                                                                                         ACCEPTED
                                                                                     03-15-00309-CV
                                                                                             5802501
                                                                          THIRD COURT OF APPEALS
                                                                                     AUSTIN, TEXAS
                                                                               6/24/2015 11:26:16 AM
                                                                                   JEFFREY D. KYLE
                                                                                              CLERK
                              NO. 03-15-00309-CV

CITY OF AUSTIN and THE UNITED §              IN THE THIRD        FILED IN
                                                          3rd COURT OF APPEALS
HEALTHCARE CHOICE PLUS PLAN §                                  AUSTIN, TEXAS
FOR CITY OF AUSTIN EMPLOYEES, §                           6/24/2015 11:26:16 AM
                              §                               JEFFREY D. KYLE
              Appellants,     §              COURT OF    APPEALS   Clerk
                                                                      IN
v.                            §
                              §
CHARLES LESNIAK,              §
                              §
              Appellee.       §              AUSTIN, TEXAS




                       JOINT APPELLANTS’ BRIEF



ORAL ARGUMENT IS REQUESTED

Andrew G. Jubinsky                       Andralee Cain Lloyd
Texas Bar No. 11043000                   State Bar No. 24071577
andy.jubinsky@figdav.com                 andralee.lloyd@austintexas.gov
Lance V. Clack                           Megan Mosby
Texas Bar No. 24040694                   State Bar No. 24073392
lance.clack@figdav.com                   megan.mosby@austintexas.gov

FIGARI + DAVENPORT, LLP                  CITY OF AUSTIN – LAW DEPARTMENT
901 Main Street, Suite 3400              P. O. Box 1546
Dallas, Texas 75202                      Austin, Texas 78767-1546
(214) 939-2000                           (512) 974-2918
(214) 939-2090 (Fax)                     (512) 974-1311 (Fax)

ATTORNEYS FOR APPELLANT                  ATTORNEYS FOR APPELLANT
THE UNITED HEALTHCARE CHOICE PLUS        CITY OF AUSTIN
PLAN FOR CITY OF AUSTIN EMPLOYEES
IDENTITY OF PARTIES AND COUNSEL

Appellant                                 Trial and Appellate Counsel

The United Healthcare Choice Plus         Andrew G. Jubinsky
Plan for City of Austin Employees         Texas Bar No. 11043000
                                          andy.jubinsky@figdav.com
                                          Lance V. Clack
                                          Texas Bar No. 24040694
                                          lance.clack@figdav.com
                                          FIGARI + DAVENPORT, LLP
                                          901 Main Street, Suite 3400
                                          Dallas, Texas 75202
                                          (214) 939-2000

Appellant                                 Trial and Appellate Counsel

The City of Austin                        Andralee Cain Lloyd
                                          State Bar No. 24071577
                                          andralee.lloyd@austintexas.gov
                                          Megan Mosby
                                          State Bar No. 24073392
                                          megan.mosby@austintexas.gov
                                          CITY OF AUSTIN – LAW DEPARTMENT
                                          P. O. Box 1546
                                          Austin, Texas 78767-1546
                                          (512) 974-2918

Appellee                                  Trial and Appellate Counsel

Charles Lesniak                           Amar Raval
                                          araval@plummerlawyers.com
                                          James C. Plummer
                                          jplummer@plummerlawyers.com
                                          PLUMMER & KUYKENDALL
                                          4203 Montrose Blvd., Suite 270
                                          Houston, Texas 77006
                                          (713) 522-2887



                                    -i-
                                          TABLE OF CONTENTS

TABLE OF CONTENTS .......................................................................................... ii

INDEX OF AUTHORITIES.....................................................................................iv

STATEMENT OF THE CASE .................................................................................. 1

APPELLANTS’ STATEMENT REGARDING ORAL ARGUMENT .................... 1

ISSUE PRESENTED .................................................................................................1
       1.     Whether the Trial Court erred in denying Appellants’ plea
to the jurisdiction. ......................................................................................................1

STATEMENT OF FACTS ........................................................................................2

         A.        The Plan.           ..........................................................................................2

