Celtic Insurance Company, Superior HealthPlan, Inc., and Cenpatico D/B/A Integrated Mental Health Services v. Rochelle Cardona

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-20-00027-CV
CELTIC INSURANCE COMPANY, Superior Healthplan, Inc., and Cenpatico d/b/a Integrated
Mental Health Services,
Appellants
v.
Rochelle CARDONA,
Appellee
From the 166th Judicial District Court, Bexar County, Texas
Trial Court No. 2019-CI-11194
Honorable Mary Lou Alvarez, Judge Presiding
Opinion by: Rebeca C. Martinez, Justice
Sitting: Rebeca C. Martinez, Justice
Beth Watkins, Justice
Liza A. Rodriguez, Justice
Delivered and Filed: September 16, 2020
AFFIRMED
In this interlocutory appeal, Celtic Insurance Company, Superior Healthplan, Inc., and
Cenpatico d/b/a Integrated Mental Health Services (collectively, “Appellants”) filed a partial
motion to dismiss Appellee’s claims for breach of contract, breach of the duty of good faith and
fair dealing, negligence, and wrongful death for failure to timely file an expert report pursuant to
chapter 88 of the Texas Civil Practice and Remedies Code. See TEX. CIV. PRAC. & REM. CODE
ANN. § 88.002(k). The trial court denied the motion to dismiss and Appellants appealed. We
affirm.
04-20-00027-CV
BACKGROUND
In January 2017, Appellee purchased a health insurance policy from Celtic Insurance
Company for her son, Steven Cardona, who was suffering from substance abuse disorder. Superior
Healthplan, Inc. and Cenpatico d/b/a Integrated Mental Health Services provided administrative
support for the policy. The effective date of the policy was February 1, 2017.
Appellee alleges that prior to purchasing the policy, she researched the policy’s benefits
and services to ensure it provided assistance with substance abuse, in-patient treatment for those
battling addiction, and had an adequate number of providers offering in-patient treatment in the
San Antonio, Texas area. According to the policy’s advertised “summary of benefits,” the policy
covered in-patient treatment, but prior approval was required. Further, the summary stated there
was no time limitation on an insured’s length of stay at an in-patient treatment facility. Appellee
alleges Appellants’ website listed nine “in-network” providers in the San Antonio, Texas area that
offered in-patient treatment to its insureds. Based on her research, Appellee believed the policy
would meet Steven’s needs.
According to Appellee, the policy she purchased from Appellants stated, “We will provide
benefits to you, the enrollee, for covered Healthcare Services as outlined in this contract.” The
policy further represented, “Covered services for mental health and substance use disorder are
included on a non-discriminatory basis for all enrollees for the diagnosis and treatment of mental,
emotional, and substance use disorders . . . .” The policy listed in-patient treatment as a covered
service. The policy stated, “Expenses for these services are covered, if medically necessary and
may be subject to prior authorization.” The policy terms provided no time limitation on an
insured’s length of stay at an in-patient treatment facility. Under the “Mental Health and Substance
Use Disorder Services,” the policy states, “If you need help, you will be able to get it.” According
-2-
04-20-00027-CV
to Appellee, “this representation would turn out to be false for [Appellee] and [Steven],” which
ultimately resulted in Steven’s death.
In February 2017, Steven relapsed. According to Appellee, she called the “in network”
providers advertised on Appellants’ website that could provide in-patient treatment to Steven in
the vicinity of San Antonio, Texas. After contacting the facilities, Appellee learned that none of
these facilities were covered under Steven’s plan and that none could provide the in-patient
treatment sought by Appellee. According to Appellee, “it would turn into a constant battle to find
the proper services for Steven under his policy.”
Appellee alleges that every time she called to inquire about finding treatment for Steven,
Appellants would require permission from Steven prior to speaking with her on the phone and,
even if she received permission from Steven, Steven’s permission lasted only twenty-four hours.
According to Appellee, this significantly delayed finding Steven treatment because it was difficult
to find and communicate with Steven on a daily basis since he had relapsed. Appellants provided
Appellee the opportunity to mail in an authorization form, but it took weeks for the form to process
in Appellants’ systems, “which only caused more delay and frustration.”
Appellee alleges that Appellants were struggling to find facilities that could provide in-
patient treatment to Steven. Appellee claims she was verbally told by Appellants that Steven’s
insurance policy only provided for thirty days of in-patient treatment. According to Appellee, the
insurance policy’s stated terms provide no such time limitation.
