about the application of the statute to fully funded license there really isn't any dispute that the statute as written applies to fully insured health insurance plans and i want to talk about the fully insured plans or claims that are at issue in this case and i'm referring to blue card plans there are two different kinds of blue card plans that are administered by health care service corporation one of them involves claims where you have different divisions of health care service corporation administering claims for each other on the very last page of health care service corporation's brief and the very last footnote acknowledges that a few out of state blue plans are insured or administered through h c s c's other operating divisions h c s c has to be shin's here and in texas in oklahoma illinois montana and new mexico so these blue car plans are our plans in which for example a beneficiary under a plan issued by h c s c in illinois comes to texas and receives care from a texas provider and that claim is administered by blue cross blue shield texas which is another division of a c s but in that situation h c s e remains the insurance company it is always the insurer there is no corporate distinction between blue cross blue shield texas and lou cross blue shield of illinois or any of the other divisions that was the subject of these blue card plans those plans because they are fully funded by a c s e as a licensed texas insurance company and involve the payment of proceeds to texas provider based on services rendered to a patient in texas those claims squarely within the statute eight c s e has argued that that constitutes an extra territorial application of the statute we can't regulate the policies issued by c s e in a different jurisdiction outside of texas that simply isn't what's happening here because again h c s c is a license texas insurance company there is no extra territorial application of the statute we're talking about a license to texas i'm sure a texas provider and a patient receiving benefits in texas the other threshold question i wanted to address again which i addressed briefly a minute ago is the question of certification again a new toronto case does provide some controlling texas precedent on the question of whether there is an insurer but as it relates to the other elements of the statute and whether those provisions applied to self funding plans because this is an important issue and it is one that involves determinative questions of texas law that issues the issue of interpretation should be certified to the texas supreme court on the question of interpretation again the statute requires only if there be an insurer a c s e is clearly a licensed texas insurance company that is operating under chapter eight forty one of the insurance code which only requires an authority under a charter to engage in business involving the payment of money or other thing of value in the event of loss resulting from disability incurred as a result of sickness for your health here what is significant is that in contrast to the aetna case the provisions of the administrative services agreement between blue cross blue shield or ac a c and d cell funded plans actually requires blue cross blue shield to advance payment to the providers and then  self funding plan so clearly with that being the case this is clearly a situation where if c s e is operating under age forty one because it is authorized and in fact does engage in the business involving the payment of money in exchange for the provision of health care services with respect to the other elements in the statute clearly h c s c s c is authorized to issue deliver or issue for delivery in the state of texas health insurance policies  clearly qualifies i say insured under the statute with respect to whether there is a health insurance policy again this statute requires that there be a group or individual insurance contract providing benefits for medical or surgical expenses incurred as a result of a city or sickness like in the aetna case the terms of the administrative services agreement and preferred provider agreements in this matter with messrs methodist hospital show texas will cross blue shield texas will pay to the point of service member hospital the amount of its obligation under the year was subscribers health care coverage pos age has been approved by blue cross blue shield texas to submit blue cross blue shield texas claims only for the categories of services continue x in the box if you look at the chart underneath medical and surgical expenses that is checked that's the record it's twelve fifty six again this is a this is an agreement whereby methodist hospitals is a greenie provided covered medical expense medical procedures and health care to members of the cell phone the plans in exchange for the payment of health insurance proceeds from the and the other contract that you can read it in conjunction with is the administrative services  independently or construed together they can qualify as a health insurance policy because they provide benefits for medical and surgical expenses incurred as a result of the accident or sickness the language from the administrative services agreement record of twelve sixteen all payments made by the claim administrator for the benefit of any covered person may be made directly to any provider furnishing covered services for which payment is due and the claim administrator is authorized to make such payments directly to providers so again this is a situation where it's not as though the fully funded plan is making payments to the provider these payments are being made by the third party administrator in this case yes and as a result of that exchange this qualifies as a health insurance policy but where the insured is the employee