holding that § 1396a would be unconstitutional as applied to withhold funding from states based on failure to comply with newly imposed Medicaid requirements, absent voluntary state acceptance
How later courts described this case
- holding that § 1396a would be unconstitutional as applied to withhold funding from states based on failure to comply with newly imposed Medicaid requirements, absent voluntary state acceptance
- judicial right of action must be “unambiguously conferred” in Spending Clause context
- dismissing takings claim that was based on invalid legal theory
- federal governments’ acceptance of Medicaid plan, within its expertise, precluded rate claim against state and required plaintiffs to go to federal forum
Written by the judges who cited it.
The opinion
ACCEPTED
03-15-00657-CV
7810967
THIRD COURT OF APPEALS
AUSTIN, TEXAS
11/12/2015 11:26:21 PM
JEFFREY D. KYLE
CLERK
No. 03-15-00657-CV
In the Court of Appeals FILED IN
3rd COURT OF APPEALS
for the Third Judicial District AUSTIN, TEXAS
11/12/2015 11:26:21 PM
at Austin, Texas JEFFREY D. KYLE
Clerk
Chris Traylor, as Executive Commissioner of the Texas
Health and Human Services Commission, et al.
Appellants,
v.
Diana D., as Next Friend of KD, a Child, et al.
Appellees.
On Appeal from the
200th Judicial District Court of Travis County, Texas
Appellants’ Brief
Ken Paxton Scott A. Keller
Attorney General of Texas Solicitor General
Charles E. Roy Kristofer S. Monson
First Assistant Attorney General Assistant Solicitor General
State Bar No. 24037129
Office of the Attorney General
P.O. Box 12548 (MC 059)
Austin, Texas 78711-2548
Tel.: (512) 936-1820
kristofer.monson@texasattorneygeneral.gov
Counsel for Appellants
Oral Argument Requested
Identity of Parties and Counsel
Appellants:
Chris Traylor, as Executive Commissioner of the Texas Health and Human
Services Commission, et al.
Lead Appellate Counsel:
Kristofer S. Monson Office of the Attorney
Assistant Solicitor General General
State Bar No. 24037129 P.O. Box 12548 (MC 059)
Austin, Texas 78711-2548
[Tel.] (512) 936-1820
kristofer.monson@texasattorneygeneral.gov
Appellee:
Diana D., as Next Friend of KD, A Child, et al.
Lead Appellate Counsel:
Daniel R. Richards Richards Rodriguez & Skeith
State Bar No. 00791520 816 Congress Avenue
Benjamin H. Hathaway Suite 1200
State Bar No. 09224500 Austin, Texas 78701
[Tel.] (512) 476-0005
drichards@rrsfirm.com
bhathaway@rrsfirm.com
Table of Contents
Identity of Parties and Counsel ............................................................................... i
Table of Contents .................................................................................................. ii
Index of Authorities ...............................................................................................vi
Statement of the Case .......................................................................................... xvi
Issues Presented ................................................................................................. xvii
Statement of Facts ................................................................................................. 2
Summary of Argument.......................................................................................... 14
Standards of Review ............................................................................................. 17
Argument.............................................................................................................. 18
I. The Live Petition Does Not Attempt to Tie the Causes of
Action it Pleads to the Remedies it Seeks. ................................ 18
II. Plaintiffs’ Lawsuit Has No Arguable Basis in Law.................... 20
A. Plaintiffs Fail to Address the Distinction Between Review
and Adjustment. ................................................................ 20
B. Plaintiffs Fundamentally Misunderstand Rider 50. ............... 22
1. The rider’s plain text is not optional. ......................... 23
2. The post-enactment legislative history proffered by
plaintiffs cannot change statutory text. ....................... 26
C. There is No Basis in Texas Law For Obtaining Judicial
Review of Medicaid Rates that Are Not Required to be
Adopted Through Contested-Case Proceedings. .................. 27
ii
1. Plaintiffs’ approach of using § 2001.038 to attack
Medicaid rates has been rejected by the Texas
Supreme Court......................................................... 28
2. The ultra vires cause of action cannot be used to
retroactively undo rules that became effective on
October 1, but for the district court’s improper
counter-supersedeas order. ....................................... 29
III. That Texas Law Does Not Provide a Judicial Review
Mechanism Under Which Texas Courts Set Medicaid Rates
Makes Sense, Because Such a System Would Be Preempted
by Federal Law.......................................................................... 30
A. The Medicaid Act Makes Rates Subject to the Exclusive
Jurisdiction of the Secretary, Subject Only to Potential
Federal-Court Proceedings. ................................................ 31
B. The Medicaid Act Preempts Texas Remedies Related to
Medicaid Rates By Creating Exclusive Jurisdiction in the
Secretary. .......................................................................... 32
C. Both the Texas and Federal Constitutions Prohibit Judicial
Orders that Interfere with the Relationship Between the
State and Federal Governments. ......................................... 34
IV. Plaintiffs Lack a Vested Property Right in Medicaid Rates. ..... 36
A. Neither the Providers Nor the Beneficiaries Have a Vested
Property Right, and Cannot Raise Either A Due-Course or
Inherent-Judicial-Review Claim. ......................................... 36
1. The provider plaintiffs lack a vested property right...... 37
2. The beneficiary plaintiffs lack a vested property
right—in fact, they will suffer no cognizable change
in their legal status by a change in the rates. ................ 38
B. The Court Should Follow Justice Scalia’s Lead in
Armstrong and Hold that Providers and Beneficiaries Lack
iii
Constitutional Standing to Bring Suit Under the
Ratemaking Criteria of the Medicaid Act. ............................ 39
V. Even if plaintiffs have constitutional standing, they cannot
successfully invoke § 2001.038 or the Ultra Vires Cause of
Action. ...................................................................................... 40
A. Section 2001.038 and the Ultra Vires Cause of Action
Cannot Be Used to Obtain Judicial Review........................... 40
1. The ultra vires cause of action does not apply
retroactively because it is not a form of judicial
review...................................................................... 40
2. Section 2001.038 does not create judicial power to
review substantive agency actions, only agency
rules. ....................................................................... 41
3. Plaintiffs’ lawsuit is barred because it seeks to use
these causes of action retroactively and specifies no
remedy appropriate to the causes of action pleaded.
............................................................................... 43
B. Plaintiffs’ § 2001.038 Claims Are Barred. ............................ 44
1. Plaintiffs lack a right or privilege. ............................... 45
2. Plaintiffs have not “identified” an administrative
rule.......................................................................... 47
a. Plaintiffs cannot reverse engineer a rule
challenge from a rate challenge. ........................ 47
b. Plaintiffs ignore the application of
§ 355.201(d). .................................................. 48
C. Plaintiffs’ Ultra Vires Claims Would Fail Even if they Had
Been Properly Pleaded. ...................................................... 49
iv
1. Plaintiffs’ position regarding § 355.8021 would fail
to trigger an ultra vires claim in any event. .................. 50
2. Plaintiffs’ remaining claims likewise cannot
describe an ultra vires act. .......................................... 53
VI. Because there is no potential for recovery, the Court Should
vacate the Temporary Injunction. ................................................. 55
Prayer ................................................................................................................... 57
Certificate of Service............................................................................................. 58
Certificate of Compliance ..................................................................................... 58
v
INDEX OF AUTHORITIES
Cases
Adams v. Calvert,
396 S.W.2d 948 (Tex. 1965) ........................................................................ 35
Armstrong v. Exceptional Child Ctr., Inc.,
135 S.Ct. 1378 (2015)...............................................................2, 31, 32, 35, 39
Butnaru v. Ford Motor Co.,
84 S.W.3d 198 (Tex. 2002) ................................................................... 55, 56
Charlie Thomas Ford v. A.C. Collins Ford,
912 S.W.2d 271 (Tex. App.—Austin 1995, writ dism’d) ............................ 42
City of Amarillo v. Hancock,
150 Tex. 231, 239 S.W.2d 788 (1951) ..................................................... 36, 42
City of Austin v. Cannizzo,
153 Tex. 324, 267 S.W.2d 808 (1954) .......................................................... 25
City of Austin v. Chandler,
428 S.W.3d 398 (Tex. App.—Austin 2014, no pet.) .................................... 33
City of El Paso v. Heinrich,
284 S.W.3d 366 (Tex. 2009) ....................................................................... 41
City of Houston v. Williams,
216 S.W.3d 827 (Tex. 2007) (per curiam) .................................................. 40
Colorado Health Care Ass’n v. Colorado Dep’t of Soc. Servs.,
842 F.2d 1158 (10th Cir. 1988) ......................................................................3
Combs v. City of Webster,
311 S.W.3d 85 (Tex. App.—Austin 2009, pet. denied).......................... 36, 47
Creedmoor-Maha Water Supply Corp. v. Tex. Comm’n on Envt’l Quality,
307 S.W.3d 505 (Tex. App.—Austin 2010, no pet.) ...............................29-30
vi
Cullen Center Bank & Trust Co. v. Tex. Commerce Bank,
841 S.W.2d 116 (Tex. App.—Houston [14th Dist.] 1992, writ
denied)........................................................................................................ 25
Dallas Cnty. Mental Health & Mental Retardation v. Bossley,
968 S.W.2d 339 (Tex. 1998) ...................................................................17, 18
Douglas v. Indep. Living Ctr. of S. Calif., Inc.,
132 S.Ct. 1204 (2012) ....................................................................................3
El Paso Cnty. Hosp. Dist. v. Tex. Health & Human Servs. Comm’n,
400 S.W.3d 72 (Tex. 2013) ............................................................. 28, 44, 48
El Paso Hospital District v. Tex. Health & Human Services Commission,
247 S.W.3d 709 (Tex. 2008) ................................................................. 28, 44
Eldercare Props., Inc. v. Dep’t of Human Servs.,
63 S.W.3d 551 (Tex. App.—Austin 2001, pet. denied) ................................ 37
Entergy Gulf States, Inc. v. Pub. Util. Comm’n,
173 S.W.3d 199 (Tex. App.—Austin 2005, pet. denied) .............................. 32
Entergy Gulf States, Inc. v. Summers,
282 S.W.3d 433 (Tex. 2009) .......................................................................26
Equal Access for El Paso, Inc. v. Hawkins,
509 F.3d 697 (5th Cir. 2007) ........................................................................ 4
Ex Parte Mitchell,
783 S.W.2d 703 (Tex. App.—El Paso 1989, no writ) ................................... 25
Finance Commission of Texas v. Norwood,
418 S.W.3d 566 (Tex. 2013) ........................................................................ 45
Garcia v. Kubosh,
377 S.W.3d 89 (Tex. App.—Houston [1st Dist.] 2012, no pet.) ................. 44
vii
Gattis v. Duty,
349 S.W.3d 193 (Tex. App.—Austin 2011, no pet.) ..................................... 17
Gen. Servs. Comm’n v. Little-Tex Insulation Co.,
39 S.W.3d 591 (Tex. 2001) ......................................................................... 40
Gerst v. Nixon,
411 S.W.2d 350 (Tex. 1966) ........................................................................ 34
Gulf Land Co. v. Atl. Ref. Co.,
134 Tex. 59, 131 S.W.2d 73 (1939) ......................................................... 33, 41
Harris County v. Sykes,
136 S.W.3d 635 (Tex. 2004) ........................................................................ 18
Heckman v. Williamson Cnty.,
369 S.W.3d 137 (Tex. 2011) ................................................................... 38, 39
Houston Mun. Emps. Pension Sys. v. Ferrell,
248 S.W.3d 151 (Tex. 2007) .................................................................. 33, 42
In re Doe,
19 S.W.3d 346 (Tex.2000) .................................................................... 26, 27
In re Entergy Corp.,
142 S.W.3d 316 (Tex. 2004) ........................................................................ 33
In re Sw. Bell Tel. Co., L.P.,
226 S.W.3d 400 (Tex. 2007) ....................................................................... 18
Jessen Assocs., Inc. v. Bullock,
531 S.W.2d 593 (Tex. 1975) ......................................................................... 34
Lopez v. Pub. Util. Comm’n,
816 S.W.2d 776 (Tex. App.—Austin 1991, writ denied) ............................. 42
Mills v. Warner Lambert Co.,
157 S.W.3d 424 (Tex. 2005) ........................................................................ 32
viii
N. Alamo Water Supply Corp. v. Tex. Dep’t of Health,
839 S.W.2d 455 (Tex. App.—Austin 1992, writ denied) .............................30
Nat’l Fed’n of Indep. Bus. v. Sebelius,
132 S.Ct. 2566 (2012) .................................................................................. 31
Ojo v. Farmers Group,
356 S.W.3d 421 (Tex. 2011) ........................................................................ 27
Pers. Care Prods. v. Hawkins,
635 F.3d 155 (5th Cir. 2011)......................................................................... 37
Pharm. Research & Mfrs. of Am. v. Walsh,
538 U.S. 644 (2003) (plurality op. ......................................... 31, 32, 34, 35, 36
Prairie View A&M Univ. v. Chatha,
381 S.W.3d 500 (Tex. 2012) ....................................................................... 42
R.R. Comm’n v. Tex. Citizens for a Safe Future and Clean Water,
336 S.W.3d 619, 624-25 (Tex. 2011) ............................................................ 51
Richardson v. First Nat’l Life Ins. Co.,
419 S.W.2d 836 (Tex. 1967) ........................................................................ 17
S.C. San Antonio, Inc. v. Tex. Dep’t of Human Servs.,
891 S.W.2d 773 (Tex. App.—Austin 1995, writ denied) .............................. 37
Spring Branch Indep. Sch. Dist. v. Stamos,
695 S.W.2d 556 (Tex. 1985) ........................................................................ 36
SSC Mo. City Operating Co., LP v. Tex. Dep’t of Aging & Disability Servs.,
No. 03-09-00299-CV, 2009 WL 4725286 (Tex. App.—Austin
2009, pet. denied) (mem. op.) ..................................................................... 37
State Bar of Tex. v. Gomez,
891 S.W.2d 243 (Tex. 1994) ........................................................................ 18
State v. Holland,
221 S.W.3d 639, 644 (Tex. 2007) ................................................................ 19
ix
Sw. Pharmacy Solutions, Inc. v. Tex. Health & Human Servs. Comm’n,
408 S.W.3d 549 (Tex. App.—Austin 2013, pet. denied) ........................19, 37
Tex. A&M Univ. Sys. v. Koseoglu,
233 S.W.3d 835 (Tex. 2007) ........................................................................ 17
Tex. Ass’n of Bus. v. Tex. Air Control Bd.,
852 S.W.2d 440 (Tex. 1993) ............................................................ 17, 18, 38
Tex. Comm’n of Licensing & Regulation v. Model Search Am., Inc.,
953 S.W.2d 289 (Tex. App.—Austin 1997, no writ) ....................................30
Tex. Comm’n on Envtl. Quality v. Slay,
351 S.W.2d 532 (Tex. App.—Austin 2011, pet. denied) .............................. 45
Tex. Dep’t of Parks & Wildlife v. Miranda,
133 S.W.3d 217 (Tex. 2004) ...................................................................17, 18
Tex. Dep’t of Protective & Regulatory Servs. v. Mega Child Care, Inc.,
145 S.W.3d 170 (Tex. 2004) .................................................................. 29, 41
Tex. Dep’t of Pub. Safety v. Salazar,
304 S.W.3d 896 (Tex. App.—Austin 2009, no pet.) ................................... 45
Tex. Dep’t of State Health Servs. v. Balquinta,
429 S.W.3d 726 (Tex. App.—Austin 2014, pet. dism’d)....................... 44, 45
Tex. Health & Human Servs. Comm’n v. Advocates for Patient Access, Inc.,
399 S.W.3d 615 (Tex. App.—Austin 2013, no pet.)..................................... 56
Tex. Health & Human Servs. Comm’n v. El Paso Cnty. Hosp. Dist.,
351 S.W.3d 460 (Tex. App.—Austin 2011) ........................................... 28, 44
Tex. Parks & Wildlife Dep’t v. Sawyer Trust,
354 S.W.3d 384 (Tex. 2011) ....................................................................... 40
Thomas v. Groebl,
147 Tex. 70, 212 S.W.2d 625, 630 (1948) ................................................... 24
x
U.S. v. L.A. Tucker Truck Lines, Inc.,
344 U.S. 33 (1952) ..................................................................................... 44
Walling v. Metcalfe,
863 S.W.2d 56 (Tex. 1993) (per curiam) ..................................................... 17
Water Dev’pt Bd. v. Hearts Bluff Game Ranch, Inc.,
313 S.W.3d 479 (Tex. App.—Austin 2010), aff’d 381 S.W.3d 468
(Tex. 2012) ............................................................................................ 19-20
Wichita Falls State Hosp. v. Taylor,
106 S.W.3d 692 (Tex. 2003) ........................................................... 42, 45, 46
Constitutional Provisions, Statutes & Rules
TEX. CONST. art. I, § 28 ........................................................................................ 33
TEX. CONST. art. II, § 1 ......................................................................................... 33
TEX. CONST. art. IV, § 10 ..................................................................................... 35
U.S. Const. art. VI, cl. 2 ........................................................................................ 32
