Jackson Jambalaya

U.S. District Judge Henry Wingate said at a Friday hearing he will rule today on Blue Cross's petition for a temporary restraining order against Governor Phil Bryant. The insurer seeks the TRO against the Governor's executive order directing the company to reinstate six HMA hospitals to network status. HMA sued Blue Cross earlier this year as it alleged the insurer violated their contract over reimbursement rates. Blue Cross notified HMA it was exercising the termination clause in the contract. The effect was all ten HMA hospitals in Mississippi were paid lower "out of network" reimbursement rates on September 1. HMA is currently paying the difference for Blue Cross policyholders as the dispute continues in court.


Lawyers representing the Insurance Commissioner, Blue Cross, and the Governor sparred for three hours in Judge Wingate's courtroom. Attorney John Corlew notified the court he was making an appearance for Commissioner Mike Chaney. Blue Cross did not object to his appearance but the state did object. The Commissioner filed a motion to intervene against the Governor late Thursday afternoon. Judge Wingate said he would allow him to present his arguments while later determining if he would approve the motion to intervene.

The audience more resembled a funeral as almost everyone wore corporate black and blue. This post will present each argument as it took place so the reader has a better idea of what took place in the courtroom.

Blue Cross (represented by David Kaufman of Brunini, Grower, Grantham)

Mr. Kaufman pointed out Blue Cross is a Mississippi Company and the "aggressive media coverage and political campaign by HMA." Mr. Kaufman summed up Blue Cross's position in one statement: "We are here because the Governor issued an executive order. The executive order will have the effect of negating a decision to terminate the contract with HMA."

Blue Cross claimed the Governor cited "no case" where a Governor in "any state" usurped the regulatory function from another agency. The contract was negotiated by management teams who were fairly sophisticated in business affairs. Both parties have the right to terminate the contract for any reason on sixty days' notice to the other party.

The Commissioner found no evidence that Blue Cross engaged in unfair trade practices. The Governor’s executive order violated the liberty and property interest of Blue Cross under the 14th amendment.

Blue Cross stressed it was not denying access to health care to anyone. Any Blue Cross subscriber can to any hospital, regardless of its network status. The issue is the rate of reimbursement to that hospital. DK pointed out HMA will not penalize those at the six hospitals for using Blue Cross. Thus no patient is financially impacted by the termination.

Mr. Kaufman said "HMA created a panic with misinformation as well as an emergency that does not affect anyone. Blue Cross needs relief from the court before Tuesday as that is when the EO will begin."

Blue Cross argued the Commissioner found Blue Cross did not violate the law.  Mr. Kaufman concluded: “what we have here is an end run around the Insurance Commissioner without any evidence. It’s a mandatory injunction.”

Insurance Commissioner Mike Chaney (Represented by John Corlew)

Mr. Corlew said the order direct the Commissioner to "do something.". It orders him to issue a report.  It places a time limit on the Commissioner's actions.  Mr. Corlew said there was no evidence Mr. Chaney had not done his job although the Governor said such was the case.  Mr. Corlew bluntly told the judge he challenged the Attorney General and Governor to show he had not fulfilled his duties as Insurance Commissioner.

Mr. Corlew argues the legislature delegated the job of insurance regulation to the insurance commissioner.  He said under the state's logic, thee Governor can call Delbert Hoseman and tell him how to run his office as well as that of every other statewide elected official.  Over 200,000 people elected Mike Chaney and the Governor's order violates those rights.  At this point Chuck McRae walked in to watch the proceedings.  Hair was actually cut.

Governor Phil Bryant (Represented by Harold Pizetta of the AG's office and Jack Wilson. Chief of Staff Kirk Sims sat on the front row.  No boxing gloves were present.

Mr. Pizetta argued Blue Cross and the Commissioner were in the wrong court.  The dispute between all three parties is a state law question and should be addressed in state court.  He said the 11th Amendment keeps state law disputes out of federal court.

The order is "very well detailed and well researched."   The state constitution makes the Governor the CEO of the state and he is responsible for ensuring all laws are faithfully executed. Section 7-1-5 states the Governor shall supervise the conduct of all state officers: "(c) He shall see that the laws are faithfully executed."  The Governor can require the Commissioner to issue a report if asked to do so by the Governor.


Mr. Pizetta then moved on to Blue Cross.  He said Blue Cross had no claim under the Equal Protections clause as there was no other company similarly situated in Mississippi since Blue Cross has a market share of 80%.  Blue Cross terminated 10% of the hospitals in Mississippi and thus affected access to care for a large number of people.   Mr. Pizetta also argued the due process clause did not apply to Blue Cross since there was no violation of a protected liberty or property right.  "There is no constitutional right to contract under the due process clause."

