   OFFICE OF THE ATTORNEY GENERAL . STATE OF TEXAS
   JOHN     CORNYN




                                              April 29,2002



Mr. James R. Hine                                    Opinion No. JC-0495
Commissioner
Texas Department of Human Services                   Re: Whether the Texas State Office of Administra-
P.O. Box 149030                                      tive Hearings may order the Texas Department of
Austin, Texas 78714-9030                             Human Services to pay a licensee’s attorney’s fees
                                                     after the SOAH dismissed an administrative action
                                                     brought to revoke a license (RQ-0463-JC)


Dear Commissioner      Hine:

         In Texas, a party to an action may recover attorney’s fees from an opposing party only if a
statute or contract expressly permits such a recovery. See Travelers Indem. Co. v. Mayfield, 923
S.W.2d 590,593 (Tex. 1996). While sections 2003.042 and 2003.0421 of the Government Code
authorize the Texas State Office of Administrative Hearings (the “SOAH”) to sanction the Texas
Department of Human Services (the “Department”) in an administrative action brought to revoke
a nursing home’s license, the statutes do not expressly permit a party to recover attorney’s fees. See
TEX. GOV’TCODEANN.        $4 2003.042, .0421 (Vernon 2000). You ask whether the SOAH may require
the Department to pay the opposing party’s attorney’s fees in a dismissed license-revocation action. 1
Because the SOAH does not have express authority to require the Department to pay attorney’s fees
in such a situation, we conclude that the SOAH may not order the Department to do so. Section
2003.0421, which enumerates several specific sanctions, lists “charging all or any part of the
expenses of discovery against the offending party,” id. 5 2003.042 1(b)(2), but it does not separately
list assessing attorney’s fees as a permissible sanction. Additionally, a statute or rule that permits
a court to award attorney’s fees against the state does not apply to the SOAH, which is not a court.
Furthermore, the state has not waived its immunity from attorney’s fees in this situation. See Dallas
Cent. Appraisal Dist. v. Seven Inv. Co., 835 S.W.2d 75,77 (Tex. 1992) (stating that attorney’s fees
may not be recovered from state agency unless statute or contract expressly waives sovereign
immunity).

        Your query stems from an action that the Department brought to revoke the nursing-home
license of Mabee Health Care Center (“Mabee”), a nursing home facility located in Midland, Texas.




        ‘See Letter from James R. Hine, Commissioner,   Texas Department of Human Services, to Honorable John
Cornyn, Texas Attorney General (Nov. 8, 2001) (on file with Opinion Committee) [hereinafter Request Letter].
Mr. James R. Hine - Page 2                             (JC-0495)




See Request Letter, supra note 1, at 1.2 The SOAH, which hears contested-case hearings for the
Department, see TEX.HUM.RES. CODE ANN. 5 22.018(a) (Vernon 2001), conducted the hearing “from
February 20,2001, through March 2,200l.” Request Letter, supra note 1, at 1; see also Sanctions
Order, supra note 2, at 1; Department Brief, supra note 2, at 1. During the course of the hearing, on
March 1 the Department’s counsel informed the SOAH’s administrative law judges “that several
pages of Exhibit 10,” which the Department had offered and which had been admitted into evidence,
“were not authentic.” Request Letter, supra note 1, at 2; see also Department Brief, supra note 2,
at 1. Mabee consequently asked the SOAH to dismiss the action and to sanction the Department by
awarding it “all costs and fees incurred” in prosecuting the appeal, including attorney’s fees in the
amount of $126,120 and costs in the amount of $15,568.17. See Sanctions Order, supra note 2, at
2, 5.

        The SOAH granted Mabee’s motion for costs including attorney’s fees, determining that
sanctions were “appropriate . . . to deter future conduct and to punish the existing conduct.” Id. at
32. The SOAH premised the award of attorney’s fees on what it believed to be its implicit authority
to impose monetary sanctions in appropriate cases:

                           The [administrative law judges] conclude that the sanctions
                  authority in the SOAH Act[, chapter 2003 of the Government Code,]
                  and in SOAH’s procedural rules confer sufficient authority in the
                  [administrative    law judges] to award monetary sanctions in
                  appropriate cases, particularly those that affect the core mission of the
                  agency to serve as an independent forum to conduct fair, objective,
                  prompt, and efficient hearings, pursuant to the SOAH Act. Further,
                  the [administrative law judges] conclude that utilizing the Texas
                  Rules of Civil Procedure, and cases decided thereunder, to determine
                  the factors to be weighed, and the relative weight given them in
                  determining an appropriate sanction, would yield a ruling that is just
                  under the circumstances of this case.