1 TEX. ADMIN. CODE § 353.411(a)(5)............................................................... 13, 54
1 TEX. ADMIN. CODE ch. 355 subch. B .................................................................... 6
1 TEX. ADMIN. CODE § 355.201 ...............................................................................5
1 TEX. ADMIN. CODE § 355.201(c) ..................................................................... 8, 10
1 TEX. ADMIN. CODE § 355.201(c)(4) ............................................................ 3, 8, 53
1 TEX. ADMIN. CODE § 355.201(d) .............................................................. 9, 21, 22
1 TEX. ADMIN. CODE § 355.201(d)(1)(A) ......................................... 9, 10, 12, 21, 48
1 TEX. ADMIN. CODE § 355.201(d)(1) (D) ................................... 9, 10, 12, 21, 48
1 TEX. ADMIN. CODE § 355.201(e) ........................................................... 7, 9, 10, 13
xi
1 TEX. ADMIN. CODE § 355.201(f) ................................................................ 7, 10, 13
1 TEX. ADMIN. CODE § 355.8021 ....................................................................... 8, 13
1 TEX. ADMIN. CODE § 355.8021(a)(2) ........................................................8, 22
1 TEX. ADMIN. CODE §355.8021(a)(2)(A) ........................................ 8, 21, 22, 50
1 TEX. ADMIN. CODE §355.8021(a)(2)(B) .............................................. 8, 21, 22
1 TEX. ADMIN. CODE 355.8021(B)........................................................................49
1 TEX. ADMIN. CODE § 355.8063(k)(1)(A) (2010), repealed by 35 TEX.
REG. 6511, 6513 (2010) ............................................................................... 28
1 TEX. ADMIN. CODE § 355.8085 ..................................................................... 13
1 TEX. ADMIN. CODE § 355.8085(g)(3) ................................................................... 8
1 TEX. ADMIN. CODE § 355.8441.................................................................. 8, 13
1 TEX. ADMIN. CODE § 355.8441(3)(B) .................................................................. 8
1 TEX. ADMIN. CODE § 355.8441(5)(B) ............................................................. 8
1 TEX. ADMIN. CODE § 355.8441(6)(B) ............................................................. 8
1 TEX. ADMIN. CODE § 355.8441(7)(B) ............................................................. 8
42 U.S.C. § 1396a(a) .............................................................................................. 2
42 U.S.C. § 1396a(a)(3) ..........................................................................................3
42 U.S.C. § 1396a(a)(5) ..........................................................................................5
42 U.S.C. § 1396a(a)(30)(A) ....................................................................... 3, 54, 26
42 U.S.C. § 1396b ............................................................................................31, 53
42 U.S.C. § 1396b(a) ...............................................................................................3
xii
42 U.S.C. § 1396b(m)(1)(A)(i) .............................................................................. 55
42 U.S.C. § 1396c ...............................................................................................2, 4
5 U.S.C. § 702 ...................................................................................................... 41
TEX. CIV. PRAC. & REM. CODE § 37.011 ................................................................ 33
TEX. GOV’T CODE § 2001.022 ......................................................................... 53
TEX. GOV’T CODE § 2001.022(a) ............................................................... 13, 46
TEX. GOV’T CODE § 2001.023(a) .......................................................... 13, 46, 53
TEX. GOV’T CODE § 2001.024 ................................................................... 13, 54
TEX. GOV’T CODE § 2001.038 ......................................................................... 41
TEX. GOV’T CODE § 2001.038(a) .............................................................. 16, 42, 43
TEX. GOV’T CODE § 2001.171 ......................................................................... 42
TEX. GOV’T CODE § 2001.174 .................................................................... 41, 42
TEX. GOV’T CODE § 2006.002 ....................................................................13, 53
TEX. GOV’T CODE § 2006.002(c) ....................................................................46
TEX. GOV’T CODE § 311.016 ................................................................................ 24
TEX. GOV’T CODE § 311.034 ................................................................................ 42
TEX. GOV’T CODE ch. 531 .......................................................................................5
TEX. GOV’T CODE ch. 531 subch. B .........................................................................5
TEX. GOV’T CODE § 531.021(b-1)............................................................................5
TEX. GOV’T CODE § 531.021(d) .......................................................................... 8, 9
TEX. GOV’T CODE § 531.021(e) ........................................................................ 9
xiii
TEX. GOV’T CODE § 531.02113.......................................................................... 5, 13
TEX. GOV’T CODE § 531.02113(1) ......................................................................... 53
TEX. GOV’T CODE § 531.0212(b)(2) ...................................................................... 38
TEX. GOV’T CODE § 533.005(a)(21) ...................................................................... 13
TEX. GOV’T CODE § 533.005(a)(21)(c) ................................................................. 54
TEX. HUM. RES. CODE ch. 32 ..................................................................................5
TEX. HUM. RES. CODE § 32.002 ........................................................................5
TEX. HUM. RES. CODE § 32.021 .................................................................. 5, 35
TEX. HUM. RES. CODE § 32.021(a) ..........................................................................5
TEX. HUM. RES. CODE § 32.028 ................................................................... 3, 31, 53
TEX. HUM. RES. CODE § 32.028(a)...................................................................... 5, 6
TEX. HUM. RES. CODE § 32.0281.......................................................................5
TEX. HUM. RES. CODE § 32.0281(b)(1)............................................................. 6
TEX. HUM. RES. CODE § 32.0281(d)....................................................................... 6
TEX. HUM. RES. CODE § 32.0281(e) ............................................................ 6, 29
TEX. HUM. RES. CODE § 32.0282 ................................................................ 6, 10, 52
TEX. HUM. RES. CODE § 32.0282(a) .......................................................................7
TEX. R. CIV. P. 683 ................................................................................................ 56
Rule 24........................................................................................................... 22, 52
xiv
Other Authorities
2016-17 Gen. Appropriations Act,
84th Leg., R.S., ch. 1281, art. II, 2015 TEX. SESS. LAW SERV. 4343,
4547 (Health & Human Servs. Comm’n), Rider 50..................................... 11
A DICTIONARY OF MODERN LEGAL USAGE (2d ed. 1995) ................................ 24, 46
AMER. HERITAGE DICTIONARY 691 (4th ed. 1994) ................................................ 21
AMER. HERITAGE DICTIONARY 1612 (4th ed. 1994) ............................................. 24
BLACK’S LAW DICTIONARY 1436 (9th ed. 2009) ....................................................46
Gen. Appropriations Act, 2012-13 Biennium, 82d Leg., R.S., ch. 1355, art.
II, § 16, 2011 TEX. GEN. LAWS 4025, 4241 (Special Provisions Re:
All Health & Human Servs. Agencies, Provider Rates) ............................... 10
xv
STATEMENT OF THE CASE
Nature of the Case: Plaintiffs sought to impede the
implementation of a set of Medicaid rates
for home therapy services that were to go
into effect on October 1. They attempted to
invoke § 2001.038 of the APA and the ultra
vires cause of action, and asked the district
court to foreclose the Commission from
superseding the judgment.
Trial Court: 200th Judicial District Court,
Travis County
The Hon. Tim Sulak Presiding
Trial Court Disposition: The trial court denied the plea, CR.673
(Appendix Tab B),1 and granted a
temporary injunction, CR.587-672
(Appendix Tab A). The court foreclosed
supersedeas based on a bond of $500; that
matter is being challenged by a separate
motion in the same cause.
1 References to the Clerk’s Record appear as “CR.__,” with a numeral indicating the page number
and, as appropriate, a paragraph reference. References to the Reporter’s Record appear as
__.RR.__, with the first numeral indicating a volume and the second a page number, sometimes
followed by a line number. The Supplemental Reporter’s Record is referred to as “SRR.”
xvi
ISSUES PRESENTED
Plaintiffs sought ultra vires and declaratory relief under the Administrative
Procedure Act related to the Commission’s adjustment of Medicaid rates for certain
therapy services, which were arrived at as a rate adjustment triggered by a decreased
appropriation for Medicaid funding. Plaintiffs allege in their trial-court briefing (but
not in their live petition) that they are entitled to relief related to the rates, because
they are implicitly in conflict with separate administrative rules governing periodic
rate review related to costs. Claims regarding the amount of Medicaid rates are
subject to the exclusive jurisdiction of the federal Secretary of Health and Human
Services, and Texas law does not provide for an administrative process or judicial
review related to the rate-setting process.
1. Does plaintiffs’ petition establish jurisdiction based on any of the
causes of action asserted? Are the jurisdictional defects
incurable?
2. Are Texas-law claims and remedies related to the amount
of Medicaid rates preempted by the federal Medicaid Act?
Does Texas law purport to create an independent basis for
challenging Medicaid rates in state court?
3. Do plaintiffs have a standing to challenge the Medicaid rates or a
vested right in a particular level of Medicaid rates?
4. Do plaintiffs have a vested property right on which to base
a constitutional due-course-of-law claim or seek inherent
judicial review?
xvii
No. 03-15-00657-CV
In the Court of Appeals
for the Third Judicial District
at Austin, Texas
CHRIS TRAYLOR, AS EXECUTIVE COMMISSIONER OF THE TEXAS HEALTH AND
HUMAN SERVICES COMMISSION, et al.
Appellants,
v.
DIANA D., AS NEXT FRIEND OF KD, A CHILD, et al.
Appellees.
On Appeal from the
200th Judicial District Court of Travis County, Texas
APPELLANTS’ BRIEF
TO THE HONORABLE THIRD COURT OF APPEALS:
Plaintiffs seek to challenge the result of a Medicaid rates adjustment, through
a series of procedural mechanisms governing the adoption of the administrative rules
governing the Medicaid process. The remedy plaintiffs seek—to keep the old
rates—is incompatible with the exceptions to sovereign immunity on which they
rely. Those exceptions apply at most to rules, not rates; there is no Texas-law
mechanism to challenge the amount of Medicaid rates. The lack of a Texas-law
remedy for ratemaking is entirely sensible, because federal law preempts all state law
remedies that impact the amount of Medicaid fees related to considerations such as
access to care. The federal Secretary of Health and Human Services has exclusive
authority to review the amount of Medicaid rates, subject to the remedy of
withdrawing federal funds if state levels are too low. 42 U.S.C. § 1396c.
Because there is no Texas-court lawsuit that can change the rates, plaintiffs
should direct their concerns about access to care to the Secretary. The lawsuit should
be dismissed.
STATEMENT OF FACTS
Plaintiffs would engraft a substantive Texas-law access requirement on the
federal Medicaid Act, and to establish a new legal basis for judicial review of
Medicaid rates through statutes that allow review of the underlying administrative
rules. A full understanding of the procedural and jurisdictional issues in this case
requires an understanding of the Medicaid Act’s rate structure and the Texas-law
requirements for adopting administrative rules, periodically setting Medicaid rates,
and adjusting those rates in other circumstances.
Medicaid
Medicaid is a Spending Clause program, cooperatively managed by the state
and federal governments. E.g., Armstrong v. Exceptional Child Ctr., Inc., 135 S.Ct.
1378, 1382 (2015). The program functions as a contract between the states and the
federal government: to qualify for funding, the State tenders and the federal
government accepts a Medicaid “plan,” see 42 U.S.C. § 1396a(a), to be administered
2
by the State, see Douglas v. Indep. Living Ctr. of S. Calif., Inc., 132 S.Ct. 1204, 1210
(2012) (federal governments’ acceptance of Medicaid plan, within its expertise,
precluded rate claim against state and required plaintiffs to go to federal forum). The
availability of funds is predicated on the availability of money appropriated to pay
Medicaid benefits. 42 U.S.C. § 1396b(a) (setting amount to be distributed to states
“[f]rom the sums appropriated therefor”); accord, e.g., TEX. HUM. RES. CODE
§ 32.028, 1 TEX. ADMIN. CODE § 355.201(c)(4) (requiring consideration of “levels
of appropriated state . . . funds . . . that limit, restrict, or condition the availability of
appropriated funds for medical assistance”). A shortfall in Medicaid appropriations
requires either further appropriations, or, more rarely, cuts to Medicaid rates. E.g.,
Colorado Health Care Ass’n v. Colorado Dep’t of Soc. Servs., 842 F.2d 1158, 1171-72
(10th Cir. 1988).
The state plan must meet a number of requirements, such as providing a
hearing before a State agency for any individual whose claim for medical assistance
under the plan is denied. E.g., 42 U.S.C. § 1396a(a)(3). One requirement of the
Medicaid Act is “access.” Rates must be:
sufficient to enlist enough providers so that care and services are
available under the plan at least to the extent that such care and services
are available to the general population in the geographic area
42 U.S.C. § 1396a(a)(30)(A).
3
Consistent with the contractual nature of the program, many of its
requirements are subjected to the discretion of the federal Secretary of Health and
Human Services, who has ultimate authority to suspend Medicaid payments to the
states for non-compliance with the Act, 42 U.S.C. § 1396c. For example, the Fifth
Circuit has held that the “access” requirement cannot give rise to a statutory cause
of action in federal court, because discretion over setting rates to meet the access
requirement is vested in the Secretary, rather than the courts. Equal Access for El
Paso, Inc. v. Hawkins, 509 F.3d 697, 701 (5th Cir. 2007).
The amount of rates is, ultimately, reviewed by the Secretary through the
Centers for Medicare and Medicaid Services (“CMS”). This review currently takes
place on an ad hoc basis, but CMS is currently pursuing a formal rulemaking that
would standardize the data requirements and standards for demonstrating access to
care. Medicaid Program; Methods for Assuring Access to Covered Medicaid
Services, 80 Fed. Reg. 67576 (Nov. 2, 2015) (to be codified at 42 C.F.R. pt. 447)
(Appendix, Tab C). This new rule will establish specific criteria for establishing
access to care, including documentation requirements. Id.
Texas Statutes and Rules
In Texas, Medicaid is governed by Chapter 32 of the Human Resources Code
and some provisions in subchapter B of Chapter 531 of the Government Code. See
4
TEX. HUM. RES. CODE ch. 32., TEX. GOV’T CODE ch. 531 subch. B. The statutory
provisions—unsurprisingly—mirror federal law. See TEX. HUM. RES. CODE
§ 32.002 (requiring Chapter be construed in light of federal law and that any
provisions that would render Texas ineligible to receive funds inoperative to that
extent).
The program is administered by the Health and Human Service Commission,
and the Commissioner is charged with adopting the necessary administrative rules
to implement the system. See id. § 32.021; see also TEX. GOV’T CODE ch. 531 (setting
out Commission’s authority and duties). Consistent with the Medicaid Act, the
Commission is charged with presenting the State’s medical assistance plan to the
federal government for approval by the Secretary. See TEX. HUM. RES. CODE
§ 32.021(a) (referring to 42 U.S.C. § 1396a(a)(5)). A separate provision of the
Government Code creates a general duty to “optimize” Medicaid financing by,
among other things, maximizing the receipt of federal funds, creating incentives to
use preventive care, increasing and retaining providers in the system to maintain an
“adequate provider network.” TEX. GOV’T CODE § 531.02113.
