Cecile Erwin Young, in Her Official Capacity as the Executive Commissioner of the Texas Health and Human Services Commission; Molina Healthcare of Texas, Inc.; And Aetna Better Health of Texas, Inc. v. Cook Children's Health Plan, Texas Children's Health Plan, Superior Health Plan, Inc., and Wellpoint Insurance Company

ACCEPTED 15-24-00114-CV FIFTEENTH COURT OF APPEALS AUSTIN, TEXAS 7/10/2025 4:31 PM No. 15-24-00114-CV CHRISTOPHER A. PRINE CLERK FILED IN 15th COURT OF APPEALS IN THE COURT OF APPEALS FOR THE FIFTEENTH DISTRICT OF TEXAS AUSTIN, TEXAS 7/10/2025 4:31:15 PM CHRISTOPHER A. PRINE Clerk CECILE ERWIN YOUNG, IN HER OFFICIAL CAPACITY AS EXECUTIVE COMMISSIONER OF THE TEXAS HEALTH AND HUMAN SERVICES COMMISSION, MOLINA HEALTHCARE OF TEXAS, INC., AND AETNA BETTER HEALTH OF TEXAS, INC. Appellants, v. COOK CHILDREN’S HEALTH PLAN, TEXAS CHILDREN’S HEALTH PLAN, SUPERIOR HEALTHPLAN, INC., AND WELLPOINT INSURANCE COMPANY, Appellees.

On Appeal from the 455th Judicial District Court, Travis County, Texas Cause No. D-1-GN-24-003839

RULE 29.3 MOTION OF APPELLEES COOK CHILDREN’S HEALTH PLAN AND TEXAS CHILDREN’S HEALTH PLAN TABLE OF CONTENTS Table of Contents ..................................................................................................... ii Table of Authorities .................................................................................................. v Relief Requested ....................................................................................................... 1 Summary ................................................................................................................... 2 Factual and Procedural Background ......................................................................... 8 I. The Children’s Plans have been trusted partners to HHSC since the beginning of Medicaid managed care over two decades ago......... 8 II. The challenged procurement sought to determine which Managed Care Organizations would administer STAR & CHIP for up to a decade or more. ................................................................... 9 III. HHSC’s STAR & CHIP procurement is unlawful.............................10 IV. The trial court signed a temporary injunction to prevent the Commissioner from executing the unlawful STAR & CHIP contracts..............................................................................................11 Argument.................................................................................................................14 I. Relief under Rule 29.3 is available to preserve the parties’ rights pending appeal..........................................................................14 A. The requested injunction will preserve the status quo. ............15 B. The requested injunction will safeguard the Court’s jurisdiction and the Children’s Plans’ appellate rights. ...........16 II. Irreparable injury to the Children’s Plans and their employees and members is imminent. .................................................................19 A. Losing STAR & CHIP contracts will likely force the Children’s Plans to shutter their operations. ............................19 B. Disruption or closure will cause job losses. .............................20 ii C. Current operations have already been and will continue to be compromised. ..................................................................21 III. Beneficiaries are also at risk of irreparable harm...............................23 A. Medical care will inevitably be disrupted. ...............................23 B. The Children’s Plans are irreplaceable assets for their beneficiaries and communities.................................................25 IV. Neither the Commissioner nor STAR & CHIP beneficiaries will be harmed by an injunction. ...............................................................28 V. The Children’s Plans demonstrated both jurisdiction and a probable right to relief on their ultra vires claims. ............................30 A. A plaintiff establishes a valid ultra vires claim by showing that a state official acted without legal authority. .....30 B. A plaintiff may overcome a government official’s plea to the jurisdiction by introducing evidence showing at least a fact question. .........................................................................31 C. Evidence presented at the hearing demonstrated that the Commissioner is conducting the STAR & CHIP procurement in an ultra vires manner. ...................................333 1. No consideration or preference based on past performance or quality.................................................355 2. No preference for networks with Medicaid or charity-care providers. .................................................388 3. No promotion of continuity of care or reduction of administrative and nonfinancial barriers. ......................38 4. No consideration of different plans for different populations. ..................................................................399 5. No evaluation and certification....................................399 6. Unlawful disclosure. ......................................................39 7. “Mandatory” CHIP contracts.........................................40 iii 8. Unlawful STAR Kids procurement. ..............................40 Conclusion and Prayer ..........................................................................................422 Certificate of Compliance .......................................................................................44 Certificate of Conference ........................................................................................44 Certificate of Service ..............................................................................................45 Appendix .................................................................................................................47 iv TABLE OF AUTHORITIES Page(s) Cases In re Abbott, 645 S.W.3d 276 (Tex. 2022) .............................................................................. 14 Amend v. Watson, 333 S.W.3d 625 (Tex. App.—Dallas 2009, no pet.) .......................................... 15 Ariz. Ass’n of Providers for Persons with Disabilities v. State, 219 P.3d 216 (Ariz. App.—Div. 1 2009) ........................................................... 25 Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547 (Tex. 2000)................................................................................. 31 Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002)................................................................................. 19 Chambers-Liberty Cntys. Navigation Dist. v. State, 575 S.W.3d 339 (Tex. 2019) .......................................................................passim City of El Paso v. Heinrich, 284 S.W.3d 366 (Tex. 2009) .............................................................................. 31 Clayworth v. Bonta, 295 F. Supp. 2d 1110 (E.D. Cal. 2003), rev’d on other grounds, 140 F. App’x 677 (9th Cir. 2005) ....................................................................... 25 Dallas Morning News v. Fifth Court of Appeals, 842 S.W.2d 655 (Tex. 1992) (orig. proceeding) .................................................. 7 Frequent Flyer Depot, Inc. v. Am. Airlines, Inc., 281 S.W.3d 215 (Tex. App.—Fort Worth 2009, pet. denied) ............................ 20 In re Geomet Recycling LLC, 578 S.W.3d 82 (Tex. 2019) (orig. proceeding) ............................................15, 17 Hall v. McRaven, 508 S.W.3d 232 (Tex. 2017) .............................................................................. 41 v Hous. Belt & Terminal Ry. Co. v. City of Houston, 487 S.W.3d 154 (Tex. 2016) ..................................................................30, 31, 41 Intercont'l Terminals Co. v. Vopak N. Am., Inc., 354 S.W.3d 887 (Tex. App.—Houston [1st Dist.] 2011, no pet.) ...................... 22 Leddy v. Becerra, 617 F. Supp. 3d 116 (E.D.N.Y. 2022) ................................................................ 28 Methodist Hosps. of Dall. v. Tex. Indus. Accident Bd., 798 S.W.2d 651 (Tex. App.—Austin 1990, writ dism’d w.o.j.) ........................ 15 Muth v. Voe, 691 S.W.3d 93 (Tex. App.—Austin 2024, pet. filed) ........................................ 25 Nemer Jeep-Eagle, Inc. v. Jeep-Eagle Sales Corp., 992 F.2d 430 (2d Cir. 1993) ............................................................................... 20 In re Newton, 146 S.W.3d 648 (Tex. 2004) (orig. proceeding) ................................................ 15 Patel v. St. Luke’s Sugar Land P’ship, LLP, 445 S.W.3d 413 (Tex. App.—Houston [1st Dist.] 2013, pet. denied)................................................................................................................. 32 Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763 (Tex. 2020) .............................................................................. 15 Planned Parenthood of Gulf Coast, Inc. v. Gee, 862 F.3d 445 (5th Cir. 2017), overruled on other grounds sub nom.

Planned Parenthood of Greater Tex. Fam. Planning & Preventative Health Servs. v. Kauffman, 981 F.3d 347 (5th Cir. 2020) (en banc) ................................................................................................... 25 Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371 (Tex. 2006) .............................................................................. 30 Smith v. Abbott, 311 S.W.3d 62 (Tex. App.—Austin 2010, pet. denied) ..................................... 18 In re State, 711 S.W.3d 645 (Tex. 2024) (orig. proceeding) ..........................................15, 32 vi Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) .............................................................................. 32 Tex. Dep’t of State Health Servs. v. Holmes, 294 S.W.3d 328 (Tex. App.—Austin 2009, pet. denied) ................................... 21 In re Tex. Educ. Agency, 619 S.W.3d 679 (Tex. 2021) (orig. proceeding) ........................................6, 7, 15 Tex. Educ. Agency v. Hous. Indep. Sch. Dist., 609 S.W.3d 569 (Tex. App.—Austin 2020, no pet.), mand. denied sub nom. In re Tex. Educ. Agency, 619 S.W.3d 679 (Tex. 2021) (orig. proceeding)..........................................................................................16, 17 TrueEX, LLC v. MarkitSERV Ltd., 266 F. Supp. 3d 705 (S.D.N.Y. 2017) ..........................................................20, 21 Universal Health Servs., Inc. v. Thompson, 24 S.W.3d 570 (Tex. App.—Austin 2000, no pet.) ............................................ 29 Walling v. Metcalfe, 863 S.W.2d 56 (Tex. 1993) (per curiam)............................................................ 32 Welch v. Brown, 551 F. App’x 804 (6th Cir. 2014) ....................................................................... 27 Westheimer Indep. Sch. Dist. v. Brockette, 567 S.W.2d 780 (Tex. 1978) .............................................................................. 18 Wilson v. Cmty. Health Choice Tex., Inc., 607 S.W.3d 843 (Tex. App.—Austin 2020, pet. denied) .............................................................................................................7, 17, 18, 31 Statutes TEX. CIV. PRAC. & REM. CODE § 65.011 .................................................................. 15 TEX. GOV’T CODE § 22.221(a) ................................................................................... 7 TEX. GOV’T CODE § 311.016(2) ............................................................................... 33 TEX. GOV’T CODE § 533.002(1)(B).......................................................................... 38 TEX. GOV’T CODE § 533.002(6) ............................................................................... 38 vii TEX. GOV’T CODE § 533.003(a)(3) ....................................................................38, 39 TEX. GOV’T CODE § 533.0035(a) ............................................................................. 39 TEX. GOV’T CODE § 536.052(d) ............................................................................... 37 TEX. GOV’T CODE § 2155.144(c) ............................................................................. 35 TEX. GOV’T CODE § 2155.144(d)(5) ....................................................................... 35 TEX. HEALTH & SAFETY CODE § 62.155 .................................................................. 40 Other Authorities TEX. ADMIN. CODE § 391.101(2) .......................................................................... 39 TEX. ADMIN. CODE § 391.209(3)(A) ..................................................................... 39 TEX. ADMIN. CODE § 20.208(d)(3)...................................................................... 40 Acts 2023, 88th Leg., R.S., Ch. 769, §1.01 ............................................................. 37 Becky Staiger, Disruptions to the Patient-Provider Relationship and Patient Utilization and Outcomes: Evidence from Medicaid Managed Care .................................................................................................... 23 Tex. R. App. P. 29.3................................................................................................. 14 viii RELIEF REQUESTED Appellees Cook Children’s Health Plan (“Cook Children’s”) and Texas Children’s Health Plan (“Texas Children’s,” and together with Cook Children’s, the “Children’s Plans”) request temporary relief under Texas Rule of Appellate Procedure 29.3 to preserve the status quo pending disposition of the interlocutory appeal filed by Appellant Cecile Erwin Young (the “Commissioner”), Executive Commissioner of the Texas Health and Human Services Commission (“HHSC”), and by Molina Healthcare of Texas, Inc. (“Molina”) and Aetna Better Health of Texas, Inc (“Aetna”).1 In this litigation, the Children’s Plans seek to prevent the Commissioner from awarding, signing, and implementing unlawfully procured Medicaid managed care contracts. Following a three-and-a-half-day evidentiary hearing, the trial court issued a temporary injunction prohibiting the Commissioner from moving forward with the procurement or contracts. The Commissioner’s appeal has superseded the injunction, necessitating this motion to preserve the Court’s jurisdiction and prevent irreparable harm to the Children’s Plans, their members and employees, and more than 1.5 million vulnerable children and expectant mothers statewide.

