Cecile E. Young v. Cook Children’s Health Plan
No. 15-24-00114-CV
In the Court of Appeals for the Fifteenth District of Texas
In the Court of Appeals for the
Fifteenth District of Texas
Cecile E. Young, in her official capacity as Executive Commissioner of Texas
Health & Human Services Commission, Molina Healthcare of Texas, Inc., and
Aetna Better Health of Texas, Inc.,
Appellants,
v.
Cook Children’s Health Plan, Texas Children’s Health Plan, Superior HealthPlan,
Inc., and Wellpoint Insurance Company,
Appellees.
Appeal from the 455th Judicial District Court, Travis
County, Texas, Trial Court Cause No. D-1-GN-24-003839,
Hon. Laurie Eiserloh, Presiding
Appellee Superior HealthPlan, Inc.’s
Reply in Support of Motion for
Temporary Relief Under Rule 29.3
Karen D. Walker
Admitted Pro Hac Vice
karen.walker@hklaw.com
Tiffany Roddenberry
Admitted Pro Hac Vice
tiffany.roddenberry@hklaw.com
Holland & Knight LLP
315 S. Calhoun Street, Suite 600
Tallahassee, Florida 32301
(850) 425-5612 (telephone)
(850) 224-8832 (facsimile)
Richard B. Phillips, Jr.
Texas Bar No. 24032833
rich.phillips@hklaw.com
Holland & Knight LLP
One Arts Plaza
1722 Routh Street, Suite 15500
Dallas, Texas 75201
(214) 964-9500 (telephone)
(214) 964-9501 (facsimile)
Counsel for Appellee Superior HealthPlan, Inc.
Page
Index of Authorities ................................. iii
Introduction........................................ 1
Argument ......................................... 4
1. This Court has jurisdiction to grant temporary relief
pending appeal. ................................ 4
A. This Court has power under Rule 29.3 to protect
Appellees’ rights pending appeal. .................... 4
B. The Court also has inherent authority to grant
temporary orders. ............................. 7
2. The trial court correctly concluded that Appellees have
a probable right to relief. ............................ 9
A. Appellees’ claims are ripe for adjudication. .............. 9
B. Appellees were not required to exhaust administrative
remedies before bringing their ultra vires claims. .......... 16
C. The Commissioner mischaracterizes the relief
Appellees seek............................... 19
D. The trial court correctly determined that the
Commissioner has acted and proposes to act ultra
vires. ................................ ... 23
(1) Section 2155.144 does not confer unlimited discretion
and requires documentation of the relevant factors
considered in making contract awards............... 24
(2) The Commissioner was required to apply statutory
preferences and cannot argue they were discretionary...... 26
(a) The Court should reject the Commissioner’s shotgun
arguments for why the preferences do not apply, afford
her unbounded discretion, or are waived. .......... 26
(b) Appellees have a probable right to relief on their claims
that the Commissioner has failed to apply or will fail to
apply statutory preferences. ................. 32
(3) Appellees have a probable right to relief on their claims
that HHSC wrongfully disclosed proposals. ........... 36
(4) The trial court appropriately found that Appellees have a
probable right to relief on their claims that the
Commissioner will act ultra vires in failing to certify the
proposals in accordance with section 533.0035 and in
awarding “mandatory” CHIP contracts in violation of
section 536.052(d). ......................... 38
3. The equities weigh heavily in favor of temporary relief. ......... 40
Conclusion and Prayer................................ . 44
Certificate of Compliance ............................... 46
Page
Cases
Abbott v. Doe,691 S.W.3d 55 (Tex. App.—Austin 2024, no pet.) ............... 10
City of El Paso v. Heinrich,284 S.W.3d 366 (Tex. 2009) ........................... 22
E&L Constr. Grp., LLC v. United States,159 Fed. Cl. 115 (2022)............................... 27
Eichelberger v. Eichelberger,582 S.W.2d 395 (Tex. 1979) ............................. 8
Etan Indus., Inc. v. Lehmann,359 S.W.3d 620 (Tex. 2011) ............................. 9
Hensley v. State Comm’n on Jud. Conduct,692 S.W.3d 184 (Tex. 2024)............................ 18
In re Geomet Recycling LLC,578 S.W.3d 82 (Tex. 2019) (orig. proceeding)................... 7
In re State,711 S.W.3d 641 (Tex. 2024) (orig. proceeding) ................. 41
In re Texas Educ. Agency,619 S.W.3d 679 (Tex. 2021) (orig. proceeding) ............... 7, 8, 23
Matzen v. McLane,659 S.W.3d 381 (Tex. 2021) ............................ 22
Phillips v. McNeill,635 S.W.3d 620 (Tex. 2021)............................ 22
Sw. Elec. Power Co. v. Lynch,595 S.W.3d 678 (Tex. 2020)......................... 9, 15, 16
VAS Realty, LLC v. United States,26 F.4th 945 (Fed. Cir. 2022) ........................... 27
Statutes and Regulations
Rule
Other Authorities
Merriam-Webster Online Dictionary ...................... 30, 31
The trial court (after hearing live testimony for three and a half days) concluded that Appellees have brought viable claims that the Executive Commissioner of the Texas Health and Human Services Commission has acted and will act ultra vires in connection with the procurement at issue in this appeal. The trial court also found that Appellees have a likelihood of success on the merits of those ultra vires claims and enjoined the Commissioner from taking action to execute the proposed contracts. This Court should issue temporary orders to keep that injunction in place pending until this appeal is resolved.