yeah right that's right of course obviously as i argued a minute ago the self funded plan document also provides a basis to find that there is an insurance policy in that context there is no really no dispute that these documents provide different levels of coverage based on whether the provider is a preferred provider or not and preferred provider and therefore if you look at the terms of thirteen zero one point zero four one each of those elements and ensure that the insurers health insurance policy and provision of different levels of coverage is met and as a result the statute can be fired to sell funded plans that time i have remaining i just wanted to address the the preemption issues and again to put this in context if you take the if you take h c s e's argument to its logical extreme if asserting a claim under the texas prompt payment statute somehow implicates a federal area of exclusive area of federal concern or if it somehow implicates the relationships between traditional reset and it is any contract would be subject to preemption take for example in texas we have a statute that authorizes that's not a preempted statute but if you take the arguments that you're going to hear from a c s e to their logical conclusion then any statute any contractual relationship that a plan enters into with a third party for utilities for any anything would argue arguably be preempted under the way that they've interpreted the the preemption doctrine that's simply not the case this the provisions are the this is the test that is to be applied for clear and express preemption which is really there is no argument about complete preemption a conflict question raised by a c s e is that there has to be an exclusive area of federal concern addressed by the by the statute and it has to impart traditional owners and it is it's important that in this case blue cross blue shield of texas and the administrative services agreement disclaims and if we do surely doesn't nation with respect to the plan if blue cross blue shield is not a fiduciary and obviously the hospital is not fiduciary how can there be any impact on the relationship between traditional us entities by virtue of the application of the statute to yourself under plans simply not there with respect to preemption under section twenty two fifty one point zero three seven of the government code this is another argument that c s c has made that statute actually requires the same relationship start  get the insurance code and other laws of the state relating to the provision or regulation of insurance do not apply to an agreement entered into under the subchapter or to the proceeds of a public securities issued under the sub again the language speaks specifically to relating to relationship because this is not for the same reasons that a ressa preemption doesn't apply preemption under twenty two fifty nine point zero three seven also does not apply there admittedly is not a whole lot of authority in this area that interprets this particular statute the one case that c s c has cited is the hill case importantly that case involved a beneficiary who was trying to argue that the government funded insurance plan should have included some kind of uninsured motorist coverage that's really not any way analogous to what we're talking about here number one it's not a claim by the fisher it's a claim by a provider who is a stranger to these self appointed plans and only has a contract with the third party administrator and in addition we're not advocating anything having to do with the coverage under the plan and as was the case in the whole matter finally and with respect to fever preemption again the terms of title five section eight hundred eighty nine of the two state of the terms of any contract under this chapter which relate to the nature provision or extent of coverage or benefits shall supersede in preempt any state look state or local law or regulation issued there under which relates to health insurance or plans there have been several cases including the blue cross blu of florida case and the mcveigh case that have found that the analysis the preemption analysis in your field is consistent with the preemption analysis on your research in fact the mcveigh case says that preemption under is actually more narrow than research so for the very same reasons that preemption doesn't apply in the research context it doesn't apply in the future context now health care service corporation has cited the birkie case as a reason why fewer preemption would apply here that case involved a mother who was trying to obtain health insurance benefits for her son after a car accident again that was a claim by a beneficiary under a plan contesting the coverage afforded under that plan that obviously does impact the actual plan determination by contrast the claims made under the t p a don't include any addition any implication with regard to the coverage under the plan but imposing  failure to properly paid your contract that then the big claim obligated it doesn't affect anything having to do with the coverage of the plan whether there is coverage or not is independent of whether there is a timely payment and whether the payments are subject to penalties and the distinction there is is clearly made in the cedars sinai case this is a united circuit case from two thousand and seven and which that court specifically found that because that was a claim by a provider seeking to assert its right under contract and under other statutes to obtain coverage or payment for services that were rendered that was distinguished from cases where the beneficiary was actually seeking coverage under a plan document in the box for a case for example was the case that cedars sinai distinguished the reason that was distinguished