Affirm; Opinion Filed October 2, 2019




                                                                   In The
                                           Court of Appeals
                                    Fifth District of Texas at Dallas
                                                        No. 05-18-00239-CV

              BARBARA STEGALL, INDIVIDUALLY, AND ON BEHALF OF
                     THE ESTATE OF JOE STEGALL, Appellant
                                      V.
           TML MULTISTATE INTERGOVERNMENTAL EMPLOYEE BENEFITS
                      POOL, INC., AND UMR, INC., Appellees

                                  On Appeal from the County Court at Law No. 4
                                              Dallas County, Texas
                                      Trial Court Cause No. CC-16-05440-D

                                           MEMORANDUM OPINION
                          Before Justices Whitehill, Partida-Kipness, and Pedersen, III
                                        Opinion by Justice Pedersen, III
          Members of this Court are vested with the authority to interpret the law; we possess
          neither the expertise nor the prerogative to make policy judgments. Those decisions
          are entrusted to our . . . elected leaders, who can be thrown out of office if the people
          disagree with them. It is not our job to protect the people from the consequences of
          their political choices.1

          This is an appeal of the trial court’s orders granting the partial plea to the jurisdiction filed

by appellee TML Multistate Intergovernmental Employee Benefits Pool, Inc. and the first

amended plea to the jurisdiction2 filed by appellee UMR, Inc. Appellant Barbara Stegall,

Individually, and on behalf of the Estate of Joe Stegall, asserts that the trial court erred in granting



   1
       Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 538 (2012) (Chief Justice Roberts, for a majority of the Court).
   2
       The trial court’s order states that it “hereby GRANTS the UMR, Inc.’s Plea (and First Amended Plea) to the Jurisdiction.”
appellees’ pleas to the jurisdiction. In a single issue, she contends that appellees have no

governmental immunity because her claims pertain to appellees’ proprietary functions, not their

governmental functions. We affirm.

                                       BACKGROUND

       The suit underlying this appeal is a health benefits coverage dispute. Joe Stegall worked as

the Chief Financial Officer for the city of Royse City, Texas. As a city employee, he was eligible

for, and participated in, the city’s medical and prescription drug benefits provided by TML

Multistate Intergovernmental Employee Benefits Pool, Inc. (TML). TML is an intergovernmental

self-insurance risk pool that operates under the Texas Interlocal Cooperation Act. See TEX. GOV’T

CODE ANN. §§ 791.001, 791.011. UMR, Inc. (UMR) is one of TML’s third-party administrators.

       In May 2014, Mr. Stegall was diagnosed with bile duct cancer and liver cancer. His

oncologist advised him to begin treatment immediately, using a combination of chemotherapy

medications specifically targeting bile duct cancer. The oncologist stated that once he saw how

Mr. Stegall responded to the first chemotherapy regimen, additional chemotherapy would be added

to treat the liver cancer. Based on Mr. Stegall’s positive response to the first chemotherapy

regimen, on October 23, 2014, his oncologist prescribed sorafenib (brand name Nexavar), an FDA-

approved drug designed to increase survival rates and life expectancy for patients with advanced

liver cancer.

       TML and UMR initially denied coverage for Nexavar for Mr. Stegall. When the oncologist

sought clarification, he learned that the TML and/or UMR medical representative did not believe

that Mr. Stegall actually had liver cancer. Mr. Stegall’s oncologist attempted to procure Nexavar

through other sources. However, when TML learned of these attempts, a TML representative

called Mr. Stegall’s oncologist to warn that TML would consider terminating Mr. Stegall’s health

benefits coverage if Mr. Stegall took Nexavar without TML’s authorization. On November 21,
2014, Mr. Stegall and his oncologist learned that TML had reversed its position and would provide

coverage for Nexavar. Unfortunately, Mr. Stegall died several weeks later.

       Barbara Stegall, individually, and on behalf of the estate of her deceased husband, sued

TML and UMR for wrongful denial of medical benefits and additional acts of interference with

the decedent’s access to prescribed chemotherapy. Stegall brought suit under tort and contract

theories. TML and UMR filed general denials and, as to the tort claims, both filed pleas to the

jurisdiction on grounds of governmental immunity. After separate hearings, the trial court granted

both pleas to the jurisdiction, leaving only Stegall’s breach of contract claims against TML. Stegall

voluntarily nonsuited her breach of contract claims against TML and filed a motion for new trial.

