We refe r to appe llees collec tively as the “ Depa

rtment” unless other

wise noted. 1 

### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03-0 9 -00299-CV

SSC M iss our i C it y Op e r at ing Co m pany , LP ; SSC Ri c hm ond O pe r at ing Com pany, L P ; HMG

P ark Manor of Qu ail Valley LLC; Rosenberg Health & Re habi litation CenterLP and Nexion Health at Beec hnu t, Inc., Appellants
v . Texas Depart m ent of Aging an d Disab ility Services; and Ad elaide Horn, ind ividu ally and in h er official capacity as Com m ission er of the Texas Depart m ent of Aging an d Disab ility Services , Appellees

F ROM THE DIST RICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT NO . D- 1-GN- 08 -00 26 60 , H ON ORAB LE OR LI NDA NARANJ O, JUD GE PRE S ID IN G

M E M O R

A N D U M O P I N I O N Appellants SSC M issouri Cit y Oper ating Company , L P; S SC R ichmond Oper ating Company , L P; HMG Park Manor of Quail Valley L L C; Rosenberg Hea lth & Reha bilitation C enter L P and Nexion Health at B eec hnut, I nc.—five nursing homes in For t Be nd County , Texas—sought judicial revie w of a

decision by

appellee s the Texas Depa rtment of Ag ing a

nd Disability

Service s
and Ad e la ide Ho rn , in div idu a lly and in he r of fi c ia l c a pa c ity a s Co mmi ssi on e r o f t

he De pa rtme nt, 1 t o g r an ta c o m m u n i t y- n e e d s w a i v e r f o r s e v e n t y- f

i v e a d d i t i o n a l M e d i c a i d b e d s i n F o rt B e n d C o u n t y, Te xas. I n tw o iss ue s, a

pp e lla nts argue that the dis tr ic t c ourt e rr e d in g ra nti ngsu mma

ry jud g me nt i n favor of the De partment be cause appellants have an i n h er en t ri g ht to judicial review of the2

Depa rtment’s ac tion and appellants we re entitled to judicial reviewunder the Uniform De clar atory J udg ments Act. F inding no err or i n the di strict court’s gr ant of summary judgme nt in favor of the De pa rtme nt, we a ff

ir m.
BACK GR OUND Th e le g isl a tur e ha s c ha

rg e d th e De pa

rtme nt t o a dmi nis te r t

he Me dic a id pr og ra

m in Texas to provide hea lth care service s for citizens who qualify for Me dicaid. Te x . Hum. Res. Code Ann. §§ 32 .0 01 -. 25 7 (We st 200 1 & Sup p. 20 09 ). Am on g the se rv ic e s o ff e re d thro ug h th e Me dic a id prog ram is nursing fac ility , or nursing home, servic es. To par ticipate in the M ed i ca i d p rogram, a nursing fac ility

must meet cer

tain require ments to be come Me dicaid ce rtified. 40 Te x . Admin. Code §§ 19.1-.2615 (2009) (T ex . Dep’ t of Ag ing & Disability Servs., NursingFa cility

Requirements). On c e c e rt if

ie d, a nurs ing fa c ili ty may a pp ly to the De pa

rtme nt fo r an a llo c a tio n o f M e dic a id b e ds to provide nursinghome servic es to qualified Te x as citizens. Id. § 19.2322.

Pursuant to its deleg ated authority , the Depa rtment is responsible for

“contr olling the
numbe r o f M e dic a id b e ds in n ur si ng faci li ti es.” Te x. Hum. R e s. Cod e Ann. § 3 2. 02 13 (a ) ( Wes t 20 01 ); se e ge ne ra lly

El de rCa re Pr op s. , I

nc . v . Tex as De

p’ t of Hu ma n S

e rv s. , 63 S.W .3d 551, 553 (Tex. App.—Austin 2001, pet. denied), ov e rru le d in pa rt by Te x as De p’ t of Pro te c tiv e & Re

gu lator y Serv s . v. Mega Child Care, Inc. , 145 S.W .3d 170, 173 (Tex. 2004). I n 1985, the Depa rtment’s prede cessor

