chris-traylor-commissioner-texas-department-of-aging-and-disability ( 2013 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-12-00072-CV
Chris Traylor, Commissioner, Texas Department of Aging and Disability Services;
The Texas Department of Aging and Disability Services; Thomas Suehs,
Executive Commissioner of The Texas Health and Human Services Commission;
and Texas Health and Human Services Commission, Appellants
v.
Oakview Healthcare Residence, Ltd., d/b/a Oakview Healthcare Residence, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 419TH JUDICIAL DISTRICT
NO. D-1-GN-10-002298, HONORABLE ORLINDA NARANJO, JUDGE PRESIDING
MEMORANDUM OPINION
The Texas Department of Aging and Disability Services (DADS); Chris Traylor,
Commissioner of DADS; the Texas Health and Human Services Commission (HHSC); and Thomas
Suehs, Executive Commissioner of HHSC (jointly the State) challenge the district court’s judgment
reversing a final order of DADS following Oakview Healthcare Residence’s administrative appeal
of an administrative enforcement action. The order upheld changes made by HHSC, through its
Office of Inspector General, Utilization Review Division (OIG), to certain assessments of Medicare
recipients made by Oakview, a long term care facility, resulting in reduced Medicaid reimbursements
to Oakview. The State appeals the district court’s reversal of the DADS order and denial of its plea
to the jurisdiction. For the reasons that follow, we affirm in part and reverse and dismiss in part.
FACTUAL AND REGULATORY BACKGROUND
Oakview is a licensed nursing facility that provides reimbursable Medicaid services
under a contract with DADS. See Tex. Health & Safety Code Ann. § 242.031 (West 2010);
Tex. Hum. Res. Code Ann. § 161.071(6) (West Supp. 2012); 40 Tex. Admin. Code §§ 46.1–.71
(Dep’t of Aging and Disability Servs., Contracting to Provide Assisted Living and Residential Care
Servs.) (West 2012).1 Oakview is required to perform assessments of the clinical condition and
functional performance of Medicaid recipients and the level of services provided to each. Prior to
October 3, 2008, the applicable assessment system was the Case Mix Classification System, which
consisted of eleven Texas Index for Level of Effort (TILE) classifications. See former 1 Tex.
Admin. Code §§ 371.212–.214 (West 2008) (Texas Health & Hum. Servs. Comm’n, Case Mix
Classification Sys., Utilization Review and Control Activities Performed by Texas Heath and Human
Services Commission (Commission), Texas Index for Level of Effort (TILE) Assessments) repealed
33 Tex. Reg. 8311 (2008) (proposed July 4, 2008).2 The TILE assessment scores determined the
amount of Medicaid reimbursement; the greater the level of effort required by the nursing facility,
the lower the score and the higher the reimbursement. Oakview was required to record the
assessments on Client Assessment Review and Evaluation (CARE) forms, submit them
electronically, and maintain copies. See id. § 371.212(7).
1
Except where material substantive changes have been made, we cite the current versions
of the relevant statutory provisions and agency rules for convenience.
2
Unless otherwise stated, the repealed rules are cited as former 1 Tex. Admin. Code
§§ 371.212–.214. All citations to title 1, chapter 371 of the Texas Administrative Code are to
repealed or current rules issued by the Texas Health and Human Services Commission.
2
HHSC, through OIG, periodically conducts on-site utilization reviews and
investigations of fraud and abuse in nursing facilities that receive Medicaid funds. Id. §§ 371.213(a),
.214(c)(1); Tex. Gov’t Code Ann. § 531.102 (West 2012).3 Under the repealed TILE rules, during
the on-site visits, the facility was required to provide hard copies of the previously-submitted CARE
forms. Former 1 Tex. Admin. Code §§ 371.212 (7)(B), .213(b). CARE forms that could not be
located were considered invalid assessments. Id. § 371.212(7)(B). The first time the forms could
not be located, the lack of compliance was factored into the nursing facility’s “error rate.” Id. The
error rate determined the frequency of on-site visits, which could occur at intervals of between seven
and sixteen months. Id. § 371.214(d). Subsequent failures to locate CARE forms could result in a
default score of the highest TILE assessment (212) and therefore a reduced Medicaid reimbursement.
