TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
ON MOTION FOR REHEARING
NO. 03-12-00560-CV
The Texas State Board of Pharmacy, and in their official capacities only, Gay Dodson,
Executive Director; and Jeanne D. Waggener, President of the Board, Appellants
v.
Tiana Jean Witcher, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT
NO. D-1-GN-12-000026, HONORABLE TIM SULAK, JUDGE PRESIDING
OPINION
We withdraw our opinion and judgment dated May 3, 2013, and substitute the
following in its place. The appellants’ motion for rehearing is overruled.
After a contested-case hearing, the Texas State Board of Pharmacy (“the Board”)
indefinitely suspended Tiana Jean Witcher’s pharmacist license. Witcher filed a suit for judicial
review of the Board’s order. See Tex. Gov’t Code § 2001.176. The trial court reversed the Board’s
order and remanded the cause to the Board, concluding that the indefinite suspension of Witcher’s
license was arbitrary and capricious and also was based on an invalid rule. See id. § 2001.174(2).
We will affirm the trial court’s judgment.
FACTUAL AND PROCEDURAL BACKGROUND
The facts of this case are largely undisputed. Witcher received her Texas pharmacist
license in 1987 and her North Carolina pharmacist license in 1992 via reciprocity. In
November 2007, her husband died in a car accident two weeks after they were married. In
October 2008, near the anniversary of his death, Witcher became so intoxicated during her personal
time that she had to be treated for alcohol poisoning. On the advice of a colleague, Witcher
self-referred to the North Carolina Pharmacist Recovery Network (NCPRN), a program that aids
impaired pharmacists, to address alcohol-abuse issues in her personal life. She voluntarily entered
into a monitoring contract with NCPRN in January 2009.
Witcher subsequently came under scrutiny by the North Carolina licensing authority
when she failed to comply with some of the terms of her voluntary monitoring agreement with the
NCPRN. Due to the compliance issues, the North Carolina licensing authority suspended Witcher’s
pharmacist license in April 2010 based on concerns that she was unfit to practice pharmacy. In
suspending Witcher’s license, the North Carolina licensing authority found that she had “[i]ndulged
in the use of drugs to an extent that renders the pharmacist unfit to practice pharmacy” and
“[d]eveloped a physical or mental disability that render[ed her] unfit to practice pharmacy with
reasonable skill, competence and safety to the public.” See N.C. Gen. Stat. Ann. § 90-85.38(a)(3),
(5). Under the North Carolina suspension order, Witcher is ineligible to petition for reinstatement
of her license until the NCPRN advocates for its reinstatement, a condition presumably directed to
2
ensuring her fitness to practice pharmacy.1 The North Carolina order further specifies that only the
NCPRN may monitor Witcher’s recovery.
After Witcher’s North Carolina license was suspended, she returned to Texas to live
with her father because she lacked means to earn a living in North Carolina, had lost her house in
foreclosure, and had no family or support system in North Carolina. Upon returning to Texas, she
voluntarily enrolled in the Texas Pharmacist Recovery Network (TxPRN), became successfully
employed as a pharmacist, and participated in therapy. Witcher averred that she did not abuse
alcohol after her October 2008 hospitalization, did not abuse alcohol on the job, and sought
assistance from NCPRN and TxPRN on her own initiative. While in Texas, Witcher has exhibited
no signs of alcohol impairment in the workplace or elsewhere.
Based on the active suspension of Witcher’s license in North Carolina, however, the
Board instituted disciplinary proceedings to suspend Witcher’s Texas license until the suspension
of her North Carolina license has been lifted. See Tex. Occ. Code § 565.001(a)(16) (authorizing
disciplinary action against licensed pharmacist disciplined by another state). Along with the
disciplinary complaint, the Board’s staff filed a motion for summary disposition, asserting that, as
a matter of law, (1) Witcher was subject to discipline under section 565.001(a)(16) of the Texas
Pharmacy Act (TPA), which authorizes the Board to discipline a license holder who has “been
disciplined by the regulatory board of another state for conduct substantially equivalent to conduct
1
The North Carolina suspension order notes that becoming eligible to petition for
reinstatement does not guarantee that such petition will be granted. Thus, even if Witcher satisfies
the precondition to applying for reinstatement, her license would remain suspended indefinitely
under the North Carolina suspension order.
3
described under this subsection”; (2) the violations found by the North Carolina licensing authority
were, as a matter of law, substantially equivalent to conduct prohibited in TPA sections
565.001(a)(4) and (a)(7); and (3) the appropriate disciplinary sanction was “a period of suspension
in Texas to run concurrently with the North Carolina suspension.” See id. §§ 565.001(a)(4)
(pharmacist may be disciplined upon “developing an incapacity that prevents the applicant or license
holder from practicing pharmacy with reasonable skill, competence, and safety to the public”), (a)(7)
(pharmacist may be disciplined for “us[ing] drugs in an intemperate manner that, in the board’s
opinion, could endanger a patient’s life”), (a)(16) (pharmacist may be disciplined based on
disciplinary action in another state for conduct that would violate the TPA); 565.051 (discipline for
violation of TPA includes revocation, suspension, probated suspension, and licensing restrictions).
Witcher admitted that she was subject to being disciplined by the Board based on the
North Carolina disciplinary action. However, because she had not abused alcohol since
October 2008 and it was undisputed that she was presently fit to practice pharmacy, she advocated
for a five-year probated suspension in keeping with Board precedent in disciplinary proceedings
involving impaired pharmacists who had engaged in significantly more egregious conduct but who
had demonstrated current fitness to practice to the Board’s satisfaction.
The administrative law judge (ALJ) who presided over the disciplinary proceedings
granted partial summary disposition as to Witcher’s violation of the TPA but denied summary
disposition regarding the appropriate sanction to be imposed.2 See 1 Tex. Admin. Code § 155.505
2
In granting partial summary disposition, the ALJ concluded from the following undisputed
facts that Witcher was subject to disciplinary action by the Board in accordance with section
565.001(a)(16) of the TPA:
4
1. Tiana J. Witcher (Respondent) holds pharmacist license No. 30135
issued by the Texas State Board of Pharmacy (Board) on
October 21, 1987.
2. On or about April 20, 2010, the North Carolina Board of Pharmacy
(NCBP) entered a Final Order against the North Carolina license
No. 11664 held by [Witcher]. That order made the following
Findings of Fact:
a) On or about January 29, 2009, [Witcher] voluntarily entered
a substance abuse program administered by North Carolina
Pharmacist Recovery Network (NCPRN). At that time
Respondent entered into a contract governing the terms of her
participation in the program (Contract).
b) Between approximately March 2009 and November 2009,
Respondent violated the terms of the Contract in various
ways, including but not limited to:
i. By failing to call in to determine if she should be drug
tested on or about March 14, 2009, April 15, 2009, and
April 17, 2009;
ii. By submitting dilute urine samples on or about
June 9, 2009, July 27, 2009, September 8, 2009,
October 21, 2009, and November 24, 2009;
iii. By violating the Contract’s limitations on her
employment, specifically by working the third shift at
the North Carolina Baptist Hospital Pharmacy in or
about April 2009, without approval from NCPRN, and
after NCPRN had denied her request for such approval;
and
iv. By failing to participate in the required sessions of
continuing care in July 2009.
3. The April 10, 2010, Order placed [Witcher’s] license on an indefinite
suspension with the requirement that she may not petition for
reinstatement unless she provides the NCBP with written notice from
5
(2014) (State Office of Admin. Hearings, Summary Disposition) (authorizing ALJ to issue decision
without evidentiary hearing if no genuine issue of material fact and party is entitled to decision as
matter of law). After an evidentiary hearing directed solely to the appropriate sanction, the ALJ
recommended a five-year probated suspension, finding among other things that (1) Witcher
voluntarily entered into a participation agreement with TxPRN, (2) she had complied with all terms
and conditions of her TxPRN participation agreement, (3) she had been sober since
October 22, 2008, which was prior to her self-referral to NCPRN, and was not working when she
was impaired due to alcohol use, (4) she “can safely practice pharmacy in Texas,” (5) the mitigating
factors in her case outweighed the aggravating factors, (6) it was “not feasible for [Witcher] to
participate in the NCPRN program as a precondition to having the suspension of her North Carolina
license lifted, and it is not financially viable for her to return to North Carolina,” and (7) the North
Carolina licensing authority would not accept Witcher’s participation in the TxPRN program as a
substitute for the requirement that she participate in the NCPRN program. The ALJ further found
that, in relocating to Texas, Witcher was “not seeking to evade compliance with the reinstatement
provisions of the North Carolina order, but only to avoid the considerable financial hurdles she
would face to achieve that compliance.”
The Board adopted all of the ALJ’s recommended findings of fact and conclusions
of law without modification. However, in keeping with the Board’s unwritten policy that a
NCPRN that NCPRN will advocate for [her] reinstatement.
4. [Witcher] had been disciplined by a regulatory board of another state
for conduct substantially equivalent for which the Board may
discipline a licensee.
6
pharmacist with an active suspension in another state cannot practice pharmacy in Texas, the Board
rejected the ALJ’s recommended sanction and instead suspended Witcher’s Texas license until her
North Carolina license has been reinstated. The Board also required Witcher to submit to
simultaneous monitoring by the TxPRN, even though the terms of both the NCPRN and TxPRN
agreements require Witcher to be physically present to participate in or complete several of the tasks,
including meeting attendance and drug and alcohol screenings.