The Commissioner’s and Molina Healthcare of Texas, Inc.’s1 responses to Appellees’ motions for temporary relief essentially argue that the Commissioner should have unreviewable discretion to award these contracts as she sees fit. But the Legislature has established multiple requirements that the Commissioner must follow in awarding these contracts. Appellees’ suits are the proper way to invoke the courts’ jurisdiction to ensure that the Commissioner follows the law. And temporary relief from this Court is necessary to protect this Court’s jurisdiction and Appellees’
Appellee Superior HealthPlan, Inc.’s Reply in Support of Motion for Temporary Relief — Page 1
Molina (but not the Commissioner) questions this Court’s authority to grant temporary relief at all. This argument hinges on a misapprehension of Appellees’ rights and this Court’s power. Because Appellees have viable ultra vires claims, they have rights that can (and should) be protected by temporary relief under Rule 29.3. Molina’s arguments are based on its flawed assertion that the Commissioner has unfettered discretion in the procurement process. Also, this Court has inherent power to enjoin execution of the proposed contracts because any other result would raise significant constitutional issues.
Despite ample evidence of imminent harm to Appellees, the Commissioner and Molina argue that Appellees’ claims are not yet ripe. They also both argue that Appellees were required to exhaust their administrative remedies before bringing ultra vires claims. These arguments misconstrue the nature and purpose of Appellees’ ultra vires claims. Texas courts have repeatedly recognized that ultra vires claims are not subject to the exhaustion requirement. Where the official’s actions are ultra vires, there is no purpose in requiring the plaintiff to wait until the ultra vires process ends before seeking judicial relief. Thus, Appellees’ claims are ripe and properly before the Court.
Appellee Superior HealthPlan, Inc.’s Reply in Support of Motion for Temporary Relief — Page 2
Finally, the Commissioner argues that the equities weigh in favor of allowing her to continue on a course of action the trial court found to be likely ultra vires. (HHSC Resp. at 41.) The Commissioner argues that the State has an interest in enforcing its laws. True enough. But that interest weighs against the Commissioner here because the purpose of ultra vires suits is to rein in officials who are acting outside their authority. Because Appellees are likely to succeed on their ultra vires claims, the interest of enforcing the law weighs in favor of a temporary order from this Court to prevent ultra vires actions. The Commissioner does not (and cannot)
Appellee Superior HealthPlan, Inc.’s Reply in Support of Motion for Temporary Relief — Page 3
Argument
1. This Court has jurisdiction to grant temporary relief pending appeal.
Molina (but not the Commissioner) asserts that this Court lacks jurisdiction to grant the temporary relief requested by Appellees. (Molina Resp. at 12.) But as explained in Superior’s motion, this Court has the power to grant the requested relief under either Rule 29.3 or the Court’s inherent authority. (Superior Mot. at 23–25.) Molina’s attempts to avoid these sources of jurisdiction are unavailing.
A. This Court has power under Rule 29.3 to protect Appellees’ rights pending appeal.
Molina argues that Rule 29.3 cannot apply by urging that Appellees have no rights that need to be preserved because (according to Molina) Appellees have no right to challenge the Commissioner’s administration of the procurement. (Molina Resp. at 16–21.) This is not an argument that the Commissioner made in the trial court or in this Court, and for good reason. The only Texas cases Molina cites for
Appellee Superior HealthPlan, Inc.’s Reply in Support of Motion for Temporary Relief — Page 4
A more recent case about setting prevailing wage rates makes clear that the decision turned on the absolute discretion granted by the statute. The statute was amended in 1993 to prescribe two methods by which the prevailing wage rate was required to be determined. See Associated Gen. Contractors of Texas, Inc. v. City of El Paso, 879 S.W.2d 318, 319 (Tex. App.—El Paso 1994, no writ). When Associated General Contractors of Texas sued the City of El Paso for failing to comply with the amended statute, the city argued that the courts had no jurisdiction over the claim,
Appellee Superior HealthPlan, Inc.’s Reply in Support of Motion for Temporary Relief — Page 5
In a footnote, Molina also cites a case from 1921, in which the applicable statute gave the county commissioners court the absolute power to reject any bid. Holt & Co. v. Wheeler County, 235 S.W. 226, 228 (Tex. App.—Amarillo 1921, writ dism’d w.o.j.). Again, because the statute conferred absolute discretion, the court lacked jurisdiction over claims about the bidding process. Id.
