
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN





NO. 03-04-00662-CV


United Independent School District and Shirley J. Neely, Commissioner,
Texas Education Agency, Appellants

v.

Ann Whitehawk, Appellee





FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
NO. GN202020, HONORABLE JOHN K. DIETZ, JUDGE PRESIDING


M E M O R A N D U M   O P I N I O N


	This is an administrative appeal from a decision by the Commissioner, Texas
Education Agency, denying the appeal of Ann Whitehawk's grievance against her employer, United
Independent School District (UISD). (1) See Tex. Educ. Code Ann. § 7.057(d) (West 1996 & Supp.
2005).  In her grievance, Whitehawk complained that UISD had violated district policy by reducing
its monthly contribution to her health insurance premiums under the district's group plan to less than
90 percent of the monthly premium.  UISD and then the Commissioner denied Whitehawk's
grievance, but the district court reversed, finding that the Commissioner's decision was not
supported by substantial evidence and was arbitrary and capricious.  We will reverse the district
court and reinstate the Commissioner's decision. 

BACKGROUND

	As the district court observed, the administrative record in this proceeding is not a
model of clarity.  It is unclear, at best, concerning several pivotal events underlying Whitehawk's
grievance.  We can glean the following salient facts, however.
	In 1993, UISD adopted Board Policy CRD (Local), which reserves to the UISD Board
the authority to determine the school district's contribution to employees' health insurance premiums
on an annual basis:

DISTRICT CONTRIBUTION	The Board annually shall determine its contribution
to employees' health insurance premiums as part of
the employee contribution and benefits system
approved in the budget development and adoption
process . . . .