See id. § 371.212(6)(L), (7)(B).
On February 22, 2008, OIG conducted a routine on-site visit to Oakview, at which
time certain CARE forms were not provided. On October 9, 2008, the Case Mix Classification
System rules were repealed and replaced with rules adopting the Resource Utilization Group
Classification System (RUG). See current 1 Tex. Admin. Code §§ 371.212, .214 (West 2012)
(Minimum Data Set Assessments, Res. Utilization Group Classification Sys.). The RUG rules do
not require the use of CARE forms and do not contain a provision for assignment of a default high
score for failure to provide records during on-site visits. See id. On February 3, 2009, OIG
3
See also 1 Tex. Admin. Code §§ 371.214(n) (West 2012) (Minimum Data Set
Assessments, Resource Utilization Group Classification Sys.) (current version of rule regarding
utilizations reviews). The current rules that replaced the repealed rules are cited as current 1 Tex.
Admin. Code §§ 371.212 and 371.214.
3
conducted another on-site visit to Oakview, at which time Oakview did not provide CARE forms
for certain recipients. OIG assigned a default score of 212 for each of those recipients, which
resulted in reduced reimbursement to Oakview.
PROCEDURAL BACKGROUND
Oakview sought informal reconsideration of OIG’s determination and provided the
missing CARE forms, but no changes were made to the TILE scores. See former 1 Tex. Admin.
Code § 371.214(c)(3). The Decision Rationale states that the CARE forms were submitted for
reconsideration with all of the required signatures, but “since the form is no longer effective, the
default TILE 212 value is upheld.” Oakview contested the findings and submitted a request for a
formal appeal to HHSC. See id. § 371.214(c)(4); 1 Tex. Admin. Code §§ 357.481(a) (West 2012)
(Texas Health & Hum. Servs. Comm’n, Application of this Subchapter) (hearings under subchapter
conducted in accordance with Texas Administrative Procedure Act (APA), Chapter 2001 of Texas
Government Code), .484 (West 2012) (Texas Health & Hum. Servs. Comm’n, Request for
Hearing).4 HHSC transferred the case to the State Office of Administrative Hearings (SOAH) and
requested that SOAH docket the case, naming DADS as the referring agency. See 1 Tex. Admin.
Code §§ 155.53 (West 2012) (State Office of Admin. Hearings, Request to Docket Case);5 357.482
(West 2012) (Definitions) (defining “referring agency” as “the HHSC agency taking the action and
that issues the notice of adverse action, or the state agency that otherwise refers the matter to the
4
All cites to title 1, chapter 357 of the Texas Administrative Code are to rules issued by the
Texas Health and Human Services Commission.
5
All cites to title 1, chapter 155 of the Texas Administrative Code are to rules issued by the
State Office of Administrative Hearings.
4
HHSC Appeals Division for a hearing”), .484(d) (Request for Hearing) (upon receipt of request for
hearing HHSC will transfer case to SOAH).6
DADS sent a notice of hearing, and the case was docketed at SOAH with DADS and
Oakview as the parties. See Tex. Gov’t Code Ann. § 2001.051, .052 (West 2008); 1 Tex. Admin.
Code § 155.401 (West 2012) (Notice of Hearing); 1 Tex. Admin. Code § 357.489 (Notice of
Hearing). The parties filed cross-motions for summary disposition. See 1 Tex. Admin. Code
§§ 155.505 (West 2012) (Summary Disposition); 357.496 (West 2012) (Summary disposition). The
central issue was whether the repealed TILE rules applied to the enforcement action against
Oakview. On partially stipulated facts, two administrative law judges (ALJs) assigned to the case
issued a proposal for decision (PFD) recommending that DADS’s motion for summary disposition
be denied and Oakview’s be granted. See Tex. Gov’t Code Ann. § 2001.062 (West 2008); 1 Tex.
Admin. Code §§ 155.507 (West 2012) (Proposal for Decision); 357.497(a) (West 2012) (Proposals
for Decision, Exceptions, and Replies). The PFD contained a conclusion of law that the legislative
intent to delete the TILE rules was clear and the general savings provision of the Texas Code
Construction Act did not operate to preserve the application to the TILE rules after their repeal. See
Tex. Gov’t Code Ann. § 331.031 (West 2005) (Savings Provisions).