Here, in contrast, as discussed in Superior’s motion (and in Part D of this reply), the governing statutes do not give the Commissioner absolute discretion. Instead, the applicable statutes establish standards and requirements that the Commissioner must follow in determining and awarding the contracts at issue. Molina’s cases about absolute discretion thus do not apply here.
Molina also makes no effort to address recent Texas Supreme Court authority about courts’ power to address ultra vires actions by state officials. In Houston Belt & Terminal Railway Co. v. City of Houston, the Supreme Court clarified that an ultra vires suit can be maintained when the plaintiff alleges that an official exercised “limited discretion without reference to or in conflict with the constraints of the law
Appellee Superior HealthPlan, Inc.’s Reply in Support of Motion for Temporary Relief — Page 6
B. The Court also has inherent authority to grant temporary orders.
Molina’s arguments about this Court’s inherent authority fare no better. (Molina Resp. at 21.) Texas courts have recognized that appellate courts have the inherent authority “to preserve a party’s right to judicial review of acts that it alleges are unlawful and will cause it irreparable harm.” Tex. Health & Human Servs. Comm’n v. Sacred Oak Med. Ctr. LLC, No. 03-21-00136-CV, 2021 WL 2371356, at *5 (Tex. App.—Austin June 9, 2021, no pet.). Molina tries to avoid this case as simply applying Rule 29.3 (Molina Resp. at 22 n.27), but the court expressly exercised its inherent authority. Id. The point is that even without Rule 29.3, an appellate court has the inherent power to grant temporary relief to preserve the right to appellate review and prevent irreparable harm. Id.
That power is necessary because if a party has no recourse to preserve its rights pending appeal, that would raise “serious constitutional questions.” In re Geomet Recycling LLC, 578 S.W.3d 82, 89 (Tex. 2019) (orig. proceeding); see also In re
Appellee Superior HealthPlan, Inc.’s Reply in Support of Motion for Temporary Relief — Page 7
Appellee Superior HealthPlan, Inc.’s Reply in Support of Motion for Temporary Relief — Page 8
A. Appellees’ claims are ripe for adjudication.
Both the Commissioner and Molina argue that the Appellees’ claims are not ripe because their administrative appeals remain pending before the Commissioner. (HHSC Resp. at 12; Molina Resp. at 24.) The ripeness arguments hinge on the contention that there can be no cognizable injury to Appellees until after the Commissioner decides their pending appeals from the denial of their bid protests. (HHSC Resp. at 12; Molina Resp. at 24.) But the Commissioner and Molina misconstrue the law and the testimony at the temporary-injunction hearing. Appellees face an imminent injury that is sufficiently ripe for adjudication.
A dispute is ripe if “the facts are sufficiently developed ‘so that an injury has occurred or is likely to occur, rather than being contingent or remote.’” Sw. Elec. Power Co. v. Lynch, 595 S.W.3d 678, 683 (Tex. 2020) (internal citations omitted). “A claimant is not required to show that an injury has already occurred, provided the injury is imminent or sufficiently likely.” S.O. v. Univ. of Tex., No. 03-16-00726-CV, 2017 WL 2628072, at *2 (Tex. App.—Austin June 15, 2017, no pet.). A declaratory-judgment claim is ripe when there is a live controversy, harm will occur if it is not resolved, and the declaration sought will “actually resolve the controversy.” Lynch, 595 S.W.3d at 685; see also Etan Indus., Inc. v. Lehmann, 359 S.W.3d 620, 624 (Tex.
Appellee Superior HealthPlan, Inc.’s Reply in Support of Motion for Temporary Relief — Page 9
To argue that Appellees’ claims are not ripe, the Commissioner and Molina selectively quote from the hearing transcript about the administrative appeals’ status. (HHSC Resp. at 12–13; Molina Resp. at 25–26.) The Commissioner contends that “whether the Commissioner will proceed with the results from HHSC’s procurement scoring or alter them in some way is far from certain.” (HHSC Resp. at 13.) This statement cannot be squared with the Commissioner’s testimony. For example, she was asked:
Q: But you’ve decided that you’re not going to redo something or fix something; you’re just going to sign the contracts?
A: On these—on this procurement, I felt like we did—what we did was correct, so no.