Id. at 17.

         You suggest that the SOAH acted outside its statutory authority when it imposed sanctions
that included an award of attorney’s fees. See Request Letter, supra note 1, at 2. We agree. We do
not understand you to contest the order to pay other costs. See id. at 2 n.2.

        As a state agency, the SOAH has only those powers that the legislature has explicitly
or implicitly delegated to it. See R.R. Comm ‘n v. Lone Star Gas Co., 844 S.W.2d 679, 685 (Tex.



           *See aZso Tex. State Office of Admin. Hearings, Order Granting Motion for Sanctions at 1, Mabee Health Care
Ctr. v. Tex. Dep’t ofHuman Servs. (July 3,200l) (Docket No. 324-OO-0077.K-W) [hereinafter Sanctions Order]; Letter
from John M. Hohengarten,        Deputy Division Chief, Financial Litigation Division, Office of Attorney General,
representing    Dep’t of Human Servs., to Honorable John Cornyn, Texas Attorney General, at 1 (Jan. 24, 2002)
[hereinafter Department Briefl (documents on file with Opinion Committee).
Mr. James R. Hine - Page 3                         (JC-0495)




1992); 6th & Neches, L.L.C. v. Aldridge, 992 S.W.2d 684, 687 (Tex. App.-Austin          1999, pet.
denied); Tex. Att’y Gen. Op. Nos. JC-0418 (2001) at 6, JC-416 (2001) at 5, JC-0324 (2001) at 1.
The SOAH’s authority is set forth primarily in chapter 2003 of the Government Code, which creates
the SOAH to conduct administrative hearings in contested cases for other state agencies. See TEX.
GOV’T CODEANN. 8 2003.021(a), (b) (Vernon Supp. 2002).


        Under chapter 2003, a SOAH administrative law judge may, among other things, “issue an
order relating to discovery or another hearing or prehearing matter, including an order imposing a
sanction” or “issue a proposal for decision that includes findings of fact and conclusions of law.”
Id. 9 2003.042(a)(4), (6) (V emon 2000); see also 1 TEX. ADMIN.CODE5 155.15(b) (2001) (SOAH
Rules of Procedure). Section 2003.042 1 provides for sanctions generally:

                        (a) An administrative law judge employed by the [SOAH]
               . . . on the judge’s own motion or on motion of a party and after
               notice and an opportunity for a hearing, may impose appropriate
               sanctions as provided by Subsection (b) against a party or its
               representative for:

                             (1) filing a motion    or pleading   that is groundless    and
               brought:

                                (A)   in bad faith;

                                (B)   for the purpose of harassment;     or

                                 (C) for any other improper purpose, such as to cause
               unnecessary    delay or needless increase in the cost of the proceeding;

                            (2) abuse of the discovery process in seeking, making, or
               resisting discovery; or

                          (3) failure to obey an order of the administrative law judge
               or of the state agency on behalf of which the hearing is being
               conducted.

                       (b) A sanction imposed under Subsection                (a) may include,   as
               appropriate and justified, issuance of an order:

                           (1) disallowing further discovery        of any kind or of a
               particular kind by the offending party;

                           (2) charging all or any part of the expenses of discovery
               against the offending party or its representatives;
Mr. James R. Hine - Page 4                       (JC-0495)




                             (3) holding that designated     facts be considered admitted
                 for purposes of the proceeding;

                            (4) refusing to allow the offending party to support or
                oppose a designated claim or defense or prohibiting the party from
                introducing designated matters in evidence;

                            (5) disallowing in whole or in part requests for relief by
                the offending party and excluding evidence in support of those
                requests; and

                             (6) striking pleadings or testimony,    or both, in whole or
                in part.

                        (c) This section applies to any contested case hearing
                conducted by the office, except hearings conducted on behalf of the
                Texas Natural Resource Conservation Commission or the Public
                Utility Commission of Texas[,] which are governed by Sections
                2003.047 and 2003.049.

