TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-03-00738-CV
Sante Rehabilitation, L.P., Appellant
v.
National Heritage Insurance Company; Texas Health and Human Services
Commission; and Albert Hawkins, Commissioner, Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT
NO. GN300910, HONORABLE PATRICK O. KEEL, JUDGE PRESIDING
MEMORANDUM OPINION
Appellant Sante Rehabilitation, L.P. (“Sante”) filed suit against appellees for payment
of 2,050 Medicaid claims provided pursuant to Sante’s provider agreement with the Texas Health
and Human Services Commission (“the Commission”).1 Sante sought declaratory and mandamus
relief regarding the Commission’s duty to process and pay Sante’s claims. The Commission filed
a plea to the jurisdiction asserting sovereign immunity, and National Heritage Insurance Company
(“NHIC”) filed a motion to dismiss, asserting that it was also entitled to immunity as the State’s
agent. The district court granted the Commission’s plea to the jurisdiction and NHIC’s motion to
dismiss. We will affirm the order and judgment of the district court.
1
We will refer to Albert Hawkins, Commissioner of Texas Health and Human Services
Commission, separately as “the Commissioner” only when necessary to refer to him individually.
BACKGROUND AND PROCEDURE
Between January 1996 and February 1998, Sante provided rehabilitative services to
Medicaid patients involving thousands of claims. The Commission requires that claims for payment
be received within 95 days of the date of discharge. See Former Rule 354.1003(a)(1).2 Sante alleges
that it in fact submitted the claims in question within the 95-day deadline, but the claims were
improperly “front end rejected” due to electronic transmission difficulties with NHIC.3
On August 4, 1997, Sante informed NHIC that many of its claims had not been paid.
Sante argued that it was entitled to an exception to the 95-day rule because of electronic transmission
difficulties with NHIC. See Former Rule 354.1003(e)(1)(C).4 NHIC and the Commission
2
21 Tex. Reg. 9635 (1996), recodified by 27 Tex. Reg. 4561 (2002) (amended 2003)
(current version at 1 Tex. Admin. Code § 354.1003 (2004)). For convenience, we will refer to the
version of the rule in effect at the time of this dispute as “Former Rule 354.1003.”
3
At the time of this dispute, NHIC was the claims administrator for the Texas Medicaid
program and functioned as a fiscal intermediary for the State. See Tex. Hum. Res. Code Ann.
§ 32.029(b) (West 2001).
4
At the time of this dispute, the Texas Administrative Code provided:
(e) Exceptions to the 95-day deadline. The department shall consider exceptions
only when at least one of the situations included in this subsection exists.
The final decision of whether a claim falls within one of the exceptions will
be made by the department’s Medical Appeals office.
(1) Exceptions to the filing deadline are considered when one of the
following situations exists:
....
(C) delay due to electronic claim or system implementation
problems[.]
Former Rule 354.1003(e)(1)(C).
2
subsequently analyzed a portion of Sante’s unpaid claims and reimbursed Sante approximately
$200,000. According to Sante, however, 2,050 claims totaling $345,978 were never processed or
paid. Sante continued to work with the Commission and NHIC in an effort to resolve these unpaid
claims. On March 12, 2002, Sante presented a computer printout of the unpaid claims to the
Commission for review and consideration as an exception to the 95-day rule. See id.
On August 13, 2002, the Commission denied Sante’s request for an exception to the
95-day rule. The Commission relied on a federal mandate that requires providers to submit all
claims to state Medicaid agencies within one year from the date of service. See 42 C.F.R.
§ 447.45(d) (2004) (“The [State] Medicaid agency must require providers to submit all claims no
later than 12 months from the date of service.”). Unlike the Texas 95-day deadline, the federal
mandate provides no exceptions to the one-year submission deadline. See id. The Commission
therefore argued that Sante’s claims, which were filed more than twelve months following the date
of service, had to be rejected pursuant to the federal mandate.
Contentions of the Parties
On March 21, 2003, Sante filed suit against the Commission and NHIC, seeking a
declaratory judgment and a writ of mandamus. Sante argues that the federal rule requires only that
claims be submitted, while the Texas 95-day rule is a deadline for claims to be filed. Compare 42
C.F.R. § 447.45(d), with Former Rule 354.1003(a)(1). Sante seeks a declaration that the federal rule
is not applicable here because Sante’s claims were submitted but were not actually filed with the
Commission due to electronic transmission difficulties. Sante additionally seeks a declaration and
a writ of mandamus that its claims should be processed and paid.