DADS filed exceptions to the PFD, and Oakview filed a response. See 1 Tex. Admin.
Code § 357.497(b). The ALJs declined to revise the PFD. DADS subsequently issued an order
adopting the ALJs’ findings and conclusions except for the conclusions concerning the general
6
HHSC is the umbrella agency over four other health and human services agencies,
including DADS. See Tex. Gov’t Code Ann. §§ 531.001(1-a)(4), .0055 (West 2012).
5
savings provision and the rulings on the motions. In the order, DADS revised the conclusions to
read that the general saving provision operated to preserve the application of the TILE rules and that
Oakview’s motion for summary disposition should be denied. The order then denied Oakview’s
motion, deleted the conclusion that DADS’s motion should be denied, and remanded the case to
SOAH “for a proposal on [DADS’s] Motion for Summary Disposition or for a hearing on the
merits.” On remand, the ALJs issued a revised PFD, stating that “[b]ased on [DADS’s] Order in this
docket, the ALJs find that the TILE values [assigned by OIG] must be applied.” DADS subsequently
issued an order adopting the findings, conclusions, and recommendations contained in the revised
PFD. See Tex. Gov’t Code Ann. § 2001.141 (West 2008). Oakview filed a timely motion for
rehearing. See id. § 2001.145, .146 (West 2008). In response, DADS deleted one objected-to
paragraph and otherwise denied the motion for rehearing, and the modified order became final. See
id. §§ 2001.144 (West 2008).
Oakview appealed to the district court, naming as defendants DADS, its
commissioner, HHSC, and its commissioner. In its petition, Oakview sought reversal of the order,
relief under the Uniform Declaratory Judgments Act (UDJA), and fees and expenses under a motion
for a frivolous claim by a state agency. See id. § 2001.171 (West 2008); Tex. Civ. Prac. & Rem.
Code Ann. §§ 37.004–.011 (West 2008), 105.001–.004 (West 2011) (Frivolous Claim by State
Agency). The state defendants jointly filed a plea to the jurisdiction contending that HHSC was not
a proper party to an appeal of a DADS order and that the district court lacked jurisdiction over all
6
of Oakview’s claims other than reversal of the DADS order. The district court denied the plea to the
jurisdiction, reversed the DADS order, and denied all other relief sought by Oakview. This
appeal followed.
DISCUSSION
Standard of Review
Generally, the APA provides for review of an agency decision under a substantial
evidence standard, and a court may not substitute its judgment for the agency’s judgment on the
weight of the evidence on a question committed to agency discretion. See Tex. Gov’t Code Ann.
§ 2001.174 (West 2008); City of El Paso v. Pub. Util. Comm’n, 344 S.W.3d 609, 618 (Tex.
App.—Austin 2011, no pet.). Here, however, the challenge to the order turns on the construction
of a statute, which is a question of law that we review de novo. See Railroad Comm’n of Tex.
v. Texas Citizens for a Safe Future & Clean Water, 336 S.W.3d 619, 624 (Tex. 2011); First Am.
Title Ins. Co. v. Combs, 258 S.W.3d 627, 631 (Tex. 2008); City of El Paso, 344 S.W.3d at 618. Of
primary concern is the express statutory language. See Galbraith Eng’g Consultants, Inc.
v. Pochucha, 290 S.W.3d 863, 867 (Tex. 2009). We apply the plain meaning of the text unless a
different meaning is supplied by legislative definition or is apparent from the context or the plain
meaning leads to absurd results. Marks v. St. Luke’s Episcopal Hosp., 319 S.W.3d 658, 663 (Tex.
2010). Although we must give “serious consideration” to the construction of a statute by the
administrative agency charged with its enforcement, see Railroad Comm’n of Tex., 336 S.W.3d at
624, we do not defer to an administrative interpretation regarding questions that do not lie within the
agency’s expertise or that deal with a nontechnical question of law, see Rylander v. Fisher Controls
7
Int’l, Inc., 45 S.W.3d 291, 302 (Tex. App.—Austin 2001, no pet.) (quoting 2B Singer, Sutherland
Statutory Construction § 49.04, at 23–23 (6th ed. 2000)). Courts are as competent as agencies in
construing statutory language. See id.
