Courtney N. Phillips, Executive Commissioner Sylvia Hernandez Kauffman, Inspector General And Texas Health and Human Services Commission v. John McNeill, Jr., R.ph. And Nichols Southside Pharmacy

CourtTexas Supreme Court
DecidedDecember 3, 2021
Docket19-0831
StatusPublished

This text of Courtney N. Phillips, Executive Commissioner Sylvia Hernandez Kauffman, Inspector General And Texas Health and Human Services Commission v. John McNeill, Jr., R.ph. And Nichols Southside Pharmacy (Courtney N. Phillips, Executive Commissioner Sylvia Hernandez Kauffman, Inspector General And Texas Health and Human Services Commission v. John McNeill, Jr., R.ph. And Nichols Southside Pharmacy) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Courtney N. Phillips, Executive Commissioner Sylvia Hernandez Kauffman, Inspector General And Texas Health and Human Services Commission v. John McNeill, Jr., R.ph. And Nichols Southside Pharmacy, (Tex. 2021).

Opinion

Supreme Court of Texas ══════════ No. 19-0831 ══════════

Courtney N. Phillips, Executive Commissioner; Sylvia Hernandez Kauffman, Inspector General; and Texas Health and Human Services Commission, Petitioners,

v.

John McNeill, Jr., R.Ph.; and Nichols Southside Pharmacy, Respondents

═══════════════════════════════════════ On Petition for Review from the Court of Appeals for the Fourteenth District of Texas ═══════════════════════════════════════

Argued September 15, 2021

JUSTICE BUSBY delivered the opinion of the Court.

Justice Young did not participate in the decision.

This case concerns whether Corpus Christi pharmacist John McNeill, who participated in a Medicaid drug program run by the Texas Health and Human Services Commission, was entitled to an administrative contested-case hearing of his challenge to the results of a program audit by the Commission. We also consider whether McNeill’s request that the trial court make findings of fact and conclusions of law extended the deadline to file his notice of appeal under Texas Rule of Appellate Procedure 26.1. We hold that a request for findings and conclusions extends the appellate timetable if the trial court proceeding was the type where evidence could be considered and evidence was before the trial court. Under this rule, McNeill’s appeal was timely. We further hold that the Commission’s Inspector General acted ultra vires in failing to perform her ministerial duty to provide McNeill a contested-case hearing under section 531.1201 of the Government Code, and that she is not entitled to sovereign immunity. Accordingly, we reverse the court of appeals’ judgment and render judgment requiring the Inspector General to docket a request for a contested-case hearing. BACKGROUND John McNeill is the pharmacist in charge and sole shareholder of Nichols Southside Pharmacy in Corpus Christi. 1 In 2005, McNeill contracted with the Health and Human Services Commission through its Vendor Drug Program (VDP) to provide pharmaceutical services for patients enrolled in Medicaid and other state health-care programs. McNeill’s contract with the VDP incorporated the Commission’s rules for administering the program, including an agreement to be subject to periodic audits overseen by the Commission’s Office of Inspector General. See 1 TEX. ADMIN. CODE § 354.1891(a) – (b).

1 We refer to McNeill and the pharmacy collectively as McNeill.

2 The Commission audited McNeill in 2012. The auditor reviewed McNeill’s claims for reimbursement between 2007 and 2010 and determined that he had been overpaid by $70,266.36. In response to the audit, McNeill retained counsel to challenge the Commission’s estimation methodology and provided additional documentation for the auditor to review. The Commission issued an updated audit report that reduced the overpayment to $69,911.48, and it informed McNeill that he had the right to an informal agency hearing. McNeill requested a hearing, which resulted in the Commission issuing a final notice that reduced the overpayment amount to $64,549.30. The Commission informed McNeill that a vendor hold would be placed on his account until he either paid the sum or entered into a payment plan. A week after the Commission’s final notice, McNeill requested a contested-case hearing before the State Office of Administrative Hearings (SOAH).2 McNeill contended that the Recoupment-Appeal Statute—section 531.1201 of the Government Code—provided for such a hearing. The Commission denied the request. Two days later, McNeill made a second request. The Commission refused and placed a vendor hold on McNeill’s account. McNeill again asserted his right to a contested-case hearing, this time under Chapter 2260 of the Texas Government Code governing claims against state agencies for breach of contract. The Commission denied the request once again, reiterating its

2 TEX. GOV’T CODE § 2001.003(1) (“Contested case means a proceeding, including a ratemaking or licensing proceeding, in which the legal rights, duties, or privileges of a party are to be determined by a state agency after an opportunity for adjudicative hearing.”) (internal quotations omitted).

