New Texas AG Weighs Next Move In HMO Lawsuits

New Texas Attorney General John Cornyn is considering how to proceed with his predecessor's eleventh-hour lawsuits against six HMOs, saying only that he will hold them accountable “if someone has broken the law.” Cornyn, a Republican, received strong financial support from insurance companies during his campaign.

A common HMO utilization tool — financial incentives for physicians — is at the heart of the suits. Before leaving office Jan. 1, Attorney General Dan Morales accused HMOs of violating a 1997 state law that prohibits them from using financial incentives that “directly or indirectly [cause physicians] to limit medically necessary services.” The suits seek fines to stop HMOs from using incentives in physician contracts.

The HMOs — PacifiCare, Humana, two Aetna plans and two NYLCare plans — say their practices comply with state law. Humana says its incentives were approved by the Texas Department of Insurance.