The State’s plea to the jurisdiction challenges the district court’s authority to decide
this case, see Heckman v. Williamson Cnty., 369 S.W.3d 137, 149 (Tex. 2012), and also raises a
question of law that we review de novo, see Westbrook v. Penley, 231 S.W.3d 389, 394 (Tex. 2007).
When, as here, a plea to the jurisdiction challenges the pleadings, we must determine if the pleader
has alleged sufficient facts to affirmatively demonstrate the trial court’s jurisdiction to hear the cause.
City of El Paso v. Heinrich, 284 S.W.3d 366, 378 (Tex. 2009); Texas Dep’t of Parks & Wildlife
v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004).
To make this determination, we look to the pleader’s intent, construe the pleadings
liberally in favor of jurisdiction, and accept the allegations in the pleadings as true. Westbrook,
231 S.W.3d at 405; Miranda, 133 S.W.3d at 226. When the pleadings do not allege sufficient facts
to affirmatively demonstrate the trial court’s jurisdiction but do not affirmatively demonstrate an
incurable jurisdictional defect, the issue is one of pleading sufficiency, and the plaintiff should be
given an opportunity to amend. Miranda, 133 S.W.3d at 226–27. If the pleadings affirmatively
negate the existence of jurisdiction, then a plea to the jurisdiction may be granted without allowing
the plaintiff an opportunity to amend. Id. at 227. In determining a plea to the jurisdiction, the trial
court may consider any evidence the parties have submitted and must do so when necessary to
resolve the jurisdictional inquiry. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000).
8
Sovereign immunity from suit bars actions against the state absent a legislative
waiver, deprives a court of subject matter jurisdiction, and is therefore properly asserted in a plea to
the jurisdiction. Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Texas Political Subdivisions
Prop./Cas. Joint Self-Ins. Fund,, 212 S.W.3d 320, 323–24 (Tex. 2006); Harris Cnty. v. Sykes,
136 S.W.3d 635, 638 (Tex. 2004); Miranda, 133 S.W3d at 224. The APA provides a limited waiver
of sovereign immunity from suit for appeal of an agency decision to district court. See Tex. Gov’t
Code Ann. § 2001.171. “For a suit to proceed against a governmental unit under a statute [that
waives immunity], the court must first look to the terms of the Act to determine the scope of its
waiver and then ‘consider the particular facts of the case . . . to determine whether it comes within
that scope.’” Texas Dep’t of Criminal Justice v. Cooke, 149 S.W.3d 700,704 (Tex. App.—Austin
2004, no pet.) (quoting Texas Dep’t of Criminal Justice v. Miller, 51 S.W.3d 583, 587 (Tex. 2001))
(ellipsis in original). Although the UDJA waives immunity for declaratory judgment actions
challenging the validity of statutes, it is not a general waiver of immunity. See Tex. Civ. Prac. &
Rem. Code Ann. § 37.006(b) (West 2008); Texas Parks & Wildlife Dep’t v. Sawyer Trust,
354 S.W.3d 384, 388 (Tex. 2011). It does not enlarge a trial court’s jurisdiction, and a request for
declaratory relief does not alter the underlying nature of a suit. Heinrich, 284 S.W.3d at 370;
IT-Davy, 74 S.W.3d at 855.
The General Savings Clause
In its first issue, the State contends that the district court erred in reversing the DADS
order because the general savings provision of the Texas Code Construction Act preserved the
application of the TILE rules after their repeal. The general common law rule is that when a statute
9
is repealed without a savings clause limiting the effect of the repeal, the repeal is given immediate
effect. Quick v. City of Austin, 7 S.W.3d 109, 128 (Tex. 1999). Here the parties agree that there was
no express savings clause in the repealing legislation but join issue on whether the general savings
provision applies. The savings provision, which modified the general common law rule, provides:
(a) Except as provided by Subsection (b), the reenactment, revision, amendment, or
repeal of a statute does not affect:
(1) the prior operation of the statute or any prior action taken under it;
(2) any validation, cure, right, privilege, obligation, or liability previously
acquired, accrued, accorded, or incurred under it;
(3) any violation of the statute or any penalty, forfeiture, or punishment
incurred under the statute before its amendment or repeal; or
(4) any investigation, proceeding, or remedy concerning any privilege,
obligation, liability, penalty, forfeiture, or punishment; and the investigation,
proceeding, or remedy may be instituted, continued, or enforced, and the
penalty, forfeiture, or punishment imposed, as if the statute had not been
repealed or amended.
