Texas Health and Human Services Commission v. Dimitria Pope and Shannon Pickett

Supreme Court of Texas

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No. 20-0999

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Texas Health and Human Services Commission,

Petitioner,

v.

Dimitria Pope and Shannon Pickett,

Respondents

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On Petition for Review from the

Court of Appeals for the Third District of Texas

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Argued November 29, 2022

JUSTICE BUSBY delivered the opinion of the Court.

This case concerns when a public employee “reports a violation of

law by the employing governmental entity or another public employee”

under the Texas Whistleblower Act. Because the plaintiff employees did

not expressly report any legal violations by the Health and Human

Services Commission (HHSC) that could have led to their terminations,

and at most voiced disagreement regarding enforcement policies that

were within the discretion of HHSC management, their conduct was not

protected by the Whistleblower Act. Accordingly, we reverse the court

of appeals’ judgment and render judgment dismissing the suit.

BACKGROUND

Respondents Dimitria Pope and Shannon Pickett served as

Director and Associate Director of HHSC’s Medical Transportation

Program (MTP) from 2012 and 2013, respectively. The MTP works to

provide Medicaid beneficiaries with nonemergency transportation to

and from medical providers, as required by federal law. Specifically, the

MTP pays private contractors to provide the transportation and seeks

partial reimbursement from the federal government under the Medicaid

program. Federal and state Medicaid statutes and rules require that

children who are Medicaid beneficiaries be accompanied to be eligible to

receive transportation services and for the claim to be eligible for federal

Medicaid reimbursement. See 42 C.F.R. §§ 431.53, 440.170; TEX. HUM.

RES. CODE § 32.024(a); 1 TEX. ADMIN. CODE §§ 380.201, .207(4), .209.

Between 2012 and 2017, Pope and Pickett raised concerns that

LeFleur Transportation, a private nonemergency medical

transportation provider in South Texas, was transporting children

under 15 to medical appointments without an accompanying parent,

guardian, or adult authorized by a parent or guardian. In emails, phone

calls, and face-to-face meetings with HHSC’s Office of the Inspector

General (OIG), HHSC executives, the FBI, and the Texas Attorney

General’s Office (OAG), Pope and Pickett repeatedly discussed their

beliefs that LeFleur, its subcontractors, competitors, medical providers,

parents, and other individuals were violating the accompaniment

requirements. The alleged violations included: a single adult attending

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to multiple, unrelated children; drivers serving as accompanying adults;

employees of medical providers serving as accompanying adults; and

transportation of minors in vehicles owned or operated by the medical

providers. The correspondence included a February 2014 email from

Pope to OIG, which reported that some HHSC call center employees

were “allowing” unauthorized adults to accompany minors and that

some providers were encouraging parents to call the center repeatedly

until they received approval.

Before 2014, HHSC used a “fee-for-service” model to pay

contractors for each documented, eligible ride. HHSC then transitioned

to a “managed care” model, under which contractors are paid based on

the number of people served each month regardless of the actual number

of rides provided. Under the managed care model, providers are subject

to a profit cap and obligated to make “experience rebate” payments for

any profits above the cap, which OIG is charged with collecting on

HHSC’s behalf. See TEX. GOV’T CODE §§ 531.102, 533.014(a); 1 TEX.

ADMIN. CODE §§ 353.3, 371.11(a).

In October 2014, a federal audit by the United States Department

of Health and Human Services concluded that HHSC did not always

comply with federal and state requirements for reimbursement of

nonemergency medical transportation claims it had submitted in 2011.

The audit recommended that HHSC repay over $30 million in

reimbursements Texas had received from the federal government.

According to Pope, over $12 million of this amount was due to

noncompliance with the accompaniment requirement.

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In 2017, Pope and Pickett were helping OIG’s audit resolution

team respond to the federal audit. Given the lack of contemporaneous

documents showing compliance with requirements relating to the

transportation of minors, federal officials requested a letter from State

Medicaid Director Jami Snyder addressing compliance. Pope and

Pickett were part of the team helping to draft Snyder’s letter, which

asked that the claims at issue be considered allowable, thus removing

HHSC’s financial liability for repayment. Pickett sent her edits to the

draft letter by email to OIG’s Federal Audit Coordination Manager.

Pickett pointed out in her email that some statements in the draft letter

were not accurate, were not reported to federal officials by the program,

and could not be supported by documents in the MTP’s possession. The

federal audit manager later stated in a declaration that he believed

Pickett’s points to be “customary, appropriate responses from MTP

management to ensure the letter was correct,” and that he was “not

aware of Ms. Pickett reporting any violations of law by any party.”