Rulemaking:
Rates are adopted under a system set out by administrative rule. TEX. HUM.
RES. CODE § 32.028(a), § 32.0281; TEX. GOV’T CODE § 531.021(b-1); see 1 TEX.
ADMIN. CODE § 355.201. These rules are promulgated under the formal rulemaking
5
requirements of the Administrative Procedure Act. TEX. HUM. RES. CODE
§ 32.0281(d).2
Ratemaking:
The rate making process, by contrast to the underlying rulemaking, is
governed by requirements that are different in form and substance from the APA’s.
See TEX. HUM. RES. CODE § 32.0282 (setting out public-hearing requirement,
different from APA’s). The Human Resources Code makes clear that something
different from formal APA process is required. Id. §§ 32.028(a), 32.0281(b)(1). The
Medicaid-rate-specific process further distinguishes between the processes for
“establishment” and “periodic review,” on the one hand, and “adjustment” on the
other. See 1 TEX. ADMIN. CODE ch. 355 subch. B.
2Somewhat confusingly, § 32.0281 states that the adoption of rules is subject both to the APA’s
rulemaking provisions, TEX. HUM. RES. CODE § 32.0281(d), and that the same rules are subject to
an “appeal” under the contested-case provisions of the APA, id. § 32.0281(e). Subsection (e) is
not implicated in this case, which involves no contested-case proceeding. See infra, n. 9.
6
Ratemaking: Establishment and Periodic Review
When a rule is “established,” the Commission considers the information
detailed in § 355.201(c). HHSC ratemaking staff regularly review new rates based on
all required inputs, and consider stakeholder comments regarding potential access-
to-care issues. Periodic rate changes are adopted at a public hearing “to allow
interested persons to present comments relating to proposed payment rates for
medical assistance.” TEX. HUM. RES. CODE § 32.0282(a). By contrast to public
hearing requirements for APA rulemaking, there is no requirement that the
Commission respond to public comment before the new rate goes into effect, only a
notice requirement.
The notice requirement is satisfied by publication in the Texas Register, no
later than 10 state working days before the effective date of the adjustment. 1 TEX.
ADMIN. CODE § 355.201(e). The published notice must include a description of the
specific increase or reduction, the date on which it will take effect, a description of
the legal and factual bases therefor, a description of any rate setting requirements
that cannot be met, and instructions for interested parties to submit written
comments prior to the hearing on the rates. 1 TEX. ADMIN. CODE § 355.201(f).
Substantively, periodic rate changes are circumscribed by the Commission’s
rules, the requirements of state and federal law, economic factors, and “levels of
appropriated state and federal funds or state or federal laws or enactments that limit,
7
restrict, or condition the availability of appropriated funds for medical assistance.”
See id. §§ 355.201(c), 355.201(c)(4); see also TEX. GOV’T CODE § 531.021(d).
With regard to home health programs, an additional provision § 355.8021,
governs rates for establishment and periodic review of services. See 1 TEX. ADMIN.
CODE § 355.8021. The Commission will “update” schedules for home care “as
needed.” Id. § 355.8021(a)(2). Fees are to be based on an analysis of other fees
authorized by the federal government for similar services, Medicaid fees paid by
other states, a survey of costs reported by home health agencies, the Medicare Low
Utilization Payment Adjustment (LUPA) fees; previous payments for these services,
or “some combination thereof.” Id. § 355.8021(a)(2)(A).
Periodic rate reviews “include,” but are not “limited to, payments for as well
as costs associated with providing” home health services. Id. § 355.8021(a)(2)(B).
Rates for early-intervention therapeutic intervention are subject to the same inquiry.
See 1 TEX. ADMIN. CODE § 355.8441(3)(B); (5)(B); (6)(B); (7)(B) (referring back to
§ 355.8021 when discussing “EPSDT”3 services by home health agencies); 1 TEX.
ADMIN. CODE § 355.8085(g)(3) (specifying that EPSDT services are governed by
§ 355.8441). Thus, for services governed by § 355.8021(a)(2), review is related to
costs.
3 “EPSDT” stands for “Early and Periodic Screening, Diagnosis, and Treatment.”
8
Ratemaking: Adjustments
While rates are ‘established’ and periodically ‘reviewed’ under the relevant
administrative rules, separate provisions govern adjusting rates. 1 TEX. ADMIN. CODE
§§ 355.201(d)(1)(A), (D) (mirroring factors set out in § 531.021(d) of the
Government Code for changing rates notwithstanding other legal requirements),
355.201(e) (discussing procedural requirements therefor). Echoing the Government
Code’s requirement that rates be adjusted “[n]otwithstanding any other provision”
to accommodate the factors such as reduced appropriations, TEX. GOV’T CODE
§ 531.021(d), (e), the rules provide:
Adjustment of fees, rates, and charges. Notwithstanding any other
provision of this chapter, the Commission may adjust fees, rates, and
charges paid for medical assistance if:
(1) state or federal law is enacted, amended, judicially interpreted,
or implemented to:
(A) require the Commission to increase or reduce a fee, rate or
charge paid to a provider for medical assistance;
* * *
(D) restrict, limit, or condition the availability of appropriated
funds to the Commission for payment or reimbursement
of medical assistance.
1 TEX. ADMIN. CODE § 355.201(d). The substantive requirements for an adjustment,
under subsection (d), are different from those for establishment or periodic review
of a rate, under subsection (c), compare id. (allowing a change in rates when
9
appropriations are cut “notwithstanding” other law), with § 355.201(c) (setting out
various data to be considered in establishing rates).
Adjustments are subject to the same procedural requirements as the rate
establishment and review process; interested parties are entitled to submit written
comments and attend a public hearing. Id. § 355.201(f) (requiring same type of
hearing as for establishment of rule under TEX. HUM. RES. CODE § 32.0282). The
administrative rules expressly contemplate the changes in legislation will require
new rates, specifying that such changes will not take effect until the new law does.
Id. § 355.201(e). One example of a non-periodic rate adjustment occurred in the
2012-13 biennium, when the Legislature mandated specific cuts to particular rates.
Gen. Appropriations Act, 2012-13 Biennium, 82d Leg., R.S., ch. 1355, art. II, § 16,
2011 TEX. GEN. LAWS 4025, 4241 (Special Provisions Re: All Health & Human
Servs. Agencies, Provider Rates). By contrast to periodic review based on cost,
adjustments are triggered by discreet events such as a decrease in appropriations for
Medicaid reimbursement. 1 TEX. ADMIN. CODE §§ 355.201(d)(1)(A), (D); see TEX.
GOV’T CODE § 531.021(d), (e).
The Current Dispute
The current state budget contains a rider cutting $186,500,000 in General
Revenue Funds and $249,349,498 in Federal Funds in 2016, and similar numbers in
10
2016. 2016-17 Gen. Appropriations Act, 84th Leg., R.S., ch. 1281, art. II, 2015 TEX.
SESS. LAW SERV. 4343, 4547 (Health & Human Servs. Comm’n), Rider 50 (“Rider
50”) (Appendix Tab D). The rider specifies cuts for acute care therapy services
(including physical, occupational, and speech therapies. Id. It states:
HHSC shall reform reimbursement methodology to be in line with
industry standards, policies, and utilization for acute care therapy
services (including physical, occupational, and speech therapies) while
considering stakeholder input and access to care. Out of the amount in
subsection (a), in each fiscal year at least $50,000,000 in General Revenue
Funds savings should be achieved through rate reductions.
Id. (emphasis added).
The rider separately addresses $25,000,000 to be made through various
medical policy initiatives, setting out initiatives the Commission “may” undertake.
Id. Thus, by contrast to the rate cuts, the Commission has flexibility regarding efforts
such as “[c]larifying policy language,” Rider 50(c)(1), and requiring “a primary care
or treating physician to initiate a signed order or referral prior to an initial therapy
evaluation,” id. 50(c)(4).
In response, the Commission attempted to change the rates in accordance
with Rider 50(c). See CR.18-39. That attempt triggered this lawsuit.
The first notice of changed rates under Rider 50 failed to mention the
adjustment process, see CR.20 (reciting other rate-related provisions). Following
public comment, an internal memorandum suggested that the original rates be
11
changed for various reasons and suggested that the new rates be based on a
modification of the prior announcement and hearing, see CR.235-261. As explained
above, however, the internal memorandum by Commission staff could not trigger
changed rules, because there is no formal requirement or mechanism for addressing
the public’s concerns. Accordingly, the Commission withdrew the entire first rate
proposal, in light of the internal memorandum plaintiffs describe as a second rate
proposal (but which never attempted to meet the procedural requirements to change
the rates). CR.235-261. It then proposed the new, October 1, rates. CR.351-373
(Appendix Tab E). The October 1 rates were proposed under the “adjustment”
procedure. CR.352 (citing 1 TEX. ADMIN. CODE §§ 355.201(d)(1)(A), (D)).
The District Court
Plaintiffs instituted suit Travis County district court while the first set of rates
was in the administrative process, see CR.4-17, and amended their petition following
the internal memorandum, which they have described as a second set of rates,
CR.196-210. After the agency announced the October 1 rates, plaintiffs amended
their petition again and sought a temporary injunction precluding the Commission
from applying the rates while this lawsuit is pending. CR.336-392 (Appendix Tab F).
The second amended petition asserted that the providers would go out of
business, and the beneficiaries might no longer be able to obtain services. CR.342-43
¶ 24. They asserted that the rates were adopted without complying with the
administrative rules governing establishment and periodic review of rates (1 TEX.
12
ADMIN. CODE §§ 355.8021, 355.8441, 355.8085); several provisions related to formal
rulemaking (TEX. GOV’T CODE §§ 2001.022(a), 2001.023(a), 2001.024, 2006.002);
that there had been no published notice under the Medicaid Rate setting rule (1 TEX.
ADMIN. CODE § 355.201(e), (f)). CR.343 ¶ 25, CR.505 ¶ 2. They further asserted
substantive rights to (1) have Medicaid rates ‘maximized,’ CR.343-44 ¶ 26 (citing
TEX. GOV’T CODE § 531.02113); and (2) ensure access to care for each beneficiary
under the provisions governing MCO rates, CR.344 ¶ 27 (citing TEX. GOV’T CODE
§ 533.005(a)(21) and 1 TEX. ADMIN. CODE § 353.411(a)(5)). Finally, plaintiffs
asserted a due-course of law claim. CR.344-45 ¶ 28.
The Commission and Commissioner filed a plea to the jurisdiction and
opposed the temporary injunction in the hearing. CR.581-84. The district court
granted the temporary injunction and denied defendants’ plea. CR.673, CR.587-672
(Appendix Tab A).The district court’s analysis of the probable right of recovery
element accepted plaintiffs’ argument that it is appropriate to enjoin a change in
rates because the rate adjustment allegedly violated the administrative rules
governing rate establishment and periodic rate review or adoption of an administrative
rule under the APA. See CR.591 ¶ 18. The district court incorporated a counter-
supersedeas order into the temporary injunction, requiring a bond of $500 to cover
the potential expense to the State of not implementing Rider 50(c). CR.596-97. That
order is currently being challenged in this Court under Rule of Appellate Procedure
24.
13
While the Rule 24 motion was pending, the trial court heard Appellants’
motion to modify the temporary injunction. The district court denied the motion and
stated that the scope of the injunction could be determined in subsequent sanctions
proceedings, if the State did not choose to comport with plaintiffs’ view of how rates
should be set. SRR.37-39.
Summary of Argument
Plaintiffs have not stated a claim within either of the exceptions to sovereign
immunity they attempt to invoke. That defect is incurable, because (1) Rider 50
mandates the cuts resulting in the rate adjustment that became effective October 1;
(2) plaintiffs’ complaints are all about the standards for rate review, not rate
adjustment; and (3) consistent with the exclusive federal, executive-department
remedy provided by the Medicaid Act, Texas law does not provide judicial review of
Medicaid rates.
Plaintiffs’ petition avers that the adoption of rates in this case violated several
administrative rules (although they never say how), that (implicitly) the adoption of
the rate constituted an amendment of some rule (though they don’t say which), and
they throw in a substantive argument based on the access requirements for
Medicaid-paying managed care organizations (which are not covered by these rates).
In short, their petition fails to invoke trial-court jurisdiction regardless of what the
record shows. A plaintiff cannot rely on the notice-pleading standard against the
14
State; it must articulate a legal theory within a waiver of immunity from suit and
allege facts to support it.
The next step would ordinarily be to look at the record to see whether it
supports remand for repleading. It does not, as explained below. But the ordinary
next step does not apply, because it is first necessary to determine whether plaintiffs
can obtain the remedy they seek, regardless of the facts. To the extent plaintiffs
complain about the October 1 rates, qua rates, their lawsuit is preempted by federal
law. The Medicaid Act preempts contrary state remedies by making claims regarding
“access to care”—a claim that is governed exclusively by federal law and is the only
cited basis for attacking the substance of the rates—subject to the sole remedy of the
federal Secretary of Health and Human Service’s control over rate settings. While
the United States Supreme Court has left open the question whether the Secretary’s
actions are subject to further federal court proceedings, there can be no doubt that
those proceedings must be in federal court, because they will be against, or brought
by, the United States.
That any right to particular rates is contingent on the Secretary’s actions
precludes constitutional standing, any due-course-of-law claim, and any invocation
of inherent judicial review.
And to the extent plaintiffs complain about the adoption and application of
administrative rules, they cannot obtain relief regarding the rate amounts under the
causes of action they attempt to invoke. Section 2001.038 cannot be used to
15
challenge particular applications of administrative rules: it is limited to
“applicability,” not application, and does not provide for injunctive relief. TEX.
GOV’T CODE § 2001.038(a). Nor can the ultra vires cause of action result in the
reversal of a particular action taken pursuant to a rule: it operates prospectively only.
If plaintiffs’ view of jurisdiction were correct, both § 2001.038 and the ultra vires
cause of action would constitute independent bases for judicial review. The Supreme
Court and this Court have long rejected both propositions.
Finally, the pleadings and evidence affirmatively negate any alternative claim.
(1) Plaintiffs have not, as a matter of law, “identified” an administrative rule as
required by Third Court precedent, because the only substantive arguments they
make are that the rules have been misapplied. That cannot result in a declaration
regarding the rules themselves. (2) Their ultra vires claim fails because the
Commissioner has done, and threatens to do, nothing that is not provided by law. As
with any application of administrative rules, if there is no statutory basis for judicial
review and no constitutional basis for inherent review, the defendant’s actions
cannot be the basis for an ultra vires claim. And (3), even assuming (in the face of
overwhelming precedent), that there could be an ultra vires claim, it fails because as
a matter of law the ratemaking was proper exercise of the power to adjust rates
pursuant to decreased appropriations.
16
Standards of Review
A plaintiff must demonstrate that the allegations in his petition fall within the
court’s jurisdiction. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446
(Tex. 1993) (citing Richardson v. First Nat’l Life Ins. Co., 419 S.W.2d 836, 839 (Tex.
1967). Notice pleading is not enough: the “real substance” of the petition must state
a valid legal theory within an exception to sovereign immunity. E.g., Dallas Cnty.
Mental Health & Mental Retardation v. Bossley, 968 S.W.2d 339, 343 (Tex. 1998). A
defendant’s plea to the jurisdiction based on sovereign immunity is analyzed in two
steps: (1) examining the plaintiff’s petition to see if it articulates a claim within the
scope of a valid waiver of immunity and (2) determining whether undisputed
evidence of jurisdictional facts negates the trial court’s jurisdiction. Tex. Dep’t of
Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). The legal question
whether the alleged facts invoke an exception to immunity can require an inquiry
into the merits of the claim; conclusory legal allegations are insufficient, without
supporting facts, to establish jurisdiction. E.g., Gattis v. Duty, 349 S.W.3d 193, 201
(Tex. App.—Austin 2011, no pet.) If either the pleadings themselves or the evidence
affirmatively negates jurisdiction over the claim, the claim must be dismissed. Tex.
