Tex. Court Holds Hospitals Cannot Sue Insurance Cos. for Unpaid Medical Debts Under Quantum Meruit

On Thursday, in the Northern District of Texas, Judge Brantley Starr ruled against a group of hospitals seeking payment under a theory of quantum meruit for emergency room services provided to patients insured by Blue Cross Blue Shield, Anthem, and Health Care Services Corporation. 

The plaintiffs alleged that the defendants’ insured parties were provided with “medically necessary emergency services” for which the defendants then underpaid for the amount billed for services rendered. As such, the hospitals proffered that under Texas state’s law of quantum meruit, the defendants must pay for that from which benefit was provided, lest the defendants become unjustly enriched. 

The court summarily dismissed the plaintiffs’ argument, citing a misstatement of the law. Quantum meruit, Judge Starr explained, is the equitable remedy that says that if a defendant received a valuable service from which said defendant benefitted with reasonable notice to the defendant that compensation to the plaintiff for the rendered service was expected, the defendant then must pay damages equivalent to the original amount agreed upon for the prior benefit rendered. However, the court ruled, precedential case-law with almost matching fact patterns dictate that the plaintiffs rendered a service — emergency medical care — to the benefit of the insurance customers, not the insurance companies. “Saddling someone with a debt to repay hardly qualifies as a benefit. … Serving a defendant’s customers is hardly the same as serving the defendant itself.”

Judge Staff ended by dismissing the plaintiffs’ case with prejudice. The plaintiffs are represented by King & Spalding and Winstead PC. The defendants are represented by Sidley Austin, Kirkland & Ellis, and Hedrick Kring