The parties agree that this official Board policy is a term of Whitehawk's employment contract.  See
Perry v. Houston I.S.D., 902 S.W.2d 544, 547 (Tex. App.--Houston [1st Dist.] 1995, writ dism'd
w.o.j.).  This policy remained in effect at all times relevant to this appeal.  
	On August 3, 1999, UISD's director of risk management sent a letter to the district's
principals, department managers, and administrators notifying them of changes in the district's group
health insurance plan.  The letter announced that UISD was switching health insurance carriers from
Humana to Trustmark, and enclosed a schedule of informational meetings and enrollment sessions
throughout the district, an election form, and comparisons between the current Humana plan and two
coverage plans to be offered by Trustmark, a "High Plan" and a "Basic Plan."  According to these
materials, the High Plan provided benefits comparable to the Humana Plan but at a higher premium,
$198.49 per month for employee-only coverage and $502.93 per month for employee and family
coverage, as compared to Humana's monthly premiums of $132.30 for employee-only coverage and
$333.22 for employee and family coverage.  The Basic Plan was closer in cost to the Humana
Plan--$134.60 per month for employee-only coverage and $341.02 for employee and family
coverage--but provided reduced benefits.
	The materials also indicated that UISD would contribute $121.37 toward the monthly
premium of any plan and coverage the employee selected, a slight increase from its previous year's
contribution of $119.07.  Dividing these figures into the premium amounts reveals that UISD would
have contributed exactly 90 percent of the premium amount under the Humana plan for employee-only coverage and slightly over 90 percent of the premium for employee-only coverage under the
Trustmark Basic Plan.  However, under the Trustmark High Plan, UISD's contribution of $121.37
represented slightly over 61 percent of the premium for employee-only coverage. 
	Ann Whitehawk, an art teacher at United High School, attended one of the
informational meetings on August 26, 1999, and learned of the changes in insurance benefits.  She
filed a Level One grievance complaining that neither Trustmark plan complied with the coverage
requirements of section 22.004 of the education code, (2) that the district was improperly cutting
benefits, and that UISD had provided inadequate notice of the changes.  She sought two forms of
relief: (1) the district should offer its employees a health insurance plan that meets or is comparable
to that required under section 22.004 of the education code; and (2) "[t]he district should continue
to pay 90% of the employee's [i]nsurance premiums as they agreed to do in the past," including
paying 90 percent of premiums for a plan comparable to the section 22.004 standards. (3)
	A subsequent October 11, 1999 memorandum from UISD's risk management director
represents that UISD added a third Trustmark coverage plan, a "State Plan," with coverages
comparable to the section 22.004 standards but at a premium higher than either the Basic or High
Plans.  The total monthly premium under the State plan was $265.54 for employee-only coverage
and $672.84 for employee and family coverage.  The materials reflected that, as was the case with
the two other Trustmark plans, UISD's contribution toward State Plan monthly premiums would be
$121.37, meaning that employees would absorb $144.17 per month for employee-only coverage and
$551.47 per month for family coverage.  In percentage terms, UISD's contribution would represent
approximately 46 percent of the monthly premium for employee-only coverage under the State Plan.
Whitehawk ultimately enrolled in the State plan.
	UISD thereafter denied Whitehawk's Level One grievance on the basis that it had
complied with section 22.004 by offering the State Plan, that it had no obligation to contribute 90
percent of employees' health insurance premiums, and that it had provided adequate notice of the
plan changes.  Whitehawk continued to press her grievance that she was legally entitled to have
UISD contribute 90 percent of the premium cost of the section 22.004-compatible State Plan.  After
the district denied both her Level Two grievance (to the UISD assistant superintendent for human
resources) and Level Three grievance (to the UISD board), she had exhausted her remedies with the
district.  She appealed the district's denial of her grievance to the Commissioner.  See Tex. Educ.
Code Ann. § 7.057(a) (West 1996 and Supp. 2005).
	A hearing was held before a Texas Education Agency administrative law judge.
Whitehawk urged that UISD had adopted a policy since 1991 of contributing 90 percent of employee
health insurance premium costs, that this policy was incorporated into her employment contract, and
that the district had breached the contract by contributing a lower percentage of the premium in the
1999-2000 school year.  UISD countered that, while it had contributed 90 percent of premium costs
in prior years, it had no year-to-year policy that it would continue making such contributions nor any
other obligation to do so in 1999.
	In reply, Whitehawk argued that there was no evidence in the administrative record
that the UISD board had ever acted under this written policy to officially change what Whitehawk
characterized as UISD's year-to-year de facto policy to contribute 90 percent of employee premium
costs.  While acknowledging the correspondence and materials referenced above concerning the new
Trustmark plans, Whitehawk characterized them merely as communications from subordinate district
employees, not evidence of official UISD board action.
	The Commissioner, adopting the ALJ's recommendations, denied Whitehawk's
appeal.  Whitehawk brought a suit for judicial review of the Commissioner's decision in the district
court.  See id. § 7.057(d).  The district court reversed the Commissioner's decision, finding that it
was not supported by substantial evidence and was arbitrary and capricious.  This appeal followed. 

DISCUSSION

	UISD and the Commissioner each appealed the district court's judgment. (4)  In UISD's
fourth issue on appeal and the Commissioner's third issue, they argue that the Commissioner's
decision denying Whitehawk's appeal of her grievance is supported by substantial evidence and is
not arbitrary and capricious.  These issues prove to be dispositive, and we need not reach the parties'
other issues.

