Source: https://m.openjurist.org/80/f3d/153
Timestamp: 2019-11-18 21:42:35
Document Index: 95180378

Matched Legal Cases: ['§ 3', '§ 3', 'art. 21', '§ 6', '§ 3', '§ 3', 'art. 21', '§ 4', '§ 3', '§ 16', '§ 4', '§ 3', '§ 3', '§ 16', '§ 6', 'art. 21', '§ 6', '§ 3', '§ 3', '§ 16', '§ 16', '§ 16', 'art. 21', 'art. 21', '§ 16', '§ 16', '§ 3', '§ 4', 'art. 21', '§ 4', '§ 4', '§ 4', '§ 16', 'art. 21', '§ 4', '§ 16', '§ 4', '§ 4', '§ 11']

80 F3d 153 Texas Medical Association v. Aetna Life Insurance Company | OpenJurist
80 F. 3d 153 - Texas Medical Association v. Aetna Life Insurance Company
80 F3d 153 Texas Medical Association v. Aetna Life Insurance Company
80 F.3d 153
TEXAS MEDICAL ASSOCIATION, et al., Plaintiffs-Appellants,
AETNA LIFE INSURANCE COMPANY, et al., Defendants-Appellees.
No. 94-20690.
The district court granted summary judgment for Aetna on the ground that Texas law does not provide a private cause of action to enforce the PPO rules. The district court reasoned that "if any of the provisions of 28 Tex.Admin.Code § 3.3703 is violated, 28 Tex.Admin.Code § 3.3703(4) provides that enforcement shall be pursued in accordance with Article 21.21-2 of the Texas Insurance Code." Article 21.21-2 gives the Texas Board of Insurance authority to investigate alleged violations of the Insurance Code and determine appropriate sanctions and penalties. Tex.Ins.Code Ann. art. 21.21-2 § 6 (Vernon Supp.1996). The court found that "both 28 Tex.Admin.Code § 3.3703 and Article 21.21-2 of the Insurance Code clearly indicate that the Texas Board of Insurance is the only party responsible for assuring that insurers comply with 28 Tex.Admin.Code § 3.3703." Additionally, the court rejected the argument that the doctors could pursue their claims of violations of the PPO rules under Tex.Ins.Code Ann. art. 21.21 §§ 4(7)(b) and 16, reasoning that 28 Tex.Admin.Code § 3.3703(4) explicitly sets forth the method whereby its provisions may be enforced, and that sections 4(7)(b) and 16 are not applicable to the doctors' complaints that they have been unfairly terminated under the provisions of their preferred provider contracts. The court concluded that Aetna's motion for summary judgment should be granted because Texas law provides no private cause of action for the conduct alleged by TMA, HCMS, and the doctors.
We review the grant of a summary judgment de novo, applying the same criteria used by the district court in the first instance. Norman v. Apache Corp., 19 F.3d 1017, 1021 (5th Cir.1994); Conkling v. Turner, 18 F.3d 1285, 1295 (5th Cir.1994). Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Whether Texas law provides appellants with a private cause of action to enforce the PPO rules is a pure question of law, for which summary judgment is proper. Sheline v. Dun & Bradstreet Corp., 948 F.2d 174, 176 (5th Cir.1991).
The appellants argue that the district court erred in granting summary judgment in favor of Aetna on the ground that Texas law does not provide a private cause of action to enforce violations of the PPO rules. First, they contend that even if no private cause of action exists, the doctors are entitled to a declaratory judgment concerning their "contract rights" and related injunctive relief. Second, the appellants argue that they can challenge Aetna's alleged violations of the PPO rules under Article 21.21 § 16(a) of the Texas Insurance Code as unfair or deceptive acts or practices in the business of insurance. Third, the appellants claim that they can challenge Aetna's violations of the PPO rules under Article 21.21 § 4(7)(b) as unfair discrimination in the business of insurance.