         B.        Appellee’s Claims. ................................................................................3

SUMMARY OF ARGUMENT .................................................................................4

ARGUMENT .............................................................................................................5

         A.        Standard of Review on Appeal.............................................................. 5

         B.        Governmental Immunity. ...................................................................... 5

         C.        The Plan is Immune From Suit and Liability. ....................................... 7

         D.        Appellee Has Not Pled a Valid Waiver of Immunity. .......................... 8

                   1.       The Proprietary/Governmental Function Distinction Does
                            Not Apply. ...................................................................................8

                   2.       Appellee did not plead a valid waiver of immunity under
                            Chapter 271. ..............................................................................10

PRAYER ..................................................................................................................10

                                                             -ii-
CERTIFICATE OF COMPLIANCE ................................................................................ 12

CERTIFICATE OF SERVICE .......................................................................................... 12

APPENDIX




                                                        -iii-
                                        INDEX OF AUTHORITIES

                                                                                                                    Page(s)
CASES

Anderson v. City of San Antonio,
  120 S.W.3d 5 (Tex. App.—San Antonio 2003, pet. denied) .................................. 5
Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Texas Political
  Subdivisions Prop./Cas. Joint Self-Ins. Fund,
  212 S.W.3d 320 (Tex. 2006) .................................................................................. 5, 7

City of Georgetown v. Lower Colorado River Authority,
   413 S.W.3d 803 (Tex. App.—Austin 2013, pet. dism’d) ....................................... 9

City of San Antonio ex rel. City Pub. Serv. Bd. v. Wheelabrator Air Pollution
   Control, Inc.,
   381 S.W.597 (Tex. App.—San Antonio 2012, pet. denied) ................................... 8

Dallas County Mental Health and Mental Retardation v. Bossley,
  968 S.W.2d 339 (Tex. 1998) ...................................................................................... 5

East Houston Estate Apartments, LLC v. City of Houston,
  294 S.W.3d 723 (Tex. App.—Houston [1st Dist.] 2009, no pet.) ....................... 10

Foster v. Teacher Ret. Sys.,
  273 S.W.3d 883 (Tex. App.—Austin 2008, no pet.) ............................................... 8

Gay v. City of Wichita Falls,
  457 S.W.3d 499 (Tex. App.—El Paso 2014, no pet.) ..................................... 7, 8, 9

General Services Com’n v. Little-Tex Insulation Co., Inc.,
  39 S.W.3d 591 (Tex. 2001) ........................................................................................ 6

Gentilello v. University of Texas Southwestern Health Systems,
  2014 WL 1225160 (Tex. App.—Dallas, 2014)........................................................ 6

Humana Ins. Co. v. Mueller,
  2015 WL 1938657, No. 04-14-752-CV (Tex. App.—San Antonio, April
  29, 2015, no pet. h.) ..................................................................................................... 9

Lubbock County Water Control & Imp. Dist. v. Church & Akin, L.L.C.,
  442 S.W.3d 297 (Tex. 2014) .................................................................................... 10

                                                             -iv-
Mayhew v. Town of Sunnyvale,
  964 S.W.2d 922 (Tex.1998) ....................................................................................... 5

Republic Power Partners, L.P. v. City of Lubbock,
  424 S.W.3d 184 (Tex. App.—Amarillo 2014, no pet.) ....................................... 8, 9

Richardson Hosp. Auth. v. Duru,
   387 S.W.3d 109 (Tex. App.—Dallas 2012, no pet.) ............................................... 7

State v. Lueck,
   290 S.W.3d 876 (Tex. 2009) ...................................................................................... 5

Tex. Natural Res. Conservation Comm’n v. IT-Davy,
   74 S.W.3d 849 (Tex. 2002) ........................................................................................ 5

Texas Ass’n of Bus. v. Texas Air Control Bd.,
   852 S.W.2d 440 (Tex. 1993) ...................................................................................... 6

Texas Dep’t of Parks and Wildlife v. Miranda,
   133 S.W.3d 217 (Tex. 2004) .................................................................................. 5, 6

Texas Dept. of Pub. Safety v. Int’l Capital Corp.,
   40 S.W.3d 687 (Tex. App.—Austin 2001, no pet.) ................................................. 5

Texas Dept. of Transportation v. Jones,
   8 S.W.3d 636 (Tex. 1999) .......................................................................................... 7
Tooke v. City of Mexia,
  197 S.W.3d 325 (Tex. 2006) .................................................................................. 5, 7

