
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN




NO. 03-00-00429-CV


ElderCare Properties, Inc. d/b/a/ Valley Grande Manor, Appellant

v.



Texas Department of Human Services and Weslaco Nursing and Rehabilitation
Center, Inc., Appellees




FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT

NO. 99-06519, HONORABLE PAUL R. DAVIS, JR., JUDGE PRESIDING





	Appellant ElderCare Properties, a nursing home in Weslaco, appeals from a summary
judgment that the Texas Department of Human Services did not violate any statute or constitutional
provision by granting a special commissioner's waiver to ElderCare's competitor, Weslaco Nursing
and Rehabilitation Center.  ElderCare claims that the trial court erred in granting summary judgment
raising three grounds: (1) that ElderCare has an inherent right to judicial review of the waiver; (2)
that the special commissioner's waiver rule is invalid or improperly applied in this case; and (3) that
ElderCare has a right to a contested case hearing under the Administrative Procedure Act. (1)  We will
affirm the judgment.


BACKGROUND	The Texas Legislature has delegated to the Department of Human Services ("DHS")
the authority to administer and monitor the Texas program of medical assistance to financially needy
persons.  Tex. Hum. Res. Code Ann. §§ 32.001-.052 (West 2001).  Pursuant to this grant of authority
DHS contracts with nursing homes to provide a certain number of beds for Medicaid patients. 
ElderCare Properties ("ElderCare") operates the Valley Grande Manor nursing home in Weslaco and
is licensed to operate 147 nursing beds.  Of those beds, ElderCare contracts with DHS to operate 142
as Medicaid beds for which ElderCare is reimbursed under the Medicaid program. (2) 
	In 1985, DHS established a moratorium on granting additional Medicaid contracts
to regulate the number of Medicaid beds.  The moratorium was formally adopted by rule in 1998 and
is codified in the Texas Administrative Code.  See 40 Tex. Admin. Code § 19.2322(c) (2001). 
However, there are several exceptions to the moratorium, including the special commissioner's
waiver rule also adopted by DHS in 1998, and at issue here.  Id. § 19.2322(e)(6).  The special
commissioner's waiver ("waiver") enables the commissioner of DHS to lift the moratorium and
make additional beds available to applicants that can satisfy the waiver rule's criteria.  Applicants
operating existing nursing homes and those who wish to operate nursing homes may apply for the
waiver.  The issuance of a waiver does not require notice, a hearing, or findings of fact.
	As noted above, there are other exceptions to the moratorium rule besides the special
commissioner's waiver.  See 40 Tex. Admin. Code §§ 19.2322(e)(1)-(9);19.2324.  One, the high-occupancy area (HOA) exception, is important for our discussion here.  Id. § 19.2324.  The HOA
rule allows nursing homes to apply for additional Medicaid beds when the county occupancy rate
of Medicaid beds reaches 90%. (3) Id.  DHS then allocates beds on an equal basis to nursing homes
that submit a qualifying application.  Id.  Throughout its brief, ElderCare complains that the waiver
rule improperly circumvents the HOA exception to the moratorium.  ElderCare argues that in the
absence of the waiver, it would have been entitled to apply for additional beds under the HOA
exception when the county occupancy rate of Medicaid beds in Hidalgo County reaches 90%.
	In 1999, Weslaco Nursing and Rehabilitation Center ("Weslaco Nursing Center")
received a waiver from DHS allowing it to build and operate a nursing home in Weslaco with ninety 
Medicaid-contracted beds.  In a declaratory judgment action under the Administrative Procedure Act
(APA), ElderCare sued DHS on the basis that the department should have held a contested case
hearing on the waiver application, and that the waiver rule was unconstitutionally vague.  DHS
moved for summary judgment on the grounds that the waiver rule was valid and that the department
was not required by any statute or constitutional provision to conduct a hearing on the matter.  In a
written response to the motion, accompanied by an affidavit, ElderCare repeated its initial claims
and raised a new claim that it had an inherent right to judicial review of the waiver granted to
Weslaco Nursing Center.  DHS addressed these arguments in a written reply, including the claim to
an inherent right of judicial review.  Weslaco Nursing Center joined DHS in its motion for summary
judgment which the trial court granted without specifying the grounds for its order.

