A manag ed ca re or g anization (MCO) is a ty pe of health maintenance or g anization (HMO) 1 “in which the ove rall ca re of a patient is coor dinat ed b y or throug h a sing le provider or org anization.” 1 Tex. Admin. C ode § 353.2(36) (2006). 

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

NO. 03-0 4 -00 663 -CV

Albert Hawki ns, Executive Com m ission er of the Texas Health and Hu m an Services Com m ission ; the Texas Healt h and Human Servic es Com m ission ; Anne Sapp , ac ti ng C om m iss ion e r of t he Te xa s D e par tm e nt of Hum an Se r vic e s; and the Texas De partm ent of Hu m an Services, Appellants
v. El Paso F irst Health P lans, In c. and Com m uni ty Health Choice, Inc., Appellees

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 98TH JUDICIAL DISTRICT NO. GN30377 8 , HO NORAB LE P ATRICK O. K EEL , JUDGE PRESIDI NG

O P I N I O N This appea l aris es fr o m a dispute about whe ther the Te x as He alth and Human Se rv ic e s Co mmi ssion is r e sp on sib le fo r d ise nr oll ingun de rw e ig ht n e wb or ns fr om t he a pp e lle e s’ manag ed ca

re pla ns beca use the ne wborns ar e inelig ible to p a r tic ipate and/or

be mandatorily

enrolled in t he a pp e lle e s’ pla

ns ba se d o n th e ne wb or ns ’ e lig ibi lity

to r e c e ive su

pp le me nta l secu ri ty inc ome (S SI ) b e ne fi ts.

Appellee s Communi ty

Hea lth Choi ce a

nd El Paso First Hea lth Pl ans ar e mana g ed
c are or g anizatio ns (M CO s) that have c ontrac ts with the Comm ission to provide healthca re se rvice s 1At the time of suit, the task of dete rmining Me dicaid elig ibilit y had bee n deleg ated f

rom 2 the Te xas H e a lthand

Human Se rv ic e s Co mmi ssi on to t he Te xas D e pa

rtme nt o f H uma

n Servi c e s, with Anne Sapp ac ting a s its Commissi oner. Thus, the Depa rtment and Sapp we re a lso named as defe ndants. As of S ep t em b er 1, 2004, however , the Depa rtment ce ased to e x ist. Bec ause the Commi ssion, led b y Ha wk i n s , is now the sole state a g ency responsible for

administering the Medica id and CHI P prog r a ms in T exas, we will collectively ref er to a ppellants as “the Commi ssion.” Th e de nia l of

inj un c tiv e re lie f w a s n ot r a ise d a s a n is su e on a pp e a l. 3 F o r c o n v e n ie n c e , w e c it e to th e c u r r e n t v e r s io n o f s tatute s an d r u le s a s lo ng as no 4 substantive amendment r eleva nt to this appea l has bee n made since this case wa s orig inally filed. 2 to low-income Te x ans par ticipating in the Medica id prog ram a nd the Children’s He alth I nsuranc e P ro gra m (C HI P). The MCOs sued the Commission and its Ex ecutive Commissioner, Alber t Ha wk ins , se e king de c larator y and inj un c tiv e re lie f r e qu ir ingthe Com mis sio n to re tr oa c tiv e ly 2 dis e nr oll c e rt a in M e dic a id a nd CH I P be ne fi c iari e s f

ro m th e MCO s’ pla

ns ba se d o n th e be ne fi c iari e s’ SSI -elig ibilit y . The Commission filed a plea to the jurisdiction a sserting that it was protec ted from suit by sovere ign immunity , and the MCOs mov ed for summary judgme nt on their reque sts for decla ratory and injunctive re lief. After conductinga hea

ring on both the summary judgme nt motion and the plea

to the jurisdiction, the t rial court issued a final judg ment denying the Commi ssion’s plea and the MCOs’ r equest for an injunction but g ranting decla ratory relief in favor of