was again because botsford included a beneficiaries claim under  just in conclusion and i was served my time but with respect to preemption again for the very same reasons that arista cremation doesn't apply and this has been found by the in the several cases i mentioned a few minutes applies to claim submitted by methodist when blue cross and blue shield a tax this is not acting as an insurer and has not issued a health insurance policy and second like to talk a bit about c but preemption i'd like to pick up a little bit on before i jump out about what from mr skidmore's argument and and no doubt what is apparent from our perspective is that what the hospitals are or in our case methodist is trying to do in both of these cases is directly or indirectly regulate the plan whether that's done through another number the theories that methodist his has argued here i'm going to talk about those the result is the same it's not sanctioned by section thirteen no one in this prohibited by recess and i think that's a theme that runs through the arguments that i'm going to make here today and that permeated our briefing we're talking about two preemption before judge oil she just did not reach that issue because she found that chapter thirteen a one doesn't apply to these all but the time permitting i'll address some of the other section on ambiguously provides and in plain stark language that the chapter only applies where nature has issued a health insurance policy and these terms insured and health insurance policy are key terms the texas supreme court because the language is plain and clear and other courts have found not this provision has been interpreted in other provisions of thirteen zero on our plain clear something this court does on a regular basis and we don't think you need to send this over to the texas supreme court to get guidance on how to interpret that plain language and wear blue cross and blue shield the texas was merely administering claims which is administering claims submitted by methodist which is the qualifies him as an insurer in some contacts and therefore methodist argues it's always in church but that can't be the way these statutes work blue cross and blue shield of texas with where's if you will different hats at different times when it's acting as an insurer is wearing it and it's insured hat and it's regulated as an ensure their specific provisions in the taxes code to regulate tax to cross lease of the taxes as an in other times it has its hat on as a third party administrator and it's acting and is regulated under sections of the texas insurance code that apply to third party ministries chapter forty one fifty so why do you think it w then that the legislature put this particular part of the statute under the umbrella of parties that are ensure going why did it include the definition if i understand your question why did it include insure the put ability section right i thought it would be our position your honor that the legislature knew how to differentiate between the roles of an in and the third party administrator it did so in the code generally it has provisions that apply to insurers that has permissions that apply to third parties in the structures and it did so in chapter thirteen zero one of there are provisions to talk about third party administrator use in chapter to and and this notion that blue cross blue shield of texas can be regulated differently depending on what it's doing as opposed to as methodist advance being regulated as a neutral no matter what it's doing has of an individual can get a commercial driver's license an individual can get its commercialise drivers license indorsed with the ability to drive around hazardous materials and when an individual is driving around in each of those compass a regulated differently it's regulated differently with respect to driving under the influence with respect to use of cell phones all sorts of things as if you're driving if i was driving my pickup truck down the road with no hazardous material in the back i'm not going to be held to the same standards i would have been held if i was driving with nuclear waste in the back of my pickup truck in the commercial contacts there's myriad examples of the same thing think of financial institutions finance banks operate as lenders they operate as savings institutions and when they're doing those things they're regulated different we under different statutes and we would argue your honor is that the same should apply here one who cross and blue shield of texas is acting as an insurer it isn't insured when it's not and it takes that how often is acting merely as a third party administrator as it is with respect to every single claim that we're talking dot under the implicit bill of the section if you're only be regulated as a texas supreme court held the blue cross and blue shield of texas was an insurer but that statutory provision that text supreme court relied on for the definition of insurer referred to third party administrators and therefore because it was acting as a third party administrator even though it was set up as a hospital services corporation at the time and that provision wasn't included under the definition of insure that it was at issue in toronto t found that it was acting as a third party administrator and therefore it could be regulated as an insurer in that context it supports the notion that the texas supreme court looks to the hat that an entity is wearing as opposed to just whether somebody whether or not he qualifies as an insurer at the one time and therefore is always an insurer with regard to the claims or blue cross blue shield of texas didn't issue a health insurance policy blue cross was acting as a third party administrator even though it was licensed as neutral as