—the Texas Depa

rtment of Human Service s—established a moratorium on allocating additional Medica id beds in Texas nursing homes. Se e El de rCa re Pr op s. , 63 S.W .3d at 553. The moratorium was f

ormally adopted b y ru l e in 1998 and is currently codified in title 40, section 19.2322 of the Te x as Administrative Code. See 40 Tex
. Admin. C od e § 1 9. 23 22 (b ). With in t hisAlth o u gh the Depa rtment disputes whether

appellants re quested a

contested c ase he aringon 2 t h e wa i v er a

pplication filed by

K.D. Gotche r, Inc., the r ecor d ref lects that appe llants’ written co m m en t s fi l edwi t h t h e D ep ar t m en ti n cl u d eda r eq u es tfo r h ea ri n g. 3 ru l e, the Depa

rtment also adopted se vera l exceptions to t he moratorium, including the communi t y -needs waiver at issue in this case. See id. § 19.2322(g )-( h). The c ommunity -nee ds waiver allows the De partment to lift the morator i u m and make additional Medica id beds available when the D epar tment finds that the criteria for g ranting a community -nee ds waiver have been me t. Id. Appellants oper ate va rious nursin g fa cil ities in Fort B end County and neig hboring Har ris County

that are Medica id cer

tified and have receive d an allocation of Medica id beds from the Depa rtment. I n November

2006, K.D. Gotche r, Inc., re quested a community -nee ds waiver from the Depa rtment to provide additional Medic aid beds in F ort Be nd County . Appellants filed wr itten
c omm e nts op po sin g the re qu e ste d wa ive r an d ar g uin g that Gotc he r ha d fa ile d to sat isf y the c ri te ri a
nece ssary to gr ant a wa iv er. Appellants also reque sted a he aringon Gotcher ’s application for wa iver. The De partment de nied appellants’ reque st for a he aringand g rante d Gotcher a 2
c o m m u n i t y- n e e d s w a i v e r f o r a s e v e n t y- f i v e b e d M e d i c a i d

n u r s i n g f a c i l i t y. Appellants filed suit in a Travis County District Court c halleng ing the Depa rtment’s decision to g rant a

waiver to Gotcher . Appella n t s soug ht injunctive and dec laratory relief . The De pa rtme nt mov e d fo r s umm ary jud g me nt o n th e g ro un ds that th e tr ia l c ourt la c ke d ju ri sd ic tio n to revie w the De partment’s a ction beca use neither

the statute nor the Depa

rtment’s rules provide d for judicial revie w of the D epar tment’s decision t o g rant a community -nee ds waiver , appellants did not have a n inhere nt rig ht of j udicial review, and there was no basis for jurisdiction under the UniformI n c lu d e d a mo n g th e e v id e n c e p r o v id e d by appellant s w e r e th e a f f id a v it s o f G r e g L e n tz , 3 manag ing me mber of H ea l t hmark Gr oup, L td.’s g ener al par tner HM Gr oup, L L C; Robert Kalin, vic e -p re sid e nt o f o pe ratio ns fo r S SC Ric hmo nd Op e ratin g Com

pa ny , L P’ s g e ner a l pa

rt ne r S SC Richmond Operating GP, L L C, and vice- president of operations for SSC Missouri City Oper ating Company , L P ’s gen er al p ar t n er S S C M i s s o u ri Op er at i n g GP , L L C ; P et er J
. L i ca ri , m an ag ing me mber of Ros e nb e rgHe a lth& Re ha bil itatio n Ce nte r, L P’ s g e ne ral partne r R os e nb e rgHe a lth & Re habilitation Center GP, L L C; Franc is Kirley , chief executive offic er of

Ne x i o n He alt h at B e e c hnut, I nc .; a

nd Ke lly A. Mc Do na ld, c ouns e l f

or a pp e lla nts
. 4 Dec laratory

J udg ments Ac t
. I n support of its motion for summary judgme nt, the Depa

rtment provided the le tter appr oving G otcher ’s waive r re quest; copies of a ppellants’ incor

poration documents; copies of

the Medica id contrac ts betw een the Depa rtment and a

ppellants for the provision of Medica id service s; and an a ffidavit fr om J oe D. Armstrong , Manag er, Prof essional and Tec hnical Review Br anch, Reg ulatory Service s Division of DADS. The D epar tment also provided
cer tified copies of

the “Plaintiff’s Response to Defe ndant’s Motion for Summary J udg ment” and the trial court’ s judgme nt in Valley GrandeManor, Inc . v. Texas D epartment o f Hu ma n Servic es , No. GN- 101,221 (Tra

vis County

Apr. 14, 2003). I n response , appellants provide d summary judgme nt evidenc e in an attempt to show 3 that they possessed an inhe rent rig ht of judicial revie w because their Medica id bed allocations and provider a g ree ments were fra nchises and, theref

ore, c onstitut ionally

protec ted prope rty

rig hts, that the awa rd of a waiver to Gotcher

irrepa rabl y d am age d t heir prope rty rig hts, and that they

had req u es t ed, but had not bee n provided, a hear ing. A

ppellants also direc ted the district cour t’s attention to portions of their petition seeking relief under the UDJA. The d i s trict court g rante d summary judgme nt in favor of