the MCOs. The 3 Commi s s ion now appea ls, claiming that the trial court e rre d in denying its plea to the jurisdiction

and that th e de c laratio ns e nte re d b y the tr ia l c ourt

are in e rr or . We wi ll a ff

ir m.
BACK GR OUND Th e Te xas H e a lthand

Human Se rv ic e s Com mis sio n is the state a g e nc y re sp on sib le fo r a dmi nis te ri ngand

su pe rv isi ngbo th t

he Med ic a id a

nd CH I P pr og ra

ms. See 42 U.S.C.A. 4 § 1396a( a) (W es t Supp. 2006), §§ 1396e, 1396u-2 (West 2003) (r eleva nt provisions of Social3

Security Act re lated to state Medic aid plan); 42 U.S.C .A. §§ 1397bb, 1397jj (West 2003) (same, related to CHI P); 42 C.F.R. §§ 430.0, 431.10 (2005) (a dminist rative guidelines promulg ated by fede ral Sec reta

ry related to Commi s s i on’s re sponsibili ties to supervise Medic aid prog rams), §§ 457.1, 457.40 (2005) (same, related to CHI P); Tex. Gov’t Code Ann. § 531.0055(b) (West 2004) (Commissi on’s g ener al re sponsibili ty for administ ration of Me dicaid and CHI P prog rams), § 5 3 1.021 (West Supp. 2006) (Commi ssion’s powers a nd duties relatingto Medicaid); Tex. Health & S af

et y C o de Ann. § 62.051 ( West 2001) (Commis sion’s duties reg ardingCHI P); Tex. Hum. Res. Code Ann. §§ 22.0001, 2 2
. 0 0 2 (West 2001) (g ener al re sponsibili ties for administering assistance prog rams to nee dy individuals), § 32.021 (West Supp. 2006) (Commissi on’s admini stration of all medical assistance progr ams for needy individuals authorized by fede ral law ). The Commission contracts with the MCOs to provide mana g ed ca re se rvi ces f

or Me dic a id a

nd CH I P be ne fi c iari e s. Com mun ity He a lth Cho ic e is a Me dic a id MCO , and El Pa so F ir st is a CHI P MCO.

I n order for the Commission to contra ct wit h a MC O for the provision of mana g ed
car e ser vices, the C o mmissi on must obtain a “sec tion 1915(b) waive r” f rom the United States Secre tary of He alth and Human Ser vices. See 42 U.S.C.A
. § 1 3 9 6 n(b) ( West S upp. 2006) (a uth or izin g wa ive r) ; 42 C.F .R. § 4 31 .5 5 ( e xpla ini ngse c tio n 1 91 5( b) wa ive rs ). Suc h a w a ive r w ill
on ly be a pp ro ve d if the a

pp lic a tio n de mon str a te s tha t the “ c a pit a tio n rate s” pa id t o th e MCO s w ill be cost-e ffe ctive. Unde r the c ontrac ts with the Comm i s s i o n , t he MCOs are obligated to pay for service s provided to bene ficiar ies under eac h of the re spective pr og rams fr om providers in the a rea . I n exchang e, the MCOs ar e paid on a capitate d basis by

the State.Under a traditional fee -for -ser vice arra ng ement, the he althcar e provide r is reimburse d for 5 all proce dures that are provided at a price controlled by the hea lthcare provider. Se e Vi sta He alt h Plan, Inc. v . Texas He alth &Human Serv s. Comm’n , N o . 0 3