University of Tex. Med. Branch v. York,
  871 S.W.2d 175 (Tex.1994) ....................................................................................... 6


STATUTES

Tex. Civ. Prac. & Rem. Code § 51.014 .......................................................................... 1

Texas Loc. Gov’t Code § 271.151 ............................................................................ 2, 10

Texas Loc. Gov’t Code § 271.152 .............................................................................. 4, 8

Texas Gov’t Code § 2259.001 ................................................................................. 4, 7, 9

                                                          -v-
Texas Gov’t Code § 2259.002 ................................................................................. 4, 7, 9

Texas Gov’t Code § 2259.031 ..................................................................................... 2, 7




                                                         -vi-
                           STATEMENT OF THE CASE

      This is a suit for benefits under a self-funded health plan established by the

City of Austin for its eligible employees. [C.R. 29-30.] Appellants The United

Healthcare Choice Plus Plan for the City of Austin (the “Plan”) and the City of

Austin (the “City”) filed a joint plea to the jurisdiction based on sovereign

immunity, inasmuch as the City and the Plan are governmental entities. [C.R. 29.]

The Trial Court denied the plea, and Appellants appealed pursuant to Tex. Civ.

Prac. & Rem. Code § 51.014. [C.R. 206-208, 210.]

     APPELLANTS’ STATEMENT REGARDING ORAL ARGUMENT

      Appellants believe that, given the importance of the issues presented by this

appeal, oral argument would aid the Court’s decision making process.

                               ISSUE PRESENTED

      1.        Whether the Trial Court erred in denying Appellants’ plea to the

jurisdiction.




JOINT APPELLANTS’ BRIEF - Page 1
                            STATEMENT OF FACTS

A.    The Plan.

      The City of Austin is a local governmental entity as defined by the Local

Gov’t Code § 271.151. The Plan is a self-funded plan solely funded by the City of

Austin and created pursuant to Texas Gov’t Code § 2259.031. [C.R. 30.] The

terms of the Plan are set forth in the “Summary Master Benefit Plan Documents”

(the “SPDs”), effective January 1, 2013, and January 1, 2014. [C.R. 30.]

      The Plan provides:

             1.1 Purpose
             The City has contracted with United HealthCare
             Services, Inc. (UnitedHealthcare), a private healthcare
             claims administrator, to administer this Plan and process
             the payment or reimbursement of specified expenses
             incurred by eligible Covered Persons.
                                         ***

             1.13 Interpretation of Benefits
             The Plan Administrator has the sole and exclusive
             discretion to do all of the following:

             1.     Interpret Benefits under the Plan.

             2.     Interpret the other terms, conditions, limitations,
                    and exclusions set out in the Plan Document.

             3.     Make factual determinations related to the Plan
                    and its Benefits.

             4.     The Plan Administrator may, in certain
                    circumstances, for purposes of overall cost savings
                    or efficiency, in its sole discretion, offer Benefits



JOINT APPELLANTS’ BRIEF - Page 2
                    for services that would otherwise not be Covered
                    Services. The fact that the Plan Administrator
                    does this in any particular case shall not in any
                    way be deemed to require the Plan Administrator
                    to do so in similar cases.
[C.R. 93-94.] Further, the Plan sets forth a remedy in the event a claim for benefits

is denied, namely, a member has two levels of appeal: an internal appeal to the

Plan Administrator and, if the first appeal is denied, a second, external appeal to an

Independent Review Organization unaffiliated with the Plan or the City. [C.R. 89-

93.]

B.     Appellee’s Claims.
       Appellee is an employee of the City of Austin and a qualified member of the Plan.

[C.R. 30.]   Appellee’s daughter underwent treatment in 2013 and 2014, and

submitted claims to the Plan related to this treatment. [C.R. 30-31.]         The Plan

Administrator denied some of the claims because the services in question were not

medically necessary. [Id.] Appellee appealed through each level provided by the

Plan, and the original denial was upheld. [C.R. 3-5.] Appellee filed suit against

Appellants seeking benefits under the Plan. [C.R. 3.] Appellants filed a joint plea

to the jurisdiction, which the Trial Court denied. [C.R. 29, 206.]