A&M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 847 (Tex. 2007).
A temporary injunction is reviewed for abuse of discretion. E.g., Walling v.
Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993) (per curiam). A trial court abuses its
17
discretion when it fails to analyze or apply the law correctly. In re Sw. Bell Tel. Co.,
L.P., 226 S.W.3d 400, 403 (Tex. 2007).
Argument
I. THE LIVE PETITION DOES NOT ATTEMPT TO TIE THE CAUSES OF
ACTION IT PLEADS TO THE REMEDIES IT SEEKS.
To invoke an exception to immunity a petition must, based on alleged facts,
articulate a legal theory that falls within an exception to sovereign immunity as a
matter of law. E.g., Bossley, 968 S.W.2d at 343. Plaintiffs’ petition makes no such
effort: it merely alleges inconsistencies between the rate-adoption and various
administrative rules and statutes. Nowhere does it articulate how the alleged facts
support a claim within a waiver of sovereign immunity.
It is the plaintiffs’ burden to file a petition that invokes the court’s jurisdiction.
Tex. Ass’n of Bus., 852 S.W.2d at 446. Jurisdiction must appear based on the
allegations, because the defendant is entitled to a ruling on the plea as early as
possible. E.g., State Bar of Tex. v. Gomez, 891 S.W.2d 243, 245 (Tex. 1994). The
petition is tested to see whether the pleading party has “alleged facts that
affirmatively demonstrate a trial court’s subject-matter jurisdiction.” Tex. Dep’t of
Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). It is not enough
merely to mention a cause of action for which immunity is waived: the plaintiff must
allege facts sufficient to support the waiver. See Harris County v. Sykes, 136 S.W.3d
635, 639-640 (Tex. 2004) (lawsuit of plaintiff who does not amend petition to include
18
sufficient facts to trigger immunity waiver must be dismissed); see also State v.
Holland, 221 S.W.3d 639, 644 (Tex. 2007) (dismissing takings claim that was based
on invalid legal theory). More specifically, if the case involves an ultra vires claim
against an official, the plaintiff must plead acts that are, as a matter of law, ultra vires.
E.g., Sw. Pharmacy Solutions, Inc. v. Tex. Health & Human Servs. Comm’n, 408
S.W.3d 549, 557-58 (Tex. App.—Austin 2013, pet. denied) (ultra vires analysis
involves legal inquiry to determine whether alleged acts are prohibited). In sum, a
petition that merely names a waiver of immunity, but does not attempt to allege facts
and assert a legal claim invoking that waiver of immunity, must be dismissed on a
plea to the jurisdiction.
The live petition makes no attempt to tie the relief it requests to the legal
theories or causes of action invoked in the petition (and is thus jurisdictionally
defective), plaintiffs try to circle the square in their trial-court briefing and in the
district court’s temporary-injunction order. There, they assert that the adoption of
the rules manifests an implicit amendment of the administrative rules. That briefing
can’t fix the disconnect between the waivers of immunity plaintiffs invoke and the
legal theories on which they rely. The proper inquiry in this lawsuit is not whether
plaintiffs’ allegations in the petition successfully trigger jurisdiction, but whether
there is any basis for repleading. Holland, 21 S.W.3d at 643, 644; Water Dev’pt Bd. v.
Hearts Bluff Game Ranch, Inc., 313 S.W.3d 479, 485, 490 (Tex. App.—Austin 2010),
19
aff’d 381 S.W.3d 468 (Tex. 2012) (no takings claim asserted in pleadings where
State’s actions were subsidiary to actions of federal government).
II. Plaintiffs’ Lawsuit Has No Arguable Basis in Law.
The core of plaintiffs’ lawsuit—which is found not in their live petition but
rather in their briefing, CR.509 ¶ 6, and in the text of the temporary injunction order,
CR.590 ¶ 11—is that the rate adjustment resulting in the October 1 rates implicitly
invalidates the underlying administrative rules by amending them to reach the
current rates. Thus, plaintiffs seek to use the mechanism for challenging formal
administrative rules under the APA as a collateral vehicle for obtaining judicial
review when there is none. And even if they had pleaded a valid rule challenge—
which they have not, see infra, Part V.B.2—it would fail as a matter of law because
plaintiffs allege violations of the APA and the administrative rules relating to the
establishment and periodic review of Medicaid rates. The October 1 rates, however,
result from a rate “adjustment” triggered by Rider 50. CR.352. So even if plaintiffs’
view of the procedural requirements of Texas law were correct, there lawsuit would
fail for want of jurisdiction.
A. Plaintiffs Fail to Address the Distinction Between Review and
Adjustment.
Plaintiffs’ view of this case depends primarily on the assertion that the
October 1 rates are invalid because there is evidence that the Commission did not
comply with § 355.8021 and, by extrapolation, with various other procedural
20
requirements and with the APA. CR.343 ¶ 25. They suggest that § 355.8021 has been
violated because the rates have not been set according to a particular “formula” set
out therein.4 CR.508 ¶ 2.
More specifically, plaintiffs appear to suggest that there is a violation of
§ 355.8021(a)(2), which relates to the periodic review of rates. 1 TEX. ADMIN. CODE
§ 355.8021(a)(2)(A), (B). Those provisions do not apply at all. And if they did apply,
plaintiffs’ lawsuit would nonetheless be jurisdictionally barred because plaintiffs
misconstrue their requirements. See infra, Part V.C.1.
The October 1 rate notice references §§ 355.201(d)(1)(A) and (D). CR.352.
Those provisions are triggered when state law is amended to (1) require the
Commission to increase or reduce a rate, 1 TEX. ADMIN. CODE § 355.201(d)(1)(A),
or when a law restricts the availability of appropriate funds to the Commission for
the payment or reimbursement of medical assistance, 1 TEX. ADMIN. CODE
§ 355.201(d)(1)(D). When § 355.201(d) is triggered, the Commission may “adjust”
rates “notwithstanding any other provision” in the administrative rules. 1 TEX.
ADMIN. CODE § 355.201(d) (“Adjustment of fees, rates, and charges”).
4 Far from imposing a formula, § 355.8021 (and its dependent provisions, § 355.8441 and
§ 355.8085) creates no substantive requirement except that the Commission consider various data
in some combination and form. A list of data, stating that it can be considered in any combination,
is hardly a “formula.” See AMER. HERITAGE DICTIONARY 691 (4th ed. 1994) (“A method of doing
or treating something that relies on an established uncontroversial model or approach.”).
21
All the procedural rules invoked by plaintiffs, CR.343 ¶ 25, expressly apply to
the establishment and periodic review of Medicaid rates. E.g., 1 TEX. ADMIN. CODE
§§ 355.8021(a)(2) (the Commission will “update the fee schedules . . . as needed);
(a)(2)(A) (fee schedules arrived at in these reviews will be made using a list of data
“or some combination thereof”); (a)(2)(B) (the Commission “may conduct
periodic rate reviews that will include, but not be limited to, payments for as well as
the costs associated with providing” these services). Those provisions do not on
their face apply to the adjustment of the rates resulting in the October 1 rates because
§ 355.8021(a)(2) expressly relates to periodic review of rates. By contrast, when the
Legislature changes the underlying funding for Medicaid, the adjustment process
occurs “notwithstanding” the other requirements of the chapter. 1 TEX. ADMIN.
CODE § 355.201(d).
To sum up: Rider 50 triggered the adjustment process of § 355.201(d), which
occurs notwithstanding other requirements of the Commission’s rules. Plaintiffs
complain exclusively about rules that apply to the periodic review of rules based on
cost, not the adjustment of rules based on a change in appropriations.
B. Plaintiffs Fundamentally Misunderstand Rider 50.
Plaintiffs suggest that Rider 50 creates the option to cut the rates, not a
mandate to do so. See Rule 24 Resp. at 5 n.2, 6 ¶ 8. Not so: Rider 50(c) made rate
cuts for these services a mandatory element of the broader cuts to the Medicaid
reimbursement program.
22
1. The rider’s plain text is not optional.
The rate cuts in Rider 50(c) are not optional. Part 50(a) makes clear that
funding has already been cut from the Medicaid portion of the budget. Rider 50(a).
(“Included in appropriations above in Goal B, Medicaid, is a reduction of . . . a
biennial total of $373,000,000 in General Revenue Funds and $496,570,428 in
Federal Funds.”) Portions of this larger cut “may” include various initiatives. Rider
50(b) (“This reduction shall be achieved through the implementation of the plan
described under subsection d which may include any or all of the following
initiatives:”).
Rider 50(c) is the kicker. After requiring a change in reimbursement
methodology to meet industry standards, “while considering stakeholder input and
access to care,” the Rider makes specific requirements regarding Medicaid therapy
rates:
Out of the amount [already cut] in subsection (a), in each fiscal year at
least $50,000,000 in General Revenue Funds savings should be
achieved through rate reductions. . . . .
Rider 50(c). Plaintiffs’ view that the rate cuts are optional hangs entirely on the word
“should,” which addresses “rate cuts” that are to be used to account for money that
23
was already cut from the budget, according to Rider 50(a).5 In this context, the word
“should” creates a mandatory obligation.
Rider 50(a), not Rider 50(c), cuts funds from the budget. The word “should”
is an instruction to the Commission regarding the proportion of the total cuts that
are to be directed to Medicaid therapy rate reductions.
A sentence containing “should” can, in context, create a mandatory
obligation. The word “should” is not included in the list of words given a
background meaning by the Code Construction Act, see TEX. GOV’T CODE § 311.016,
nor is there a large body of case law governing its use as opposed to the more common
statutory terms “shall” and “may,” see Thomas v. Groebl, 147 Tex. 70, 78-79, 212
S.W.2d 625, 630 (1948) (“shall” can mean “may,” and vice versa). “Should” is the
past tense of “shall,” and, though it is sometimes used to express “probability or
expectation,” it also serves to indicate “obligation or duty.” AMER. HERITAGE
DICTIONARY 1612 (4th ed. 1994). Thus, like “shall” and “may,” the word “should”
can create a mandatory standard in some contexts. See A DICTIONARY OF MODERN
LEGAL USAGE (2d ed. 1995) (“Oddly, should, like may . . . is sometimes used to create
5The response suggests that the word “may” also applies to the rate cuts. Resp. at 16 ¶ 21. This is
wrong. The word “may” applies to the various initiatives in which the Commission is empowered
to initiate to cut an additional $25 million in funding. Rider 50(c). Moreover, while the later
reference in Rider 50(d) to Rider 50(c) addresses some optional programs, it is referring to the
optional programs to cut the additional $25 million. Rider 50(d) does not make the rate cuts in
Rider 50(c) optional, contrary to the plain text of Rider 50(c) and its reference back to Rider 50(a).
24
mandatory standards, as in the ABA Code of Judicial Conduct”). Texas courts have
routinely applied decrees using the word “should” as creating mandatory duties in
statutes, orders, and instructions.6
It makes sense to treat ‘should’ as mandatory in this context. Rider 50(a) sets
out a total amount of cuts, and Rider 50(c) sets out instructions for how to achieve
at least $100,000,000 of those cuts during the biennium. Given that the word
“should” is directed at a portion of the cuts already made, nothing in the context
suggests that the cuts themselves, or their amount, is either conditional or
conditioned upon any particular data or analysis.
Plaintiffs have implied that the reference to “access to care” impacts the rate
changes. See Resp. at 16 ¶ 21 (putting “access to care” next to the rate cuts with an
ellipsis). This is misleading: Rider 50 ties access to reformation of reimbursement
methodology, not to rate cuts. Rider 50(c). The rate cuts are in a separate sentence.
And even if the rate cuts were subject to procedural requirement to perform an
“access to care” inquiry, the reference to “access to care” necessarily invokes the
6 See City of Austin v. Cannizzo, 153 Tex. 324, 331, 267 S.W.2d 808, 813 (1954) (“Whatever
distinctions may be made between the words will and should by lexicographers and between the
phrases ‘the price which the property will bring’ and ‘the price which the property should bring’
by grammarians, the ordinary signification of the latter word and phrase would, by contrast at least,
be calculated to lead the jury to award a greater sum, including purely speculative elements of
damages.”); Ex Parte Mitchell, 783 S.W.2d 703, 705 (Tex. App.—El Paso 1989, no writ) (support
order enforceable even though it says obligor “should” pay); Cullen Ctr. Bank & Trust Co. v. Tex.
Commerce Bank, 841 S.W.2d 116, 125 (Tex. App.—Houston [14th Dist.] 1992, writ denied) (use of
word “should” does not render finding speculative).
25
Medicaid Act’s interpretation of the term, because there is no contrary definition in
Texas law and because Medicaid is a Spending Clause program. 42 U.S.C.
§ 1396a(a)(30)(A). Thus, the only potential legal question is whether the data
supporting the adjustment pass muster under federal law—and that inquiry is in the
hands of the Secretary.
2. The post-enactment legislative history proffered by plaintiffs
cannot change statutory text.
Plaintiffs appear to believe that the number of legislator signatures they can
marshal in support of their lawsuit changes the law. E.g., CR.679 ¶ 14, 731-32.7 But
such letters are of little, or no, value in determining the meaning of a Legislative
enactment. In re Doe, 19 S.W.3d 346, 352 (Tex. 2000) (“[C]ourts construing
statutory language should give little weight to post-enactment statements by
legislators. Explanations produced, after the fact, by individual legislators are not
statutory history, and can provide little guidance as to what the legislature
collectively intended.”).
“The very notion of ‘subsequent legislative history’ is oxymoronic.” Entergy
Gulf States, Inc. v. Summers, 282 S.W.3d 433, 470 n.46 (Tex. 2009). Like all post-
7 Plaintiffs attach even more letters to their response to the Commission’s rule 24 motion. These
examples prove the rule: far from indicating the Legislature’s intent, these letters include policy
statements from members of the Legislature and even letters from a members of Congress, who
have no insight whatsoever into the intent behind Rider 50. Medicaid policy is beyond the judicial
power.
26
enactment legislative history, the Legislator letters are of little use to the courts,
because they represent the views of the Legislators, not the Legislature as a body at
the time of enactment. See Ojo v. Farmers Group, 356 S.W.3d 421, 433 (Tex. 2011)
(using Commissioner of Insurance report implemented pursuant to statute as
evidence of Legislature’s knowledge of report’s contents). The letters attached to
plaintiffs reply are the type of oxymoronic attempt to sway the outcome of a case on
political grounds the Supreme Court has long decried: they “are not statutory
history.” Doe, 19 S.W.3d at 352. They should not sway the Court to take an
unrealistic view of the word “should,” read—as it must be—in light of the
Legislature’s choice to cut far more money from the Medicaid budget and dedicate
$100 million of that cut to rate cuts—as opposed to other aspects of therapy
provision, which are subject to separate cuts of different amounts of money—
addressed to home therapy.
C. There is No Basis in Texas Law For Obtaining Judicial Review of
Medicaid Rates that Are Not Required to be Adopted Through
Contested-Case Proceedings.
Plaintiffs have repeatedly asserted, though curiously enough not in their live
petition, that it is permissible to bring suit to challenge the amount of Medicaid rates
through the vehicle of §2001.038, which governs rule challenges. The district
court’s temporary-injunction order erroneously presupposes that a rule challenge
27
can be used to obtain injunctive relief requiring a change in Medicaid rates. CR.592-
93. The Supreme Court has expressly rejected that proposition.
1. Plaintiffs’ approach of using § 2001.038 to attack Medicaid
rates has been rejected by the Texas Supreme Court.
Plaintiffs justify their attempt to obtain substantive relief regarding Medicaid
rates through the vehicle of a § 2001.038 suit based on El Paso Hospital District v.
Tex. Health & Human Services Commission, 247 S.W.3d 709, 711, 714-15 (Tex. 2008)
(“El Paso Hospital District I”). The Supreme Court held that the plaintiff hospitals
could seek review of their rates in already-pending, exhausted administrative
proceedings based on a new rule. Id. at 715 (allowing Hospitals to obtain “review of
the disputed calculation” under then-existing administrative rule, former 1 TEX.