- 0 3

- 0 0 2 1 6

- C V , 2 0 0 4 T e x . A p p . LE X IS 45 29 , a t *6 n. 6 (T e x. Ap p. —Aus tin May 20 , 20 04 , p e t. d e nie d) (m e m. o p. ); se e als o E qu al A c c ess for El Paso, Inc. v. H

awkins , 428 F. Supp. 2d 585, 593-94 (W.D. Te x . 2006). 4 Capitation is a method of financ ing that disti ng uishes manag ed ca re s er v ice plans fr om tr a dit ion a l fe e -f

or -s e rv ic e pla

ns . I t a llo ws he a lth c are pa y e rs lik e Me dic a id a

nd CH I P to 5 purcha se ser

vices at a per

person/per

month rate fr om providers like the MCOs; in tur n, the MCOs
are paid pursuant to a c apitated r ate sc h ed u le. The c apitation rate s are fix ed sums, calc ulated monthly for e ach e nrolled member , reg ardle ss of t h e amount of covere d service s used by the member. Thus, beca

use Medicaid and C HI P are g overnme nt-funded pr og rams, these fully -ca pitated contra cts provide budg et certainty to the State. Capitation rates a re c onsidered c ost-eff

ective if the MCOs’ aver ag e cost of providing service s is less than what it would have cost under the traditional fe e -f or -s e rv ic e pla

n. Ac c or din g ly , t

h e c o nt r a c t s b e tw e e n th e Com mis sio n a nd the MCO s in c or

po rate provisions to e n s u r e th a t t h e r a te s p a id

w il l b e c o s t- e f

f e c ti v e . T h e k e y

is s u e in th is a p peal
c on c e rn s th e int e rp re tatio n a nd a pp lic a tio n of th ese pr ov isi on s, a s w e ll a s th e re le va nt s tate
and fe de ra l st a tut e s.

I t is un dis pu te d th a t th e Com mis sio n is re sp on sib le fo r m a ki ng e lig ibi lity deter mi n a ti o n s f o r M e d ic a id a n d CH I P be nefic iaries. See 42 U.S.C.A. § 1396a(a) (5) ( “dete rmination of elig ibilit y for medical assistance under the [st ate Medica id] plan shall be made by the State or loc a l a g e n c y ” ) , § 1 3 9 7 b b ( b ) ( s tate CH I P p la ns h a ll in c lu d e me th o d s o f e s ta b li s h in g e li g ibility ); 42 C.F .R. §§ 43 1. 10 , 4 35 .9 16 (2 00 5) (s ing le state a g e nc y sh a ll be re sp on sib le fo r m a kin g e lig ibi lity de te rm inatio ns re late d to Me dic a id on co nti nu ing ba sis ), § 457 .3 40 (d )( 1) (2 00 5) (s tate a g e nc y mus tTh e SSI pr og ra m is a dmi nis te re d by the fe de ra l So c ia l Se c ur ity Ad min ist ratio n ( SSA ) t o 6 provide c ash assistance to individ uals who ar e ag ed, blind, or disabled a nd who have limit ed incomes or re source s. See 42 U.S.C.A. §§ 1381-1381a (West 2003). F or purp os e s o f S SI , a

n und e rw e ig ht c hil d is c on sid e re d “ fu nc tio na lly dis a

ble d” if the c hil d 7 is born “we ighingless than 1200 g rams” or “we ighingat least 1200 but less than 2000 g rams at birth, and [is] small for g estational ag e . . . mea ning a birth weig ht that is at or more than 2 standard deviations below the mean or that is below the 3rd g rowth per centile f or the g estational ag e of the inf ant. ” 20 C.F .R. § 41 6. 92 6a (m )(7 ), ( 8) (20 06 ); se e als o 42 U.S.C.A. § 1381 (West 2003), § 1382c(a )(3) (C) (West Supp. 2006). 5 promptly deter mine CHI P eligibility); Tex. Gov’t Code An n . § 531.0055(b)( 4) (West 2004) (“ de te rm ini nge lig ibi lity

fo r b e ne fi ts un de r the fo llo wi ngpr og ra ms i s th e re sp on sib ili ty

of and mus t be ce ntralized by the commi ssion: (A) the child health plan prog ram; . . . (C) the medic al assistance p r o g r a m ” ) ; T e x . He a l t h& S a f e t y C o d e A n n . § 6 2
. 1 0 4 ( W e s t2 0 0 1 ) ( C o m m i s s i o ns h a l l d e v e l o p C H IP el ig ib il it y s c r e e n in g p r o c e d

u r e s )

