Vista Hospital Stop Loss Cases: Third Court of Appeals Affirms Decisions in Favor of Carriers and Self-Insureds
In a long awaited Memorandum Opinion of December 28, 2022, the Third Court of Appeals has affirmed the trial court judgment which had, in turn, affirmed the State Office of Administrative Hearings’ (SOAH’s) decisions in favor of the carriers and self-insureds in 541 inpatient hospital fee disputes. In sum, Vista has been seeking more than $31M in additional payments, plus interest.
Under the substantial evidence review standard, the Third Court has rejected Vista’s four grounds for claiming the decisions below were arbitrary and capricious.
These cases are governed by the 1997 Acute Care Inpatient Hospital Fee Guideline (former rule 134.401, repealed effective March 1, 2008). SOAH found Vista was not entitled to the alternative extraordinary stop loss payment (75% of audited charges). The carriers had paid Vista under the standard per diem methodology. While each of the hospital admissions had reached the initial threshold of $40,000+ audited charges, SOAH concluded Vista had not proven each admission was also “unusually costly and unusually extensive.”
While some of the SOAH decisions ordered additional payment under the standard per diem reimbursement, the carriers and self-insureds owe nothing further under the SOAH decisions, as affirmed by the trial court and the Third Court of Appeals.
What Next
Vista may file motions for rehearing in the court of appeals. Failing that, Vista may still appeal to the Supreme Court of Texas. We believe all that will likely fail, and only serve to delay the inevitable.
“The inevitable” is the stop loss docket that is teed up at SOAH, currently abated pending final resolution of this consolidated docket. Those are hundreds of other stop loss disputes where, in the initial round of contested case hearings, SOAH ordered payment under the stop loss exception based upon a conclusion the hospitals only had to show $40,000+ in audited charges. All those cases were reversed by the court of appeals, and remanded back to SOAH for decisions based upon the “unusually costly and unusually extensive” criteria.
Under the Gov’t Code, carriers had paid those SOAH orders pending appeal. Our ultimate goal is to obtain decisions the hospitals were not entitled to the stop loss payment, and obtain refunds from the hospitals. That is likely to also be a lengthy battle.
When that battle begins again depends on whether Vista seeks appeal in the present docket. If the current decisions from SOAH and the court of appeals stand, Vista will likely be forced to go with plan B. We do not yet know what Plan B looks like. We will keep you posted.
If you have questions about these issues, please contact Steve Tipton, smt1@fol.com.
FOLIO
