Nariocan Enterprises LLC D/B/A Cantu's Pharmacy v. the Texas Health and Human Services Commission

Affirmed and Memorandum Opinion filed June 4, 2026.

In The

Fifteenth Court of Appeals

NO. 15-24-00117-CV

NARIOCAN ENTERPRISES LLC D/B/A CANTU’S PHARMACY,

Appellant

V.

THE TEXAS HEALTH AND HUMAN SERVICES COMMISSION, Appellee

On Appeal from the 98th District Court

Travis County, Texas

Trial Court Cause No. D-1-GN-24-001103

MEMORANDUM OPINION

The Texas Health and Human Services Commission (the Commission) Office

of Inspector General began investigating Appellant Nariocan Enterprises d/b/a

Cantu’s Pharmacy (Nariocan) for improperly submitted claims for payment by

Texas Medicaid for COVID-19 at-home test kits. The Commission sent a letter to

Nariocan explaining its investigation and requesting a response addressing the

allegations. In response, Nariocan filed this lawsuit, seeking declaratory relief and

alleging a due process violation.

The Commission filed a plea to the jurisdiction on multiple grounds alleging

that Nariocan’s claims were barred by sovereign immunity, Nariocan failed to

exhaust administrative remedies, and that Nariocan’s claims were not ripe. The trial

court granted the Commission’s plea to the jurisdiction and dismissed all of

Nariocan’s claims with prejudice. We conclude the trial court did not err and affirm

its judgment.

BACKGROUND

Nariocan operates a pharmacy in Texas and is enrolled as a Texas Medicaid

Pharmacy Provider subject to the administration of the Texas Medicaid Program by

the Commission. See Tex. Hum. Res. Code § 32.021(a). The Office of Inspector

General is responsible for the investigation of Medicaid fraud and the enforcement

of state law relating to the provision of the Medicaid program. Tex. Gov’t Code

§ 544.0103.

The Commission opened an investigation into certain claims paid by

Medicaid to Nariocan. According to Nariocan, the Commission alleged that it had

issued a directive in the Texas Medicaid Provider Procedures Manual (Provider

Manual) instructing pharmacies that Medicaid was no longer authorizing refills,

effective January 17, 2022, for COVID-19 at-home test kits. In response to

notification about the investigation, Nariocan filed the underlying lawsuit.

Nariocan asserted a claim under the Uniform Declaratory Judgments Act

(UDJA), seeking declarations that the Commission was required to 1) issue notice

to Nariocan of changes to the Provider Manual, and 2) establish actual notice to

Nariocan of the changes prior to any enforcement or sanction. The Commission

responded by filing a plea to the jurisdiction challenging jurisdiction over each of

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Nariocan’s claims. The Commission contended that the UDJA claim was barred by

sovereign immunity, the claim was not ripe, and Nariocan had failed to exhaust

administrative remedies.

Nariocan amended its pleadings to add a claim for a due process violation

under Texas Constitution Article 1, Section 19, claiming that the Commission

infringed on its “right to notice of applicable regulations in which administrative

review and alleged penalties resulting therefrom.” The Commission filed a

supplemental plea to the jurisdiction asserting that sovereign immunity barred the

due process claim because Nariocan had failed to assert a viable constitutional claim.

The trial court granted the Commission’s plea to the jurisdiction and dismissed

Nariocan’s claims with prejudice. Nariocan filed a motion to modify the trial court’s

judgment asking that the trial court modify its order to reflect that dismissal of its

suit was without prejudice to refiling. The trial court denied Nariocan’s motion to

modify, and this appeal followed.

ANALYSIS

In three issues Nariocan argues (1) the trial court erred in granting the

Commission’s plea to the jurisdiction; (2) the trial court abused its discretion by not

allowing jurisdictional discovery; and (3) the trial court erred in dismissing

Nariocan’s claims with prejudice to refiling. We begin by addressing Nariocan’s

assertion that the plea to the jurisdiction was granted in error.

I. Standard of Review and Governing Law

Unless the Legislature has clearly and unambiguously waived sovereign

immunity, the State and its agencies retain immunity from suit. Christ v. Tex. Dep’t

of Transp., 664 S.W.3d 82, 86 (Tex. 2023). Sovereign immunity implicates a trial

court’s jurisdiction and is properly raised in a plea to the jurisdiction. Id. Whether a

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trial court has jurisdiction is a question of law subject to de novo review. Tex. Nat.