Appellee claims she continued to try to find a facility for Steven, even if it was for only
thirty days of in-patient treatment. However, according to Appellee, Appellants “were less than
helpful in trying to find the right provider for her son, even when [she] begged for their help.”
Appellants allegedly suggested a treatment facility in Dallas, Texas. Appellee alleges she was
shocked Appellants thought Dallas, Texas was a viable option given that it was “less than desirable
-3-
04-20-00027-CV
for an addict to be in a new city without his support system.” Appellee contends this showed
Appellants’ “limited ability, experience and knowledge of how to handle insureds struggling with
drug addiction.”
Appellee claims that Appellants approved Steven for a “short stay” at Laurel Ridge in San
Antonio, Texas. Appellee alleges neither “she nor her son ever received anything in writing from
[Appellants] as to why the approval was for a short period of time.” According to Appellee,
“[d]uring the times when Steven was struggling with his addiction and could not find the
appropriate services, he would check himself into Laurel Ridge for the short stays, . . . which was
the only assistance [Appellants] would provide.”
Appellee alleges that Laurel Ridge recommended the “IHRP Program” in San Antonio,
Texas but that Appellants “would not be accepted at that facility.” Laurel Ridge also recommended
“NOVA,” another long-term treatment facility. Appellee claims she “begged for an agreement to
be worked out between [Appellants] and NOVA,” but an agreement could not be reached.
Appellee alleges she found another facility called the “Right Step” in Wimberley, Texas, and,
according to Appellee, she waited on Appellants to work something out with this facility. Appellee
alleges that she and her son “lived in a constant state of limbo, trying to wait until a viable option
for the services he needed would open up.”
In March 2017, Steven was admitted at Right Step. However, after only seventeen days of
treatment, Appellee alleges that Steven was told that Appellants were no longer covering his stay
and he was forced to leave the facility. Appellee claims that Steven was admitted back into Laurel
Ridge for a “short stay.” According to Appellee, Steven “was placed in a series of chaotic,
unpredictable, and unstable situations in regard to the care he needed.” “Instead of being able to
get the services needed, . . . which [were] so vehemently advertised by [Appellants],” Appellee
alleges, she was forced to find other programs for Steven.
-4-
04-20-00027-CV
Appellee claims she found a sober living house in Austin, Texas for Steven, but that she
was forced to pay out of pocket for the facility. In June 2017, Steven relapsed and was forced out
of the sober living house. Appellee alleges she “again tried to find the services needed for her son,
but [Appellants] only purported to cover short stays in Laurel Ridge.”
In July 2017, Steven’s body was found “lying in the Texas heat for roughly five days.”
Steven had died of a drug overdose. According to Appellee, “only after Steven’s death did
[Appellants] send letters to [Appellee] and Steven . . . about trying to find the services Steven so
desperately needed.” In the letter, Appellants assigned an “intensive case manager” to Steven and
represented to Steven, “my job is to help you get the services you need.” Appellee claims
Appellants “waited nearly [five] months to finally address the problem, . . . which was a little too
late as [Steven] had already passed away.”
Appellee sued Appellants for breach of contract, breach of the duty of good faith and fair
dealing, violations of section 541 of the Texas Insurance Code, violations of the Deceptive Trade
Practices Act, negligence, and wrongful death. Appellants filed their original answer on July 3,
2019. On November 11, 2019, Appellants filed a partial motion to dismiss Appellee’s claims for
breach of contract, breach of the duty of good faith and fair dealing, negligence, and wrongful
death for failure to timely file an expert report pursuant to chapter 88 of the Texas Civil Practice
and Remedies Code. After a hearing on the motion, the trial court denied Appellants’ motion to
dismiss without prejudice. This interlocutory appeal followed.
On appeal, Appellants argue that Appellee’s claims for breach of contract, breach of the
duty of good faith and fair dealing, negligence, and wrongful death are claims within the purview
of chapter 88 because they challenge Appellants’ “health care treatment decisions” as that term is
defined under the statute and, as such, Appellee was required to serve an expert report in support
of her claims within 120 days of Appellants’ original answer. Because Appellee did not serve an
-5-
04-20-00027-CV
expert report, Appellants argue the trial court erred in denying their motion to dismiss Appellee’s
claims for breach of contract, breach of the duty of good faith and fair dealing, negligence, and
wrongful death.