Molina and Aetna filed notices of appeal of the trial court’s injunction, even though they were not parties to the trial court proceedings. Appellees have jointly moved to dismiss Molina’s and Aetna’s appeals for lack of jurisdiction.

On October 24, 2024, the parties entered into an agreement that obliges the Commissioner to comply with the temporary injunction—and continue to pause any further procurement, including awarding, executing, or implementing the unlawfully procured contracts— until the latest of (a) 30 days after the end of the 89th Regular Session of the Texas Legislature, regardless of the appellate court’s ruling on the Joint Motion to Abate; (b) a ruling from the appellate court on any request for temporary orders under TRAP 29.3 filed within seven days of the Appeal’s reinstatement; or (c) disposition of any mandamus proceeding in the Texas Supreme Court reviewing a ruling on a request described in (b) above, provided that the proceeding is filed within seven days of such ruling.

On October 29, 2024, the Commissioner and Appellees filed a joint motion to abate this appeal until 30 days after the end of the 2025 (89th) Regular Session of the Texas Legislature, which session ended on June 2, 2025. On November 12, 2024, this Court granted the motion, abating the appeal and stating that the appeal would be reinstated on July 3, 2025. On July 3, this Court reinstated the appeal.

Because this agreement prevents harm to the Children’s Plans while the instant Rule 29.3 motion is pending, the Children’s Plans do not seek expedited consideration and disposition of the motion.

SUMMARY The Commissioner is currently administering one of the largest procurements in Texas history—involving $10 billion annually and contracts for up to twelve years—which will determine the future of how healthcare is provided to millions of the state’s most vulnerable children and expectant mothers. These beneficiaries receive coverage through the Medicaid State of Texas Access Reform (“STAR”) program and the Children’s Health Insurance Program (“CHIP,” and together with STAR, “STAR & CHIP”).2 HHSC is Texas’s health regulatory agency in charge of administering the state’s Medicaid and CHIP programs and administers those programs by contracting with managed care organizations (“MCOs”) to coordinate and cover health-care services for STAR & CHIP beneficiaries.

The notice of intent to award contracts under HHSC’s current STAR & CHIP procurement would, if finalized and implemented, inflict a seismic shift on the state’s Medicaid landscape, eliminating the Children’s Plans—high-performing, nonprofit plans that were developed at the Texas Legislature’s behest to provide care to underprivileged women and children—and replacing them with lower-performing subsidiaries of large, national, for-profit companies. This shocking outcome resulted from an unlawful procurement that has defied statutory requirements and been

In addition to STAR & CHIP, this procurement will also determine which managed care organizations will provide coverage under the Healthy Texas Women (“HTW”) program. PX.38 at 5. STAR, CHIP, and HTW assist vulnerable Texans with their healthcare needs in different ways. STAR is a Medicaid managed care program that provides coverage to low-income children, pregnant women, and families. 6.RR.102-03. CHIP is not a Medicaid program: It provides low- cost health coverage for children (and unborn children of pregnant women) whose families earn too much to qualify for Medicaid but are unable to afford commercial health insurance. 6.RR.86, 103-104. HTW provides free women’s health and family-planning services to eligible, low-income women between the ages of 15 and 44. PX.92 at 1-2. And STAR Kids—which is the subject of another ongoing and unlawful procurement—is a separate Medicaid program that provides healthcare benefits to children and young adults with disabilities. 6.RR.103.

marred by, among other things, HHSC’s improper disclosure of competing bidders’ proposals to Aetna—a successful bidder and putative intervenor in this appeal— during the evaluation process.

Once it became apparent that HHSC was disregarding numerous statutory directives, including requirements to consider and give preference for past performance and quality services in its evaluation process, the Children’s Plans brought suit against the Commissioner for ultra vires acts in the agency’s execution of the procurement. Two other MCOs also sued, and the four cases were consolidated. Discovery revealed additional evidence that HHSC is violating multiple statutory directives in determining which MCOs will be awarded STAR & CHIP contracts and is violating those same mandates in its ongoing procurement for STAR Kids, another Texas Medicaid program.

The Commissioner filed a plea to the jurisdiction seeking dismissal of the Children’s Plan’s claims, and the Children’s Plans applied for temporary injunctive relief barring further ultra vires acts by the Commissioner. At the evidentiary hearing on the plea and applications, HHSC officials themselves provided proof of these ultra vires acts. They admitted that the applicable statutes were mandatory, and that the agency had no discretion whether to apply them. But they also conceded that the procurement was not designed to address the statutorily required considerations and preferences; the procurement did not ask bidders to provide information on these considerations and preferences; the HHSC employees charged with evaluating and scoring the proposals were not told to apply these considerations and preferences; and the scoring forms did not identify these considerations or preferences, let alone assign them any weight or points. HHSC witnesses also confirmed that no document shows that any MCOs received the mandated preferences or that the statutory mandates were taken into account. In short, there is no evidence that these mandatory statutory preferences were applied—because they were not.

HHSC nevertheless contends that the required preferences and considerations were “baked into” the scores the MCOs received. But the only proof they offer is their own officials’ ipse dixit that the required factors were considered and somehow reflected in the scores, even though those officials did not score the bids, have no personal knowledge of the evaluators’ scoring decisions, and reviewed only the final scores themselves—not the underlying scoring materials.

For the Children’s Plans, the harm caused by this illegal procurement is existential. Unlike for-profit, commercial insurance companies with large, diverse operations across Texas and the nation, the Children’s Plans are local nonprofits that were created and currently exist solely to serve Medicaid- and CHIP-eligible children and pregnant mothers within the areas served by their respective children’s hospitals. Consequently, loss of their STAR & CHIP contracts might cause the

Children’s Plans to permanently dissolve; at a minimum, the consequences will be dire as each would likely lose most of their employees and revenue.

Medicaid beneficiaries themselves are also at significant risk of harm. The Children’s Plans serve more than a half-million children and women—large portions of the STAR & CHIP enrollees in their respective service areas. If HHSC’s ultra vires procurement is not enjoined, all of these vulnerable Texans will be forced to switch health plans, and many will need to find new healthcare providers and suffer delayed care. Statewide, more than 1.5 million STAR & CHIP beneficiaries will have to move to new health plans. Such a large and unprecedented upheaval of the state’s Medicaid program administration and reassignment of children and pregnant women will inevitably deprive some beneficiaries of longstanding, trusted provider relationships and interrupt their ongoing access to medical care.

Based on this evidence, the trial court denied the Commissioner’s plea to the jurisdiction, which argued—incorrectly—that the Children’s Plans had not demonstrated ultra vires acts. The trial court also issued temporary injunctive relief preventing the Commissioner from moving forward with the unlawful STAR & CHIP and STAR Kids procurements.

The Commissioner’s appeal of the trial court’s temporary injunction order automatically supersedes it. See generally In re Tex. Educ. Agency, 619 S.W.3d 679 (Tex. 2021) (orig. proceeding). Thus, absent action by this Court, the Commissioner is poised to continue the procurement process, including awarding, signing, and implementing the unlawfully procured contracts before this Court decides the Commissioner’s appeal, threatening irreparable harm to the Children’s Plans, their employees and members, and STAR & CHIP beneficiaries across the state. Given the trial court’s findings, the Children’s Plans’ probable right to relief on their claims, and the equities, the Children’s Plans respectfully request that the Court exercise its authority under Rule 29.3 to issue a new order continuing the same temporary injunction the trial court issued on October 4, 2024 (which had remained in effect through the conclusion of the 2025 session of the Texas Legislature by agreement of the parties), pending disposition of this appeal. See id. at 689 n.57, 692 (court of appeals has authority under Rule 29.3 to issue “new order” continuing or maintaining injunction issued by trial court).

An injunction is also necessary to protect the Court’s jurisdiction over this appeal. See TEX. GOV’T CODE § 22.221(a); Dall. Morning News v. Fifth Ct. of Appeals, 842 S.W.2d 655, 658 (Tex. 1992) (orig. proceeding). Maintaining the status quo would prevent the Commissioner from arguing that final awards or signed contracts render moot any challenges to the procurement, as HHSC contended in another case. See Wilson v. Cmty. Health Choice Tex., Inc., 607 S.W.3d 843, 848 (Tex. App.—Austin 2020, pet. denied).

FACTUAL AND PROCEDURAL BACKGROUND3 I. The Children’s Plans have been trusted partners to HHSC since the beginning of Medicaid managed care over two decades ago.

The Children’s Plans are local, nonprofit health plans that provide services to STAR & CHIP and STAR Kids members as part of fully-integrated pediatric healthcare systems centered around world-renowned and highly ranked children’s hospitals—Cook Children’s Medical Center in Fort Worth and Texas Children’s Hospital in Houston. As one of the nation’s first MCOs focused solely on children and pregnant women, Texas Children’s has participated in STAR & CHIP since the inception of Medicaid managed care in Texas and the State’s adoption of CHIP.

PX.161 at 234, CR.85. Founded in 1954, Texas Children’s Hospital is the largest children’s health system in the United States. CR.2279. Texas Children’s longstanding affiliation with Texas Children’s Hospital, Texas Children’s Pediatrics, and the Baylor College of Medicine provides unique and critical access to some of the nation’s leading experts for children and their mothers. CR.134-35.

Cook Children’s Medical Center, the cornerstone of the larger Cook Children’s healthcare system, has served Fort Worth families for over 100 years, and

“CR.____” refers to the Clerk’s Record in this appeal. “____.RR.____” refers to the volume and page of the Reporter’s Record in this appeal. “PX.____” refers to the Plaintiffs’ exhibits from the hearing on Plaintiffs’ applications for temporary injunction, which may be found in Volumes 9-12 of the Reporter’s Record.

Cook Children’s has been integral to Texas Medicaid managed care for more than two decades. 8.RR.129-33.

Unlike large, for-profit plans, neither of the Children’s Plans seeks to maximize market share across the state. 8.RR.132-33, CR.4035. Rather, each operates only within the geographic regions served by their respective affiliated hospitals—the Tarrant Service Area (Cook Children’s) and the Harris and Jefferson Service Areas (Texas Children’s). 8.RR.132-33, CR.4035.

II. The challenged procurement sought to determine which MCOs would administer STAR & CHIP for up to a decade or more.

Following several failed STAR & CHIP procurements that were canceled due to pervasive scoring and process errors, HHSC spent significant time and State resources consulting with an outside firm, Mercer, to design a “defensible” procurement. 6.RR.136, 146, 196-97. As discussed below, however, HHSC officials ultimately ignored several of the specific recommendations made by Mercer to ensure that the STAR & CHIP procurement complied with Texas law. 5.RR.181; see also infra p. 35. The STAR & CHIP procurement, as designed and implemented, departed from prior procurements in several notable ways. The statutorily mandated consideration of past performance was removed, as were examinations of MCOs’ provider networks and quality and cost-efficiency ratings, and the procurement included no analysis by region or service area. 5.RR.97, 221-28, 230-233, 254-56.

On December 7, 2022, HHSC announced the long-awaited new procurement, seeking MCOs to “provide, arrange, and coordinate preventive, primary, Acute Care, Behavioral Health, Non-Emergency Medical Transportation, and pharmacy Covered Services for pregnant women, newborns, children, and parents with limited income.” CR.135. After receiving eighteen written proposals, HHSC undertook a three-step evaluation process: (1) initial screening to ensure that each proposal met submission requirements; (2) review and scoring by an “evaluation team” of HHSC employees; and (3) “consensus” scoring by which the MCOs’ responses to technical questions were compared with HHSC-developed “Best Value Evaluation Criteria” and a scoring guide that assigned point values to each technical question. PX.38 at 21-22. After this evaluation, bidders within a “competitive range”—which ended up being every bidder—were invited to oral presentations. PX.38 at 23, PX.92 at 5.