3
On April 23, 2003, the Commission filed its plea to the jurisdiction. The Commission
argues that Sante’s claims, many of which were in excess of one-year old, cannot be paid due to the
federal mandate that claims be submitted within one year from the date that the service was
provided. The Commission also argues that Sante’s provider contract and the Texas Medicaid rules
provided ample provisions for a provider to contest unpaid claims, but Sante failed to exercise these
opportunities. The Commission argues that although Sante has cast its suit in terms of declaratory
relief and mandamus seeking that its claims be processed, it is actually seeking to force the
Commission to pay Sante’s claims. The Commission argues Sante’s suit for damages is barred by
the doctrine of sovereign immunity.
On November 12, 2003, NHIC filed a motion to dismiss, asserting that it was also
entitled to sovereign immunity because of its status as an agent of the State operating only as a fiscal
intermediary. On November 17, 2003, the district court heard argument and granted the
Commission’s plea to the jurisdiction and NHIC’s motion to dismiss.5 Sante now appeals in one
issue, arguing that the district court erred in granting the plea to the jurisdiction and motion to
dismiss.
DISCUSSION
Standard of Review
5
Sante concedes that if the Commission’s plea to the jurisdiction was granted due to
sovereign immunity, NHIC’s motion to dismiss should also be granted.
4
A plea to the jurisdiction contests the district court’s subject-matter jurisdiction.
Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex. 2004); Bland Indep. Sch.
Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000); see also Texas Dep’t of Transp. v. Jones, 8 S.W.3d
636, 638 (Tex. 1999). Because subject-matter jurisdiction poses a question of law, we review rulings
on a plea to the jurisdiction de novo. See Miranda, 133 S.W.3d at 226; Mayhew v. Town of
Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998).
The district court granted the Commission’s plea to the jurisdiction and NHIC’s
motion to dismiss based upon the Commission’s assertion of sovereign immunity. Sovereign
immunity from suit defeats a trial court’s subject-matter jurisdiction and thus is properly asserted
in a plea to the jurisdiction. Miranda, 133 S.W.3d at 225-26 (citing Jones, 8 S.W.3d at 637). To
waive immunity from suit, consent must ordinarily be found in a constitutional provision or
legislative enactment. Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 695 (Tex. 2003). A
plaintiff must allege facts that affirmatively demonstrate a trial court’s subject-matter jurisdiction;
whether a plaintiff has met this burden is a question of law we review de novo. See Miranda, 133
S.W.3d at 226.
Sante’s Petition
The only jurisdictional allegation in Sante’s petition read in its entirety: “Venue and
jurisdiction is appropriate in a District Court of Travis County, Texas, pursuant to Sections 15.004
and 15.014 of the Texas Civil Practice and Remedies Code.” However, sections 15.004 and 15.014
are merely venue provisions. See Tex. Civ. Prac. & Rem. Code Ann. §§ 15.004, .014 (West 2002).
Whether the district court had jurisdiction to hear Sante’s request for declaratory and mandamus
5
relief are separate questions. See Continental Cas. Co. v. Rivera, 124 S.W.3d 705, 713 (Tex.
App.—Austin 2003, pet. denied). We must therefore determine whether Sante’s requests for
declaratory and mandamus relief constitute waiver of the Commission’s sovereign immunity from
suit.
Declaratory Judgment
Sante’s request for declaratory relief stated in its entirety:
Pursuant to Section 37.004 of the Texas Civil Practice and Remedies Code, [Sante]
seeks a declaratory judgment that otherwise valid Medicaid claims submitted within
ninety-five (95) days of the date of service, but rejected (not filed) and, therefore, not
processed and paid due to electronic transmission difficulties, fall within the
exception to the ninety-five (95) day filing deadline for claims as provided under
[Former Rule] 354.1003(e)(1)(C) and, once corrected and resubmitted, should be
processed and paid under applicable federal and state regulations; and that,
accordingly, the unpaid claims which are the subject of this lawsuit fall within the
exception set out in [Former Rule] 354.1003(e)(1)(C) and should be paid.
