potter-county-texas-as-plan-administrator-for-the-health-benefits-plan-for ( 2010 )

NO. 07-09-00163-CV
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL D
MARCH 12, 2010
POTTER COUNTY, TEXAS AS PLAN
ADMINISTRATOR FOR THE HEALTH
BENEFITS PLAN FOR THE EMPLOYEES OF
POTTER COUNTY, TEXAS, APPELLANT
v.
RONDA TUCKNESS AND
MICHAEL TUCKNESS, APPELLEES
FROM THE 47TH DISTRICT COURT OF POTTER COUNTY;
NO. 96,379-A; HONORABLE PAT PHELAN, JUDGE
Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ.
OPINION
Appellant Potter County brings this interlocutory appeal from an order denying its
plea to the jurisdiction.1 The County contends it is immune from suit in the underlying
action to recover health care benefits brought by appellees Ronda Tuckness and her
husband Michael Tuckness. Finding the County’s governmental immunity has not been
waived, we will reverse the order of the trial court and render judgment dismissing the
Tucknesses= case for want of jurisdiction.
1
See Tex. Civ. Prac. & Rem. Code Ann. ' 51.014(a)(8) (Vernon 2008).
Background
According to the live petition of the Tucknesses,2 Mrs. Tuckness is employed by
the County and covered by its AEmployee Health Benefit Plan.@3 She purchased
additional health care coverage under the plan for Mr. Tuckness. Mr. Tuckness
sustained a back injury and was scheduled for surgery. In a letter to Mrs. Tuckness
dated prior to the scheduled surgery, the third party Aplan supervisor@ certified the
medical necessity of the intended hospitalization.4 After the surgery, the County denied
Mr. Tuckness’s claim for reimbursement of the surgery’s cost, finding the plan’s
exclusion for occupational sicknesses and injuries sustained in the course of
employment was applicable.5
2
In reviewing a trial court=s ruling on a plea to the jurisdiction, we take all factual
allegations pled as true, unless jurisdictionally relevant evidence was offered. Bland
Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). All facts recited in this
opinion are from appellees= live petition, including its attached exhibits, unless otherwise
noted.
3
The plan document, attached to the Tucknesses’ original petition designates
the County as Anamed fiduciary and plan administrator.@
4
The letter also provided, AIf the claims and/or medical records do not support
the initial information, the certification is not valid.@ The letter further stated that benefits
or payments were not guaranteed and benefits were based on the employee=s eligibility
status at the time charges were incurred.
5
The Tucknesses’ pleadings refer to the plan’s exclusion paragraph reading:
The following exclusions and limitations apply to expenses incurred by all
Covered Persons:
***
Charges for any services or supplies provided in connection with an
occupational sickness or an injury sustained in the scope of and in the
course of any employment whether or not benefits are or could be
2
The plan document specified a two-tier review procedure for coverage disputes
before Alegal action is brought.@ The Tucknesses exhausted the review procedure and
filed suit against the County seeking a declaratory judgment. They sought declarations
that:
Ronda Tuckness, was at all times pertinent hereto a Participant in the
Plan. . . . Plaintiff, Michael Tuckness was at all times pertinent hereto a
Dependent for purposes of coverage under the Plan as defined by the
Plan terms, conditions and/or definitions. Plaintiff, Michael Tuckness, did
not have any spinal exclusions in effect Under (sic) any term or condition
of the Plan . . . which would prohibit denial of the claim as a pre-existing
condition. Plaintiff, Michael Tuckness, was not in the course and scope of
employment [at the time of injury] with any person and/or entity. Plaintiff,
Michael Tuckness= . . . injury should be a covered medical charge under
the terms and/or conditions of the [Plan]. Plaintiffs have complied with the
terms and conditions of the Plan and all conditions precedent have been
performed for payment of benefits under the [Plan].
In the prayer, the Tucknesses requested a declaration that, AMichael Tuckness=s injury
and subsequent surgery were not work related or an occupational injury and that [the
County] pay all reasonable and necessary medical expenses related [to Mr. Tuckness=s
condition] . . . in accordance with the terms and conditions of the Plan. In addition, your
Plaintiffs ask for . . . actual damages in the amount of $34,872.78 for medical
expenses.@
The County interposed the affirmative defense of governmental immunity and
filed a plea to the jurisdiction asserting the trial court lacked subject-matter jurisdiction.
The Tucknesses filed a traditional motion for partial summary judgment challenging the
provided under Workers’ Compensation.