Tex. Gov’t Code Ann. § 311.031.7 The supreme court has held that there is a presumption that the
general savings provision applies “unless a contrary legislative intent is shown by clear expression
or necessary implication” in the repealing legislation. Quick, 7 S.W.3d at 130.
Oakview contends that the language of the preambles to the proposed and adopted
RUG rules that replaced the repealed TILE rules are a clear expression of intent that the general
savings provision does not apply and that the repealed TILE rules cannot be applied in an
7
The Code Construction Act applies to agency rules as well as statutes. See Tex. Gov’t
Code Ann. § 311.002(4) (West 2005) (application of code construction act).
10
enforcement action after their repeal. The preamble to the proposed rules explained the proposed
repeal of the existing rules and adoption of new rules under the same numbers and stated that the
agency was “moving from the TILE classification system to the RUG classification system” and that
the proposed repeal of the TILE rules “deletes existing requirements governing a nursing facility’s
use of the TILE case mix classification system and assessments.” See 33 Tex. Reg. 5131 (2008),
adopted 33 Tex. Reg. 8311 (2008) (codified at 1 Tex. Admin. Code §§ 371.212, .214). The
preamble to the adopted rules stated that the proposed rules were adopted without changes and that
the new sections replaced the old sections. See 33 Tex. Reg. 8311. The State argues that this
language does not add anything to the fact that the TILE rules were repealed and replaced by the
RUG rules and does not constitute a clear statement of intent that the general savings provision
should not apply. In the absence of a clear expression that the general savings provision should not
apply, the State contends that, under Quick, it does apply. We agree. The repealing language does
not expressly negate the application of the general savings provision, and we therefore find no
legislative intent that the general savings provision does not apply to the repealed TILE rules. See
Quick, 7 S.W.3d at 130 (repealing legislation, which contained narrow savings clause, did not
expressly negate application of general savings provision, and both specific and general savings
clauses were needed to effectuate legislative intent).
We turn, then, to whether the general savings provision operates to preserve the
application of the TILE rules in the enforcement action against Oakview. The State argues that
subsections (a)(2) and (a)(4) of the savings provision save the enforcement under the TILE rules.
Subsection (a)(2) provides that the repeal of a statute does not affect rights accrued or obligations
11
incurred prior to the repeal. Tex. Gov’t Code Ann. § 311.031(a)(2). The State contends that
Oakview incurred the obligation to maintain the CARE forms under the TILE rules prior to their
repeal and therefore had to provide the forms in the on-site visit conducted after their repeal. See
former 1 Tex. Admin. Code §§ 371.212(7), .213(b). The State further contends that OIG acquired
the right to review the TILE assessments at the time they were conducted and electronic forms filed,
which was prior to the repeal. These obligations and rights, the State argues, therefore survive the
repeal of the TILE rules.
However, Oakview’s obligation was to “maintain” the records and provide
documentation to reviewers as necessary to conduct reviews under TILE. See former 1 Tex. Admin.
Code § 371.213(b). On-site reviews under TILE ceased upon repeal of the TILE rules. See current
1 Tex. Admin. Code 371.214(n) (outlining procedures for utilizations reviews under RUG rules).
Thus, although Oakview did have an obligation to “maintain” the CARE forms under the old rules,
see former 1 Tex. Admin. Code § 371.212(7), there was no current obligation to maintain them at
the time of the review because that rule had been repealed and replaced, see 33 Tex. Reg. 8311.8 Nor
did the State accrue a right of review and assessment prior to the repeal of the TILE rules; the State’s
right under the TILE rules was to view the CARE forms at the time of the on-site visit, which did
not occur until after the repeal and replacement of the rules governing on-site visits. Therefore, we
do not defer to the State’s construction of subsection (a)(2) here, see Rylander, 45 S.W.3d at 302,
8
In addition, we observe that there is no provision in the RUG rules for a default high score
for failure to produce the required forms during on-site visits. See current 1 Tex. Admin. Code
§§ 371.212, .214.
