federal law we submit today the both of those conclusions are mistaken on the stayed loyal we stand by the well reasoned opinion of judge boyle in the companion case i think the two key aspects eight forty one i do your attention to the fact that this particular statute is chapter thirteen no one actually you know refers to somebody who is operating under certain enumerated chapters including age forty one and it seems obvious to us that in adding that extra language that the that the entity is operating under one of the enumerated chapters it has to be acting in his capacity as and he sure that is to say the assumption of the financial risk of coverage when et now acts for self on the planet as an administrator it is not acting under chapter eight forty one it is acting under chapter forty one fifty one but if you were not persuaded by that you know the statute on its applicability section it's also very clear that there is a second aspect of the applicability section that is not met by the administrators of self funded plans and that is that the insurer must pay for the coverage through the surest health insurance policy and it is can you explain to us i understand that we take the statue measure as it reads but can you explain to us you need any reason why the legislature would have made the distinction which are urging on us what would have been the policy reason or the justification for the most surely i mean there is a long history and this gets us a little bit in advance or second argument of the states having power to regulate the risk bearing aspects of the insurance market going back to the commerce clause cases and now incorporated in the federal statute that that we deal with here there is a recognition that there is a special role for the states in dealing with the insurance aspect that is to say the risk bearing aspect of this given that this has been the law for decades every state legislator has been working for decades on an understanding that even if policymakers might think that these things are functionally equivalent that there are bounds to what a state legislator can do legislature he was governor and it was vetoed by the governor on the understated ground that it was preempted by the federal statute it was then passed again and a subsequent governor signed it it was then enjoined by the federal district court in in an is there is a new reference in the briefing to subsection one o nine that deals with administrators who act for insurers this was never mentioned by the hospitals in our case in the insurer and what one hundred nine does basically is if you have somebody who is operating under under age forty one somebody who is in fact assuming the financial risk of coverage that person if you delegate certain administrative functions may not escape the duties of this decade in the insurance side simply having an administrator this is not uncommon you can look at the website of the texas department of insurer to see who the administrators are and who the are there is no total overlap there are certain services like acupuncture or physical therapy infusion therapies where circle dedicated administrators have their own network or providers and even insurers contract with them as administrator for the sure to deal with those aspects of coverage but under the statute you still have to identify a state let me say a word about the preemption in our obviously you know the first word on that is that if we agree with you if you agree with us on the state law construction issues there are no need to reach you know the federal  you know the case is over at that point but if you were to conclude that the well but we could we could if we wanted to make alternative alternative holdings because it seems to me that if we simply parse the language of the statute mr and  covered the legislature might want to go back and change that certainly and you'd have to have another round of litigation on the preemption issue and we would welcome that i mean these are issues that you can see from your own cases do come up a lot over the cases  i i already mentioned the hodgins opinion from the court of appeals in the eleventh circuit which i think is the most recent and apis it to the to the issues that are in front of you today but these issues are also covered by your own case law and the fundamental insight here is that good test for coverage under section five fourteen really does look at whether there's a deals with a central issue a plan of ministration and determining whether claims are statues have been raised in some of your cases and in each case that you have come up with one of these you have you have found that the particular claim is preempted by second five fourteen i would like to draw your attention to do i particular the bank of louisiana case if you look at footnote six in the case you will see that there was a claim raised by the bank under a parallel set of duties in louisiana statute and  one of the things that the court held in its in its closing paragraph in the opinion was preempted by section five fourteen you more recently dealt with similar claims in the context of the age and most accurate analog under texas law in the north cyprus case where you again affirmed the conclusion of the district court that the prompt pay duties and penalties were preempted by the federal statute section five fourteen and not even saved by the insurance savings clause because they did not need you know the miller test now i should parse to address you know the significant contention that the hospitals make here which is principally based on the potential of the ability of the lone star case now let me start by making it clear that the lonestar case dealt with the doctrine of complete preemption under section five with two which deals with the claim is whether the claim is so completely overtaken by federal law that it gives you a federal cause of action and extinguishes any state cause of action a claim can stale to qualify for section five want to and still be preempted by the much broader section five fourteen which we think applies here but in any other end we believe that the hospital's contentions with respect to lonestar are also in error because they vastly overstate the importance of what this court was doing in lonestar  issue in the case was based on a truly independent state court duty and it identified the rate that had been agreed to as something that had no analogue it was not incurred on anything that was you know required by the plan if you had independently agreed to pay x rather than y that it was something that was truly a voluntarily acquired state low duty that is extremely narrow and we know how narrow it is because