STANDARD OF REVIEW	The movant for summary judgment has the burden of showing that no genuine issue
of material fact exists and that it is entitled to judgment as a matter of law.  Tex. R. Civ. P. 166a(c);
Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985).  In reviewing the grant of
summary judgment, we view the evidence in the light most favorable to the nonmovant and make
every reasonable inference and resolve all doubts in favor of the nonmovant.  Nixon, 690 S.W.2d at
548-49.

DISCUSSIONInherent Right to Judicial Review 
A.  Preservation of Error
	In its first issue, ElderCare claims an inherent right to judicial review of the waiver
granted to Weslaco Nursing Center.  We first address DHS's claim that ElderCare waived this issue
by not asserting it in its pleadings below.  While ElderCare did not raise the issue of an inherent right
to review in its original petition, it states in its response to the summary judgment motion that
"because DHS violated ElderCare's due process rights and adversely affected its vested property
rights, DHS's actions are subject to appeal."  Thus the question is whether ElderCare has preserved
for review its claim to an inherent right to appeal when it raised the issue for the first time in its
response to the summary judgment motion.  
	Issues a nonmovant contends avoid the movant's entitlement to summary judgment
must be expressly presented by written motion or by other written response.  Tex. R. Civ. P. 166a(c);
City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979).  In this case,
ElderCare needed to assert a right to judicial review to preclude summary judgment; it raised this
issue in its response to summary judgment as required by Rule 166a(c), and having done so, has
sufficiently preserved the issue for this appeal.