12
and conclude that subsection (a)(2) of the savings provision does not save the enforcement action
under the TILE rules.
The State also contends that subsection (a)(4) preserves the TILE rules here.
Subsection (a)(4) provides that investigations and proceedings are not affected by the repeal of a
statute. Tex. Gov’t Code Ann. § 311.031(a)(4). The State characterizes the visit to Oakview by OIG
on February 3, 2009, as a “follow-up” visit and part of an ongoing investigation that was begun at
the time of the visit conducted on February 22, 2008, before the repeal of the TILE rules. However,
there is no evidence in the record that HHSC or OIG opened any “investigation” or that the on-site
visit on February 3, 2009, was part of any “proceeding.” Rather, the visits appear from the record
to have been conducted in accordance with the provisions of both the TILE and RUG rules regarding
frequency of reviews. See former 1 Tex. Admin. Code § 371.214(d)(1) (frequency of reviews
determined by error rate history); current 1 Tex. Admin. Code § 371.214(n)(1) (same). The State
argues that the reference to Oakview’s failure to provide the forms at the first visit contained in the
Reconsideration Review Report following the second visit indicates the two visits were somehow
connected. We disagree. The reference to the prior violation was required under the TILE rules to
justify the imposition of the default score of 212, which could be applied only on subsequent
violations. See former 1 Tex. Admin. Code § 371.212(7)(B). We therefore conclude that subsection
(a)(4) of the savings provision does not save the enforcement action under the TILE rules. See
Rylander, 45 S.W.3d at 302. We overrule the State’s first issue.
13
DADS’s Authority to Issue Final Order
In its second issue, the State argues that DADS was within its authority to issue the
final order following the contested case hearing. In addition to seeking reversal of the DADS order,
Oakview sought declarations under the UDJA that DADS exceeded its authority in interpreting
HHSC rules, modifying the ALJs’ PFD, and issuing the final decision in the matter. See Tex. Civ.
Prac. & Rem. Code Ann. §§ 37.004. However, in its judgment, the district court denied the relief
Oakview sought under the UDJA, and Oakview does not appeal that ruling.9 Therefore, we need not
reach this issue. See Tex. R. Civ. P. 47.1.
Substantial Evidence
In its third issue, the State contends that there was substantial evidence to support
DADS’s final order adopting the revised PFD’s finding that Oakview did not provide the CARE
forms during the on-site visit of February 3, 2009, and upholding the resulting default TILE scores
assigned by OIG. The APA authorizes a reviewing court to test an agency’s findings and
conclusions to determine if they are reasonably supported by substantial evidence considering the
reliable and probative evidence in the record as a whole. Tex. Gov’t Code Ann. § 2001.174; see City
of El Paso, 344 S.W.3d at 618. Here, however, Oakview did not challenge the findings of fact under
the substantial evidence standard before SOAH or the district court and does not do so on appeal.
There is no dispute that Oakview did not provide the CARE forms on February 3, 2009. The only
issue below and on appeal regarding the appropriateness of the order is whether the general savings
9
We do not construe the judgment as ambiguous, as the State contends it is, and conclude
that on its face, it reversed the DADS order and denied all other relief sought.
14
provision operated to preserve the application of the TILE rules in the enforcement action. Such
construction of a statute is a question of law, which we review do novo. See Railroad Comm’n ,
336 S.W.3d at 624; First Am. Title Ins. Co., 258 S.W.3d at 631; City of El Paso, 344 S.W.3d at 618
(applying de novo standard of review to construction of statute in appeal under APA of utility
commission’s order). Further, this argument presumes the application of the TILE rules, an issue
we have already decided in favor of Oakview. Consequently, we need not reach this issue.10 See
Tex. R. Civ. P. 47.1.
