,000.
IT IS FURTHER ORDERED that, on the filing by Plaintiffs of the bond and on approving the bond according to law (or the cash deposit in lieu of bond), the Clerk shall issue a Temporary Injunction in conformity with the law and the terms of this order.
IT IS FURTHER ORDERED that this Temporary Injunction shall not expire until final judgment in this case is entered or this case is otherwise dismissed by this Court.
IT IS FURTHER ORDERED that the trial on Plaintiffs’ ultra vires claims seeking declaratory relief, permanent injunctive relief, and mandamus relief is set for November 3, 2025.
SIGNED on October 4, 2024.
JUDGE PRESIDING
Judge Laurie Eiserloh
455th District Court
I, VELVA L. PRICE, District Clerk, Travis County, Texas, do hereby certify that this is a true and correct copy as same appears of record in my office. Witness my hand and seal of office On 11/01/2024 09:28:21
VELVA L. PRICE
DISTRICT CLERK
By Deputy: SH
Ex. B
The following is an Agreement executed by and among the undersigned parties in connection with the interlocutory appeal filed by Cecile Young, in her official capacity as Executive Commissioner of the Texas Health & Human Services Commission (“Defendant“) in the Fifteenth Court of Appeals as Cause No. 15-24-00114-CV (the “Appeal“) from Travis County Cause No. D-1-GN-24-003839, consolidated with Travis County Cause Nos. D-1-GN-24-003874, D-1-GN-24-004059, and D-1-GN-24-004327 (the “Consolidated Lawsuit“). This Agreement is effective upon execution by counsel for the following: Defendant; Cook Children‘s Health Plan; Texas Children‘s Health Plan; Superior HealthPlan, Inc.; and Wellpoint Insurance Company (collectively, the “Parties“).
Through the Appeal, Defendant seeks review of the trial court‘s October 4, 2024, order denying her Plea to the Jurisdiction and granting Plaintiffs’ Motions for a Temporary Injunction (the “Temporary Injunction Order“). Now the Parties agree as follows:
- The Parties shall file a Joint Motion to Abate in the Appeal. In it, the Parties will ask the appellate court to abate the Appeal until 30 days after the end of the 89th Regular Session of the Texas Legislature. A copy of this Agreement will be attached as an exhibit to the Joint Motion to Abate.
- Notwithstanding any supersedeas rights, Defendant, the Texas Health & Human Services Commission, and all employees and agents of the Texas Health & Human Services Commission (collectively, “HHSC“) will comply with the terms of the Temporary Injunction Order until the latest of (a) 30 days after the end of the 89th Regular Session of the Texas Legislature, regardless of the appellate court‘s ruling on the Joint Motion to Abate; (b) a ruling from the appellate court on any request for temporary orders under
TRAP 29.3 filed within seven days of the Appeal‘s reinstatement; or (c) disposition of any mandamus proceeding in the Texas Supreme Court reviewing a ruling on a request described in (b) above, provided that the proceeding is filed within seven days of such ruling. - HHSC may complete the consensus scoring on the written proposals in RFP No. HHS0013071 (the “STAR Kids RFP“), provided HHSC takes no other action with respect to the STAR Kids RFP.
- Should the Consolidated Lawsuit return to the trial court before the end of the 89th Regular Session of the Texas Legislature, the Parties agree to file a Joint Motion to Abate in the Consolidated Lawsuit, asking those proceedings be abated until 30 days after the end of the 89th Regular Session of the Texas Legislature.
- Additionally, the Parties agree to file a Joint Motion to Abate in each of the PIA lawsuits filed as Cause Nos. D-1-GN-24-003564, D-1-GN-24-002509, and D-1-GN-24-002569, which the Parties agree shall stay abated until at least thirty days after the end of the 89th Regular Session of the Texas Legislature.
- The Parties agree that this Agreement will apply to any successor to Defendant.
In the event that the Appeal is successful and all claims in the Consolidated Lawsuit are dismissed, following exhaustion of all appellate proceedings, then this Agreement shall be deemed terminated and no Party is bound by its terms.
Agreed:
Matthew Gordon, Counsel for Cook Children‘s Health Plan
Meghan McCaig, Counsel for Superior HealthPlan, Inc.
Paul Trahan, Counsel for Texas Children‘s Health Plan
Rob Johnson, Counsel for Wellpoint Insurance Company
Thomas Bevilacqua, Counsel for Cecile E. Young, in her Official Capacity as Executive Commissioner of HHSC
10/24/2024
This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.
Richard Phillips on behalf of Richard Phillips Jr.