B.  Inherent Right to Judicial Review
	ElderCare argues that it has an inherent right to judicial review of the waiver granted
to Weslaco Nursing Center based on its alleged vested property rights to be allocated additional beds
under the HOA exception to the moratorium on Medicaid beds and to optimize its Medicaid contract. 
In response, DHS argues that these claims are an expectancy and do not constitute vested property
rights.  We agree.  
	When the legislature remains silent or denies a right of judicial review, administrative
decisions may nevertheless be challenged in court if they adversely affect a vested property right or
otherwise violate some provision of the state or federal constitution.  City of Amarillo v. Hancock,
239 S.W.2d 788, 790 (Tex. 1951); see U.S. Const. amend. XIV; Tex. Const. art. I, § 19. (4)  However,
the affected right must be more than "a mere expectation based upon an anticipated continuance of
the existing law.  It must have become a title, legal or equitable, to the present or future enjoyment
of property, or to the present or future enforcement of a demand, or a legal exemption from the
demand of another."  National Carloading Corp. v. Phoenix-El Paso Exp., 176 S.W.2d 564, 570
(Tex. 1943); State v. Operating Contractors ABS Emissions, Inc., 985 S.W.2d 646, 653 (Tex.
App.--Austin 1999, pet. denied).
	Generally, Texas courts have limited the right to judicial review of agency actions to 
instances in which the state permanently deprives an individual or entity of a state-conferred right,
such as a state contract, a business permit, or payments under a government program.  See generally,
House of Tobacco, Inc. v. Calvert, 394 S.W.2d 654 (Tex. 1965) (invalidating agency's order
cancelling tobacco permit); Texas Dep't of Human Servs. v. Christian Care, 826 S.W.2d 715 (Tex.
App.--Austin 1992, writ denied) (reviewing rule that allowed withholding of Medicaid payments);
Texas State Dep't of Human Res. v. Silver Threads Co., 569 S.W.2d 49 (Tex. Civ. App.--1978, writ
ref'd n.r.e.) (reviewing agency's termination of Medicaid contract).  These cases involve the state
taking away a tangible, state-conferred property interest that the individual or entity already
possesses.  House of Tobacco, 394 S.W.2d at 657. 
	Another line of cases recognizes a right to judicial review, even in the absence of state
deprivation of a vested right when the vested right at issue is a franchise, or tantamount to a
franchise.  See generally Chemical Bank & Trust Co. v. Falkner, 369 S.W.2d 467 (Tex. 1963);
Brazosport Sav. & Loan Ass'n v. American Sav. & Loan Ass'n, 342 S.W.2d 747 (Tex. 1961); White
Top Cab, Inc. v. City of Houston, 440 S.W.2d 732, 734 (Tex. Civ. App.--Houston [14th Dist.] 1969,
no writ).  As we will discuss, ElderCare has waived the argument that it has a franchise entitling it
to judicial review in the absence of state deprivation of a vested right; thus we will confine our
analysis to whether DHS has deprived ElderCare of a vested right.
	ElderCare correctly points out that this court has recognized that a nursing home's
Medicaid contract creates a vested property right entitling it to judicial review of an agency's action
to cancel the contract.  Silver Threads, 569 S.W.2d at 51.  However, as DHS notes, ElderCare has
not alleged that DHS has canceled or taken any action against ElderCare's Medicaid contract.  Had
the department sought to cancel ElderCare's contract, then by statute it would have been required
to hold a contested-case hearing.  See Tex. Hum. Res. Code Ann. § 32.034 (West 2001).  Instead,
ElderCare complains that the grant of the waiver to a competing nursing home adversely affects
ElderCare's vested property right to receive additional Medicaid beds under the HOA exception. 
ElderCare argues that the grant of the waiver to Weslaco Nursing Center will cause the occupancy
rate of Medicaid beds to drop, thus decreasing the likelihood that the HOA rule will be triggered by
high occupancy levels and diminishing ElderCare's opportunity to apply for additional beds.
 	We rejected a similar argument based on diminished opportunity in S.C. San Antonio,
Inc. v. Texas Department of Human Services, 891 S.W.2d 773 (Tex. App.--Austin 1995, writ
denied).  In S.C. San Antonio, a Medicaid hospital claimed a vested property right to additional
Medicaid funds distributed under a DHS-run competitive reimbursement program for hospitals
serving a disproportionate share of low-income patients ("Dispro I program").  Id.  Pointing to the
fact that the hospital was fully reimbursed for the services it had provided, we held that the hospital
did not have a vested right to additional reimbursement.  Id. at 778.  To receive the additional funds
in any given year the hospital had to qualify and rank in the top tier of competing hospitals; thus it
had no more than an expectation of receiving additional reimbursement contingent on comparing its
level of services with other hospitals.  Id.  Similarly, any right ElderCare has to additional beds is
contingent on the HOA rule being triggered by high occupancy levels of Medicaid beds in the county 
and on ElderCare applying for the additional beds made available by the rule.  Therefore, we
conclude this claim is no more than a mere expectation "based on an anticipated continuance of
existing law"and not a vested property right entitling ElderCare to judicial review.  National
Carloading, 176 S.W.2d at 570.
	ElderCare also claims a vested right in "optimizing" the value of its Medicaid contract
by "ensuring that its Medicaid beds not only receive optimum value, but give optimum value to the
community, and that [sic] optimum value serves the public purpose as well as the intent of the
Legislature."  While it is not entirely clear what ElderCare means by "optimize" in this context,
ElderCare appears to be simply repeating the argument discussed above that the waiver rule
improperly circumvents the HOA exception by providing an additional method by which to obtain
Medicaid beds.  Again, we conclude that this claim is no more than a mere expectation and not a
vested property right. (5)
	Finally, in its motion for new trial and on appeal, ElderCare claims a vested right to
be free of unlawful competition.  Texas courts have recognized a basis for challenging unlawful
competition, but only when an individual or organization possesses a franchise.  See Brazosport, 342
S.W.2d at 750; ABS Emissions, 985 S.W.2d at 653; White Top Cab, 440 S.W.2d at 732.  However,
as DHS emphasizes, ElderCare did not raise this claim until its motion for new trial.  As stated
previously, for purposes of summary judgment, a nonmovant must expressly present to the trial court
those issues that would defeat the movant's right to summary judgment.  Tex. R. Civ. P.166a(c); 
Clear Creek, at 678-679.  If the nonmovant fails to do so, it may not later assign those issues as
errors on appeal.  Id. at 678.  "[B]oth the reasons for the summary judgment and the objections to
it must be in writing before the trial judge at the hearing."  Id. at 677.  Having failed to raise the issue
of a right to challenge unlawful competition in the summary judgment proceedings below, ElderCare
has not preserved this issue for appellate review.
	Finding that ElderCare does not have a vested property right entitling it to judicial
review of Weslaco Nursing Center's waiver, we overrule ElderCare's first issue.	

