VSP, other vision care organizations sue Texas over 'un-American' law

Four major law firms have joined forces to represent vision health care organizations challenging a Texas law they describe as “protectionist” and “un-American.”

Dykema Gossett attorneys Christopher Kratovil and David Schenck of Dallas filed a federal suit in the Northern District of Texas-Lubbock Division against Gov. Greg Abbott, the interim attorney general and the state insurance commissioner.

Dykema is representing Vision Services Plan Insurance Co. of Rancho Cordova, California.

Fellow plaintiffs are Texas-based Visionworks of America Inc., an optometrist and a patient, represented by Baker Botts; Tucker, Georgia-based National Association of Vision Care Plans Inc., represented by Phelps Dunbar;  and St. Louis, Missouri-based Healthy Vision Association, represented by Morgan, Lewis & Bockius.

At issue is House Bill 1696, which the governor signed and which is set to become effective Sept. 1. The bill restricts vision care insurers’ ability to communicate the cost of vision care at competing optometrists to their insureds and prevents patients from receiving information important to their health care decisions, the complaint as spotted on Law.com Radar alleges.

Enrollees of Vision Services Plan, known as VSP, such as association members of Healthy Vision Association, are able to receive information about discounts and rebates to avail themselves of their most cost-effective care option, the complaint states.

“H.B. 1969 eviscerates this mutually beneficial model,” the plaintiffs allege.

VSP became an integrated business by forming its own eyewear subsidiary, acquiring lens manufacturers and the retail chain Visionworks of America. This reduced costs by avoiding built-in margins at each stage of the supply chain.

VSP utilized these cost savings to launch a discount and rebate program it called Premier Edge.

“As of May 2023, the Visionworks stores make up only 9.1% of Premier Edge locations, and private practices make up the remaining 90.9%,” the complaint asserts.

Optometrists’ Lobbying Efforts

The plaintiffs allege the purpose of H.B. 1696 is to insulate independent optometrists who lobbied the legislature in pursuit of their “protectionist goals.” Their intent has been to stifle competition from an integrated business model by keeping patients ignorant of financial and other benefits of pursuing lawful, alternate care providers.

The law is a reaction to the Premier Edge program and other discounts and value-added benefits offered by other vision insurers, the plaintiffs claim.

“Optometrists who do not participate in these programs simply do not want to compete with the lower prices and vision care incentives Premier Edge locations afford to its members,” it states.

“While the bill author (Rep. Brad Buckley, R-Salado) emphasized that ‘patients deserve transparency and choice,’ in reality, H.B. 1696 does the opposite,” the plaintiffs allege.

The law is essentially a description of VSP’s Premier Edge program, the plaintiffs assert, adding, “The statute may as well read ‘VSP shall not operate its Premier Edge program’—that would be a lot shorter, and means the same thing.”

One section, 1451.153(5), of the law explicitly restricts communication to vision care plan members, requiring VSP to not incentivize patronage of any one provider over the other, and may not encourage VSP members to patronize a retailer owned by VSP, plaintiffs said.

“What that means, practically, is that VSP cannot tell its enrollees about discounts or rebates offered by any optometrist, including at its own Visionworks stores, because that may ‘incentivize” or ‘persuade’ an insured to obtain care from one optometrist over the other,” the plaintiffs allege. “This law is anti-speech, anti-free market, and, frankly, un-American.”

The plaintiffs further pointed out the hypocrisy of the legislature, which in the same session passed H.B. 711, a bill that prohibits the same censorship of insurers and health care providers.

“Confoundingly, the same Legislature that passed H.B. 1696 also passed a contradictory bill, H.B. 711, which specifically prohibits private contracts containing anti-steering and anti-tiering provisions like those the state now seeks to impose upon vision service plan providers through H.B. 1696,” the plaintiffs state.

The plaintiffs cite violations of the First and Fourteenth Amendments to the U.S. Constitution and of 42 U.S.C. § 1983, the civil action for deprivation of rights. Their request is the granting of an injunction and a declaratory judgment finding the law unconstitutional, void and unenforceable.