Aetna responds that the district court properly granted summary judgment because no private cause of action by which appellants can enforce alleged violations of the PPO rules exists under Texas law. Aetna argues that 28 Tex.Admin.Code § 3.3703(4) provides the exclusive enforcement mechanism for violations of the PPO rules. Aetna contends that the appellants, by characterizing their suit as a request for a declaratory judgment of their "contract rights," and by additionally arguing that the PPO rules are incorporated into their contracts as a matter of law, merely attempt to circumvent the exclusive enforcement mechanism of § 3.3703(4). Aetna also contends that the private causes of action provided by Texas Insurance Code Article 21.21 §§ 16(a) and 4(7)(b) are inapplicable to the appellants' allegations that the doctors' deselection from Aetna's PPO violates the PPO rules.2
A. THE PPO RULES
Texas Insurance Code Article 21.21-2 § 6(a) authorizes the State Board of Insurance (now the Texas Department of Insurance) to ensure compliance with the Insurance Code. Tex.Ins.Code Ann. art. 21.21-2 § 6(a) (Vernon Supp.1996). Texas courts have repeatedly held that no private cause of action exists under article 21.21-2. See, e.g., Allstate Ins. Co. v. Watson, 876 S.W.2d 145, 148 (Tex.1994); Maryland Ins. Co. v. Head Indus. Coatings & Servs., Inc., 906 S.W.2d 218, 225 (Tex.App.--Texarkana 1995, no writ); Progressive County Mut. Ins. Co. v. Boman, 780 S.W.2d 436, 437 n. 1 (Tex.App.--Texarkana 1989, no writ) (noting that "[t]he Unfair Claims Settlement Practices Act [article 21.21-2] does not purport to give individuals a private cause of action. Rather, it authorizes the State Board of Insurance to investigate and impose sanctions ..."); Cantu v. Western Fire & Casualty Ins. Co., 716 S.W.2d 737, 741 (Tex.App.--Corpus Christi 1986), writ ref'd. n.r.e. per curiam, 723 S.W.2d 668 (Tex.1987). Because § 3.3703(4) refers solely to Article 21.21-2 for the manner in which the PPO rules may be enforced, the appellants may not bring a judicial action to privately enforce the PPO rules.3
The appellants argue that, despite the reference of § 3.3703(4) to Article 21.21-2 for enforcement of the PPO rules, they may seek a declaratory judgment of their "contract rights," and pursue relief through the private causes of action available under Texas Insurance Code Article 21.21 §§ 16(a) and 4(7)(b).
C. ARTICLE 21.21, SECTION 16(A)
Although the language of § 16(a) provides a cause of action to "any person," the right to sue under § 16(a) has been limited by Texas courts to persons in privity of contract with the insurer on an insurance policy or an intended beneficiary of an insurance policy. In re Burzynski, 989 F.2d 733, 740 (5th Cir.1993); Shelton Ins. Agency v. St. Paul Mercury Ins. Co., 848 S.W.2d 739, 744 (Tex.App.--Corpus Christi 1993, writ denied) (stating that "no authority exists to extend the meaning of the term 'person,' as found in art. 21.21, beyond one who was either an insured or an intended beneficiary of the policy"); CNA Ins. Co. v. Scheffey, 828 S.W.2d 785, 791 (Tex.App.--Texarkana 1992, writ denied); Chaffin v. Transamerica Ins. Co., 731 S.W.2d 728, 731 (Tex.App.--Houston [14th Dist.] 1987, writ ref'd n.r.e.). The doctors are neither in privity of contract with Aetna on an insurance policy nor intended beneficiaries of an insurance policy. Therefore, the appellants cannot maintain a suit under Tex.Ins.Code Ann. art. 21.21 § 16(a). Because we determine that the doctors are not "persons" within the meaning of § 16(a), we do not address Aetna's additional arguments that violations of the PPO rules are not declared to be unfair methods of competition or unfair or deceptive acts or practices and that the doctors have not suffered any actual damages.
D. ARTICLE 21.21, SECTION 4(7)(B)
Finally, appellants argue that, despite § 3.3703(4), they can pursue a private cause of action for violations of the PPO rules under former Texas Insurance Code Article 21.21 § 4(7)(b) (Vernon Supp.1995).5 Former Texas Insurance Code Article 21.21 section 4(7)(b) prohibits unfair discrimination in the business of insurance. Tex.Ins.Code Ann. art. 21.21 § 4(7)(b) (Vernon Supp.1995). Unfair discrimination is defined as:
Id. The district court held that "there is no indication that section 4(7)(b) is in any way implicated by Plaintiffs' allegations" because the "Plaintiffs claim that they have been unfairly terminated under the provisions of their preferred provider contracts, not that they have been unfairly discriminated against in terms of policy premiums, rates or fees." We agree.
On appeal, the doctors argue for the first time that their deselection resulted in unfair discrimination to their patients, who are Aetna policyholders, and that the doctors suffered actual damage because of this unfair discrimination against their patients. Ordinarily, we do not address arguments that were not presented to the district court. See E.E.O.C. v. Clear Lake Dodge, 25 F.3d 265, 270 n. 3 (5th Cir.1994). Even had the doctors raised this argument before the district court, they could not maintain an action against Aetna under § 4(7)(b). A violation of Article 21.21 § 4(7)(b) is an unfair practice that is actionable through Article 21.21 § 16(a), which provides a private cause of action to "any person who has sustained actual damages as a result" of an insurer's unfair method of competition or unfair or deceptive act or practice. See Tex.Ins.Code Ann. art. 21.21 §§ 4 (defining the actions described in the subsections as "unfair methods of competition and unfair and deceptive acts or practices in the business of insurance"), 16(a) (Vernon Supp.1995). We have already decided that the doctors are not "persons" within the meaning of § 16(a). See Burzynski, 989 F.2d at 740. Therefore, appellants may not bring a private cause of action to enforce the PPO rules under former Article 21.21 § 4(7)(b). Accordingly, we conclude that the district court properly granted summary judgment to Aetna on the grounds that Texas law does not provide a private cause of action for enforcement of the PPO rules.
Texas Insurance Code § 4(7)(b) has recently been deleted. See Acts 1995, 74th Leg., ch. 414 § 11, eff. Sept. 1, 1995