Right to a Hearing Under APA
	In its third issue, ElderCare argues that DHS should have held an APA contested case
hearing in connection with Weslaco Nursing Center's waiver application to afford ElderCare with
the right to comment on the application.  ElderCare does not contend that DHS's enabling statute
and rules relating to the waiver provide for a contested case hearing, but instead argues for a broader
application of the APA's contested case provisions.  We have consistently rejected the interpretation
that the APA creates an independent right to a contested case hearing in the absence of express
statutory authority.  See Best & Co. v. Texas State Bd. of Plumbing Exam'rs, 927 S.W.2d 306, 309
(Tex. App.--Austin 1996, writ denied).
	ElderCare also directs us to Texas Government Code section 531.011 for authority
that DHS is required to hold hearings on waiver applications; but as DHS correctly observes, this
provision governs the Health and Human Services Commission, a separate agency, and is inapposite
here.  See Tex. Gov't Code Ann. § 531.011 (West 1998 & Supp. 2001). (6)  In response to ElderCare's
claims that DHS has acknowledged the need to provide hearings on waivers in the Texas Register,
a review of that publication reveals only that, in 1999, the department received a comment on the
issue and was working on procedures to alert the public of waiver requests; the waiver rule has not
been subsequently amended to require a hearing.  See 24 Tex. Reg. 5525-26 (1999);40 Tex. Admin.
Code Ann. §19.2322(e)(6) (West 2001).
	Also, to the extent that ElderCare is claiming a statutory right to judicial review under
section 2001.171 of the APA, we have repeatedly held that this section is a procedural provision that
does not confer independent subject matter jurisdiction on the district court.  Carrizales v. Texas
Dep't of Protective and Regulatory Servs., 5 S.W.3d 922, 924 (Tex. App.--Austin 1999, pet.
denied).  Finally, with regard to ElderCare's argument that it was not afforded any due process, we
note that ElderCare does not contend that DHS adopted the waiver rule without complying with the
rulemaking sections of the APA.  ElderCare had an opportunity to voice its objections to the rule
before it was adopted and failed to do so.  We overrule ElderCare's third issue.  