3
County=s claim of governmental immunity. Following recusal of the sitting judge, an
assigned judge granted the Tucknesses= motion for partial summary judgment and
overruled the County=s plea to the jurisdiction. This interlocutory appeal by the County
followed.
Issues
Through three issues the County urges its immunity from suit for the declaratory
relief sought by the Tucknesses. The Tucknesses respond that immunity was expressly
waived by the terms of the plan and statute and impliedly waived by the conduct of the
County.
Analysis
A plea to the jurisdiction of the trial court based on governmental immunity
challenges the subject-matter jurisdiction of the trial court. State v. Holland, 221 S.W.3d
639, 642 (Tex. 2007). Whether the trial court lacks subject-matter jurisdiction is a
question of law we review de novo. Id. ASovereign immunity and its counterpart,
governmental immunity, exist to protect the State and its political subdivisions from
lawsuits and liability for money damages.@ Mission Consol. Indep. Sch. Dist. v. Garcia,
253 S.W.3d 653, 655 (Tex. 2008); Reata Constr. Corp. v. City of Dallas, 197 S.W.3d
371, 374 (Tex. 2006).6 Sovereign and governmental immunities encompass two distinct
principles, immunity from suit and immunity from liability. Texas Dep’t of Parks &
6
We refer to the immunity asserted by the County as governmental immunity.
Houston Mun. Empl. Pension Sys. v. Ferrell, 248 S.W.3d 151, 154 n.2 (Tex. 2007)
(governmental immunity protects counties).
4
Wildlife v. Miranda, 133 S.W.3d 217, 224 (Tex. 2004); Channelview Indep. Sch. Dist. v.
A.R.C.I., Ltd., 199 S.W.3d 556, 559 (Tex.App.BHouston [1st Dist.] 2006, no pet.).
Immunity from liability is an affirmative defense subject to waiver, but immunity from suit
deprives a court of subject-matter jurisdiction. Miranda, 133 S.W.3d at 224.
Because immunity from suit affects the court=s jurisdiction, it is properly raised in
a plea to the jurisdiction. Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 696
(Tex. 2003). A plea to the jurisdiction may be presented as either an attack on the
sufficiency of the pleadings, as the County does here, or an evidentiary attack on the
existence of jurisdictional facts. See Miranda, 133 S.W.3d at 226-27. We liberally
construe the plaintiff=s petition, looking to the pleader=s intent. Holland, 221 S.W.3d at
642-43.
Waiver by Request for Declaratory Relief
As a general proposition, governmental immunity is not a bar to suits seeking a
declaration of a party=s rights under a statute or regulation. See Tex. Educ. Agency v.
Leeper, 893 S.W.2d 432, 446 (Tex. 1994) (in suit challenging construction of
compulsory school-attendance law by state officials, governmental immunity did not bar
claim for declaratory relief). The County contends this exception is not applicable here
because the Tucknesses did not seek a statutory interpretation but employed an action
for declaratory relief to obtain a contract interpretation that would compel a particular
action.
The Uniform Declaratory Judgment Act is a remedial statute designed Ato settle
and to afford relief from uncertainty and insecurity with respect to rights, status, and
5
other legal relations.@ Tex. Civ. Prac. & Rem. Code Ann. ' 37.002(b) (Vernon 2008);
Texas Natural Res. Conservation Comm=n v. IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002).
In relevant part, the act provides:
A person interested under a . . . written contract . . . or whose rights,
status, or other legal relations are affected by a statute, municipal
ordinance, contract, or franchise may have determined any question of
construction or validity arising under the instrument, statute, ordinance,
contract or franchise and obtain a declaration of rights, status, or other
legal relations thereunder.
Tex. Civ. Prac. & Rem. Code Ann. ' 37.004(a) (Vernon 2008). Seeking declaratory
relief does not alter the underlying nature of a suit or confer jurisdiction on a court where
none otherwise exists. IT-Davy, 74 S.W.3d at 855.