the outcome of the lone star case was a remember the district court and i would like to draw your attention to the closing paid for that opinion which is a page five thirty three where you stated you know the holding and you know the hold it was at follows we hold up claims for underpayment implicated coverage determination and in that case in the very next paragraph the court send the case back to the district court because it was not clear whether the failure to pay had been based in part on a coverage determination some claims were only partially covered or an error in the application of the rate and so you know the epic you know the contention that the hospitals have in this case that the key is broadly established as a category of claims that can be brought by doctor of or hospitals under under contract is just not supported by the case if i could just mention to our part of the record in this case that tied this point to the record it is undisputed but the duty imposed by the texas  this case does involve an inquiry into a coverage determination we know that because section one o three imposes a duty to determine quote whether the claim is payable on quote now whether the claim is actually pay in the context of this case turns at least on two aspects of the contract first both of the contracts have issued here expressly require an assignment of claim from the from the plaintiffs so you can see from that aspect of the case alone that the claim being raised into the contract is not remotely independent of the coverage determination because the claim is not payable in the absence of an assignment that is section four five of the methodist contract record on appeal and two or two in section four one one of the under the terms of the relevant claims and so a claim could not be payable under the statute or let the has been a demonstration and a determination both that there is an assignment from the plaintiff in that the plan that underlies the coverage for the to thirty six i think that's all i have i have additional arguments under section five with three i will say about those only that the obvious purpose of the second five with three is for congress to give the department of labor the authority to regulate the timing and process of claims payment the department of labor has issued extend service regulations and when claims must be paid and what consequences follow from failure to play and to pay in accordance with  section five with three regulations those include you know the waving of the exhaust bearing bar that you usually would apply among others in so this is an area that not only on the face of second five fourteen is covered by your case  issues in broad terms that were presented at the trial court one hundred to do was going to throw into a petition the other has to do with crimson in the decision that was rendered by judge lane in march of this year it was very clear that the court only intended to exercise jurisdiction over the creation issue and was abstaining from making a decision on the statutory interpretation issue under this court's decision earlier you say it was clear that the court abstained from making a determination state courts determination was yes yes that's right and so why is it a reasonable inference that the judge deferred because the judge approved of the state courts result outcome right in making that decision in a separate matter that's correct yeah so under this the court's decision or the senator of a do for a case when the trial court decides to abstain from exercising and exercising jurisdiction is to look for a alternatively if the court does find that there was an abuse of discretion then the proper result would then be to remand the case back to judge len to enter a decision on the statutory interpretation question the second threshold why would that be the issue and if that wasn't the serious question in the course of the trial court should have an opportunity to address that so the second threshold issue that i want to address is the question of certification under will fifty eight point one of the texas rules  does provide authority that is does address the question of interpretation of what is an insurer but to the extent that there are other determinate questions of texas law that have not been addressed by the texas supreme court then this is a case that is is appropriate for certification to the texas supreme court and that's something that hadn't that was acknowledged and so briefing on point is thirty five and thirty six of the principal brief we would it would be appropriate for us to do that i see him only if we were to decide there's no preemption here well i think that's i think perhaps that if the court were to decide that there is a threshold interpretation issue that does need to be addressed it would be appropriate to certify the question to the texas no application of the statute to the so called plans in this case then there is really no need to decide the preemption question i do want to address some of the substantive issues that counsel or a funded plan and a fully insured plan and in the briefing that's been raised by not only i don't but also by the amicus parties it's clear that many many insurers are many many employers are now using cell phone to clients to provide health insurance coverage to their employees according to ed and seventy five percent of the plans they administer are for employer self funded plans according to the makers parties one hundred fifty million americans receive their health insurance coverage from self funded plan that's sixty one percent of all employer benefit plans and crimp lawyers with more than two hundred employees it's eighty one percent if you were to ask any of those employees who receive their health insurance coverage from a cell  phone plan whether they are insured undoubtedly the question the answer that question would be yes they are the interpretation that that out there has offered this or is that even though those individuals are clearly insured there is no insured and there is no health insurance policy by comparison the interpretation that the hospitals have offered provides not only a interpretation that is consistent with the language in the statute but is also consistent with the way that those millions of americans understand and experience the health insurance that they receive from their employers cellphone to place on the question of whether there is an insurer and that there has argued that the statute actually requires that there be a capacity for some cost some functionality as an insured that's simply not found in the terms of the statute under thirteen zero one point zero zero one five and insurers defined as