. T h e p arti e s d is p u te , h o w e v e r , w h a t a c ti o n is r e quired of the Com mis sio n w he n a

be ne fi c iary

e nr oll e d in

on e of the MCO s’ pla

ns be c ome s in e l i g i b l e t o p a r tic ipate in the re sp e c tiv e pla

n. Mo re sp e c if

ic a lly , th e y

dis pu te wh e the r t

he Com mis sio n mu st r e tr oa c tiv e ly disenroll a spec ial class of bene ficiar ies—underw eig ht infants born to mothers enr olled in one of the MCOs’ plans—if those infants become ineligible to pa rticipate in or be mandatorily enrolled in the p l anb e c a u s e t h e y b e c o m e e l i g i b l e f

o r S S I. 6 By law, a c hild born to a Medica id or CHI P benef iciary is ge nera lly

enrolled in the
s ame plan as its mother. See 4 2 U
. S. C. A
. § 1 3 9 6 a ( e ) ( 4 ) ; 4 2 C. F
. R. § 4 3 5
. 1 1 7 ( a ) ( 2 0 0 5). I f, h o w e v e r , t h e c h i l d

i s b o r nu n d e r w e i g h t , t h e n t h e c h i l d i s e l i g i b l e f o r S S I. Of c e ntr a l im

po rt anc e to 7 thi s c a se is the imp a c t tha t SSI e lig ibi lity

ha s o n a c hil d’ s e lig ibi lity

to p art ic ipate in a

Me dic a id or CHI P MCO.The leg islature has e x pressly authorized the C ommissi on to adopt admini strative rules as 8 n e c e s s ar y t o c ar r y o u t t h e C o m m i s s i o n ’ s r e s p o n s i b i l i t i e s i na dm i n i s t e r i n g t h e M e d i c a i d an d C H IP prog rams. See Tex. Gov’t Code Ann. §§ 531.001, .033 (West 2004). 6 Re g ard ingMe dic a id M CO s, the re is a re sid e nti a l di ff

e re nc e (b e tw e e n H arr is C ounty
and the re st o f T e xas) in t

he imp act th a t a

c hil d’ s SSI

e lig ibi lity

ha s o n th e c hil d’ s a

bil ity to pa rt ic ipate in a

mana g e d c are pla

n. Th is dic ho tomy re su lts fr om ho w T e xas a dmi nis te rs the State of Te xas A c c e ss R e fo rm

(S TA R) pr og ra

m. When Me dicaid ser

vices a re pr ovided pursuant to a c ontrac t obtained with a sec tion 1915(b) wa iver, the pla

n is classified as pa

rt of the STAR prog ram. See 1 Tex
. Ad m i n . Code § 353.2(57) (2 0 0 6), § 353.402(41) (2004) ( STAR prog ram “ is the name of the State of Texas Medi ca id manag ed ca

re pr og ram e stablished in response to leg islative mandate a nd by fede ral waiver ”). With in thi s pr og ra m, the re are STA R MCO s and STA R PCCM s (P ri mary Ca re C ase 8 Manag ement plans, whic h mirror tra ditiona l fe e- fo r-service pla ns). Additionally , there is a pilot prog ram run only

in Harr is County

known as STAR+PL US, which is desig ned to provide care to “a more fr ag ile population” and is admini s t ere d pursuant to waive rs under sections 1915(b) a

nd 1915(c)