Res. Conservation Comm’n v. IT–Davy, 74 S.W.3d 849, 855 (Tex. 2002).

When considering a plea to the jurisdiction, our analysis begins with the live

pleadings. Heckman v. Williamson Cnty., 369 S.W.3d 137, 150 (Tex. 2012). We first

determine if the pleader has alleged facts that affirmatively demonstrate the court’s

jurisdiction to hear the case. Tex. Dep’t. of Parks & Wildlife v. Miranda, 133 S.W.3d

217, 226 (Tex. 2004). In doing so, we construe the pleadings liberally in favor of the

plaintiff, and unless challenged with evidence, we accept all allegations as true. Id.

at 226–28. The plea must be granted if the plaintiff’s pleadings affirmatively negate

the existence of jurisdiction or if the defendant presents undisputed evidence that

negates the existence of the court’s jurisdiction. Heckman, 369 S.W.3d at 150.

II. The Trial Court did not Err in Granting the Commission’s Plea to the

Jurisdiction.

On appeal, Nariocan argues that the trial court erred by dismissing its claims

for lack of jurisdiction because Nariocan’s due process claim (1) is limited to seeking

only equitable relief; (2) is ripe in that Nariocan is alleging the active sustainment of

injuries from the Commission’s investigation; and (3) is not subject to an exhaustion-

of-administrative remedies requirement due to the nature of the constitutional

challenge it presents. Nariocan also contends that the trial court had jurisdiction over

its declaratory action because it properly falls within Section 2001.038 of the

Administrative Procedure Act, which authorizes certain actions for declaratory

judgment against a state agency.

A. Nariocan’s Due Process Claim is Barred by Sovereign Immunity.

We first address whether Nariocan affirmatively demonstrated the trial court’s

jurisdiction over its due process claim. Nariocan alleged that the Commission

deprived it of “due process under Article I, Section 19 of the Constitution of the State

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of Texas by infringing on its right to notice of the applicable regulations . . . .”

Nariocan also alleged that the Commission’s actions were arbitrary, capricious,

unreasonable, unlawful, and unconstitutional. The Commission responded that it

retained its sovereign immunity because Nariocan had failed to allege a viable

constitutional claim.

On appeal, Nariocan asserts that its due process claim is not barred by

immunity because Nariocan seeks only declaratory and injunctive relief to prevent

an ongoing violation of law and not monetary damages. The Commission responds

that the claim is facially invalid. While “sovereign immunity does not bar a suit to

vindicate constitutional rights, immunity from suit is not waived if the constitutional

claims are facially invalid.” Klumb v. Houston Mun. Emps. Pension Sys., 458 S.W.3d

1, 13 (Tex. 2015) (citations omitted).

Article I, Section 19 of the Texas Constitution states that “[n]o citizen of this

State shall be deprived of life, liberty, property, or privileges or immunities . . .

except by the due course of the law of the land.” Tex. Const. Art. I, § 19.

Accordingly, “[b]efore any substantive or procedural due-process rights attach …,

the citizen must have a liberty or property interest that is entitled to constitutional

protection.” Honors Acad., Inc. v. Tex. Educ. Agency, 555 S.W.3d 54, 61 (Tex.

2018). A due course of law claim, therefore, requires us to answer two questions: (1)

does the plaintiff have a liberty or property interest that is entitled to due process

protection, and (2) did the government comply with due course of law in depriving

the plaintiff of that interest. Tex. S. Univ. v. Villarreal, 620 S.W.3d 899, 905 (Tex.

2021). “This inquiry requires a careful analysis of the interest of which the plaintiff

is allegedly being deprived.” State v. Loe, 692 S.W.3d 215, 228 (Tex. 2024) (citing

Villarreal, 620 S.W.3d at 905).

In its petition, Nariocan alleged the Commission infringed on “its right to

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notice of applicable regulations . . . .” “A right is vested, and thus constitutionally

protected, when one has a ‘legitimate claim of entitlement rather than a mere

unilateral expectation.’” Tex. Parks & Wildlife Dep’t v. RW Trophy Ranch, Ltd., 712

S.W.3d 943, 954 (Tex. App.—15th Dist. 2025, no pet.) (quoting Honors Acad., 555

S.W.3d at 61). Relevant here, the Texas Administrative Code provides that “[a]ll

persons and affiliates who participate in the Medicaid and other HHS programs are

required to know … federal and state law, including rules and regulations, that

govern Medicaid or other HHS programs . . . .” 1 Tex. Admin. Code §

371.1605(b)(1) (emphasis added).