among other things a health insurance company or other company operating under age forty one that is authorized to issue deliver or issue for delivery in the state health insurance policies evan it is clearly authorized insurance company well the argument was that is it operating under a different shaft when it's serving only as an administrator and not an insurer well let me address that the chapter eight forty one it was argued that the that's a  requirement you have to be operating under a forty one chapter eight forty one defines a health insurance company operating under their chapter as a corporation authorized under a charter to engage in business involving the payment of money or another thing of value in the event of loss resulting from disability incurred it was as a result of sickness or ill health even if you were only to focus on the conduct that performs as a third party administrator it fits the definition of a company operating operating a forty one under that statute so regardless of whether you interpret the started to require that as a function again as a third party administrative the plain language of the statues that tell us what it is in this case under the facts that constitute quote health insurance policies the definition of a health insurance policy under the statute is a contract excuse me a group or individual insurance policy certificate or contract providing benefits for medical or surgical expenses incurred as a result of accident or sickness in this case there are a multitude of different contracts the preferred provider agreement between the hospitals and qualifies as an insurance policy the administrative services agreement between that and the self funded plan qualifies as an insurance policy and separately we have the benefit in this case of having in the record the summary plan documents or summary plan descriptions that by by federal law the plan is required to issue that describes what benefits are afforded to the employee beneficiaries under the self funded plan each one of those documents either individually or collectively qualifies as an insurance policy under the terms of the statute and to give you an example the language from the agreement with methodist hospitals this is the preferred provider agreement shows that this is a contract that provides insurance benefits to members this is of the record seven ninety one hospital agrees to render to members hospital care facilities equipment and services which are covered services under members plans on the next picture company was referring to  equivalent hospital this is a record of eight thirty two hospital make available and provide services to members in the same manner in accordance with the same standards and with the same of the ability offered to other patients of the hospital eight thirty eight company agrees to pay hospital for public services rather to members of full risk plans will be notified on sponsors to forward payment to hospital for public services rendered to plan sponsors members so in each of these agreements it's an exchange of public services medical and surgical its services to the plan beneficiaries in exchange for insurance proceeds paid by the third party administrator so again the plain language  the summary plan document this is in even clearer takes for insurance policy a reading from the record at twenty seven forty seven this aetna choice pos two plan provides access to covered benefits through a network of health care providers and facilities these network providers have contracted with an affiliate or third party vendor to provide health care services and supplies to the plan members at reduced fee i should correct this is the example that i read from is from a company called cognizant which is an employer whose benefit plan is administered by it's those employees who look to this document to figure out exactly what benefits they refers to that no choice pos to play or i can reach you multiple examples throughout this document where the employer is only mentioned once in the very beginning everywhere else this is referred to as an ethno benefit plan and  dash and apply and the sharing of the risks under the scheme that you described well let me just address that briefly the statute to be clear doesn't require there's nothing in the terms of the statute that requires the insurer t bear risk but isn't isn't that just in and hair and in any insurance policy that it's a it's a sharing of or a bearing of risk not necessarily in the end to use an example of toronto case is a perfect example of that in that case the in question was does blue cross blue shield qualify as an insurer under a different provision in the insurance co that has to do with the prohibition on the assignment of benefits and in that case the very similar definition of insure it required that the entity be authorized under subchapter three of the insurance co there was nothing in the statute that required anyone to bear any risk in that case blue cross blue shield argued that because it was only acting as a third party administrators that it wasn't a three definition of the insurer and we're talking about a completely different chapter in this case it is a different chapter in some of the language is different but the the the analysis in the courts case the reason they decided that it would be an insurer is because it had the authority subchapter three here again where there is a requirement that there are these forty two issue insurance policy that's clearly established in this matter you need to save some time for preemption mr yes i do want to address preemption and let me let me address that in the context of the hudgens case which was mentioned by counsel the hudgens case dealt with a completely different kind of statute chapter thirteen zero one of the insurance code requires it as one of  signature requirements that there be a contract between the insurer and the health care provider that is what when you look at the legislative history for this matter for the statute that's what the legislature intended to regulate was the contract between the insurance carrier and the insurer and the provider in the hudgens case which in that case obviously found that there was preemption there was not that requirement and in fact out of network providers parties they didn't have any contracts at all beneficiaries in the process under the plan could have asserted claims under the georgia statute in that case that hudgens case also did not all this court's precedent in terms of what is what constitutes relating to an employee benefit plan for purposes of preemption under this court's analysis there has to be an exclusive area of federal concern addressed by