(5RR:180.) In the context of earlier questions, the Commissioner’s statement “so no” refers to whether she intends to order a new procurement. An earlier question asked about her option to “just start over.” (Id.) And this answer makes clear that
Appellee Superior HealthPlan, Inc.’s Reply in Support of Motion for Temporary Relief — Page 10
Molina hypothesizes that it is possible that the Commissioner might find in Appellees’ favor in the administrative appeals and could order a new procurement. (Molina Resp. at 26–27.) But based on the evidence at the hearing and the Commissioner’s arguments in this Court, there is no reasonable doubt about the administrative appeals’ outcome: the Commissioner fully intends to move forward with awarding the contracts identified in the notice of intent to award.
Appellee Superior HealthPlan, Inc.’s Reply in Support of Motion for Temporary Relief — Page 11
Appellee Superior HealthPlan, Inc.’s Reply in Support of Motion for Temporary Relief — Page 12
Here, in contrast, the Commissioner’s ultra vires conduct is the cause of the harm Appellees face. The administrative appeals’ pendency does not affect this anal- ysis. The Commissioner continues to take the position that she and HHSC complied with all applicable laws and unless a court tells her otherwise, the Commissioner stands poised to deny the appeals and execute the contracts immediately thereafter. Thus, the alleged harm in Riner was materially more contingent and attenuated than the harm at issue here.
The Commissioner also cites Marble Falls Independent School District v. Scott, 275 S.W.3d 558, 567 (Tex. App.—Austin 2008, pet. denied). But that case addresses exhaustion of administrative remedies, not ripeness. And as discussed in Part 2.B, Appellees were not required to exhaust administrative remedies before seeking a declaration that the Commissioner is acting ultra vires. Marble Falls is also inapposite
Molina also cites City of Anson v. Harper, 216 S.W.3d 384, 395 (Tex. App.— Eastland 2006, no. pet.), for the proposition that injury that depends on uncertain administrative action is not ripe. (Molina Resp. at 27.) That case addressed a chal- lenge to a proposed landfill, where the landfill permit applications were still pending and thus the landfill’s construction and operation was a mere possibility. 216 S.W.3d at 388. The court cited two Fifth Circuit cases finding that controversies over pro- posed landfills were not ripe where the landfills’ regulatory approvals were still pending. Id. at 390. But the court found that because the city had already done some dirt work relating to the proposed landfill that had damaged plaintiffs, the trial court did have potential jurisdiction to resolve claims based on events which had already taken place. Id. at 388. Here, Appellees have alleged that the Commissioner has already en- gaged in ultra vires action (which has caused injury to Superior) and will continue to engage in ultra vires action unless stopped by the court (which will result in additional injury to Superior). Thus, this case does not support Molina’s ripeness argument.
The facts here are more analogous to the facts in Lynch, which involved a dis- pute about the rights granted under a blanket easement. 595 S.W.3d at 684. The defendant argued that the plaintiffs’ claim was not ripe because their concerns
Similarly, there is a “present disagreement” here about the Commissioner’s inter- pretation of the statutes governing the STAR & CHIP and STAR Kids procurements, and Appellees have shown that they are likely to suffer harm if that controversy is not resolved. That harm is neither contingent nor remote. The dispute is therefore ripe for adjudication.
B. Appellees were not required to exhaust administrative remedies be- fore bringing their ultra vires claims.
Relatedly, the Commissioner and Molina also argue that this Court lacks ju- risdiction because Appellees should have exhausted their administrative remedies before filing their declaratory-judgment case. (HHSC Resp. at 15–16; Molina Resp. at 27–31.) But administrative exhaustion is not required when the plaintiff asserts a valid ultra vires claim. See, e.g., McGarry v. Houston Firefighters’ Relief & Ret. Fund, 680 S.W.3d 14, 34–35 (Tex. App.—Houston [1st Dist.] 2023, pet. denied). Both the
As discussed in Part 1.A., in 2016, the Texas Supreme Court decided Houston Belt & Terminal Railway Co. and clarified what constitutes an ultra vires claim. 487 S.W.3d at 163. In that case, the City of Houston argued that ultra vires claims are cognizable only when the official had no discretion whatsoever. Id. at 161. That is, according to the City, if the official had any discretion, no ultra vires claim could ever be brought. Id. The Supreme Court rejected that argument. Id. at 163. The Court instead held that ultra vires claims are cognizable to address “an officer’s exercise of judgment or limited discretion without reference to or in conflict with the constraints of the law authorizing the official to act.” Id. The Court reasoned that the purpose of ultra vires claims is not to “attempt to exert control over the state” but to “at- tempt to reassert the control of the state.” Id. at 164. Thus, the issue is not whether
The Commissioner cites Hensley v. State Commission on Judicial Conduct, 692 S.W.3d 184, 194 (Tex. 2024), for the proposition that “when an available adminis- trative remedy ‘may moot the claim … the claim is barred.’” (HHSC Resp. at 15.) But in that case the Supreme Court concluded that the plaintiff did not have to ex- haust her administrative remedies because “exhaustion would be a pointless waste of time and resources.” 692 S.W.3d at 194. That holding is fully consistent with the ultra vires exception’s application. When the plaintiff has a viable claim that the of- ficial is acting outside the authority granted by the legislature, requiring the plaintiff to complete the administrative process before making those claims serves no pur- pose.
