                          IN THE
                  TENTH COURT OF APPEALS

                        No. 10-11-00105-CV

REBECCA LUCHAK, R.N. AND
CYNTHIA HUNTER, R.N.,
                                             Appellants
v.

BOBBY MCADAMS, INDIVIDUALLY AND
AS AN HEIR AND REPRESENTATIVE ON
BEHALF OF THE ESTATE OF TINA MCADAMS,
DECEASED, AND AS NEXT FRIEND OF SAVANNAH
MCADAMS, A MINOR AND HEIR OF THE ESTATE
OF TINA MCADAMS, DECEASED; RYAN MCADAMS,
AND JARED MCADAMS, INDIVIDUALLY AND AS
HEIRS OF THE ESTATE OF TINA MCADAMS, DECEASED,
                                       Appellees
                             And

                        No. 10-11-00106-CV

HATTIE JOHNSON, R.N.,
                                             Appellant
v.

BOBBY MCADAMS, INDIVIDUALLY AND
AS AN HEIR AND REPRESENTATIVE ON
BEHALF OF THE ESTATE OF TINA MCADAMS,
DECEASED, AND AS NEXT FRIEND OF SAVANNAH
MCADAMS, A MINOR AND HEIR OF THE ESTATE
OF TINA MCADAMS, DECEASED; RYAN MCADAMS,
AND JARED MCADAMS, INDIVIDUALLY AND AS HEIRS
OF THE ESTATE OF TINA MCADAMS, DECEASED,
                                      Appellees
                               From the 278th District Court
                                    Walker County, Texas
                              Trial Court Nos. 25245 and 24771


                                          OPINION


       Bobby McAdams1 sued several parties, including three nurses, Rebecca Luchak,

Cynthia Hunter, and Hattie Johnson, in two separate cases regarding the death of

McAdams’ daughter, Tina.2 The nurses filed a motion pursuant to section 101.106(f) of

the Civil Practice and Remedies Code contending they were employees of a

governmental unit and that the suit against the nurses must be dismissed. 3 The trial

court denied the motion and the nurses appeal. Because the trial court erred in denying

the nurses’ motion to dismiss, the trial court’s order is reversed and an order is

rendered that McAdams’ suits against the nurses are dismissed.

                                           JURISDICTION

       We first address a portion of McAdams’ cross-point which questions whether we

have jurisdiction of this appeal.        His primary argument is that the nurses are not


1Although additional capacities and individuals are named as plaintiffs in the suits, we refer to the
plaintiffs/appellees as “Bobby McAdams” or “McAdams.”

2Rebecca Luchak and Cynthia Hunter were sued in trial court case number 25,245 (appellate number 10-
11-00105-CV) and Hattie Johnson was sued in trial court case number 24,771 (appellate number 10-11-
00106-CV).

3 Although the motion was styled, “Defendants’ Motion to Substitute Their Employer in Place of
Individually-Named Hospital Employees,” the relief requested was a dismissal of the suits filed against
the nurses.

Luchak, Hunter, and Johnson v. McAdams                                                          Page 2
governmental employees. This argument is also the key to the nurses’ contention that

the trial court erred in denying their motion to dismiss.           McAdams’ secondary

argument, the argument that we address at this juncture, is that even if the nurses are

governmental employees, the Civil Practice and Remedies Code provides no means to

appeal the motion the nurses filed.

       The nurses filed a motion pursuant to section 101.106, the Election of Remedies

provision, of the Civil Practice and Remedies Code and sought dismissal of the lawsuits

filed against them. Section 101.106(f) specifically provides,

       If a suit is filed against an employee of a governmental unit based on
       conduct within the general scope of that employee's employment and if it
       could have been brought under this chapter against the governmental
       unit, the suit is considered to be against the employee in the employee's
       official capacity only. On the employee's motion, the suit against the
       employee shall be dismissed unless the plaintiff files amended pleadings
       dismissing the employee and naming the governmental unit as defendant
       on or before the 30th day after the date the motion is filed.

TEX. CIV. PRAC. & REM. CODE ANN. § 101.106(f) (West 2011).