. Se e id

. §§ 353.2(58), 353.601 ( 2006). Community Hea lth Choi ce pr ovides only STAR MCO service s, not STAR+PL US or STAR PCCM ser vices. The e x istence of

the STAR+PL US plan in H arr is C ounty

me ans tha

t SSI e lig ibi lity a ff

e c ts a c hil d’ s a

bil ity to pa

rt ic ipate in a

STA R MCO dif fe re ntl y in H arr is C ounty

tha n in the re st o f T e xas. Un de r f e de ra l la w, a state re c e ivi ngfe de ra l Me dic a id f un din gmus t make a va ila ble Me dic a id b e ne fi ts t o in div idu a ls r e c e ivi ngSSI be c a us e su c h p e rso ns are d e e me d “ c a te g or ic a lly needy .” See 42 U.S.C.A. § 1396a(a) (10)( A)(i) ; 42 C.F.R. §§ 435.120, 435.909 (2005). Thus, if aThese f acts of e ligibility

are ref lected in the 1915( b) waiver documents for the STAR and 9 STA R+ PLUS p ro g ra

ms; the y we re a lso a dmi tte d b y

the Co mm is si on in r e sp on se to t he MCO s’ re qu e sts fo r a dmi ssi on s. 7 c h il d is SS I e li g ib le , th e n th e c h il d is e li g ib le for Me dicaid. See Tex. Hum. Res. Code Ann. § 32.025(a) (West Supp. 2006). Although SSI -elig ible children a re a utomatically

elig ible to rec eive Medica id benef

its, they are prohibited from re ceiv ing these bene fits t hrough a managed c are plan (1) at all in Harris County and (2) absent a

voluntary

elec tion to be enrolled in a STAR MCO in any other Te x as county
.

Th is i s b e c a

us e fe de ra l la

w d ic tate s th a t the State c ann ot re qu ir e an SSI -e lig ibl e c hil d to e nroll in a Medica id ma nag ed ca re or g anization. See 42 U.S.C.A. § 1396u-2(a) (2)( A)(i) . Outside of Ha rris County , an SSI -elig ible child may voluntarily enroll in a STAR MCO, but enrollment of an SSI -elig ible child in a STAR MCO cannot be ma nd ato ry . Id

. T h u s , o u t s i d e o f H ar r i s C o u n t y, SSI -e lig ibl e c hil dr e n c an b e a uto matic a lly

e nr oll e d in

a STA R PCCM , with the op tio n o f v olu nta ri ly elec ting to par

ticipate in a STAR MCO. Wit hin Harr is County , SSI -elig ible children c an ele ct to rec eive he alth car e ser vices fr om e ith e r a

STA R+ PLUS o r a

STA R PCCM pla

n— bu t th e y are no t a llowed to e nr oll (e ve n v olu

nta ri ly ) i n a S TAR MC O. I f n o a ff ir mativ e c ho ic e is m a de , th e se c hil dr e n w ill automatically be enrolled in a S TAR PCC M. See 1 T e x. Ad min . Co de § 3 53 .6 03 (c ) ( 20 06 ). Thus , in Harr is County , SSI -elig ible children w ill be enrolled by defa ult int o a S TAR PCC M or may voluntarily

elec t to participate in a

STAR+PL US plan. 9 Th e imp a c t of

SSI e lig ibi lity

on a c hil d’ s a bil ity to p art ic ipate in a

CH I P MCO is

u n i f o r m a c r o s s T e x a s . U n d e r

w e i g h tn e w b o r

n s w e i g h i n g l e s s t h an 1 2 0 0 g r a m s ar e e l i g i b l e f o r S S I.See 42 U.S.C.A. § 1396a(a) (5) ( West S upp. 2006); 42 C.F.R. §§ 431.10, 435.916 (2005); 10 Te x. Go v’ t Co de An

n. § 5 31 .0 05 5( b) (4 )( C) (We st 2 00 4) ; see also 1 Tex. Admin. Code § 353.403(b) (2004) ( Commi ssion “shall determine which Medica id eligible c lients residing in a STAR Progr am service are a will be mandatory or voluntary