the Depa

rtment on April 29, 2009. This appea l followed.5 DI SCU SSIO N I n two issues, appella n t s co n t end that the dist rict cour t erre d in gr anting summary judgme nt in favor of t he Department. First, appellants contend that the district court ha d jurisdiction over the ir claims see king judicia l review o f t h e Depa rtment’s orde r g ranting a wa iver to Gotche r beca use appellants had constitutionally protec ted prope rty

rig hts or fra

nchises in their Medic aid bed
a llo c a tio ns a nd

pr ov id e r a g re e me nts pr e vio us ly g ra nte d b y the De pa

rtme nt. Se c on d, a

pp e lla nts contend that the district c ourt had jurisdiction to review the Depa rtment’s orde r under

the UDJA.
Stan dard of Revie w

We re vie w the dis tr ic t c ourt ’s g ra nt o f s umm ary

jud g me nt de novo
. Pr ov ide nt L ife & Ac c ide nt I

ns . Co . v . Kn ott , 128 S.W .3d 211, 215 (Tex. 2003)
. Where, a s here , the district court does not specif

y the basis for its ruling in its j udg ment, we may consi der a ny and all summary judgme nt gr ounds prese nted to the district court a nd prese rved for appellate re view. Cin c inn ati Life Ins. Co. v. Cates , 927 S.W .2d 623, 626 (Tex. 1996). The movant has t he burden of demonstrating that no g enuine issue of

materia l fac t exi sts and that he is entitled to judgme nt as a m at ter of la w. Te x. R. C iv. P. 1 66 a (c ); Nixon v. Mr. Prop. Mgm t. Co. , 6 9 0 S
. W
. 2 d 5 4 6 , 5 4 8

- 4 9 ( T e x . 1 9 8 5 )
. In revie wing a g rant of summar y judgme nt, we conside r the e vidence in the light most fa vorable to the
no nmo va nt and make e ve ry re a so na ble inf e re nc e and re so lve a ll do ub ts in fa vo r of the no nmo va

nt. Nixon , 690 S.W .2d at 548-49.6

Judicial R evie w of the Departm ent’s Order A) Inhere nt right t o judicial review I n their first issue, appellants arg ue that they possess an inher ent rig ht to judicial revie w of the D epar

tment’s decision to g rant a waiver to Gotcher

beca use the De partment’s de cision adver sely aff ects a ppellants’ veste d proper

ty rig hts. I n support of this claim, appellants c ontend that the ir be d a llo c a tio ns a

nd pr ov ide r a g re e me nts a

r e c o n s t i t ut i o n a l l y p r o t e c t e d f r a n c h i s e s , wh ic h “ e nti tle them to be fre e of competition c reated in violation of the law .” Appe llants further c ontend that the Depa rtment was without authority to g rant the waiver beca use t he mandatory regulatory criter ia had not been met. As a

g e ne ra l r ule , the re is no rig ht to jud ic ia l r e vie w o f a n a dmi nis tr a tiv e or de r u

nle ss a statute e x pressly

provides that rig ht or the orde r violates a c onstitut ional rig ht. Se e Ge ne ra l Se rv s. Comm’n v. Little-Tex I

nsulation Co. , 3 9 S. W.3 d 5 91 , 5 99 (T e x. 20 01 ); Continental Cas. Ins. Co.

v . F un c tio na l R esto ra tio n A sso c s. , 19 S.W.3 d 393 , 397 (T e x. 20 00 ); Fi re me n’ s & Po lic e me n’

s Ci v il Serv. Comm’n v. Kenne dy , 5 1 4 S
. W
. 2 d 2 3 7 , 2 3 9

- 4 0 ( T e x. 1 9 7 4 ); City of Amarill o v. Hanc ock, 239 S.W .2d 788, 790-92 (Tex
. 1951). The parties ag ree that no statute provides for judicial revie w of the Depa

rtment’s dec ision to gra

nt a community -nee ds waiver to Gotcher . Appellants, howe ver, maintain that their cla ims fall within the ex ception to the g ener al rule be ca u s e t h e Department’s de c isi on vio la te s a

pp e lla nts ’ f ra nc his e or ve ste d p ro pe rt

y ri g hts
.7 1) Do Ap

pe lla nts ’ M

e dic aid be d a llo c ati on s a n d

p ro v i d e r ag re e me nts c on sti tut e a franchise? As part of their ar g ument that they

