Texas Supreme Court Rules Against Medicare HMOs (Aetna) in Hospital Reimbursement Fight

In a state court lawsuit, the hospitals alleged that NAMM grossly mismanaged its accounting and, ultimately, ceased paying the hospitals for their services. The hospitals claimed that Texas law made Aetna responsible for $13,967,759.19 in unpaid service fees once NAMM was placed into supervised conservatorship by the Texas Department of Insurance.

Initially, the trial court dismissed the lawsuit, finding that the dispute was governed exclusively by the federal Medicare Act. That ruling meant that the hospitals had no other remedy but to pursue their 6,000 individual claims through a lengthy federal administrative process. A Texas court of appeals affirmed the trial court decision.

However, the Texas Supreme Court found that "requiring Hospitals to exhaust administrative remedies before coverage decisions have been made would turn the administrative scheme on its head ... "

The Court reversed the court of appeals decision and remanded the case to the trial court to determine Aetna's contractual obligations to the hospitals.