Substantial evidence
 Standard of review
	When reviewing an agency decision under the "substantial evidence" standard, we
consider the reliable and probative evidence in the record as a whole.  Tex. Gov't Code Ann.
§ 2001.174(2)(E) (West 2004).  We may not substitute our judgment for that of the agency and may
only consider the record on which the agency based its decision. Stratton v. Austin Indep. Sch. Dist.,
8 S.W.3d 26, 30 (Tex. App.--Austin 1999, no pet.).  The issue before us is not whether the agency
reached the correct conclusion, but whether there is some basis in the record for its action.  See City
of El Paso v. Public Util. Comm'n, 883 S.W.2d 179, 185 (Tex. 1994); see also Texas Health
Facilities Comm'n v. Charter Med.-Dallas, Inc., 665 S.W.2d 446, 452 (Tex. 1984).  "Substantial
evidence does not mean a large or considerable amount of evidence, but rather 'such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion' of fact."
Lauderdale v. Department of Agric., 923 S.W.2d 834, 836 (Tex. App.--Austin 1996, no pet.)
(quoting Pierce v. Underwood, 487 U.S. 552, 564-65 (1988)).  We presume that the agency's
findings, inferences, conclusions, and decisions are supported by substantial evidence, and the
burden to prove otherwise is on the party challenging the decision.  Charter Med., 665 S.W.2d at
453; Stratton, 8 S.W.3d at 30.  If the agency offers more than one ground as the basis for its decision,
we will affirm if we find substantial evidence supporting one ground even if all bases given would
be independently sufficient to support the decision.  Texas State Bd. of Medical Exam'rs v. Scheffey,
949 S.W.2d 431, 436 (Tex. App.--Austin 1997, writ denied).  Finally, the agency's decision should
be reversed only if the party challenging the decision demonstrates that the absence of substantial
evidence has prejudiced that party's substantial rights.  See Locklear v. Texas Dep't of Ins., 30
S.W.3d 595, 597 (Tex. App.--Austin 2000, no pet.).

 Application
	Reflecting the apparent focus of the district court, the parties devote much of their
briefing to the question of whether the administrative record contains substantial evidence that the
UISD board took official action to change its percentage premium contribution for the 1999-2000
school year from the 90 percent rate it applied in previous years.  All of this is predicated on what
proves to be the controlling issue in this appeal, however: whether substantial evidence supports
the Commissioner's determination that UISD had no policy or other continuing obligation
requiring it to pay 90 percent of its employees' health insurance premiums during the 1999-2000
school year.  If UISD's prior practice of contributing 90 percent did not constitute a policy or other
obligation to continue doing so year-to-year, it is irrelevant whether there is substantial evidence of
official action to depart from that practice.
	In his decision, the Commissioner made findings of fact and conclusions of law. 
Several are related to Whitehawk's central contention that UISD was obligated to contribute 90
percent of her health insurance premiums during the 1999-2000 school year.  The Commissioner
found that the UISD board had voted in 1991 and 1993 to pay 90 percent of employees' health
insurance premiums and that "[f]rom May 1991 until August 1999, Respondent paid 90% of an
employee's health insurance premium."  He also found that UISD's policy provided, "the Board
annually shall determine its contribution to employees' health insurance premiums as part of the
employee contribution and benefits system approved in the budget development and adoption
process."  The Commissioner made the following conclusions of law:

2.	Respondent's votes in 1991 and 1993 to pay 90% of its employees' health
insurance premiums were votes to do so only for those years.

3.	Respondent's actions of paying 90% of its employees' health insurance
premiums for a number of years did not establish a board policy that required it
to pay 90% of its employees' health insurance premiums in future years. 

4.	Respondent did not have a policy for the 1999-2000 school year that required
it to pay 90% of its employees' health insurance premiums. 

Whitehawk challenged these conclusions of law as arbitrary and not supported by substantial
evidence.
	The record contains evidence that, in 1991 and 1993, the Board voted to set its
contribution rate at 90 percent.  On December 18, 1991, the Board adopted a motion "that the Board
pay 90% of the employee's health insurance premium."  On May 13, 1993, the Board voted to
approve a health insurance provider "with the clarification that the Board would pay 90% coverage
on all employees at UISD."  These votes were reflected in the Commissioner's findings.  The
Commissioner also found that UISD did, in fact, contribute 90 percent of employees' health
insurance premiums between the 1991-92 and 1998-99 school years.  Whitehawk contends that this
evidence establishes that the Board had a policy to continue this practice into the 1999-2000 school
year and "elected to follow previous decisions in the absence of a current year determination."
However, the Commissioner, concluding otherwise, reasoned that these votes and past practices
should be viewed in light of UISD's official Board Policy CRD (Local) that "The Board annually
shall determine its contribution to employees' health insurance premiums as part of the employee
compensation and benefits system approved in the budget development and adoption process."  
	Viewing these facts in context with Board Policy CRD (Local), there is substantial
evidence that UISD did not bind itself to a year-to-year policy to always pay 90 percent of its
employees' health insurance premiums but reserved the right to determine its percentage contribution
each year.  Therefore, in order for Whitehawk to have prevailed in her appeal to the Commissioner,
she would have had the burden to prove that the Board acted under Board Policy CRD (Local) to
adopt a 90 percent contribution for the 1999-2000 school year.  She did not attempt to do so, but
instead urges her argument only that the Board "elected inaction."  However, there is simply no
evidence in the record that the Board "elected inaction" for the 1999-2000 school year.  We thus
conclude that Whitehawk has failed to meet her burden to show a lack of substantial evidence
supporting the Commissioner's conclusion that UISD was not obligated to contribute 90 percent of
Whitehawk's health insurance premiums during the 1999-2000 school year.