STANDARD OF REVIEW
Determining whether Appellee’s claims fall within the purview of chapter 88 requires the
court to construe the statute. Cf. Loaisiga v. Cerda, 379 S.W.3d 248, 254 (Tex. 2012) (construing
chapter 74 to determine whether the plaintiff’s claim was a “health care liability claim” as defined
by the statute). Issues of statutory construction are reviewed de novo. Id. at 254–55. In construing
a statute, our primary objective is to determine and give effect to the Legislature’s intent. City of
San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003) (citing State v. Gonzalez, 82 S.W.3d
322, 327 (Tex. 2002)). To do this, “[w]e look first to the ‘plain and common meaning of the
statute’s words.’” Id. (quoting Gonzalez, 82 S.W.3d at 327). “If a statute’s meaning is
unambiguous, we generally interpret the statute according to its plain meaning.” Id. (citing
Gonzalez, 82 S.W.3d at 327). “[L]egislative intent should be determined from the entire act, and
not simply from isolated portions.” Jones v. Fowler, 969 S.W.2d 429, 432 (Tex. 1998) (per
curiam) (citing Acker v. Tex. Water Comm’n, 790 S.W.2d 299, 301 (Tex. 1990)). Thus, “we must
read the statute as a whole and interpret it to give effect to every part.” Id. (citing Ex parte Pruitt,
551 S.W.2d 706, 709 (Tex. 1977)).
To determine whether Appellee’s claims fall within the purview of chapter 88, we “focus[]
on the facts underlying the claim, not the form of, or artfully-phrased language in, the plaintiff’s
pleadings describing the facts or legal theories asserted.” Cf. Loaisiga, 379 S.W.3d at 255. We
may consider the entire court record and the overall context of Appellee’s suit, including the nature
of the factual allegations in the pleadings, the motion to dismiss and the response to the motion,
and any relevant evidence properly admitted. Cf. id. at 258.
-6-
04-20-00027-CV
DISCUSSION
Section 88.002(a) provides:
A health insurance carrier, health maintenance organization, or other managed care
entity for a health care plan has the duty to exercise ordinary care when making
health care treatment decisions and is liable for damages for harm to an insured or
enrollee proximately caused by its failure to exercise such ordinary care.
TEX. CIV. PRAC. & REM. CODE ANN. § 88.002(a). The statute defines a “health care treatment
decision” as “a determination made when medical services are actually provided by the health care
plan and a decision which affects the quality of the diagnosis, care, or treatment provided to the
plan’s insureds or enrollees.” Id. § 88.001(5). Our understanding of what constitutes an actionable
“health care treatment decision” as stated in section 88.002(a) is informed by the other sections of
the statute. See Jones, 969 S.W.2d at 432 (“[L]egislative intent should be determined from the
entire act, and not simply from isolated portions.” (citing Acker, 790 S.W.2d at 301)).
Subject to certain exceptions, Section 88.003(a) provides that a person may not maintain a
cause of action under section 88.002(a) unless the affected insured has first “exhausted the appeals
and review applicable under the utilization review requirements” as set forth in the Texas Insurance
Code. The Texas Insurance Code defines “utilization review” as “a system for prospective,
concurrent, or retrospective review of the medical necessity and appropriateness of health care
services . . . .” TEX. INS. CODE ANN. § 4201.002(13). A “utilization review agent” conducts
utilization review for an insurance company. See id. § 4201.002(14). An insured who receives an
“adverse determination” in utilization review may appeal that decision and have it reviewed. See
id. § 4201.303; see also §§ 4201.351–4201.403 (setting forth the procedures for appealing an
adverse determination). An “adverse determination” in utilization review “means a determination
by a utilization review agent that health care services provided or proposed to be provided to a
patient are not medically necessary . . . .” Id. § 4201.002(1). Thus, subject to the other provisions
-7-
04-20-00027-CV
of section 88.002(a) and assuming a person has exhausted the appeals and review applicable under
the utilization review requirements as required by section 88.003(a), a person may then maintain
a cause of action under section 88.002(a) against a health insurance carrier, health maintenance
organization, or other managed care entity for those decisions where a utilization review agent has
determined in utilization review that health care services provided or proposed to be provided to
the affected person were not medically necessary and, thus, were denied.
This reasoning is in line with section 88.002(c), which states that it is a defense:
to any action asserted against a health insurance carrier, health maintenance
organization, or other managed care entity for a health care plan that: (1) neither
the health insurance carrier, health maintenance organization, or other managed
care entity . . . controlled, influenced, or participated in the health care treatment
decision; and (2) the health insurance carrier, health maintenance organization, or
other managed care entity did not deny or delay payment for any treatment
prescribed or recommended by a provider to the insured or enrollee.
