Tex. Dep't of Ins. v. Tex. Ass'n of Health Plans

• Court: Texas Court of Appeals
• Writing for the Court: Melissa Goodwin, Justice
• Citation: Tex. Dep't of Ins. v. Tex. Ass'n of Health Plans, 598 S.W.3d 417 (Tex. App. 2020)
• Decision Date: 05 March 2020
• Docket Number: NO. 03-19-00185-CV,03-19-00185-CV
• Parties: TEXAS DEPARTMENT OF INSURANCE, Appellant v. TEXAS ASSOCIATION OF HEALTH PLANS, Appellee

598 S.W.3d 417

TEXAS DEPARTMENT OF INSURANCE, Appellant

v.TEXAS ASSOCIATION OF HEALTH PLANS, Appellee

NO. 03-19-00185-CV

Court of Appeals of Texas, Austin.

Filed: March 5, 2020

David A. King, Matthew Baumgartner, Austin, for Appellee.

H. Melissa Mather, Evan S. Greene, Austin, for Appellant.

Before Justices Goodwin, Kelly, and Smith

OPINION

Melissa Goodwin, Justice

In this interlocutory appeal, the Texas Department of Insurance (the Department) challenges the trial court's denial of the Department's plea to the jurisdiction on two claims brought by the Texas Association of Health Plans (the Association): (1) a claim under the Administrative Procedure Act (APA), see Tex. Gov't Code § 2001.038, seeking to invalidate certain Department rules as "invalid exercises of [the Department's] statutory authority" to regulate certain health plans (the APA Claim); and (2) an alternative claim under the Uniform Declaratory Judgments Act (UDJA), see Tex. Civ. Prac. & Rem. Code §§ 37.001 –.011, seeking to invalidate certain Texas Insurance Code provisions that "authoriz[e] out of network payments at ‘usual and customary rates’ " as "unconstitutional delegations of state authority to self-interested private entities" (the UDJA Claim). The Department argues that sovereign immunity bars these claims. We disagree and affirm.

BACKGROUND

The Association is "a not-for-profit trade association representing the legal and financial interests of licensed Texas health insurers, health maintenance organizations (HMOs) and other health plans licensed to operate in Texas" with a mission to "improve healthcare in Texas, including by improving the value and cost-effectiveness of healthcare services covered by its members' plans." In 2018, the Association sued the Department, raising its APA Claim and alternatively its UDJA Claim, asserting associational standing to bring claims on behalf of its members, and claiming that section 2001.038 waives sovereign immunity as to its APA Claim. The Department filed a plea to the jurisdiction, asserting that sovereign immunity barred the APA and UDJA Claims and challenging the Association's standing to bring the claims on behalf of its members. At an evidentiary hearing, the Association submitted affidavits from its members supporting associational standing, and the Department does not challenge the Association's standing in this interlocutory appeal. Following the hearing, the trial court denied the Department's plea to the jurisdiction. The Department timely appealed the order.

STANDARD OF REVIEW

"Procedurally, the assertion of sovereign immunity implicates the trial court's jurisdiction and is properly asserted in a plea to the jurisdiction." PHI, Inc. v. Texas Juvenile Justice Dep't , No. 18-0099, 593 S.W.3d 296, 301 (Tex. Apr. 26, 2019) (citing Houston Belt & Terminal Ry. v. City of Houston , 487 S.W.3d 154, 160 (Tex. 2016) ; Rusk State Hosp. v. Black , 392 S.W.3d 88, 91 (Tex. 2012) ). When a plea challenges the pleadings, we determine if the pleader has alleged facts that affirmatively demonstrate the court's jurisdiction to hear the case, construing the pleadings liberally in favor of the plaintiffs and looking to the pleaders' intent. Houston Belt & Terminal Ry. , 487 S.W.3d at 160 (quoting City of El Paso v. Heinrich , 284 S.W.3d 366, 378 (Tex. 2009) ). When the relevant jurisdictional facts are undisputed, as they are here, "the trial court rules on the plea to the jurisdiction as a matter of law." PHI , 593 S.W.3d at 301 (quoting Texas Dep't of Parks & Wildlife v. Miranda , 133 S.W.3d 217, 227–28 (Tex. 2004) ). We review the trial court's ruling on the plea de novo. See id.

DISCUSSION

The Department raises two issues on appeal. First, the Department argues that sovereign immunity bars the Association from asserting its APA Claim. According to the Department, " section 2001.038 [ ] limits who may invoke its waiver of immunity" and does not waive sovereign immunity for a claim brought by an association to challenge the Department's rules on behalf of its members because the provision requires an allegation "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) (emphasis added). Second, although the UDJA waives sovereign immunity for constitutional challenges to statutes, the Department argues that the UDJA Claim is in effect a statutory construction claim that is barred by the redundant remedies doctrine and that even if it is a constitutional challenge to the statute, the Association did not sufficiently plead a viable constitutional claim.