ADMIN. CODE § 355.8063(k)(1)(A) (2010), repealed by 35 TEX. REG. 6511, 6513
(2010)).
The crux of plaintiffs’ argument is that, by challenging a rule, a plaintiff can
necessarily obtain judicial relief regarding the rates adopted under that rule. E.g.,
CR.507-508. That is precisely the approach that this Court and the Supreme Court
rejected following remand. El Paso Cnty. Hosp. Dist. v. Tex. Health & Human Servs.
Comm’n, 400 S.W.3d 72, 81 (Tex. 2013) (“El Paso Hospital District II”) (“our prior
opinion and judgment did not create a remedy for the hospitals’ past reimbursement
claims”); see also Tex. Health & Human Servs. Comm’n v. El Paso Cnty. Hosp. Dist.,
351 S.W.3d 460, 487 (Tex. App.—Austin 2011) aff’d 400 S.W.3d 72 (Section
28
2001.038’s scope is limited “solely to the extent of permitting suits against state
agencies for declaratory relief concerning the validity or applicability of their
rules”).8 The former rule gave the only relief related to rates, not § 2001.038.
2. The ultra vires cause of action cannot be used to retroactively
undo rules that became effective on October 1, but for the
district court’s improper counter-supersedeas order.
Plaintiffs’ argument appears to be that, because they believe that the rates
were improperly adopted, they are entitled to injunctive relief against the
Commissioner to prevent his implementation of the rates. E.g., CR.246 ¶ 34. But the
Commissioner is expressly entitled to implement the Medicaid plan according to the
rates adopted through the ratemaking process. Thus, even if the rates were wrong,
there could be no ultra vires claim based upon them, because the Commissioner is
expressly entitled by law to implement the existing rates.9
An ultra vires claim must be based on an act outside the defendant official’s
discretion. E.g., Creedmoor-Maha Water Supply Corp. v. Tex. Comm’n on Envt’l
8Tellingly, in plaintiffs’ sur-reply related to the Rule 24 motion, the only response to this point
about El Paso Hospital District II is to double down on El Paso Hospital District I. See Rule 24 Sur-
Reply (served but not yet filed) at 5 ¶6.
9 The Human Resources Code includes a provision, now superseded by case law, see see Tex. Dep’t
of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 198 (Tex. 2004)
(providing that if a statute requires a contested-case proceeding, the APA allows judicial review),
mandating judicial review when rates are required to be adopted through contested-case
procedures, TEX. HUM. RES. CODE § 32.0281(e). The rates in question are not subject to
contested-case proceedings by the current text of the Code, but rather to the non-APA “review”
and “adjustment” procedures. See supra, n.2.
29
Quality, 307 S.W.3d 505, 517-18 (Tex. App.—Austin 2010, no pet.). The violation
must be more than a mistake in judgment: mistaken exercise of a clear grant of
executive power is not subject to common-law judicial remedy. Tex. Comm’n of
Licensing & Regulation v. Model Search Am., Inc., 953 S.W.2d 289, 292 (Tex. App.—
Austin 1997, no writ) (that officials “might decide ‘wrongly’” does not vitiate its
authority to act (quoting N. Alamo Water Supply Corp. v. Tex. Dep’t of Health, 839
S.W.2d 455, 459 (Tex. App.—Austin 1992, writ denied)). If the Commission acted
consistent with the adjustment rules and Rider 50(c) (which requires that access be
considered, but does not mandate a particular form that analysis will take), the
Commissioner cannot act ultra vires in implementing the resulting rates.
III. That Texas Law Does Not Provide a Judicial Review
Mechanism Under Which Texas Courts Set Medicaid
Rates Makes Sense, Because Such a System Would Be
Preempted by Federal Law.
The reason that plaintiffs allege a series of causes of action in state law related
to administrative rules, but then seek a series of remedies related to rates based upon
those rules, is that Texas law allows challenges to the rules but not the rates. See
supra, Part II.A. While there is no jurisdiction over plaintiffs’ claims by operation of
Texas law, there could be no jurisdiction over plaintiffs’ only requested relief—
declarations regarding the amount of money in the rates and injunctive relief
foreclosing application of a particular rate—because any claim related to the amount
of Medicaid rates themselves is preempted by federal law.
30
A. The Medicaid Act Makes Rates Subject to the Exclusive
Jurisdiction of the Secretary, Subject Only to Potential Federal-
Court Proceedings.
Armstrong rejected the idea that there is a free-standing right to sue in federal
court to enforce provisions of the Medicaid Act that are not, themselves, amenable
to judicial enforcement, 135 S.Ct. at 1385, 1387 (judicial right of action must be
“unambiguously conferred” in Spending Clause context). This makes sense in light
of the broad discretion given to the Secretary to determine whether Medicaid rates
meet the Act’s requirements. Moreover, rates are always subject to prior
appropriations, which means that there is not only executive discretion in play, but
also legislative discretion. 42 U.S.C. § 1396b; TEX. HUM. RES. CODE § 32.028.
Spending Clause preemption entails the very specific question whether the
State has agreed to the condition of the federal-law remedy by accepting federal
funds. See Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S.Ct. 2566, 2606 (2012) (holding
that § 1396a would be unconstitutional as applied to withhold funding from states
based on failure to comply with newly imposed Medicaid requirements, absent
voluntary state acceptance). There is no doubt that Spending Clause statutes have
preemptive effect. See Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 661-
69 (2003) (plurality op.). Supremacy Clause provisions preempt state law, although
statute in question was not preempted); id. at 684-690 (O’Connor, J., dissenting on
ground that statute was preempted); id. at 675 (Scalia, J., concurring on ground that
31
exclusive remedy of § 1396c has preemptive effect); id. at 683 (Thomas, J.,
concurring, expressing doubt that private parties have standing to enforce Spending
Clause program requirements). But the scope of that preemption must be tied to the
State’s acceptance of funding.
B. The Medicaid Act Preempts Texas Remedies Related to Medicaid
Rates By Creating Exclusive Jurisdiction in the Secretary.
The Supremacy Clause makes federal law “the supreme Law of the Land.”
U.S. Const. art. VI, cl. 2. The existence of an exclusive federal forum deprives the
Texas courts of jurisdiction over a claim. See Mills v. Warner Lambert Co., 157 S.W.3d
424, 427-28 (Tex. 2005). Accordingly, federal statutes that empower federal
executive department agencies to act impose a remedy regarding a particular subject
matter preempt Texas judicial proceedings. E.g., Entergy Gulf States, Inc. v. Pub. Util.
Comm’n, 173 S.W.3d 199, 207 (Tex. App.—Austin 2005, pet. denied) (Texas
agency’s failure to give effect to federal agency’s action within its exclusive
jurisdiction was preempted).
The only potential for judicial action regarding Medicaid rates would be
recourse to the Secretary, see Armstrong, 135 S.Ct. at 1385, or potentially a suit in
federal court against the Secretary or, hypothetically, the State, id. at 1389 (Breyer,
J. concurring) (discussing same process). That exclusive remedy, regardless of
whether it allows ancillary federal-court proceedings involving the United States as
a party, necessarily preempts any state-law remedy.
32
This result is, likewise, compelled by Article II, § 1 of the Texas Constitution,
which prohibits the judicial branch from exercising authority conferred on the
executive. TEX. CONST. art. II, § 1. The Texas statutes and rules related to Medicaid
mirror the federal Act, which, in turn, creates an exclusive remedy in the federal
executive branch. Implying a judicial cause of action in contravention of the
Legislature’s choice not to create one would violate the separation of powers. E.g.,
In re Entergy Corp., 142 S.W.3d 316, 321-22 (Tex. 2004) (rejecting separation-of-
powers argument regarding executive exercise of putatively judicial determination
on ground that there is no general right to judicial review of executive-department
action). Put another way, some executive-department actions are necessarily
unreviewable by the judiciary. E.g., Gulf Land Co. v. Atl. Ref. Co., 134 Tex. 59, 73-74,
131 S.W.2d 73, 82 (1939). This is particularly true when a procedure is created by
statute, because a statute that creates rights can place them outside judicial review.
Houston Mun. Emps. Pension Sys. v. Ferrell, 248 S.W.3d 151, 157-58 (Tex. 2007). And
a statute can be designed to incorporate federal standards. E.g., City of Austin v.
Chandler, 428 S.W.3d 398, 411 (Tex. App.—Austin 2014, no pet.). Texas law
incorporates federal law in this context and, as a result, the exclusive remedy of
federal law.
Similarly, there are constitutional limitations on the Legislature’s power to
impose remedies on the Legislative branch. The suspension of laws provision, TEX.
CONST. art. I, § 28, affirmatively limits the judiciary’s power to exercise policy
33
discretion to avoid executive-branch action. E.g., Gerst v. Nixon, 411 S.W.2d 350, 354
(Tex. 1966) (striking down statute allowing court to determine the public good by
preponderance of the evidence). Accordingly, the courts lack power to change the
budget adopted by the Legislature absent a finding of a constitutional violation. E.g.,
Jessen Assocs., Inc. v. Bullock, 531 S.W.2d 593, 601-02 (Tex. 1975) (declining to
change effect of constitutionally valid budget rider).
Judicial review of the October 1 rates would subject a federal decision to state-
court second-guessing, transfer executive department functions to the judiciary, and
result in non-constitutional review (and suspension) of Rider 50’s spending cuts.
The claims related to the amount of rates are preempted.
C. Both the Texas and Federal Constitutions Prohibit Judicial Orders
that Interfere with the Relationship Between the State and Federal
Governments.
Put another way, the Secretary’s exclusive remedy powers make Medicaid,
like all Spending Clause programs, a continuously negotiated contract between the
state and federal governments. As Justice Thomas pointed out in his Walsh
concurrence, the Secretary’s power to terminate Medicaid funding carries with it
the power to forgive or accept particular policy outcomes for the purpose of
encouraging the state to perform better in other areas, or as a recognition of the
particular health challenges facing individual states, 538 U.S. at 680-81 (Thomas, J.,
concurring). Judicial interference with Medicaid rates would mark a direct
34
interference with that discretion. Accordingly, Justice Thomas has questioned
whether Medicaid providers and beneficiaries have constitutional standing to
complain about the Secretary’s actions. Walsh, 538 U.S. at 683 (Thomas, J.,
concurring); see also Armstrong, 135 S.Ct. at 1387 (Scalia, J.); see infra, Part IV.B.
A cognate provision of the Texas Constitution precludes Texas courts from
issuing judgments in this area. The Texas Constitution requires that the Governor
“conduct, in person, or in such manner as shall be prescribed by law, all intercourse
and business of the State with other States and with the United States.” TEX.
CONST. art. IV, § 10. The Legislature has designated the Commission as the
Governor’s agent. TEX. HUM. RES. CODE § 32.021. So long as the Commission’s
state rates are acceptable to the Secretary, and are not subject to additional, separate
requirements of Texas law, they are binding on the courts. Adams v. Calvert, 396
S.W.2d 948, 950 (Tex. 1965) (Governor’s decisions within gap between
requirements of state law and of federal law unassailable). This is the flip side of the
Secretary’s discretion. If the Commissioner and CMS agree on rates, it would violate
the Constitution for a court to set rates differently. Any judicial remedy that does not
take into account that rates are the subject of continuous back and forth between the
Commission and the federal government violates Article IV, § 10.
35
IV. Plaintiffs Lack a Vested Property Right in Medicaid
Rates.
The amount of Medicaid rates is always contingent. It is contingent on
Legislative and Congressional appropriations. It is contingent on the Secretary’s
view of the federal Medicaid Act’s requirements. It is contingent on changes in the
market. It is contingent on the State maintaining its current model of providing
Medicaid care, and not changing to another.
A contingent right is insufficient to invoke the Texas Constitution’s due-
course provision. Spring Branch Indep. Sch. Dist. v. Stamos, 695 S.W.2d 556, 560-62
(Tex. 1985); Combs v. City of Webster, 311 S.W.3d 85, 92 (Tex. App.—Austin 2009,
pet. denied). And a contingent right as a third-party beneficiary to a government
contract may preclude any assertion of constitutional standing. Walsh, 538 U.S. at
680-81 (Thomas, J., concurring).
A. Neither the Providers Nor the Beneficiaries Have a Vested
Property Right, and Cannot Raise Either A Due-Course or
Inherent-Judicial-Review Claim.
Any due-course claim must be predicated on a vested right. Stamos, 695
S.W.2d at 560-62. Likewise, inherent review under the Texas Constitution requires
a vested right. City of Amarillo v. Hancock, 150 Tex. 231, 233, 239 S.W.2d 788, 790
(1951). If plaintiffs lack a vested right, there is no due-course protection and no
inherent review available.
36
1. The provider plaintiffs lack a vested property right.
A Medicaid provider has no vested interest in a particular level of Medicaid
rates. See S.C. San Antonio, Inc. v. Tex. Dep’t of Human Servs., 891 S.W.2d 773, 778
(Tex. App.—Austin 1995, writ denied) (dismissing rate challenge because plaintiff
provider had no vested right in amount of payment, apart from right to
reimbursement under applicable rate for services already rendered); Pers. Care Prods.
v. Hawkins, 635 F.3d 155, 158-59 (5th Cir. 2011) (no vested right in future rates). It
does not have a vested right in avoiding a decrease in rates or profitability based on
statutory changes to the Medicaid program. Sw. Pharmacy Solutions, 408 S.W.3d at
564. Nor does it have a cognizable interest in its business model based on an earlier
set of rates or rules. Eldercare Props., Inc. v. Dep’t of Human Servs., 63 S.W.3d 551,
556 (Tex. App.—Austin 2001, pet. denied).
This does not leave providers without recourse. They have, for example, a
vested property interest in remaining part of the Medicaid system and cannot be
ejected without process. But it leaves them without a trigger for constitutional
protections in this circumstance, where they can easily remain part of the Medicaid
program, but complain that their profitability will be impaired by lower Medicaid
rates. SSC Mo. City Operating Co., LP v. Tex. Dep’t of Aging & Disability Servs., No.
03-09-00299-CV, 2009 WL 4725286, at *6 (Tex. App.—Austin 2009, pet. denied)
(mem. op.) (mere expectation of providing services insufficient to trigger providers’
inherent review claim). The lack of a vested right is fatal to their due-course claim.
37
2. The beneficiary plaintiffs lack a vested property right—in
fact, they will suffer no cognizable change in their legal status
by a change in the rates.
There is a difference between the beneficiary plaintiffs’ asserted potential
injuries and their legal rights under Texas law and the Medicaid Act. To be clear, the
Commission does not dispute that plaintiffs’ allegations of decreased access are
within the scope of the courts’ constitutional authority and, therefore, legally
cognizable in the abstract. But it does not follow that they have a sufficient interest
to trigger the due-course provision.
Moreover, the beneficiaries nonetheless lack standing because their alleged
injuries are non-redressable. See Heckman v. Williamson Cnty., 369 S.W.3d 137, 155
(Tex. 2011). Failure to establish redressability is a jurisdictional bar. Tex. Ass’n of
Bus., 852 S.W.2d at 446. There is no change in the beneficiaries’ legal status to be
redressed. Nothing in the Medicaid Act or the cognate Texas statutes creates a right
to care, or a right to access care. They are entitled to have the costs of care
reimbursed if they seek care from a participating health care provider, and a
“reasonable opportunity to choose a health care plan and primary care provider,”
not an absolute right See TEX. GOV’T CODE § 531.0212(b)(2). That is all. That status
will not change under the new rates. Accordingly, their due-course claim, and any
inherent-review claim, fail.
38
B. The Court Should Follow Justice Scalia’s Lead in Armstrong and
Hold that Providers and Beneficiaries Lack Constitutional
Standing to Bring Suit Under the Ratemaking Criteria of the
Medicaid Act.