TEX. GOV’TCODEANN. 8 2003.0421       (Vernon 2000); $1 TEX.ADMIN.CODE$8 155.33, -49 (2001)
(SOAH Rules of Procedure authorizing administrative law judge to issue orders regulating conduct
of proceeding and requiring attorneys to adhere to Texas Lawyers’ Creed’s standards of conduct).
As section 2003.0421 (c) suggests, other provisions pertain specially to contested case hearings
performed by the SOAH’s natural resource conservation division or utility division. SeeTEx. GOV’T
CODEANN. $8 2003.0421(c), .047, .049 (Vernon 2000). Of particular interest, as we explain later,
is section 2003.049, which authorizes the SOAH’s utility division to impose appropriate sanctions
against a party, including attorney’s fees incurred because of sanctionable behavior.      See id.
5 2003.049(j)(7).

         Under Texas law, no party may recover attorney’s fees from an opposing party unless
recovery is expressly provided by statute or by contract between the parties. See Travelers Indem.
Co. v. Mayfield, 923 S.W.2d at 593. An award of attorney’s fees may not be merely implied, “but
must be provided for by the express terms of the statute in question.” First City Bank-Farmers
Branch v. Guex, 677 S.W.2d 25, 30 (Tex. 1984). For example, rule 215.2 of the Texas Rules of
Civil Procedure, which is largely similar to section 2003.042 1, explicitly permits a court to order a
party to pay an adversary’s “reasonable expenses, including attorney’s fees.” TEX. R. CIV. P.
215.2(b)(8) (V emon Supp. 2001); see Hearings on Tex. S.B. 331 Before the House Comm. on State
Affairs, 75th Leg., R.S. (Apr. 24 1997) (testimony of Sheila Bailey Taylor, representing the SOAH,
indicating that sanctions listed in section 2003.042 1 are “similar to the sanctions in the Rules of Civil
Procedure”) (tape available from House Video/Audio Services Office). Likewise, the SOAH’s own
act, section 2003.049 of the Government Code, expressly authorizes the SOAH’s utility division to
require an offending party to pay “the reasonable expenses, including attorney’s fees, incurred by
other parties because of’ sanctionable behavior. TEX. GOV’T CODEANN. 8 2003.049(j)(7) (Vernon
Mr. James R. Hine - Page 5                      (JC-0495)




2000). Section 2006.013 of the Government Code also permits the award of attorney’s fees to a
small business that prevails over a state agency in an administrative adjudication in certain
circumstances. See id. 6 2006.013(a).

         The SOAH lacks express statutory authority to require the Department to pay attorney’s fees
in a license-revocation  action. Chapter 2003 provides no such authority. Section 2003.042 plainly
authorizes the SOAH to issue “an order imposing a sanction,” id. 5 2003.042(a)(4), but the kind
of sanction the SOAH generally may impose is limited by section 2003.0421 (b), see id.
6 2003.042 1(b). Neither section 2003.042 nor section 2003.042 1 expressly includes authority
to assess attorney’s fees against the Department in this situation. Section 2003.0421 (b) permits the
SOAH to “include” in a sanctions order, “as appropriate and justified,” a requirement that
an offending party pay “all or any part” of the opposing party’s “expenses of discovery.” Id.
$2003.0421 (b)(2); cf: also id. 0 2006.013(a) (expressly permitting award of attorney’s fees to small
business in “administrative adjudicatory proceeding . . . resulting from a complaint issued by a state
agency”); id. 4 2007.026(a) (expressly authorizing state agency to order political subdivision or state
agency to award attorney’s fees to private real-property owner who prevails in contested case). The
phrase “expenses of discovery” is not sufficient to encompass attorney’s fees.

         Nor does the Administrative Procedure Act, chapter 2001 of the Government Code, or any
law applicable to license-revocation    actions brought by the Department authorize the SOAH to
impose attorney’s fees against a state agency. As the SOAH admits in its order, the Administrative
Procedure Act, chapter 2001 of the Government Code, “does not have a sanctions provision.”
Sanctions Order, supra note 2, at 22.           While a SOAH administrative       law judge must
“consider applicable agency rules or policies in conducting the hearing,” TEX. GOV’T CODEANN. 4
2001.058(b) (Vernon 2000), nothing in the Department’s statutes or regulations authorize the
imposition of attorney’s fees. See TEX.HEALTH& SAFETY     CODEANN. ch. 242 (Vernon 2001& Supp.
2002); 40 TEX. ADMIN.CODEch. 79 (2001) (Department Legal Services).