The Texas cases that Molina cites to support its exhaustion argument all pre- date Houston Belt & Terminal. (Molina Resp. at 30–31.) Nor does Molina identify any reason that the ultra vires exception to the exhaustion requirement should be limited to claims that the official lacked any authority whatsoever where the claim is that the official acted beyond the scope of, or contrary to, the applicable legislative authority. As discussed above, the Supreme Court has explained that a plaintiff states a claim
C. The Commissioner mischaracterizes the relief Appellees seek.
The Commissioner next argues that Appellees are not entitled to ask a court “to compel the Commissioner to redo the procurement process.” (HHSC Resp. at 16.) But this argument misstates the relief Appellees seek. The Commissioner does not cite to any portion of the record where Appellees have sought an order compel- ling the Commissioner to redo the procurement. (Id.) That is because there is no such pleading. Instead, Superior seeks (1) declarations that the Commissioner is re- quired to comply with the statutes governing the procurement and that the Commissioner has failed and will continue to fail to comply with such statutes if the
The Austin Court of Appeals has also previously recognized that a claim for an injunction to stop the Commissioner from executing a contract that violates the procurement statutes is a valid ultra vires claim. Wilson v. Community Health Choice Texas, Inc., 607 S.W.3d 843, 855 (Tex. App.—Austin 2020, pet. denied). Thus, Su- perior’s similar claim is also cognizable. That is, by seeking to stop the Commissioner from violating the law, the claim seeks prospective relief. And injunc- tive relief to stop improper conduct is a recognized and proper remedy for an ultra vires claim.
Further, the cases the Commissioner cites for this strawman argument are readily distinguishable. The Commissioner first cites In re Stetson Renewables Hold- ings, LLC, 658 S.W.3d 292, 297 (Tex. 2022) (orig. proceeding) for the proposition that absent a legislatively crafted remedy, there is no remedy for the Commissioner’s ultra vires conduct. (HHSC Resp. at 16–17.) But Stetson does not support that argu- ment. A taxpayer sought mandamus relief ordering the Comptroller to process its application to participate in a tax incentive program. 658 S.W.3d at 293. The Su- preme Court held that because the legislature had expressly provided that the
The Commissioner next cites Morath v. Kingsville Independent School District, 710 S.W.3d 918, 925 (Tex. App.—15th Dist. 2025, no pet.), for the proposition that “the lack of a legislatively mandated judicial remedy is fatal to [Appellees’] claims.” (HHSC Resp. at 17.) Again, however, the case does not support that proposition. The issue was whether a school district was entitled to an order compelling the Com- missioner of Education to cancel school district ratings rather than issuing them retroactively because they were not timely under the statute. 710 S.W.3d at 921–22. This Court held that issuing the ratings retroactively was not an ultra vires act. Id. at 927. This case does not address what the remedy would have been if the commis- sioner was acting ultra vires.
Finally, the Commissioner cites City of Austin v. Utility Associcates, Inc., 517 S.W.3d 300, 312–13 (Tex. App.—Austin 2017, pet. denied), to argue that Appellees seek retrospective relief rather than prospective relief. (HHSC Resp. at 18.) But that case establishes that Appellees are seeking prospective relief. In Utility Associates, the plaintiff sought injunctive relief to stop enforcement of an existing contract the
More fundamentally, the Commissioner’s argument cannot be squared with the many cases recognizing that injunctive relief is proper to stop ultra vires actions. See, e.g., Matzen v. McLane, 659 S.W.3d 381, 388 (Tex. 2021) (“Texas law recognizes ‘ultra vires’ claims seeking prospective injunctive relief against individual govern- ment officials in their official capacities.”); Phillips v. McNeill, 635 S.W.3d 620, 627– 28 (Tex. 2021) (noting that the doctrine of ultra vires suits against government offi- cials traces its roots “to courts’ issuance of writs of habeas corpus, mandamus, and injunction against government officials to check acts in excess of lawful author- ity”); Houston Belt & Terminal Ry. Co., 487 S.W.3d at 160 n.4 (noting that a successful plaintiff on an ultra vires claim is entitled to injunctive relief); City of El Paso v. Heinrich, 284 S.W.3d 366, 373, 376 (Tex. 2009) (same). In short, when the relief Appellees seek is correctly understood, there can be no question that the relief is judicially cognizable.