       McAdams argues that a denial of such a motion is not appealable because it is

interlocutory and section 51.014 of the Civil Practice and Remedies Code does not

provide for an appeal from the denial of a section 101.106 motion. We disagree with

McAdams.

       Section 51.014(a) allows an appeal from an interlocutory order . . . that:

       ***



Luchak, Hunter, and Johnson v. McAdams                                              Page 3
       (5) denies a motion for summary judgment that is based on an assertion of
       immunity by an individual who is an officer or employee of the state or a
       political subdivision of the state; [or]

       ***
       (8) grants or denies a plea to the jurisdiction by a government unit . . . .

TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(5), (8) (West Supp. 2011).

       The Texas Supreme Court has held that under section 51.014(a)(8), "an

interlocutory appeal may be taken from a refusal to dismiss for want of jurisdiction

whether the jurisdictional argument is presented by plea to the jurisdiction or some

other vehicle, such as a motion for summary judgment." Tex. Dep't of Criminal Justice v.

Simons, 140 S.W.3d 338, 349 (Tex. 2004) (citing Harris County v. Sykes, 136 S.W.3d 635 638

(Tex. 2004) ("If the trial court denies the governmental entity's claim of no jurisdiction,

whether it has been asserted by a plea to the jurisdiction, a motion for summary

judgment, or otherwise, the Legislature has provided that an interlocutory appeal may

be brought.")). "The reference to 'plea to the jurisdiction' is not to a particular vehicle

but to the substance of the issue raised." Id.

       Recently, the Court, when reviewing the denial of a motion pursuant to section

101.106(e), expanded its holding in Simons and concluded that an appeal may likewise

be taken from orders denying an assertion of immunity, as provided in section

51.014(a)(5), regardless of the procedural vehicle used. Austin State Hosp. v. Graham, 347

S.W.3d 298, 301 (Tex. 2011). It reasoned that “*t+he point of section 51.014(a)(5), like



Luchak, Hunter, and Johnson v. McAdams                                                Page 4
section 51.014(a)(8), is to allow an interlocutory appeal from rulings on certain issues,

not merely rulings in certain forms.” Id.

       Although the nurses brought a motion to dismiss pursuant to subsection (f)

rather than subsection (e) of section 101.106, the result is the same. In both subsections,

the employee is entitled to dismissal due to immunity. Compare TEX. CIV. PRAC. & REM.

CODE ANN. § 101.106(f) (West 2011) with (e) (“If a suit is filed under this chapter against

both a governmental unit and any of its employees, the employees shall immediately be

dismissed on the filing of a motion by the governmental unit.”).              Thus, if an

interlocutory appeal is allowed by section 51.014(a)(5) from the denial of a motion to

dismiss under subsection (e), it necessarily follows that an appeal from the denial of a

motion to dismiss under subsection (f) is also allowed by section 51.014(a)(5). We see

no reason to hold otherwise. Because the nurses asserted immunity in their motion

which was denied, they are entitled to appeal, regardless of the procedural vehicle

used, if they are employees of a governmental unit.

                                   GOVERNMENTAL UNIT

       The next question, the answer to which will resolve both McAdams’ cross-point

regarding jurisdiction and the nurses’ issue on appeal, is: are the nurses considered

employees of a governmental unit? If so, then we have jurisdiction of the interlocutory

appeal and the trial court should have granted the nurses’ motion to dismiss. If not, we

have no jurisdiction of this appeal and the appeal must be dismissed.


Luchak, Hunter, and Johnson v. McAdams                                               Page 5
       The nurses contend that they are employees of a governmental unit because they

work for Walker County Hospital Corporation d/b/a Huntsville Memorial Hospital.

They argue that WCHC is a hospital district management contractor which is

considered a governmental unit for the purposes of the Texas Tort Claims Act and

whose employees are considered employees of a hospital district. The Health and

Safety Code provides:

       A hospital district management contractor in its management or operation
       of a hospital under a contract with a hospital district is considered a
       governmental unit for purposes of Chapters 101, 102, and 108, Civil
       Practice and Remedies Code, and any employee of the contractor is, while
       performing services under the contract for the benefit of the hospital, an
       employee of the hospital district for the purposes of Chapters 101, 102,
       and 108, Civil Practice and Remedies Code.

