TPA of Self-Insured Health Plan Not Subject to Texas Prompt-Pay Law

From the February 18, 2016 EBIA Weekly
[Health Care Serv. Corp. v. Methodist Hosps. of Dallas, 2016 WL 530680 (5th Cir. 2016)]

Available at http://www.ca5.uscourts.gov/opinions/pub/15/15-10154-CV0.pdf

The Fifth Circuit has ruled that a third-party administrator (TPA) of employer-sponsored self-insured health plans is not an insurer subject to the Texas Prompt Payment Act. A hospital sued the TPA for over $31 million under the state law, which generally requires insurers to pay benefit claims within 30 or 45 days (depending on the claim’s format), or face penalties. The TPA argued to the trial court that the Texas law does not apply because the TPA is not an “insurer” providing coverage through a “health insurance policy,” as required by the law. It also contended that ERISA preempts the application of the state law to claims arising under self-insured health plans. The trial court ruled that the state law by its terms does not apply to the TPA’s administration of self-insured plans; because of this conclusion, it did not address ERISA preemption.

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