TEX. CIV. PRAC. & REM. CODE ANN. § 88.002(c) (emphasis added). It follows then that if a “health
care treatment decision” is not denied, there is no claim, see id.; and if a “health care treatment
decision” is denied, there may be a claim after utilization review. See TEX. INS. CODE ANN.
§ 4201.002(13).
Section 88.002(d) provides that the standards imposed in section 88.002(a) “create no
obligation on the part of the health insurance carrier, health maintenance organization, or other
managed care entity to provide to an insured or enrollee treatment which is not covered by the
health care plan of the entity.” Thus, according to section 88.002(d)’s plain terms, a health
insurance carrier or other stated entity could not be subject to liability under section 88.002(a) for
a decision it made when it “correctly concluded that, under the terms of the relevant plan, a
particular treatment was not covered” by the health care plan. Aetna Health Inc. v. Davila, 542
-8-
04-20-00027-CV
U.S. 200, 213 (2004). 1 For instance, “if the terms of the health care plan specifically exclude from
coverage the cost of an appendectomy, then any injuries caused by the refusal to cover the
appendectomy are properly attributed to the terms of the plan itself, not the managed care entity
that applied those terms.” Id. at 213 n.3.
With these considerations in mind, we disagree that Appellee is challenging “health care
treatment decisions” as that term is described in the statute.
In examining the facts underlying Appellee’s breach of contract claim, the complaint
derives from the contract itself and the alleged representations that Appellants made to Appellee
and Steven. Appellee alleges Appellants breached the contract when they represented that the
policy’s express terms covered only thirty days of in-patient treatment. The insurance contract is
not in the record. However, according to Appellee, the stated policy terms provide no such time
limitation. Appellee also alleges Appellants breached the contract when they failed to have an
adequate number of providers in the area to provide in-patient treatment. According to Appellee,
Appellants advertised on their website nine “in-network” providers that offered in-patient
treatment to its insureds in the San Antonio, Texas area. However, according to Appellee, this
representation was false because none of the listed providers offered in-patient treatment. Whether
this representation was in the contract or was incorporated into the contract’s express terms is an
issue not before us. Lastly, according to Appellee, the contract provided for in-patient treatment
and promised, “If you need help, you will be able to get it.” Appellee’s factual allegations detail
1
In Aetna Health Inc. v. Davila, two individuals sued their respective health maintenance organizations under section
88.002(a) for refusing to cover certain medical services recommended by their health care provider. Davila, 542 U.S.
at 204–05. The health care plans at issue were ERISA-regulated employee benefit plans. Id. at 204. At issue in
Davila was whether the individuals’ causes of action under section 88.002(a) were completely preempted by ERISA.
Id. The Court concluded they were completely preempted by ERISA and, thus, removable from state to federal court.
Id. Thereafter, the Legislature amended chapter 88 to include section 88.0015, which states, “This chapter does not
apply to an employee benefit plan regulated under the Employee Retirement Income Security Act of 1974 . . . .” See
TEX. CIV. PRAC. & REM. CODE ANN. § 88.0015.
-9-
04-20-00027-CV
the alleged difficulties and delays she encountered trying to get Appellants to help Steven find
treatment. It was not until after Steven’s death five months later that Appellants assigned an
intensive case manager to Steven in an attempt get him help. Therefore, Appellee alleges
Appellants breached the contract when they failed to timely provide the help and in-patient
treatment as promised under the contract.
Appellants attempt to categorize Appellee’s complaint as a challenge to Appellants’
healthcare treatment decisions by focusing on the part of the complaint where Appellee complains
that Steven was not provided in-patient treatment because of Appellants’ deficient assistance.
Appellants argue Steven was not provided in-patient treatment because their utilization review
process determined that in-patient treatment was not medically necessary for Steven under the
policy. There is nothing in the record supporting this assertion. It could be equally likely that in-
patient treatment was not provided because it was determined that in-patient treatment was
specifically excluded under the policy’s terms, in which case the decision would not come within
the purview of liability under chapter 88. On this record, it is impossible for us to ascertain which
is the case. Nevertheless, in considering the totality of Appellee’s petition, the gravamen of
Appellee’s complaint concerns Appellants’ inadequate assistance in helping Steven find treatment
at all, rather than any particular decision Appellants made regarding Steven’s treatment. The same
is true for Appellee’s breach of the duty of good faith and fair dealing, negligence, and wrongful
death claims.
