The Fifteenth Court of Appeals agreed to a request to abate an appeal of a trial court's temporary injunction halting the state's implementation of Medicaid and Children’s Health Insurance Program managed-healthcare service contracts.

The per curiam order, entered Tuesday, treats the case as closed until July 3, 2025, after the Texas Legislature concludes its session.

Texas Health and Human Services Commission executive commissioner Cecile E. Young, Molina Healthcare of Texas Inc., and AETNA Better Health of Texas Inc. brought the appeal.

Young and the commission are appealing the Oct. 4 order of Travis County 353rd District Judge Laurie Eiserloh, who blocked the agency from finalizing a set of contracts that Eiserloh found illegally favored AETNA and would have dropped several qualified healthcare providers based in Fort Worth, South Texas and the Houston area.

The controversey affects the state's $116 billion Medicaid contract proposal, which excludes plaintiffs Cook Children's Health Plan; Texas Children's Health Plan; Superior Healthplan Inc.; and Wellpoint Insurance Co.

The state explained its request to halt judicial proceedings becaue the House Committee on Human Services, in a June hearing, contemplated changes to the statutory scheme governing procurement of Medicaid services.

"There is a substantial likelihood that the Texas Legislature will consider legislation affecting the issues in this appeal during the 89th Regular Session. In the meantime, Appellant and Appellees have negotiated a standstill agreement under Texas Rule of Appellate Procedure 6.6 to preserve the status quo," assistant attorney general Jennifer Cook stated to the appellate court.

Plaintiffs argue and Eiserloh agreed that the proposal would force low-income residents to change their children's health coverage to other organizations: AETNA, Molina, UnitedHealthcare, and Blue Cross and Blue Shield of Texas.

Judge Eiserloh concluded the contract awards "would impose significant harm and confusion to millions of Texas's STAR and CHIP members. More than 1.5 million Texans, mostly children—and 43% of the total STAR and CHIP population—will be forced to change health plans."

Eiserloh catalogued the state commission's unlawful actions, stating the intended contract awards:

• Will fail to give preference to managed care organizations with significant participation in their provider networks from each healthcare provider in the region who has traditionally provided care to Medicaid and charity care patients as required by law.
• Will fail to give preference to MCOs that have successfully implemented quality initiatives as required by law.
• Failed to develop and implement the cost-efficiency and quality of care benchmarks mandated by Texas Government Code, despite being subject to an obligation to do so for over decade. Defendant's intended contract awards will likewise fail to give preference to MCOs that have met such benchmarks.
• Will fail to consider MCOs' past performances as required by law.
• Will fail to evaluate and certify that MCOs are reasonably able to fulfill the terms of the STAR contract as required by law, and to review MCOs to confirm their ability to fulfill the requirements of the CHIP contract as required by law.
• Will fail to implement the Medicaid managed care program in manner that improves the health of Texans by promoting continuity of care and provides medical home for recipients as required.
• Will fail to reduce administrative and other nonfinancial barriers for recipients as required.
• Will fail to consider the need to use different managed care plans to meet the needs of different populations as required.

Eiserloh also cited the commission's bias in favor of AETNA and the harms that caused other competitors.

"In August 2023 and again in October 2023, defendant wrongfully disclosed the RFP proposals of plaintiffs and other respondents—with the August disclosure recipients including legal counsel for Aetna, oneof the competing respondents, while the procurement was ongoing and prior to completion of the oral presentations—thus, destroying any integrity of the procurement process and creating an unlevel playing field that cannot ensure fair consideration of all proposals.

By doing so, Eiserloh said the commission:

• Will unlawfully award mandatory CHIP contracts to MCOs to which defendant intends to award mandatory STAR contracts in violation of Texas Health and Safety Code.
• Defendant's intended award of mandatory CHIP contracts will fail to give consideration to statutorily required factors.
• Defendant's continuing practice of denying relevant information about procurement to bidders until after the deadline to submit bid protest violates the Due Course of Law provision of Article I, Section 13 of the Texas Constitution by not providing meaningful bid protest process after promising one.
• Defendant's continuing practice of refusing to consider as untimely any information submitted in supplemental protests and/or after the protest filing deadline is inconsistent with the procedural protections promised to protestants in bid protest rules that require consideration of protest or appeal submitted after the filing deadline when good cause for delay is shown.

Lead counsel for the plaintiffs is Susan Feigin Harris of Norton Rose Fulbright, Houston office. The plaintiffs' legal team includes Paul Trahan, Norton Rose in Austin; Karen Crook Burgess, Burgess Law in Austin; Michelle Youn Ku and Robert Frances Johnson III of Foley & Lardner in Dallas and Austin, respectively.

For the state's appeal, the plaintiffs also retained the services of Alexander Dubos & Jefferson, Perkins Coie, and Holland & Knight.

AETNA is represented by Ewell, Brown, Blanke & Knight. Molina Healthcare is represented by Scott Douglas & McConnico.