After exhausting her administrative remedies, Witcher filed a suit for judicial review
in the district court of Travis County. See Gov’t Code § 2001.176. Witcher alleged, and the district
court ultimately found, that (1) an enforced suspension of Witcher’s license is arbitrary and
capricious in light of the facts found by the Board and its conclusions of law, (2) the Board used an
unwritten policy (“reciprocal-sanctions policy”) to impose an enforced suspension on Witcher’s
license, and (3) the use of the reciprocal-sanctions policy was arbitrary and capricious, resulted from
improper ad hoc rulemaking, and violated the formal rulemaking requirements in the Administrative
Procedure Act (APA) and the TPA. See id. § 2001.174(2) (specifying when trial court must reverse
and remand in suit for judicial review); see also id. §§ 2001.021-.041 (governing agency
rulemaking); Tex. Occ. Code §§ 554.051-.057 (prescribing Board’s rulemaking authority). The trial
court did not disturb any of the Board’s findings of fact and conclusions of law (which were
unchallenged), but the court reversed the portion of the final order imposing an indefinite enforced
suspension of Witcher’s license. The court ordered the cause remanded to the Board to determine
an appropriate sanction consistent with the court’s findings but limited the proceedings on remand
7
to the established record and the Board’s affirmed fact findings and conclusions of law. See Gov’t
Code § 2001.174(2) (governing judicial review of agency decisions).
On appeal, the Board contends that the reciprocal sanction imposed in Witcher’s case
was not arbitrary and capricious because the Board has the exclusive authority to impose penalties
and the sanction imposed was (1) within the range of sanctions authorized in the TPA, (2) consistent
with statutory provisions that automatically deny licensing to new applicants who are subject to an
active suspension in another state, and (3) consistent with the Board’s policy, practice, and precedent
of imposing reciprocal sanctions on Texas licensees who have been disciplined by other states.
DISCUSSION
In addition to having the authority to discipline a pharmacist for acts violating Texas
laws and federal law applicable in Texas, the Board may also discipline pharmacists who have been
disciplined by pharmacy regulatory boards in other states if the pharmacist was disciplined for
conduct that would violate the TPA. See Occ. Code § 565.001(a)(16). If a pharmacist is found to
have committed violations in another state that are substantially equivalent to Texas violations, the
Board has available to it the same disciplinary options in regard to limiting a pharmacist’s practice
as it would have for a violation committed in Texas. See id. § 565.051. Those options include
revocation, enforced suspension, probated suspension, and license restrictions. See id. Although
the Board may consider an ALJ’s recommendation regarding the sanction to be imposed, the Board
retains discretion to determine the appropriate sanction. 22 Tex. Admin. Code § 281.60(b) (2014)
(Tex. State Bd. of Pharmacy, General Guidance); cf. Sears v. Texas State Bd. of Dental Exam’rs,
8
759 S.W.2d 748, 751 (Tex. App.—Austin 1988, no writ) (“The agency is charged by law with
discretion to fix the penalty when it determines that the statute has been violated.”).
In selecting the appropriate sanction, the Board has formally promulgated rules setting
forth guidelines to be considered in assessing sanctions for violations of the TPA. Those guidelines
specify that “[t]he ultimate purpose of disciplinary sanctions is to protect and inform the public, deter
future violations, offer opportunities for rehabilitation, if appropriate, punish violators, and deter
others from violations.” 22 Tex. Admin. Code § 281.60(c). The guidelines are further “intended
to promote consistent sanctions for similar violations.” Id. Included in the analytical framework
guiding disciplinary matters is section 281.62, a rule that prescribes several aggravating and
mitigating factors that the Board may consider in assessing the appropriate disciplinary penalty.3
3
Rule 281.62 provides:
The following factors may be considered in determining the disciplinary sanctions
imposed by the board if the factors are applicable to the factual situation alleged. . . .
(1) Aggravation. The following may be considered as aggravating factors so as to
merit more severe or more restrictive action by the board:
(A) patient harm and the severity of patient harm;
(B) economic harm to any individual, entity, or the environment, and the
severity of such harm;
(C) increased potential for harm to the public;
(D) attempted concealment of the conduct which serves as a basis for
disciplinary action under the Act;
(E) premeditated conduct which serves as a basis for disciplinary action under
the Act;
(F) intentional conduct which serves as a basis for disciplinary action under
the Act;
(G) motive for conduct which serves as a basis for disciplinary action under
the Act;
(H) prior conduct of a similar or related nature;
(I) disciplinary actions taken by any regulatory agency of the federal
9
Although the Board adopted the ALJ’s finding that the mitigating factors in Witcher’s case
government or any state;
(J) prior written warnings or written admonishments from any government
agency or official regarding statutes or regulations pertaining to the conduct
which serves as a basis for disciplinary action under the Act;
(K) violation of a board order;
(L) failure to implement remedial measures to correct or mitigate harm from
the conduct which serves as a basis for disciplinary action under the Act;
(M) lack of rehabilitative potential or likelihood for future conduct of a
similar nature;
(N) relevant circumstances increasing the seriousness of the conduct which
serves as a basis for disciplinary action under the Act; and
(O) circumstances indicating intoxication due to ingestion of alcohol
and/or drugs.
(2) Extenuation and Mitigation. The following may be considered as extenuating and
mitigating factors so as to merit less severe or less restrictive action by the board:
(A) absence of potential harm to the public;
(B) self-reported and voluntary admissions of the conduct which
serves as a basis for disciplinary action under the Act;
(C) absence of premeditation to commit the conduct which serves as
a basis for disciplinary action under the Act;
(D) absence of intent to commit the conduct which serves as a basis
for disciplinary action under the Act;
(E) absence of prior conduct of a similar or related nature;
(F) absence of disciplinary actions taken by any regulatory agency of
the federal government or any state;
(G) implementation of remedial measures to correct or mitigate harm
from the conduct which serves as a basis for disciplinary action under
the Act;
(H) rehabilitative potential;
(I) prior community service and present value to the community;
(J) relevant circumstances reducing the seriousness of the conduct
which serves as a basis for disciplinary action under the Act;
(K) relevant circumstances lessening responsibility for the conduct
which serves as a basis for disciplinary action under the Act; and
(L) treatment and/or monitoring of an impairment.
22 Tex. Admin. Code § 281.62 (2014) (Tex. State Bd. of Pharmacy, Aggravating and
Mitigating Factors).
10
outweighed the aggravating factors, it nonetheless imposed an indefinite enforced suspension of
Witcher’s license coterminous with the suspension of her North Carolina license.
It is undisputed that, under the TPA, the Board had the authority to discipline Witcher
and to impose an enforced suspension of her license. The overarching issue in this appeal, however,
is whether the particular sanction imposed—enforced suspension of Witcher’s license concurrently
with the suspension of her North Carolina license—resulted from the improper application of a
“rule” as that term is defined in the APA. See Tex. Gov’t Code § 2001.003(6) (defining “rule” for
purposes of APA). A rule that is not properly promulgated under mandatory APA procedures is
invalid, see El Paso Hosp. Dist. v. Texas Health & Human Servs. Comm’n, 247 S.W.3d 709, 714
(Tex. 2008), and an agency decision based on an invalid rule must be reversed and remanded to the
agency if substantial rights of the appellant have been prejudiced thereby, see Gov’t Code
§ 2001.174(2) (specifying when trial court must reverse and remand agency decision). Because the
Board’s action in this case undeniably affected Witcher’s substantial rights, we focus our analysis
on whether the Board applied an improperly promulgated “rule” within the meaning of the APA.
The Board does not dispute that, in the present case, it employed what it characterized
as a “non-binding” policy, practice, or precedent of imposing reciprocal sanctions on Texas licensees
who have been disciplined by licensing authorities of other states if the conduct would have been
sanctionable if committed in Texas. It is further undisputed that the Board did not adopt this policy,
practice, or precedent in accordance with the APA’s formal rulemaking procedures. The Board
contends, however, that no matter how the reciprocal-sanctions policy is characterized, it was not
required to comply with the APA’s rulemaking procedures because the policy is not a “rule” within
11
the meaning of the APA but rather is a “statement regarding only the internal management or
organization of a state agency and not affecting private rights or procedures.” See Gov’t Code
§ 2001.003(6)(c) (excluding such statement from APA’s definition of “rule”). The Board asserts that
it has the authority to develop internal practices intended to promote consistency in the assessment
of administrative penalties and that the reciprocal-sanctions policy furthers that goal. Alternatively,
the Board asserts that it was entitled to adopt the policy as an ad hoc rule because the Board did not
have sufficient experience with the issue of suspended pharmacists to develop a “hard and fast rule.”
See City of El Paso v. Public Util. Comm’n of Tex., 883 S.W.2d 179, 188-89 (Tex. 1994) (observing
that agency rule may be adopted outside formal rulemaking procedures in limited circumstances
including novel situations in which agency is inexperienced).
Witcher contends, however, that the policy falls squarely within the APA’s definition
of a rule, was not properly promulgated under the APA, and does not qualify for any recognized
exception to the requirement of formal rulemaking. See, e.g., id. (citing SEC v. Chenery Corp.,
332 U.S. 194, 202-03 (1947), as recognizing that agency has discretion to proceed on ad hoc or
“case-by-case” basis when issue is novel to agency or so specialized and varying as to be impossible
of capture within any general rule); see also Southwestern Bell Tel. Co. v. Public Util. Comm’n of
Tex., 745 S.W.2d 918, 926 (Tex. App.—Austin 1988, writ denied) (recognizing ad hoc rulemaking
can be appropriate to flesh out new statute or rule). Witcher also asserts that, absent the application
of a rule, the Board’s chosen sanction is arbitrary and capricious because, among other things, there
is no rational relationship between the facts found by the Board and the sanction imposed. See City
of El Paso, 883 S.W.2d at 184 (agency decision is arbitrary if agency fails to consider statutorily
12
required factor, considers irrelevant factor, or weighs only relevant factors but reaches unreasonable
result). Stated another way, Witcher contends that absent the application of a valid rule mandating
a reciprocal sanction, such a sanction is unreasonable considering both her individual circumstances
and prior Board precedent involving pharmacists who engaged in significantly more egregious
substance-abuse conduct but who received probated five-year sentences upon establishing fitness
to practice, as she has in this case. See Agreed Board Order #G-09-025 (May 5, 2010) (pharmacist
who stole drugs from pharmacy, abused legal and illegal drugs, and violated terms of monitoring
agreement with TxPRN given one-year active suspension followed by five-year probated suspension
if fitness to practice established by end of active suspension); Agreed Board Order #G-10-020
(June 7, 2011) (involving similar facts and sanctions); Agreed Board Order #B-08-038-A
(Aug. 11, 2010) (pharmacist who stole controlled substances given limited active suspension
followed by five-year probated suspension if fitness to practice established by end of
active suspension).