The Commissioner also seeks to avoid relief maintaining the status quo pend- ing her appeal by asserting that all Appellees’ claims lack merit. (HHSC Resp. at 20– 41.) This Court need not and should not resolve the merits at this early stage given this case’s procedural posture. See, e.g., In re Tex. Educ. Agency, 619 S.W.3d 679 (Tex. 2021) (orig. proceeding) (making no comment on the merits of school district’s claims in affirming temporary orders entered under Rule 29.3); Abbott v. Doe, No. 03-22-00126-CV, 2022 WL 837956, at *2 (Tex. App.—Austin Mar. 21, 2022, no pet.) (“Therefore, without regard to the merits of the issues on appeal, which are not yet briefed to this Court, we exercise our discretion under Rule 29.3 to reinstate the injunction as issued by the district court on March 11, 2022.”); Tex. Educ. Agency v. A+ Tex. Teachers, No. 03-23-00318-CV, 2023 WL 4981604, at *3 (Tex. App.— Austin Aug. 4, 2023, no pet.) (issuing temporary order reinstating part of temporary injunction “without commenting on the merits of any party’s claims or defenses”). In any event, Appellees have demonstrated a probable right to relief on the merits warranting Rule 29.3 relief and maintaining the trial court’s temporary injunction.
In her opposition, the Commissioner suggests for the first time that her con-
duct was entirely proper because
To begin with, although the Commissioner is generally required to use pro-
curement methods that provide best value under
For instance, the Commissioner cannot and does not dispute that HHSC
deemed past performance a relevant factor in this procurement. (5RR:225–26.) Once
HHSC deemed it a relevant factor under
Despite the Commissioner’s arguments to the contrary,
The Commissioner next argues that there is no specified manner by which she
must apply the statutory preferences required in managed care procurements, see
(a) The Court should reject the Commissioner’s shotgun ar- guments for why the preferences do not apply, afford her unbounded discretion, or are waived.
The Commissioner offers a series of disparate arguments contending that the statutory preferences at issue are inapplicable, confer discretion, or have been waived. (HHSC Resp. at 25–28.) These arguments cannot withstand scrutiny.
The Commissioner first questions whether Appellees have standing to chal- lenge her failure to apply the statutory preferences, arguing that Appellees were required to show that the failure to apply the statutory preferences caused them to be passed over in the procurement process. (HHSC Resp. at 25–26.) The single case the Commissioner cites is a federal bid protest case. See Elcon Enters., Inc. v. Wash. Metro. Area Transit Auth., 977 F.2d 1472, 1483–84 (D.C. Cir. 1992). But this is not a bid protest; it is an action asserting claims of ultra vires action. In any case, the same
Equally unavailing is the Commissioner’s suggestion that Appellees should have protested how HHSC would employ the statutory preferences before the no- tices of intent to award were issued. Appellees could not have known the Commissioner would ignore the required statutory preferences until after the notices of intent to award were issued, particularly when the RFP—as the Commissioner agrees—indicated that HHSC would follow these statutes. (See HHSC Resp. at 26.)
Contrary to the Commissioner’s argument, Wilson, is on point. The court in no way limited its ruling to the fact that the petitioner there was an entity qualifying
The Commissioner next contends that
The court in Wilson rejected a similar argument about
So too here. Although the Commissioner certainly must comply with the gen-
erally applicable requirements to employ a procurement method that will provide
best value, that does not mean she can ignore the specific statutory preferences and
requirements set out in
The Commissioner then suggests she maintains discretion in applying the preferences, and states that the preferences only come into play when “two bidders offer the same value.” (HHSC Resp. at 27.) But “preference” has a common mean- ing in no way limited to the circumstance where a tie must be broken. See Preference,
The Commissioner next suggests that the onus was on Appellees to present
information in their proposals so that HHSC could apply the preferences and Appel-
lees failed to do so. (HHSC Resp. at 28.) But the statutes place the responsibility of
effecting the preferences on the Commissioner and HHSC, not Appellees.
(b) Appellees have a probable right to relief on their claims that the Commissioner has failed to apply or will fail to apply statutory preferences.