Bar No. 24032833
Rich.Phillips@hklaw.com
Envelope ID: 102998328
Filing Code Description: Motion
Filing Description: Superior HealthPlan, Inc.‘s Motion for Temporary Relief Under
Status as of 7/10/2025 4:52 PM CST
Case Contacts
| Name | BarNumber | TimestampSubmitted | Status | |
|---|---|---|---|---|
| Michaelle Peters | mpeters@scottdoug.com | 7/10/2025 4:41:43 PM | SENT | |
| Julie Wright | julie.wright@nortonrosefulbright.com | 7/10/2025 4:41:43 PM | SENT | |
| Amanda DoddsPrice | amanda.price@squirepb.com | 7/10/2025 4:41:43 PM | SENT | |
| Karen Burgess | 796276 | kburgess@burgesslawpc.com | 7/10/2025 4:41:43 PM | SENT |
| Robert Johnson | 10786400 | rjohnson@foley.com | 7/10/2025 4:41:43 PM | SENT |
| Richard Phillips | 24032833 | Rich.Phillips@hklaw.com | 7/10/2025 4:41:43 PM | SENT |
| J McCaig | 24070083 | meghan.mccaig@outlook.com | 7/10/2025 4:41:43 PM | SENT |
| Michelle Ku | 24071452 | mku@foley.com | 7/10/2025 4:41:43 PM | SENT |
| Joseph Knight | 11601275 | jknight@ebbklaw.com | 7/10/2025 4:41:43 PM | SENT |
| Amy Warr | 795708 | awarr@adjtlaw.com | 7/10/2025 4:41:43 PM | SENT |
| Warren Huang | 796788 | warren.huang@nortonrosefulbright.com | 7/10/2025 4:41:43 PM | SENT |
| Paul Trahan | 24003075 | paul.trahan@nortonrosefulbright.com | 7/10/2025 4:41:43 PM | SENT |
| Susan Harris | 6876980 | susan.harris@nortonrosefulbright.com | 7/10/2025 4:41:43 PM | SENT |
| Anna Baker | 791362 | abaker@adjtlaw.com | 7/10/2025 4:41:43 PM | SENT |
| Cheryl LaFond | 24104015 | clafond@scottdoug.com | 7/10/2025 4:41:43 PM | SENT |
| Maria Williamson | maria.williamson@oag.texas.gov | 7/10/2025 4:41:43 PM | SENT | |
| Mandy Patterson | mpatterson@adjtlaw.com | 7/10/2025 4:41:43 PM | SENT | |
| Michelle Joyner | mjoyner@scottdoug.com | 7/10/2025 4:41:43 PM | SENT | |
| William FCole | William.Cole@oag.texas.gov | 7/10/2025 4:41:43 PM | SENT | |
| Abril Rivera | arivera@scottdoug.com | 7/10/2025 4:41:43 PM | SENT | |
| Nancy Villarreal | nancy.villarreal@oag.texas.gov | 7/10/2025 4:41:43 PM | SENT | |
| Kristin Hernandez | kristin.hernandez@foley.com | 7/10/2025 4:41:43 PM | SENT |
| Name | BarNumber | TimestampSubmitted | Status | |
|---|---|---|---|---|
| Kristin Hernandez | kristin.hernandez@foley.com | 7/10/2025 4:41:43 PM | SENT | |
| Thomas Coulter | 4885500 | tom.coulter@nortonrosefulbright.com | 7/10/2025 4:41:43 PM | SENT |
| Victoria Gomez | victoria.gomez@oag.texas.gov | 7/10/2025 4:41:43 PM | SENT | |
| Jessie Johnson | jessie.johnson@nortonrosefulbright.com | 7/10/2025 4:41:43 PM | SENT | |
| Benjamin Grossman | bjgrossman@foley.com | 7/10/2025 4:41:43 PM | SENT | |
| Cory Scanlon | cory.scanlon@oag.texas.gov | 7/10/2025 4:41:43 PM | SENT | |
| Katie Dolan-Galaviz | kgalaviz@burgesslawpc.com | 7/10/2025 4:41:43 PM | SENT | |
| David Johns | david@cobbjohns.com | 7/10/2025 4:41:43 PM | SENT | |
| Jennifer Cook | Jennifer.Cook@oag.texas.gov | 7/10/2025 4:41:43 PM | SENT | |
| Juliana Bennington | jbennington@perkinscoie.com | 7/10/2025 4:41:43 PM | SENT | |
| Jonathan Hawley | jhawley@perkinscoie.com | 7/10/2025 4:41:43 PM | ERROR | |
| Reina A.Almon-Griffin | ralmon-Griffin@perkinscoie.com | 7/10/2025 4:41:43 PM | SENT | |
| Trisha Marino | tmarino@perkinscoie.com | 7/10/2025 4:41:43 PM | SENT | |
| Perkins Docketing Team | DocketSEA@perkinscoie.com | 7/10/2025 4:41:43 PM | SENT | |
| Karen Walker | karen.walker@hklaw.com | 7/10/2025 4:41:43 PM | SENT | |
| Tiffany Roddenberry | tiffany.roddenberry@hklaw.com | 7/10/2025 4:41:43 PM | SENT | |
| Stacey Obenhaus | sobenhaus@foley.com | 7/10/2025 4:41:43 PM | SENT | |
| Jason R.LaFond | jlafond@scottdoug.com | 7/10/2025 4:41:43 PM | SENT | |
| Matthew Gordon | mgordon@perkinscoie.com | 7/10/2025 4:41:43 PM | SENT | |
| Stacey Jett | sjett@adjtlaw.com | 7/10/2025 4:41:43 PM | SENT |