Texas Health Care v. Seton Health Plan

• Decision Date: 19 December 2002
• Docket Number: No. 03-02-00114-CV.,03-02-00114-CV.
• Citation: 94 S.W.3d 841
• Parties: TEXAS HEALTH CARE INFORMATION COUNCIL and the State of Texas, Office of the Attorney General, Appellants, v. SETON HEALTH PLAN, INC., Appellee.
• Court: Texas Court of Appeals

Page 841

94 S.W.3d 841

TEXAS HEALTH CARE INFORMATION COUNCIL and the State of Texas, Office of the Attorney General, Appellants, v. SETON HEALTH PLAN, INC., Appellee.

No. 03-02-00114-CV.

Court of Appeals of Texas, Austin.

December 19, 2002.

COPYRIGHT MATERIAL OMITTED

Idolina Garcia, Assistant Attorney General, Austin, for appellants.

John K. Schwartz, Robyn L. Strelitz, Locke Liddell & Sapp, LLP, Austin, for appellee.

Before Chief Justice ABOUSSIE, Justices PATTERSON and PURYEAR.

MARILYN ABOUSSIE, Chief Justice.

Appellants Texas Health Care Information Council ("the Council") and the State of Texas, Office of the Attorney General ("the Attorney General") (collectively "the State"), appeal the district court's judgment granting appellee Seton Health Plan, Inc.'s ("Seton") request for a declaratory judgment to construe a statute, ordering Seton to pay penalties, ordering the State to pay Seton attorney's fees, and dismissing with prejudice the Council's counter-claim and request for injunctive relief. In four issues, the State contends the district court's judgment must be reversed because: (1) Seton's action for declaratory judgment was moot or alternatively Seton's request for declaratory judgment was barred by sovereign immunity; (2) the State was entitled to injunctive relief in addition to the assessment of a civil penalty against Seton; (3) the court's assessment of the minimum penalty constituted an abuse of discretion; and (4) the failure to award the State reasonable attorney's fees and costs constituted an abuse of discretion. We will affirm in part and reverse and remand in part.

BACKGROUND

Seton is a licensed health maintenance organization ("HMO") providing health benefits plans, claims administration, and claims payment for member groups throughout central Texas. Under Chapter 108 of the Texas Health and Safety Code ("the Code"), Seton must file a verified annual Health Plan Employer Data Information Set ("HEDIS") report with the Council. See Tex. Health & Safety Code §§ 108.009, .010 (West 2001); see also 25 Tex. Admin. Code § 1301.33 (West 2002) (Texas Health Care Information Council, Health Care Information). The HEDIS report must include data on the number of members served by the HMO, the demographics of the services provided, aggregate claims information, and related information for the specified reporting period. The Code provides for a civil penalty for failure to file an annual HEDIS report: "A person who fails to supply available data under Sections 108.009 and 108.010 is liable for a civil penalty of not less than $1,000 or more than $10,000 for each act of violation." Tex. Health & Safety Code § 108.014(b). Seton's 1999 report was due to be filed with the Council by June 15, 2000. Seton did not file its report.

On January 10, 2001, Seton was notified by a letter from the Attorney General (the "Johnsonius letter") that it had failed to file the 1999 HEDIS report and that "demand is hereby made for the amount of $153,000 in civil penalties." The letter also stated that if Seton did not make the payment to the Council, the Attorney General "will file a lawsuit against Seton ... for no less than the amount of $153,000...."¹ Seton conceded the failure to file, but disputed the amount of the penalty. Seton took the position that $10,000 per report was the maximum penalty for failure to file the annual HEDIS report. The State responded that it interpreted "each act of violation" in section 108.014 of the Code to mean each day of violation.² In the months following its receipt of the Johnsonius letter, Seton made a number of attempts to pay a civil penalty that it believed comported with the statute. In each instance, the State rejected the offer and stated that it intended to file a lawsuit to collect a penalty of no less than $153,000. During one exchange, after rejecting Seton's offer to pay a $12,500 penalty, the Attorney General stated that "little remains but to see how the Courts will interpret the Statute."

In March 2001, Seton filed a declaratory judgment action against the Council and the Attorney General to construe the statute pursuant to the provisions of the Administrative Procedure Act ("the APA") and Uniform Declaratory Judgments Act ("the UDJA"). Tex. Gov't Code Ann. § 2001.038 (West 2000); TEX. CIV. PRAC. & Rem.Code Ann. § 37.003 (West 1997). Seton sought a declaration that $10,000 per report is the maximum civil penalty that may be assessed under the Code for failure to file the annual HEDIS report. Seton also sought to recover its attorney's fees and costs incurred in obtaining the requested relief.