JOINT APPELLANTS’ BRIEF - Page 3
                          SUMMARY OF ARGUMENT

      Appellants have governmental immunity from Appellee’s claims. Absent

legislative waiver, governmental immunity deprives the trial court of jurisdiction to

hear Appellee’s claims, and no such waiver exists. Appellee bears the burden of

pleading a valid waiver of immunity, and he has not done so.            Specifically,

Appellee pled that the City was engaged in a proprietary function, however, the

distinction between proprietary and governmental functions on which Appellee

relies has been abolished by Tex. Local Gov’t Code § 271.152, and the legislature

has stated expressly that a municipality does not waive immunity by establishing a

self funded plan. See Tex. Gov’t Code §§ 2259.001, 2259.002. Appellee also

pled, in the alternative, that Appellants waived immunity pursuant to Section

271.152. This argument fails because Appellee is not suing under a contract that

provided services to a governmental entity. This Court should reverse the order of

the Trial Court and dismiss Appellee’s claims with prejudice.




JOINT APPELLANTS’ BRIEF - Page 4
                                   ARGUMENT

A.    Standard of Review on Appeal.

      A trial court's ruling on a plea to the jurisdiction is reviewed under a de novo

standard of review. Anderson v. City of San Antonio, 120 S.W.3d 5, 7 (Tex.

App.—San Antonio 2003, pet. denied); Texas Dept. of Pub. Safety v. Int’l Capital

Corp., 40 S.W.3d 687, 688 (Tex. App.—Austin 2001, no pet.); Mayhew v. Town of

Sunnyvale, 964 S.W.2d 922, 928 (Tex.1998).

B.    Governmental Immunity.

      Absent legislative waiver, governmental immunity shields governmental

entities, including municipalities, from suit for common law and statutory claims.

See, e.g., Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006); Ben Bolt-

Palito Blanco Consol. Indep. Sch. Dist. v. Texas Political Subdivisions Prop./Cas.

Joint Self-Ins. Fund, 212 S.W.3d 320, 327 (Tex. 2006) (holding that immunity

extended to self-funded plans or cooperative insurance entities created by

governmental entities); Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74

S.W.3d 849, 853-55 (Tex. 2002); Dallas County Mental Health and Mental

Retardation v. Bossley, 968 S.W.2d 339, 341-42 (Tex. 1998); see also State v.

Lueck, 290 S.W.3d 876, 880 (Tex. 2009). Governmental immunity from suit

deprives the trial court of subject matter jurisdiction and, thus, is properly asserted

in a plea to the jurisdiction. Texas Dep’t of Parks and Wildlife v. Miranda, 133




JOINT APPELLANTS’ BRIEF - Page 5
S.W.3d 217, 225-226 (Tex. 2004). When subject matter jurisdiction is contested,

“[t]he trial court must determine at its earliest opportunity whether it has the

constitutional or statutory authority to decide the case before allowing the litigation

to proceed.” Id. at 226. Whether the trial court has subject matter jurisdiction is a

question of law subject to de novo appeal. Id.

      Appellee bears the burden to allege facts that affirmatively demonstrate the

trial court’s jurisdiction to hear a case. Texas Ass’n of Bus. v. Texas Air Control

Bd., 852 S.W.2d 440, 443 (Tex. 1993). If the pleadings affirmatively negate the

existence of jurisdiction, the plea to the jurisdiction may be granted without

allowing the plaintiff an opportunity to amend. Texas Dept. of Parks and Wildlife

v. Miranda, 133 S.W.3d 217, 226, 227 (Tex. 2004).

      The State’s consent may be alleged either by reference to a statute or by

pleading express legislative permission. General Services Com’n v. Little-Tex

Insulation Co., Inc., 39 S.W.3d 591, 594 (Tex. 2001). Texas does not recognize the

doctrine of waiver of governmental immunity by conduct. Gentilello v. University

of Texas Southwestern Health Systems, 2014 WL 1225160, at *5 (Tex. App.—

Dallas, 2014) (“In summary, the Texas Supreme Court has never ruled that a

doctrine of waiver of governmental immunity by conduct exists.”). Legislative

consent to sue must be made in “clear and unambiguous language.” University of

Tex. Med. Branch v. York, 871 S.W.2d 175, 177 (Tex.1994). Absent this consent,



JOINT APPELLANTS’ BRIEF - Page 6
the trial court lacks a jurisdictional basis to hear the claim.     Texas Dept. of

Transportation v. Jones, 8 S.W.3d 636, 638-39 (Tex. 1999). Here, Appellee failed

to allege a valid waiver of immunity, and the Trial Court therefore erred in denying

Appellants’ plea to the jurisdiction.