In part IV of the Armstrong opinion, Justice Scalia referred back to a prior
concurrence by Justice Thomas suggesting that private parties cannot establish
standing to challenge Medicaid rates because they are merely third-party
beneficiaries to the ongoing contractual arrangement between the states and the
federal government, 135 S.Ct. at 1387 (Scalia, J.) (plurality op.). This renders any
claim non-redressable in the courts, which is a jurisdictional bar to standing. See
Heckman, 369 S.W.3d at 155.
That view should prevail here. For the same reasons neither the providers nor
the beneficiaries have a vested right—primarily that the rates are subject to constant
change based on legislative appropriation and other factors, and that the Medicaid
Act contemplates resolution of those issues through the Executive Department, see
supra, Part III.C—they cannot establish constitutional standing to challenge the
amount of Medicaid rates. While they may have demonstrable inconvenience or even
injury related to the plan, there can ultimately be no judicial redress because the
Executive Department remains free to adopt a contrary view.
39
V. Even if plaintiffs have constitutional standing, they
cannot successfully invoke § 2001.038 or the Ultra
Vires Cause of Action.
Even assuming plaintiffs’ asserted injuries trigger standing, their lawsuit
would be barred by sovereign immunity in any event. Plaintiffs attempt to create
judicial review of Medicaid rates through the mechanism of § 2001.038 and the ultra
vires cause of action, in derogation of the common law and the plain text of the APA.
A. Section 2001.038 and the Ultra Vires Cause of Action Cannot Be
Used to Obtain Judicial Review.
Plaintiffs rely on the ultra vires cause of action and § 2001.038 to seek relief
regarding the Commission’s application of its rules to adopt the October 1 rates. A
claim for a remedy that is not supported by the invoked waiver of immunity from suit
is jurisdictionally barred. E.g., Tex. Parks & Wildlife Dep’t v. Sawyer Trust, 354
S.W.3d 384, 388 (Tex. 2011) (citing City of Houston v. Williams, 216 S.W.3d 827,
828-29 (Tex. 2007) (per curiam)). Plaintiffs cannot achieve judicial review of the rate
determination through causes of action that don’t allow this form of relief.
1. The ultra vires cause of action does not apply retroactively
because it is not a form of judicial review.
The background presumption of Texas administrative law is that there is no
judicial review absent a vested property right or another basis for constitutional
inquiry. Gen. Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591, 599 (Tex.
2001). The ultra vires cause of action is an exception to this general principle,
40
allowing prospective relief to foreclose action in contravention of law. City of El Paso
v. Heinrich, 284 S.W.3d 366, 372 (Tex. 2009) (plaintiff must “allege” and
“ultimately prove” act that is outside defendant official’s authority); id. at 376 (relief
must be prospective). Ultra vires relief cannot reach back in time to undo past
executive action, even by prospectively enjoining the results of an administrative
proceeding, without becoming a common-law basis for judicial review—which Little-
Tex and Heinrich teach us does not exist.
2. Section 2001.038 does not create judicial power to review
substantive agency actions, only agency rules.
By contrast to the federal system, in which the federal APA provides a general
right to review of executive-department action, see 5 U.S.C. § 702, Texas has a
limited system of review, in which some executive department determinations are
not subject to judicial review, e.g., Gulf Land Co, 134 Tex. at 73-74, 131 S.W.2d at 82,
and the others are generally reviewable only if the government’s actions take (or
should take) the form of a formal contested-case proceeding or rulemaking, TEX.
GOV’T CODE §§ 2001.038, 2001.174; see Tex. Dep’t of Protective & Regulatory Servs.
v. Mega Child Care, Inc., 145 S.W.3d 170, 198 (Tex. 2004) (judicial review triggered
by requirement that agency proceed under APA). That the Legislature provided for
formal administrative rules, but not a contested-case proceeding, to govern Medicaid
rates dovetails neatly with the preemptive effect of the Medicaid Act: federal law
41
does not permit judicial review of rate determinations, and Texas law does not
contemplate such review. E.g., Ferrell, 248 S.W.3d at 157-58.
The two review structures of the APA are a statutory exception to this bar on
review, but they are narrow in scope. Because the remedies are statutory, not
common law, they are subject to restrictions on statutory waivers of immunity. E.g.,
City of Amarillo, 150 Tex. at 233, 239 S.W.2d at 790. Ambiguities are resolved in
favor of immunity. Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 697 (Tex.
2003); TEX. GOV’T CODE § 311.034. And the pleading requirements are
jurisdictional. Prairie View A&M Univ. v. Chatha, 381 S.W.3d 500, 510-513 (Tex.
2012). Section 2001.038 applies to rules. TEX. GOV’T CODE § 2001.038(a). Section
2001.174 applies to contested-case proceedings applying those rules. Id. § 2001.174.
The text of § 2001.038 forecloses its use to attack action taken under rules: it
addresses the “applicability” of rules, not their application, for a reason. See Id. §
2001.038(a). Contested-case judicial review is subject to strict exhaustion rules. Id.
§ 2001.171. If § 2001.038 could be used retroactively to challenge application of a
rule, it would be an ancillary form of judicial review and render § 2001.171’s
exhaustion requirement meaningless. See Charlie Thomas Ford v. A.C. Collins Ford,
912 S.W.2d 271, 275 (Tex. App.—Austin 1995, writ dism’d); Lopez v. Pub. Util.
Comm’n, 816 S.W.2d 776, 782 (Tex. App.—Austin 1991, writ denied).
42
3. Plaintiffs’ lawsuit is barred because it seeks to use these
causes of action retroactively and specifies no remedy
appropriate to the causes of action pleaded.
Plaintiffs’ petition relies on these two causes of action to enjoin the outcome
of the rate adjustment that resulted in the October 1 rates. Plaintiffs, strikingly, recite
only past actions as the basis for their ultra vires claim. See CR.346 ¶ 34 (“the actions
of Commissioner Traylor are ultra vires in that his actions taken in promulgating the
Rates are outside his statutory and legal authority”). The Commissioner’s actions
had already been taken. To the extent that the petition seeks to reach back and undo
past action, it is jurisdictionally defective.
The ultra vires cause of action cannot be used to obtain that remedy, because
it cannot be a form of judicial review: allowing injunctive relief based on an alleged
error in past action would render the remedy retroactive, in contravention of
Heinrich, and turn it into a basis for common-law judicial review, in derogation of
Little-Tex. And § 2001.038 cannot be used to review the application of a rule, because
to do so would ignore the text of the APA and vitiate that statute’s exhaustion
requirement.10 Because the remedy plaintiffs seek is incommensurate with the either
§ 2001.038 or the ultra vires cause of action.
10 Nor does § 2001.038 provide a basis for injunctive relief. Compare TEX. GOV’T CODE
§ 2001.038(a) (providing for declaratory, not injunctive relief) with TEX. CIV. PRAC. & REM. CODE
§ 37.011 (expressly providing for injunctive relief ancillary to declaratory relief). Because the
Legislature provides a statutory basis for injunctive relief when it intends declaratory and
injunctive relief to be issued together, § 2001.038’s remedy cannot implicitly allow injunctive
43
To be clear, § 2001.038 does provide a remedy with regard to past actions
related to Medicaid rules: they can be declared invalid despite the fact that they were
implemented in the past. E.g., El Paso Hosp. Dist. I, 247 S.W.3d at 711, 714-15. But it
does not follow that invalidity triggers a right to different rates. El Paso Hosp. Dist.
II, 400 S.W.3d at 81. Likewise, the ultra vires cause of action would be available to
enjoin the Commissioner from proceeding to adopt rates without regard to the
relevant statutes and rules, but it would do so only prospectively. In each
circumstance, the invalidity of the rule or the injunction against extra-legal activity
is prospective from issuance of the mandate.
B. Plaintiffs’ § 2001.038 Claims Are Barred.
As explained above, plaintiffs’ theory that they can obtain relief related to the
rates, as opposed to prospective relief related to the underlying administrative rules,
has been expressly rejected by this Court and the Texas Supreme Court, which have
both held that § 2001.038 addresses only rules, not the resulting rates. El Paso Hosp.
Dist. II, 400 S.W.3d at 81; El Paso Hosp. Dist. II, 351 S.W.3d at 487; see supra, Part
II.C. The next question is whether the jurisdictional defect caused by plaintiffs’
relief. Recognizing that the Court has relied on El Paso Hospital District I for the proposition that
injunctive relief is appropriate, Tex. Dep’t of State Health Servs. v. Balquinta, 429 S.W.3d 726, 749-
750 (Tex. App.—Austin 2014, pet. dism’d, the Commission asks the Court to reconsider that view.
The issue of injunctive relief was raised sua sponte in El Paso Hospital District I, which means that
the parties did not brief it and the issuance of injunctive relief is, as a result, non-precedential. See
U.S. v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 38 (1952); Garcia v. Kubosh, 377 S.W.3d 89, 106
(Tex. App.—Houston [1st Dist.] 2012, no pet.).
44
misplaced reliance on a foreclosed legal theory is incurable. The defect cannot be
cured.
1. Plaintiffs lack a right or privilege.
To be clear, constitutional standing does not require a vested property right;
the Commission does not challenge plaintiffs’ asserted injury to their businesses, nor
does it suggest that the beneficiary plaintiffs will not be inconvenienced if they have
to find new providers. In some legal contexts, those injuries would be sufficient to
trigger constitutional standing. However, for the same reason plaintiffs have no
vested property interests, they cannot articulate a “right or privilege” sufficient to
trigger the waiver of immunity in § 2001.038. Because § 2001.038 is a statutory
waiver of immunity, e.g., Tex. Comm’n on Envtl. Quality v. Slay, 351 S.W.2d 532, 543
(Tex. App.—Austin 2011, pet. denied), its requirements are strictly construed in
favor of preserving immunity, Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692,
697 (Tex. 2003).11 Thus, failure to meet the pleading requirements of § 2001,038 is
a jurisdictional bar.
11The Commission acknowledges this Court’s prior holding that the “right or privilege” inquiry
extends to any claim for which there is constitutional standing. Balquinta, 429 S.W.3d at 742-43.
Balquinta wrongly extends Finance Commission of Texas v. Norwood, 418 S.W.3d 566, 582 n.83 (Tex.
2013). Footnote 83 of Norwood merely rejected the argument that there is a lower standing
requirement for §2001.038 claims than is required by the constitution; it did not address whether
the “right or privilege” requirement is more restrictive than the scope of allowable constitutional
standing, id. This Court has previously held that a § 2001.038 claim based on something that is not
a right or privilege results in dismissal; that is the appropriate rule. Tex. Dep’t of Pub. Safety v.
Salazar, 304 S.W.3d 896, 907-08 (Tex. App.—Austin 2009, no pet.). The issue is not squarely
45
A “right” is “an interest or expectation guaranteed by law.” A DICTIONARY
OF MODERN LEGAL USAGE 772 (2d ed. 1995). “Privilege” is generally defined as a
“person’s legal freedom to do or not to do a given act.” Id. at 693.12 In either case,
to be a basis for a § 2001.038 suit, a claim would have to be presently enforceable,
not merely legally cognizable; having a legal existence, not merely legal potential.
That standard is more narrow than constitutional standing.
The temporary injunction order fleshes out plaintiffs’ administrative-law
claim, with the assertion that there are formal defects in the ratemaking that render
the rates improper because the Commission did not comply with formal
requirements for adopting new administrative rules. See CR. 590-91 (asserting that
rate adoption requires application of TEX. GOV’T CODE § 2001.022(a) (employment
impact statement); § 2001.023(a) (30 days’ notice); § 2006.002(c) (small-business
impact statement)). Even assuming plaintiffs’ request for relief threads the two
needles of preemption and the prohibition on implied judicial review of past actions,
plaintiffs’ legal theory is insufficient to trigger jurisdiction.
presented here, because the claims are barred by standing and failure to invoke §2001.038, but the
analysis of each claim should be distinct.
12 Accord BLACK’S LAW DICTIONARY 1436 (9th ed. 2009) (defining a “right” as “a legally
enforceable claim that another will do or will not do a given act; a recognized and protected interest
the violation of which is a wrong”), 1316 (defining “privilege” as a “special legal right, exemption,
or immunity granted to a person or class of persons; an exception to a duty”).
46
The providers have no legally cognizable interest in their business model or
the continued receipt of particular rates; the only recourse regarding the amount of
rates is the discretion of the Secretary. See supra, Part III. The beneficiaries’ situation
is not changed at all: they are entitled to have payments made to providers on their
behalf, at the rate indicated by law. See supra, Part IV.A. Accordingly, they have no
“interest” that can be “affected” by the relevant administrative rules or their
application in a ratemaking. For the same reason that these claims are unredressable,
they cannot trigger jurisdiction under § 2001.038.
2. Plaintiffs have not “identified” an administrative rule.
Nor have plaintiffs successfully identified a particular administrative rule that
has been violated. City of Webster, 311 S.W.3d at 101. This is a rate adjustment, not a
rulemaking, so none of the Government Code provisions they cite apply. They have
cited only administrative rules that govern periodic rate review. See supra, Part II.C.
Their jurisdictional hook is that the Commission’s proceedings implicitly amended
those rules. But, if completely different rules applied, then plaintiffs have not
“identified” a rule the validity or applicability of which they challenge. Under City
of Webster, their § 2001.038 claim must be dismissed.
a. Plaintiffs cannot reverse engineer a rule challenge from
a rate challenge.
Plaintiffs seek to strike at the rates by arguing that the issuance of a rate within
which they disagree implicitly amends the requirements of the underlying
47
administrative rules. CR.509 ¶ 6. Raising that issue in the briefing does not
“identify” it in the petition; plaintiffs have asserted only a potential, contingent
application of a rule that they assert, without merit, has been violated. In fact, the
Commission’s actions were based on different rules governing the adjustment
process, see supra, Part II.C. There is, as a result, no jurisdictional hook based on
implied amendment to support plaintiffs’ lawsuit. Certainly, that is the position
taken by the Texas Supreme Court when it held that a § 2001.038 proceeding did
not entitle plaintiffs to a change in already-final rates. El Paso Hosp. Dist. II, 400
S.W.3d at 81.
b. Plaintiffs ignore the application of § 355.201(d).
The first defect in plaintiffs’ claim is that it relies on rules that do not apply to
rate adjustments triggered by changes in appropriations. Plaintiffs cite § 355.8021
and provisions that refer to it, as well as the reporting requirements for rule adoption
under the APA. CR.343 ¶ 25. That argument fails to take into account that the
adjustment was made under § 355.201(d), which provides for rate adjustments
“notwithstanding” any other statutory or rule-based requirement, when, among
other things, the Legislature cuts funding. CR.352 (citing 1 TEX. ADMIN. CODE
§§ 355.201(d)(1)(A), (D)).
Plaintiffs also assert that there was improper notice of the October 1 rates.
CR.343 ¶ 25. The proper notice standard is set out in §§ 355.201(e) and (f). The
Commission tendered evidence showing that the notice was properly published on
48
September 4, 2015, in the Texas Register and on the Commission’s website, setting
the hearing for September 18, 2015. CR.577-580. Because the relevant statute
requires nothing more, the existence of adequate notice is a jurisdictional fact issue
that plaintiffs have failed to controvert.
C. Plaintiffs’ Ultra Vires Claims Would Fail Even if they Had Been
Properly Pleaded.
As explained above, the Commissioner cannot act ultra vires in implementing
Medicaid rates that are already final: that is his job. See supra, Part II.A. Plaintiffs’
claim might be construed to construed to be that, in issuing the current rates, the
Commission’s cost analysis includes none of the data included in
§ 355.8021(a)(2)(A), or that it is a “periodic rate review” that includes, but is not
limited, to analysis of payments and costs for therapy. See CR.591-92.
Even if these claims were framed prospectively—applied to future
ratemaking, an ultra vires claim could result in relief preventing the Commissioner
from acting contrary to statute or rule in future proceedings, see supra, Part II—they
would nonetheless be jurisdictionally barred, and the defect is incurable. As
explained above, the Commission was not circumscribed by § 355.8021(a)(2)(A),
complied with its requirements by providing a “combination” of the data required,
and is entitled to do so under deference principles. And § 355.8021(B) cannot be
applied to rate adjustments triggered by legislative action. At most, plaintiffs
complain that information was not in a particular format (which the rule does not in
49
fact require) and that it was not analyzed using a particular methodology (even
though the rule imposes no particular methodology, but rather allows consideration
of “some combination” of data). Accordingly, implementation of the October 1 rates
is not, as a matter of law, ultra vires. And because the act described is intra vires, suit
against the Commissioner must be dismissed.