TEX. HEALTH & SAFETY CODE ANN. § 285.072 (West 2010). The Code’s definition of a

"hospital district management contractor" is as follows:

       In this chapter, "hospital district management contractor" means a
       nonprofit corporation, partnership, or sole proprietorship that manages or
       operates a hospital or provides services under contract with a hospital district
       that was created by general or special law.

TEX. HEALTH & SAFETY CODE ANN. § 285.071 (West 2010) (emphasis added).

       The parties agree that the Walker County Hospital District (District) is a

governmental unit. See TEX. CIV. PRAC. & REM. CODE ANN. § 101.001(3) (West Supp.

2011); Martinez v. Val Verde County Hosp. Dist., 140 S.W.3d 370, 371 (Tex. 2004). They do

not agree, however, that the nurses were employed by a governmental unit.

Specifically, McAdams contends WCHC is not a governmental unit because it is not a
Luchak, Hunter, and Johnson v. McAdams                                                    Page 6
hospital district management contractor, and even if it was, the nurses did not work for

it.

       Case Authority

       There is not much case authority on sections 285.071 and 285.072 of the Health

and Safety Code, and none of those cases are directly on point with this case. For

example, in Maldonado v. Frio Hosp. Ass'n, no dispute existed between the parties about

whether the appellee met the statutory classification of a hospital district management

contractor. Maldonado v. Frio Hosp. Ass'n, 25 S.W.3d 274, 276 (Tex. App.—San Antonio

2000, no pet). In Rodriguez v. Christus Spohn Health System Corp., the parties on appeal

also did not contest the district court's determination that the appellee was a hospital

district management contractor. Rodriguez v. Christus Spohn Health System Corp., 628 F.

3d 731, 734 (5th Cir. 2010). Further, in Carroll v. Donau, the parties agreed that the

hospital was a governmental unit because it was managed under a contract with the

hospital district. Carroll v. Donau, No. 03-09-00293-CV, 2010 Tex. App. LEXIS 6063 (Tex.

App.—Austin July 29, 2010, pet. denied) (mem. op.). None of these cases analyzed how

to determine whether an entity was a hospital district management contractor.

       One case comes close to the question we have here. In Christus Spohn Health Sys.

Corp. v. Ven Huizen, the Ven Huizens filed suit against a hospital corporation, a nurse,

and a doctor regarding injuries that occurred to their daughter at the time of her birth.

Christus Spohn Health Sys. Corp. v. Ven Huizen, 2011 Tex. App. LEXIS 3805 (Tex. App.


Luchak, Hunter, and Johnson v. McAdams                                             Page 7
Corpus Christi May 19, 2011) (pet. denied). Spohn filed a plea to the jurisdiction and a

motion to dismiss with respect to the Ven Huizens' claims against Spohn and Dulak,

asserting that Spohn was a "hospital district management contractor" and was entitled

to immunity as a "governmental unit." Id. *3. The trial court denied Spohn’s motions.

       On appeal, the Corpus Christi court reviewed the evidence submitted in support

of the motions which included the affidavit of the controller of finance for Spohn who

stated that from 1996 until the present, Spohn had provided services at the Nueces

County Hospital District hospital, formerly known as Memorial Medical Center, under

a contract with the Nueces County Hospital District. Id. *12. Under the master and

lease agreements between the hospital district and Spohn, Spohn managed and

provided care to all patients at Memorial. Id. The agreement also mandated that Spohn

was to take sole control of and responsibility for all aspects of the management and

operation of the Hospital. Id. The Court held that the evidence established that the

hospital district vested Spohn with the duty and responsibility of managing the

hospital.   Id. *13.   However, this determination was unnecessary because the Ven

Huizens did not actually argue that Spohn failed to meet the "technical" requirements of

a hospital district management contractor; instead, they argued that section 285.071 was

inapplicable to the contracts between Spohn and the hospital district because the

contracts designated Spohn an independent contractor. Id. *14. On this issue, the

Corpus Christi court held that Spohn's contractual relationship with the hospital


Luchak, Hunter, and Johnson v. McAdams                                            Page 8
district, that of independent contractor, did not negate the applicability of sections

285.071 and 285.072. Id. *19.