Here, Nariocan has not identified any rule or regulation for which HHS failed

to provide publication notice. Section 371.1065 places the burden on Nariocan to

know the Medicaid regulations, not on the State to keep Nariocan specially informed

of changes to those regulations. Because Nariocan has no constitutionally protected

right to special notice of Medicaid regulations changes, it failed to state a cognizable

due process claim. See Klumb, 458 S.W.3d at 17 (holding that because claimants had

no vested rights in the benefits at issue, “their pleadings conclusively negate the

existence of subject-matter jurisdiction over their constitutional claims.”).

B. Nariocan’s Declaratory Judgment Claim Is Barred by Sovereign

Immunity.

Next, Nariocan asserts that it invoked the trial court’s jurisdiction regarding

its declaratory judgment claim. According to Nariocan, the Commission claimed it

had issued a directive to Nariocan that Medicaid was no longer authorizing refills

for COVID-19 home test kits. Nariocan claims the delivery of the notices had not

been provided. Nariocan asked the trial court to declare that the Commission was

required to (1) “issue to [Nariocan] notice of changes to the Texas Medicaid Provider

Procedure Manual,” and (2) establish “actual notice” to Nariocan of any

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“administrative changes prior to enforcement of any administrative action.”

Nariocan also asked that the Court “affirmatively declare its rights with respect to

statutory and administrative policy and enforcement as referenced above.”

“[T]here is no general right to sue a state agency for a declaration of rights.”

Tex. Parks & Wildlife Dep’t v. Sawyer Tr., 354 S.W.3d 384, 388 (Tex. 2011).

However, Nariocan asserts that its claim was authorized under Section 2001.038 of

the APA, which creates a cause of action for declaratory judgment regarding “[t]he

validity or applicability of a rule . . . 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). Nariocan is

correct in that Section 2001.038 is a grant of original jurisdiction and waives

sovereign immunity. Id. § 2001.038(a), (c); Tex. Logos, L.P. v. Tex. Dep’t of

Transp., 241 S.W.3d 105, 123 (Tex. App.—Austin 2007, no pet.). But to establish

jurisdiction under Section 2001.038, a claimant must challenge a “rule.” Gant v.

Abbott, 574 S.W.3d 625, 631 (Tex. App.—Austin 2019, no pet.) (“When no rule is

being challenged, a claimant cannot obtain declaratory relief under the APA against

the State, its agencies, or its agents because sovereign immunity bars the cause of

action.”). In its plea to the jurisdiction and in this Court, the Commission alleged

that Nariocan has not identified a “rule” that is amenable to challenge under Section

2001.038. We agree.

In its reply brief, Nariocan responds to the Commission’s claim that it has not

challenged a rule by asserting that “[t]he ‘rule’ at issue is the requirement that

pharmacies obtain a doctor’s prescription before dispensing COVID-19 test kits to

Medicaid patients . . . .” Without support in the record, Nariocan claims its lawsuit

“squarely contests the validity and applicability of that requirement . . . .” But such

a challenge does not appear in Nariocan’s pleadings. “When assessing a plea to the

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jurisdiction, our analysis begins with the live pleadings.” Heckman, 369 S.W.3d at

150. And here, the live pleadings only seek a declaration related to Nariocan’s rights

regarding notice of changes to the Texas Medicaid Provider Manual. Accordingly,

because Nariocan has failed to challenge a rule in its pleadings, it failed to

demonstrate the trial court’s jurisdiction over its declaratory judgment claim. See

Gant, 574 S.W.3d at 631. The validity of the Medicaid requirement that pharmacies

obtain a doctor’s prescription for at home COVID-19 test kits has not been

challenged in this suit and we do not address it.

The trial court did not err in granting the Commission’s plea to the

jurisdiction. We overrule Nariocan’s first issue. Because we hold that the trial court

properly granted the Commission’s plea to the jurisdiction based on sovereign

immunity, we do not address the Commission’s alternative grounds raised in its plea

that Nariocan’s claims were not ripe or that it was required to exhaust administrative

remedies.

II. The Trial Court Did Not Abuse its Discretion by Denying Jurisdictional

Discovery.