Issue Four
HHSC as a party
The State raises several arguments in its fourth issue. First, it argues that HHSC and
Suehs are protected by sovereign immunity and are not proper parties to this action, matters raised
in the State’s plea to the jurisdiction, which the district court denied. Oakview points to the
following as reasons that HHSC and Suehs are proper parties: (1) HHSC promulgated the rules at
issue, see Tex. Hum. Res. Code Ann. § 161.073 (West Supp. 2012); (2) Oakview’s appeal was to
the HHSC Appeals Division, see 1 Tex. Admin. Code Ann. § 357.484(b); (3) the case was given an
HHSC cause number, and the number was retained but changed to reflect it was a DADS cause
number; (4) HHSC is responsible for review and investigation of nursing homes that receive
Medicaid funds and conducted the on-site visits to Oakview through its OIG, see Tex. Gov’t Code
Ann. § 531.102; former 1 Tex. Admin. Code §§ 371.213(a), .214(c); and (5) the preamble to the
10
The State notes that it briefed this issue out of “an abundance of caution.”
15
proposed rules stated that it is HHSC that recovers incorrect Medicaid payments and reimburses
underpayment to the nursing facility, see 33 Tex. Reg. 5131.
We do not find these reasons persuasive. It is true that HHSC and DADS are related
agencies and that HHSC promulgated the rules that governed the enforcement proceeding and
participated in it. See Tex. Gov’t Code Ann. §§ 531.001(1-a)(4), .0055(e) (West 2012); Tex. Hum.
Res. Code Ann. § 161.073; former 1 Tex. Admin. Code §§ 371.213(a), .214(c). However, it is also
apparent that DADS was the only agency that was a party to the SOAH proceeding and was the
agency that issued the final order at issue here. As a state entity, HHSC is protected by sovereign
immunity unless it is expressly waived by statute. See Ben Bolt-Palito Blanco Consol. Indep. Sch.
Dist, 212 S.W.3d at 323–24; Sykes, 136 S.W.3d at 638. “[C]ourts are required to narrowly construe
statutory waivers of sovereign immunity.” TJFA, L.P. v. Texas Comm’n on Envtl. Quality & BFI
Waste Sys. of N. Am., 368 S.W.3d 727, 737 (Tex. App.—Austin 2012, pet. denied) (citing Mission
Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653, 655 (Tex. 2008)). It is settled that for a statute
to waive immunity, it must contain a clear and unambiguous expression of the legislature’s intent
to do so. Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 696 (Tex. 2003). When a statute
does not contain “‘magic words,’ such as the State’s ‘sovereign immunity to suit and liability is
waived[,]’” the supreme court has employed certain “aids to help guide our analysis.” Id. at 697.
One guideline is that, although the statute need not be a “model of ‘perfect clarity,’” it must waive
immunity “beyond doubt.” Id. For example, if the provision in question would be meaningless
unless immunity were waived, a court may find waiver. See id. Another is that “when construing
16
a statute that purportedly waives sovereign immunity, we generally resolve ambiguities by retaining
immunity.”11 Id.
The APA provides a limited waiver of sovereign immunity from suit by providing
for appeal of an agency decision to district court. See Tex. Gov’t Code Ann. § 2001.171. The APA
contemplates judicial review of an “agency decision” and refers to “agency action,” “agency
discretion,” and service of the petition on “a state agency” or “the state agency.” See id.
§§ 2001.172.–176 (West 2008). Although the statute does not expressly state that “immunity is
waived,” the right of judicial review and the provisions for service on “a state agency” would be
meaningless if immunity were not waived as to the agency whose decision is being appealed. See
Wichita Falls State Hosp., 106 S.W.3d at 697. However, there is nothing in the plain language of
the APA that expressly extends that waiver of immunity beyond the agency whose order is at issue
to related agencies, and we need not read in such an extension in order to give the statute meaning.
See Pochucha, 290 S.W.3d at 867; Wichita Falls State Hosp., 106 S.W.3d at 697. Although the
references to “the” or “a” state agency and its “decision,” “action,” or “discretion” could be
construed as ambiguous in light of HHSC’s oversight of DADS, its coordination with DADS on
enforcement, and its role in issuing rules for the operation of DADS, we must resolve that ambiguity
in favor of immunity. See Wichita Falls State Hosp., 106 S.W.3d at 697.12
11
Other guidelines cited by the supreme court in Wichita Falls State Hospital v. Taylor, 106
S.W.3d 692, 698 (Tex. 2003), do not apply to the facts before us.