The underlying facts supporting Appellee’s breach of the duty of good faith and fair
dealing, negligence, and wrongful death claims mirror Appellee’s breach of contract claim.
Because of the unreasonable delays in finding Steven treatment and the misrepresentations made
by Appellants, Appellee alleges in her negligence cause of action that Appellants “negligently
provided and managed its behavioral health and substance abuse services” to Steven under the
- 10 -
04-20-00027-CV
policy. 2 With regard to Appellee’s breach of the duty of good faith and fair dealing and wrongful
death claims, Appellee alleges she and her son requested assistance in finding in-patient treatment
from Appellants, which Appellants failed to provide and, instead, “caused significant delay in
finding treatment, misrepresented the terms of the policy, shortened stays at detox treatment,” and
waited five months after Appellee requested assistance to assign an intensive case manager to help
Steven, all of which deprived Steven of the benefits and treatment afforded under the policy and
ultimately caused his death.
Appellants attempt to label Appellee’s complaints as challenges to Appellants’ healthcare
treatment decisions by only focusing on the part of the complaint where Appellee complains that
Appellants “shortened stays.” Appellants argue the shortened stays were the product of a decision
made after utilization review as to what length of stay was medically necessary for Steven. As
discussed, we cannot determine from the record Appellants’ reasons for the “shortened stays” and,
thus, we cannot discern whether Appellants’ decision falls within or outside the purview of chapter
88. As such, Appellants have not demonstrated that Appellee’s breach of contract, breach of the
duty of good faith and fair dealing, negligence, and wrongful death claims fall within the purview
of chapter 88. See Miles v. Lee Anderson Co., 339 S.W.3d 738, 743 (Tex. App.—Houston [1st
Dist.] 2011, no pet.) (“The party appealing the trial court’s judgment bears the burden to show that
the judgment is erroneous.” (citing Murray v. Devco, Ltd., 731 S.W.2d 555, 556 (Tex. 1987))).
2
After Appellants filed their motion to dismiss, Appellee amended her petition and removed the negligence cause of
action from her petition. See FKM P’ship, Ltd. v. Bd. of Regents of Univ. of Hous. Sys., 255 S.W.3d 619, 632 (Tex.
2008) (“In civil causes generally, filing an amended petition that does not include a cause of action effectively nonsuits
or voluntarily dismisses the omitted claims as of the time the pleading is filed.”). However, a nonsuit or voluntary
dismissal of a claim “does not control the fate of a non-moving party’s independent claims for affirmative relief.”
Villafani v. Trejo, 251 S.W.3d 466, 469 (Tex. 2008). Appellants’ motion to dismiss constitutes a claim for affirmative
relief because it seeks dismissal of Appellee’s claims with prejudice and attorney’s fees. See Walker v. Hartman, 516
S.W.3d 71, 80 (Tex. App.—Beaumont 2017, pet. denied) (concluding appellant’s motion to dismiss under the Texas
Citizens’ Participation Act survived the appellee’s nonsuit of certain causes of action because the motion to dismiss
sought affirmative relief, such as dismissal with prejudice, attorney’s fees, and sanctions). Thus, although Appellee
removed her negligence action from her petition, we consider Appellants’ motion to dismiss that claim. See id.
- 11 -
04-20-00027-CV
Nonetheless, in examining the nature of Appellee’s factual allegations as stated in the pleadings
and the overall context of Appellee’s suit, we disagree that the “shortened stay” allegations are the
gravamen of Appellee’s complaint. It is merely one instance used to show Appellants’ alleged
deficiencies in the process of finding Steven treatment. Appellants’ alleged deficient assistance is
the gravamen of Appellee’s complaints, not their “health care treatment decisions” as that term is
described in the statute.
In sum, the factual allegations underlying Appellee’s complaints do not allege that
Appellants failed to exercise ordinary care when making “health care treatment decisions,” as that
term is defined in the statute. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 88.001(5); 88.002(a).
Because Appellants have not established that Appellee’s breach of contract, breach of the duty of
good faith and fair dealing, negligence, and wrongful death claims fall within the purview of
chapter 88, we conclude the trial court did not err in denying their motion to dismiss those claims
for failure to file an expert report pursuant to chapter 88. See Miles, 339 S.W.3d at 743.
CONCLUSION
We affirm the trial court’s order denying Appellants’ motion to dismiss Appellee’s claims
for breach of contract, breach of the duty of good faith and fair dealing, negligence, and wrongful
death.
Rebeca C. Martinez, Justice
- 12 -