The APA defines a “rule” as follows:
“Rule”:
(A) means a state agency statement of general applicability that:
i. implements, interprets, or prescribes law or policy; or
ii. describes the procedure or practice requirements of a
state agency;
(B) includes the amendment or repeal of a prior rule; and
(C) does not include a statement regarding only the internal management
or organization of a state agency and not affecting private rights or
procedures.
13
Gov’t Code § 2001.003(6). This Court has held that, to constitute a “rule” under this definition, “an
agency statement interpreting law must bind the agency or otherwise represent its authoritative
position in matters that impact personal rights.” Texas Dep’t of Transp. v. Sunset Transp., Inc.,
357 S.W.3d 691, 703 (Tex. App.—Austin 2011, no pet.) (emphasis added); see Texas Dep’t of Pub.
Safety v. Salazar, 304 S.W.3d 896, 905 (Tex. App.—Austin 2009, no pet.) (“Agency statements that
‘have no effect on private persons’ are not considered rules.”) (quoting Brinkley v. Texas Lottery
Comm’n, 986 S.W.2d 764, 770 (Tex. App.—Austin 1999, no pet.)); Combs v. Entertainment Publ’ns
Inc., 292 S.W.3d 712, 722 (Tex. App.—Austin 2009, no pet.) (emphasizing that legal interpretation
in Comptroller’s letters would bind agency employees and “unambiguously express[ed] an intent to
apply this interpretation . . . in all future cases” involving private parties in similar circumstances);
Texas Alcoholic Beverage Comm’n v. Amusement & Music Operators of Tex. Inc., 997 S.W.2d 651,
658 (Tex. App.—Austin 1999, pet. dism’d w.o.j.) (agency memoranda to its law-enforcement agents
held to constitute “rules” on that record where there was evidence that agents “not only intend to
enforce, but have enforced administrative sanctions” in accordance with memoranda (emphasis
added)); see also Brinkley, 986 S.W.2d at 770 (observing that agency advisory opinion regarding
applicable law would have no legal effect “absent a statute that so provides or some attempt by the
agency to enforce its statement against a private person” (emphasis added)). “Although the
distinction between a ‘rule’ and an agency statement that concerns only ‘internal management or
organization . . . and not affecting private rights’ may sometimes be elusive, the core concept is that
the agency statement must in itself have a binding effect on private parties.” Slay v. Texas Comm’n
on Envtl. Quality, 351 S.W.3d 532, 546 (Tex. App.—Austin 2011, pet. denied). In that regard, a
14
distinction exists between nonbinding evaluative guidelines that take into consideration case-specific
circumstances—which have been held not to be a rule—and policies that dictate specified results
without regard to individual circumstances, which have been held to be a rule. Compare id. at
538-39, 548 (agency’s guidelines used to evaluate environmental violations for purposes of
recommending penalty based on individual circumstances was not “rule” under APA), with El Paso
Hosp. Dist., 247 S.W.3d at 714 (by establishing cut-off date for accepting data to determine
hospitals’ Medicaid reimbursement rate, agency established “rule” within meaning of APA) and
Entertainment Publ’ns, 292 S.W.3d at 721(“[T]he Comptroller’s statements in the March and April
2008 letters that the Comptroller will uniformly regard brochure-fundraising firms as the sellers and
nonprofit entities as the sellers’ agents, without regard to the individual factors considered under the
Comptroller’s previous guidelines, are ‘generally applicable’ statements for purposes of the APA.”).
The Board’s disciplinary order in this case, including the findings of fact and
conclusions of law, leave little doubt that the Board’s reciprocal-sanctions policy is a statement
implementing, interpreting, or prescribing the agency’s policy that affects private rights and has
implications beyond the parties to the underlying proceeding. It is, therefore, a rule within the
meaning of the APA. See El Paso Hosp. Dist., 247 S.W.3d at 714 (stating that “general
applicability” under APA references agency statements that affect interests of public at large such
that they cannot be given effect of law without public input); see also CenterPoint Energy Entex
v. Railroad Comm’n of Tex., 213 S.W.3d 364, 369 (Tex. App.—Austin 2006, no pet.) (“Ad hoc
rulemaking occurs when the agency makes a determination that has implications beyond the instant
parties . . . .”).
15
In the final agency order in Witcher’s disciplinary proceeding, the Board explained
its reciprocal-sanctions policy in the following terms of general applicability:
A concurrent suspension is the appropriate disciplinary sanction because the Board
can not [sic] allow pharmacists to work in Texas who have had their practice ability
taken away in another state. The integrity of all states’ licensing systems is
compromised if pharmacists are allowed to jump from state to state in order to avoid
disciplinary action. The Board has a duty to respect the public acts of another state
board. This promotes uniformity and consistency in regulation among the states.
As articulated, the Board’s reciprocal-sanctions policy applies not just to Witcher but to all
pharmacists licensed in more than one state. The order essentially states that the Board is
duty-bound to impose reciprocal disciplinary action without regard to any other factor that might be
considered in individual circumstances.4
The general applicability of the Board’s policy is underscored by the passage that
followed its articulation, which further demonstrates that the reciprocal-sanctions policy was applied
without regard to the specific circumstances in Witcher’s case:
Although the ALJ’s recommendation [of a five-year probated sentence with
monitoring] may satisfy concerns the Board would have regarding [Witcher’s]
impairment, it would not address the fact that [Witcher] is barred from practicing
pharmacy by a regulatory board of another state for conduct substantially equivalent
to conduct described under the Texas Pharmacy Act.
4
The dissent makes much of the fact that “the Board’s representative” (i.e., a staff member)
argued to the Board that it was not required to suspend Witcher. But in an administrative hearing,
the agency’s staff is simply like any other party in the proceeding, and statements by a staff member
are not deemed to be statements of the agency board or commission. Here, as in every contested
case, the Board spoke through its order.
16
Moreover, contrary to the stated rationale for the reciprocal-sanctions policy, the Board adopted the
ALJ’s finding that Witcher was “not seeking to evade compliance with the reinstatement provisions
of the North Carolina order, but only to avoid the considerable financial hurdles she would face to
achieve that compliance.” Significantly, although the Board found that requiring Witcher to
participate in the NCPRN program as a precondition to having the suspension of her North Carolina
license lifted is not reasonably possible given her current circumstances, it nonetheless ordered her
to do just that.5 These findings and conclusions support the construction of the Board’s policy as a
rule that applies irrespective of the circumstances in an individual case.
The general applicability of the reciprocal-sanctions policy and its impact on the
interests of the public at large is further evident from the evidence and testimony admitted at the
hearing before the ALJ. At the evidentiary hearing, Carol Fisher, the Board’s Director of
Enforcement, testified that reciprocal discipline is the “Board’s policy” and the “standard sanction.”
As the source of the policy, Fisher cited the case of In re Nealy, in which the Board had previously
5
The Board adopted the ALJ’s finding that it would not be “feasible” for Witcher to comply
with the NCPRN precondition to reinstatement. “Feasible” is defined to mean “capable of being
done . . . possible of realization,” “capable of being managed, utilized or dealt with successfully,”
and “reasonable, likely.” Webster’s Third New Int’l Dictionary: Unabridged 831 (2002). “An
agency’s decision is arbitrary or results from an abuse of discretion if the agency . . . weighs only
relevant factors that the legislature directs it to consider but still reaches a completely unreasonable
result.” City of El Paso v. Public Util. Comm’n of Tex., 883 S.W.2d 179, 184 (Tex. 1994). Thus,
even if we were to agree with the Board that its policy is not a rule under the APA, the imposition
of a requirement that the Board itself found to be virtually impossible to satisfy would suggest that
the Board’s decision is arbitrary and capricious. If the Board applied a properly promulgated rule
dictating such a consequence, however, it would be more difficult to conclude that the sanction
lacked a rational basis. Cf. Pierce v. Texas Racing Comm’n, 212 S.W.3d 745, 753-54 (Tex.
App.—Austin 2006, pet. denied) (agency did not abuse its discretion in applying zero-tolerance
policy when racehorse tested positive for banned substance and unchallenged “guidelines” mandated
loss of purse for type of violation involved).
17
articulated its reciprocal-sanctions policy in the same terms of general applicability in a particularly
egregious case in which a pharmacist who received his Texas license via reciprocity with Louisiana
had a long history of violating the pharmacy laws of both states. See Texas State Bd. of Pharmacy
v. Nealy, Board Order #N-03-005, SOAH Docket No. XXX-XX-XXXX (2005). After nearly 15 years
of suspensions, revocations, reinstatements, and continuing violations, the Board suspended Nealy’s
license concurrently with an active suspension of his Louisiana license, and stated:
In previous cases with similar facts, the Board has typically imposed disciplinary
action mirroring the action by another state board of pharmacy. The policy the Board
considers in taking such action is to prevent licensees from escaping disciplinary
action in one state by coming to Texas. If another state board of pharmacy has
prohibited a pharmacist from practicing, so long as there is no evidence that a
pharmacist has not been afforded due process in the other state, the Board believes
it is sound policy for the pharmacist to be prevented from practicing in Texas until
the pharmacist resolves the restrictions on his license in the other state. Otherwise
a pharmacist would suffer no negative consequences from violations of the law in
another state. Other pharmacists with licenses in Texas and in another state might
assume that similar violations would not merit serious consideration by the Board.
Id. (emphasis added). Although the factual circumstances and extensive disciplinary history in Nealy
would have justified the imposition of a reciprocal sanction without regard to the enunciated policy,
the Board made a point of articulating the policy itself as the basis for imposing a reciprocal
sanction. As the Board’s staff noted in its written closing argument in Witcher’s case: “It is clear
from the order [in Nealy] that [the Board] based the selection of the sanction on the licensee’s
disciplinary status in the other state and not upon his prior disciplinary history with [the Board].”