In Federal Sign v. Tex. Southern Univ., the court held Awe distinguish suits to
determine a party=s rights against the State from suits seeking damages.@ 951 S.W.2d
401, 405 (Tex. 1997). Cases of the first type seek a declaration that state officers acted
without legal or statutory authority and seek to compel conduct conforming to law. IT-
Davy, 74 S.W.3d at 855. Generally, cases of this class are not barred by governmental
immunity.7 Cases of the second type seek declarations establishing contract validity,
7
But cases involving such an “ultra vires” act may yet implicate governmental
immunity through the remedy sought. See City of El Paso v. Heinrich, 284 S.W.3d 366,
373-74 (Tex. 2009). In City of Houston v. Williams, retired firefighters sought a
declaration of rights under a statute concerning amounts deducted from payments they
received on termination of employment. 216 S.W.3d 827, 828 (Tex. 2007). In finding
no waiver of immunity by the city, the court noted the only claimed injury occurred in the
past and the only plausible remedy was money damages. Id. at 828-29. Thus,
6
enforcing contract performance, or imposing contractual liabilities. Claims of this nature
are unenforceable because their attempted effect is control of state action by imposing
liability on the State. IT-Davy, 74 S.W.3d at 855-56. Specifically, Aprivate parties
cannot circumvent the State=s sovereign immunity from suit by characterizing a suit for
money damages, such as a contract dispute, as a declaratory-judgment claim.@ Id. at
856.
Here, the Tucknesses seek enforcement of a contract and recovery of damages
rather than a declaration of rights under a statute or constitutional provision. Their suit
attempts to adjudicate a breach of contract claim, nothing more. Immunity from suit was
not waived simply because the Tucknesses couched their claim as one for declaratory
relief. See IT-Davy, 74 S.W.3d at 860.
Waiver by Contract
As noted, the plan document specified a two-tier review process before initiation
of “any legal action.” Thus, argue the Tucknesses, the County contracted for a legal
remedy after the exhaustion of administrative claim review procedures. It is
unnecessary to, and we do not, interpret the meaning and effect of the plan document=s
remedies section because even accepting the interpretation given it by the Tucknesses,
there is no waiver of governmental immunity. It is correct that the State waives
immunity from liability on its contracts with a private party as if it were a private party.
Gen. Servs. Comm=n v. Little-Tex Insulation Co., 39 S.W.3d 591, 594 (Tex. 2001). But
Aretrospective monetary claims are generally barred by immunity@ even though the suit
seeks a declaration of rights under a statute. See Heinrich, 284 S.W.3d at 374.
7
waiver of immunity from suit for a claimed breach of contract requires a clear and
unambiguous expression by the Legislature. Travis County v. Pelzel & Assocs., 77
S.W.3d 246, 248 (Tex. 2002). It has long been settled in Texas that Ait is the
Legislature=s sole province to waive or abrogate sovereign immunity.@ Federal Sign,
951 S.W.2d at 409 (citing authorities). Legislative consent to suits against the State
may be granted by statute or resolution. Gen. Serv. Comm=n, 39 S.W.3d at 594; Tex.
Civ. Prac. & Rem. Code Ann. ' 107.001-.005 (Vernon 2005 & Supp. 2009) (resolution).
The County’s plan language dealing with “any legal action” has no greater effect
as a waiver of immunity from suit than the similar language in the Texas Natural
Resource Conservation Commission’s contract in IT-Davy, 74 S.W.3d at 851 (contract’s
remedies section stated claims or disputes would be decided by arbitration or in court).
The court rejected a waiver-of-immunity-by-contract contention there, again pointing out
that waivers of immunity from suit in contract claims are made only by the Legislature.
Id. at 858. Absent express legislative authorization, the County could not contract to
waive its immunity from suit.
Waiver by Other Conduct
The County accepted premiums paid on the plan for Mr. Tuckness and the plan
supervisor submitted the previously noted letter to Mrs. Tuckness. The Tucknesses
claim the conduct of the County brings their facts within the so-called Awaiver by
conduct exception@ to governmental immunity. In a footnote in Federal Sign the court
stated, AThere may be. . . circumstances where the State may waive its immunity by
conduct other than simply executing a contract so that it is not always immune from suit
8
when it contracts.@ 951 S.W.2d at 408 n.1. But if additional8 such circumstances exist
under current law,9 the nature of the conduct necessary to bring a contract case within
the contemplated exception is uncertain. In IT-Davy, the court was asked to carve out a
waiver by conduct exception. 74 S.W.3d at 856-57. It declined, reaffirming Athat it is the
Legislature=s sole province to waive or abrogate sovereign immunity.@ Id. That and
other decisions have made clear that a governmental entity does not waive immunity
from suit based on breach of a contract simply by accepting benefits under the contract.