After her new trial motion was overruled by operation of law, Stegall filed this appeal.

                                          DISCUSSION

       Stegall contends that the trial court erred in granting appellees’ pleas to the jurisdiction.

She does not argue that this is a case in which governmental immunity was waived. Instead, she

argues that governmental immunity never existed because appellees’ claims-adjusting activities,

including improperly denying coverage, attempting to intimidate Mr. Stegall into foregoing

chemotherapy, threatening Mr. Stegall’s future coverage, and later reversing their position on

coverage without notifying Mr. Stegall of their decision, were proprietary—not governmental—

functions.

Plea to the Jurisdiction

       In their pleas to the jurisdiction, TML and UMR argued that they had governmental

immunity from Stegall’s suit. An assertion of governmental immunity implicates a court’s subject

matter jurisdiction, and such immunity is properly asserted in a plea to the jurisdiction. Harris Cty.

v. Annab, 547 S.W.3d 609, 612 (Tex. 2018). The existence of subject matter jurisdiction is a

question of law, and we review the trial court’s ruling on a plea to the jurisdiction de novo. See
id.; see also City of Dallas v. E. Vill. Ass’n, 480 S.W.3d 37, 42 (Tex. App.—Dallas 2015, pet.

denied).

       A plea to the jurisdiction can be based on the pleadings or on the evidence. Tex. Dep’t of

Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004); City of Dallas v. Turley, 316

S.W.3d 762, 767 (Tex. App.—Dallas 2010, pet. denied). When a plea to the jurisdiction challenges

the pleadings, we determine if the pleader has alleged facts that affirmatively demonstrate the

court’s jurisdiction to hear the case. Miranda, 133 S.W.3d at 226, 228. We look to the allegations

in the pleadings, construe them in the plaintiff’s favor, and look to the pleader’s intent. See Cty. of

Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002); Peek v. Equip. Serv. Co., 779 S.W.2d 802,

804 (Tex. 1989). The plaintiff bears the burden to allege facts that affirmatively demonstrate the

trial court’s jurisdiction to hear a case. Miranda, 133 S.W.3d at 226–27; Turley, 316 S.W.3d at

767.

       When a plea to the jurisdiction challenges the existence of jurisdictional facts, we consider

relevant evidence submitted by the parties to determine if a fact issue exists. Miranda, 133 S.W.3d

at 227. The standard of review for a jurisdictional plea based on evidence “generally mirrors that

of a summary judgment under Texas Rule of Civil Procedure 166a(c).” Id. at 228.

Immunity

       Sovereign immunity and governmental immunity are related common law doctrines that

protect the government from suit. Hughes v. Tom Green Cty., 573 S.W.3d 212, 218 (Tex. 2019).

“Sovereign immunity protects the state and its various divisions, such as agencies and boards, from

suit and liability, whereas governmental immunity provides similar protection to the political

subdivisions of the state, such as counties, cities, and school districts.” Travis Cent. Appraisal Dist.

v. Norman, 342 S.W.3d 54, 57–58 (Tex. 2011) (citing Wichita Falls State Hosp. v. Taylor, 106

S.W.3d 692, 694 n.3 (Tex. 2003)). Governmental immunity encompasses both immunity from suit
and immunity from liability. Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371, 374 (Tex.

2006); Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). Immunity from suit completely

bars actions against governmental entities unless the Legislature expressly consents to suit. Tooke,

197 S.W.3d at 332.

Does TML have governmental immunity?

       To answer this question, we first determine whether TML is a governmental entity. The

Texas Legislature has expressly authorized groups of political subdivisions to enter into interlocal

agreements to establish risk pools to provide health benefits coverage for their officials and

employees. TEX. LOC. GOV’T CODE ANN. § 172.004(a); see also TEX. GOV’T CODE ANN.

§§ 791.001, 791.011, 2259.031(a). Under the Texas Interlocal Cooperation Act, those political

subdivisions are empowered to contract with one another through interlocal agreements to pool

their resources and collectively self-insure against insurable risks and hazards. See TEX. GOV’T

CODE ANN. §§ 791.001, 791.011. TML is such a pool; it has over 900 members from more than

forty different types of political subdivisions, all participating in the risk pool to provide self-

insured health coverage for their officials, employees, and other relevant persons. See TML

Intergovernmental Emp. Benefits Pool v. Prudential Ins. Co. of Am., 144 S.W.3d 600, 603 (Tex.

