On May 23, the U.S. Court of Appeals for the Fifth Circuit upheld a preliminary injunction in favor of Baker Botts clients Vision Service Plan Insurance Company (VSP), Visionworks of America, Inc., Dr. Greg Hogan, and Bobby Montgomery enjoining the State from enforcing Texas House Bill 1696, which restricts certain commercial speech by managed vision care plans.

In 2023, the Texas Legislature passed HB 1696 and the Governor signed it into law.  The bill modified the Texas Insurance Code to prohibit managed care plans from differentiating between optometrists based on discounts or incentivizing consumers to use any particular optometrist over another.

Plaintiffs sued the Governor, Attorney General, and Insurance Commissioner in August 2023, complaining that HB 1696 unlawfully restricts what information VSP can communicate to its members about vision care providers in the VSP network.  In particular, the law prevented VSP from telling its enrollees about discounts or rebates offered by any optometrist, including at its own Visionworks stores.  The district court granted a preliminary injunction and the State defendants appealed.

The Fifth Circuit agreed with Plaintiffs’ interpretation of HB 1696’s restrictions on commercial speech: “[I]t is hard to see how VSP can ‘inform[] its members which retailers are Premier Edge locations that may offer discounts and savings’ without giving members an incentive (discounts and savings) to obtain products at those retailers.”  

The court acknowledged the State’s asserted interests of transparency, fair competition, and patient choice, but concluded that “such interests are not properly advanced by requiring that consumers should be misled or uninformed for their own protection.” The court quoted the U.S. Supreme Court’s decision in Sorrell v. IMS Health Inc.: “The First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good.”  “Because the defendants have not explained why H.B. 1696’s limitations on speech directly advance the governmental interests they have asserted in a manner no more extensive than necessary, we conclude that the plaintiffs are likely to succeed on their commercial speech claim.”

The case now returns to the district court in Lubbock for further proceedings, presumably including competing motions for summary judgment.

Plaintiffs VSP, Visionworks of America, Inc., Dr. Hogan, and Montgomery are represented by partners Aaron Streett (Houston) and Gavin Villareal (Austin).  Former associate Elisabeth Butler (Houston) assisted with the appeal.

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