       Although, the actual issue in controversy was not about whether Spohn was a

hospital district management contractor, this case is instructive as to how to determine

whether WCHC is a hospital district management contractor but is not controlling in

the type of evidence considered to support a determination of a hospital district

management contractor.

       History—Huntsville Memorial Hospital

       For us to determine whether WCHC is a hospital district management

contractor, and thus considered to be a governmental unit, we have to look at the

history between the hospital in Huntsville and the District.

       Huntsville Memorial Hospital (HMH) was incorporated in 1927. It entered into a

“Lease, Mortgage, Deed of Trust, Assignment of Production and Security Agreement”

with the Walker County Hospital District in 1977 and a new hospital was built. As

expressed in the lease agreement, it was the intent of the parties that HMH be

associated or affiliated with or controlled by the District. The new hospital was leased

to HMH and HMH was to operate and maintain the hospital in an economical and

efficient manner consistent with standards generally acceptable for fully accredited

hospitals. HMH agreed that it would run the hospital in accordance with the act that

created the District which charged the District with the responsibility of providing


Luchak, Hunter, and Johnson v. McAdams                                            Page 9
hospital care for the needy inhabitants of Walker County. HMH also agreed to provide

for the management of the hospital, as long as any bonds issued for the establishment of

the new hospital were outstanding, in one of two ways: (1) by employing a hospital

management company, or (2) by submitting a plan for the management of the hospital

by administrative personnel directly responsible to HMH.

       After reviewing the lease agreement between HMH and the District, HMH was a

hospital district management contractor because HMH managed or operated the

hospital under the lease agreement with the District.

       Walker County Hospital Corporation

       But where does Walker County Hospital Corporation (WCHC) fit in the picture?

WCHC was established in 2005 as a non-profit Texas corporation. It was organized for

charitable purposes and is exempt from Federal income tax. Further, its assumed name

was registered as Huntsville Memorial Hospital. Robert E. Gray, Jr., the Chief Financial

Officer of WCHC stated by affidavit4 that in 2006, a majority of assets held in HMH

were shifted to WCHC. As a part of the shift, WCHC assumed the Lease, Mortgage,

Deed of Trust, Assignment of Production and Security Agreement made by and

between HMH and the District. As per the lease agreement, HMH was allowed to

4 McAdams suggests in his brief on appeal that we should not consider Gray’s affidavit because it was
late filed which deprived him of the opportunity to contest it. The document to which the affidavit was
attached was filed on February 10, 2011. Further, a response by McAdams to that document was filed on
March 3, 2011 and specifically addressed Gray’s affidavit but did not complain about its alleged late
filing. The hearing on the nurses’ motion was held on March 4, 2011. McAdams did not seek a
continuance of the hearing, did not request additional discovery, and did not object to the affidavit.
Accordingly, any complaint about the affidavit is not preserved. TEX. R. APP. P. 33.1.

Luchak, Hunter, and Johnson v. McAdams                                                         Page 10
transfer to another non-profit corporation all or substantially all of its assets if, among

other things, the transferee corporation assumed all the obligations of HMH contained

in the lease agreement. An amendment to the lease agreement entered into on October

25, 2006 indicated that HMH and WCHC entered into a transfer agreement on August

31, 2005 which transferred all of HMH’s rights in the lease agreement to WCHC and

that the District, on the same date, executed a consent authorizing the transfer.

       VHA Southwest and Memorial Hermann Healthcare System

       McAdams argues that because two other entities, VHA Southwest Community

Health Corporation (Southwest) and Memorial Hermann Healthcare System (MHHS),

were involved in the management of the hospital, WCHC could not ultimately be a

hospital district management contractor. In 2004, and before HMH transferred its rights

in the lease agreement with the District to WCHC, HMH and the District entered into a

Hospital Operating Agreement with Southwest. On the same date, Southwest and the

District entered into an Executive Management Agreement with MHHS. We do not

agree with McAdams that the agreements with these other entities prevent WCHC from

being a hospital district management contractor.