App.—Austin 2004, pet. denied) (“The Pool was created to provide health benefits coverage to

employees of political subdivisions.”).

       “Many of our courts of appeals have considered self-insurance pools, though composed of

political subdivisions, to be distinct governmental entities apart from their membership.” Ben Bolt-

Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions Prop./Cas. Joint Self-Ins.

Fund, 212 S.W.3d 320, 326 (Tex. 2006) (internal citations omitted). The Ben Bolt case involved a

self-insurance fund composed of several political subdivisions that was sued by a fund member

after the fund denied a claim for benefits. Id. at 322. The court looked to the governing statutory
authority to determine whether the Legislature intended that the fund have discrete governmental-

entity status. Id. at 324–26. The court concluded that the fund was a governmental entity in its own

right and was entitled to immunity on equal footing with its constituent members. Id. at 326. In so

holding, the court identified several indicia of legislative intent in the Texas Interlocal Cooperation

Act and the Texas Government Code’s self-insurance provisions. Under the Interlocal Cooperation

Act’s special definitions, the fund was a “local government.” Id. at 324–25 (citing TEX. GOV’T

CODE § 791.003(4)(A), (E)). The Act also “expressly authorized combinations of political

subdivisions,” like the fund, “to perform government functions and services,” which were defined

as including any “governmental functions in which the contracting parties are mutually interested.”

Id. at 324–25 (citing TEX. GOV’T CODE §§ 791.003(3)(N), .003(4)(E), .011(a)).

       In Rosenberg Development Corporation v. Imperial Performing Arts, Inc., 571 S.W.3d 738

(Tex. 2018), the Texas Supreme Court discussed its analysis in the Ben Bolt case, stating “[w]e

noted that local governments have an interest in guarding against risk and the Legislature explicitly

authorized political subdivisions to combine to provide self-insurance and ‘use available money

to finance a self-insurance pool’ ‘as a ‘public purpose’ of the governmental unit.’” Id. at 749.

Applying the analysis of Ben Bolt and Rosenberg to TML, we conclude that TML’s “nature,

purposes, and powers” demonstrate legislative intent that it exist as a distinct governmental entity

entitled to assert immunity in its own right. See Ben Bolt, 212 S.W.3d at 326; Rosenberg, 571

S.W.3d at 749.

       Having resolved that TML is a distinct governmental entity, we next determine whether

the Legislature expressly waived that immunity. It is the province of the Legislature to consent to

a suit against a governmental entity. Ben Bolt, 212 S.W.3d at 326. “We have consistently deferred

to the Legislature to waive sovereign immunity from suit, because this allows the Legislature to

protect its policymaking function.” Tex. Nat. Res. Conservation Comm’n v. IT–Davy, 74 S.W.3d
849, 854 (Tex. 2002). Immunity is waived only by clear and unambiguous language. Tooke, 197

S.W.3d at 328–29. The government code expressly states: “The establishment and maintenance of

a self-insurance program by a governmental unit is not a waiver of immunity or of a defense of the

governmental unit or its employees.” TEX. GOV’T CODE § 2259.002 (emphasis added). It further

provides: “The issuance of a public security or the use of available money for a self-insurance fund

under this subchapter is a public purpose of the governmental unit.” Id. § 2259.032. “Because

immunity from suit protects the public coffers, ‘the claims process is tied to the appropriations

process, and the priorities that guide the latter should also inform the former.’” Ben Bolt, 212

S.W.3d at 326 (quoting Tooke, 197 S.W.3d at 332).

       In Ben Bolt, the Texas Supreme Court concluded that given the fund’s governmental

immunity shield, Ben Bolt’s claims were barred absent a waiver of that immunity. Id. at 326. We

likewise conclude that in light of TML’s governmental immunity shield, Stegall’s claims are

barred absent a waiver of that immunity. See id.

Governmental/Proprietary Function Dichotomy

       Stegall does not contend that TML’s governmental immunity has been waived. Instead,

she argues that TML’s governmental immunity is not absolute and extends only to TML’s

performance of governmental functions and not to its performance of proprietary functions. Stegall

contends that TML’s governmental functions are limited to the establishment and maintenance of

the risk pool. She insists that TML’s claims-adjusting activities are proprietary functions for which

TML had no immunity. TML and UMR respond that the governmental/proprietary distinction on

which Stegall bases her argument only applies to municipalities and does not apply to the risk pool

as a matter of law.