Around the same time, OIG began investigating whether Pope

and Pickett had engaged in “official oppression” of LeFleur, and HHSC

managers became concerned about litigation risks if Pope and Pickett

continued to interact with LeFleur. Pope and Pickett were told to “stand

down” on their attempts to collect $5.6 million in experience rebate

payments that LeFleur had not timely paid HHSC. Meanwhile, HHSC

senior managers were negotiating directly with LeFleur to discuss

payment options that would allow LeFleur to stay in business while

making payments, cutting Pope and Pickett out of those discussions.

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Two days after Pickett’s last email exchange with the federal audit

manager about Snyder’s letter, HHSC fired Pope and Pickett.

Pope and Pickett sued HHSC under the Texas Whistleblower Act,

alleging they were terminated in retaliation for their “good faith reports”

about “violations of law” by HHSC to various law enforcement agencies.

See TEX. GOV’T CODE § 554.002. According to Pope and Pickett, their

reports to OIG, OAG, and the FBI about LeFleur’s violations of the

accompaniment requirements also impliedly reported misconduct by

HHSC, which would have been receiving federal reimbursement for

ineligible claims. In a later filing, Pope and Pickett contended that they

reported further violations when they informed OIG about HHSC’s

failure to enforce the experience rebate requirements against LeFleur.

HHSC responded by filing a combined plea to the jurisdiction and

motion for summary judgment, arguing that Pope and Pickett failed to

demonstrate that they made “good faith reports” about an actual

“violation of law” by HHSC. 1 The trial court denied the plea and motion,

and the court of appeals affirmed, holding that Pope and Pickett “carried

their burden to establish a genuine issue of material fact on each of the

elements of their Whistleblower claim.” 646 S.W.3d 562, 577 (Tex.

App.—Austin 2020). The court of appeals reasoned that under the

federal Medicaid reimbursement scheme, the reports Pope and Pickett

made about LeFleur’s violations of law were “necessarily” reports of

violations by HHSC as well. Id. at 573. The court also agreed with Pope

1 HHSC also argued in the trial court and court of appeals that Pope

and Pickett failed to show that their alleged reports were a but-for cause of

their terminations. HHSC has not pressed that issue in this Court.

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and Pickett that they “could have reasonably believed in good faith that

HHSC was violating the law by allowing LeFleur to avoid pay[ing]” the

experience rebates. Id. at 574. We granted HHSC’s petition for review.

ANALYSIS

The Whistleblower Act provides that “[a] state or local

governmental entity may not suspend or terminate the employment of,

or take other adverse personnel action against, a public employee who

in good faith reports a violation of law by the employing governmental

entity or another public employee to an appropriate law enforcement

authority.” TEX. GOV’T CODE § 554.002(a). The Act defines “law” as a

“state or federal statute; an ordinance of a local governmental entity; or

a rule adopted under a statute or ordinance.” Id. § 554.001. It also

defines “public employee” as “an employee or appointed officer other

than an independent contractor who is paid to perform services for a

state or local governmental entity” and provides definitions for “state

governmental entity” and “local governmental entity.” Id. (emphasis

added).

Pope and Pickett contend that they were terminated for reporting

two types of violations of law: (1) violations of the accompaniment

requirement for nonemergency medical transportation that LeFleur

provided to minors, and (2) HHSC’s failure to collect experience rebate

payments owed by LeFleur. We address each theory in turn. Taking

the entire record into account, we conclude for the reasons below that

Pope and Pickett have not provided evidence to support a finding that

they made “good faith reports [of] a violation of law by the employing

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governmental entity or another public employee.” Id. § 554.002(a). The

trial court therefore erred in denying HHSC’s plea to the jurisdiction.

I. Standard of review

The State and its agencies, including HHSC, “are immune from

suit and liability in Texas unless the Legislature expressly waives

sovereign immunity.” State v. Lueck, 290 S.W.3d 876, 880 (Tex. 2009).

An agency may assert its immunity in a plea to the jurisdiction. Tex.

Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex.

2004); see also Hosner v. DeYoung, 1 Tex. 764, 769 (1847). Although

immunity from suit is a jurisdictional question generally distinct from

immunity from liability, we have held the two are interwoven in the

context of the Whistleblower Act, which requires plaintiffs to allege

jurisdictional facts giving rise to an actual violation of the Act to qualify

for the statutory waiver of immunity. Lueck, 290 S.W.3d at 881; see TEX.

GOV’T CODE §§ 554.003(a) (authorizing suit by public employee

terminated in violation of Act), .0035 (waiving immunity “to the extent

of liability for the relief allowed under this chapter for a violation of this

chapter”).

A plea to the jurisdiction presents a question of law that is

reviewed de novo on appeal, State v. Holland, 221 S.W.3d 639, 642 (Tex.