In Nariocan’s second issue, Nariocan asserts the trial court erred by denying

Nariocan the opportunity to obtain jurisdictional discovery. The Commission filed a

motion to stay discovery pending the trial court’s ruling on its plea to the jurisdiction,

asserting that Nariocan’s discovery requests went to the merits of its claim, not the

trial court’s jurisdiction. The trial court granted the Commission’s motion. On

appeal, Nariocan argues that the trial court abused its discretion in staying discovery

if we determine “the trial court’s ruling on the plea to the jurisdiction turns on the

constitutionality of the Commission’s legal basis for determining that Nariocan’s

professional activities were in any way unlawful . . . .” The Commission responds

that the trial court was well within its discretion to refuse jurisdictional discovery

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when the requested discovery will not impact the jurisdictional analysis.

A plea to the jurisdiction may challenge either (1) the sufficiency of the

pleadings, or (2) the existence of jurisdictional facts. Miranda, 133 S.W.3d at 226–

27. When a plea to the jurisdiction challenges jurisdictional facts, a trial court

considers relevant evidence. Id. at 227. But “[w]hen a plea to the jurisdiction

challenges the pleadings, [the trial court] determine[s] if the pleader has alleged facts

that affirmatively demonstrate [its] jurisdiction to hear the cause.” Id. at 226. In

making this determination, a trial court looks to the pleadings. Id.

The Commission did not challenge the existence of jurisdictional facts in its

plea to the jurisdiction but rather challenged the sufficiency of Nariocan’s pleadings

to demonstrate jurisdiction. Accordingly, no discovery was necessary for the trial

court to rule on the Commission’s plea to the jurisdiction. See In re Dallas Cnty.,

No. 05-21-01144-CV, 2022 WL 1467987, at *3 (Tex. App.—Dallas May 10, 2022,

orig. proceeding) (mem. op.) (“Because relators’ jurisdictional challenges are solely

based on the sufficiency of the pleadings and there is no fact issue to be resolved,

we conclude the trial court abused its discretion by compelling any discovery before

considering the pleas to the jurisdiction.”). Jurisdictional discovery, therefore, was

not warranted and the trial court did not abuse its discretion in staying discovery

while it considered the plea to the jurisdiction. See Joe v. Two Thirty Nine Joint

Venture, 145 S.W.3d 150, 162 (Tex. 2004) (concluding denial of motion for

continuance to conduct jurisdictional discovery was not abuse of discretion because

material sought in discovery was not in response to claim of official immunity). We

overrule Nariocan’s second issue.

III. The Trial Court did not Err in Ordering Dismissal with Prejudice.

In Nariocan’s third issue, Nariocan asserts the trial court erred in dismissing

its claims with prejudice. Nariocan argues that when a trial court dismisses a claim

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for lack of ripeness or failure to exhaust administrative remedies, it must dismiss

without prejudice to refiling. However, we affirmed the trial court’s dismissal of

Nariocan’s claims on sovereign immunity grounds. “If a plaintiff has been provided

a reasonable opportunity to amend after a governmental entity files its plea to the

jurisdiction, and the plaintiff’s amended pleading still does not allege facts that

would constitute a waiver of immunity, then the trial court should dismiss the

plaintiff’s action.” Harris Cnty. v. Sykes, 136 S.W.3d 635, 639 (Tex. 2004) “Such a

dismissal is with prejudice because a plaintiff should not be permitted to relitigate

jurisdiction once that issue has been finally determined.” Id.

Here, Nariocan amended its petition after the Commission filed its initial plea

to the jurisdiction. The Commission filed a supplemental plea to the jurisdiction and

over a month later Nariocan filed its response. Nariocan had a reasonable

opportunity to amend its pleadings. Because Nariocan’s pleadings did not allege

facts constituting a waiver of immunity, dismissal with prejudice was proper. See

id.; City of El Paso v. Wilkins, 281 S.W.3d 73, 75 (Tex. App.—El Paso 2008, no

pet.) (“A trial court lacks subject matter jurisdiction when a cause of action is barred

by sovereign immunity, and dismissal with prejudice is proper.”). We overrule

Nariocan’s third issue.

CONCLUSION

We affirm the trial court’s judgment.

/s/ April Farris

April Farris

Justice

Before Chief Justice Brister and Justices Field and Farris.

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