       Stegall’s argument is based on her interpretation of two recent Texas Supreme Court

opinions, Wasson Interests, Ltd. v. City of Jacksonville, 489 S.W.3d 427 (Tex. 2016) (Wasson I)
and Wasson Interests, Ltd. v. City of Jacksonville, 559 S.W.3d 142 (Tex. 2018) (op. on rehearing)

(Wasson II). She argues that these opinions overturn the long-established distinction under Texas

law between immunity of municipalities and immunity of other political subdivisions of the state.

We do not agree that either Wasson opinion supports this conclusion.

       Wasson I and Wasson II involve a dispute between a tenant and City of Jacksonville over

lakefront property owned by the city. In Wasson I, the Texas Supreme Court stated, “we have long

held that ‘[a] municipality is not immune from suit for torts committed in the performance of its

proprietary functions, as it is for torts committed in the performance of its governmental

functions.’” Wasson I, 489 S.W.3d at 430 (quoting Tooke, 197 S.W.3d at 343). The court held that,

as a matter of first impression, the governmental/proprietary distinction applies in the contract-

claims context just as it does in the tort-claims context. Id. at 439. The court only addressed the

governmental/proprietary distinction as it applies to municipalities and, indeed, confirmed that it

only applies to municipalities. See id. at 430 n.3 (“In practice—because of the governmental nature

of counties and school districts—this distinction only applies to municipalities.”).

       In Wasson II, the court considered whether the contract claim arose from the municipality’s

performance of a governmental or proprietary function. 559 S.W.3d at 148. The court held that the

municipality was engaged in a proprietary function when it leased its lakefront lots to Wasson, and

thus governmental immunity did not bar Wasson’s claim that the city breached those leases. Id. at

154. After careful consideration, we conclude that Wasson I and Wasson II did not expand

application of the governmental/proprietary dichotomy to political subdivisions other than

municipalities.

       The Texas Supreme Court specifically addressed this issue in Guillory v. Port of Houston

Authority, 845 S.W.2d 812 (Tex. 1993), in refusing to extend the proprietary function immunity

limitation to non-municipal governmental subdivisions. Guillory, the plaintiff, argued that because
municipalities are not immune from liability for their proprietary actions, other subdivisions of

government, such as a non-municipal port authority, should likewise not be immune from liability

for their proprietary actions. 845 S.W.2d at 814–15. The Texas Supreme Court rejected Guillory’s

argument for several reasons. It reasoned that the limitation on immunity which Guillory sought

had the same effect as a waiver, which remains a matter for the Legislature. Id. at 814. The court

noted that the Legislature had assumed such an undertaking for municipalities, classifying

proprietary and governmental activities, and waiving immunity for the former. Id. The court

distinguished between municipalities, created by consent of their inhabitants, and governmental

units such as the non-municipal port authority, created by the Legislature for general public

purposes, that are “entirely governmental in function.” The court acknowledged that “applying

immunity based upon the creation of the governmental unit instead of its function results in certain

anomalies and inconsistencies.” Id. Nevertheless, the court declined to apply the proprietary

function immunity limitation to a non-municipal port authority, and it noted that “one

governmental unit cannot be denied the immunity to which it would otherwise be entitled simply

because the Legislature has waived immunity for another governmental unit.” Id. at 815.

       Here, we have concluded that TML is a distinct governmental entity entitled to assert

immunity in its own right. We have also determined that the Legislature intended for such funds

to perform governmental functions and services. And the Legislature did not expressly waive or

limit governmental immunity for such funds. Therefore, we reject Stegall’s argument that the

governmental/proprietary distinction should apply to TML.

Does UMR have governmental immunity?

       With respect to UMR, Stegall asserts that as a private entity, UMR has no immunity of its

own. Therefore, according to Stegall, because TML has no immunity for this suit, there can be no
derived immunity for UMR. Alternatively, Stegall argues that even if TML has government

immunity, the same immunity cannot be extended to UMR.