2007), mirroring the standard applied to a traditional motion for

summary judgment, City of San Antonio v. Maspero, 640 S.W.3d 523,

528 (Tex. 2022). When a plea to the jurisdiction challenges the existence

of alleged jurisdictional facts, such as those necessary to establish a

claim under the Whistleblower Act, “we must move beyond the

pleadings and consider evidence when necessary to resolve the

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jurisdictional issues, even if the evidence implicates both subject-matter

jurisdiction and the merits of a claim.” Alamo Heights Indep. Sch. Dist.

v. Clark, 544 S.W.3d 755, 770-71 (Tex. 2018).

A defendant that files a plea to the jurisdiction has the initial

burden of meeting the summary judgment standard of proof for its

assertion that the courts lack jurisdiction; if it does so, the plaintiff must

then “show that a disputed material fact exists regarding the

jurisdictional issue.” Mission Consol. Indep. Sch. Dist. v. Garcia, 372

S.W.3d 629, 635 (Tex. 2012). When a fact issue exists, the plea to the

jurisdiction should be denied. Id. If the plaintiff fails to raise a fact

question on the jurisdictional issue or the relevant evidence supporting

the defendant’s assertion is undisputed, the plea to the jurisdiction must

be granted as a matter of law. Id. “[I]n determining whether a material

fact issue exists, we must take as true all evidence favorable to the

plaintiff, indulging every reasonable inference and resolving any doubts

in the plaintiff’s favor.” Alamo Heights, 544 S.W.3d at 771. In doing so,

“we cannot disregard evidence necessary to show context, and we cannot

disregard evidence and inferences unfavorable to the plaintiff if

reasonable jurors could not.” Id.

II. Accompaniment requirement

A. Implied reports are not “reports [of] a violation of

law by the employing governmental entity” under

the Act.

Pope and Pickett’s primary position is that they reported

“violations of law by the employing governmental entity” when they

made extensive and well-documented reports to various law

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enforcement authorities of violations by LeFleur, its subcontractors,

competitors, and various medical providers in South Texas relating to

the transportation of minors without accompanying parents, guardians,

or other authorized adults. As discussed above, they made these reports

to HHSC leadership, OIG, OAG, and the FBI.

HHSC does not contest in this Court that these recipients

included “appropriate law enforcement authorit[ies]” under the

Whistleblower Act, and it mostly does not challenge at this stage (with

one exception we discuss below) whether the reports were a cause of

Pope’s and Pickett’s terminations. Rather, the parties disagree about

whether these reports satisfied the Whistleblower Act’s requirement

that they reported a “violation of law” by HHSC, the “employing

governmental entity.” TEX. GOV’T CODE § 554.002(a).

The court of appeals agreed with Pope and Pickett’s arguments

that these reports against LeFleur were also “impliedly” made against

HHSC because of the structure of Medicaid’s federal reimbursement

scheme. 646 S.W.3d at 572-73. We disagree and hold that the

Whistleblower Act protects only express reports to an appropriate law

enforcement authority that unambiguously identify the employing

governmental entity or another public employee as the violator.

Viewing the record in the light most favorable to Pope and

Pickett, we assume that their complaints stemmed from a commendable

desire to keep the program in compliance with federal and state law so

that HHSC would not have to repay millions of dollars in federal

reimbursements. Indeed, the federal audit report shows that their

concerns were well founded.

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But the Whistleblower Act excludes from its scope violations of

law by independent contractors such as LeFleur, protecting only reports

of violations by the “employing governmental entity” or other “public

employee[s].” TEX. GOV’T CODE § 554.002(a). Neither description

applies to Pope’s and Pickett’s reports about misconduct by LeFleur.

Pope and Pickett were employed by HHSC (not LeFleur), and the statute

carves out independent contractors from the definition of “public

employee.” Id. § 554.001(4) (defining “public employee” as a paid

“employee or appointed officer other than an independent contractor”

who performs services for a governmental entity). 2

Nor can Pope’s and Pickett’s reports of violations by LeFleur be

treated as reports of violations by their employer HHSC under the

statutory text and this Court’s precedents. Although the court of

appeals reasoned that Pope and Pickett had also reported a violation of

law by HHSC because they “would be aware that by reporting LeFleur’s

violation of law, they would necessarily be reporting HHSC’s violation

of law,” 646 S.W.3d at 573, this “implied report” theory cannot be

squared with the text of the Act.

Rather, the Act requires the reporting employee to make an

actual, express statement of acts or omissions “by” the entity or other

public employee. TEX. GOV’T CODE § 554.002(a) (emphasis added). A

2 Other federal and state courts have likewise held that the Act does not

protect reports of misconduct by independent contractors or outside vendors

because they are not employing governmental entities or public employees. See

Denton v. Morgan, 136 F.3d 1038, 1045-46 (5th Cir. 1998); City of Houston v.