are entitled to an inhere nt rig ht of judicial re view, appellants c ontend that their Medic aid bed a llocations coupled wi th their contra ctual provide r ag ree ments constitute a fra nchise. This Court confr onted a similar ar g ument in El de rCa re Properties, Inc . v. Texas D epartment of Human Se rvice s but, f inding that ElderCar e had w aived the argument, we de clined to addr ess it. See 63 S.W .3d at 555. I n El de rCa re , t h i s C ourt noted, ho we ve r, that “ [a] li ne of c a se s r e c og nize s a

ri g ht t o ju dic ia l r e vie w, e ve n in t he a bs e nc e of state deprivation of a vested r ight whe n the vested r ight at issue is a fra nchise, or t antamount t o a fra nchise.” Id. (c i t i n g Chemica l B a n k & Trust Co. v. Falkne r , 369 S.W .2d 427 (Tex. 1963); Brazosport Sav. & Loan Ass’n v. American Sav . & Loan Ass’n , 3 42 S.W. 2d 74 7 ( Te x. 19 61 ); W

hit e Top Cab Co. v. City of Houston , 440 S.W .2d 732 (Tex. Civ. App.—Houston [14t h Dist.] 1969, no writ)). We thus consider as a matter of f irst impression whether a

ppellants’ Medic aid bed a llocations and provide r ag ree ments constitute a fra nchise. There is nothing in the statute, the Depa rtment’s rules, or appellants’ p ro vider
a g re e me nts su g g e sti ngthat a pp e lla nts ’ M e dic a id b e d a llo c a tio ns or pr ov ide r a g re e me nts c on sti tut e fra nchises. Und er T ex as l aw, a contra ctual g rant of a

fra nchise must be cle ar, una mbiguous, a

nd unequivoca l. See State v. Ope rating Cont ractors ABS Emissions, Inc. , 9 8 5 S. W. 2 d 6 4 6 , 6 5 3 ( T e x. App.—Austin 1999, pet. denied) . As this Court explained in Op e ra tin g Co ntrac tor s , “F ranc hises
un de r T e xas c a se law g e ne ra lly take the fo rm

of utilitie s, or

oth e r m on op oli e s, c re a te d to further the public intere st.” I

d. ( c i t i n g Texas Power &Light v. Ci ty of Garland , 431 S.W .2d 511 (T e x. 19 68 ) ( e le c tr ic uti lity ); Brazosport Sav. & Loan Ass’n v. Ame rican Sav. &Loan Ass’n ,8

34 2 S. W .2 d 74 7 ( Te x. 19 61 ) ( savin g s a nd loa n a sso c ia tio ns ); City

of J ac k so nv ill e v . G e ne ra l Te l. Co. , 538 S.W .2d 253 (Tex. Civ. App.—Tyler 1976, writ ref ’d n.r.e .) (tele phone utility )). More over,

“ [o]ne wh o c la ims a

fr anc his e ri g ht o r p ri vil e g e in d e ro g a tio n o f t he c ommon ri g hts of

the pu bli c must p r o v e h is ti tl e th e r e to b y a g r an t c le ar ly an d d e f in it e ly e xp r e s s e d , an d c an n o t e n la r g e it by equivoca l or doubtful p ro visions or probable infe renc es.” Id. (c i t i n g Incorporated Town of Hempste ad v. Gulf States Utils. Co. , 20 6 S. W.2 d 2 27 , 2 30 (T e x. 19 47 )) . App lyingthi s st and a rd to
a pp e lla nts ’ M e dic a i d

b e d a l l o c a t i o n s a n d p ro vid e r a g re e me nts make s c le ar t hat th e De pa

rtme nt c ou ld not and did not awar d fra nchises to appe llants. I n section 32.0213 of the huma n resour ces c ode, the leg islature cha rg ed the Depa rtment to establish proce dures f or controlling the number of Me dicaid beds in Te x as nursing fac iliti es. See Te x. Hum. R e s. Cod e Ann. § 3 2. 02 13 . Se c tio n 3 2. 02 13 state s: (a) The de partment by rule shall esta

blish procedur es for : (1 ) c on tr oll ingthe numbe r o f M e dic a id b e ds in n ur sin g fa c ili tie s; (2) dece rtification of unuse d Medica id beds in nursing fac iliti es; and (3) rea llocation of nursing home be ds dece rtified under Subdivis ion (2) to o the r n ur sin g fa c ili tie s. (b) The proc edure s established under this section must t ake into ac count the o c c u p an c y r a t e o f