the statute and there has to be one that impacts the relationship between traditional orse and it is in hudgens they didn't follow that analysis in fact the court found in that case that the relationship between traditional risk and it is was irrelevant that's not following the circuit precedent instead the hudgens case focused exclusively on what what burden might be imposed on the plane and as a result of being subject to this statute frankly there isn't any evidence in contrast to hutchens there is no evidence in the record at all that it is going to experience any burden as a result  this and being subject to the statute and in fact if you look at their briefing on page nine of their principal brief they're going to say that they administer seventy five percent of their docket of self funded plans are self funded twenty five percent of them are not for the twenty five percent of the plans that that ministers in which it is not administering itself under the plan and is clearly subject to these problems with regulations it already has the corporate machinery place to make sure that they are compliant with are relying upon for preemption analysis only deal with complete preemption as opposed to express preemption under five fourteen of the statute there are a number of cases that have been cited that involve both expressed preemption and  and preemption under complete preemption those cases are the access medicaid case two thousand seven case from a circuit where the versus blue cross blue shield of arkansas or the other versus a park north bergen surance compan considering preemption in the context of a creature contract claim or in many cases the actual front payment statutes that we're here to discuss today in all of those cases the court found that because the provider was not acting on behalf of  beneficiary but as a parties who an independent contract that there was no exclusive federal concern and there was no impact on traditional owners and it is in fact in this case what is notable is that  implicates in the termination over coverage that's another argument that the made in its principal argument was that somehow by going through educating these promptly when claims someone's going to have to make a determination over coverage that simply isn't the case there's nothing in the record and frankly nothing in the briefing that suggests that there is a fact issue over whether there is going to be a coverage claim or not and keep in mind that moved for summary judgment if they really all of the cases that it has relied upon including that to be the case north cyprus case those involved either cases where there was no provider at all or whether provider was acting on behalf of beneficiary of a plan this is not our submission and that the federal preemption issue is so clear that even if you harbor any doubts on on the state law issues we can i do not believe you should you would be well within your discretion by issuing a ruling that awards the need for asking the texas courts and by simply ruling that the issue is already clear under federal law and should the issue actually  rise under state law it would not be a claim in any event the issue of possible certification would only arise if you were not disposed to reach you know the federal question and wanted you know the answer to stay low as you first there is no you no requirement that you do that we heard you know the claim that cell from the fans are increasing and that to be sure may be true that is i think an indication of the growth of the national economy companies that have self on the planet and to be national companies u airlines they need to have uniform rules you know the question is not whether the whether the man on the street or the proverbial person on the street believes he or she has insurance somebody clearly underwrite the financial risk of his or her of her coverage you know the question is who regulates the states or the feds with respect to self on the plans congress made its judgment quite clear that it would be the fed we heard sort of briefly and i think we answered in our in our the reply brief about the various mishmash of various contracts that purportedly give rise to a separate insurance policy i think as we said in our brief there is no evidence that that could be made to fit into this decade because there is an overlooking of the key qualifier award insurance but in any event one example should suffice to see you know the circularity of the argument you know the summary plan description that was touted and read to you is ordinarily understood because it is in backdoor effort to regulate itself under the plan itself as an insurance product we heard that you know the true issue here is about you know the enforcement of contract this is not remotely about the importance of contract we know that because there is no breach of any sort let the contracts the dim selves have deadlines which with respect to the claims in this case are longer than would be applied by texas law and that they have their own enforcement mechanisms interest and penalties that are provided by the statute themselves those are the record on appeal at two twenty eight and two forty five you know with respect to the methodist contract we would have forty five days rather than thirty for the electronic claims and t have breached and in any of fact if you look at section one zero seven of start of chapter thirteen or one it is clear that the state where it would hear could not sustain you know the burden of showing that this is about the enforcement of voluntarily enter contract because section one zero seven expressly says that the duties and penalties imposed by chapter thirteen or one may not be waived by contract and so i go back to you know the point that i started on the hundred  what are aren't you addressed no i understand your red lights on but you can answer so that address mr skidmore's contention that hutchens really dealt with a very different sort of statute i don't understand what the difference is  by the court of appeals that tried in many ways to impose deadlines that were shorter that otherwise would be allowed by federal law or that simply dealt with an issue a federal concern i believe his his main point it is we saw in your reasoning in the back of louisiana a case where the claim was that the insurer aetna had delayed payment in order to avoid incurring claims under stop loss policy the essence of the reasoning on that case and what has been an issue in your case is the application of the two part test that this court has used in analogous cases involving other promptly claims have or have led to the same result or thank you mr ink your honor a slender submission