Smith, No. 01-14-00789-CV, 2015 WL 4967020, at *5-8 (Tex. App.—Houston

[1st Dist.] Aug. 20, 2015, no pet.); Saldivar v. Tex. Dep’t of Assistive & Rehab.

Servs., No. H-08-1820, 2009 WL 3386889, at *13 (S.D. Tex. Oct. 13, 2009).

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reporting employee’s unspoken belief that her statements about conduct

by a third party will necessarily be understood by the receiving law

enforcement authority as a report of conduct by the employing entity or

another employee as well is not sufficient.

As we recently held in City of Fort Worth v. Pridgen, a report must

“convey information that exposes or corroborates a violation of law or

otherwise provide relevant, additional information that will help

identify or investigate illegal conduct.” 653 S.W.3d 176, 184 (Tex. 2022).

To serve these functions, the report must specify whose conduct is

violating the law. We have also held that the “report must be direct” in

the sense that it must be made “directly” to an “appropriate law

enforcement authority.” Tex. Comm’n on Env’t Quality v. Resendez, 450

S.W.3d 520, 521, 523 (Tex. 2014). The same reasoning applies with

equal force to the report being “directly” about the misconduct of “the

employing governmental entity or another public employee.” Id. at 521;

TEX. GOV’T CODE § 554.002(a).

Similarly, when the Act was passed, Black’s Law Dictionary

defined “report” as “[a]n official or formal statement of facts or

proceedings. To give an account of, to relate, to tell, to convey or

disseminate information.” 3 Official or formal statements of facts and

proceedings are not presented by implication or with the expectation

that the recipient will “read between the lines.”

The “good faith” element of the Whistleblower Act does not steer

Pope and Pickett’s claims toward a safer harbor. Although our

3 Report, Black’s Law Dictionary (6th ed. 1990).

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precedents explain that the Act protects employees who honestly and

reasonably believe they are reporting an “actual violation of law,” even

where what is reported does not actually amount to a violation, these

precedents all recognize that an actual report has to be made. City of

Elsa v. Gonzalez, 325 S.W.3d 622, 627 n.3 (Tex. 2010); Tex. Dep’t of

Transp. v. Needham, 82 S.W.3d 314, 320 (Tex. 2002) (emphasis added).

The conduct must be “reported,” not implied or insinuated.

Put another way, employees can be protected by the

Whistleblower Act for reporting only perceived—rather than actual—

violations of the law, City of Elsa, 325 S.W.3d at 627 n.3, when their

report is consistent with the subjective and objective prongs of the good

faith standard, Wichita County v. Hart, 917 S.W.2d 779, 784 (Tex. 1996).

But employees cannot earn the Act’s protection if they only perceive that

they reported misconduct by the “employing governmental entity or

another public employee.” TEX. GOV’T CODE § 554.002(a). They must

actually make an express report.

Indeed, the Act’s structure relies on the report being made to an

“appropriate law enforcement authority” with the power to enforce the

law alleged to be violated or to investigate or prosecute criminal

violations. TEX. GOV’T CODE § 554.002(b); see, e.g., Resendez, 450 S.W.3d

at 523; Tex. Dep’t of Hum. Servs. v. Okoli, 440 S.W.3d 611, 616-17 (Tex.

2014); Univ. of Hous. v. Barth, 403 S.W.3d 851, 857 (Tex. 2013). It is

hard to understand how a report could be implied “to” such an authority.

For these bodies to conduct their investigations properly, they must

have access to reports that concretely identify the alleged misconduct

and the responsible party, rather than being left to rely on guesswork,

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innuendo, and “reading between the lines” as they try to figure out what

exactly they are being asked to investigate.

Our cases emphasize that the Texas Whistleblower Act does not

protect purely internal reports because, unlike federal and other state

whistleblower statutes, the Act only “protects those who report to

authorities that issue legal directives, not authorities that follow them.”

Univ. of Tex. Sw. Med. Ctr. v. Gentilello, 398 S.W.3d 680, 686-87 (Tex.

2013); cf. 5 U.S.C. § 2302(f)(1); N.Y. LAB. LAW § 740(2) (McKinney 2022).

Just as internal reports to supervisors fail to provide “authorities that

issue legal directives” with the information needed for them to carry out

their investigative and enforcement functions, reports that rely on

innuendo and implication also fail to provide such authorities with the

information necessary to act on reports of alleged misconduct.