3 belief that McNeill had already received the only hearing to which he and his pharmacy were entitled. McNeill then sued the Commission, its Commissioner, and its Inspector General in their official and individual capacities in Travis County district court. McNeill’s complaint sought, among other things, a declaration that he was entitled to a contested-case hearing under the Recoupment-Appeal Statute, certain administrative rules, and the Due Process Clause of the Texas and U.S. Constitutions. He also requested injunctive relief compelling the Commission and officials to provide him a contested-case hearing and a temporary restraining order against the Commission withholding more than the amount of the claimed overpayment. The Commission and McNeill entered into a Rule 11 agreement that the Commission would not continue to withhold more than the amount it had determined McNeill overpaid. The Commission filed a plea to the jurisdiction based on sovereign immunity. The trial court held a bench trial, after which it granted the plea and dismissed McNeill’s claims for declaratory relief. It also denied McNeill’s petition for a writ of mandamus. After the trial court signed its judgment, McNeill requested findings of fact and conclusions of law, which the court made. Eighty-seven days after the final judgment was signed, McNeill filed his notice of appeal. The court of appeals reversed and remanded. 585 S.W.3d 109, 123 (Tex. App.—Houston [14th Dist.] 2019). The court concluded unanimously that it had appellate jurisdiction because the request for findings and conclusions made McNeill’s notice of appeal timely. Id. at 115. The panel then split. The majority determined that McNeill had a

4 right to a contested-case hearing on federal due-process grounds. Id. at 116–23. The majority did not reach the question whether McNeill had a non-constitutional right to a hearing. In her dissent, then-Justice Christopher contended that the majority had reached the constitutional question improperly and resolved it incorrectly. Id. at 124–27 (Christopher, J., dissenting). In this Court, the Commission challenges the court of appeals’ jurisdiction, arguing that McNeill’s appeal was untimely. The Commission also contends that the court of appeals failed to consider the Commission’s assertion of sovereign immunity. Finally, the Commission asserts that it was not required by regulation, statute, or the U.S. or Texas Constitutions to provide McNeill a contested-case hearing. We address each of these issues in turn. ANALYSIS I. The request for findings and conclusions extended McNeill’s deadline to file his notice of appeal.

Texas Rule of Appellate Procedure 26.1 provides that a notice of appeal must be filed within thirty days after judgment unless “any party timely files . . . a request for findings of fact and conclusions of law if findings and conclusions either are required by the Rules of Civil Procedure or . . . could properly be considered by the appellate court.” TEX. R. APP. P. 26.1(a)(4). When one party files a request for findings and conclusions that could properly be considered on appeal, any party that wishes to appeal has ninety days after judgment to file its notice. Id. 26.1(d). We have addressed the relationship between requests for findings and conclusions and the appellate timetable before, most instructively

5 in IKB Industries (Nigeria) Ltd. v. Pro-Line Corp., 938 S.W.2d 440 (Tex. 1997), and Gene Duke Builders, Inc. v. Abilene Housing Authority, 138 S.W.3d 907 (Tex.

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Courtney N. Phillips, Executive Commissioner Sylvia Hernandez Kauffman, Inspector General And Texas Health and Human Services Commission v. John McNeill, Jr., R.ph. And Nichols Southside Pharmacy, Counsel Stack Legal Research, https://law.counselstack.com/opinion/courtney-n-phillips-executive-commissioner-sylvia-hernandez-kauffman-tex-2021.