McMillen v. Texas Health & Human Services Commission
485 S.W.3d 427
Tex.2016Background
- Michael McMillen, an attorney and Deputy Counsel in the Texas Health and Human Services Commission’s Office of Inspector General (OIG), prepared a memorandum concluding the Commission’s practice of obtaining Medicaid payments from certain beneficiaries lacked legal justification.
- McMillen gave the memorandum to his supervisors (Deputy Inspectors General) and alleges he also reported the issue to the OIG Internal Affairs head and the Commission’s Executive Commissioner.
- McMillen was placed on administrative leave in early 2012 and later terminated; he sued under the Texas Whistleblower Act seeking to waive sovereign immunity for retaliatory discharge.
- The trial court denied the State’s plea to the jurisdiction; the court of appeals reversed, holding McMillen did not report to an appropriate law‑enforcement authority.
- The Texas Supreme Court granted review to decide whether McMillen reported to an appropriate law‑enforcement authority and whether the alleged law (notably 42 U.S.C. § 1396p(b)) covered the Commission’s conduct.
- The Court assumed McMillen’s good‑faith belief for purposes of the appeal, concluded the OIG had outward‑looking enforcement authority regarding the federal Medicaid recovery statute, and held the OIG is an appropriate law‑enforcement authority. The court reversed the court of appeals and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether McMillen reported a violation of law to an appropriate law‑enforcement authority under the Whistleblower Act | McMillen reported to OIG/Internal Affairs and Executive Commissioner, and reasonably believed they were authorized to enforce the law (including 42 U.S.C. § 1396p(b)) | The reports were internal only; OIG lacked outward‑looking enforcement power and thus was not an appropriate authority | The OIG is an appropriate law‑enforcement authority because it has authority to enforce and ensure compliance with the Medicaid recovery statute; reversed COA and remanded |
| Whether the statute McMillen alleged violated (42 U.S.C. § 1396p(b)) applies to the Commission’s recovery program | § 1396p(b) governs state recovery/adjustment of Medicaid payments and is implicated by the Commission’s program | The State argued McMillen failed to show the cited statutes prohibited the conduct; criticized gaps in McMillen’s statutory argument | The Court agreed § 1396p(b) relates to the Commission’s program and, for purposes of the appeal, addressed only the appropriate‑authority question and remanded remaining issues |
| Whether a good‑faith belief that the reported authority could enforce the law requires outward‑looking power | McMillen contends his training/position made his belief reasonable when reporting to OIG | State argued internal investigatory/disciplinary power is insufficient to confer status as an appropriate authority | The Court reiterated that good‑faith belief must be reasonable and the authority must have outward‑looking enforcement/regulatory power; OIG satisfied this standard here |
| Scope of “regulate under or enforce the law alleged” — whether inward focus defeats appropriateness | State relied on precedent stating only HHS Secretary can enforce Medicaid rules against third parties | McMillen argued OIG has authority to ensure compliance with § 1396p(b) and can act beyond internal discipline | The Court distinguished prior cases (where officials had only internal powers) and found OIG’s statutory authority reached beyond mere internal discipline, making it appropriate |
Key Cases Cited
- Tex. Dep't of Transp. v. Needham, 82 S.W.3d 314 (Tex. 2002) (good‑faith belief assessed by employee’s training and experience)
- Univ. of Tex. Sw. Med. Ctr. v. Gentilello, 398 S.W.3d 680 (Tex. 2013) (internal reporting to officials with only inward‑looking powers is not to an appropriate law‑enforcement authority)
- Tex. Dep't of Human Servs. v. Okoli, 440 S.W.3d 611 (Tex. 2014) (an OIG within the same agency can be an appropriate authority if it has outward‑looking enforcement power)
- McMillen v. Texas Health & Human Servs. Comm'n (court of appeals), 483 S.W.3d 576 (Tex. App.—Austin 2015) (court of appeals held McMillen did not report to an appropriate law‑enforcement authority; reversed by Texas Supreme Court)