       Pursuant to the operating agreement, HMH granted Southwest membership in

the HMH Corporation. Southwest set the number of board of directors for the hospital.

And although it reserved some powers for itself to perform oversight responsibility of

the ongoing operations for HMH, there was nothing in the reserved powers which


Luchak, Hunter, and Johnson v. McAdams                                              Page 11
suggested that Southwest had the power to hire or fire employees. HMH retained

employees who were employed by HMH at the time the operating agreement was

signed, and HMH was to establish competitive benefit packages for their employees.

All employees that were retained were to receive credit for the time they had been

employed by HMH prior to the date of the agreement for determining benefits and

other personnel matters.

       Pursuant to the management agreement, MHHS was to provide hospital

administrators. It was agreed that all HMH employees would remain employees of and

carried on the payroll of HMH. These employees were not to be employees of MHHS.

The final decision making authority relating to medical staff membership was

exclusively the responsibility of HMH.      HMH was responsible for the quality of

hospital care provided. Further, HMH and Southwest would employ or retain and

have sole employment responsibilities for their respective personnel.

       Conclusion

       The definition for a hospital district management contractor is very broad and

includes any type of management or operation of a hospital or any kind of provision of

services either of which are pursuant to a contract with a hospital district. Although

some management and operation responsibilities were designated to Southwest and

MHHS, HMH was still responsible for some of the operation of the hospital. The

critical fact in the analysis is that, at the very least, HMH provided services under a


Luchak, Hunter, and Johnson v. McAdams                                          Page 12
contract with the District. See TEX. HEALTH & SAFETY CODE ANN. § 285.071 (West 2010).

The addition of Southwest and MHHS to the operation or management of certain

aspects of the hospital did not change HMH’s status.

       Further, WCHC is a non-profit corporation. Because it assumed HMH’s lease

with the District and all of HMH’s rights in the lease with the District were transferred

to WCHC, it, too, falls within the definition of a hospital district management

contractor. Thus, WCHC is a governmental unit for the purposes of the Texas Tort

Claims Act. See TEX. HEALTH & SAFETY CODE ANN. § 285.072 (West 2010).

                               EMPLOYMENT OF THE NURSES

       At her deposition, Hattie Johnson stated that she worked for Huntsville

Memorial Hospital. The printed payroll histories for Rebecca Luchak and Cynthia

Hunter show that they also work for Huntsville Memorial Hospital. McAdams argues

that these documents show the nurses do not work for WCHC. We disagree. WCHC

has the assumed name of Huntsville Memorial Hospital, and because HMH transferred

most of its assets and its interest in the lease agreement with the District to WCHC and

WCHC assumed the lease agreement between HMH and the District, the nurses are

employees of WCHC. As additional evidence that the nurses are, in fact, employees of

WCHC, the W2 forms for each nurse lists the employer as “Walker County Hospital

Corp DBA HMH.”




Luchak, Hunter, and Johnson v. McAdams                                            Page 13
                                         CONCLUSION

       WCHC is a hospital district management contractor, a governmental unit as

defined by the statute. See TEX. HEALTH & SAFETY CODE ANN. § 285.072 (West 2010).

The nurses are employees of WCHC. Because the nurses are employees of WCHC, a

hospital district management contractor, they are considered to be employees of the

District, a governmental unit. Id. Accordingly, we have jurisdiction of this appeal and

the trial court erred in denying the nurses motion to dismiss them from the suits filed

against them by McAdams. McAdams’ cross-point is overruled, and the nurses’ sole

issue is sustained.

       Having overruled the cross-point of McAdams and sustained the sole issue of the

nurses, we reverse the trial court’s order denying their motion to dismiss and render an

order that Rebecca Luchak and Cynthia Hunter are dismissed from trial court case

number 25,245 and Hattie Johnson is dismissed from trial court case number 24,771.




                                         TOM GRAY
                                         Chief Justice

Before Chief Justice Gray,
       Justice Davis, and
       Justice Scoggins
Reversed and rendered
Opinion delivered and filed February 1, 2012
[CV06]




Luchak, Hunter, and Johnson v. McAdams                                           Page 14