t h e n u r s i n g f

a c i l i t y. (c) The de p ar t m en t may exempt a nursing f

acility from the pr ocedur es e s t a b l i s h e d u n d e r t h i s s e c t i o ni f

t h e f a c i l i t y: (1 ) is a ff

ili a te d w itha

state -s up po rt e d me dic a l sc ho ol; (2) is located on land owned or controlled by the state-suppor

ted medica l school; and9 (3) serve s as a tea chi n g fa cil ity for phy sicians and r elated he alth car e pr of e ssi on a ls.
Id. Pur su ant to its de le g a te d au tho ri ty , the De pa rtme nt ha s ado pte d rul e s est a bli sh ingpr oc e dure s to control the number o f M ed i ca i d beds in Texas nursing fac iliti es. See 40 Tex. Admin. C ode §§ 19.2301-. 2 3 2 6 (2009) (Tex. Dep’t of Ag ing & Disability Servs., Requireme nts for Medicai d -C ertified F acilities). The re is nothing in the plain lang uag e of se ction 32.0213 of the human re source s code or the Depa rtment’s r u l es gra

nting a fra nchise, much le ss authorizing the De pa rtme nt t o g ra

nt a fr anc his e , to Me dic a id be d pr ov ide rs . No r do a pp e lla nts ’ p ro vid e r a g re e me nts include any

lang uag e cle arly

or unambig u o u sly

demonstrating that the Depa rtment g rante d a fra nchise to appe llants by

enter ing into such ag ree ments. We theref ore r ejec t appellants’ c ontention that th e ir Me dic a id b e d a llo c a t i o n s a n d p r o v i d e r a gr e e m e nt s a

r e c on sti tut ion a lly

pr ote c te d f

ra nc his e s. To the ex tent appellants claim they need not point to specific statutory or contra ctual langua g e to e sta

bli sha fr anc his e be c a

us e the ir Me dicaid bed

a llo c a tio ns and

pr ov ide r a g re e me nts
s at i s fy al l o f t he ele ments of a f ranc hise, appe llants’ argument is without m erit. Relying on Brazosport Saving & Loan Assoc iation v. American Savings & Loan Association , 342 S.W .2d 747 (T e x. 19 61 ), a

pp e lla nts argue that the ir Me dic a id be d a llo c a tio ns and pr ov ide r arg e e me nts sh ou ld be construe d as franchises. The Department responds that appe llants’ Medica id bed allocations and provider ag ree ments are more like the licenses considere d by the court in W hit e Top Cab Co. v . Ci ty of Houston , 440 S.W .2d 732 (Tex. Civ. App.—Houston [ 14th Dist.] 1969, no writ).

Acc ording to appellants, the c ombination of a Medica id bed allocation and provide r ag ree ment should be construe d as a f ranc hise bec ause the bed allocation coupled with a provider10

ag ree ment is an “e x clusive privileg e[ ] g rante d by the gover nment in an area

of public intere st for purposes of e conomic re g ulation ra t h er t h an quality regulation.” Appellants c ontend that, like a fran ch i s e, their Medica id bed allocations and provider a g ree ments possess the following char acte ristics: ex clusivity , public interest, and e conomic but not quality regulation. Although w e ag ree that Medica id bed allocations and provider ag ree ments conce rn
an ar e a o f p u

b li c in te r e s t, w e ar e u np e r s u a d e d b y a p p e ll an ts ’ e xc lu s iv it

y an d e c o n o mi c but not qu a lity re g ulatio n a

rgume nts . With r e g ard

to e xclu siv ity , a

pp ella nts re c og nize in t

he ir br ie fi ngto this Court t hat the De partment’s r ules allow the Depa

rtment to g rant waiver s to the moratorium on Medica id beds for a varie ty of circ umstances, including c ommunity needs. See, e .g. , 40 Tex. Admin. Code § 19.2322(h) ( allowing waiver s for c ommunity needs; c riminal justice; under-se rved minorities; Alzheimer’s; teac hing nursing fac iliti es; rura l counties; and state ve tera ns homes). And, by virtue of a

ppellants’ own Me dicaid bed a llocatio n s , ap pellants also re cog nize that there a re mul tip le Me dic a id b e d p ro vid e rs thr ou g ho ut t he st ate and

in H arr is a

nd F or t B e nd Cou nti e s in particula r. L ikewise, there is nothing in the statute or the Depa rtment’s rules that would preve nt the Depa rtment from g ranting additional waiver s in appropriate circ umstances. Thus, a ppellants ca

