Suit Alleges Major Health Insurance Carriers' PPO Networks Ignore State Law

TYLER, Texas, June 2, 2015 /PRNewswire/ -- East Texas Medical Center Tyler has filed suit¹ in excess of $1 million against three of the largest health insurance carriers¹ in East Texas, citing that the hospital's exclusion from the preferred provider networks (PPO) of these companies has created serious and negative consumer impacts.

The insurance companies named in the suit are Blue Cross & Blue Shield of Texas, a division of Health Care Service Corporation; Aetna Health, Inc., Aetna Life Insurance Company; Cigna Healthcare of Texas, Inc.; and Cigna Health and Life Insurance Company.

ETMC Tyler, one of the largest hospitals in the region, alleges that its exclusion lessens consumers' choice of quality health care providers and increases healthcare costs for some patients. The suit also states that the exclusion of ETMC Tyler is contrary to the provisions of the Texas Insurance Code. Chapter 1301 of this code requires that insurance companies provide "a fair, reasonable, and equivalent opportunity to apply to be and to be designated as a preferred provider." The code states further that carriers "may not unreasonably withhold a designation as a preferred provider."

"ETMC's involuntary exclusion is unique in the State of Texas in terms of its treatment by Blue Cross, Aetna and Cigna," the suit states. "For example, there are 271 not-for-profit charitable hospitals in Texas. ETMC is the only general acute care community hospital involuntarily excluded from the Blue Cross PPO."

"We are a charitable not-for-profit hospital seeking to fulfill our mission of providing for the health care needs of the residents of East Texas," said Elmer G. Ellis, president and CEO of the East Texas Medical Center Regional Healthcare System. "Litigation was the last resort but sadly it is necessary if we are to fulfill this important mission."

The suit notes that ETMC offers East Texas the only renal transplant and deep brain stimulation services and the only Level 1 trauma center. ETMC is one of only two hospitals in Smith County that provides inpatient psychiatric services and is the only hospital in East Texas that provides inpatient psychiatric services for children and adolescents. Patients needing these services must leave the area or face higher deductibles and/or copays if they seek care at ETMC's flagship hospital in Tyler. 

Further, ETMC Tyler offers the highest and most advanced level of care within the ETMC Regional Healthcare System and is a critical referral destination for the system's nine smaller hospitals and 40 clinics. "The irony of this situation is that the affiliated ETMC providers are included in the PPO networks of these carriers," Ellis said. "But the exclusion of the ETMC flagship hospital from the PPOs creates higher costs and more inconvenience for many East Texans, while also undermining seamless access to high quality health care."

The lawsuit notes that there is no legitimate basis for ETMC's exclusion from the Blue Cross, Aetna and Cigna PPOs. The suit further states, "ETMC has approached Blue Cross seeking admission to the Blue Cross PPO but that those efforts have proven futile. Blue Cross has made no substantive response to the request, and ETMC has not been admitted to the Blue Cross PPO." The suit calls that exclusion "unreasonable."

The suit also notes that because the three defendants are by far the dominant form of private health care insurance in Smith County, ETMC Tyler—one of the largest hospitals in the area—is effectively excluded from providing hospital health care services to privately insured patients in its service areas throughout East Texas.

The Texas Legislature has already expressed its disapproval of this type of discriminatory and exclusionary policy when, in 2003, it passed legislation requiring that insurance carriers for the Teacher Retirement System of Texas include ETMC in their PPO network.

The suit alleges the insurance carriers are interfering with ETMC's business relationships and are negligent for failing to follow the provisions of the insurance code.

SOURCE East Texas Medical Center Tyler

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