       In response, UMR asserts that TML is entitled to immunity and as its third-party

administrator, UMR is entitled to the same immunity. UMR contends that Foster v. Teacher

Retirement System, 273 S.W.3d 883 (Tex. App.—Austin 2008, no pet.), supports its argument that

a third-party administrator for a governmental plan enjoys the same immunity from suit and

liability. Id. at 889–90. In Foster, Aetna was the administrator of a plan maintained by the Teachers

Retirement System (TRS) for its eligible employees. Id. at 890. Aetna was not the insurer of the

plan, and it only provided administrative services to TRS. The court determined that Aetna was

functioning as an agent for TRS and in a fiduciary capacity for the benefit of the State; therefore,

“TRS’s immunity should protect Aetna from liability as well.” Id.

       Other Texas courts agree that third-party administrators for government health plans,

including municipal plans, are immune from suit and liability. See United Healthcare Choice Plus

Plan for City of Austin Employees v. Lesniak, No. 03-15-00309-CV, 2015 WL 7951630, at *3

(Tex. App.—Austin Dec. 1, 2015, pet. denied) (mem. op.) (reversing trial court’s denial of plea to

jurisdiction because the city and its plan administrator were entitled to governmental immunity);

Humana Ins. Co. v. Mueller, No. 04-14-00752-CV, 2015 WL 1938657, at *2–5 (Tex. App.—San

Antonio Apr. 29, 2015, pet. denied) (mem. op.) (Humana, third-party administrator of self-funded

health care plan, was entitled to same sovereign immunity from suit as San Antonio Housing

Authority); McAllen Anesthesia Consultants, P.A. v. United Healthcare Servs., Inc., No. 7:14-CV-

913, 2015 WL 9257154, at *8 (S.D. Tex. Dec. 14, 2015) (immunity extended to third-party

administrator of health insurance plan for Employees Retirement System of Texas (ERS) because,

among other reasons, final decisions on benefit payments rested with ERS).
        Here, UMR is a third-party administrator for TML. According to the record, UMR is not

an insurer and does not guarantee any benefits under the plan. According to plan documents,

employer members—local and state governmental units—were responsible for funding TML plan

benefits, not UMR. UMR provides administrative services to assist TML in facilitating the

provision of health care benefits under the plan. The plan is self-funded, and UMR has no financial

stake in whether claims are approved or denied. There is no dispute that TML makes the final

decision on denying claims for benefits under the plan. Based on this record, we conclude that

UMR, as TML’s third-party administrator, has the same governmental immunity as TML. See

Foster, 273 S.W.3d at 889–90.

        Because we have already concluded that TML has governmental immunity, we also

conclude that UMR has governmental immunity with respect to Stegall’s claims.

                                          CONCLUSION

        This case presents an emotional and tragic scenario in which we are asked to ignore the

governmental immunity enjoyed by TML and UMR. However, this Court, like the U.S. Supreme

Court in National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012), must apply

the law, and mandatory authority interpreting such law, to effectuate the Legislature’s intent. See

TEX. GOV’T CODE §§ 791.003(3)(N), .011(a); Ben Bolt, 212 S.W.3d at 326. Accordingly, we affirm

the trial court’s orders granting appellees’ pleas to the jurisdiction.



                                                     /Bill Pedersen, III/
                                                     BILL PEDERSEN, III
                                                     JUSTICE


Partida-Kipness, J., dissenting

180239F.P05
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                       JUDGMENT

 BARBARA STEGALL, INDIVIDUALLY,                     On Appeal from the County Court at Law
 AND ON BEHALF OF THE ESTATE OF                     No. 4, Dallas County, Texas
 JOE STEGALL, Appellant                             Trial Court Cause No. CC-16-05440-D.
                                                    Opinion delivered by Justice Pedersen, III.
 No. 05-18-00239-CV          V.                     Justices Whitehill and Partida-Kipness
                                                    participating.
 TML MULTISTATE
 INTERGOVERNMENTAL EMPLOYEE
 BENEFITS POOL, INC., AND UMR,
 INC., Appellees

     In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.

       It is ORDERED that appellees TML MULTISTATE INTERGOVERNMENTAL
EMPLOYEE BENEFITS POOL, INC., AND UMR, INC. recover their costs of this appeal from
appellant BARBARA STEGALL, INDIVIDUALLY, AND ON BEHALF OF THE ESTATE OF
JOE STEGALL.


Judgment entered this 2nd day of October, 2019.