as judge boyle found at the district court level blue cross and blue shield of texas just is not an insurer when it's to cross and blue shield the texas didn't issue a health insurance policy with no health insurance policy even if blue cross blue shield the texas is an insurer at all times no matter what happens when methodist cannot the section methodist puts a lot of stock in the fact that its p p o contract with blue cross and blue shield of texas can be construed as a health insurance policy or that you can put the connect together a bunch of different contracts with including blue cross and blue shield of texas third party administration agreements with a couple that agreement with the p p o contract and and hobble together a health insurance policy  he said standing alone may be with the same as an insurance bonus and i disagree with that your honor and i'm going to explain why there are many reasons why it's wrong we talked a lot about those reasons in our brief but i'd like to talk about a textural reason here today and if if you take the term preferred provider contract or take the term third party administration agreement and substitute that out throughout chapter thirteen no one where the legislature used the term health insurance policy definitions and terms in that statute become in comprehensible and let me give  couple of examples the definition of preferred provider which is out thirteen zero one point zero one sub eight that provision provides that a preferred provider becomes it is a doctor who contracts with insurer to provide health care to insured is covered by health insurance policy a substitute out preferred provider contract for health insurance policy or third party administrator agreement or both of them for health insurance policy and the way that reads is a preferred provider is a doctor who contracts with an insurer to provide health care to insure it's covered by a p p o contract covered by a third party administrator or by both that is incomprehensible insureds are not covered by such means there is no insurance the same thing applies for the definition of preferred provider benefit plan with the use of health insurance policy is institutional provider and i think it's important to note and there's other examples in the statute and in but i think it's important to note that the legislature actually knew how to distinguish between these two between the two things between a health insurance a preferred provider contract there's a definition of service area in in the statute thirteen zero one point zero zero one subsection ten where the legislature distinguish between the two things are provided that a service area is  among other things and then it says that it distinguishes between a health insurance policy and a preferred provider contract so if health insurance policy includes preferred provider contract why in the definition of service area is access to a network in exchange for discounted rates that's the contract third party administrator agreement is a contract between blue cross and blue shield of taxes and any number of plans to administer the claims that that self on the plan has taken on the responsibility for those are not health insurance policies completely different i want to  unified what does it cover there's no answer for that in the papers in the district court but never had the opportunity to address it and not to this advances no position here today or elsewhere about what that contract is what is it and who isn't it between because blue cross and blue shield that texas has one p p o contract not that us but it has eighty thousand providers in the in the state taxes all those contracts part of this unified contract has roughly forty thousand groups all those while the answer without is isn't clearly be preempted by result but is it would not be necessary to complete this unified contract i mean that's what methodist argued below they've abandoned that here that the case is that baylor case that methodist relied on for this unified contract theory is distinguishable and it's ben distinguished by a number of subsequent cases federal district courts and the one i want to focus on is memorial herman cain's memorial hermann versus coastal drilling twelve thirty one zero zero one the southern district case from texas in two thousand and fourteen  immoral herman the court found no unified contract where and i'm quoting from page ten sixteen of the opinion the parties expressly disclaim an intent that third parties obtain enforceable contract rights under  both contracts at issue here in this single unified theory the p p o contract and administrate of services agreement have integration clauses the p p o contracts integration clauses record on appeal twelve fifty two and the administrative services agreement his record on appeal twelve of six those are where the integration clauses are and like the memorial hermann case the administrative services remain expressly disclaims that it's conf any right on anybody who is in a party to the administrative services so that in and of itself and that's the record on appeal at twelve o three at paragraph fourteen point two should dispense with this notion that point i'll note here the cook ability section before i talk about fever preemption is the history this statue has been a place and operated the same way for a long time very long time everybody briefs that's important because the legislature is observed that it's amended the statute several times over the course of the decades plus that the statute has been in place and it is never ever touch changed that requirement that it insure issue health insurance policy in the political side i once and it has acquiesced as a result to that construction statute feeble preemption so is this court knows