Texas hospital suffers major setback in lawsuit against BCBS over PPO exclusion

East Texas Medical Center in Tyler has suffered a disappointment in its lawsuit against Blue Cross Blue Shield of Texas — the largest health insurer in the state.

The hospital is once again excluded from the health insurer's PPO network, following an appellate court decision that lifted an injunction issued by a lower court.

In June 2015, ETMC filed a lawsuit against BCBS of Texas, Aetna and Cigna, claiming exclusion from the insurers' preferred provider networks increases healthcare costs for some consumers. The hospital claims it is violation of the Texas Insurance Code for the insurers to exclude it from their PPO networks.

Although ETMC named three insurers as defendants in the lawsuit, most of the hospital's frustration is with BCBS of Texas. When it filed its lawsuit last year, ETMC said of the 271 nonprofit hospitals in Texas, it is the only general acute care community hospital involuntarily excluded from the Blue Cross PPO.

ETMC claims there is no legitimate reason it is being kept out of the Blue Cross PPO, and the insurer hasn't provided specifics as to why ETMC isn't included. A BCBS executive did testify that its existing network has been approved by the Texas Department of Insurance, and adding ETMC to the PPO network could set "dangerous precedent" for other unhappy hospitals, according to the Houston Chronicle.

Not long after ETMC filed its lawsuit against the insurers, Moody's Investor Service and Fitch Ratings, downgraded the hospital's rating and assigned a negative outlook. The hospital's out-of-network status was cited by Moody's as a reason for the downgrade.

After the downgrades were issued, ETMC asked the court to issue a temporary injunction to put it in BCBS' PPO network. ETMC's motion was successful, and the judge ordered the insurer to include the hospital in its network at least until trial, according to The Houston Chronicle.

The court's ruling thrilled ETMC executives, and a billboard on the highway into Tyler now reads, "Congratulations, Blue Cross Blue Shield of Texas members! You've won a real choice in healthcare."

However, the billboard will be taken down soon, as ETMC was issued a setback in its case last month when an appeals court lifted the injunction. The appellate court said ETMC had failed to show its exclusion from the PPO network put it in immediate financial danger, according to the report.

In an email to the Houston Chronicle, BCBS said it was pleased with the appellate court's decision.

ETMC officials said they hope the insurer will continue to cover patients' treatment until the matter goes to trial.

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