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Appellate court hears dispute over when managed‑care pays for post‑stabilization ER care

State appellate court (court name not specified in transcript) · February 13, 2026

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Summary

In oral argument, counsel for AmeriChoice and Erlanger disputed whether federal regulations or contract terms required a treating‑physician 'notice of stabilization' before AmeriChoice became financially responsible for post‑stabilization hospital care; the court probed factual gaps in the record and the parties' competing damage calculations.

William Jordan, counsel for AmeriChoice, told the court he was urging reversal of the Court of Appeals and affirmation of the Chancery Court on when managed‑care plans must reimburse out‑of‑network hospitals for patients who arrive by emergency transport. Jordan said the regulatory scheme (including EMTALA and provisions cited as 42 C.F.R. provisions governing transfers) makes payment obligations change only when a treating physician on‑site determines a patient is “stable for transfer.” He argued the record does not contain such treating‑physician determinations or a communication to AmeriChoice that would qualify as a request for post‑stabilization care authorization.

Jordan said Erlanger transmitted inpatient‑admission faxes and AmeriChoice replied with a reference number “not a guarantee of payment,” and that AmeriChoice’s corporate designee conceded no transmission of a contemporaneous post‑stabilization request occurred. “It did not,” Jordan said when asked whether AmeriChoice authorized Erlanger to provide post‑stabilization care. He added that AmeriChoice paid for emergent and pre‑stabilization treatment and would only become financially responsible for post‑stabilization care after the required treating‑physician determination and a corresponding request.

Counsel for Erlanger (addressed in argument as Mr. Riley) responded that the federal provision cited by AmeriChoice does not impose a separate hospital duty to send a distinct “notice of stabilization” and that, as a practical matter, Erlanger’s admission notices were sufficient to trigger AmeriChoice’s authorization process. Riley emphasized that Erlanger told AmeriChoice it would “keep treating this patient unless you tell us otherwise” and argued AmeriChoice had the opportunity to accept or decline the benefit; Riley said this factual posture supports the unjust‑enrichment claim and presents triable issues. He also noted evidence that Erlanger provided records and treating‑physician contact information for many admissions.

The bench repeatedly pressed whether the dispute is primarily a question of law — how to read the federal regulation and related TennCare contract provisions — or one of fact, particularly whether the admission notices and records in the sealed file conveyed stabilization to AmeriChoice. One justice asked whether the absence of specific words in a notice creates genuine factual disputes for a jury; Jordan and Riley offered opposing views about whether the regulations or contract require specific language or a documented physician certification prior to a change in financial responsibility.

The parties debated damages. Jordan told the court AmeriChoice paid “within $500,000” of what it would have paid an in‑network provider and disputed Erlanger’s larger damage estimate; Riley and others described a benefit AmeriChoice received by avoiding transfer costs and asserted that difference in value is for a jury. Counsel also clarified the appeal excludes a separate set of roughly 1,600 patients who were later retroactively enrolled in AmeriChoice and will be tried separately.

David King, representing the Tennessee Hospital Association, told the court hospital practice is to use admission notice and subsequent clinical records to start managed‑care authorization processes and that a final treating‑physician signature normally comes at the end of transfer planning. “A patient is stable until they're unstable,” King said, urging the justices to account for operational and patient‑safety realities in reading the federal rules.

The bench described the dispute as a difficult, fact‑intensive matter and concluded oral argument after about one docket’s worth of presentations. The court did not issue a decision at argument and adjourned the session.

The appeal centers on whether the absence of a documented treating‑physician determination and a transmitted request for post‑stabilization care in the record defeats Erlanger’s unjust‑enrichment claim as a matter of law or whether material factual disputes require a trial. The court’s questions focused on (1) how to interpret the cited federal regulations and related TennCare provisions, (2) whether the admission notices in the sealed record amounted to adequate notice to AmeriChoice, and (3) the proper measure of any damages if liability is shown.