1. Plaintiffs’ position regarding § 355.8021 would fail to trigger
an ultra vires claim in any event.
The temporary-injunction order incorrectly suggests that there has been a
violation of § 355.8021(a)(2)(A). CR.590 ¶ 9. Not so. Section 355.8021(a)(2)(A)
requires the Commission to address a series of data in setting rates or “some
combination thereof.” 1 TEX. ADMIN. CODE § 355.8021(a)(2)(A). Regardless of the
methodology, there is no dispute that the report incorporates at least some of the
elements of § 355.8021(a)(2)(A). And that fact precludes jurisdiction, because the
rule does not require consideration of all the data listed in (a)(2)(A), nor does it
require it to be in any given format. It requires only “some combination thereof.” If
the report aggregates any of the (a)(2)(A) data, in any form, it complies with
(a)(2)(A).13
13Plaintiffs’ petition might be read to imply an argument that Rider 50(c) itself requires an
independent access analysis. As explained above, that language does not apply to the rate cuts. See
supra, Part II.B & n.5. Of course, the federal access requirement still applies. But both the substance
and remedy for the access requirement preempt state law either because there is no judicial
recourse, per Justice Scalia, or because the only available judicial proceedings are a federal APA
50
Consider how this issue would be resolved if the Legislature had provided
judicial review under the APA. The Commission would be entitled to deference on
its construction of the technical requirements of its own rule. E.g., R.R. Comm’n v.
Tex. Citizens for a Safe Future and Clean Water, 336 S.W.3d 619, 624-25 (Tex. 2011).
Because the words “some combination thereof” cannot be read to require,
unambiguously, that all the data in (a)(2)(A) be considered, or that it be considered
in some particular format, the Commission would prevail. This aspect of plaintiffs’
petition highlights the degree to which they ask for something procedurally new: to
invalidate the rule under § 2001.038, based not on the rule itself but on its
application, thereby sidestepping the Commission’s discretion—which is entitled to
deference—to interpret its own rules. There is no viable rule challenge hidden in
plaintiffs’ attack on the October 1 rates.
The weakness of plaintiffs’ position is underscored by their trial court briefing.
At the end of the day, all of plaintiffs’ jurisdictional allegations boil down to the
assertion that the administrative rules impose a particular formula for funding, when
in fact they require only that the Commission consider certain information in no
particular format, giving none of it a particular weight. See CR.343 ¶ 25. Without a
“formula,” the Gordian knot of plaintiffs’ lawsuit is cut, and it must be dismissed.
suit against the Secretary, per Justice Breyer, see supra, Part III.B. Under neither view of the law
would it be appropriate for a Texas court to answer an access question.
51
They do not require the Commission to respond to public comment regarding
this data. They do not require the Commission to publish the contents of any studies
on which it relies. And that makes sense, because (1) there is no administrative
process in which the public can contest the studies, only a requirement of comment,
TEX. HUM. RES. CODE § 32.0282; (2) that requirement is entirely consistent with the
Medicaid Act’s provision of an exclusive executive-department remedy for access-
to-care issues, see supra, Part III; (3) and it is mandated by the Legislature’s choice,
consistent with the Medicaid Act and two centuries of Texas law, not to provide
judicial review of rate setting. What matters, at the end of the day, is whether the
Secretary is satisfied with the Commission’s access-to-care analysis. There is no
Texas-law vehicle for addressing the issue.
The temporary injunction order likewise invokes § 355.8021(a)(2)(B). CR.590
¶ 10; see also Rule 24 Resp. at 5 ¶ 6 (citing testimony at 3.RR.229-230 to effect that
October 1 rates were not required to be based on § 355.8021(a)(2)(B)). The easy
response to this is that § 355.8021(a)(2)(B) expressly applies only to periodic
reviews, not to adjustments. See supra, Part II.A. That Commission employees
voluntarily used data that complied with § 355.8021(a)(2)(A) goes only to their
efforts to ensure that the rates are acceptable to the Secretary. And that distinction
makes sense: periodic rate review updates costs, while adjustment respond to
changes made by Congress and the Legislature. A cost study is not necessary to carry
out the Legislature’s instruction in Rider 50.
52
2. Plaintiffs’ remaining claims likewise cannot describe an ultra
vires act.
In addition to the notice and data requirements that directly apply to home
care Medicaid rights, plaintiffs raise a number other claims, based on broader
statutory requirements. Those claims necessarily fail, both as § 2001.038 and as ultra
vires claims
Plaintiffs invoke § 531.02113 of the Government Code, which requires
“Optimization of Medicaid Financing” and instructs the Commission to “maximize
the state’s receipt of federal funds.” TEX. GOV’T CODE § 531.02113(1); CR.343-44
¶ 26. Plaintiffs appear to view the section as creating a generic vehicle for judicial
review of the policy behind setting Medicaid rates. That view is untenable in light of
Rider 50(c): the Commission cannot increase the amount of federal Medicaid funds
spent contrary to the budget. Nor can the term “maximize” be extended to create a
judicial right to a particular amount of funding to set rates at a particular level—
Medicaid rates are always subject to being cut by Congress and the Legislature. 42
U.S.C. § 1396b; TEX. HUM. RES. CODE § 32.028, 1 TEX. ADMIN. CODE
§ 355.201(c)(4).
Plaintiffs cite several reporting requirements related to the formal rulemaking
process. CR.343 ¶ 25 (referring to TEX. GOV’T CODE § 2006.002 (economic impact
analysis and regulatory flexibility analysis for “rules with adverse economic effect”);
§§ 2001.022 (local employment impact statement for rulemaking); 2001.023(a),
53
2001.24 (requiring 30 days’ notice before rulemaking, implementing requirements
notice)). None of these statutes apply, because ratemaking is not subject to the
APA’s formal rulemaking process. To the contrary, as explained above, rates are
subject to a shorter, less-involved notice requirement, do not require response to
public input, and need not be justified after the public comment period is over. See
supra, Part II.A.
Finally, plaintiffs suggest that various statutes and rules create a separate
“access to care” requirement under Texas law that is independently actionable.
CR.344 ¶ 27 (invoking 1 TEX. ADMIN. CODE § 353.411(a)(5) (requiring MCOs to
“ensure reasonable availability of specialists); TEX. GOV’T CODE
§ 533.005(a)(21)(c) (providing that “health care services will be accessible . . . to a
comparable extent that health care services would be available to recipients under a
fee-for-service or primary care case management model”). Plaintiffs suggest that,
because the rates will put the beneficiaries’ current care providers out of business, it
will violate this statute. CR.344 ¶ 27. That argument fails. It attempts to cherry-pick
language that, when excerpted, gives the impression that there is a separate, greater
Texas requirement of access to care that supplements the federal standard. But each
of these provisions is entirely coterminous with the federal standard. The federal
standard requires rates be set at a level that gives beneficiaries access to care that is
comparable to patients with private insurance in the same geographic area. 42 U.S.C.
§ 1396(a)(30)(A). Each MCO is created to cover a particular geographic area.
54
Indeed, the Texas law provisions on which plaintiffs rely merely echo the language
of the Medicaid Act provision that authorizes MCOs. See 42 U.S.C.
§ 1396b(m)(1)(A)(i).14 And the Medicaid Act requires only that rates be set to ensure
there is similar provider availability as would otherwise be available under private
insurance, not a general right of all beneficiaries to access care qua care. See supra,
Part III.
VI. BECAUSE THERE IS NO POTENTIAL FOR RECOVERY, THE COURT SHOULD
VACATE THE TEMPORARY INJUNCTION.
A temporary injunction must be reversed if the trial court’s decision was so
arbitrary that it exceeds the bounds of reasonable discretion. Butnaru v. Ford Motor
Co., 84 S.W.3d 198, 204 (Tex. 2002). An element of that discretion requires the
court to determine whether there is a cause of action against the defendant. Id. That
this lawsuit is barred by immunity in its entirety, yet was allowed to proceed, is an
arbitrary abuse of discretion and a failure to determine whether there is a cause of
action against defendants.
So is issuing an order restraining a change in the amount of Medicaid rates in
contravention of the Medicaid Act’s exclusive remedy provision. See supra, Part III.
Indeed, the district court has underscored the impropriety of its order in denying
14An MCO “makes services it provides to individuals eligible for benefits under this subchapter
accessible to such individuals, within the area served by the organization, to the same extent as
such services are made accessible to individuals (eligible for medical assistance under the State
plan) not enrolled with the organization.” 42 U.S.C. § 1396b(m)(1)(A)(i).
55
defendants’ motion to modify the temporary injunction. See SRR.37-39. To be
enforceable a temporary injunction—indeed any injunction in the Texas system—
must “describe in reasonable detail . . . the act or acts sought to be restrained.” TEX.
R. CIV. P. 683; Tex. Health & Human Servs. Comm’n v. Advocates for Patient Access,
Inc., 399 S.W.3d 615, 628-29 (Tex. App.—Austin 2013, no pet.) (vacating portions
of temporary injunction that did not adequately put Commission on notice of its
obligations under the injunction). The district court suggested that it was
appropriate to require the Commission to confer with plaintiffs before taking future
action, and stated that whether the Commission had violated the injunction could be
decided at the sanctions hearing. SRR.38. Taking discretion over Medicaid rates
from both the Commission and the Secretary and predicating that usurpation of
power on a $500 bond, was arbitrary.
Likewise, it was an abuse of discretion to treat plaintiffs’ assertions of harm—
many of which were contingent on the acts of third parties, e.g., CR.342-43 ¶ 24
(asserting that beneficiaries will lose treatment because providers will go out of
business)—as satisfying the probable-right-of-recovery requirement, see Butnaru, 84
S.W.3d at 204. Plaintiffs’ claims are non-redressable as a matter of law, because their
legally protected rights and vested interests have not been impacted. See supra, Part
IV.A. Accordingly, there is no probable right of recovery.
56
Prayer
The Court should render judgment dismissing plaintiffs’ lawsuit. It should
also reverse and vacate the temporary injunction.
Respectfully submitted.
Ken Paxton
Attorney General of Texas
Charles E. Roy
First Assistant Attorney General
Scott A. Keller
Solicitor General
_/s/ Kristofer S. Monson_
Kristofer S. Monson
Assistant Solicitor General
State Bar No. 24037129
OFFICE OF THE ATTORNEY GENERAL
P.O. Box 12548 (MC 059)
Austin, Texas 78711-2548
Tel.: (512) 936-1820
Fax: (512) 474-2697
kristofer.monson@texasattorneygeneral.gov
Counsel for Appellants
57
CERTIFICATE OF SERVICE
On November 12, 2015 this document was served via File&Serve Xpress on:
Daniel R. Richards
Benjamin H. Hathaway
Richards Rodriguez & Skeith LLP
816 Congress Avenue
Suite 1200
Austin, Texas 78701
drichards@rrsfirm.com
bhathaway@rrsfirm.com
Counsel for Appellees
/s/ Kristofer S. Monson
CERTIFICATE OF COMPLIANCE
In compliance with Texas Rule of Appellate Procedure 9.4(i)(2), this brief
contains 14,002 words, excluding the portions of the brief exempted by Rule
9.4(i)(1).
/s/ Kristofer S. Monson
Kristofer S. Monson
58
APPENDIX
TABLE OF CONTENTS
Tab
CR.587-672 Order Granting Temporary Injunction and Denying
Supersedeas .....................................................................................................A
CR.673 Order Denying Defendants’ Plea to the Jurisdiction
......................................................................................................................... B
Medicaid Program; Methods for Assuring Access to Covered Medicaid
Services, 80 Fed. Reg. 67576 (Nov. 2, 2015) (to be codified at 42 C.F.R. pt.
447) ................................................................................................................C
2016-17 Gen. Appropriations Act, 84th Leg., R.S., ch. 1281, art. II, 2015
Tex. Sess. Law Serv. 4343, 4547 (Health & Human Servs. Comm’n),
Rider 50 ..........................................................................................................D
CR.351-73 Tex. Health & Human Servs. Comm’n Rate Analysis Dep’t:
Notice of Proposed Adjustments .................................................................... E
CR.336-92 Plaintiffs’ Second Amended Original Petition and Application
for Injunctive Relief ........................................................................................ F
Relevant State Statutes and Rules.................................................................. G
Relevant Federal Statutes............................................................................... H
A
DC BK15274 PG1420
CAUSE NO. D-1-GN-15-003263
DIANA D., as next of friend of KD, a child, § IN THE DISTRICT COURT
KAREN G., as next friend of TG and ZM, §
children, GUADALUPE P., as next of friend §
of LP, a child, SALLY L., as next of friend of §
CH, DENA D., as next friend of BD, a child, § Filed in The Distiict Court
of Travis County, Texas
OCI ACQUISITION, LLC d/b/a §
CARE OPTIONS FOR KIDS, §
CONNECTCARE SOLUTIONS, LLC § SEP2~
d/b/a CONNECTCARE THERAPY FOR § At 'lfi!_f M.
Velva L. Price, District Clerk
KIDS, ATLAS PEDIATRIC THERAPY §
CONSULTANTS LLC, and PATHFINDER §
PEDIATRIC HOME CARE, INC., §
§ 200th JUDICIAL DISTRICT OF
Plaintiffs, §
§
v. §
§
CHRIS TRAYLOR, as EXECUTIVE §
COMMISSIONER of TEXAS §
HEALTH AND HUMAN SERVICES §
COMMISSION, and TEXAS §
HEALTH AND HUMAN SERVICES §
COMMISSION, §
§
Defendants. § TRAVIS COUNTY, TEXAS
ORDER GRANTING TEMPORARY INJUNCTION AND DENYING SUPERSEDEAS
On the 21 51 and 22"d days of September, 2015 the Court held a hearing on Plaintiffs'
application for temporary injunction in the above entitled and numbered cause. The Court has
considered the testimony, documentary evidence, pleadings, briefs, and arguments of counsel
and GRANTS the Temporary Injunction based on the following:
General History:
1) Plaintiffs include the parents as next friends of several minor children who suffer from
severe and disabling conditions, including seizure disorders, delayed development, autism,
speech developmental delays, epilepsy, cerebral palsy, and other conditions. These Plaintiffs and
II Page
1~~m~m~m~Mnrn~~~m~m~~~~
004236981 587
DC BK15274 PG1421
many other minor children suffering from similar conditions across the State of Texas can
exhibit a wide variety of disabling symptoms, including:
a. nonverbal
b. non-ambulatory
c. difficulty with speech
d. uncontrolled behavioral outbursts
e. difficulty with motor control over their limbs
f. difficulty with mental processing of information.
2) Because of these disabling conditions and symptoms, these children depend on home-
health providers for physical, occupational, and speech therapy services under the Texas
Medicaid program to develop basic skills such as walking, talking, dressing themselves, feeding
themselves, understanding simple communications, and maintaining control over their own
behavior. The Plaintiffs include several home health service providers who deliver physical,
occupational, and speech therapy services under the Texas Medicaid program to the children of
Texas who depend on such services.
3) Texas Health and Human Services Commission ("HHSC") and Chris Traylor, as
Executive Commissioner of HHSC ("Commissioner Traylor") have developed proposed
decreases to the reimbursement rates for physical, occupational, and speech therapy services that
will probably result in a decrease, or complete elimination, of available home health services for
Medicaid-dependent children across Texas.
Proposed Rate Changes:
4) On or about July 20, 2015, HHSC and Commissioner Traylor held a hearing regarding
new proposed reimbursement rates to be implemented on September 1, 2015 for physical,
21Page
588
DC BK15274 PG1422
occupational, and speech therapy services under the Texas Medicaid program (the "July 20, 2015
Proposed Rates"). A copy of the July 20, 2015 Proposed Rates is attached hereto as Exhibit A.