Final scores for each MCO’s bid were then computed based on weighted scores for each of the technical questions and the oral presentations. 5.RR.208-09.

III. HHSC’s STAR & CHIP procurement is unlawful.

On March 7, 2024, HHSC issued a notice of intent to award for the STAR & CHIP procurement, announcing the health plans with which HHSC intended to contract to administer these programs for at least the next six—and potentially up to twelve—years. 5.RR.81, 203-04. The Children’s Plans learned that, for the first time in program history, they would not receive STAR & CHIP contracts. Instead, their respective service areas would be served almost exclusively by subsidiaries of large, national organizations—mostly for-profit—none of which has the Children’s Plans’ deep roots in their communities or longstanding commitment to the health of Texas’s children and expectant mothers. CR.3310-11, 4718.

If HHSC’s decision is implemented, every one of the approximately 420,000 Texas Children’s members and 115,000 Cook Children’s members in the STAR & CHIP programs will be forced to switch to a new health plan, one that is not part of a fully-integrated pediatric healthcare system. 8.RR.39, 133, 135. Many will also have to find new healthcare providers. 8.RR.22, 161. Statewide, more than 1.5 million STAR & CHIP beneficiaries will be forced to switch health plans. 5.RR.190, 6.RR.97-98, 7.RR.38.

IV. The trial court signed a temporary injunction to prevent the Commissioner from executing the unlawful STAR & CHIP contracts.

Four MCOs filed suit: the two Children’s Plans; Superior HealthPlan, Inc.; and Wellpoint Insurance Company. Each asserted ultra vires claims against the Commissioner and sought temporary relief to prevent her from awarding, signing, or implementing the contracts under the STAR & CHIP procurement. CR.3398, 3556⁋169, 4234⁋3, 4762-63⁋170. In response, the Commissioner filed a plea to the jurisdiction seeking dismissal of the MCOs’ claims. CR.2949-93. After consolidation of these suits, CR.2778, the Court allowed expedited discovery in advance of an evidentiary hearing on the Commissioner’s plea to the jurisdiction and the MCOs’ applications for temporary injunction, CR.2786-97.

On October 4, 2024, following the hearing, the trial court entered an order denying the plea to the jurisdiction and granting the applications for temporary injunction. CR.5875-84 (App. Tab A). In its order, the trial court made findings that: • The Commissioner “violated and will continue to violate the Texas Government Code, Texas Health and Safety Code, and Texas Administrative Code in procuring managed care contracts for STAR & CHIP in Texas, and that any award, execution, or implementation of Defendant’s intended contract awards would be unlawful,” CR.5877- 78⁋7; • The Commissioner violated thirteen statutes, constitutional provisions, and administrative rules, id.; • “These statutory and regulatory violations, each singly and together collectively, have resulted in intended contract awards that will be invalid and unlawful, and the further execution and implementation of such intended contract awards will be ultra vires acts,” CR.5878⁋8; • Execution and implementation of the proposed contracts would imminently and irreparably harm the Children’s Plans, “threaten[ing] Cook Children’s financial viability” and potentially “lead[ing] to the [health plan’s] forced wind-down” and “threatening the future viability” of Texas Children’s Health Plan, CR.5879-80⁋⁋11-12; • Execution and implementation of the proposed contracts would irreparably harm the public interest by “disrupt[ing]” STAR & CHIP beneficiaries’ “access to care and continuity of care, thereby threatening the medical care and the very health and welfare of those beneficiaries,” CR.5882-83⁋18; and • An injunction would not harm either HHSC or the public interest because “(1) operations under the intended contract awards are not scheduled to start until September 1, 2025, and (2) HHSC has previously delayed the [procurement] several times and was able to continue providing coverage through the current STAR & CHIP contracts by extending the contracts in effect at the time,” CR.5882⁋17.

The trial court then ordered temporary injunctive relief against the Commissioner, enjoining her from awarding, signing, entering into, executing, implementing, or otherwise taking action to effectuate or perform any contracts resulting from or in connection with the STAR & CHIP [procurement] or to further the procurement or contracting processes for the STAR & CHIP [procurement].

CR.5883.4 On October 21, 2024, the Commissioner filed a notice of appeal challenging the trial court’s rulings on both the plea to the jurisdiction and the applications for temporary injunction. CR.5957-60.

On November 12, 2024, the Court abated the appeal pending the conclusion of the 2025 (89th) Regular Session of the Texas Legislature. On July 3, 2025, the Court lifted the abatement and reinstated the appeal.

Before the appeal was abated, the Commissioner and Appellees entered into an agreement that obliges the Commissioner to comply with the temporary

The trial court also made findings regarding the separate STAR Kids program, see supra note 2, for which HHSC is currently evaluating proposals. The trial court found that the STAR Kids procurement will be conducted in the same flawed manner as the STAR & CHIP procurement and “will therefore also violate statutory and regulatory requirements and be ultra vires.” CR.5878- 79⁋9. Accordingly, the trial court also enjoined the Commissioner from “further proceeding with the procurement of, issuing a notice of intent to award or awarding contracts under, or otherwise implementing results from the STAR Kids” procurement. CR.5883.

injunction (i.e., pause execution and implementation of the STAR & CHIP contracts) while an appellate court considers any Rule 29.3 motion, under certain conditions.

Specifically, the Commissioner must adhere to the trial court’s injunction: until the latest of (a) 30 days after the end of the 89th Regular Session of the Texas Legislature, regardless of the appellate court’s ruling on the Joint Motion to Abate; (b) a ruling from the appellate court on any request for temporary orders under TRAP 29.3 filed within seven days of the Appeal’s reinstatement; or (c) disposition of any mandamus proceeding in the Texas Supreme Court reviewing a ruling on a request described in (b) above, provided that the proceeding is filed within seven days of such ruling.

Accordingly, because the agreement prevents harm while this Rule 29.3 motion is pending, expedited consideration of the motion is not necessary.

ARGUMENT I. Relief under Rule 29.3 is available to preserve the parties’ rights pending appeal.

“When an appeal from an interlocutory order is perfected, the appellate court may make any temporary orders necessary to preserve the parties’ rights until disposition of the appeal.” TEX. R. APP. P. 29.3. This Court therefore has the authority to issue an order continuing the trial court’s temporary injunction, notwithstanding the State’s automatic supersedeas right. See In re Abbott, 645 S.W.3d 276, 282 (Tex. 2022) (“[R]ule [29.3] may authorize a court of appeals ‘to preserve the status quo and prevent irreparable harm’ to the parties during the pendency of the appeal, even if the temporary order has ‘the same practical effect as denying supersedeas of the trial court’s injunction.’” (quoting Tex. Educ. Agency, S.W.3d at 680)). Indeed, “Rule 29.3 expressly contemplates that [relief to protect a party from irreparable harm] is directly available in the court of appeals.”

In re Geomet Recycling LLC, 578 S.W.3d 82, 89 (Tex. 2019) (orig. proceeding).

Because “[a] stay pending appeal is . . . a kind of injunction, [] the familiar considerations governing injunctive relief in other contexts [] generally apply in this context as well.” In re State, 711 S.W.3d 641, 645 (Tex. 2024) (orig. proceeding).

These considerations include an applicant’s entitlement to relief and the imminent risk of irreparable injury. See TEX. CIV. PRAC. & REM. CODE § 65.011; Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763, 792 (Tex. 2020). The balance of harms and public interest are also relevant considerations. See, e.g., Amend v. Watson, 333 S.W.3d 625, 630 n.4 (Tex. App.—Dallas 2009, no pet.); Methodist Hosps. of Dall. v. Tex. Indus. Accident Bd., 798 S.W.2d 651, 660 (Tex. App.—Austin 1990, writ dism’d w.o.j.).

A. The requested injunction will preserve the status quo.

Appellate courts have “great flexibility in preserving the status quo based on the unique facts and circumstances presented.” Geomet, 578 S.W.3d at 89. The Texas Supreme Court defines “the status quo” as “the last, actual, peaceable, noncontested status which preceded the pending controversy.” In re Newton, 146 S.W.3d 648, 651 (Tex. 2004) (orig. proceeding).

Here, the status quo is that the Commissioner has not yet awarded, signed, or implemented the unlawful STAR & CHIP contracts. In asking the Court to enjoin the Commissioner from awarding, signing, or implementing the intended contracts or otherwise effectuating the results of the procurement, the Children’s Plans thus seek to preserve the state of affairs as it is today (and, indeed as it was when these consolidated lawsuits were filed).

Notably, the Commissioner acknowledged at the hearing that the alleged statutory violations are ongoing because the STAR & CHIP procurement has not yet been completed and she has put the process “on pause because of the court action.”

6.RR.128-29. She further confirmed that, absent an injunction, she will proceed with further ultra vires acts. 6.RR.132, 147. (“[A]ssuming the Court will allow me to move forward, I would then finish the appeals process [and] move forward.”). These statements confirm that the status quo for purposes of this litigation is the point in time before further actions that would consummate the award, execution and implementation of the STAR & CHIP contracts. Accordingly, for purposes of their ultra vires claims, the Children’s Plans properly seek prospective relief.

B. The requested injunction will safeguard the Court’s jurisdiction and the Children’s Plans’ appellate rights.

Another purpose of “an appellate court’s inherent power to make temporary orders” is “to preserve the parties’ rights until disposition of the appeal.” Tex. Educ.

Agency v. Hous. Indep. Sch. Dist., 609 S.W.3d 569, 578 (Tex. App.—Austin 2020, no pet.), mand. denied sub nom. In re Tex. Educ. Agency, 619 S.W.3d 679 (Tex. 2021) (orig. proceeding). This function is especially crucial in cases like this given Rule 24.2’s supersedeas effect on temporary injunctions; otherwise, “the application of Rule 24.2(a)(3) would prevent a party from ever meaningfully challenging acts by the executive branch that the party alleges to be both unlawful and reviewable by courts and that it further alleges will cause it irreparable harm.” Id.; see also Geomet Recycling, 578 S.W.3d at 89 (observing that “serious constitutional questions” would be raised if appellee “had no recourse for the preservation of its rights during an interlocutory appeal”).

HHSC’s conduct in a prior procurement challenge suggests that, absent immediate intervention from this Court, the agency might argue that the Children’s Plans will lose their ability to challenge the STAR & CHIP procurement. As recounted in Community Health, a health plan sued the Commissioner’s predecessor in November 2019 following HHSC’s announcement of intended awards, “asserting an ultra vires claim and seeking ‘injunctive, mandamus, and declaratory relief.’” 607 S.W.3d at 848. The following month, in the midst of the litigation, the then- commissioner “executed and officially awarded the contracts . . . as planned”—and then “filed a ‘supplemental plea to the jurisdiction’ asserting that [the health plan’s] claims, which sought to prevent the commissioner from awarding the contracts in violation of [state law], had become moot.” Id. Ultimately, the appellate court did not have occasion to decide whether the execution of the challenged contracts mooted the health plan’s ultra vires claim because HHSC voluntarily cancelled the contracts during the pendency of the appeal. See id. at 848-49. But Community Health nevertheless underscores the risk that HHSC will take precipitous action in a bid to avoid judicial scrutiny if the Court does not grant this motion.

The Children’s Plans do not agree that awarding, signing, or even beginning to implement the STAR & CHIP contracts would moot their claims. However, given past actions in similar circumstances, the Commissioner could try the same gambit, attempting to insulate the procurement from judicial review and seeking to deny the Children’s Plans recourse by rejecting their internal appeals,5 immediately executing the STAR & CHIP contracts, and then claiming mootness. To foreclose even the possibility of this unacceptable result and thus safeguard the Court’s jurisdiction and the Children’s Plans’ appellate rights, immediate injunctive relief is needed.

