In 1997, the 75th Texas Legislature enacted House Bill 1511, later codified at Texas Human Resources Code Section 32.0315, which changed the way the state reimburses teaching hospitals for their graduate medical education ("GME") costs under Medicaid. The state Legislature set forth a specific formula that provided greater reimbursement to hospitals than they had previously received under the state's Medicare-based formula. The Texas Department of Health ("TDH"), however, never modified its rulemaking to comply with the statute. Both TDH and the Texas Health and Human Services Commission ("HHSC"), which subsequently administered the Medicaid program, continued to reimburse hospitals under the old formula. In 2002, Parkland Health and Hospital System sued HHSC for injunctive relief and declaratory judgment. V&E lawyers J.D. Epstein and Allyson Kinzel, and former V&E partner Susan Conway, represented Parkland in the case. The district court judge ruled for Parkland from the bench. The state Attorney General's office, which handled this case on behalf of HHSC, appealed the decision. On April 8, 2004, the Texas Third Court of Appeals issued a very brief opinion in Hawkins v. Dallas County Hospital District, No. 03-03-00355-CV, affirming the judgment of the district court in all respects, invalidating HHSC's current GME reimbursement rule, and enjoining HHSC from using any formula other than the statutory one for calculating GME reimbursement to teaching hospitals for that time period. Ironically, in the most recent Texas Legislative session, HHSC was successful in voiding the formula effective September 1, 2003. The opinion is posted on the Court of Appeals website at http://www.3rdcoa.courts.state.tx.us/opinions/htmlopinion.asp?OpinionID=12695.
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