On April 13, 2001, the Attorney General sent a letter (the "withdrawal letter") to Seton stating that the Johnsonius letter was "withdrawn" and that it "was not intended as an assessment of civil penalties" because that power "is vested in our courts." In July, the Council counter-claimed against Seton, seeking to have the district court: (1) permanently enjoin Seton from violating the Code by ordering it to submit HEDIS reports for the years 1999 and 2000 and each subsequent year thereafter;³ (2) order that Seton be assessed "civil penalties not to exceed $10,000 for each act of violation for its failure to submit HEDIS data" for 1999 and 2000; and (3) order Seton to pay the Council's costs and attorney's fees. Seton and the State then filed cross-motions for summary judgment.

The State argued in its motion for summary judgment that Seton's claim for declaratory relief was moot once the Attorney General had withdrawn the Johnsonius letter and because it was "neither requesting the assessment by [the district court] of penalties in excess of $10,000 per violation, nor is there a threat to [Seton] that [the State] will do so in the future." Seton contended that the district court had jurisdiction to grant declaratory relief because, while acknowledging that "no current controversy" existed between itself and the State on the issue of the maximum civil penalty for the two years in question, it still had "reason to fear that [the Council] may in the future attempt to assess penalties in excess of the maximum allowed by the regulation." Following a hearing and submission of briefs, the district court rendered a final declaration and judgment whereby it: (1) declared $10,000 per report to be the maximum penalty for failure to file an annual HEDIS report required by statute and the Council's rules; (2) assessed penalties against Seton of $1,000 for failure to file a 1999 report and $1,000 for failure to file a 2000 report; (3) ordered the State to pay Seton $15,000 in attorney's fees for obtaining the declaratory judgment; and (4) dismissed with prejudice the Council's counterclaim, thereby denying injunctive relief. This appeal followed.

STANDARD OF REVIEW

Summary judgment is proper if there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. TEX.R. CIV. P. 166a(c); Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). The standards for reviewing a summary judgment are well established: (1) the movant for summary judgment has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law; (2) in deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true; and (3) every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in its favor. Nixon v. Mr. Prop. Mitgint. Co., 690 S.W.2d 546, 548-49 (Tex.1985).

Here, the parties asserted that there were no disputed material issues. Because all parties filed motions for summary judgment, one of which was granted and the other denied, we must review the summary judgment evidence presented by both sides, determine all questions presented, and render such judgment as the trial court should have rendered. See Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex.2001); Vanliner Ins. Co. v. Tex. Workers' Comp. Comin'n, 999 S.W.2d 575, 577 (Tex.App.-Austin 1999, no pet.) (citing Commissioners Court v. Agan, 940 S.W.2d 77, 81 (Tex. 1997)). Each party must carry its own burden as the movant and, in response to the other party's motion, as the non-movant. Gaut v. Amarillo Eco. Dev. Corp., 921 S.W.2d 884, 887 (Tex.App.-Austin 1996, no writ) (citing James v. Hitchcock Indep. Sch. Dist., 742 S.W.2d 701, 703 (Tex.App.-Houston [1st Dist.] 1987, writ denied)). The prevailing party bears the burden of establishing that it is entitled to judgment as a matter of law. Gaut, 921 S.W.2d at 887 (citing Guynes v. Galveston Co., 861 S.W.2d 861, 862 (Tex.1993)).

In its final judgment, the district court held that "there is no material fact question on any of the parties' disputes." When a trial court's order granting summary judgment does not specify the grounds relied upon, the reviewing court must affirm the summary judgment if any of the summary judgment grounds are meritorious. FM Properties Operating Co. v. City of Austin, 22 S.W.3d 868, 872-73 (Tex.2000) (citing Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex.1995)).

DISCUSSION

Mootness

In its first issue, the State contends that the district court lacked jurisdiction over Seton's request for declaratory judgment because no live controversy existed at the time the court rendered a decision. We disagree. A declaratory judgment action may be used, among other things, to determine "any question of construction or validity arising under" a statute. TEX. CIV. PRAC. & Rem.Code Ann. § 37.004(a) (West 1997); see also Frasier v. Yanes, 9 S.W.3d 422, 427 (Tex.App.-Austin 1999, no pet.). In the words of the supreme court, a declaratory judgment proceeding is "an additional remedy and does not supplant any existing remedy, but is intended as a speedy and effective remedy for the determination of the rights of the parties when a real...