        In addition, nothing waives the state’s immunity from the payment of attorney’s fees ordered
by the SOAH. Attorney’s fees may not be recovered from a state agency unless a statute or contract
expressly waives the agency’s sovereign immunity in this regard. See Dallas Cent. Appraisal Dist.
v. Seven Inv. Co., 835 S.W.2d at 77; Univ. of Tex. Sys. v. Courtney, 946 S. W.2d 464, 469 (Tex.
App.-Fort Worth 1997, writ denied); cJ: CoZZ. Sav. Bank v. FZ. Prepaid Postsecondary Educ.
Expense Bd., 527 U.S. 666,682 (1999) (holding that waiver of state sovereign immunity may not
be implied).

        The SOAH cannot rely on statutes and rules authorizing a court to charge attorney’s fees
against a state agency. In its order, the SOAH appears to rely on rules 13 and 215.2 of the Texas
Rules of Civil Procedure, section 10.001 of the Texas Civil Practices and Remedies Code, and “the
court’s inherent authority.” Sanctions Order, supra note 2, at 22-24. Rule 13 of the Texas Rules of
Civil Procedure articulates the effect of a signature on a pleading or motion and requires a court to
impose upon a party who has signed a court document in violation of the rule “an appropriate
sanction available under Rule 215-2b.” TEX. R. CIV.P. 13 (Vernon Supp. 2001). Rule 2 15.2, as we
have already discussed, explicitly permits a court to award attorney’s fees. Section 10.001 of the
Mr. James R. Hine - Page 6                     (JC-0495)




Civil Practices and Remedies Code states, similar to rule 13, the effect of a signature on a pleading
or motion filed in a court. See TEX. CIV. PRAC.& REM.CODEANN. 5 10.001 (Vernon Supp. 2002).
Section 10.004 of the Civil Practices and Remedies Code, similar to rule 215.2, permits a “court that
determines that a person has signed a pleading or motion in violation of Section 10.001” to impose
sanctions, which may include “an order to pay to the other party the amount of the reasonable
expenses incurred by the other party because of the filing of the pleading or motion, including
reasonable attorney’s fees.” Id. 8 10.004(a), (c)(3). We also note section 105.002 of the Civil
Practice and Remedies Code, which permits a court to award reasonable attorney’s fees against the
State, “if. . . the court finds that the action is frivolous, unreasonable, or without foundation.” See
id. 6 105.002( 1) (Vernon 1997).

        The SOAH is not a court. “An administrative agency is not a ‘court’ and its contested case
proceedings are not lawsuits, no matter that agency adjudications are sometimes referred to loosely
as being ‘judicial’ in nature. Agency adjudications do not reflect an exercise of the judicial power
assigned to the ‘courts’ of the State in [article V, section 1 of the Texas Constitution]; they are
simply executive measures taken in the administration of statutory provisions.”        State v. FZag-
Redfern Oil Co., 852 S.W.2d 480,486 n.7 (Tex. 1993) (quoting Beyer v. EmpZoyees ‘Ret. Sys., 808
S.W.2d 622,627 (Tex. App.-Austin 1991, writ denied)).

        Given that the SOAH lacks express statutory authority to require the SOAH to pay the
opposing party’s attorneys and that the state has not waived its sovereign immunity in this regard,
we conclude that the SOAH has no authority to order the Department to pay Mabee’s attorney’s fees.
Mr. James R. Hine - Page 7                   (JC-0495)




                                      SUMMARY

                        The Texas State Office of Administrative Hearings has no
               authority to order the Texas Department of Human Services to pay a
               licensee’s attorney’s fees after an administrative action brought to
               revoke the license. The state has not waived its sovereign immunity
               against attorney’s fees imposed in an administrative proceeding
               administered by the State Office of Administrative Hearings.




                                             Attorney General of Texas



HOWARD G. BALDWIN, JR.
First Assistant Attorney General

NANCY FULLER
Deputy Attorney General - General Counsel

SUSAN DENMON GUSKY
Chair, Opinion Committee

Kymberly K. Oltrogge
Assistant Attorney General, Opinion Committee