C.    The Plan is Immune From Suit and Liability.

      The City is a governmental entity immune from suit, absent legislative

waiver.   See, e.g., Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Texas

Political Subdivisions Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320, 327 (Tex.

2006). The Plan, as an entity created by the City pursuant to authority granted by

Texas Gov’t Code § 2259.031, is likewise immune. Id. A municipality does not

waive immunity by providing benefits to its employees, whether through as self-

funded plan or otherwise. See Tex. Gov’t Code §§ 2259.001, 2259.002 (stating

that a municipality does not waive immunity by establishing a self-funded plan);

see also Gay v. City of Wichita Falls, 457 S.W.3d 499, 505 (Tex. App.—El Paso

Aug. 13, 2014, no pet.) (holding that a city was immune from suit when it provided

benefits to its employees, citing Texas Gov’t Code Chapter 271 and Tooke v. City

of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). Appellants did not waive immunity

by offering benefits to eligible employees of the City and their dependents.

Richardson Hosp. Auth. v. Duru, 387 S.W.3d 109, 113 (Tex. App.—Dallas 2012,

no pet.) (holding that a municipality did not waive immunity by offering insurance




JOINT APPELLANTS’ BRIEF - Page 7
to employees, because such contracts did not fall within the waiver of immunity in

Tex. Local Gov’t Code § 271.152); Foster v. Teacher Ret. Sys., 273 S.W.3d 883,

886 (Tex. App.—Austin 2008, no pet.) (holding that a state agency did not waive

immunity by providing benefits via a self-funded plan). Accordingly, Appellants

are immune from suit, and this Court should reverse the Trial Court’s ruling and

enter judgment dismissing Appellee’s claims.

D.    Appellee Has Not Pled a Valid Waiver of Immunity.

      In his amended petition, Appellee asserts that (1) Appellants were not

entitled to immunity because they were performing a proprietary function, and (2)

in the alternative, Appellants waived their immunity pursuant to Section 271.152,

because the documents establishing the Plan constitute a contract under which

services were provided to the City. Appellee has failed to plead a valid waiver of

immunity, and this Court should reverse the Trial Court and dismiss his claims.

      1.     The Proprietary/Governmental Function Distinction Does Not Apply.

      The legislature, in enacting Texas Local Government Code Chapter 271,

refused to apply the distinction between proprietary and governmental functions to

claims for breach of contract, and it therefore has no application here.          See

Republic Power Partners, L.P. v. City of Lubbock, 424 S.W.3d 184, 190-191 (Tex.

App.—Amarillo 2014, no pet.); Gay v. City of Wichita Falls, 457 S.W.3d 499, 505

(Tex. App.—El Paso 2014, no pet.); City of San Antonio ex rel. City Pub. Serv. Bd.




JOINT APPELLANTS’ BRIEF - Page 8
v. Wheelabrator Air Pollution Control, Inc., 381 S.W.597, 605 (Tex. App.—San

Antonio 2012, pet. denied).

      Further, the legislature has expressly stated that the establishment of a self-

funded plan does not waive Appellants’ immunity. See Tex. Gov’t Code §§

2259.001, 2259.002 (stating that a municipality does not waive immunity by

establishing a self-funded plan); see also Humana Ins. Co. v. Mueller, 2015 WL

1938657, No. 04-14-752-CV (Tex. App.—San Antonio, April 29, 2015, no pet. h.)

(holding that establishing a self-funded plan did not waive immunity of a

governmental entity).