Arbitrary and capricious
 Standard of review
 Agency decisions that are not supported by substantial evidence are deemed arbitrary
and capricious.  Public Util. Comm'n. v. Gulf States Util. Co., 809 S.W.2d 201, 211 (Tex. 1991). 
An agency decision is arbitrary when its final order denies parties due process of law or fails to
demonstrate a connection between the agency decision and the factors that are made relevant to that
decision by the applicable statutes and regulations.  Reliant Energy, Inc. v. Public Util. Comm'n, 153
S.W.3d 174, 184 (Tex. App.--Austin 2004, no pet.).  A court reviewing a decision for arbitrariness
should consider all relevant factors and may not substitute its judgment for that of the agency.  See
Gulf States, 809 S.W.2d at 211.

 Application
	We have already concluded that the Commissioner's decision was supported by
substantial evidence.  Whitehawk does not argue in her brief that the Commissioner denied her due
process of law or failed to demonstrate a connection between his decision and the factors relevant
to that decision.  In reviewing the evidence and the law that formed the basis for the Commissioner's
findings of fact and conclusions of law, we can find nothing arbitrary or capricious about the
Commissioner's decision.
	The decision of the Commissioner was supported by substantial evidence and was
not arbitrary and capricious.  We sustain UISD's fourth issue on appeal and the Commissioner's
third issue on appeal.  Because this resolution controls our disposition of the appeal, we need not
address UISD and the Commissioner's remaining issues.  See Tex. R. App. P. 47.1.

CONCLUSION 

	The Commissioner's decision was supported by substantial evidence and was not
arbitrary and capricious.  We reverse the judgment of the district court and render judgment
affirming the Commissioner's order.


  
					Bob Pemberton, Justice
Before Chief Justice Law, Justices B. A. Smith and Pemberton
Reversed and Rendered
Filed:   March 17, 2006
1.   UISD is located in Laredo.
2. 	At the time of Whitehawk's grievance, section 22.004 provided, in relevant part:

(a)	Each district shall make available to its employees group health coverage
provided by a risk pool established by one or more school districts under
Chapter 172, Local Government Code, or under a policy of insurance or
group contract issued by an insurer, a company subject to Chapter 20,
Insurance Code, or a health maintenance organization under the Texas
Health Maintenance Organization Act (Chapter 20A, Vernon's Texas
Insurance Code).  The coverage must meet the substantive coverage
requirements of Article 3.51-6, Insurance Code, and any other law
applicable to group health insurance policies or contracts issued in this state.

Act of May 27, 1995, 74th Leg., R.S., ch. 260, § 1, 1995 Tex. Gen. Laws 2207, 2282-83 (amended
1997, 1999, 2001, 2003, 2005) (current version at Tex. Educ. Code Ann. § 22.004 (West Supp.
2005).
3. 	The record indicates that approximately one hundred other UISD employees had initially
joined in Whitehawk's grievance.  They are no longer parties to this proceeding. 
4. 	This court has also received an amicus curiae brief from the Texas Association of School
Boards Legal Assistance Fund urging reversal.