Gentilello, 398 S.W.3d at 686. Thus, for the same reason that the

Whistleblower Act protects only direct reports of a violation of law, it

also protects only express reports of a violation of law. See Resendez,

450 S.W.3d at 523.

Pope’s and Pickett’s reports of accompaniment violations do not

meet these standards, as the conduct reported was LeFleur’s—not

HHSC’s. In addition, as we explain below, none of these reports

identified an act or omission by HHSC that gave rise to a “violation of

law.”

B. Pope’s February 2014 email reporting conduct by

other HHSC employees is too remote to support

causation.

The closest Pope and Pickett came to expressly reporting

violations of law by HHSC or other public employees is a February 2014

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email from Pope to the OIG Inspector General, which included a report

that some HHSC call center employees were “allowing” unauthorized

adults to accompany minors and that some providers were encouraging

parents to call the center repeatedly until they received approval. The

email does not mention LeFleur by name, even though it does name

several other medical providers in South Texas.

HHSC argues that rather than providing evidence of HHSC

employee misconduct, the email shows HHSC’s victimization at the

hands of providers trying to manipulate the system and confuse HHSC

employees. There is some evidence to support this characterization. But

when the email is viewed most favorably to Pope and Pickett, it also

suggests that there was actual misconduct by some HHSC employees in

“allowing” unauthorized trips, and that this misconduct was expressly

reported to an appropriate law enforcement authority.

But more than three and a half years passed between this report

and Pope’s and Pickett’s firings. Thus, we agree with HHSC that the

report is too remote to support a finding that it caused their

terminations. See Alamo Heights, 544 S.W.3d at 790 (explaining that

an eight-month gap between protected activity and termination has

“little, if any, probative value” in proving causation for a retaliation

claim).

C. Pickett’s edits to Snyder’s letter did not report a

violation of law.

Pickett also contends that her email providing comments on

Snyder’s draft letter qualifies as a report of a legal violation by HHSC

or another employee. In her email, Pickett said that some specific

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statements in the draft were unsupported by documentation or were

inaccurate.

These suggested revisions do not report a violation of law for

several reasons. Pickett’s email never expressed disagreement with the

draft letter’s recommendation—made in the very same sentence—that

the claims at issue “be considered to be allowable.” If the federal

government agreed with that recommendation, HHSC would no longer

be obligated to repay the reimbursement it received for those claims.

Nor were Pickett’s comments perceived by OIG’s federal audit manager,

who received them, as “report[ing] a violation of law.” When the letter

is considered in context, as it must be in a plea to the jurisdiction, see id.

at 771, there is simply no way in which Pickett’s suggested edits can

meet the Pridgen standard of conveying actionable “information.” 653

S.W.3d at 184.

Pickett’s email also did not provide information that would “assist

in identifying or investigating a violation of law,” as we have held that

the Act requires. Id. at 186 n.7. Instead, Pickett took no issue with the

letter’s ultimate conclusion that the claims at issue were eligible for

federal reimbursement and thus HHSC had no financial liability to the

federal government. Pickett’s expression of concern regarding some

statements another employee suggested to support that conclusion,

which appeared in a proposed draft letter that had not yet been sent to

the federal government, identified no misconduct by HHSC that

amounted to a “violation of law” as defined by the Whistleblower Act.

Pickett’s edits were not, and in context could not, be viewed as “ferreting

out government mismanagement” with an eye toward “protecting the

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public,” which we recently explained are the only types of reports

protected under the Whistleblower Act. See id. at 184 (citing

Neighborhood Ctrs., Inc. v. Walker, 544 S.W.3d 744, 748 (Tex. 2018)).

D. The record shows no report that OIG violated the

law by failing to investigate or enforce the

accompaniment requirements.

Pope additionally contends that she reported OIG’s failure to act

on the information about the accompaniment problems with LeFleur. In

her view, this failure violated OIG’s “responsib[ility]” to investigate

abuse and enforce the law under section 531.102(a) of the Government

Code.

But the record reveals that Pope’s report instead concerned the

failure to collect experience rebates, which we discuss in Part III. The

court of appeals agreed that during Pope’s interview with OIG, she

“complained of HHSC’s failure to collect the experience-rebate

payments.” 646 S.W.3d at 567.

Moreover, Pope’s argument misreads section 531.102(a). That

statute outlines OIG’s jurisdiction—the matters it is “responsible for”; it

does not establish absolute obligations that OIG has no discretion to

tailor based on enforcement priorities, resources, or administrative

realities. TEX. GOV’T CODE § 531.102(a). Pope and Pickett seem to view

OIG’s “responsib[ility] for the prevention, detection, audit, inspection,

review, and investigation of fraud, waste, and abuse in the provision and

delivery of all health and human services in the state” as fully self-

executing. Id. But the same statute goes on to require HHSC to “set

clear objectives, priorities, and performance standards for [OIG] that

emphasize” matters such as “coordinating investigative efforts,”

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“allocating resources to [particular] cases,” and “maximizing [certain]

opportunities.” Id. § 531.102(b). Hence, although section 531.102(a)

does articulate OIG’s mission, it does not transform OIG into an

omnipotent “roving commission,” A.L.A. Schechter Poultry Corp. v.