Despite the stark disparity in individual circumstances between Witcher’s case and
the facts in Nealy, Fisher testified that she did not expect that the Board would do anything
18
differently from what it had done in Nealy because the fact of an active suspension of Witcher’s
North Carolina license was dispositive of the appropriate sanction. Fisher repeatedly testified to the
effect that individual circumstances do not matter. In this regard, the reciprocal-sanctions policy is
analogous to agency policies that this Court in Combs v. Entertainment Publications, Inc.,
292 S.W.3d 712 (Tex. App.—Austin 2009, no pet.), and the supreme court in El Paso Hospital
District v. Texas Health & Human Services Commission, 247 S.W.3d 709 (Tex. 2008), found to be
rules under the APA.
In Entertainment Publications, a brochure-fundraising firm that contracted with
tax-exempt schools to sell merchandise and food products to raise money for student groups
challenged an agency policy that would require it to collect and remit tax on its sale of those goods
to the schools. Entertainment Publ’ns, 292 S.W.3d at 715. Historically, the brochure-fundraising
firm had structured its transactions with its customers to take advantage of the exemption to avoid
collecting sales taxes on its initial sale of goods to those customers. Id. at 716. The tax-exempt
customers, in turn, could use a different provision of the tax code to avoid collecting sales tax on the
items when sold to the ultimate consumer, but only if the tax-exempt customer was considered to
be the “seller” of the merchandise. Id. To determine who was the seller in such transactions, the
Comptroller had historically applied several criteria to analyze the actual substance of the relevant
transaction. That policy had been reflected in an earlier letter ruling, which a representative of the
Comptroller’s office testified accurately stated the Comptroller’s policy as to brochure fundraising
at the time it was issued. However, the Comptroller subsequently issued two letters in which the
19
policy was changed from the factor-based approach to a bright-line rule that the fundraising firm
would always be considered the “seller.”
Like the Board in the present case, the Comptroller in Entertainment Publications
argued that the letters were merely advisory opinions, not binding instructions, concerning her future
enforcement of the sales tax. This Court disagreed, holding:
There is no question in this case that the [Comptroller’s] March and April 2008
letters are statements implementing, interpreting, or prescribing law or policy. As the
Comptroller’s witness testified, these letters communicated the Comptroller’s
intention to apply section 151.024 in all cases involving brochure fundraising firms,
thereby interpreting the tax code to mean that such firms are, for purposes of
collecting and remitting sales tax, always the “sellers” of the taxable items.
Id. at 721. The Court further concluded that the policy was “generally applicable” within the
meaning of the APA because
the Comptroller’s statements in the March and April 2008 letters that the Comptroller
will uniformly regard brochure-fundraising firms as the sellers and nonprofit entities
as the sellers’ agents, without regard to the individual factors considered under the
Comptroller’s previous guidelines, are “generally applicable” statements for purposes
of the APA. These interpretations apply not only to [the appellee] and the
tax-exempt groups with which it conducts business, but to all brochure-fundraising
firms engaging in business across the state.
Id. at 721-22.
As in Entertainment Publications, the present case involves a policy that establishes
a bright-line rule that is applicable without regard to individual circumstances that could be
considered under section 281.62 of the Board’s rules. In addition, both the terms of the final order
20
and the testimony by the Board’s Enforcement Director during the disciplinary proceeding reveal the
Board’s intent to apply the policy not just to Witcher but also prescriptively to others.
In El Paso Hospital District, the Texas Supreme Court considered whether the Health
& Human Services Commission’s (HHSC) data-collection method for calculating prospective
Medicaid inpatient service rates was an agency rule as defined by the APA. 247 S.W.3d at 711. In
determining the reimbursement rate, HHSC employed a policy of accepting data from claims paid
only through a specified date in the year following the base year. Id. at 713. Claims for all patients
admitted during the base year, but not paid by the cut-off date, were not included in determining the
prospective reimbursement rates. Id. This policy resulted in the exclusion of data for services
actually performed in the base year if the claims were not paid before the cut-off date. Id. The
supreme court rejected HHSC’s argument that the cut-off date was not a rule itself but rather an
interpretation of its own base-year rule. Id. at 714. The court concluded that the cut-off rule fell
squarely within the APA’s definition of a rule because (1) it implemented HHSC’s policy and
described its data-collection procedure and (2) it applied to all hospitals receiving reimbursement
for inpatient Medicaid services. Id.
The court observed that HHSC’s rules provided that it would use a base year, defined
as “[a] 12-consecutive-month period of claims data,” to calculate the Hospitals’ rates and that the
effect of the cut-off date was to modify the base-year rule by controlling the data HHSC would use
from that base year. Id. at 714 (quoting 1 Tex. Admin. Code § 355.8063(b)(5)). The court also
determined that the cut-off date did not concern the agency’s internal management or organization
but rather affected the Hospitals’ private rights. Id. at 714-15. Consequently, the court said, the
21
Hospitals were “entitled to have their prospective reimbursement rates determined according to the
formula set out in HHSC’s rules.” Id. Because the cut-off date was a rule that had not been properly
promulgated, it was found to be invalid. Id.
In the present case, the reciprocal-sanctions policy the Board cited in its final order
is analogous to the cut-off date in El Paso Hospital District in that it establishes one of the
aggravating factors in section 281.62 of the Board’s rules—specifically, subsection (1)(I) pertaining
to disciplinary actions taken by any state—as an outcome-determinative factor. Although use of the
factors in section 281.62 is discretionary, the elevation of one of those factors to case-dispositive
status either constitutes a modification of that rule or the establishment of a new rule.
The Board argues that the reciprocal-sanctions policy is like the evaluative penalty
guidelines this Court concluded did not constitute a rule in Slay v. Texas Commission on
Environmental Quality, 351 S.W.3d 532, 548 (Tex. App.—Austin 2011, pet. denied). That
case—unlike the present case, Entertainment Publications, and El Paso Hospital District—involved
guidelines that required evaluation of case-specific factors in formulating a recommendation for an
appropriate sanction. See id. at 537-42. Although the guidelines considered in Slay were intended
to achieve a level of consistency when similar circumstances were present, they did not require a
specific result in all cases. There was no per se penalty dictated by the guidelines; rather, the
agency’s staff was required to use a formalized analytical structure to evaluate the case, but the
structure did not direct a particular outcome. Id. at 546-48. That is the opposite of the circumstances
in the present case.
22
Considering the foregoing, we conclude that construing the Board’s policy as a “rule”
is consistent with the supreme court’s instruction that we consider the intent of the agency, the
prescriptive nature of the policy, and the context in which the agency statement was made. Cf.
Entertainment Publ’ns, 292 S.W.3d at 722 (citing Texas Educ. Agency v. Leeper, 893 S.W.2d 432,
443 (Tex. 1994)). The Board has unambiguously expressed its intent to apply the
reciprocal-sanctions policy to all Texas pharmacists licensed to practice in other states, regardless
of whether the particular circumstances of each case might result in a different sanction if the
aggravating and mitigating factors in agency rule 281.62 were considered. Cf. 22 Tex. Admin. Code
§ 281.62 (2014) (Tex. State Bd. of Pharmacy, Aggravating and Mitigating Factors) (listing factors
that “may be considered in determining the disciplinary sanctions imposed by the board if the factors
are applicable to the factual situation alleged”); cf. also Entertainment Publ’ns, 292 S.W.3d at 722
(construing Comptroller’s letters that changed policy from “seller versus agent-for-seller” analysis
to bright-line standard). Without doubt, the Board’s policy “represent[s] its authoritative position
in matters that impact personal rights.”6 See Sunset Transp., Inc., 357 S.W.3d at 703.
6
After issuing its final order in Witcher’s case, the Board, using notice-and-comment
rulemaking procedures, formally promulgated a rule requiring the imposition of reciprocal sanctions
when a Texas licensee has been disciplined by the regulatory board of another state:
§ 281.67. Sanctions for Out-of-State Disciplinary Actions
(a) When determining the appropriate sanction for a disciplinary action taken by
a regulatory board of another state under § 565.001(a)(16), § 565.002(a)(13), or
§ 568.003(a)(13), the board has determined that the following shall be applicable for
all types of licensees and registrants for such licenses and registrations issued by
the board.
(1) If the other state’s disciplinary action resulted in the license or
23
Furthermore, having previously articulated the reciprocal-sanctions policy in Nealy
and as it is rearticulated in Witcher’s case, the Board is not entirely free to disregard it in future
cases. Although an “‘agency is not bound to follow its decisions in contested cases in the same way
that a court is bound by precedent.’ . . . [,] an agency is required by courts to ‘explain its reasoning
when it “appears to the reviewing court that an agency has departed from its earlier administrative
policy or there exists an apparent inconsistency in agency determinations.”’” Austin Chevrolet, Inc.
registration being restricted, suspended, revoked, or surrendered, the appropriate
sanction shall be the same as the sanction imposed by the other state, such that the
licensee or registrant has the same restriction against practice in Texas.
(2) If the license or registration is subject to any other type of disciplinary
sanctions, the appropriate sanction shall be equivalent to or less than that imposed
by the other state unless contrary to board policy.
(b) The sanctions imposed by this section can be used in conjunction with other
types of disciplinary actions, including administrative penalties, as outlined in
this chapter.
(c) When a licensee or registrant has additional violations of the Texas Pharmacy
Act, the board shall consider imposing additional more severe types of disciplinary
sanctions, as deemed necessary.
22 Tex. Admin. Code § 281.67 (2014) (Texas State Bd. of Pharmacy, Sanctions for Out-of-State
Disciplinary Actions). In adopting that rule, the Board stated that the addition of section 281.67
“clarifies the sanctions for disciplinary actions taken by a regulatory board of another state.”