pre amps the prop amun provisions of the insurance code because the at the peak contract with the blue cross blue shield association is for the provision of health care benefits for federal employees and the insurance co to attempts to set payment deadlines for claims under this prop these prop eight provisions but that's covered by the f t p contract and it's a direct conflict as a result and as this court noted in bercy if a statute addresses proper claims handling in other words the way a claim is paid it relates to the f t p plan and that's exactly what's going on here under the construction that methodist has offered the statute it issue inferred he was a out in our present some of the mickey pointed out in their briefs there are differing schedules of prop anus around the country different states have different statutes at different time requirements at the federal employee plan had to address and deal with different statutory time payments all around the country would violate uniformity if self funded plans had to address different payment schemes around the country it would violate that uniform governed by the proper payment act if you look at the actual statements by t d i that are cited and you see ses brief in none of them is there any explanation of why that now that result is concluded we don't know whether it was based on an interpretation of the statute or whether it was based on some assumption made about preemption obviously t d i is not entitled to any difference with respect to its opinions about preemption and to the but i think out of the government code the court can look at legislative history even in the absence of ambiguity but if the court thinks there's an ambiguity obviously it's appropriate to look at that sort of history as well but i want to address this idea that somehow these statutes are by merit that if you are a t p a you're only a t p a you can't be an insurer or if you're an insurer you can't be a t p a under chapter forty one fifty one that's simply not how these statutes operate if you look at cha pter forty one fifty one because a c s is functioning as an insurer it is not touched truly a third party administrator is subject to that statute but there is nothing in the actual language of the statute the disk defines i'm sure for purposes of thirteen zero one that requires that there be an assumption of risk likewise in the definition of insurance policy there's nothing in that definition that requires that there be a transfer of risk between one party and issue a health insurance policy in this case and there was there was a question earlier about well what happens if there is a determination or a question about coverage for the claims that are the subject of these penalties in this case by by definition in the complaint that was filed by c s e the only claims that are at issue here are claims that have been paid therefore no there is no determination or no dispute about coverage but the claims  the record site there is record that sixty seven word was in comprehensible there's nothing in comprehensible about the idea that there is an administrative agreement that governs a certain set of plans and that by virtue of that governs a certain set of beneficiaries under those plans there's nothing extraordinary about that at all there's nothing extraordinary about the idea that in ministry of that a preferred provider agreement would reach a certain set of beneficiaries under a certain set of plans in the absence of that preferred provider agreement those beneficiaries don't have access to that provider it's like when you want to go to a doctor you need to make sure that that doctor is covered by your plan and that there is an agreement in place between your third party administrator and that provider obviously those enroll are covered by that agreement because that's the agreement that gives them access to health care from that specific provider at least to health care at the lower right that's right like independently use that provider right but there's nothing again the idea that somehow these beneficiaries can't be covered by that agreement obviously they are because they take advantage of it by going to that doctor and it will and receiving services from that individual the idea that there can't be a unified contract because there are integration clauses and i want to read over her to the administrative services agreement which specifically refers to a number of other contracts this is a record eleven ninety four the employer has established an adopted an employee welfare benefit plan as described in its plan document it's referring to the summary plan description that we referred to earlier record again in eleven ninety four the allowable amount of this is how much is going to be paid for a provider who has a written agreement with the claim administrator or another blue cross or blue shield plan to provide care to a covered person at the time covered services are provided it's referring to a separate contract with the claim administrator and the provider the definition of network refers to health care facilities that have entered into agreements with the claimant ministry for the fact is there are references all throughout the administrative services agreement and the preferred provider agreement to other contracts including the administrative services agreement in the case of the preferred provider agreement and vice versa in the case of the administrative services agreement so there's nothing inconsistent with the language of those contracts and construing them consistently with regard to the integration clauses those integration causes your time jews are now history thank you your thank you in your case under submission a court of take a brief recess for hearing the final three cases