The Children’s Plans note that, although their internal HHSC appeals are still pending with the Commissioner, that has no impact on their ability to obtain relief, as the ultra vires doctrine does not require exhaustion of administrative remedies. See, e.g., Smith v. Abbott, 311 S.W.3d 62, 80 (Tex. App.—Austin 2010, pet. denied) (noting that “administrative exhaustion is not required” where declaratory judgment claims “allege acts ultra vires of [defendant’s] statutory authority” (citing Westheimer Indep. Sch. Dist. v. Brockette, 567 S.W.2d 780, 789 (Tex. 1978))). Nor, in any event, would an exhaustion requirement be appropriate under these circumstances, since completion of the internal HHSC appeal process does not facilitate any further administrative action or a contested-case proceeding in state court.

Moreover, if HHSC is not enjoined and proceeds to award, sign, and begin implementing contracts during the pendency of this appeal, the Children’s Plans will experience direct harm, as putative awardees will poach the Children’s Plans’ employees even before the new contracts go into effect—threatening their ability to continue servicing their members for the remaining term of their existing contracts.

CR.3140-41; see also infra p. 22.

II. Irreparable injury to the Children’s Plans and their employees and members is imminent.

“An injury is irreparable if the injured party cannot be adequately compensated in damages or if the damages cannot be measured by any certain pecuniary standard.” Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002).

That standard is amply satisfied here.

A. Losing STAR & CHIP contracts will likely force the Children’s Plans to shutter their operations.

Because STAR & CHIP contracts are the linchpin of the Children’s Plans’ overall businesses, loss of those contracts poses an existential threat to the continued viability of each. 8.RR.35-36, 159.

The Children’s Plans were founded in conjunction with Texas’s rollout of Medicaid managed care and CHIP to partner with the State and ensure access to high-quality care for beneficiaries—and that is all they do. 8.RR.36, 129-30, 176- 77. They neither provide commercial insurance coverage nor participate in Medicaid programs specific to adults. 8.RR.36; see also 8.RR.133. Moreover, although the Children’s Plans operate STAR Kids programs, if they lose their STAR & CHIP contracts, they will lose the vast majority of their Medicaid members and most of their revenue—and will likely be unable to continue to operate. 8.RR.35-36, 39, 159- 60. This is because STAR Kids is likely unsustainable if uncoupled from the much larger STAR & CHIP programs. 8.RR.39.

This threat of dissolution is alone sufficient to warrant immediate relief. See, e.g., Frequent Flyer Depot, Inc. v. Am. Airlines, Inc., 281 S.W.3d 215, 228 (Tex. App.—Fort Worth 2009, pet. denied) (“Disruption to a business can be irreparable harm.” (citations omitted)); TrueEX, LLC v. MarkitSERV Ltd., 266 F. Supp. 3d 705, 727 (S.D.N.Y. 2017) (“[M]ajor disruption of a business can be as harmful as termination, and a threat to the continued existence of a business can constitute irreparable injury.” (citation modified) (quoting Nemer Jeep-Eagle, Inc. v. Jeep- Eagle Sales Corp., 992 F.2d 430, 435 (2d Cir. 1993))).

B. Disruption or closure will cause job losses.

If they lose their STAR & CHIP contracts, each Children’s Plan will have to slash its workforce even if the plans survive. Texas Children’s employs approximately 650 people, all of whom serve the STAR & CHIP and STAR Kids programs. 8.RR.35. Without its STAR & CHIP contracts, significant job losses are inevitable. 8.RR.40. Texas Children’s employs many single mothers for whom job loss will be especially traumatic, representing the loss of all household income, as well as generous benefits. Id. Cook Children’s employs approximately 375 people, 70% of whom serve STAR & CHIP members and would likely be let go if those contracts are not renewed. 8.RR.160-61. The remaining 30% focus on the separate STAR Kids program; they would also be at risk of termination because operating that plan alone might not be viable. 8.RR.159.

This risk of job losses for the Children’s Plans’ employees also constitutes irreparable harm and further justifies temporary injunctive relief. See, e.g., Tex. Dep’t of State Health Servs. v. Holmes, 294 S.W.3d 328, 334 (Tex. App.—Austin 2009, pet. denied) (affirming temporary injunction where applicant testified that, absent relief, “she would be forced to lay off employees and could potentially go out of business”).

C. Current operations have already been and will continue to be compromised.

The Children’s Plans are still under contract to provide STAR & CHIP services through at least August 31, 2026. But in the absence of an injunction, uncertainty about future contracts will likely cause current STAR & CHIP members to consider switching plans; indeed, before the trial court’s injunction, some providers had already advised members to do just that. 7.RR.116-17.

Moreover, if new STAR & CHIP MCOs begin to ramp up operations in the Tarrant, Harris, and Jefferson Service Areas, they will likely poach the Children’s Plans’ experienced STAR & CHIP employees prior to the new contracts’ go-live date—while the existing STAR & CHIP contracts are still in effect. CR.3140-41.

The mere indication, from the notice of intent to award, that the Children’s Plans would be shut out of the new STAR & CHIP contracts immediately began disrupting their operations. For example, members and providers alike were confused about whether Cook Children’s would continue to operate, requiring its staff to expend time and effort to clarify the impact of the announced procurement results. 8.RR.160. Cook Children’s was also unable to hire a director of network management, a critical position, because multiple qualified candidates turned down the position to seek more stable opportunities elsewhere. Id. Texas Children’s also has suffered and will continue to suffer disruptions in its workforce as its employees voice concern about their job security in light of the intended contract awards.

CR.3140.

This disruption, uncertainty, delay, diminished customer service, and reputational injury all weigh in favor of immediate relief. See, e.g., Intercont’l Terminals Co. v. Vopak N. Am., Inc., 354 S.W.3d 887, 895-96 (Tex. App.—Houston [1st Dist.] 2011, no pet.).

III. Beneficiaries are also at risk of irreparable harm.

HHSC officials conceded that if the STAR & CHIP contracts are awarded as announced, more than 1.5 million Texans will be forced to switch health plans, and many of those will also have to find new healthcare providers. 5.RR.190, 6.RR.97- 98, 7.RR.38-39. Texas Children’s serves approximately 420,000 beneficiaries— more than 40% of beneficiaries in the Harris and Jefferson Service Areas. 8.RR.39; PX.38 at 29. Cook Children’s serves 115,000 beneficiaries—approximately 40% of beneficiaries in the Tarrant Service Area. 8.RR.133; PX.38 at 29.

A. Medical care will inevitably be disrupted.

These beneficiaries—some of Texas’s most vulnerable children and expectant mothers—rely on the Children’s Plans and their networks of providers for their health care. 8.RR.162. Because various MCOs’ networks are not coextensive, some Medicaid members who are forced to change plans will lose access to primary care providers, specialty care providers, or both. For some, this disruption will occur as they are battling life-threatening illnesses and navigating the hardships of economic disadvantage and marginalization. Unsurprisingly, research demonstrates that forcing Medicaid beneficiaries to change providers has negative consequences: fewer primary care visits and increased hospitalizations for patients with chronic conditions. See generally Becky Staiger, Disruptions to the Patient-Provider

Relationship and Patient Utilization and Outcomes: Evidence from Medicaid Managed Care, 81 J. HEALTH ECON. 102574 (2022).

HHSC claims it will ensure continuity of care (which is, as discussed below, a statutory imperative, see infra pp. 38-39), by pointing to rules requiring that new plans cover care by existing providers for up to ninety days and honor prior authorizations for a set period of time. But these safeguards, while laudatory, sometimes fall short in practice because they depend on timely transfer of information between plans, which does not always occur—thus delaying and disrupting care even when a single beneficiary voluntarily changes plans. 8.RR.163, 174-75.

Moreover, these requirements do not protect beneficiaries in all circumstances. One stark example involves autism, which is diagnosed in roughly 4% of children statewide. 8.RR.13. Ashley Simms, Assistant Vice President of Nursing for Texas Children’s, explained that applied behavioral analysis (“ABA”), a proven treatment for autism in children aged 3 to 5, requires a completed assessment before it is covered. Id. But this assessment has a waitlist of seventeen months, and because it is an assessment—not actual treatment—it is not covered by

HHSC’s continuity-of-care rules. 8.RR.14.6 As a result, a beneficiary on the waitlist who is forced to change plans may have to start “at the back of the line” on another provider’s waitlist. Id. Thus, an involuntary change in health plan can delay, perhaps by many months, treatment for an autistic child. Worse, because ABA treatment loses efficacy after age 5, a delay of this sort might prevent a child from receiving the benefit of ABA treatment altogether. 8.RR.13-14. That too is irreparable harm.

See, e.g., Muth v. Voe, 691 S.W.3d 93, 109-18, 137-38 (Tex. App.—Austin 2024, pet. filed) (recognizing “the deprivation or disruption of medically necessary care” as irreparable harm (emphasis added)).7 B. The Children’s Plans are irreplaceable assets for their beneficiaries and communities.

The Children’s Plans are much more than insurance companies. Each is part of a nonprofit integrated pediatric healthcare organization—a single coordinated

Likewise, HHSC’s continuity-of-care rules do not apply to pregnancy care if the mother is at less than twenty-four weeks’ gestation. 8.RR.23.

See also, e.g., Planned Parenthood of Gulf Coast, Inc. v. Gee, 862 F.3d 445, 454 (5th Cir. 2017) (Medicaid beneficiaries had standing where challenged action would “deny them access to the healthcare services they seek”), overruled on other grounds sub nom. Planned Parenthood of Greater Tex. Fam. Planning & Preventative Health Servs. v. Kauffman, 981 F.3d 347 (5th Cir. 2020) (en banc); Clayworth v. Bonta, 295 F. Supp. 2d 1110, 1116 (E.D. Cal. 2003) (beneficiaries had standing to challenge reimbursement-rate reduction where reduction would limit “the number of providers in the program [and thus] adversely affect beneficiaries’ equal access to medical care and, quite possibly, its quality”), rev’d on other grounds, 140 F. App’x 677 (9th Cir. 2005); Ariz. Ass’n of Providers for Persons with Disabilities v. State, 219 P.3d 216, 223-24 (Ariz. App.—Div. 1 2009) (beneficiaries had standing where they would “suffer a reduction in overnight services and changes to their living arrangements as a result of [challenged] budget reductions”).

system of providers, hospitals, and clinics all accountable for members’ healthcare.

8.RR.18-19, 33, 129-30, 133-37. For beneficiaries, this integration brings highly coordinated care not available elsewhere, including: • a single electronic medical records system; • real-time sharing of information between providers and plan, facilitating beneficiary needs such as prior authorizations; • an exceptionally robust network established over decades of service— including neighborhood health centers—and hundreds of millions of dollars annually in charity care; and • services for which HHSC does not pay, including fresh groceries for high-risk pregnant women, transportation to government offices to apply for food stamps, and generators during severe weather events for patients reliant on equipment requiring electricity, such as ventilators.

8.RR.18-19, 33, 133-37.

This integration and focus make the Children’s Plans qualitatively different from other MCOs. Their mission is to improve the health of their beneficiaries—not increase their own market shares. To that end, they operate only in the few service areas where their systems’ hospitals, doctors, clinics, and other providers are located.

They focus on the needs of beneficiaries even when it is unprofitable. And, when they have surpluses, they invest them back into their mission of providing needed services. The Children’s Plans’ demise would be a devastating loss to both their beneficiaries and their communities.