37 Tex. Reg. 4046 (June 1, 2012) (emphasis added) (adopting new section 281.67 of Board’s rules);
37 Tex. Reg. 2145 (Mar. 30, 2012) (emphasis added) (proposing new section 281.67). This
statement of the formal rule as a “clarification” might be construed to further support the prescriptive
nature and general applicability of the reciprocal-sanctions policy prior to its formal adoption as a
rule. But even if it is not, it at least demonstrates that the policy was capable of being captured in
a rule, thus rendering one of the recognized exceptions to the APA’s formal rulemaking procedures
inapplicable. See City of El Paso, 883 S.W.2d at 188-89 (observing that agency rule may be adopted
outside formal rulemaking procedures in limited circumstances including when issue is so
specialized and varying as to be impossible of capture within general rule).
24
v. Motor Vehicle Bd., 212 S.W.3d 425, 438 (Tex. App.—Austin 2006, pet. denied) (quoting Flores
v. Employees Retirement Sys. of Tex., 74 S.W.3d 532, 533-34 (Tex. App.—Austin 2002,
pet. denied)).7
The foregoing analysis leads us to conclude that the Board’s informally announced
reciprocal-sanctions policy constitutes an agency “rule” as that term is defined in the APA. It is well
established that a rule that is not adopted in accordance with the APA’s rulemaking procedures is
typically invalid. El Paso Hosp. Dist., 247 S.W.3d at 715 (citing Gov’t Code § 2001.035(a)). In
exceptional cases, however, an agency may choose to formulate and enforce a general requirement
through a decision in a particular case. Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d 248, 255
(Tex. 1999). Adjudicative rulemaking has been recognized as appropriate in limited circumstances
in which an agency is confronted with (1) an issue of first impression, (2) a new or amended
statutory scheme or administrative rules, or (3) an issue that cannot be adequately captured within
the bounds of a general rule because the problem is so specialized and varying in nature. None of
those circumstances is present in this case.8 Accordingly, the rule embodied in the
7
In light of the facts the Board adopted in Witcher’s case and the Board’s acknowledgment
that the underlying rationale of the policy is not strictly applicable to Witcher’s individual
circumstances, it is difficult to conceive of a scenario in which the Board would not apply the policy.
At oral argument, the only scenario the Board’s counsel could hypothesize was one for which no
discipline would be authorized under the TPA in the first instance—that is, counsel suggested that
the Board would not impose reciprocal discipline if a pharmacist’s license was suspended in another
state for something absurd, like wearing a red t-shirt. However, such conduct would not be
sanctionable under the TPA, and accordingly the reciprocal-sanctions policy would not be
implicated. See Tex. Occ. Code § 565.001 (providing grounds for disciplining Texas licensee).
8
We are not persuaded by the Board’s assertion that Witcher’s case presented a novel issue
with which the Board was unfamiliar. The case of In re Nealy, which references the existence of
other cases involving reciprocal sanctions, refutes such a claim, as does Fisher’s testimony.
25
reciprocal-sanctions policy is invalid and should not have been applied in Witcher’s case. The
inclusion of general language in the final order that the sanction imposed “best reflects the Board’s
determination of the seriousness of the violation and is the best sanction to deter future violations”
neither negates the rule’s obvious application in Witcher’s case nor suggests an alternative basis for
the Board’s decision. The trial court did not err in reversing the Board’s order and remanding the
cause to the Board for reconsideration of the appropriate sanction under properly promulgated rules.
ON MOTION FOR REHEARING
In its initial appellate briefing, the Board’s principal arguments were that (1) the
Board’s order did not contain or adopt a “rule” at all, and (2) if it did, the rule fell within one of the
narrow circumstances in which ad hoc rulemaking is permitted. The Board has now filed a motion
for rehearing raising wholly new issues and arguments. Although we conclude that the motion for
rehearing does not require that we alter the substance of our original opinion, we add this
supplemental opinion to address some of the new arguments raised in the motion.
It is undisputed that, at all relevant times, there was no statute or regulation that
mandated the imposition of an identical reciprocal sanction for a Texas licensee whose out-of-state
pharmacist’s license had been suspended or revoked by another state. Rather, the Board’s formally
adopted regulations provided a number of aggravating and mitigating factors to be considered in
determining the appropriate disciplinary sanction in an individual disciplinary proceeding. See
22 Tex. Admin. Code § 281.62 (providing evaluative factors in cases involving non-criminal
conduct). The disciplinary action taken by another jurisdiction was but one of those factors. Id.
§ 281.62(1)(I). The central issue in this case is whether the Board improperly engaged in ad hoc
26
rulemaking (also referred to as adjudicative rulemaking) when it applied a general policy that
requires, as a standard sanction, the imposition of a reciprocal sanction without regard to any other
factor identified in the applicable regulation and without regard to whether the rationale underlying
the policy is actually implicated by the affected pharmacist’s individual circumstances.
An ad hoc rule is a general statement of law or policy that is made in the context of
a contested case and the impact of which will extend to persons beyond those who are parties to the
proceeding at hand.
[T]he Texas Supreme Court and the Austin Court of Appeals have both recognized
that an agency may formulate a rule for the first time within a contested case
proceeding. Such act of rulemaking has been labeled ad hoc adjudication or ad hoc
rulemaking or case by case rulemaking.
. . . [A]n ad hoc “rule” is not a mere finding of fact or interpretation of a
statutory term but it is an agency formulating policy subject to its delegated rule
making power that sets forth a standard that is binding on the parties before the
agency.
2 Ronald L. Beal, Texas Administrative Practice and Procedure § 10.1 at 10-2 to 10-3 (Supp.
6/2009) (footnotes omitted).
While ad hoc rulemaking is an exercise of legislative power, the rules are developed
by the “common law” method [i.e., within a contested case] that then imposes the
rules by stare decisis and precedent. While the particular contested case order which
adopted an ad hoc rule is only directly applicable to those to whom it has been
applied, the agency will be required to apply it to future parties with substantially
similar conditions.
1 Beal, supra § 2.4 at 2-58 (Supp. 6/2010).
27
The present case presents a quintessential example of ad hoc rulemaking. Pursuant
to the APA’s notice-and-comment rulemaking procedures, the Board had formally adopted a rule
setting forth 15 aggravating factors and 12 mitigating factors that could be considered in determining
the appropriate sanction to be assessed against a pharmacist who had violated Board rules. See
22 Tex. Admin. Code § 281.62. Nonetheless, in this case the Board’s contested-case order stated
that, as a matter of policy, one of the aggravating factors listed in Rule 281.62(1) would be
dispositive in all cases in which that factor was present, regardless of the presence or absence of any
of the other 26 enumerated factors. Id. at 281.62(1)(I). This statement was announced as a matter
of general policy. This is the essence of an ad hoc rule. See 1 Beal, supra at § 2.4 (Supp. 6/2010);
Ron Beal, Ad Hoc Rulemaking in Texas: The Scope of Judicial Review, 42 Baylor L. Rev. 459,
461-67 (1990); Ron Beal, Ad Hoc Rulemaking: Texas Style, 41 Baylor L. Rev. 101, 102-07 (1989);
see also Ron Beal, The APA and Rulemaking: Lack of Uniformity within a Uniform System,
56 Baylor L. Rev. 1, 13-18 (2004).
The main thrust of the Board’s motion for rehearing is that the Board (and, by
extension, any administrative agency) has virtually unrestricted discretion to engage in ad hoc
rulemaking. In advancing this position, which was not previously made to this Court, the Board
relies largely on two arguments, which were likewise not previously made to this Court. First, the
Board asserts that certain statements in Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d 248 (Tex.
1999), in which the Texas Supreme Court recognized severe limitations on an agency’s authority to
engage in ad hoc rulemaking, are mere “dictum” that can safely be ignored. Second, the Board
asserts that, in any event, the holding in Rodriguez was undercut if not overturned—sub silentio—by
28
the supreme court’s later opinion in Railroad Commission of Tex. v. WBD Oil & Gas Co.,
104 S.W.3d 69 (Tex. 2003). We disagree on both counts.
Rodriguez v. Service Lloyds Ins. Co.
The supreme court in Rodriguez emphasized the importance of requiring agencies to
adhere to the notice-and-comment rulemaking procedures mandated by the APA: “A presumption
favors adopting rules of general applicability through the formal [notice-and-comment] rulemaking
procedures as opposed to administrative adjudication. Allowing an agency to create broad
amendments to its rules through administrative adjudication rather than through its rulemaking
authority undercuts the Administrative Procedure Act (APA).” 997 S.W.2d at 255. The court held
that agencies could utilize ad hoc rulemaking only in narrow circumstances:
In exceptional cases, an agency may choose to formulate and enforce a
general requirement through a decision in a particular case. An agency may do this
when using the [notice-and-comment] rulemaking procedure would frustrate the
effective accomplishment of the agency’s functions. Adjudicative rulemaking may
be appropriate, for example, when the agency is construing a new rule or when a
dispute deals with a problem that requires ad hoc resolution because the issue cannot
be captured within the bounds of a general rule. The agency’s discretionary choice
to rely on adjudication is subject to judicial review and revision.
Id. (citations omitted) (emphases added). In recognizing stringent limitations on an agency’s power
to use ad hoc rulemaking, the Rodriguez court did not make new law and did not go out on a
jurisprudential limb.9 Rather, the court upheld the plain language of the APA as prescribing the
9
See, e.g., SEC v. Chenery Corp., 332 U.S. 194, 202-03 (1947) (observing that agencies are
less justified in resorting to ad hoc procedures in lieu of promulgating general rules, but recognizing
that, to avoid “stultify[ing] the administrative process,” ad hoc decision making would be warranted
29
method and manner by which a state agency can adopt generally applicable statements of law, policy,
procedure, or practice. See Tex. Gov’t Code §§ 2001.0225-.034 (governing agency rulemaking); cf.
generally Texas Dep’t of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170,
173, 199 (Tex. 2004) (holding that APA’s plain language controls in absence of express conflict with
agency’s enabling statute or unless clear evidence exists of contrary legislative intent). An
improperly adopted rule is voidable. Tex. Gov’t Code § 2001.035(a).
