Texas AG Paxton Opens Inquiry Into Military Healthcare Contractor Over Denied Claims

A state-level investigation into a federally contracted military healthcare administrator raises questions about claim denial practices that affect active-duty service members and veterans in Texas.

Texas Attorney General Ken Paxton has opened a formal investigation into a major military healthcare contractor over allegations that the company wrongfully denied medical claims submitted by service members and their families, according to a report by NBC News published in September 2026.

The contractor in question administers healthcare benefits under the TRICARE program, the federally funded health coverage system that serves approximately 9.6 million beneficiaries including active-duty military personnel, National Guard and Reserve members, retirees, and their dependents, according to the Defense Health Agency's publicly available enrollment data.

Paxton's office did not specify in publicly released statements which contractor is the named subject of the investigation. The Defense Health Agency currently contracts with two regional administrators for TRICARE: Humana Military, which holds the TRICARE East Region contract, and Health Net Federal Services, which holds the TRICARE West Region contract. Both contracts are publicly documented on USASpending.gov. The specific contractor named in the investigation was not confirmed in the source material available at time of publication.

The investigation is framed as a consumer protection action under Texas state law. Texas has broad statutory authority under the Texas Deceptive Trade Practices Act and the Texas Insurance Code to investigate companies conducting business within the state, including federal healthcare contractors whose beneficiaries reside in Texas. The legal mechanism by which a state AG can compel documents or testimony from a federally contracted entity is a subject that has produced litigation in prior investigations involving other states and federal contractors.

Military healthcare claim denials have drawn sustained scrutiny at the federal level. The Government Accountability Office issued a report in 2023, GAO-23-105385, finding that TRICARE beneficiaries faced "challenges" navigating appeals processes when claims were denied, and that data on denial rates was not consistently tracked or reported by the Defense Health Agency. That report is publicly available on GAO.gov.

At the congressional level, the House Armed Services Committee and the Senate Armed Services Committee both have oversight jurisdiction over TRICARE administration. No hearing specifically addressing claim denial practices under current contracts was listed on either committee's published schedule as of September 4, 2026.

Denial of medical claims by TRICARE contractors has been the subject of prior federal enforcement activity. In 2016, the Department of Justice announced a $10 million settlement with Humana Military Healthcare Services related to claims processing under an earlier TRICARE contract, according to a DOJ press release dated February 29, 2016, publicly available on justice.gov. That settlement did not involve an admission of wrongdoing.

Texas is home to a substantial active-duty and veteran population. The Texas Veterans Commission reported in its 2025 annual report that approximately 1.5 million veterans reside in the state, making it the second-largest veteran population in the country. Many of those individuals hold TRICARE coverage or transition between TRICARE and VA healthcare, creating a potential overlap in the population affected by contractor claim practices.

The investigation's scope, the volume of claims under review, and whether Paxton's office has issued a civil investigative demand or subpoena to the contractor are not yet disclosed in available public records. A civil investigative demand, if issued, would typically be filed with the Texas AG's office and could become part of a public court record if the contractor contests it.

The federal government retains primary regulatory authority over TRICARE contractors through the Defense Health Agency, and it is not yet known whether Paxton's office has coordinated with federal investigators or whether this is a standalone state action. What documents would clarify that question: any interagency cooperation agreement or referral letter between the Texas AG and the DOJ's Civil Division, which would be obtainable through a Freedom of Information Act request to the Department of Justice.