12
The UDJA also provides a limited waiver of immunity for claims challenging the validity
of a statute. See Tex. Civ. Prac. & Rem. Code Ann. § 37.006(b) (West 2008). In addition, the APA
provides that “the state agency” must be made a party to a declaratory judgment action challenging
the validity or applicability of a rule. See Tex. Gov’t Code § 2001.038(a)(c) (West 2008). However,
even assuming Oakview’s claims can be construed as a challenge to the validity or applicability of
17
As for the immunity of Suehs, we observe that public employees generally are
protected by official immunity from suits arising out of the performance of their discretionary
duties performed in good faith and within the scope of their authority. See Franka v. Velasquez,
332 S.W.2d 367, 383 (Tex. 2011). “It is fundamental that a suit against a state official is merely
‘another way of pleading an action against the entity of which [the official] is an agent.’”
Texas A&M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 844 (Tex. 2007) (citing Kentucky v. Graham,
473 U.S. 159, 165, (1985) (quoting Monell v. New York City Dep’t of Soc. Servs., 436 U.S. 658, 690
n.55 (1978))) (brackets in original). One exception is an ultra vires claim, an action alleging that the
official acted without legal authority or failed to perform a purely ministerial act. See Franka,
332 S.W.3d at 382; Heinrich, 284 S.W.3d at 372. Here, Oakview has not alleged an ultra vires claim
against Suehs. Consequently, Oakview’s claims against Suehs are claims against HHSC and are
likewise barred by sovereign immunity. See Koseoglu, 233 S.W.3d at 844; Wichita Falls State
Hosp., 106 S.W.3d at 697. We therefore conclude that the district lacked subject matter jurisdiction
over Oakview’s claims against HHSC and Suehs and sustain the State’s fourth issue as to HHSC’s
and Suehs’s immunity from suit.
Alternate bases for judgment
Observing that the district court did not state the reasons for its ruling, the State also
challenges several arguments made by Oakview “to the extent the trial court’s decision in this case
may have been based on” those claims. First, it contends that the district court erred to the extent
the TILE rules, Oakview’s claims for declaratory relief were directed at DADS, not HHSC, and these
provisions can not waive immunity for HHSC on the record before us.
18
it reversed the DADS order based on an unexpressed finding that in modifying the ALJs’ first PFD,
DADS violated section 2001.058(e) of the APA, which outlines when an agency may change an
ALJ’s finding of fact or conclusion of law. See Tex. Gov’t Code Ann. § 2001.058(e) (West 2008).
Oakview’s claim that DADS wrongly modified the first PFD was asserted in its request for
declaratory relief, which the trial court denied and which Oakview does not appeal. We need not
address this issue again.13 See Tex. R. Civ. P. 47.1.
The State also argues that DADS’s final order and its letter denying Oakview’s
motion for rehearing cannot provide a basis for the district court’s reversal of the DADS order and
that the district court erred to the extent it relied on either in its decision to reverse the order.
However, it is clear from the record that DADS’s first order modifying the first PFD and remanding
the case to SOAH and its letter denying rehearing were not final and appealable orders of the agency,
were not what Oakview appealed, and were not what the district court considered. We need not
reach these arguments. See id.
Finally, the State challenges the district court’s authority to reverse the DADS order
under the UDJA and chapter 105 of the civil practices and remedies code. See Tex. Civ. Prac.
& Rem. Code Ann. §§ 37.004–.011, 105.001–.004. Because the district court denied the relief
Oakview sought under the UDJA and chapter 105,14 it is clear from the record that the district court
did not base its reversal of the order on these claims. Further, Oakview does not appeal the denial
of its UDJA and chapter 105 claims. We need not reach this point. See id. Therefore, we sustain
13
See supra note 7.
14
See supra note 7.
19
the State’s fourth issue as to HHSC’s and Suehs’s sovereign immunity without reaching the
remainder of the State’s arguments on this issue.
CONCLUSION
Having concluded that the district court lacks jurisdiction to hear Oakview’s claims
against HHSC and Suehs, we reverse the district court’s denial of the State’s plea to the jurisdiction
as to the sovereign immunity of HHSC and Suehs and dismiss the action as to them for lack of
subject matter jurisdiction. We affirm the district court’s judgment in all other respects.
__________________________________________
Melissa Goodwin, Justice
Before Chief Justice Jones, Justices Goodwin and Field
Affirmed in part; Reversed and Dismissed in part
Filed: March 8, 2013
20