In its motion for rehearing in the present case, the Board attempts to dismiss these
holdings in Rodriguez as dictum. They are not. In Rodriguez, the Texas Workers’ Compensation
Commission had formally adopted a rule requiring that an initial impairment rating be disputed by
the claimant within 90 days after the rating was assigned. 997 S.W.2d at 252. Over the years,
however, the Commission had purported to create ad hoc exceptions to the 90-day deadline. Id. at
254-55. The claimant in Rodriguez sought to take advantage of those exceptions. The supreme
court rejected the agency’s ad hoc exceptions as improper, holding that the formally adopted rule
would control:
in appropriate circumstances including reasonably unforseeable situations, inexperience with
particular problems, or inability to capture problem within bounds of general rule); Railroad
Comm’n of Tex. v. Lone Star Gas Co., 844 S.W.2d 679, 689 (Tex. 1992) (noting that agency has
“informed discretion” in making decision to proceed via rulemaking or ad hoc adjudication but
stating that rulemaking should be utilized except “‘[when] there is a danger that its use would
frustrate the effective accomplishment of the agency’s function”); Amarillo Indep. Sch. Dist.
v. Meno, 854 S.W.2d 950, 958 (Tex. App.—Austin 1993, writ denied) (“exceptional cases” may
arise in which “agency may justifiably choose, in its discretion to formulate and enforce a general
requirement [ad hoc]” rather than by formal rulemaking, including construing new rule or statute or
matter incapable of articulation as general rule); 1 Frank E. Cooper, State Administrative Law 177-85
(1965) (observing that legislature delegates rulemaking power to agency in expectation that it will
ordinarily employ that power to formulate and adopt requirements of general applicability).
30
Here, we see no reason to overturn the presumption favoring the fairness and public
participation that accompany formal rulemaking under the APA. The 90-day Rule
certainly is not new. In addition, the Commission could have easily formulated
exceptions in the language of a general rule. In fact, the Commission appeals panels
formulated their exceptions in the language of a general rule . . . .
Id. at 255 (citations omitted).
Thus, the Rodriguez opinion not only announced the standard by which courts should
determine the validity of ad hoc rules, it specifically applied that standard in evaluating—and
rejecting—the Commission’s ad hoc exceptions. Far from being peripheral to the court’s holding,
the Rodriguez opinion’s references to the exceptional circumstances needed to make ad hoc
rulemaking permissible (“construing a new rule” or addressing an “issue [that] cannot be captured
within the bounds of a general rule”) were central to the court’s decision. Accordingly, the relevant
statements in Rodriguez were not dictum. See Bryan A. Garner, A Dictionary of Modern Legal
Usage 274 (2nd ed. 1995) (quoting Judge Posner’s definition of “dictum” as “a statement in a
judicial opinion that could have been deleted without seriously impairing the analytical foundations
of the holding . . . .” contained in Sarnoff v. American Home Prods. Corp., 798 F.2d 1075, 1084
(7th Cir. 1986)). We therefore continue to be bound by the holdings in Rodriguez, which can only
be read as affirming that ad hoc rulemaking is a narrow exception to the APA’s mandate that agency
rules be adopted through notice-and-comment rulemaking procedures.
Railroad Commission of Texas v. WBD Oil & Gas Co.
The second major argument raised in the Board’s motion for rehearing is that the
supreme court’s holding in Rodriguez described above was undercut by the court’s later opinion in
31
Railroad Commission of Tex. v. WBD Oil & Gas Co., 104 S.W.3d 69 (Tex. 2003). Even a casual
reading of WBD, however, shows that it is inapplicable to the present case. The sole issue in WBD
was whether field rules adopted by the Railroad Commission after a trial-type proceeding (which the
supreme court held to be a contested case) could be challenged under section 2001.038 of the APA
or instead had to be challenged through contested-case procedures. See id. at 74. Section 2001.038
provides that “[t]he validity or applicability of a rule . . . may be determined in an action for
declaratory judgment if it is alleged that the rule or its threatened application interferes with or
impairs, or threatens to interfere with or impair, a legal right or privilege of the plaintiff.” Tex. Gov’t
Code § 2001.038(a). The court held that the field rules at issue could not be challenged
under section 2001.038 but had to be challenged through the procedure for challenging a
contested-case order:
Thus, as we read the APA, judicial review of orders adopting field rules
should be the same as in other contested case decisions. . . .
Accordingly, we conclude that Commission field rules adopted in a contested
case like those involved here cannot be challenged in a declaratory judgment action
under section 2001.038 of the APA.
WBD, 104 S.W.3d at 79. Nowhere in the supreme court’s WBD opinion is ad hoc rulemaking
mentioned. Nowhere in the opinion is Rodriguez cited, much less discussed or overruled. In short,
ad hoc rulemaking was never an issue in WBD.
The procedural posture of the present case, on the other hand, is radically different.
Here, Witcher did use contested-case procedures to challenge the Board’s ad hoc rule. She timely
filed a motion for rehearing with the Board, complaining of the ad hoc reciprocal-sanction rule.
32
When that was overruled, she timely filed a suit for judicial review, again complaining of the ad hoc
rule. See Tex. Gov’t Code §§ 2001.171, .174-76. The trial court agreed, ruling that “the Board’s
use of an unwritten policy to impose an enforced suspension of Ms. Witcher’s license is 1) arbitrary
and capricious, 2) improper ad-hoc rulemaking, and 3) a violation of the APA and Pharmacy Act’s
rulemaking requirements.” Thus, as stated above, the dispositive issues in this appeal are
(1) whether the Board’s contested-case order applied an ad hoc “rule,” and (2) if it did, whether the
circumstances fall within one of the narrow exceptions in which ad hoc rulemaking is permitted.
WBD does not control these questions.
Nonetheless, the Board appears to contend in its motion for rehearing that WBD
stands for the proposition that (1) agencies generally have unqualified discretion to adopt rules either
by notice-and-comment rulemaking or by ad hoc adjudication and (2) an agency statement that
“implements, interprets, or prescribes law or policy” adopted ad hoc in an adjudicative proceeding
can never be a statement of general applicability as required to meet the APA’s definition of a “rule.”
See Tex. Gov’t Code § 2001.003(6) (defining “rule” for purposes of APA). Neither of these
broad propositions is supported by the applicable statutory schemes or the relevant
jurisprudential environment.
We will not revisit the second proposition because our original opinion adequately
explains our conclusion that the reciprocal-sanctions policy meets the APA’s definition of a rule and
we discern nothing in WBD that alters that conclusion.10 Our discussion of the first proposition
10
We reiterate our initial observations that the Board’s disciplinary order included
affirmative statements of general applicability that were prospective in operation and based on
general policy considerations rather than Witcher’s individual circumstances. Cf. Combs
33
proceeds from our conclusion that the reciprocal-sanctions policy is a rule that was not promulgated
under the APA’s mandatory rulemaking procedures before being applied to dictate the sanction
imposed in Witcher’s case.
In a nutshell, (1) the APA contains a statutory mandate governing agency adoption
of rules of general applicability; (2) the Board’s enabling statute, the TPA, contains no language that
limits the APA’s reach or expands the Board’s rulemaking authority; and (3) to the extent the Board
arguably has discretion to use its limited statutory adjudicatory authority to adopt ad hoc rules of
general applicability, the facts of this case do not support the exercise (through any recognized or
proffered exception to APA rulemaking) of any such discretion in contravention of the APA’s plain
language and the presumption favoring APA rulemaking.
v. Entertainment Publ’ns Inc., 292 S.W.3d 712, 724 & n.8 (Tex. App—Austin 2009, no pet.) (agency
not precluded from making individual determination, on case-by-case basis, but pronouncement of
policy applicable to all similarly situated businesses without regard to individual circumstances
constituted “rule” under APA). The evidence established that the Board considers a reciprocal
sanction to be the “standard sanction.” Moreover, and perhaps most importantly, the indefinite-
suspension sanction the Board imposed against Witcher’s Texas license is so at odds with the
Board’s fact findings as to be inexplicable without the application of an outcome-determinative
factor not found in the enabling statute or governing regulations. Without resort to such a rule, the
sanction imposed is not supported by basic underlying fact findings and the Board’s own precedent.
Further, in addition to espousing a general policy to justify the selection of a standard sanction in
reciprocal disciplinary scenarios, the Board’s decision only sets forth justifications or explanations
that contradict its fact findings. The Board’s motion for rehearing presents no reason for us to
reconsider our prior holding that the reciprocal-sanctions policy meets the APA’s definition of
a “rule.”
We do not read WBD as holding that contested-case proceedings can never give rise to a
statement that meets the APA’s general applicability standard. In that case, the supreme court
concluded that the field rules emanating from a contested-case proceeding were not statements of
general applicability because they affected only individual interests in a specific field and had no
impact on other oil and gas fields in the state. See WBD, 104 S.W.3d at 79. That is not the situation
presented here; the policy the Board articulated and applied in this case has statewide ramifications
that extend far beyond the specific party to the contested-case proceeding.
34
As a general proposition, “[u]nless mandated by statute, the choice by an agency to
proceed by general rule or by ad hoc adjudication is one that lies primarily in the informed discretion
of the agency.” State Bd. of Ins. v. Deffebach, 631 S.W.2d 794, 799 (Tex. App.–Austin 1982, writ
ref’d n.r.e.) (citing SEC v. Chenery Corp., 332 U.S. 194 (1947)). The APA is a statute that mandates
the procedures by which agencies are permitted to adopt rules, and in Mega Child Care, the Texas
Supreme Court affirmed the unremarkable proposition that the APA must be applied according to
its plain language absent an express conflict with an agency’s enabling statute. 145 S.W.3d at 199
(“[I]n the absence of express statutory language [in the agency’s enabling statute] prohibiting judicial
review, a legislative intent to prohibit judicial review [otherwise afforded under the APA] must be
established by specific legislative history or other reliable evidence of intent.”). There is nothing in
the TPA that support’s the conclusion that the TPA’s general grant of rulemaking authority or
limited grant of adjudicatory authority categorically trumps the APA’s mandate that agencies are to
adopt rules of general applicability via notice-and-comment rulemaking.