nnot claim to be exclusive providers of Medica id be d service s even in the limit ed are a of H arr is and For t B e nd Counti e s. I n addition, the leg islature has e x pressly provided both ec onomic and qua lity regulation in the are a of Me dicaid ser vices. Sec tion 32.001 of the human re source s code state s that the purpose of

the medica l assistance pr og ram, including the provision of Medica id be ds in Texas nursing fac iliti es, is “to provide me dical assistanc e on behalf of needy individuals and to enable the11

state to obtain all bene fits for those pe rsons authorized under the Social Security Act or a ny other fede ral a ct.” Te x . Hum. Res. Code Ann. § 32.001 (West 2001)
. And section 32.002 of the human
re so ur c e s c od e state s th a t c ha pte r 3 2 “sh all be libe ra lly c on str ue d a nd a pp lie d in re la tio n to
a pp lic a ble fe de ra l la

ws and re g ulatio ns so that ad

e qu ate an d hig

h qu ali ty he alt h c ar e may

be made available to all children a

nd adults who nee d the car e and are not f inancially able to pay

for it.” Id. § 3 2
. 0 0 2 (e mp h as i s ad d ed ). T h e l egi s l at u re h as al s o s t at edi t s i n t en t t h at t h e De p ar t m en ten co u ra ge competition among contra cted nursing facilities. See, e .g. , Gene ral Appr opriations Act, 75th L eg ., R.S., ch. 14 52 , 1 99 7 T e x. Ge n. L aws 55 35 , 5 69 5 ( Rid e r 7 to 1 99 7 G e ne ra l App ro pr ia tio ns Ac t, De pa rtme nt o f H uma

n Se rv ic e s) . F ur

the r, su bs e c tio n 1 9. 23 22 (b ) o f the De pa rtme nt’ s r ule s st a te s,

“ Th e purp os e of thi s se c tio n is to c on tr ol the numbe r of Me dic a id be ds fo r w hic h [th e De pa rtme nt]
c on tr a c ts, to i mpr ov e the qu a lity of re sid e nt c are by

se le c tiv e and

lim ite d a llo cat io n of Med ic a id beds, and to promote c ompetition.” See 40 Tex. Admin. Code § 19.2322(b). We theref ore c onclude that appellants’ Me dicaid bed a llocations and provider ag ree ments do not shar e the “ exclusivi ty ” and “ec onomic but not quality regulation” eleme nts of a fr anchise
. To the extent appellants ra ise additional arguments in support of their clai m that Me dic a id b e d a llo c a tio ns and pr ov ide r a g re e me nts sh ou ld be constr ue d a s a fr anc his e and

no t a license, w e likewise r ejec t those arguments. Although a ppellants argue that fr anchise s are limit ed in number, whe rea s licenses a re unlimited, there is nothing in the st atute or the Depa rtment’s rules that w ou ld p re ve nt t

he De pa rtme nt fr om g ra

nti ng a dd iti on a l Me dic a id be d a llo c a tio ns in a pp ro pr ia te circ umstances. Appellants also argue that licenses are temporar y and re vocable , and fr anchise s are not, but appellants ig nore se ction 32.034 of the human r esourc es code , which expressly allows the12

Depa rtment to canc el or re voke a Medica id provider a g ree ment afte r notice a nd hear ing. See T e x. Hum. Res. Code Ann. § 32.034 (West 2001).

We rejec t appellants’ ar gu m ent that their Medic aid bed a llocations and provider
a g re e me nts c on sti tut e fr anc his e s.

2) Do ap

pe lla nts ’ M

e dic aid be d a llo c ati on s a nd

pr ov ide r agr e e me nts c on sti tut e v este d p ro pe rty rig hts ? Rely ing on T

exas State D epartment of Human Re sources v . Silver Threads Co. , 569 S.W .2d 49 (Tex. Civ. App.—Austin 1978, writ ref’d n.r. e. ), ap pellants contend that they are entitled to judicial review beca use the Depa

rtment’s decision g ranting a community -nee ds waiver to Gotcher

adver sely

aff ects a ppellants’ Medica id be d allocations and pr ovider a g ree ments, which
are vested prope rty

rig hts. Appellants’ re liance on Silver Threads is mispl ace d. I n Silver Threads , the s tate sought to canc el S ilver Threads’ provider c ontrac t on the g r o u n d th a t Si lv e r T h r e a d s h a d b r e a c h e d th e a g r e e me n t. Id. at 50. Afte r a he aring , the Commi ssioner deter

mined that just c ause e x isted for c ance llation based on Silver Thre ads’ br eac h of the c ontrac t’s repor