      Appellee’s reliance, in his pleadings in the Trial Court, on City of

Georgetown v. Lower Colorado River Authority, 413 S.W.3d 803 (Tex. App.—

Austin 2013, pet. dism’d) is misplaced. First, City of Georgetown involved a

contract between a city and its electrical supplier. Id. This case, in contrast

involves a suit against a self-funded plan established by the City for its employees,

and the legislature has stated expressly that a municipality does not waive

immunity by establishing a self-funded plan. See Gov’t Code § 2259.002. Second,

the distinction between proprietary and governmental functions relied on in City of

Georgetown has been rejected by numerous courts since, and is no longer valid.

See, e.g., Republic Power, 424 S.W.3d at 184; Gay, 457 S.W.3d at 505.




JOINT APPELLANTS’ BRIEF - Page 9
      2.     Appellee did not plead a valid waiver of immunity under Chapter 271.

      In order to plead a valid waiver of immunity under Chapter 271, Appellee

must show that the contract provides for the provision of goods and services to the

local governmental entity. Tex. Loc. Gov’t Code § 271.151. The contract at issue

in this case does not provide for services to a local governmental entity, and

Appellants did not allege or show that any services were provided to the City

pursuant to the Plan. Accordingly, Appellants did not waive immunity. See, e.g.,

Lubbock County Water Control & Imp. Dist. v. Church & Akin, L.L.C., 442

S.W.3d 297, 303 (Tex. 2014) (holding that the provision of services to a water

district’s constituents did not constitute the provision of services to the water

district, and therefore immunity was not waived under Chapter 271); East Houston

Estate Apartments, LLC v. City of Houston, 294 S.W.3d 723, 726 (Tex. App.—

Houston [1st Dist.] 2009, no pet.). Inasmuch as Appellee was not providing

services to the City under the contract sued on, the Plan is not a contract subject to

section 271.151. Id.

                                     PRAYER

      For the foregoing reasons, Appellants request that this Court reverse the

Trial Court’s order denying Appellants’ plea to the jurisdiction and render

judgment dismissing Appellee’s claims.




JOINT APPELLANTS’ BRIEF - Page 10
                                    Respectfully submitted,


                                    By: /s/ Lance V. Clack
                                            Andrew G. Jubinsky
                                            Texas Bar No. 11043000
                                            andy.jubinsky@figdav.com
                                            Lance V. Clack
                                            Texas Bar No. 24040694
                                            lance.clack@figdav.com

                                    FIGARI & DAVENPORT, L.L.P.
                                    901 Main Street, Suite 3400
                                    Dallas, Texas 75202
                                    Tel: (214) 939-2000
                                    Fax: (214) 939-2090

                                    ATTORNEYS FOR THE UNITED HEALTHCARE
                                    CHOICE PLUS PLAN FOR CITY OF AUSTIN
                                    EMPLOYEES



                                    KAREN M. KENNARD, CITY ATTORNEY
                                    MEGHAN L. RILEY, CHIEF LITIGATION

                                    By:   /s/ Megan Mosby
                                           Andralee Cain Lloyd
                                           State Bar No. 24071577
                                           andralee.lloyd@austintexas.gov
                                           Megan Mosby
                                           State Bar No. 24073392
                                           megan.mosby@austintexas.gov

                                    City of Austin – Law Department
                                    P. O. Box 1546
                                    Austin, Texas 78767-1546
                                    Tel: (512) 974-2918
                                    Fax: (512) 974-1311

                                    ATTORNEYS FOR CITY OF AUSTIN




JOINT APPELLANTS’ BRIEF - Page 11
                       CERTIFICATE OF COMPLIANCE
      This document complies the word-count limitations of Rule 9.4(i)(3)
because it contains 1,922 words as calculated per the word processing program
used for its preparation, excluding any parts exempted by Rule 9.4(i)(1).



                                     /s/ Lance V. Clack
                                        Lance V. Clack




                          CERTIFICATE OF SERVICE

     On the 24th day of June, 2015, a true and correct copy of the foregoing
document was served on counsel as follows:

Via E-Service
Amar Raval
araval@plummerlawyers.com
James C. Plummer
jplummer@plummerlawyers.com
PLUMMER & KUYKENDALL
4203 Montrose Blvd., Suite 270
Houston, Texas 77006
Attorney for Plaintiff
                                         /s/ Lance V. Clack
                                           Lance V. Clack




JOINT APPELLANTS’ BRIEF - Page 12
APPENDIX