With regard to rulemaking, the TPA states:
(a) The board shall adopt rules consistent with this subtitle for the administration and
enforcement of this subtitle.
(b) If the board determines it necessary to protect the health and welfare of the
citizens of this state, the board may make a rule concerning the operation of a
licensed pharmacy located in this state applicable to a pharmacy licensed by the
board that is located in another state.
(c) The board shall adopt rules regarding records to be maintained by a pharmacist
performing a specific act under a written protocol.
(d) The board by rule shall specify minimum standards for professional responsibility
in the conduct of a pharmacy.
35
Tex. Occ. Code § 554.051. Thus, the TPA authorizes the Board to adopt rules but is silent with
regard to the method or methods by which the Board may do so. The APA, on the other hand, is not
silent about how agencies are required to adopt rules. See Tex. Gov’t Code §§ 2001.0225-.036.
Nevertheless, relying on the presumption that agencies have some discretion to select the method
for adopting rules in the absence of a statutory prohibition, the Board now argues that the absence
of an express prohibition against adjudicative rulemaking is all that is required to supersede the
APA’s plain directive. Such a position, however, is contrary to bedrock principles of statutory
construction, which eschew reliance on extrinsic construction aids that alter a statute’s plain
meaning. See Shook v. Walden, 304 S.W.3d 910, 917 (Tex. App.—Austin 2010, no pet.) (courts may
resort to rules of construction or extrinsic aids only when statutory text is ambiguous); cf. generally
Mega Child Care, 145 S.W.3d at 173 (holding that plain language of APA provides independent
right to judicial review when agency’s enabling statute neither specifically authorizes nor specifically
prohibits judicial review).
In the present case, the TPA does not contain any language that limits the APA’s
mandate that agencies use notice-and-comment procedures to adopt rules, including making them
available for public inspection and comment. See Tex. Gov’t Code §§ 2001.004-.005, .0225-.034.
Nor is there any other evidence of clear legislative intent to override or limit the APA’s scope or to
expand the Board’s rulemaking authority.11 Applying the APA as written, that statute provides the
11
To the contrary, when the TPA was enacted in 1981, the statute expressly required
the Board to adopt rules in accordance with the APA. See Act of May 28, 1981,
67th Leg., R.S., ch. 255, § 16(a), 1981 Tex. Gen. Laws 638, 645 (“The rules shall be adopted,
amended, or repealed in accordance with the Administrative Procedure Act.”). During a
36
procedures required for the Board to adopt rules or regulations of general applicability. Although
narrow exceptions have been recognized where necessary to allow the agency to accomplish its
functions, the Board has cited none that would apply under the facts of this case, as we previously
discussed and further explain here.
To the extent the Board has “discretion” to adopt, repeal, or modify rules in an
adjudicative proceeding by virtue of its statutory authority to adjudicate disciplinary actions, the case
law cannot be read to support the unfettered discretion alluded to in the Board’s motion for
nonsubstantive codification in 1999, the foregoing language referring to compliance with the APA
was removed. See Act of May 28, 1999, 76th Leg., R.S., ch. 388, § 1, 1999 Tex. Gen. Laws 1431,
1949 (current version at Tex. Occ. Code § 554.051). But according to a “Revisor’s Note” to the
revised statute, the sentence requiring adoption of rules under the APA was deleted as “unnecessary”
because the APA, by its express terms, applies to all agencies: “The revised law omits as
unnecessary the portion of [the prior statute] that requires rules to be adopted, amended, or repealed
in accordance with the Administrative Procedure Act. Chapter 2001, Government Code, requires
each agency to follow that law in adopting rules.” Id. (Revisor’s Note). Notwithstanding this
explanation, the Board asserts that the deletion of the reference to the APA means that, under the
TPA, the Board has complete discretion to adopt rules in individual adjudications without regard to
the APA. We disagree.
Although a revisor’s note cannot vary the plain language of a statute, the ability to proceed
via “adjudicative rulemaking” is not included anywhere in the TPA. Therefore, the discretion to
forgo compliance with APA rulemaking procedures could exist only by resorting to an extra-textual
presumption that would create a conflict with the APA’s plain language. Harmonizing the TPA and
APA to avoid such a conflict—and consistent with the legislature’s intent in adopting both
statutes—the APA must be construed to govern the Board’s rulemaking activities in the absence of
an express provision in the TPA to the contrary or clear evidence of legislative intent to restrict the
APA’s scope and applicability vis-á-vis the Board. Cf. Texas Dep’t of Protective & Regulatory
Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 199 (Tex. 2004) (“In the absence of express
statutory language prohibiting judicial review, a legislative intent to prohibit judicial review [despite
independent right provided by the APA] must be established by specific legislative history or other
reliable evidence of intent.”); cf. also Texas Indus. Energy Consumers v. CenterPoint Energy Hous.
Elec. LLC, 324 S.W.3d 95, 107 (Tex. 2010) (resort to “specific-controls-over-general maxim” is
unnecessary because maxim only applies if overlapping statutes cannot be reconciled and court was
able to construe two provisions to harmonize rather than conflict).
37
rehearing. Rather, the principle of “informed discretion” has long been tempered by “[a]
presumption [that] favors adopting rules of general applicability through the [APA’s] formal
rulemaking procedures as opposed to administrative adjudication.” Rodriguez, 997 S.W.2d at 255;
see Railroad Comm’n of Tex. v. Lone Star Gas Co., 844 S.W.2d 679, 688-689 (Tex. 1992); cf. City
of El Paso v. Public Util. Comm’n of Tex., 883 S.W.2d 179, 189 n.21 (Tex. 1994) (observing that
agency “discretion to proceed on a ‘case-by-case basis is not absolute” and that agency is “bound to
follow the [APA’s] formal rulemaking procedures” when circumstances supporting ad hoc
adjudication are not present). Thus, when an agency seeks to adopt rules of general applicability,
there is a “presumption favoring the fairness and public participation that accompany formal
rulemaking under the APA” because “[a]llowing an agency to [amend] its rules through
administrative adjudication . . . undercuts the APA.”12 Rodriguez, 997 S.W.2d at 255.
In “exceptional cases,” an agency “may choose to formulate and enforce a general
requirement through a decision in a particular case,” but that may be done only when “using the
rulemaking procedure would frustrate the effective accomplishment of the agency’s functions.”
Id. (citing Lone Star Gas Co., 844 S.W.2d at 689, and Amarillo Indep. Sch. Dist. v. Meno,
854 S.W.2d 950, 958 (Tex. App.—Austin 1993, writ denied)). Courts have recognized that ad hoc
rulemaking “may be” appropriate, for example, when the agency is presented with a novel issue;
when a dispute deals with a problem that is too technical, complex, or varied to be captured within
12
Although the Board attempts to distinguish Rodriguez on the basis that its holding is
limited to amendments of rules made on an ad hoc basis, it is axiomatic that amending a rule is
substantively, legally, and effectively indistinguishable from adopting a new rule or repealing an
old one.
38
the bounds of a general rule; or to fill in the interstices of a new statute or rule. See, e.g., Rodriguez,
997 S.W.2d at 255; City of El Paso, 883 S.W.2d at 188-89 & n.21 (citing Chenery, 332 U.S. at
202-03, and Southwestern Bell Tel. Co. v. Public Util. Comm’n of Tex., 745 S.W.2d 918, 926-27
(Tex. App.—Austin 1988, writ denied)); see also Beal, supra, 56 Baylor L. Rev. at 16 (“[N]otice and
comment rulemaking procedures must be utilized unless a bona fide exception exists.”). As stated
in our original opinion, none of these circumstances applies to the reciprocal-sanctions policy at
issue here. Even on rehearing, the Board has offered no exceptional circumstances to support
adopting the reciprocal-sanctions policy on an ad hoc basis.
The Board asserts that the reciprocal-sanctions policy was not newly adopted in
Witcher’s case, or even in Nealy, but instead was adopted in contested cases 30 years ago (or over
the course of the past 30 years) to address the issue at a time when it was “novel.” That proposition,
however, is not supported by the plethora of Board decisions submitted for the first time in its
motion for rehearing, nor by the history of the statutes governing pharmacist licensing. Until Nealy
and the order in the present case, there is no indication that the results were governed by a
prospective policy of general applicability rather than the significantly more egregious and entirely
distinguishable factual and procedural circumstances presented in those cases. Moreover, this is not
an issue that was unfamiliar to the legislature or the Board when the TPA was enacted. Indeed,
suspension, revocation, cancellation, or restriction of an out-of-state license has been a basis for
disciplining a Texas licensee since the TPA’s inception.13 The reciprocal-sanctions policy simply
13
See generally Acts 1973, 63d Leg., R.S., ch. 286, § 1, 1973 Tex. Gen. Laws 677, 678.
(authorizing Board to issue Texas pharmacy license by reciprocity on applicant’s satisfaction of
certain conditions) (repealed); Act of May 28, 1981, 67th Leg., R.S., ch. 255, §§ 22(a)(5), 26(a)(15),
39
does not address any novelty in the regulation of pharmacists that had not already been contemplated
by the legislature in enacting the TPA.
Even if the issue had been “novel” at an earlier time, there are several other reasons
why the Board would have abused its discretion in continuing to apply an ad hoc rule, including that
any novelty or exigencies that might have previously warranted a deviation from the APA’s
procedures or the need for continued reliance on an ad hoc rule should have been temporary and
lasted only so long as reasonably necessary to allow the Board an opportunity to comply with the
APA in adopting the rule.14 See City of El Paso, 883 S.W.2d at 188-89 & n.21; cf. Tex. Gov’t Code
1981 Tex. Gen. Laws 638, 652, 54 (current versions at Tex. Occ. Code §§ 558.101, 565.001(a)(16),
565.051) (prohibiting Board from issuing Texas pharmacy license by reciprocity if applicant had
license granted by another state “suspended, revoked, canceled or otherwise restricted for any
reason” and authorizing a range of disciplinary actions against Texas licensee or applicant whose
“license to practice pharmacy issued by another state [was] canceled, revoked, or suspended for
conduct substantially equivalent” to conduct that would subject pharmacist to discipline under TPA);
Act of May 28, 1987, 70th Leg., R.S. ch. 262, §§ 3, 5, 1987 Tex. Gen. Laws 1584, 1585 (current
versions at Tex. Occ. Code § 558.051(a)(F), 559.005(a)) (amending TPA to prohibit initial licensing
by examination if pharmacist had license issued by another state “suspended, revoked, canceled,
surrendered, or otherwise restricted for any reason” and prohibiting Texas licensee from obtaining
new license upon same circumstances if Texas license lapsed without renewal for two or
more years).