ting r equire ments. Id. On appeal, t he st ate arg ued that the trial cour t had er red in denying the state’s plea in a batement on the g round that the rele vant statutes did not provide for judicial revie w. Id. at 51. The a pp el l at e co u rt reje cted the state’s ar g ument finding that the leg islature’s 1967 amendm e nt t o Se c ti o n 9 A o f th e Texas Medical Assistance Act expressly provided fo r judicial re view of the state’s de cision to canc el Silver Thre ads’ c ontrac t. Id. T he court acknow ledg ed that its holding was consistent with “long settled law of this State that whe re a vested proper ty rig ht has bee n aff

ecte d by the ac tion of an administrative a g ency , there by invoking the13

p r o te c ti o n o f d

u e p r o c e s s o f la

w , th e r e is an inh e r e n t r ig ht of appe al.” Id. (c i t i n g Chemical Bank & Trust v. Falkner , su

pra , and Brazosport Sav. & Loan Ass’n v. A me r i ca n Sav. &Loan Ass’n , su pra ). The c ourt al s o s tated, “I n our judg ment appellee ’s rig ht to a valuable c ontrac t constitutes a veste d proper

ty rig ht.” Id. Thus, SilverT

h r eads is disti ng uishable bec ause it addr essed the c ance llation of a pr ov ider’s con tr act wi th t he state fo r w hic h it

so ug ht a nd re c e ive d a

he ari ng . We dis a g re e wi th appellants’ c ontention that its rights wer e adve rsely aff ecte d by the Depa rtment’s dec ision to gra

nt
a c o mm u n it y - n e e d s w a iv e r

to G o tc h e r

s o a s to tr ig g e r

th e r e qu ir e me n t o f

a h e ar in g an d

ju dicial revie w. Se e El

de rCa re , 63 S.W .3d at 555-56 (r ejec ting c laim that Depar tment’s decision to g rant waiver to nursing fac ility ’s competitor adver sely aff ects ve sted proper

ty rig hts). Appellants have not alleg ed that the De partment ha s canc elled or t ak en any action ag ainst appellants’ Me dicaid bed allocations or pr ovider a g ree ments. Nor is there evidenc e in the rec ord bef ore us that the D epar

tment
so ug ht t o r e vo ke a

pp e lla nts ’ M e dic a id b e d a llo c atio ns or c anc e l a pp e lla nts ’ p ro vid e r a g re e me nts
. Moreove r, in El

de rCa re , this Cour t previously reje cted the a

rg ument that nursing fac iliti es l ike appellants have a vested prope rty

rig ht in a cer

tain occupa

ncy rate
. See id. L ike the petitioner in El

de rCa re , a

pp e lla nts c omp la in t

hat th e De pa

rtme nt’ s d e c isi on

to g ra nt a waive r t o Gotcher will decre ase the occupa ncy rate of appe llants’ Medica id beds. See id. at 5 5 6
. C i t i n g S. C. San Antonio, Inc. v. Tex as Department Hum an Servic es , 891 S.W .2d 773 (Tex. App.—Austin 1995, writ denied) , this Court conclude d that the petit ioner’s c laim was “no more than a mer e expectation” and did not rise to the leve l of a ve sted proper ty rig ht entitling Elder C are to judicial review
. See 63 S.W. 3d

a t 55 6. F or

the same re a so ns , we c on c lud e that a pp e lla nts ’ c la im that th e y

are su bje c t toFinding no fra nchise or ve sted proper

ty rig ht adver sely aff

ecte d by the Depa

rtment’s dec ision 4 to gr ant a wa iver to Gotche r, we also reje ct appe llants’ claim that they wer e entitled to a c ontested case hear ing. Cf. Tex. Hum. Res. Code Ann. § 32.034 (West 2001) (pr oviding f or notice a

nd hear ing wher e the De partment see ks to revoke or canc el Medica id contrac t). For this reason, in the a

bsence of fr anchise or vested pr operty rig hts entitli ng appellants to an 5 inh e re nt r ig ht o f r e vie w, the UD JA c ann ot i nd e pe nd entl y c on fe r j ur isd ic tio n o ve r a pp e lla nts ’ claims for judicia l review
. See Tex as Ass’n of Bus. v. T exas Air Cont rol Bd. , 852 S.W .2d 440, 444 (Tex. 1993). 14 incre ased c ompetition and lower oc cupanc y rate s of th eir Medic aid beds by virtue of the Depa rtment’s dec ision to gra

nt a waive r to Gotche r is no more than a mere expectation and does not rise to the leve l of a ve sted propert y ri g ht entitling appe llants to judi cial re view. See id. We 4
overr ule appe llants’ first issue. B) Judicial rev iew under the UDJ A I n th e ir se c on d is su e , ap pel lants c on te nd tha t th e dis tr ic t c ourt