United States, 295 U.S. 495, 551 (1935) (Cardozo, J., concurring), that is

statutorily obliged to deploy the full brunt of its enforcement powers

whenever the specter of someone committing healthcare fraud

somewhere in the state is raised.

E. Pope and Pickett did not report any violation of law

by the Executive Commissioner.

Finally, Pope and Pickett contend that they also reported a failure

to act by HHSC executive leadership that violated the law. The court of

appeals appears to have agreed, citing a provision of the Texas Human

Resources Code charging HHSC’s Executive Commissioner with

promulgating rules “requir[ing], as a condition for eligibility for

reimbursement . . . , that a child younger than 15 years of age be

accompanied at the visit or screening by (A) the child’s parent or

guardian; or (B) another adult . . . authorized by the child’s parent or

guardian to accompany the child.” TEX. HUM. RES. CODE § 32.024(s).

But the Commissioner fulfilled this statutory obligation by

promulgating a rule that Pope and Pickett knew about and were seeking

to enforce against LeFleur and other providers. See 1 TEX. ADMIN. CODE

§ 380.207(4). Therefore, this statute cannot provide the basis for a

report that a “violation of law” took place.

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Pope and Pickett also argue that HHSC’s Executive

Commissioner fell short of his legal obligations under section 321.022 of

the Government Code. This section provides:

If the administrative head of a department or entity that is

subject to audit by the state auditor has reasonable cause

to believe that money received from the state by the

department or entity or by a client or contractor of the

department or entity may have been lost, misappropriated,

or misused, or that other fraudulent or unlawful conduct

has occurred in relation to the operation of the department

or entity, the administrative head shall report the reason

and basis for the belief to the state auditor. The state

auditor may investigate the report or may monitor any

investigation conducted by the department or entity.

TEX. GOV’T CODE § 321.022(a).

Pope and Pickett do not explain how this statute would apply

absent a state audit or an independent statute identifying unlawful

conduct by the Commissioner. Moreover, there is no record of Pope or

Pickett actually reporting to a law enforcement authority that the

Executive Commissioner failed to notify the state auditor about LeFleur

defrauding the State when he had an obligation to do so. This argument

therefore fails for lack of an express “report” of a violation of law.

For these reasons, the evidence that Pope and Pickett reported

violations of the accompaniment requirement does not support a finding

that they reported a violation of law by HHSC or other public employees

to an appropriate law enforcement authority, or (in the case of the 2014

call center employee report) that any such violation could have led to

their 2017 terminations. The trial court therefore erred to the extent it

denied HHSC’s plea to the jurisdiction based on these reports.

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III. Experience rebates

We next address Pope and Pickett’s separate theory that they

were terminated for reporting HHSC’s failure to enforce experience

rebate payments owed by LeFleur. In their view, HHSC’s delay in

recovering the rebates was a “violation of law” that they properly

reported under the Whistleblower Act. We disagree.

The record includes evidence that both Pope and Pickett reported

to OIG investigators that HHSC had not enforced experience rebates

owed by LeFleur. But as explained below, OIG was the entity

responsible for enforcement, and there is no evidence that they reported

a violation by OIG. In addition, Pope and Pickett did not report

violations of law because when and how to collect the rebates was an

enforcement decision properly within the discretion of HHSC

leadership. Indeed, given Pope’s and Pickett’s training and experience,

it would not be reasonable for them to think that the agency was

violating the law in the way it handled the experience rebates. Agency

leaders’ choice to work with LeFleur so that it could continue to stay in

business while paying off the sums owed did not run afoul of any legal

obligations identified by Pope and Pickett that are binding on HHSC.

Thus, Pope’s and Pickett’s communications about this issue with OIG

were not “good faith reports [of] a violation of law” under the Act. TEX.

GOV’T CODE § 554.002(a).

A. Pope and Pickett did not report a violation of law by

OIG, which was responsible for enforcing rebates.

Pope and Pickett identify a variety of statutes and rules that

speak to OIG’s enforcement powers, arguing that their complaints about

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HHSC’s failure to recover the experience rebates from LeFleur

implicated a “violation of law” by HHSC. In particular, they rely on

section 531.102(f)(1) of the Government Code, which requires OIG to

conduct a preliminary investigation into any complaint or allegation of

Medicaid fraud or abuse from any source, id. § 531.102(f)(1), as well as

section 531.102(a), which provides that OIG is “responsible for the

prevention, detection, audit, inspection, review and investigation of

fraud, waste, and abuse in the provision and delivery of all health and

human services in the state . . . and the enforcement of state law relating

to the provision of those services.” Id. § 531.102(a); see also 1 TEX.