The APA Claim

The parties agree that section 2001.038 of the Texas Government Code is the only possible statutory basis for a waiver of the Department's sovereign immunity as to the Association's rule challenge in its APA Claim. In interpreting a statutory provision to determine whether the legislature has waived sovereign immunity, we look to the text of the statute at issue to determine whether it contains a clear and unambiguous expression of waiver. See Wichita Falls State Hosp. v. Taylor , 106 S.W.3d 692, 696 (Tex. 2003) ("It is settled in Texas that for the Legislature to waive the State's sovereign immunity, a statute or resolution must contain a clear and unambiguous expression of the Legislature's waiver of immunity."); see also Tex. Gov't Code § 311.034 ("In order to preserve the legislature's interest in managing state fiscal matters through the appropriations process, a statute shall not be construed as a waiver of sovereign immunity unless the waiver is effected by clear and unambiguous language."). Here, the relevant statute reads:

The validity or applicability of a rule, including an emergency rule adopted under Section 2001.034, 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 Department does not dispute that " section 2001.038 is a grant of original jurisdiction and, moreover, waives sovereign immunity," Machete's Chop Shop, Inc. v. Texas Film Comm'n , 483 S.W.3d 272, 286 (Tex. App.—Austin 2016, no pet.) (quoting Texas Logos, L.P. v. Texas Dep't of Transp. , 241 S.W.3d 105, 123 (Tex. App.—Austin 2007, no pet.) ), as to a suit brought by a plaintiff alleging that a rule interferes with or impairs its legal right or privilege. And the Department agrees that an association can challenge a rule under section 2001.038 if the association alleges interference with or impairment of the association's legal right or privilege. But, in what appears to be a novel interpretation of section 2001.038, the Department claims that the scope of the sovereign immunity waiver does not extend to an associational plaintiff alleging interference with or impairment of its members' legal rights or privileges. We disagree.

The term "plaintiff" refers to the party bringing suit. See Plaintiff, Black's Law Dictionary (11th ed. 2019) ("The party who brings a civil suit in a court of law."); Plaintiff, Webster's Third New International Dictionary 1729 (2002) (defining "plaintiff to mean "one who commences a personal action or lawsuit to obtain a remedy for an injury to his rights"; "the complaining party in any litigation"). The Department argues that since the Association is the party bringing suit, the Association must allege that the rule or its threatened application interferes with or impairs its legal right or privilege, not the legal right or privilege of its members. However, the United States Supreme Court has noted that "for the purpose of determining the scope of [an association's] rights as a litigant, the association ‘and its members are in every practical sense identical’ " and the modern concept of associational standing emerged out of this explanation. See United Food & Commercial Workers Union Local 751 v. Brown Grp., Inc. , 517 U.S. 544, 551, 116 S.Ct. 1529, 134 L.Ed.2d 758 (1996) (quoting NAACP v. Alabama ex rel. Patterson , 357 U.S. 449, 459, 78 S.Ct. 1163, 2 L.Ed.2d 1488 (1958) ). Applying this same logic to the sovereign immunity context, we conclude that because an association's "rights as a litigant" are "in every practical sense identical" with "its members," an association that can satisfy associational standing requirements to challenge a rule under section 2001.038 would also be alleging that the rule or its threatened application interferes with or impairs the rights or privileges of the plaintiff, even if those rights or privileges are of the association's members.

We recognize that "standing and sovereign immunity are distinct jurisdictional concepts." Texas Dep't of State Health Servs. v. Balquinta , 429 S.W.3d 726, 745 (Tex. App.—Austin 2014, pet. dism'd). But with respect to section 2001.038, the Texas Supreme Court has instructed: "We treat [ section 2001.038(a) ]'s requirement as but another expression of the general doctrine of standing." Finance Comm'n of Tex. v. Norwood , 418 S.W.3d 566, 582 n.83 (Tex. 2013). In Norwood , the Texas Supreme Court considered whether the plaintiffs sufficiently pleaded the requisite interest to bring suit. Id. at 582. The Norwood Court noted that the plaintiffs' pleadings tracked the language of section 2001.038(a) and that the provision "does not purport to set a higher standard than that set by the general doctrine of standing, and it cannot be lower, since courts' constitutional jurisdiction cannot be enlarged by statute." Id. at 582 n.83. Although Norwood did not specifically address the question of whether an association that met the requirements of associational standing also satisfied section 2001.038(a)'s requirements to challenge a rule, the Norwood Court spoke broadly and plainly as to how courts should treat section 2001.038(a)'s requirement.

After Norw...