The Commissioner argues that she acted within her discretion in applying the
preference contained in
“Shall” is mandatory. See, e.g., Frank, 255 S.W.3d at 324. And as discussed above, the word “preference” has a common and ordinary meaning: choosing one thing over another. Nothing supports the Commissioner’s argument that she had the dis- cretion to apply the preference only when she wished to do so, e.g., in case of a tie or all things otherwise being equal. Arguing that there is some discretion in determining
Furthermore, the Commissioner cannot rely on the cited best value evaluation criteria or technical questions to contend that HHSC somehow did account for section 533.003(a)(1) in the procurement. Section 533.003(a)(1) requires HHSC, in awarding contracts to MCOs, to give preference by region to those MCOs that have significant participation in the MCO‘s provider network from each health care provider in the region that has traditionally provided care to Medicaid and charity care patients. Thus, section 533.003(a)(1) mandates that HHSC give preference based on provider networks already in place in each region when HHSC makes contract awards. None of the RFP‘s best value evaluation criteria or technical questions requested information regarding a respondent‘s existing provider network at all, let alone by region. And even the provisions the Commissioner cites do not relate expressly to providers who traditionally provide care to Medicaid and charity care patients, but “Providers” writ more broadly. (See HHSC Resp. at 30.) Nor were the evaluators given any information necessary to apply the preference, such as which providers traditionally provide care to Medicaid and charity care patients, let alone even informed of a preference requirement. (5RR:98.)
The Commissioner admits that no benchmarks were developed and confirms that she was proceeding under the subsection requiring consideration of which MCO “offers a managed care plan that successfully implements quality initiatives … as determined by the commission based on data or other evidence provided by the organization.” (HHSC Resp. at 31.) But she readily admitted in public testimony before the House Human Services Committee that existing quality metrics were not considered in making the contract awards. (6RR:162–64; 5RR:162 & Ex. P-148 at 64–65.) HHSC merely considered what the respondents promised to do in the future. (Id.) That plainly does not comply with the statute. Nor is it sufficient to argue that respondents should have submitted and did not submit the relevant information for
The Commissioner suggests that HHSC considered the information necessary to employ the preference by considering responses to Technical Question 13, which asked bidders to “[d]escribe the Respondent‘s Quality Improvement and performance evaluation strategies and initiatives specific to the STAR, CHIP, and HTW populations.” (9RR:330.) This question was forward-looking, seeking “strategies and initiatives” that will be employed under the STAR & CHIP contracts awarded under the RFP, not quality initiatives that any MCO is now implementing. Indeed, Ramirez confirmed that the procurement process did not consider or evaluate the quality initiatives previously implemented by any plan. (5RR:224–28.)
The Commissioner next disputes that she failed to ensure mandatory contracts under section 533.004 were awarded considering section 533.003(a)(1), which requires giving preference to organizations with significant participation in their provider network from health care providers in the region who have traditionally provided Medicaid and charity care. (HHSC Resp. at 33–34.) As explained above, the Commissioner did not actually employ the preference required by section 533.003(a)(1), and thus her argument that the selection of mandatory contracts was also under that provision falls flat. Indeed, the record evidence shows that the only
(3) Appellees have a probable right to relief on their claims that HHSC wrongfully disclosed proposals.
HHSC‘s wrongful disclosure of the proposals, including to Aetna‘s legal counsel, destroyed the procurement‘s integrity and created an unlevel playing field resulting in intended contract awards procured through a process that does not provide fair consideration of proposals as required by 1 T.A.C. section 391.209(3)(A), and that is inconsistent, uniform, and transparent, as required by 1 T.A.C. section 391.101. The Commissioner responds that all respondents to the RFP agreed to the application of the Public Information Act (“PIA“) to their proposals, and that if
No one disputes that respondents knew that PIA versions of their proposals were eventually subject to public disclosure. But it is the manner in which HHSC made the disclosure that created an unlevel playing field and favored one bidder over others. (5RR:128–29 (Kay Molina agreed to the general idea of why proposals are protected until award decision is made—to protect the procurement‘s integrity—and admitted that she knew of no other instance where a proposal was released before notices of intent to award were posted); 5RR:136–40 (acknowledging the value of the prematurely-disclosed proposals to Aetna).) The Deputy Commissioner‘s conclusory resolution of Superior‘s protest (that, in HHSC‘s view, the premature disclosure did not affect the procurement) is contradicted by the record evidence, including HHSC‘s own admission that the disclosure was wrongful. (5RR:138–39 (discussing correspondence in which HHSC employees admitted the proposals were disclosed in error and asked the recipient to destroy the copies); CR:3546–47, 3588–3639; see also 6RR:16–17 (testimony of Superior‘s procurement expert).)
In short, the Commissioner fails to show any basis to reject the trial court‘s finding that Appellees have a probable right to relief on their claim that the Commissioner acted ultra vires in the premature disclosure of the proposals while the
(4) The trial court appropriately found that Appellees have a probable right to relief on their claims that the Commissioner will act ultra vires in failing to certify the proposals in accordance with section 533.0035 and in awarding “mandatory” CHIP contracts in violation of section 536.052(d).
The Commissioner next argues that the trial court “invented” statutory mandates in support of the temporary injunction. (HHSC Resp. at 38–41.) But after a three and a half day evidentiary hearing, the trial court simply applied the plain language of the relevant laws to the facts and found that Appellees have a probable right to relief on their claims sufficient to warrant entry of a temporary injunction.