5) Following the commencement of this lawsuit, on or about August 20, 2015, HHSC and
Commissioner Traylor produced a different set of new proposed reimbursement rates to be
implemented on September 1, 2015 for physical, occupational, and speech therapy services
under the Texas Medicaid program (the "August 20, 2015 Proposed Rates"). A copy of the
August 20, 2015 Proposed Rates is attached hereto as Exhibit A-I.
6) Prior to a temporary injunction hearing at which Plaintiffs sought to enjoin HHSC and
Commissioner Traylor from implementing either the July 20, 2015 Proposed Rates or the August
20, 2015 Proposed Rates, HHSC and Commissioner Traylor withdrew both sets of rates and
advised the Court that they would start over with a new rate proposal.
7) Nine days later, on September 4, 2015, HHSC and Commissioner Traylor proposed new
rates to be implemented on October 1, 2015 for physical, occupational, and speech therapy
services under the Texas Medicaid program (the "September 4, 2015 Proposed Rates"). A copy
of the September 4, 2015 Proposed Rates is attached hereto as Exhibit A-2.
8) Defendants have exhibited a pattern of behavior attempting to impose new rates, and
have withdrawn the rates or taken other steps, resulting in Plaintiffs' challenge to the rates
arguably becoming moot. This issue is appropriate for the Court to adjudicate, however, based
on the "capable of repetition yet evading review" exception to the mootness doctrine. Davis v.
Burnam, 137 S.W.3d 325, 333 (Tex. App.-Austin 2004, no pet.). Defendants' actions
withdrawing the proposed rates demonstrate that the action is too short in duration to be litigated
fully before the action ceases or expires. Id. Defendants' choice to withdraw the rates and
propose similar ones as soon as a hearing has passed creates a reasonable expectation that the
31Page
589
DC BK15274 PG1423
same complaining parties will be subjected to the same action again should the Defendants
withdraw the currently pending rates and assert that this case is moot. Id.
9) Pursuant to 1 TAC §355.8021(a)(2)(A), reimbursement rates must be based on:
a. an analysis of the Centers for Medicare and Medicaid Services fees for similar
services;
b. Medicaid fees paid by other states;
c. a survey of costs reported by Medicaid home health agencies;
d. the Medicare Low Utilization Payment Adjustment (LUPA) fees;
e. previous Medicaid payments for Medicaid-reimbursable therapy, nursing, and aide
services; or
f. some combination thereof.
10) Pursuant to 1 TAC §355.802l(a)(2)(B), periodic rate reviews conducted by HHSC must
include, but will not be limited to, consideration of the payments for, as well as all costs
associated with, providing these Medicaid-reimbursable therapy services.
11) Any proposed reimbursement rates that modify or disregard the key components of the
methodology set forth in 1 TAC §355.8021(a)(2) could constitute a rule change. Accord, El Paso
Hosp. Dist. v. Tex. HHS Comm 'n, 247 S.W.3d 709, 714-15 (Tex. 2008). To be valid, rates
resulting from a rule change must be adopted through proper rule-making procedures. Id. at 715.
12) Those rule-making procedures include:
a. Determining whether a rule may affect a local economy before proposing the rule for
adoption. If so, preparing a local employment impact statement for the proposed rule.
TEX. Gov'T CODE§ 2001.022(a).
b. Providing at least 30 days' notice of the intention to adopt the new rule. TEX. Gov'T
CODE § 2001.023(a). The notice must comply with section 2001.024 of the Texas
Government Code. This includes, among other things, a note about the public benefits
and costs associated with the new rule. TEX. Gov'T CODE § 2001.024(a)(5).
c. Preparing, for rules that may have an adverse economic impact on small businesses,:
4JPage
590
DC BK15274 PG1424
i. an economic impact statement that estimates the number of small
businesses subject to the proposed rule, projects the economic impact of
the rule on small businesses, and describes alternative methods of
achieving the purpose of the proposed rule; and
u. a regulatory flexibility analysis that includes the agency's consideration of
alternative methods of achieving the purpose of the proposed rule.
TEX. Gov'T CooE § 2006.002( c).
The September 4, 2015 Proposed Rates:
13) The September 4, 2015 Proposed Rates affect at least one local economy.
14) The September 4, 2015 Proposed Rates may have an adverse impact on small businesses.
15) The September 4, 2015 Proposed Rates were probably not determined in compliance with
1 TAC §355.802l(a)(2)(A).
16) The September 4, 2015 Proposed Rates are the result of a periodic rate review under 1
TAC §355.802l(a)(2)(B) that was probably not in compliance with adequate or appropriate
consideration of payments for, as well as the costs associated with, providing these Medicaid-
reimbursable therapy services.
17) Defendants probably did not adequately or appropriately consider the impact that the
September 4, 2015 Proposed Rates would have on access to care if implemented.
Failure to Comply with Rule 355.802l(a)(2):
18) The Proposed Rates are probably not adequately or appropriately based on the formula
set forth in 1 TAC §355.802l(a)(2)(A); therefore, they may constitute a rule change, which must
be adopted through proper rule-making procedures.
19) The September 4, 2015 Proposed Rates are also not based on any identifiable
documented criteria. The Truven Data is not data representing Medicaid fees paid by other states,
so even if the September 4, 2015 Proposed Rates are based on Truven Data, the September 4,
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2015 Proposed Rates are based on something other than the key components of the formula set
forth in 1 TAC §355.8021(a)(2)(A).
20) Should it be determined that any of the Proposed Rates comply with the methodology and
formula in 1 TAC §355.8021(a)(2)(A), those Proposed Rates could still amount to a rule change
because they are probably the result of a periodic rate re:view that failed to adequately or
appropriately consider payments for, as well as all costs associated with, providing these
Medicaid-reimbursable therapy services. 1 TAC §355.8021(a)(2)(B).
21) The margins analysis conducted by Texas A&M University is seriously flawed and not
sufficient to meet the requirements of 1 TAC §355.8021(a)(2)(B). Defendants appear to have
performed no other competent cost analysis. Defendants' own purported analysis fails to include
overhead, administrative, benefits, employer taxes, therapy materials, testing kits and other costs
of providing these Medicaid-reimbursable therapy services.
22) In proposing to promulgate each set of Proposed Rates, Defendants did not follow proper
rule-making procedures. Defendants did not:
a. determine whether the rule would affect a local economy or prepare a local
employment impact statement;
b. provide at least 30 days' proper notice of the intention to adopt the new rule. The
notice provided did not comply with section 2001.024 of the Texas Government
Code;
c. prepare an economic impact statement or a regulatory flexibility analysis.
23) The September 4, 2015 Proposed Rates are likely a rule that HHSC did not properly
promulgate. They may be invalid and may be enjoined. El Paso Hosp. Dist., 247 S.W.3d at 715.
Access to Care:
24) In addition to the above violations of the rule-making process, Texas law requires that
HHSC provide Medicaid recipients with proper access to care. Pursuant to the provisions of 1
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TAC 353.41 l(a)(S), 1 TAC 353.413(a), and 1 TAC 353.413(d), Texas law requires: that service
providers ensure the reasonable availability and accessibility of speech, occupational, and
physical therapist specialists for all Medicaid service recipients; that service providers must
provide comprehensive and timely speech, occupational and physical therapy services for all
Medicaid service recipients; and that HHSC will not delegate its responsibility to deliver speech,
occupational, and physical therapy services to all eligible children.
25) HHSC likely neither conducted nor received an adequate, appropriate, or reliable study or
analysis on the impact of any of the Proposed Rates on access to care as required by the above
regulations.
26) The implementation of the Proposed Rates will likely result in service providers being
unable to deliver speech, occupational, and physical therapy services to all eligible children.
Because HHSC only provides services to eligible children through service providers, the
implementation of either of the proposed rates will probably render service providers unable to
comply with 1 TAC 353.41 l(a)(S), and/or 1 TAC 353.413(a), and will probably result in HHSC
failing to comply with its responsibility to deliver speech, occupational, and physical therapy
services to all eligible children.
27) Any proposed change to reimbursement rates for physical, occupational, and speech
therapy services under the Texas Medicaid program during the pendency of this lawsuit would
constitute a periodic rate review pursuant to 1 TAC §355.802l(a)(2)(B) and which will include a
review of payments for providing Medicaid-reimbursable therapy services and which will
include a review of costs associated with providing Medicaid-reimbursable therapy services.
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Additional Violations:
28) In addition to the above violations of the rule-making process, each set of Proposed Rates
will likely violate Defendants' statutory duty to maximize the Medicaid finance system. TEX.
Gov'T CODE §531.02113.
29) HHSC must optimize the Medicaid finance system to:
a. maximize the state's receipt of federal funds;
b. create incentives for providers to use preventive care;
c. increase and retain providers in the system to maintain an adequate provider network;
d. more accurately reflect the costs borne by providers; and
e. encourage the improvement of the quality of care.
Id.
30) If implemented, the Proposed Rates will likely not create incentives for providers to use
preventive care, dramatically decrease the number of providers in the system, fail to accurately
reflect the costs borne by the providers, and not encourage the improvement of the quality of
care.
31) The September 4, 2015 Proposed Rates are probably based on arbitrary criteria that lack
adequate or appropriate consideration for the impact on service providers or recipients, and
probably lack adequate or appropriate consideration for the legal obligations of Commissioner
Traylor and HHSC with regard to the adoption of reimbursement rates. Therefore the September
4, 2015 Proposed Rates are likely in violation of the due course of law provision of the Texas
Constitution Art. I, § 19.
Need for Temporary Injunction:
32) Plaintiffs have shown a probable right to recovery on their claim for all the above
reasons.
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33) If a temporary injunction is not granted, Plaintiffs will probably suffer irreparable injury
because:
a. the minor children represented in this lawsuit, plus thousands of other Texas children
receiving pediatric services under the Texas Medicaid program, will probably be
deprived of those critical services;
b. Defendants' actions will probably cause multiple Texas Medicaid providers to go out
of business and/or stop providing Medicaid services;
c. Defendants' actions will probably create disincentives for Medicaid providers to use
preventive care;
d. Defendants' actions will probably decrease the quality of care provided to Medicaid
recipients in Texas; and
e. Defendants' actions will probably prevent Texas Medicaid beneficiaries from
receiving critical services.
34) The probable harm is imminent because the Septembt::r 4, 2015 Proposed Rates are set to
take effect on October 1, 2015, likely immediately cutting off care for Medicaid beneficiaries.
The adoption or implementation of any of the Proposed Rates may be ultra vires violations of
Texas law. Therefore the issuance of a temporary injunction causes less prejudice or harm to the
State of Texas, Commissioner Traylor, or HHSC, and the balance of the equities weighs in favor
of granting a temporary injunction.
Temporary Injunction:
Accordingly, it is hereby ORDERED, ADJUDGED and DECREED that a Temporary
Injunction is GRANTED to Plaintiffs, and that Commissioner Traylor and HHSC are
commanded forthwith to desist and refrain from taking any action to implement the
reimbursement rates described in Exhibit A-2 from the date of entry of this Order until final trial
in this lawsuit or until further order of this Court.
IT IS FURTHER ORDERED, ADJUDGED and DECREED that a Temporary Injunction
is GRANTED to Plaintiffs, and that Commissioner Traylor and HHSC are commanded forthwith
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DC BK15274 PG1429
to desist and refrain from taking any action to propose or implement any change in
reimbursement rates for physical, occupational, and speech therapy services under the Texas
Medicaid program without conducting a review of payments for providing Medicaid-
reimbursable therapy services and conducting a review of costs associated with providing
Medicaid-reimbursable therapy services as required by 1 TAC §355.8021(a)(2)(B) from the date
of entry of this Order until final trial in this lawsuit or until fu1ther order of this Court.
This Order does not affect HHSC's ability to seek CMS's approval of the State Plan
Amendment.
It is further ORDERED that trial on the merits of this cause is set for January 18, 2016.
The Court GRANTS Plaintiffs leave to deposit a check with the trial court clerk in lieu of
bond. Five hundred of the $1000.00 deposited by Plaintiffs into the Court's registry on
September 23, 2015 shall satisfy the bond requirement to make this Temporary Injunction
effective.
It is the Court's understanding that the Defendants intend to file a Notice of Appeal and
may assert that pursuant to Civil Practice & Remedies Code §6.001 and Texas Rules of
Appellate Procedure 24.1 and 25.1, the filing of a Notice of Appeal constitutes automatic
supersedeas of this Court's Temporary Injunction. See, Jn re State Bd. for Educator
Certification, 452 S.W.3d 802, 804 (Tex. 2014). The Plaintiffs have requested that the Court
decline to permit the Temporary Injunction to be superseded. The Court finds and concludes that
permitting the Defendants to supersede the Temporary Injunction would render any relief in this
matter ineffective. In re State Bd. for Educator Certification, 452 S.W.3d 802, 808 (Tex. 2014).
Accordingly, it is ORDERED, ADJUDGED and DECREED that pursuant to Texas Rule of
Appellate Procedure 24.2(a)(3), the Court DECLINES to permit the Temporary Injunction to be
superseded. Pursuant to Texas Rule of Appellate Procedure 24.2(a)(3), the additional $500.00
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DC BK15274 PG1430
paid in the above-described deposited check in the amount of $1,000.00 shall serve as the
security for this Order declining to permit the Temporary Injunction to be superseded.
The clerk of the above-entitled Court shall forthwith, on the filing by Plaintiffs of the
bond required, and on approving the same according to the law, issue a Temporary Injunction in
conformity with the law and the terms of this Order.
.f~
SIGNED on this day ZS of September, 2015. °"..{- <-f-1.1 S-- r· M,
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DC BK15274 PG1653
Filed in The District Court
of Travis County, Texas
SEP 2 5 2015
CAUSE NO. D-1-GN-15-003263 At lf.7,!l;y M.
Velva L. Price Dislr.il;.LCJ.e.z:k
DIANA D., as next of friend of KD, a § IN THE DISTRICT CUlJKT
child, Et Al., §
Plaintiffs, §
§
v. § 201st JUDICIAL DISTRICT OF
§
CHRIS TRAYLOR, as EXECUTIVE §
COMMISSIONER of TEXAS HEALTH §
AND HUMAN SERVICES §
COMMISSION, Et Al., §
Defendants. § TRAVIS COUNTY, TEXAS
ORDER DENYING DEFENDANTS' PLEA TO THE JURISDICTION
On September 22, 2015, the Court took under consideration Defendants' Plea to the
Jurisdiction. All parties appeared through their respective counsel. After considering the
pleadings and the arguments of counsel, the Court enters the following order.
Having considered Defendants' plea to the jurisdiction and supporting brief, Plaintiffs'
response, and the evidence, and having heard the argument of counsel, the Court finds that the plea
to the jurisdiction should be denied.
IT IS THEREFORE ORDERED that Defendants' Plea to the Jurisdiction is DENIED.
JTIS SO ORDERED this~September, 2015 . ..t- <./-? 2-~ f•""·
Illllll 111111111111111111111111111111111111111111111111
004237057
1
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Vol. 80 Monday,
No. 211 November 2, 2015
Part III
Department of Health and Human Services
Centers for Medicare & Medicaid Services
42 CFR Part 447
Medicaid Program; Methods for Assuring Access to Covered Medicaid
Services; Final Rule
asabaliauskas on DSK5VPTVN1PROD with RULES
VerDate Sep<11>2014 19:43 Oct 30, 2015 Jkt 238001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\02NOR3.SGM 02NOR3
67576 Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations
DEPARTMENT OF HEALTH AND 3. By express or overnight mail. You the Centers for Medicare & Medicaid
HUMAN SERVICES may send written comments to the Services, 7500 Security Boulevard,
following address ONLY: Centers for Baltimore, Maryland 21244, Monday
Centers for Medicare & Medicaid Medicare & Medicaid Services, through Friday of each week from 8:30
Services Department of Health and Human a.m. to 4 p.m. To schedule an
Services, Attention: CMS–2328–FC, appointment to view public comments,
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