ha d ju ri sd ic tio n to consider the ir claims under the UDJ A t o deter mine whether the Department ac ted outside its scope of authority

in gr an t i n g a wa i ver to Gotc her. The Depa rtment counter s that the true nature of appellants’ complaint is not that the Depa rtment lacke d authority

to gr ant the wa iver to Gotche r, but that th e De pa

rtme nt e rr e d in

g ra nti ng a wa ive r t o G otc he r i n v iol a tio n o f t he De pa rtme nt’ s o wn

ru le s. Be cause the Depa

rtment ac ted wi t hin its st atutory authority and discre tion to gra

nt the Gotcher waiver , the Depa

rtm en t ar gu es that the district court lac ked jurisdiction under the UDJA and pr op e rl y g ra nte d s umm ary

jud g me nt a g a ins t a

pp e lla nts
. I t is well establ i s h ed that the UDJA is “merely a proc edura l device f or deciding case s alre ady

within a court’s jurisdiction.” Texas Ass’n of Bus. v. Tex as Air Contr ol Bd. , 5 852 S.W .2d 440, 444 (Tex. 1993). “A litig ant’s re quest for de clar atory relief cannot c onfer15

jurisdiction on the co u rt , n o r can it chang e the ba sic cha rac ter of a

suit.” State v. Morales , 869 S.W .2d 941, 947 (Tex. 1994)
. Neve rtheless, Texas courts have rec og nized that the UDJ A may be us e d in a pp ro pr ia te c ir c ums tanc e s to “ se e k d e c lara tor y re lie f a g a ins t st a te of

fi c ia ls w ho a lle g e dly act without leg al or statutory authority ,” see Texas Natural Res. Conservation Comm’n v. IT-Dav y , 74 S.W .3d 849, 855 (Tex. 2002), but it may not be used to control or reve rse a discretionar y ag ency decision when no statute authorizes judicial revie w of that de cision. See City of El Paso v. He inrich , 284 S.W .3d 366, 371-72 (Te x . 2009).

I n City of El Paso v. Heinrich , the supreme c ourt rec ently explained the distinction b e tw een pe rmissible declar atory judgme nt suits aga inst state officials a nd impermissible suits barr ed by sovere ign immunity
. See 28 4 S. W .3 d at 371- 72 . T he su pr e me c ourt

c on c lud e d th a t “ su its to require state off

icials to comply

with stat u t ory

or constitutional provisions are not prohibited by
sovere ign immunity , even if a dec laration to that effec t compels the pay ment of money .” Id. at 372.

“ To fa ll w ith in t

his ultra vires e xce pti on , a su it mus t no t c omp la in o f a g ov e rnme nt o ff

ic e r’ s e xer c ise of discre tion, but rather must alleg e, and ultimatel y prove, that the office r ac ted without leg al authority or fa iled to perfor

m a pure ly

minist eria l act.” Id. I n this case, a

ppellants do not dispute the Department’s statutory authority to gr ant the Gotche r wa iver. See Tex. Hum. Res. Code Ann. § 32.0213 ( authorizing De partment to control number of Me dicaid beds in Te x as nursing fac iliti es). Appellants simply argue that the De partment
e rr e d in e xer c isi ngits a

uth or ity to do so wh e n no ne of the re g ulator y c ri te ri a ha d be e n me t. B e c a us e appellan t s co m p laint is in essence that the Depa rtment err ed in the exerc ise of its undisputed statutory authority to gr ant the waiver, appellants fail t o alleg e a pe rmissible claim for de clar atory16

relief —i.e., appe llants’ claim for decla ratory relief ag ainst the Depa rtment does not f

all within the ultra vires e x c e p t i o nt o t h o s e c l a i m s b ar r e d b y s o v e r e i g ni m m u n i t y. Ba sed on the supre me co u rt ’s holding in Heinrich , w e c on c lud e that a pp e lla nts ’ claims for decla

ratory relief are barr ed by sovere ign immunity , see 284 S.W .3d at 371-72, a nd we
overr ule appe llants’ second issue.
CO NC LU SION Havingconsidere d and over ruled a ppellants’ issues, and f

inding no error , we a ffirm the dis tr ic t c ourt ’s g ra

nt o f s umm ary

jud g me nt i n f

a vo r o f t he De pa rtme nt.

__________________________________________ J an P. Patterson, J ustice Be fore J ustices Patterson, Pury ear and Pember

ton Affir med Filed: De cembe r 8, 2009