Notably, integrated healthcare organizations provide more efficient care, with higher patient satisfaction, than nonintegrated systems. 8.RR.34-35, 137-38. And no other integrated pediatric healthcare systems operate in the Children’s Plans’ service areas. 8.RR.135. As a result, if they are locked out of these contracts, each of the 500,000-plus members of the Children’s Plans’ would have to switch to a plan that is not part of a fully integrated pediatric healthcare system. Id. Indeed, many members would have to switch to Molina, the MCO that scored highest in the STAR & CHIP procurement, even though, by HHSC’s own admission, Molina “does not meet quality of care measure minimum performance standards in any of the programs it operates in.” 5.RR.262. Moreover, in the service areas that Texas Children’s currently serves, Molina’s quality metrics are lowest while Texas Children’s boasts the highest. 8.RR.40-43.

Other winning bidders—BCBS of Texas and Aetna—also score low on statewide quality metrics. 8.RR.85-86. As the President of Texas Children’s testified, “[f]or us to be told that we’re not good enough to be part of the program . . . just doesn’t make any rational sense. It certainly isn’t what’s best for Texas.”

8.RR.44.

Courts have recognized the importance of “the public interest [] in . . . ensuring continuing health care to members of the public.” Welch v. Brown, 551 F. App’x 804, 814 (6th Cir. 2014) (citation modified) (affirming preliminary injunction); see also, e.g., Leddy v. Becerra, 617 F. Supp. 3d 116, 125 (E.D.N.Y. 2022) (“As the involuntary closure of the subject medical practice would severely, if not irrevocably, harm thousands of patients receiving medical care, the public interest overwhelmingly favors issuance of a TRO.”). The public interest here weighs strongly in favor of emergency relief.

IV. Neither the Commissioner nor STAR & CHIP beneficiaries will be harmed by an injunction.

In contrast to the significant irreparable harm to the Children’s Plans, their employees, and their members if the procurement proceeds, no harm will result if the procurement is halted during the pendency of this appeal. In her plea to the jurisdiction, the Commissioner claimed that enjoining her from effectuating the procurement’s awards would cause harm, stating, “Halting a state Medicaid program would be extremely disruptive to the current timeline that was carefully thought out to transition and protect continuity of care.” CR.2990. At the hearing, however, she testified that she had already delayed the “current timeline” by eliminating the September 2025 projected start date. 6.RR.130. That start date “is no longer operative” and “is on pause.” Id. As a result, there is no “current timeline” to disrupt—and thus no harm from disruption.8

Any potential harm to Aetna and Molina is irrelevant because they are not proper parties to the appeal. See Appellees’ Joint Motion to Dismiss. Even if they were proper parties and may be

The operative STAR & CHIP contracts have already been extended, maintaining the status quo for Medicaid beneficiaries. And, as HHSC’s Deputy Executive Commissioner for Procurement and Contracting Services, Kay Molina, acknowledged, HHSC previously extended these contracts several times because prior procurements were canceled or delayed. 5.RR.180-81. In other words, these “bridge” contracts are already in force. 8.RR.96-97.

Moreover, the Commissioner and Appellees already agreed to maintain the injunction through the end of the 2025 regular legislative session and during the pendency of the Court’s consideration of this motion. This further demonstrates that continuing to maintain the status quo during the pendency of this appeal will not inflict harm on HHSC or beneficiaries. Accordingly, the balance of harms overwhelmingly supports granting the Children’s Plans’ requested relief. See Universal Health Servs., Inc. v. Thompson, 24 S.W.3d 570, 576 (Tex. App.—Austin affected by the temporary-injunction order because it prevents the Commissioner from finalizing the procurement and executing any resulting contracts with Aetna and Molina while the appeal is pending, any such alleged potential harm to Aetna and Molina cannot and should not be the basis for permitting the Commissioner to continue to engage in ultra vires conduct while this Court considers the merits. This case and appeal is about the Commissioner’s conduct. Thus, to the extent other entities may not gain a benefit while HHSC’s procurement is paused, that should carry little, if any, weight in determining whether the Commissioner should be allowed to engage in unlawful conduct. Moreover, because Aetna and Molina did not attempt to intervene until after the case was already on appeal, they did not introduce any evidence of harm.

2000, no pet.) (courts “balance[] the equities of the parties and the resulting conveniences and hardships” when awarding injunctive relief).

V. The Children’s Plans demonstrated both jurisdiction and a probable right to relief on their ultra vires claims.

As reflected in the trial court’s order, the Children’s Plans presented overwhelming evidence that the Commissioner disregarded the law governing HHSC procurements. This more than satisfied their burden to create a fact issue on their ultra vires claims, thus defeating the Commissioner’s plea to the jurisdiction.

The same evidence also satisfied the Children’s Plans’ burden to show a probable right to relief on their ultra vires claims. See Chambers-Liberty Cntys. Navigation Dist. v. State, 575 S.W.3d 339, 349 (Tex. 2019) (recognizing that jurisdiction and merits often overlap factually).

A. A plaintiff establishes a valid ultra vires claim by showing that a state official acted without legal authority.

Though sovereign immunity protects state agencies from liability, Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371, 374 (Tex. 2006), it “does not bar a suit that seeks to bring government officials into compliance with statutory or constitutional provisions,” Chambers-Liberty, 575 S.W.3d at 348. This is the ultra vires exception to immunity. Hous. Belt & Terminal Ry. Co. v. City of Houston, 487 S.W.3d 154, 157-58 (Tex. 2016).

“To fall within [the] ultra vires exception, a suit . . . must allege, and ultimately prove, that the officer acted without legal authority or failed to perform a purely ministerial act.” City of El Paso v. Heinrich, 284 S.W.3d 366, 372 (Tex. 2009). “[A] government officer with some discretion to interpret and apply a law may nonetheless act ‘without legal authority,’ and thus ultra vires, if he exceeds the bounds of his granted authority or if his acts conflict with the law itself.” Hous. Belt, 487 S.W.3d at 158.

In a challenge to a state agency’s procurement process, a plaintiff has “a cognizable ultra vires claim if it can establish that the” defendant’s contracting decisions “exceeded the bounds of [their] authority or conflicts with the law itself.”

Cmty. Health, 607 S.W.3d at 851-52 (citing Hous. Belt, 487 S.W.3d at 158); see also Chambers-Liberty, 575 S.W.3d at 349 (“[I]mmunity only extends to those government officers who are acting consistently with the law.”).

B. A plaintiff may overcome a government official’s plea to the jurisdiction by introducing evidence showing at least a fact question.

“A court deciding a plea to the jurisdiction is not required to look solely to the pleadings but may consider evidence and must do so when necessary to resolve the jurisdictional issues raised.” Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000). When the plea to the jurisdiction implicates the merits of the plaintiffs’ cause of action and includes evidence, the trial court reviews the relevant evidence to determine if a fact issue exists, applying a summary-judgment standard. Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227 (Tex. 2004). If the state asserts and supports with evidence that the trial court lacks jurisdiction, the plaintiff must show a disputed material fact regarding the jurisdictional issue. Id. at 228.

In addition to proving jurisdiction, evidence showing that a state official acted ultra vires supports a grant of injunctive relief. “Consideration of the merits of the parties’ legal positions commonly informs a court’s assessment of the advisability of injunctive relief.” State, 711 S.W.3d at 645. Notably, however, “[t]he applicant [for injunctive relief] is not required to establish that he will prevail on final trial; rather, the only question before the trial court is whether the applicant is entitled to preservation of the status quo pending trial on the merits.” Patel v. St. Luke’s Sugar Land P’ship, LLP, 445 S.W.3d 413, 419 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) (citing Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993) (per curiam)); see also State, 711 S.W.3d at 645 (“The merits need not—and often should not—be definitively determined at this preliminary stage, but just relief that preserves the parties’ rights cannot be afforded without some consideration of the merits.”) (citation modified).

C. Evidence presented at the hearing demonstrated that the Commissioner is conducting the STAR & CHIP procurement in an ultra vires manner.

HHSC promised that the proposals responsive to the STAR & CHIP procurement would “be evaluated in accordance with [S]tate law, including, but not limited to, applicable provisions of Chapters 533, 536, and 2155 of the Texas Government Code.” 6.RR.101. But HHSC did not honor that guarantee. Instead, the Commissioner’s planning and implementation of the procurement has disregarded multiple statutory and regulatory requirements. Each of these statutes imposes a mandatory duty on the Commissioner by using the command “shall.” See TEX. GOV’T CODE § 311.016(2) (“‘Shall’ imposes a duty.”). Importantly, the Children’s Plans do not contend that HHSC should have implemented these mandatory directives differently; rather, they alleged and have proved that HHSC and the Commissioner did not implement them at all. See Chambers-Liberty, 575 S.W.3d at 354 (government officials “do not have discretion to misinterpret state statutes constricting their authority”).

Four senior HHSC officials testified at the hearing: Commissioner Young; Kay Molina, Deputy Executive Commissioner for Procurement and Contracting Services for HHSC; Emily Zalkovsky, State Medicaid Director; and James Ramirez, Director of Major Procurement, Medicaid Division. According to the Commissioner, Mr. Ramirez was the “point person” for the procurement. 6.RR.121.

These officials were well-aware of the statutory requirements and understood that they had no discretion to ignore them in this procurement. Indeed, the agency had implemented them in past STAR & CHIP procurements. But HHSC executives chose not to follow them this time because they viewed some as “antiquated” and others as “unfair” to new market entrants. 6.RR.176-77, 205-06.

Ignoring statutory directives is not within the Commissioner’s discretion. See Chambers-Liberty, 575 S.W.3d at 354. If HHSC and the Commissioner had intended to implement these directives, they would have asked bidders to submit information relevant to the directives, instructed the evaluators to score that information, and included those directives on the procurement scoring sheet. The agency did none of these things. In fact, HHSC executives in charge of the procurement could identify no HHSC document showing which MCOs received or did not receive different scores due to any of the mandatory preferences or considerations—because none did.

Below is a recitation of key evidence the trial court heard regarding the Commissioner’s multiple ultra vires acts in connection with the STAR & CHIP procurement. That evidence is more than sufficient to justify the trial court’s disposition because it both (1) establishes a fact issue on ultra vires acts to support the trial court’s denial of the Commissioner’s plea to the jurisdiction and (2) establishes the Children’s Plans’ probable right to relief on their claims to support the trial court’s grant of a temporary injunction. At a minimum, such evidence easily supports granting the Children’s Plans’ Rule 29.3 motion pending this Court’s disposition of the appeal.

1. No consideration or preference based on past performance or quality.

HHSC’s express decision to ignore statutory directives is especially evident with regard to past performance. Two separate statutes require HHSC to take bidders’ histories into account, but the agency disregarded both.

First, Texas Government Code Section 2155.144 requires that HHSC “shall document that it considered all relevant factors” to ensure that “any procurement method approved by [HHSC] provides the best value” to the agency. TEX. GOV’T CODE § 2155.144(c) (emphasis added). One factor that HHSC must document is “indicators of probable vendor performance under the contract such as past vendor performance.” Id. § 2155.144(d)(5). HHSC personnel admitted that past performance is a “relevant factor” to this procurement, but the agency failed to document that past performance was considered as required by Section 2155.144(c)—because it wasn’t: • HHSC expressly considered past performance during previous STAR & CHIP procurements. 5.RR.255-56.

• HHSC inexplicably rejected its hired consultant’s recommendation to assign 10% of a bidder’s score to past performance. 5.RR.181.

• Mr. Ramirez testified that past performance is relevant to the procurement and thus HHSC is required to document it, but the agency did not expressly document consideration of past performance.

5.RR.226-27.

• The STAR & CHIP procurement did not ask bidders to submit information on their past performances. 5.RR.227-28.