Validity of the Special Commissioner's Waiver
	In its second issue, ElderCare urges that summary judgment should have been denied
because DHS failed to prove that the special commissioner's waiver rule is constitutionally valid,
or in the alternative, that a waiver was properly granted to Weslaco Nursing Center.  DHS counters
that the rule is constitutional and that ElderCare has failed to identify any grounds that would entitle
it to review of the nursing center's waiver.  We agree.
	ElderCare challenges the rule via a declaratory judgment action under section
2001.038 of the APA, which provides that the "validity or applicability of a rule . . . may be
determined in an action for declaratory judgment if it is alleged that the rule or its threatened
application interferes with or impairs, or threatens to interfere with or impair, a legal right or
privilege of the plaintiff."  Tex. Gov't Code Ann. § 2001.038.  The terms "validity" and
"applicability" have not been precisely defined in the APA.  See Ronald L. Beal, Texas
Administrative Practice & Procedure § 12.1 (1997).  A validity challenge tests a rule on procedural
and constitutional grounds.  See Railroad Comm'n v. Arco Oil & Gas Co.,876 S.W.2d 473, 477
(Tex. App.--Austin 1994, writ denied).  In contrast, an applicability challenge does not question the
overall validity of a rule, "but supplies the petitioner with the opportunity to obtain a judicial
declaration of the application of an existing administrative rule to his particular fact situation."  See
Bob E. Shannon & James B. Ewbank, II,  The Texas Administrative Procedure And Texas Register
Act Since 1976--Selected Problems, 33 Baylor L. Rev. 393,421 (1981).  Here ElderCare does not
contest the grant or denial of a special commissioner's waiver as applied to its own facility; instead
it challenges DHS's application of the waiver rule to Weslaco Nursing Center, a competing nursing
home.  ElderCare argues that the commissioner failed to adhere to the waiver rule's criteria in
granting the waiver to Weslaco Nursing Center, thus the nursing center's waiver is void.  Because
ElderCare is not asking the court to determine whether the waiver rule was properly applied to it, but
instead to a third party, we will confine our analysis to whether the rule is constitutionally valid.
	Citing our decision in Christian Care, ElderCare argues that DHS has no statutory
authority to waive its contracting and control procedures, and that the waiver is not reasonable or
necessary in light of the HOA exception to the moratorium.  Christian Care, 826 S.W.2d at 719. 
ElderCare correctly states that DHS has only those powers expressly granted it by statute, together
with those necessarily implied from the authority conferred or duties imposed.  Id.  DHS counters
that the statute expressly grants it the power to establish procedures for controlling the number of
Medicaid beds in nursing facilities.	
	We conclude that DHS has at least implied authority to adopt the waiver rule.  Under
a general grant of authority, an agency has all the implied authority reasonably necessary to
accomplish a delegated purpose.  Id.  Section 32.021(c) of the human resources code expressly grants
DHS rulemaking authority as necessary for the administration of the Medicaid program.  Tex. Hum.
Res. Code Ann. § 32.021(c) (West 2001).  Section 32.001 states that the purpose of the chapter is
to enable the state to provide medical assistance to needy individuals and to obtain all benefits
authorized under applicable federal programs.  Id. § 32.001.  Section 32.002 requires that the chapter
be liberally construed "so that adequate and high quality health care be made available to all children
and adults who need the care and are not financially able to pay for it."  Id. § 32.002.  Section
32.0213(a), the source for the waiver rule, governs the allocation of Medicaid beds, providing: "The
department by rule shall establish procedures for:  (1) controlling the number of Medicaid beds in
nursing facilities; (2) decertification of unused Medicaid beds in nursing facilities; and (3)
reallocation of nursing home beds decertified under Subdivision (2) to other nursing facilities."  Id.
§ 32.0213(a). (7)  One of the legislative goals of section 32.0213 is to encourage competition among
Medicaid nursing homes.  Act of May 29, 1997, 75th Leg., R.S., ch. 1452, art. II, Tex. Gen. Laws
5548, 5695.  In addition, the stated benefit of the rule as proposed in the Texas Register is to make
additional Medicaid beds available in facilities providing high quality care.  23 Tex. Reg. 2257
(1998).
	A key factor in determining whether a rule is within an agency's implied authority
is whether the rule harmonizes with the general objectives of the statute.  Gerst v. Oak Cliff Sav. &
Loan Ass'n, 432 S.W.2d 702, 706 (Tex. 1968); Christian Care, 826 S.W.2d at 721.  The special
commissioner's waiver rule authorized by section 32.0213 allows the commissioner to waive the
moratorium and contract for beds with a licensed Medicaid nursing home that can satisfy the five
criteria set forth in the rule.  40 Tex. Admin. Code § 19.2322(e)(6). (8)  To receive a waiver, the nursing
home must satisfy all five criteria, which include documenting an immediate need for Medicaid beds
and documenting problems with the existing quality of care in the community.  Id.  In addition, the
nursing home must complete construction of facilities and licensing within two years of receiving
the waiver.  Id.  Our examination of the waiver rule leads us to conclude that the rule harmonizes
with the general objectives of the statute by controlling the availability of beds while ensuring that
the needs of Medicaid patients are met.  In addition, the rule harmonizes with the Legislature's stated
intent to increase competition among Medicaid facilities.  We agree with DHS that the Legislature
was not required to expressly outline the standards for granting a waiver in the enabling act.  To
require the Legislature to "include every detail and anticipate unforeseen circumstances in the
statutes which delegate authority . . . would defeat the purpose of delegating legislative authority." 
Railroad Comm'n v. Lone Star Gas Co., 844 S.W.2d 679, 689 (Tex. 1992). 
	Furthermore, we also agree with DHS that the waiver rule's five criteria provide
sufficient guidance to applicants and the commissioner and the rule is not, as ElderCare urges,
unconstitutionally vague.  ElderCare contends that the rule allows the commissioner "unbridled
discretion" to grant or deny the waiver "without reference to any guiding principles."  In support of
this contention, ElderCare cites cases dealing with rules or ordinances that contained little or no
criteria.  For example, Spann v. City of Dallas involved a developer who successfully challenged a
city ordinance that listed no criteria for the design of commercial buildings, leaving it solely to a
building inspector's discretion.  235 S.W. 513, 517 (Tex. 1921).  In Railroad Commisson v. Shell
Oil Co., Shell challenged a permit issued under a Railroad Commission exception to the well spacing
rule, the purpose of which was to prevent waste or confiscation of property.  161 S.W.2d 1022, 1024-27 (Tex. 1942).  The Shell court held the rule was arbitrary and capricious because there were no
criteria to guide the commissioner in deciding whether an exception was necessary to achieve this
purpose.  Id.  Similarly, in Texas Antiquities Committee v. Dallas County Community College
District, the supreme court struck down a statute in the Antiquities Code that failed to provide any
standards for what types of buildings could be preserved because of "historical interest."  554
S.W.2d 924, 927-28 (Tex. 1977).
	By contrast, the waiver rule provides five detailed criteria to guide the commissioner
and applicants in the waiver process.  See 40 Tex. Admin. Code § 19.2322(e)(6).  An applicant must
(1) document a crisis and immediate need for Medicaid beds, (2) document problems with the quality
of care available in the community, (3) demonstrate that Medicaid residents do not have a reasonable
access to quality nursing care, (4) document strong community support, and 5) demonstrate a history
of quality of care. (9) Id. 
	Rules are presumed valid and the burden of demonstrating their invalidity is on the
challenging party.  Browning-Ferris, Inc. v. Texas Dep't of Health, 625 S.W.2d 764, 767 (Tex.
App.--Austin 1981, writ ref'd n.r.e.).  A rule violates due process "if it requires the doing of an act
so vague that persons of common intelligence must guess at its meaning and differ as to its
application."  Id. at 765 (citing Texas Liquor Control Bd. v. Attic Club, 457 S.W.2d 41 (Tex. 1970)). 
As DHS points out, Texas courts confronted with vagueness challenges have upheld standards as
minimal as "not worthy of the public confidence," "grossly unprofessional conduct," and
"encourages misrepresentation."  Id. at 767; see also Key W. Life Ins. Co. v. State Bd. of Ins., 350
S.W.2d 839, 845 (Tex. 1961) ("encourages misrepresentation").  The special commissioner's waiver
rule identifies "a range of considerations" in its five detailed criteria that the commissioner must
review in determining whether to grant a waiver.  Browning-Ferris, 625 S.W.2d at 768.  Thus, we
agree with DHS that the waiver rule is sufficiently detailed and hold that the rule is not
unconstitutionally vague.
	Finally, ElderCare complains that the granting of the waiver to Weslaco Nursing
Center was in reality an amendment of the moratorium rule, and thus DHS should have adhered to
the notice and comment provisions in the rulemaking sections of the APA.  As DHS points out,
ElderCare does not contend that the waiver rule was not promulgated in accordance with the APA. 
The waiver rule was the subject of negotiated rulemaking sessions, a public hearing, and was
published in the Texas Register.  23 Tex. Reg. 2257-63 (1998), adopted 23 Tex. Reg. 5450 (1998),
(codified at 40 Tex. Admin. Code §19.2322(e)(6)).  ElderCare has cited no authority for why each
individual grant of the waiver should require a new round of notice and comment under the APA,
and we reject this argument.
	In sum, we hold that DHS acted within its authority in adopting the special
commissioner's waiver rule and that the rule is not unconstitutionally vague.  Therefore, we overrule
ElderCare's second issue. (10) 
CONCLUSION
	We conclude that DHS proved as a matter of law that ElderCare does not have a right
to a contested case hearing or an inherent right to judicial review based on a vested property right. 
We further hold that DHS proved as a matter of law that it acted within its authority in adopting the
special commissioner's waiver rule and that the rule is valid and not unconstitutionally vague. 
Accordingly, summary judgment was appropriate and the judgment of the trial court is affirmed.