See Tex. A&M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 840 (Tex. 2007) (listing cases);
Tooke v. City of Mexia, 197 S.W.3d 325, 343 (Tex. 2006) (rejecting contention city’s
partial performance of contract waived immunity). In Pelzel & Assocs., the court found
Travis County did not waive its immunity from suit by retaining part of its payment
pursuant to the late-completion liquidated damages clause of a construction contract.
77 S.W.3d at 252. The supreme court again found the circumstances insufficient to
show a waiver of immunity in Catalina Development, Inc. v. County of El Paso, 121
8
The court has held that, by filing suit, a governmental entity waives immunity from
suit as to certain counterclaims. Reata, 197 S.W.3d at 376-77. It also has held that, by
settling a claim for which it has waived immunity, a governmental entity waives immunity
for a suit to enforce the settlement. Texas A & M UniversityBKingsville v. Lawson, 87
S.W.3d 518, 521 (Tex. 2002) (plurality op.). Neither case has application here.
9
The Austin Court of Appeals recently declined to adopt a waiver by conduct
theory, citing the footnote in Federal Sign, 951 S.W.2d at 408 n.1, to note that the
supreme court “once hinted that it might recognize waiver by conduct in the context of a
contract claim” but that “it has since declined to judicially adopt this doctrine in light of
the legislature’s creation of an administrative remedy for breach-of-contract claims”
under chapter 2260 of the Government Code. Employees Retirement System of Texas
v. Putnam, LLC, 294 S.W.3d 309, 327 (Tex.App.BAustin 2009, no pet.) (op. on reh=g)
(citing IT-Davy, 74 S.W.3d at 857). See also Tooke v. City of Mexia, 197 S.W.3d 325,
342 (Tex. 2006), (listing recent years’ legislative waivers of immunity from suit on
contract claims, and referring to its “larger, more consistent legislative scheme for
handling contract claims”).
9
S.W.3d 704, 705-06 (Tex. 2003), holding the county’s conduct merely was that
associated with creation of its contract.10
The Tucknesses’ pleadings in this case seek a resolution of their disagreement
with the County that Mr. Tuckness’s back injury was incurred in the course of his
employment and thus excluded from coverage under the County’s plan. Despite its
equities, at bottom the case involves no more than a contract dispute. See Pelzel &
Assocs., 77 S.W.3d at 252 (county did not waive immunity by invoking contract’s
express terms); IT-Davy, 74 S.W.3d at 861 (Hecht, J., concurring) (finding parties had
“legitimate disagreement” over price to be paid for extra work, and suit involved “nothing
more than an ordinary contract dispute”).
Waiver by Statute
The Tucknesses cite Local Government Code section 271.152 as a basis for
waiver of immunity from suit. Chapter 271 waives a local governmental unit=s sovereign
immunity to suit for a claim that it breached a properly executed and authorized contract
for providing goods or services to the local governmental entity. Tex. Local Gov=t Code
Ann. ' 271.152 (Vernon 2005). But a county is excluded from the coverage of Chapter
271 because its definition of Alocal governmental entity@ expressly excludes a county.
Tex. Local Gov=t Code Ann. ' 271.151(3) (Vernon 2005). Accordingly, Chapter 271 has
no application here.
10
But see Texas Southern University v. State Street Bank & Trust Co., 212
S.W.3d 893 (Tex.App.--Houston [1st Dist.] 2007, pet. denied) (op. on reh’g) (affirming
trial court’s denial of plea to jurisdiction based on “extraordinary factual circumstances”
set forth in pleadings and university’s conduct that “lured” plaintiff into contract).
10
Incurable by Amendment
A plaintiff is generally entitled to a reasonable opportunity to amend its petition
Aunless the pleadings affirmatively negate the existence of jurisdiction.@ Koseoglu, 233
S.W.3d at 839. But here, as in Koseoglu, remanding the case for a chance to amend
would serve no legitimate purpose. The claim of the Tucknesses is for breach of
contract. This fact, and the immunity of the County, will not change by an amended
pleading alleging more facts. See Id., 233 S.W.3d at 840; Miranda, 133 S.W.3d at 227
(A[i]f the pleadings affirmatively negate the existence of jurisdiction, then a plea to the
jurisdiction may be granted without allowing the plaintiffs an opportunity to amend@).
Conclusion
We conclude the County’s governmental immunity from the underlying suit has
not been waived. We therefore reverse the order of the trial court denying the County=s
plea to the jurisdiction and render judgment dismissing the Tucknesses= case against
the County for want of jurisdiction.
James T. Campbell
Justice
11