• Mr. Ramirez admitted that past performance “was not an express and independent consideration in this procurement”; that “there is no specific documentation showing the agency’s consideration of relevant factors including past performance”; and that “the agency did not require the submission of past vendor performance.” Id.; 5.RR.110- 11.

• HHSC executives did not instruct evaluators to score past performance, and past performance was not included on the evaluators’ score sheets.

5.RR.228-30.

Rather, HHSC evaluators were instructed to consider how respondents would perform in the future and did not “document anything about what [respondents] have done in the past or are presently doing.” 5.RR.230. HHSC and the Commissioner thus failed to follow Section 2155.144’s mandatory directive.

Second, the Commissioner disregarded the statutory requirement that HHSC “shall [] give preference to an organization that offers a managed care plan that successfully implements quality initiatives” or “meets quality of care and cost- efficiency benchmarks.” TEX. GOV’T CODE § 536.052(d) (emphasis added).9 As confirmed at the hearing: • Ms. Molina and Mr. Ramirez conceded that this directive is mandatory.

5.RR.166, 223-24.

• Ms. Molina and Mr. Ramirez admitted that HHSC did not consider “quality of care and cost-efficiency benchmarks” at all in the procurement. 5.RR.197, 223-24.

• Ramirez admitted that “successfully implements quality initiatives” refers to existing or prior quality initiatives—not future initiatives.

5.RR.223-24.

• Nevertheless, the procurement did not ask bidders for data or evidence about successful implementation of existing or prior quality initiatives.

5.RR.101-03.

• Nothing in the evaluator training materials instructed evaluators “to give any of the statutory preferences or considerations at issue in this case.” 5.RR.229.

• The scoring sheets do not mention this preference. 5.R.228-29, 233.

• Evaluators did not consider the extensive quality data HHSC has about bidders. 5.RR.230-31.

• Ms. Molina conceded that she cannot tell if the Children’s Plans received this preference. 5.RR.105.

Effective April 1, 2025, portions of Texas Government Code Chapter 533 were repealed and recodified as part of “the nonsubstantive revision of the health and human services laws governing the Health and Human Services Commission, Medicaid, and other social services.” Acts 2023, 88th Leg., R.S., Ch. 769, §1.01. Section 536.052 has been recodified as Texas Government Code section 543A.0052. Id. Because the applicable statutes were in Chapter 533 at the time of the temporary-injunction hearing, and for consistency of reference, this brief will cite to the statutes as they existed at the time of the hearing.

2. No preference for networks with Medicaid or charity-care providers.

Texas Government Code Section 533.003 requires that HHSC “shall give preference to organizations that have significant participation in the organization’s provider network from each health care provider in the region who has traditionally provided care to Medicaid and charity care patients.” TEX. GOV’T CODE § 533.003(a)(1) (emphasis added).10 But HHSC executives admitted that: (1) the STAR & CHIP procurement did not ask bidders to provide information about charity care providers in their existing networks, 5.RR.95-96; (2) the evaluators’ scoring sheets make no mention of this preference, 5.RR.228, 233; and (3) it was unknown whether the Children’s Plans received preferences under this statute. 5.RR.100.

Additionally, none of these considerations was evaluated on a region-by-region basis as mandated. 5.RR.97.

3. No promotion of continuity of care or reduction of administrative and nonfinancial barriers.

Texas Government Code Section 533.002 requires that HHSC “shall . . . promote continuity of care” and “reduce[] administrative and other nonfinancial barriers for recipients.” TEX. GOV’T CODE § 533.002(1)(B), (6) (emphasis added).

But HHSC executives testified that they affirmatively decided not to consider the

Section 533.003 was recodified as Texas Government Code section 540.0204.

more than 1.5 million Texans who would need to switch health plans—and possibly healthcare providers as well. 5.RR.190; 6.RR.97-98; 7.RR.38-39.

4. No consideration of different plans for different populations.

Texas Government Code Section 533.003 requires that HHSC “shall consider the need to use different managed care plans to meet the needs of different populations.” TEX. GOV’T CODE § 533.003(a)(3) (emphasis added). But HHSC executives conceded that the procurement was conducted in a statewide manner that did not consider the needs of different populations within Texas. 5.RR.166; 6.RR.64- 66, 93-96.

5. No evaluation and certification.

Texas Government Code Section 533.0035 requires that HHSC “shall evaluate and certify that [MCOs are] reasonably able to fulfill the terms of the contract, including all requirements of applicable federal and state law.” TEX. GOV’T CODE § 533.0035(a) (emphasis added). But HHSC executives admitted that the agency allowed bidders to self-certify and did not verify or evaluate these self- certifications. 5.RR.272-74.

6. Unlawful disclosure.

Texas law requires HHSC to conduct procurements in a fair and consistent manner. See 1 TEX. ADMIN. CODE §§ 391.101(2), 391.209(3)(A). It also generally prohibits agencies from “disclos[ing] information derived from proposals . . . to any competing respondent prior to award or cancellation of [a] solicitation.” 34 TEX. ADMIN. CODE § 20.208(d)(3). But HHSC executives acknowledged that one bidder, Aetna, received the other bidders’ proposals while the STAR & CHIP procurement process was ongoing and before scoring began. 5.RR.137-40.

7. “Mandatory” CHIP contracts.

Although Medicaid programs like STAR are subject to mandatory contracting requirements, see TEX. GOV’T CODE §§ 2155.44, 533.004,11 these mandatory contracts do not apply to non-Medicaid programs like CHIP, see TEX. HEALTH & SAFETY CODE § 62.155. But HHSC executives nevertheless confirmed their intention to award “mandatory” CHIP contracts. 5.RR.111, 118; 6.RR.50, 59.

8. Unlawful STAR Kids procurement.

Finally, the Commissioner is continuing to commit similar ultra vires acts in connection with the ongoing STAR Kids procurement, which she intends to implement in the same unlawful manner as the STAR & CHIP procurement.

⁎ ⁎ ⁎ The evidence—both HHSC’s produced documents and the testimony of HHSC officials—confirms that the Commissioner has disregarded and continues to disregard numerous mandatory statutory criteria in administering the STAR & CHIP

Section 533.004 was recodified as Texas Government Code § 540.0206.

procurement. When the Commissioner “misinterpret[s] the limits” of these procurement statutes and regulations, she “misinterpret[s] the bounds of [her] own authority—exceeding the scope of what [Texas law] permit[s her] to do.” Hall v. McRaven, 508 S.W.3d 232, 241-42 (Tex. 2017). Accordingly, by exercising her “limited discretion . . . in conflict with the constraints of the law authorizing [her] to act,” Hous. Belt, 487 S.W.3d at 163, the Commissioner has committed ultra vires acts in conducting the STAR & CHIP procurement (and the ongoing STAR Kids procurement) and will continue to commit ultra vires acts if she is permitted to finalize the procurement by awarding, signing, and implementing the intended contracts.

By contrast, the Commissioner will be hard-pressed to identify any evidence that HHSC fulfilled its statutory obligations in the STAR & CHIP procurement.

Indeed, there is no dispute about the lack of any documentation showing that the agency complied with the aforementioned statutory considerations and preferences.

HHSC officials tried to brush that evidentiary lacuna aside, testifying that fulfillment of the statutory requirements was somehow “baked in” to the bidders’ scores—but that explanation defies logic and the evidentiary record. And it is certainly insufficient to satisfy the Commissioner’s burden to show that there is no fact issue on her ultra vires conduct.

CONCLUSION AND PRAYER As the trial court correctly concluded, the Children’s Plans demonstrated their entitlement to immediate injunctive relief. Although the Commissioner’s appeal of the temporary injunction superseded that order, Rule 29.3 allows this Court to issue a new, equivalent injunction to preserve the Children’s Plans’ rights during the pendency of the appeal. An injunction would also protect this Court’s jurisdiction by preventing any argument about mootness.

Given the Children’s Plans’ probable right to relief, the imminent risk of irreparable harm to themselves and their employees and members, and the public interest in ensuring consistent, quality healthcare for vulnerable Texans, the Children’s Plans respectfully request that the Court grant the Children’s Plans’ motion for temporary relief under Rule 29.3 and issue a new injunction continuing or maintaining the trial court’s temporary injunction preventing the Commissioner from awarding, signing, or implementing contracts with the intended STAR & CHIP awardees and from otherwise moving forward with the unlawful STAR & CHIP and STAR Kids procurements, to remain in effect until disposition of this appeal. The Children’s Plans further request all other relief to which they are entitled.

Respectfully submitted,

/s/ Susan Feigin Harris /s/ Amy Warr Susan Feigin Harris Amy Warr [email protected] State Bar No. 00795708 Warren S. Huang [email protected] [email protected] Anna M. Baker NORTON ROSE FULBRIGHT US, LLP State Bar No. 00791362 1550 Lamar, Suite 2000 [email protected] Houston, Texas 77010 ALEXANDER DUBOSE & JEFFERSON Telephone: (713) 651-5151 LLP Congress Avenue, Suite 1450 Paul Trahan Austin, Texas 78701-2709 [email protected] Telephone: (512) 482-9300 NORTON ROSE FULBRIGHT US, LLP Facsimile: (512) 482-9303 San Jacinto Boulevard, Suite 1100 Austin, Texas 78701 Karen C. Burgess Telephone: (512) 474-5201 [email protected] Katie Dolan-Galaviz Thomas A. Coulter [email protected] [email protected] BURGESS LAW PC NORTON ROSE FULBRIGHT US, LLP 404 West 13th Street 9th Street, NW, Suite 1000 Austin, Texas 78701-1825 Washington, D.C. 20001 Telephone: (512) 482-8808 Telephone: (202) 662-0200 Matthew P. Gordon Jeff J. Wurzburg (pro hac vice motion forthcoming) [email protected] [email protected] NORTON ROSE FULBRIGHT US, LLP PERKINS COIE LLP Texas State Bar No. 24105140 1201 Third Avenue, Suite 4900 W. Houston Street, Suite 1800 Seattle, Washington 98101-3099 San Antonio, Texas 78205 Telephone: (206) 359.8000 Telephone: (210) 224-5575 COUNSEL FOR PLAINTIFF COOK COUNSEL FOR PLAINTIFF TEXAS CHILDREN’S HEALTH PLAN CHILDREN’S HEALTH PLAN

CERTIFICATE OF COMPLIANCE Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), I certify that this motion contains 9,667 words, excluding the contents listed in Rule 9.4(i)(1).

/s/ Amy Warr Amy Warr

CERTIFICATE OF CONFERENCE Pursuant to Texas Rule of Appellate Procedure 10.1(a)(5), I certify that, on July 9, 2025, I conferred with the following counsel: • William Cole, counsel for the Commissioner, stated his client is opposed to this motion.

• Rich Phillips, counsel for Appellee Superior Health Plan, and Robert F. Johnson, III, counsel for Appellee Wellpoint Insurance Company, stated their clients support this motion.

• Joseph R. Knight, counsel for Aetna Better Health of Texas, Inc., stated his client is opposed to this motion.

• Jason LaFond, counsel for Molina Healthcare of Texas, Inc., stated his client is opposed to the motion but does not intend to file any opposition at this time.