  
					David Puryear, Justice
Before Justices Kidd, B. A. Smith and Puryear
Affirmed
Filed:   December 6, 2001
Publish
1.        Tex. Gov't Code Ann. §§ 2001.001-.902 (West 2000 & Supp. 2001).  For convenience we cite
to current statutes and administrative rules when there has been no substantive change to the relevant
provision since the time the cause of action arose.
2.        In its pleadings and appellate brief ElderCare states that it operates 142 Medicaid beds;
however, an affidavit attached to its original petition indicates that it increased its number of
Medicaid beds to 147 in November 1998.
3.        The occupancy rate is defined as the number of residents occupying certified Medicaid beds,
divided by the number of existing certified Medicaid beds in a county or designated county
commissioner precinct in the four most populated counties in the state.  See 40 Tex. Admin. Code 
§19.2324(a)(3).
4.        The vested property right test has two prongs.  First ElderCare must show that the agency has
deprived it of a vested property right; if it satisfies the first prong, the inquiry becomes whether due
process was afforded ElderCare at the agency level. Pickell v. Brooks, 846 S.W.2d 421, 426 (Tex.
App.--Austin 1992, writ denied).  Because we conclude ElderCare does not have the vested rights
it claims, we need not reach the second prong.
5.        ElderCare also claims a vested right in its reputation which it contends was damaged by DHS's 
implied finding of "no reasonable access to quality care"--one of the waiver criteria.  For this
argument, ElderCare cites Martine v. Board of Regents, 578 S.W.2d 465 (Tex. Civ. App.--Tyler
1979, no writ).  However, Martine held only that a university professor has a vested right in his
tenure and its discussion relating to reputation was dicta.  Regardless, the harm ElderCare claims to
its reputation is too indirect to confer a vested right.
6.        ElderCare claims that Texas Government Code sections 531.022(a) and 531.022(b)(6) require
DHS to develop a statewide plan for nursing facilities; however these provisions also apply only to
the Health and Human Services Commission.  See Tex. Gov't Code Ann. §§ 531.022(a), (b)(6).
7.      	The remainder of section 32.0213 provides:

(b)	The procedures established under this section must take into account the occupancy
rate of the nursing facility.

(c)	The department may exempt a nursing facility from the procedures established
under this section if the facility:

	(1)	is affiliated with a state-supported medical school;

	(2)	is located on land owned or controlled by the state-supported medical school;
and

	(3)	serves as a teaching facility for physicians and related health care professionals.

Tex. Hum. Res. Code. Ann. § 32.0213 (West 2001).

         ElderCare contends that because Weslaco Nursing Center's waiver does not fall within one of
the exemptions listed in 32.0213(c), it is void.  Section 32.0213(c) provides that DHS "may" exempt
the facilities listed; it does not prohibit DHS from granting additional exemptions pursuant to its duty
to control Medicaid beds.  In addition to the waiver rule, there are nine other exceptions to the
moratorium rule, only some of which are listed in the statute.  See 40 Tex. Admin. Code
§ 19.2322(e)(1)-(9); 19.2324.  Notably, the HOA rule that ElderCare favors is not listed in the
statute.  Moreover, section 32.0213(c) was added in 1999 and became effective after ElderCare filed
its original petition on June 7, 1999; it did not apply at the time the claim arose.  See Act of May 30,
1999, 76th Leg. R.S., ch. 1487, §1, sec. 32.0213, 1999 Tex. Gen. Laws 5133.
8.      	The relevant portions of section 19.2322(e)(6) provide:

Special commissioner's waiver.

(A)	The commissioner of DHS has authority to waive the restriction on contracting in
subsection (c) of this section and direct DHS to enter into Medicaid contracts with
NFOs [nursing facility operator] that satisfy the requirements specified in this
subparagraph. In a manner acceptable to DHS, each of these NFOs must:

	  (i)	document that there is a crisis and immediate need for additional Medicaid
nursing-facility beds in the NFO's community;

	 (ii)	document that there are problems with the quality of care available in the
NFO's community, and show that new Medicaid beds will remedy these
problems;

	(iii)	demonstrate that Medicaid residents in their community do not have
reasonable access to quality nursing facility care;

	(iv)	document strong community support for a new Medicaid nursing facility; and 

	 (v)	demonstrate a history of quality care as specified in subsection (d) of this
section.  An applicant that has not owned or operated a nursing facility may
apply . . . .
9.        "Quality of care" is defined as an absence of serious Medicaid or licensing sanctions on the
facility.  See 40 Tex. Admin. Code § 19.2322(d) (2001); see also 23 Tex. Reg. 2258 (1998).
10.        ElderCare also appeals on the ground that the trial court erred in granting summary judgment
as a matter of law because DHS failed to meet its burden of proving that there were any
circumstances under which ElderCare could be entitled to relief.  We overrule this issue because it
encompasses ElderCare's other three issues and does not present us with anything new to consider. 