Texas Government Code section 533.0035(a) is one such clear, nondiscretionary statute: “Before the commission may award a contract under this chapter to a managed care organization, the commission shall evaluate and certify that the organization is reasonably able to fulfill the terms of the contract, including all requirements of applicable federal and state law.”
The Commissioner boldly contends that “HHSC‘s decision to procure the CHIP piece with the mandatory STAR piece is consistent with the best-value scoring to award the CHIP contracts competitively” (HHSC Resp. at 40–41), but this is demonstrably untrue. The mandatory contracts were not awarded based on any “best-value scoring.” They were automatically given without regard to the score under the best
The trial court therefore correctly concluded that Superior and the other Appellees have established a probable right to relief on the merits of their claims. None of the Commissioner‘s arguments about the purported merits of the claims warrant denying Rule 29.3 relief.
3. The equities weigh heavily in favor of temporary relief.
To argue that the equities weigh against temporary relief, the Commissioner argues that the State‘s interest in enforcing its laws is the paramount concern. (HHSC Resp. at 43.) But the case the Commissioner relies on is not applicable, and the Commissioner‘s argument ignores the fundamental purpose of ultra vires suits. In State v. City of San Marcos, the State sued to enjoin a city ordinance that allegedly violated state law. 714 S.W.3d 224, 231 (Tex. App.—15th Dist. 2025, pet. filed). This Court found that the State had a likelihood of success on the merits of its claim that state law preempted the ordinance. Id. at 243. Then, in analyzing the factors governing temporary relief, the Court found that the equities weighed in favor of enjoining the ordinance because of the State‘s interest in enforcing its laws. Id. at 245.
The Commissioner also misconstrues Appellees’ interests. Appellees do not assert a right to a contract with the State. Instead, they have asserted a right to a
Similarly, the Commissioner attempts to brush aside the significant harms to the public the trial court found. (HHSC Resp. at 48–50.) Millions of Texans will be required to find new health plans if the proposed contracts are executed. (Superior Mot. at 22.) And that disruption will be the result of an unlawful process. The Commissioner‘s claimed interest in “efficient provision of Medicaid services” cannot excuse the many ways that the procurement violates Texas law. The Commissioner‘s public-interest arguments are also premised on her repeated (and mistaken)
Finally, the Commissioner is wrong about what preserving the status quo means here. As discussed in Superior‘s motion, the status quo is that the intended contracts have not yet been signed. The Commissioner makes no effort to address the cases Superior cited in its motion about the proper understanding of the status quo. (Superior Mot. at 31–32.) “Where an order is entered by a Board or Commission of this State in opposition to the objections and contentions of a party whose justiciable interests are adversely affected thereby, the ‘status quo’ would be the state of affairs as they existed immediately prior to the time the order was entered.” Tex. State Bd. of Exam‘rs in Optometry v. Lane, 349 S.W.2d 763, 765 (Tex. App.—Fort Worth 1961, no writ) (citing Transp. Co. of Tex. v. Robertson Transports, Inc., 261 S.W.2d 549 (Tex. 1953)). And in Texas Health & Human Services Commission v. Sacred Oak Medical Center, LLC, the court recognized that the status quo was the state
Conclusion and Prayer
The trial court correctly found that the Commissioner has acted ultra vires and will act ultra vires if she executes the contracts announced in the intent to award. This Court should therefore grant temporary relief to continue the injunctive relief awarded by the trial court to preserve this Court‘s jurisdiction to hear this case on the merits. Failure to do so will irreparably harm Appellees and the public and may impact this Court‘s ability to grant effective judicial review. Superior further requests general relief.
Respectfully submitted,
Holland & Knight LLP
By: /s/ Richard B. Phillips, Jr.
Richard B. Phillips, Jr.
Texas Bar No. 24032833
rich.phillips@hklaw.com
One Arts Plaza
1722 Routh Street, Suite 15500
Dallas, Texas 75201
(214) 964-9500 (telephone)
(214) 964-9501 (facsimile)
Karen D. Walker
Admitted Pro Hac Vice
karen.walker@hklaw.com
Tiffany Roddenberry
Admitted Pro Hac Vice
tiffany.roddenberry@hklaw.com
315 S. Calhoun Street, Suite 600
Tallahassee, Florida 32301
(850) 425-5612 (telephone)
(850) 224-8832 (facsimile)
Attorneys for Appellee
Superior HealthPlan, Inc.
I certify that this reply contains 9,972 words, excluding the portions of the Motion exempted by Rule 9.4(i)(1).
/s/ Richard B. Phillips, Jr.
Richard B. Phillips, Jr.