ADMIN. CODE § 371.11(a).

But Pope and Pickett did not “report a violation of law” involving

OIG’s failure to investigate LeFleur’s nonpayment of the experience

rebates. Rather, the record shows that they reported only the failure of

HHSC and its executive management to collect the rebates owed. This

is an important distinction because section 531.102(a) and rule 371.11(a)

place the responsibility for enforcing rebate requirements in the hands

of OIG. See TEX. GOV’T CODE § 531.102(a); 1 TEX. ADMIN. CODE §

371.11(a). Thus, there is an institutional mismatch between Pope’s and

Pickett’s reports and the law. Furthermore, the responsibility to pay

the experience rebates rested on LeFleur, see 1 TEX. ADMIN. CODE §

353.3, which we have previously explained is neither an “employing

governmental entity” nor “another public employee” under the Act.

Pope and Pickett also contend that they reported a violation of

section 533.014 of the Government Code, which addresses profit sharing

by managed care organizations such as LeFleur. See TEX. GOV’T CODE

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§ 533.014. This contention has the same flaw discussed in Part II.E.

above: it treats HHSC’s statutory obligation to “adopt rules regarding”

the profit-sharing experience rebates, id., which the agency did, as if it

required HHSC to enforce those rules in a particular way. To the

contrary, the text of the rule HHSC adopted does not establish binding

legal obligations for OIG, HHSC, or any other state actor whatsoever.

Instead, it simply requires that a managed care organization “pay to the

state an experience rebate calculated according to” its contract with

HHSC. 1 TEX. ADMIN. CODE § 353.3.

B. HHSC and OIG have discretion regarding how to

enforce experience rebates.

Even if Pope and Pickett had reported a failure to recover the

experience rebates by the responsible entity, OIG, they would not have

reported a “violation of law” because Texas law is clear that HHSC and

OIG have discretion regarding the enforcement of experience rebates.

As discussed in Part II.D., section 531.102(a) establishes the scope of

OIG’s jurisdiction and authority to conduct investigations and enforce

laws; it does not establish a binding obligation on OIG to exercise its

jurisdiction in a particular manner or in any particular set of

circumstances. 4 See TEX. GOV’T CODE § 531.102(a). As we have

observed, “[t]he complexity of regulatory enforcement requires that a

state agency retain broad discretion in carrying out its statutory

functions.” State v. Malone Serv. Co., 829 S.W.2d 763, 767 (Tex. 1992).

4 See, e.g., Okoli, 440 S.W.3d at 619 (describing OIG’s authority to

conduct civil and criminal investigations).

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Indeed, the remainder of section 531.102 expressly confers broad

discretion on OIG in exercising this authority. For example, section

531.102(a-5) allows OIG to use multiple tools in performing its

functions, “including audits, utilization reviews, provider education, and

data analysis.” TEX. GOV’T CODE § 531.102(a-5). Section 531.102(g)(1)

requires that OIG report a provider suspected of falsifying records to the

Medicaid fraud control unit, but it also grants OIG discretion in

continuing to investigate and impose appropriate sanctions on such a

provider. Id. § 531.102(g)(1). And section 531.102(b) provides that

HHSC

. . . in consultation with the inspector general, shall set

clear objectives, priorities, and performance standards for

the office that emphasize . . . (2) allocating resources to

cases that have the strongest supportive evidence and the

greatest potential for recovery of money; and

(3) maximizing opportunities for referral of cases to the

office of the attorney general . . . .

Id. § 531.102(b). Thus, HHSC’s and OIG’s use of discretion to allocate

administrative and enforcement resources is mandated by statute.

Pope and Pickett have not pointed to, and we have not located,

any statute or rule that establishes an obligation by HHSC or OIG to

collect the experience rebate in any particular manner. Such a law is an

essential part of their claim under the Act: for an employee to report a

violation of law, there must be a statute, rule, or ordinance that

prohibits the action taken or requires action to be taken. Put another

way, the “employee must have a good-faith belief that a law, which in

fact exists, was violated.” City of Houston v. Cotton, 171 S.W.3d 541,

547 n.10 (Tex. App.—Houston [14th Dist.] 2005, pet. denied) (citing

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Llanes v. Corpus Christi Indep. Sch. Dist., 64 S.W.3d 638, 643 (Tex.