14
Over the years, the Board has promulgated rules governing disciplinary sanctions on
several occasions but failed to formally adopt the reciprocal-sanctions rule until June 2012, after its
decision in Witcher’s case. See 22 Tex. Admin. Code § 281.67 (Texas State Bd. of Pharmacy,
Sanctions for Out-of-State Disciplinary Actions). The Board’s regulatory history reveals that, in
March 2000, it promulgated a rule expressly setting forth aggravating and mitigating factors as
guidelines for determining the appropriate sanction in disciplinary actions under section 565.001 of
the TPA, but the Board apparently was not moved at that time to include its “long-standing”
reciprocal-sanctions policy in the new rule. See 25 Tex. Reg. 2574 (Mar. 24, 2000) (former
22 Tex. Admin. Code § 281.57). Nor was it moved to do so when the rule was amended in 2005 and
later repealed and replaced in 2006, both of which occurred after the Board’s decision in In re Nealy,
Bd. Order #N-03-005 (May 10, 2005). See 30 Tex. Reg. 7874 (Nov. 25, 2005) (former
22 Tex. Admin. Code § 281.57); 22 Tex. Admin Code § 281.62 (current version). Instead,
“disciplinary actions taken by any regulatory agency of the federal government or any state” was
40
§ 2001.034 (agency may enact “emergency rule without prior notice or hearing” upon finding
“imminent peril to public health, safety, or welfare” but such rule may be used only temporarily
pending adoption following APA’s notice-and-comment rulemaking procedures). The availability
of the APA rulemaking process and the amenability of the subject matter to promulgation as a formal
rule support the presumption favoring the fairness and public participation that accompany
notice-and-comment rulemaking under the APA.15
In sum, the Board’s motion for rehearing does not persuade us that WBD requires a
different outcome in this case. Nor does it persuade us that the Board appropriately adopted the
reciprocal-sanctions policy as a rule of general applicability without complying with the APA.
included in the sanctions guidelines as one factor among many that could be considered.
15
The inadvisability of allowing the Board to freely adopt, amend, or repeal its rules in
disciplinary proceedings is further demonstrated by the TPA’s confidentiality provisions, which
preclude the Board from publicly disclosing the contents of an order disciplining an impaired
pharmacist. See Tex. Occ. Code §§ 564.002 (“All records and proceedings of the board, an
authorized agent of the board, or a pharmaceutical organization committee relating to the
administration of this chapter (governing Texas’s program to aid impaired pharmacists and pharmacy
students) are confidential and are not considered public information . . . .”), .003 (“The board may
disclose that the license of a pharmacist who is the subject of [a confidential] order . . . is suspended,
revoked, canceled, restricted, or retired . . . [but] may not disclose the nature of the impairment or
other information that resulted in the board’s action.”). Because the Board’s orders are not uniformly
made available for public inspection, using the disciplinary adjudicative process to announce new,
amended, or repealed rules of general applicability would hinder the goals of openness and public
participation reflected in the APA’s provisions. See, e.g., Tex. Gov’t Code § 2001.004 (requiring
agencies to make available for public inspection “all rules and other written statements of policy or
interpretations that are prepared, adopted, or used by the agency in discharging its functions”); see
also Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d 248, 255-56 (Tex. 1999) (“[I]nformally
amending this rule through a contested case hearing or an appeals panel decision results in the
‘issuance of private opinion that will never be known by anyone except those few persons who take
the time to research the files of an agency.’” (quoting Ron Beal, Ad Hoc Rulemaking: Texas Style,
41 Baylor L. Rev. 101, 120 (1989))).
41
The Board’s Other Arguments in its Motion for Rehearing
The Board also complains that we are required to uphold the Board’s decision if there
is a rational basis underlying the reciprocal-sanction policy and if there is some evidence that it is
applicable under the facts of Witcher’s case. However, an agency’s legislative rule is binding on all
concerned, including the judicial department, only if the rule is (1) reasonable, (2) within the power
delegated to the agency, and (3) the product of proper procedure. General Elec. Credit Corp.
v. Smail, 584 S.W.2d 690, 694 (Tex. 1979) (citing and quoting K. Davis, Administrative Law
Treatise § 5.03 (1958 ed. and Supps.)); Sharp v. Cox Tex. Publ’ns, Inc., 943 S.W.2d 206, 209 (Tex.
App.—Austin 1997, no writ). “When an agency promulgates a rule without complying with proper
rule-making procedures, the rule is invalid.” El Paso Hosp. Dist. v. Texas Health & Human Servs.
Comm’n, 247 S.W.3d 709, 715 (Tex. 2008). Having concluded that the rule here is not the product
of proper procedure, it lacks the force of law without regard to its reasonableness vel non.
The Board also complains that the trial court erred in limiting the scope of remand
to a determination of an appropriate sanction based on the established record and the affirmed fact
findings and conclusions of law, which were not challenged below or on appeal. The Board
contends that the only remedy for applying an improperly promulgated rule is remand for entirely
new proceedings affording Witcher notice of the rules of decision to be applied, including the
reciprocal-sanctions policy. Cf. Texas State Bd. of Pharmacy v. Seely, 764 S.W.2d 806, 814 (Tex.
App.—Austin 1988, writ denied) (“Assum[ing], without deciding, that the Board [of Pharmacy]
possessed authority to promulgate official policy as to what that norm or standard [of conduct]
should be; that it promulgated a valid policy consistent with the statutory provisions committed to
42
the Board’s administration; and that it permissibly promulgated and applied that policy retroactively
in the course of adjudicating Seely’s case, rather than formulating and promulgating that policy
under the rulemaking provisions of [the predecessor to the APA] to be applied prospectively”—all
such assumptions being necessary to valid license-revocation order—due process required, at
minimum, that Board give pharmacist prior notice of legal criteria Board would apply to his
conduct); Madden v. Texas Bd. of Chiropractic Exam’rs, 663 S.W.2d 626-27 (Tex. App.—Austin
1983, writ ref’d n.r.e.) (chiropractic board “arguably” had discretion to announce and apply new
definition in ad hoc adjudicative proceeding rather than by promulgation of general rule through
exercise of its rulemaking power, but, at minimum, due process required prior notice of legal criteria
and hearing relative to issues that would actually control result). In the present appeal, the Board did
not challenge the trial court’s order with respect to the scope of remand. Accordingly, if there is any
error in that regard, it has been waived. See Secure Comm, Inc. v. Anderson, 31 S.W.3d 428, 430-31
(Tex. App.—Austin 2000, no pet.) (holding that appellant waives right to complain of ruling to
which no error was assigned).
Finally, the Board summarily asserts that sovereign immunity bars Witcher’s claims
against the individual appellants who were sued in their official capacity.16 Subject to the limited
“ultra vires” exception, sovereign immunity protects state officers sued in their official capacities
to the same extent that it protects their employers. See, e.g., University of Tex. Med. Branch at
16
Although courts occasionally use the terms “sovereign immunity” and “governmental
immunity” interchangeably, they are distinct concepts. Wichita Falls State Hosp. v. Taylor,
106 S.W.3d 692, 694 n.3 (Tex. 2003). The Board generally asserts that its board members and
executive director enjoy “immunity” from suit in their official capacities. We construe this as a
claim of “sovereign immunity,” which refers to the state’s immunity from suit and liability and
extends not only to the state but also to various divisions of state government, including agencies,
boards, hospitals, and universities. Id.
43
Galveston v. Hohman, 6 S.W.3d 767, 776 (Tex. App.—Houston [1st Dist.] 1999, pet. dism’d w.o.j.)
(“[T]o the extent [the nurse] was acting in her official capacity, she enjoys the same governmental
immunity as UTMB on [the plaintiff’s] claims under the Nurse Reporting Act.”). The Texas
Supreme Court has explained the derivative nature of a state official’s immunity as follows:
When a state official files a plea to the jurisdiction, the official is invoking the
sovereign immunity from suit held by the government itself. 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.” A suit against a state official in his official
capacity “is not a suit against the official personally, for the real party in interest is
the entity.” Such a suit actually seeks to impose liability against the governmental
unit rather than on the individual specifically named and “is, in all respects other than
name, . . . a suit against the entity.”
Texas A & M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 844 (Tex. 2007) (internal citations omitted)
(emphasis added); see also, e.g., De Mino v. Sheridan, 176 S.W.3d 359, 365 (Tex. App.—Houston
[1st Dist.] 2004, no pet.). (“It is a well-established and generally accepted principle of law that suit
against a government employee in his official capacity is, in all respects, a suit against the
governmental unit.”). It is undisputed in this case that the Board’s immunity from suit is waived by
section 2001.171 of the APA.17 Because the Board is not immune from suit, neither are the
individual appellants who were sued in their official capacities.
We overrule the Board’s motion for rehearing.
CONCLUSION
For the reasons stated, we affirm the trial court’s judgment.
17
See Tex. Gov’t Code § 2001.171 (authorizing an aggrieved person to file suit for judicial
review of agency’s final decision in contested case); Mega Child Care, 145 S.W.3d at 198
(recognizing APA’s limited waiver of sovereign immunity for suits for judicial review).
44
____________________________________________
J. Woodfin Jones, Chief Justice
Before Chief Justice Jones, Justices Goodwin and Field
Dissenting Opinion by Justice Goodwin
Affirmed on Motion for Rehearing
Filed: October 31, 2014
45