In its prayer for relief, Sante also sought attorney’s fees in connection with its request for declaratory
relief. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West 1997).
Sante argues that the district court had jurisdiction over its request for declaratory
relief because the Uniform Declaratory Judgments Act (“UDJA”) “constitutes a specific statutory
waiver of sovereign immunity both with respect to the declaratory relief sought and the award of
attorney’s fees under Section 37.009.” See id. §§ 37.001-.011 (West 1997 & Supp. 2004). Sante
is correct insofar as a “party can maintain a suit to determine its rights without legislative
permission.” Federal Sign v. Texas S. Univ., 951 S.W.2d 401, 405 (Tex. 1997), superseded by
statute on other grounds as stated in General Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d
6
591 (Tex. 2001); see also City of LaPorte v. Barfield, 898 S.W.2d 288, 297 (Tex. 1995) (UDJA
waives sovereign immunity from suits brought to construe statutes); Texas Educ. Agency v. Leeper,
893 S.W.2d 432, 446 (Tex. 1994) (same).
Here, however, Sante does not seek to construe a legislative enactment. Rather, Sante
seeks a determination that the Medicaid claims at issue should be “processed and paid.” Sante
asserts that it “is seeking solely a declaratory judgment, sufficient to support a writ of mandamus,”
but Sante’s request for declaratory relief is, in essence, a request for monetary damages against the
State.6 Because the UDJA does not authorize private parties to sue the State for money damages,
we conclude that Sante’s request for declaratory relief does not waive the Commission’s sovereign
immunity from suit.7 Texas Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 860
(Tex. 2002).
6
A request for declaratory relief cannot change the basic character of a suit. State v.
Morales, 869 S.W.2d 941, 947 (Tex. 1994); Continental Cas. Co. v. Rivera, 124 S.W.3d 705, 712-13
(Tex. App.—Austin 2003, pet. denied). Moreover, “private parties cannot circumvent the State’s
sovereign immunity from suit by characterizing a suit for money damages . . . as a
declaratory-judgment claim.” Texas Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849,
856 (Tex. 2002).
7
Sante cites other cases for the proposition that its declaratory-judgment action confers
jurisdiction upon the district court, but these cases are distinguishable. See, e.g., Texas Workers’
Comp. Comm’n v. Continental Cas. Co., 83 S.W.3d 901, 904-05 (Tex. App.—Austin 2002, no pet.)
(labor code waived sovereign immunity from suit and allowed direct suit for reimbursement);
Everest Nat’l Ins. Co. v. Texas Workers’ Comp. Comm’n, 80 S.W.3d 269, 271 (Tex. App.—Austin
2002, no pet.) (same); Texas Workers’ Comp. Comm’n v. Texas Builders Ins. Co., 994 S.W.2d 902,
907 (Tex. App.—Austin 1999, pet. denied) (same); see also Texas Dep’t of Banking v. Mount Olivet
Cemetery Ass’n, 27 S.W.3d 276, 281 (Tex. App.—Austin 2000, pet. denied) (suit to construe statute
not barred by sovereign immunity); Texas Dep’t of Pub. Safety v. Moore, 985 S.W.2d 149, 154 (Tex.
App.—Austin 1998, no pet.) (sovereign immunity did not bar suit to declare that Texas Department
of Public Safety acted outside statutory authority).
7
Mandamus
Sante’s request for a writ of mandamus stated in its entirety:
For the harm and damage done to [Sante] as a result of having payment refused,
[Sante] has no adequate remedy at law. Such damages are continuing. There is no
legal justification for [the Commission’s] refusal to pay. Accordingly, [Sante] seeks
a writ of mandamus as the only remedy available to [Sante] to secure payment,
directing [the Commissioner] to pay to [Sante] the unpaid claims totaling [$345,978],
which are the subject of this lawsuit.
Mandamus is an extraordinary remedy that is available only to correct a clear abuse of discretion or
the violation of a duty imposed by law when there is no adequate remedy at law. See In re Masonite,
997 S.W.2d 194, 197 (Tex. 1999) (citing Walker v. Packer, 827 S.W.2d 833, 840-41 (Tex. 1992));
see also Rivera, 124 S.W.3d at 713. The relator has a heavy burden of demonstrating that it is
entitled to the relief requested. Canadian Helicopters Ltd. v. Wittig, 876 S.W.2d 304, 305 (Tex.