App.—Corpus Christi–Edinburg 2001, pet. denied)). A report

“express[ing] disagreement with remedial measures taken” or “internal

policy recommendation[s] . . . is not a report of a violation of law that the

Whistleblower Act was designed to protect.” Lueck, 290 S.W.3d at 885. 5

Nor does the Act protect a “prediction of possible regulatory

noncompliance,” id., or a complaint that internal administrative policies

were not followed, see Barth, 403 S.W.3d at 854; Harris Cnty. Precinct

Four Constable Dep’t v. Grabowski, 922 S.W.2d 954, 956 (Tex. 1996).

For these reasons, even if Pope and Pickett had made any

“reports” about OIG’s failure to enforce LeFleur’s rebate obligation,

those reports would not be covered by the Act. Because Pope and Pickett

were expressing their disagreement with their superiors’ discretionary

choices regarding enforcement, they were not reporting violations of

law. Like the reports of possible regulatory noncompliance in Lueck,

Pope’s and Pickett’s reports about HHSC’s failure to collect the

experience rebates merely reiterated what the agency already knew:

that LeFleur was not in compliance with its monetary obligations to the

State. The only questions before HHSC were discretionary ones

regarding whether, when, and how to collect the payments from LeFleur,

not whether it could collect the payments.

See also Coll. of the Mainland v. Meneke, 420 S.W.3d 865, 870 (Tex.

5

App.—Houston [14th Dist.] 2014, no pet.) (“Other complaints and grievances,

including alleged violations of an agency’s internal procedures and policies,

will not support a claim.” (citing Mullins v. Dall. Indep. Sch. Dist., 357 S.W.3d

182, 188 (Tex. App.—Dallas 2012, pet. denied))).

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The absence of any “law” obligating OIG and HHSC to collect the

experience rebates using any particular method or timeline also means

that Pope’s and Pickett’s experience rebate reports cannot satisfy the

objective prong of the “good faith” standard for evaluating

Whistleblower Act claims. See Hart, 917 S.W.2d at 784. 6 Given Pope’s

and Pickett’s training and experience, including their years of service at

the MTP and in government, as well as Pickett’s training as an attorney,

it was not reasonable for them to believe that OIG and HHSC had an

obligation to enforce the experience rebates in any particular manner or

on any specific timeframe, or that HHSC’s senior leadership had an

obligation to keep the two of them informed about how that collection

process was being facilitated. Simply put, no “reasonably prudent

employee in similar circumstances would have believed that the facts as

reported were a violation of law.” Id. at 785.

Other employees’ failure to tell Pope and Pickett how OIG and

HHSC were planning to collect the rebates from LeFleur does not

undermine the agency’s discretion or in any way change the “good faith

report[] [of] a violation of law” analysis. TEX. GOV’T CODE § 554.002(a).

Instead, it merely underscores that the issue was handled at a higher

level of HHSC’s senior leadership and through its legal staff. The record

includes evidence that these leaders took over communications with

LeFleur because its relationship with Pope and Pickett had deteriorated

6 It is also unclear whether Pope intended her Whistleblower Act claims

to reach the failure to collect experience rebates. In her deposition, Pope

explicitly disavowed the experience rebates being “a part of the lawsuit,”

stating that she believed her termination was caused by her and Pickett

“report[ing] violations of law with respect to parental accompaniment.”

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to the point that the leaders were concerned about litigation risk. The

risk is illustrated by the letter from LeFleur’s counsel to HHSC senior

leaders detailing conduct by Pope and Pickett that counsel characterized

as “highly unprofessional” and requesting that Pope and Pickett cease

all contact with LeFleur personnel on matters unrelated to the

transition/winding down of LeFleur’s contracts with the state—which

would necessarily include Pope and Pickett not contacting LeFleur

about the experience rebates.

In sum, evidence that Pope and Pickett reported the

nonenforcement of LeFleur’s experience rebate obligations does not

support a finding that they reported a violation of law by OIG. The trial

court therefore erred to the extent it denied HHSC’s plea to the

jurisdiction based on these reports.

CONCLUSION

The Texas Whistleblower Act protects only express “reports of a

violation of law” by an agency employer or another public employee, not

reports based on implications that the appropriate law enforcement

agency must then decode. Accordingly, Pope’s and Pickett’s reports of

misconduct by LeFleur in failing to comply with the accompaniment

requirements cannot support a Whistleblower Act claim against HHSC.

In addition, their reports that LeFleur’s experience rebate obligations

were not being enforced were expressions of disagreement with internal

policy decisions on remedial measures, not reports that OIG violated the

law. The trial court therefore erred in denying HHSC’s plea to the

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jurisdiction and motion for summary judgment. We reverse the court of

appeals’ judgment and render judgment dismissing the suit.

J. Brett Busby

Justice

OPINION DELIVERED: May 5, 2023

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