He said the contracts clause in the constitution only applies to legislative action, not action by the executive branch or courts (KF note: Here is the clause: Article 3, Section 16: "Ex post facto laws, or laws impairing the obligation of contracts, shall not be passed." This clause is in the "bill of rights" section, not legislature.  Thus the question is does an executive order fall under "laws"?).

Mr. Pizetta even argued the Governor had the power to impose contracts under the Affordable Care Act Ruling.  Every aspect of insurance is regulated in Mississippi down to the forms of the contracts and who can obtain a license to sell insurance.  However, Judge Wingate had serious reservations as he asked Mr. Pizetta a series of questions:

"What in Mississippi state law allows the Governor to assume the responsibility?  What would empower the Governor to enforce the law as you claim instead of the insurance commissioner?"

"Has there been no gathering of evidence on violations of state law?" (Pz: Legislature had a hearing.  Evidence was presented at the hearing.

"Does a conclusion on these matters demand some kind of proof?" (Doesn't matter.  It just has to be rationally related to a state analysis.  Blue Cross is in the wrong court even if the Governor is wrong.

"Back to the same question.  What law is violated?" (Pz: Testimony and affidavits showing the access to care problem.  Doctor's testimony at hearing cited.)

"Was the doctor's testimony (at legislative hearing) the result of some random poll or scientific study?" (Pz answered no.

"Do you depend on unscientific testimony?" (Doesn't matter under the rational basis test.)

"Under what circumstances can the Insurance Commissioner require an insurance company to contract with a health care provider?"

"Are you using parole evidence or hearsay evidence to trump the Insurance Commissioner?" (Pz: Even if the commissioner finds no violations, the Governor can still act. Court has no jurisdiction.)

"What about the issue of notice and hearing before the Governor can act?" (Pz: There is non issue of due process right here.)

"Can the Governor impair an existing contract?" (Pz: Declined to answer.)

"Who sets the terms? The Governor?" (Pz: No. The terms of the existing contract.)


Mr. Pizetta argues none of this mattered since under a rational basis test, the Governor's actions could not be questioned by Blue Cross or Mr. Chaney.  A ration basis test states if there is a legitimate state interest that is "rationally related" to the government's action, the action can not be questioned by the court.  It is considered the most liberal standard of interpretation.  Mr. Pizetta argues the Governor (and state) has a strong interest in access to health care for all Mississippians. Thus the executive order can not be questioned as its issuance is rationally related to the interest in health care access.

Mr. Pizetta repeatedly tried to use the rational basis test as a battering ram.  However, Judge Wingate seemed to be asking what was the basis for the rational basis? He told Mr. Pizetta he could not just form conclusions but asked if he had conducted any kind of scientific analysis to support the conclusion.  No studies or polls were provided to the court.   Indeed, Judge Wingate said "The state just can't make a conclusionary statement.  It still has to show a rational basis for why it did what it did."  Mr. Pizetta replied "Your honor, I respectfully disagree."

Mr. Pizetta said patients were already paying more money and delaying preventative health care procedures.  HMA's volume of business declined 30% since the dispute began while other local hospitals were having problems handling the overload of new patients.   HMA could lose $50 million in one year over this dispute.   Judge Wingate said the hospitals were less likely to close as they enjoyed huge revenues.  Mr. Pizetta said there was a "competing set of facts" and it doesn't matter under the rational basis test or the 11th Amendment.

Blue Cross rebuttal

"Opposing counsel struggled in answering your questions about violations of state law. Nowhere does the Governor say Blue Cross is in violation of state law."  The 11th Amendment is irrelevant as the insurer claims its constitutional rights are violated.

The legislative hearing (September 16) took no sworn testimony nor was Blue Cross allowed to cross-examine anyone.  Chairman Chism said HMA asked him to conduct the hearing.  The governor seized the legislative functions and "eviscerated" the contract.

All patients have the choice to go in or out of network.  Blue Cross's obligations  are not to keep hospitals afloat but honor the terms set forth in the contract.

Insurance Commissioner rebuttal

The Governor cannot override the Insurance Commissioner. The laws were made by the legislature. “There is no law in the state of Mississippi that gives the Governor the right to do anything about insurance. We don’t need the Governor meddling in the affairs of laws it has not authority to deal with.” The Governor has no authority and no staff to deal with insurance.

Mr. Pizetta never cited “a single instance of nonperformance of his duty by the Insurance Commissioner.” The laws cited by the Governor all give the power to the Insurance Commissioner, not the Governor. “The Governor stepped off the reservation to do something he knows nothing about.”


Judge Wingate: Intended to have session on Monday to issue opinion.  Judge Wingate ordered DK to submit all exhibits and other filings by 5:00 PM today (Friday) and HP by noon on Saturday.

Media present: Jeff Ayeres (CL), Emily Wagster Pettus (AP), Courtney Ann Jackson (WLBT), Ross Adams (WJTV), Tammy Eastwick (WAPT), Bobby Harrison (NEMDJ), MPB