/s/ Amy Warr Amy Warr

CERTIFICATE OF SERVICE I hereby certify that on July 10, 2025, a true and correct copy of this motion, including any and all attachments, was served via electronic service through eFile.TXCourts.gov on all parties through counsel of record, listed below: Ken Paxton Rich Phillips Attorney General of Texas [email protected] Brent Webster One Arts Plaza First Assistant Attorney General 1722 Routh Street, Suite 1500 William R. Peterson Dallas, Texas 75201 Solicitor General William F. Cole Theresa Wanat Principal Deputy Solicitor General [email protected] State Bar No. 24124187 HOLLAND & KNIGHT, LLP [email protected] 811 Main Street, Suite 2500 Cory A. Scanlon Houston, Texas 77002 Assistant Solicitor General Telephone: (713) 821-7000 State Bar No. 24104599 [email protected] Karen D. Walker Thomas Bevilacqua [email protected] Assistant Attorney General HOLLAND & KNIGHT, LLP Jennifer Cook 315 S. Calhoun Street, Suite 600 Assistant Attorney General Tallahassee, Florida 32301 Stephanie A. Criscione Telephone: (850) 425-5612 Assistant Attorney General OFFICE OF THE ATTORNEY GENERAL James E. Cousar P.O. Box 12548 Capitol Station [email protected] Austin, Texas 78711-25848 HOLLAND & KNIGHT, LLP Telephone: (512) 475-4104 98 San Jacinto Blvd Facsimile: (512) 320-0667 Austin, Texas 78701 Telephone: (512) 469-6112 COUNSEL FOR APPELLANT CECILE ERWIN YOUNG, IN HER OFFICIAL COUNSEL FOR APPELLEE SUPERIOR CAPACITY AS EXECUTIVE HEALTH PLAN, INC. COMMISSIONER OF THE TEXAS HEALTH AND HUMAN SERVICES COMMISSION

Robert F. Johnson III Joseph R. Knight [email protected] [email protected] FOLEY & LARDNER, LLP EWELL, BROWN, BLANKE & KNIGHT Congress Avenue, Suite 3000 LLP Austin, Texas 78701 111 Congress Ave., 28th Floor Telephone: (512) 542-7000 Austin, Texas 78701 Telephone: (512) 770-4010 Michelle Y. Ku [email protected] COUNSEL FOR AETNA BETTER Brantley A. Smith HEALTH OF TEXAS, INC. [email protected] FOLEY & LARDNER, LLP, Cheryl Joseph LaFond 2021 McKinney, Suite 1600 [email protected] Dallas, Texas 75201 Jason R. LaFond Telephone: (214) 999-3000 [email protected] SCOTT, DOUGLAS & MCCONNICO LLP Benjamin J. Grossman, 303 Colorado Street, Suite 2400 [email protected] Austin, Texas 78701 FOLEY & LARDNER, LLP Telephone: (512) 495-6300 E. College Ave., Suite 900, Tallahassee, Florida 32301 COUNSEL FOR MOLINA HEALTHCARE Telephone: (850) 222- 6100 OF TEXAS, INC. COUNSEL FOR APPELLEE WELLPOINT INSURANCE COMPANY F/K/A AMERIGROUP INSURANCE COMPANY

/s/ Amy Warr Amy Warr

APPENDIX App. No. Description A. Temporary Injunction and Order Denying Defendant's Plea to the Jurisdiction (10.04. 2024)

Appendix A Filed in The District Court of Travis County, Texas,. /, OCT O4 2024 /Jf2_ At_L!; yf /) M.

CAUSE NO. D-1-G -24-003839 Vein' :.. Pl1c.a Distrki Clerk COOK CHILDREN'S HEAL TH P LAN; § IN T HE DISTRJ CT CO URT TEXAS C HILDREN'S HEALTH PLAN; § SUPERIOR HEALTHPLA , I C.; a nd § W ELLPOI T I SU RANCE COMPA Y, § § Plaintiffs, § § v. § TRAVIS CO UNTY, TEXAS § CECILE ERWI YOU G, in her official § capacity as Executive Commissioner of the § Texas Health a nd Huma n Services § Commission, § § Defenda nt. § 353rd JUDICIAL DISTRJCT

TEM POR A RY I J UNC TIO AN D ORD ER D E YING D EF EN D A T 'S PL EA TO TH E J U RI S DI C TIO N

Before the Court are the Applications for Temporary Inj unction (the '·Applications") fi led by Plaintiffs Cook Children's Health Plan ('·Cook Children's"). Texas Children 's Health Plan ("TC HP"), Superior HealthPlan, Inc. (" Superior"'), and Wellpoint Insurance Company ("We llpoint," and collective ly, '·Plaintiffs"); and the Plea to the Jurisdiction (the " Plea") filed by Defendant Cecile Erwin Young ("'Defendant"), in her officia l capacity as Executive Comm issioner o f the Texas Health and Human Serv ices Commission ("HHSC"). After considering Pla intiffs ' Applications and Defendant's response; De fendant's Plea and Pla intiffs' responses; the p leadings and attached ev idence in these consolidated cases (Nos. D- I-GN-24-003839, D-1 -G -24-003874, D- 1-G -004059, and D- 1-G -24-004327); the parties· prehearing briefing; the evidence admitted in the record and add uced at the hearing held on September 30, October I, October 2, and October 4, 2024; applicable authorities; the arguments of co unsel, and a ll other matters properly before the Court, the Court DEN IES Defendant's Plea and G RA TS Plaintiffs' Applications.

169317251 2 Page I of 10

Copy from re:SearchTX 7. Specifically, Plaintiffs have establi shed that Defendant has violated and will continue to vio late the Texas Government Code. Texas Health and Safety Code, and Texas Admi nistrative Code in procuring managed care contracts for STAR & C HIP in Texas, and that any award, execution, or implementation of Defendant' s intended contract awards wou ld be unlawful, because: • Defendant' s intended contract awards will fa il to give preference to managed care organizations ("MCOs'') that have significant pa rticipation in their provider networks from each healthcare provider in the region who has traditionally prov ided care to Medicaid and charity care patients as required by Texas Government Code§ 533.003(a)( I); • Defendant' s intended contract awards will fai l to g ive preference to MCOs that have successfully implemented quality in itiatives as required by Texas Government Code § 536.052(a) and (d); • Defendant has fai led to develop and implement the cost-efficiency and quality o f care benchmarks mandated by Texas Government Code§ 536.052(b) despite being subject to an obligation to do so for over a decade. Defendant' s intended contract awards will likewise fail to give preference to MCOs that have met such benchmarks as required by Texas Government Code§ 536.052(d); • Defendant's intended contract awards w ill fail to consider MCOs' past performances as required by Texas Government Code § 2 155.144; • Defendant' s intended contract awards will fai l to evaluate and certify that MCOs are reasonably able to fulfi ll the tenns o f the STAR contract as required by Texas Government Code § 533.0035 and to review MCOs to confirm their ability to fulfill the requirements o f the CHI P contract as req uired by Texas Health & Safety Code § 62.05 l(e); • In August 2023 and again in October 2023, Defendant wrongfully disclosed the RFP proposals of Plaintiffs and other respondents- with the August disclosure recipients including legal counsel for Aetna, one of the competing respo ndents, while the procurement was ongo ing and prior to completion o f the oral presentations- thus, destroying any integrity of the procurement process and creating an unlevel play ing fie ld that cannot ensure fair conside ration of all proposals and is far from consistent. unifonn, and transparent as required by I Texas Administrative Code§§ 391.10 I and 391.209; • Defendant's intended contract awards will fa il to implement the Med icaid managed care program in a manner that improves the health o f Texans by promoting

16931 725 1 2 Page 3 of 10 continuity of care and provides a medical home for recipients as required by Texas Government Code§ 533.002; • Defendant's intended contract awards will fai l to reduce admini strative and other nonfi nancial barriers for rec ipients as requ ired by Texas Government Code § 533.002; • Defendant's intended contract awards will fail to consider the need to use diffe rent managed care plans to meet the needs of different populat ions as required by Texas Government Code§ 533.003(a)(3): • Defendant' s intended contract awards wi ll unlawfully award mandatory CH IP contracts to MCOs to wh ich Defendant intends to award mandatory STAR contracts in violation of Texas Health and Safety Code§§ 62.055 and 62. 155; • Defendant's intended award of mandatory CH IP contracts will fail to give consideration to statutorily required factors, including those under Texas Government Code § 533.003, in violation of Texas Government Code § 533.004(a); • Defendant's continuing practice of denying re levant information about a procurement to bidders unti l after the deadline to submit a bid protest violates the Due Course of Law provision of Article I, Section 13 of the Texas Constitution by not prov iding a meaningful bid protest process after promising one in I Texas Admin istrative Code Chapter 39 1; and • Defendant's continuing practice of refusing to consider as untimely any information submitted in supplemental protests and/or after the protest filing deadl ine is inconsistent with the procedural protections promised to protestants in bid protest rules that require consideration of a protest or appeal submitted after the filing deadline when good cause for delay is shown under I Texas Administrative Code§ 39 l .307(d)(I).

8. These statutory and regulatory violations, each sing ly and together co llectively, have resulted in intended contract awards that will be invalid and unlawful, and the further execution and imp lementation of such intended contract awards will be ultra vires acts.

9. Furthermore, Defendant is currently evaluating bids for STAR Kids, a separate Texas Medicaid managed care program , through Request for Proposals o. HHS00 1307 1 (the ·'STAR Kids RFP"') . The procurement processes in the STAR & CHIP RFP and the STAR Kids RFP are substantively identical. Plaintiffs have demonstrated that Defendant has no intention of

169317251 2 Page 4 of 10 voluntarily correcti ng her course of action for future procurements, including altering the processes and procedures used in administeri ng the STAR Kids RFP. The resulting STAR Kids contract awards wil l therefore also violate statutory and regulatory requirements and be ultra vires.

I 0. Plaintiffs have established a probable right to relief and that Defendant' s award, execution, and implementation of the intended. unlawfully procured TAR & CHIP contracts will, if not enjoined, cause Plain ti ffs to suffer imminent and irreparable injury.

11. Cook Children·s has estab lished that execution and implementation of the contracts would resu lt in irreparable harm to Cook Chi ldren 's because: • The loss of STAR & CH IP contracts threatens Cook Children 's financial viability and might lead to the forced wind-down of the entity; • Cook Children's participation in the STAR Kids program is in jeopardy because the larger STAR & CH IP contracts prov ide economies of scale to limit losses from STAR Kids: • Cook Children ·s 100,000-plus STA R & CHIP members wi ll be forced to change to different health plans from different companies, risking disruption to the members' healthcare and their access to their current primary care providers, specialty care providers, or both; • Cook Children·s has suffered immediate operational disruptions, including hiring difficulties and the delay of needed internal projects; • Cook Children's can no longer negotiate a new pharmacy benefits contract alongside other Texas-only Medicaid plans and consequently wi ll need to pay more for pharmaceuticals; • Cook Children·s 375 employees are al risk of losing their j obs-both the 70% of employees who focus on STAR & CHIP and the 30% who focus on STAR Kids; and • ew STAR & CHIP entrants in the Tarrant Service Area will likely poach Cook Children's experienced empl oyees before the new contracts go into effect- thus threatening Cook Children's STAR & CHIP operations while it is still requ ired to provide services under its current contracts.

12. TC HP has establi shed that execution and implementation of the contracts would result in irreparable harm to TCHP because:

169317251 2 Page 5 of 10 • TCHP's 425,000 STAR & CHIP members will be forced to change their health plans, impacting their access to care; • TCHP has suffered and will continue to s uffer disruptions in workforce- threaten ing the future viabi lity of the health p lan- as employees voice concern abo ut job security in light of the intended contract awards; • TCHP's 650 employees are at risk of losing their jobs, impacting the financial health of its entire Texas Chi ldren's Health Care System beyond that of the health plan; • TCHP has a lready suffered and wi ll continue to suffer the poachi ng of its well- trained employees by other MCOs-further endangering its operations while it remains under contract with HH C; • TCHP will lose members and providers, further threatening the viabil ity of the health plan and confusing members and prov iders; • TCHP has and wi ll suffer damage to its reputation and goodwi ll ; and • TCHP's participation in the STAR Kids program is at risk because the larger STAR & CH IP contracts are needed to provide economies of scale to limit losses from STAR Kids. If TCHP loses its STAR Kids contract, its 26,000 STAR Kids members would need to change their health plans, thereby adversely impacting those members' access to care, adversely impacting TCHP' s workforce, adversely impacting TCHP's abi lity to operate and damaging TCHP' s reputation and goodwill.