1994); Rivera, 124 S.W.3d at 713.
“It is well established that mandamus will not lie where a petitioner has another clear
and effective remedy, adequate to obtain the relief to which he may be entitled.” Rivera, 124 S.W.3d
at 713. Here, both Sante’s provider contract and the Texas Administrative Code provided Sante with
specific steps to take in order to obtain payment for its Medicaid claims. The provider manual
included detailed instructions for submitting claims to NHIC. If a provider did not see submitted
claims in the “Claims in Process” section of weekly reports within 30 days, the provider was to
resubmit the claims to NHIC within 95 days of the date of service. The provider manual also
instructed “electronic billers” to notify NHIC about missing claims if the claims did not appear in
weekly reports within ten days of submission. It is undisputed that Sante did not notify NHIC that
8
claims were not processed and paid until over eighteen months after the first of the claims were
submitted.
The version of the Texas Administrative Code in effect at the time of this dispute was
also specific in its instructions to providers. In order to request an exception to the 95-day deadline,
a provider was required to submit “an affidavit or statement . . . stating the details of the cause for
the delay, the exception being requested, and verification that the delay was not caused by neglect,
indifference, or lack of diligence of the provider or the provider’s employee or agent.” Former Rule
354.1003(e)(2)(A). Additionally, in order to claim an exception to the 95-day deadline based on
delay due to electronic claim or system implementation problems, a provider is required to submit
documentation detailing the electronic transmission difficulty. See Former Rule 354.1003(e)(2)(D).
Finally, the former rule included a provision for appeals from claim denials, but such appeals had
to be brought “within 180 days from the date of the last denial of and/or adjustment to the original
claim.” Former Rule 354.1003(b). Because Sante failed to avail itself of the relief offered by these
provisions in the former rule, the district court was without jurisdiction to grant mandamus relief.8
8
Additionally, a writ of mandamus is proper to compel a public official to perform a
ministerial act. Anderson v. City of Seven Points, 806 S.W.2d 791, 793 (Tex. 1991). “An act is
ministerial when the law clearly spells out the duty to be performed by the official with sufficient
certainty that nothing is left to the exercise of discretion.” Id. Here, the former rule merely required
the Commission to “consider” exceptions. See Former Rule 354.1003(e). The rule stated that “final
decision of whether a claim falls within one of the exceptions will be made by the [Commission’s]
Medical Appeals office.” Id. Even had Sante complied with the provisions for claiming an
exception and appealing the Commission’s decision, we question whether mandamus would be an
appropriate remedy to order the Commissioner to “pay to [Sante] the unpaid claims” when the rule
required only that the Commission “consider” an exception.
9
See Rivera, 124 S.W.3d at 713; Employees Ret. Sys. v. McDonald, 551 S.W.2d 534, 536 (Tex. Civ.
App.—Austin 1977, writ ref’d).9
CONCLUSION
Sante’s request for declaratory relief was insufficient to waive sovereign immunity
or confer subject-matter jurisdiction upon the district court. Because Sante failed to avail itself of
the provisions in Former Rule 354.1003 for claiming an exception and appealing a decision, the
court was without subject-matter jurisdiction to grant mandamus relief. We therefore affirm the
order and judgment of the district court granting the Commission’s plea to the jurisdiction and
NHIC’s motion to dismiss.
__________________________________________
Mack Kidd, Justice
Before Justices Kidd, B. A. Smith and Pemberton
Affirmed
Filed: August 12, 2004
9
The cases Sante cites for the proposition that the district court could grant mandamus relief
under the facts of this case are distinguishable. See Vanliner Ins. Co. v. Texas Workers’ Comp.
Comm’n, 999 S.W.2d 575, 579 (Tex. App.—Austin 1999, no pet.) (mandamus appropriate when
duty to reimburse was “clearly spelled out by law with sufficient certainty that nothing is left to the
exercise of discretion”); Texas Dep’t of Human Servs. v. Christian Care Ctrs., Inc., 826 S.W.2d 715,
716 (Tex. App.—Austin 1992, writ denied) (not mandamus case, but suit for declaratory judgment
that administrative rule was void and that Department of Human Services exceeded statutory
authority in enacting rule).
10