13. Superior has established that execution and implementation of the contracts wo uld result in irreparable harm to Superior because: • Superior will experience a reduction in the number of STAR & CHIP members it serves today, forcing members to change plans even before the operational start date of the new contracts; • Superior will need to begin reducing its workforce just as new MCO entrants and MCOs expanding their membership will seek to poach Superior's employees, who are a lready grappling with the uncertainty of their jobs in light of the intended awards; • Providers will be less likely to contract with Superior as contract renewals are being negotiated over the next few months and Superior's leverage in provider contract negotiations will be substantial ly diminished; • Superior has made substantial investments in partnerships that promote HHSC's value-based care priorities. These partnerships involve risk-sharing agreements

169317251 2 Page 6 of 10 between Superior and the partner entities and have been built to scale over time.

Superior will lose the benefit of its initial investments in these partnerships; and • Superior' s ability to prov ide the same level of service currently provided under existing STAR & C HI P contracts through the August 3 1, 2025, expiratio n date will be dim in ished due to workforce cha llenges that wou ld be caused by execution of the STAR & CH IP contracts, which wi ll impact Superior's o peratio ns and cause it to suffer reputational damage.

14 . Wellpoint has established that execution and implementation of the contracts would result in irreparable harm to We llpo int because: • A lmost 380,000 current We llpoint members w ill be forced to change their health plan, thus losing access to their existing We llpoint provider network; • We llpo int will be forced to consider substantial reductions in and/or relocations of its existing 1,200-plus-person workforce dedicated to the Texas Medicaid programs; • Wellpoint has already suffered and will continue to suffer the poaching of its highly trained employees by other MCOs. During the review and transition period, which HHSC has stated w ill take at least a fu ll year, Wellpoint must continue to provide uninterrupted healthcare to its members, and its ability to do so will be substantially jeopard ized if there are key staff vacancies; • Wellpoint has already suffered and will continue to suffer difficulty retaining its existing, robust provider network in the impacted service areas. Maintaining its network of healthcare providers is critical to We llpoint's commitment Lo providing high-quality, cost-efficient healthcare for the entire duration of its existing contracts. Worse yet, We ll point has learned that some providers are informing members that We llpoint will no longer be provid ing STAR & C H IP services in impacted areas and are enco urag ing them to switch plans on the bas is o f Defendant's intended co ntract awards; • Wellpoint has made significant investments in service areas that it will be forced to exit and has longstanding provider partnerships with alternative payment models that were developed and built to scale over multiple years. Wellpoint will lose the benefit o f its investments in those service areas and partnerships.

• There is no lega l remedy that can fully compensate We llpoint for (I) the loss of its members, (2) the harm to its business resulting from the intended, un lawfully procured contract awards, and (3) the hann to its abi lity to compete in a fai r and lawful procurement process in future procurements; a nd • The harm to Wellpo int is imminent because Defendant did not follow the requirements of Texas law in procuring the STA R & C HIP contracts but

1693 !TISI 2 Page 7 of 10 nevertheless intends to execute and begin implementing the intended, unlawful ly procured contract awards. In addition, the harm to Wellpoint is imminent as Defendant does not intend to correct her unlawful course of action for future procurements or the ongoing STAR Kids RFP.

15. Plaintiffs have also presented evidence that they will begin losing STAR & CHIP members now, even though operations under the intended STAR & CHIP contract awards are not scheduled to start until September I , 2025. Providers are already in forming Plaintiffs' members that Plaintiffs will no longer be providing STAR & CHIP services in certain service areas of the state and are encouraging members to switch plans. The confusion among providers and members alike wi ll only worsen if the intended contract awards are executed notwithstanding the pending challenge to their legality.

16. Money damages are not adequate compensation because the harms Plaintiffs will suffer cannot be measured by any certain pecuniary standard. Furthermore, Plaintiffs cannot be adequately compensated in damages because Defendant is immune from suit for damages and any limited waiver of immunity is insufficient to compensate for Plaintiffs' harms.

17. The harms to Plaintiffs outweigh any potential harm s to Defendant or HHSC that would result from preserving the status quo during the pendency of these consolidated cases.

Neither Defendant nor HHSC would be harmed if the execution and further implementation of the intended STAR & CH IP contracts are delayed given that ( I) operations under the intended contract awards are not scheduled to start until September I, 2025, and (2) HHSC has previously delayed the RFP several times and was able to continue providing coverage through the current STAR & CHIP contracts by extending the contracts in effect at the time.

18. The public will not suffer harm if a temporary injunction is granted but will suffer harm if Defendant executes and implements the intended, un lawfully procured contract awards.

The intended contract awards wi ll impose significant harm and confusion on m illions of Texas' s

1693 172512 Page 8 of 10 STAR & CHIP members. M ore than 1.5 million Texans, mostly children- and 43% of the total STAR & CHIP population-wi ll be forced to change health plans. This in turn would cause significant harms to those beneficiaries, for which there is no adequate remedy at law availab le against Defendant, including: • Confusion among those beneficiaries due to difficulties in informing them of the change in available health plans; • Disruption to those beneficiaries' access to care and continuity of care, thereby threatening the medical care and the very health and welfare of those beneficiaries; and • Adm inistrative burdens of findin g new health plans and potentially new healthcare providers.

19. The injunctive relief Plaintiffs request is narrow in scope and tailored to prohibit Defendant from continuing to act ultra vires. The balance of equities and public interest weigh in favor of granting Plaintiffs" requested injunctive relief.

Accordingly, it is there fore ORDERED that Defendant's Plea to the Jurisdiction is DE !ED. It is further ORDERED that Plaintiffs' Applications for Temporary Injunction are GRA TED. The Court ORDERS that: • Defendant, and all other persons or entities in active concert or participation with Defendant, shall refrain from awarding, signing. entering into, executing, implementing. or otherwise taking action to effectuate or perform any contracts resulting from or in connection with the STAR & CHIP RFP or to further the procurement or contracting processes for the STAR & CHIP RFP; and • Defendant, and all other persons or entities in active concert or participation with Defendant, shall refrain from further proceeding with the procurement of, issuing a notice of intent to award or awarding contracts under. or otherwise implementing results from the STAR Kids RFP.

1693 17251 2 Page9 of 10 IT IS FU RTH ER ORDERED that Defendant shall provide notice of this Temporary Injunction to her officers, agents, servants, employees, and attorneys, as well as any persons or entities in active concert or participation with Defendant.

IT IS FURTH ER ORDERED that Plainti ffs' bond or cash deposit in lieu of bond is set in the amount of $ 1,000.

IT IS FURTH ER ORDERED that, on the filing by Plaintiffs of the bond and on approving the bond according to law (or the cash deposit in lieu of bond), the Clerk shall issue a Temporary Injunction in conformity with the law and the terms of this order.

IT IS FURTHER ORDERED that thi s Temporary Injunction shall not expire until final judgment in th is case is entered or this case is otherwise dismissed by this Court.

IT IS FURTHER ORDERED that the trial on Plainti ffs' ultra vires claims seeking declaratory relief, permanent injunctive re lief, and mandam us relief is set for ovember 3, 2025.

SIGNED on Oc.to\o er tf , 2024.

~~ JUDGE PRES IDI G

Judge Laurie Eiserloh 455th District Court

169317251 2 Page 10 of 10 Automated Certificate of eService This automated certificate of service was created by the efiling system.

The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Mandy Patterson on behalf of Amy Warr Bar No. 795708 [email protected] Envelope ID: 102997305 Filing Code Description: Motion Filing Description: Rule 29.3 Motion of Appellees Cook Children's Health Plan and Texas Children's Health Plan Status as of 7/10/2025 4:41 PM CST Case Contacts Name BarNumber Email TimestampSubmitted Status Michaelle Peters [email protected] 7/10/2025 4:31:15 PM SENT Julie Wright [email protected] 7/10/2025 4:31:15 PM SENT Amanda DoddsPrice [email protected] 7/10/2025 4:31:15 PM SENT Karen Burgess 796276 [email protected] 7/10/2025 4:31:15 PM SENT Robert Johnson 10786400 [email protected] 7/10/2025 4:31:15 PM SENT Richard Phillips 24032833 [email protected] 7/10/2025 4:31:15 PM SENT J McCaig 24070083 [email protected] 7/10/2025 4:31:15 PM SENT Michelle Ku 24071452 [email protected] 7/10/2025 4:31:15 PM SENT Joseph Knight 11601275 [email protected] 7/10/2025 4:31:15 PM SENT Amy Warr 795708 [email protected] 7/10/2025 4:31:15 PM SENT Warren Huang 796788 [email protected] 7/10/2025 4:31:15 PM SENT Paul Trahan 24003075 [email protected] 7/10/2025 4:31:15 PM SENT Susan Harris 6876980 [email protected] 7/10/2025 4:31:15 PM SENT Cheryl LaFond 24104015 [email protected] 7/10/2025 4:31:15 PM SENT David Johns [email protected] 7/10/2025 4:31:15 PM SENT Maria Williamson [email protected] 7/10/2025 4:31:15 PM SENT Michelle Joyner [email protected] 7/10/2025 4:31:15 PM SENT William FCole [email protected] 7/10/2025 4:31:15 PM SENT Abril Rivera [email protected] 7/10/2025 4:31:15 PM SENT Nancy Villarreal [email protected] 7/10/2025 4:31:15 PM SENT Kristin Hernandez [email protected] 7/10/2025 4:31:15 PM SENT Thomas Coulter 4885500 [email protected] 7/10/2025 4:31:15 PM SENT Automated Certificate of eService This automated certificate of service was created by the efiling system.

The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Mandy Patterson on behalf of Amy Warr Bar No. 795708 [email protected] Envelope ID: 102997305 Filing Code Description: Motion Filing Description: Rule 29.3 Motion of Appellees Cook Children's Health Plan and Texas Children's Health Plan Status as of 7/10/2025 4:41 PM CST Case Contacts Thomas Coulter 4885500 [email protected] 7/10/2025 4:31:15 PM SENT Victoria Gomez [email protected] 7/10/2025 4:31:15 PM SENT Jessie Johnson [email protected] 7/10/2025 4:31:15 PM SENT Benjamin Grossman [email protected] 7/10/2025 4:31:15 PM SENT Cory Scanlon [email protected] 7/10/2025 4:31:15 PM SENT Katie Dolan-Galaviz [email protected] 7/10/2025 4:31:15 PM SENT Karen Walker [email protected] 7/10/2025 4:31:15 PM SENT Tiffany Roddenberry [email protected] 7/10/2025 4:31:15 PM SENT Jennifer Cook [email protected] 7/10/2025 4:31:15 PM SENT Juliana Bennington [email protected] 7/10/2025 4:31:15 PM SENT Jonathan Hawley [email protected] 7/10/2025 4:31:15 PM ERROR Reina A.Almon-Griffin [email protected] 7/10/2025 4:31:15 PM SENT Trisha Marino [email protected] 7/10/2025 4:31:15 PM SENT Perkins Docketing Team [email protected] 7/10/2025 4:31:15 PM SENT Stacey Obenhaus [email protected] 7/10/2025 4:31:15 PM SENT Jason R.LaFond [email protected] 7/10/2025 4:31:15 PM SENT Matthew Gordon [email protected] 7/10/2025 4:31:15 PM SENT Anna Baker 791362 [email protected] 7/10/2025 4:31:15 PM SENT Mandy Patterson [email protected] 7/10/2025 4:31:15 PM SENT Stacey Jett [email protected] 7/10/2025 4:31:15 PM SENT