members a

nd which Medic aid elig ible clients may be excluded from par

ticipation in manag ed ca

re” ). See 42 U.S.C.A. § 1397bb(b) (West 200 3 ); 42 C.F.R. § 457.340(d)( 1) (2005) ; 11 Tex. Gov’ t Code Ann. § 531.0055(b)( 4)(A) (West 2004) ; T ex. He alth & Safety Code Ann. § 62.104 (West 2001). 8 See 42 U. S.C. A. § 1 38 1 ( Wes t 20 03 ), § 1 38 2c (a )( 3) (C ) ( Wes t Su pp . 2 006); 20 C.F .R. § 416.926a(m)( 7), (8) (2006). I f a child is elig ible for SSI , the child is also elig ible for Me dicaid. See Te x. Hum. Re s. Cod e Ann. § 3 2. 02 5( a ); see also 42 C.F .R. §§ 43 5. 12 0, 43 5. 90 9. I f t he c hil d is eligible f

or SSI /Medicaid, t h en t h e child is ineligible f or CHI P. See 42 U.S.C.A. § 1 3 9 7 b b ( b ) ( 3 ) ( A ) ( “ o n ly ta r g e te d lo w - in c o me c h il dr e n[s h a ll b e ] f u r n is h e d c h il d h e a lt h car e
a ssi sta nc e un de r t

he State c hil d h eal th pla

n” ), § 1 39 7jj (b )( 2) (C ) ( de fi nin g “ targ e te d lo w i nc ome child” for CHI P a s one “not found to be elig ible for medical assistance under [§§ 1396 et. seq ., the Me dic a id A c t]” ); 42 C.F .R. § 4 57 .3 10 (“ targ e te d lo w- inc ome c hil d mus t no t be

. . . [f ]oun d e lig ibl e or potentially

elig ible for Medica id unde r policies of State plan”) ; T ex. He alth & Safety Code Ann. § 62.101(a) (2) ( West S upp. 2006) (to be e ligible f or CHI P, child cannot be elig ible for Me dicaid); 1 Te x. Ad min

. Cod e § 37 0. 45 (2 00 6) (“ A c hil d that me e ts a ll M e dic a id e lig ibi lity re qu ir e me nts is not eligible f

or CHI P.”). As stated, the Comm i s s i o ni s re s p o n s i b l e f o r m ak i n g el i gi b i l i t y

deter minations related to b oth Me dic a id an d

C H IP be ne fi cia ri es. Th e re fo re , in lig ht o f t he e lig ibi lity

ru le s se t f

or th 10 11

a bo ve , th e Com mis sio n mu st d e te rm ine that, onc e a c hil d is elig ibl e fo r SSI , th e c hil d is ine lig ibl e to p art ic ipate (1 ) i n a

STA R MCO insi de H arr is C ounty , ( 2) in a STA R MCO ou tsi de of

Ha rr is9

County , unle ss t

he c hil d ma

ke s a vo lun tary e le c tio n to do so , a nd (3 ) i n a CH I P MCO any

wh e re in Texas. T h e es sential question rema ins, however : Once the Commi ssion determines that an underw eig ht newborn is inelig ible to participate in a S TAR MCO or C HI P MCO as a re sult of the child’s SSI elig ibilit y , does the lawor contra ct re quire the Commi ssion to dis enroll the c hild at the t i m e o f i n e l i g i b i l i t y? Ac c or ding t o th e MCO s, the Com mis sio n is ob lig a te d to re tr oa c tiv e ly dis e nr oll underw eig ht newborns f

rom Communit y

Hea lth Choi ce’ s STAR M C O an d from El Paso Fir st’s CHI P MCO at the point of SS I elig ibilit y , there by eliminating the MCOs’ r esponsibility to pay for the hea lthcare service s rende red to the newborns fr om the moment of SSI elig ibilit y onwar d. The Commi ssion urg es, on the other hand, that no provision i n t he fe dera l or state law r equire s the Commi ssion to retroac tively disen ro ll these bene ficiar ies and that the c ontrac ts betwee n the Com mis sio n a

nd MCO s e xpre ssl y

pr ov ide that th e MCO s sh a ll r e ma in r e sp on sib le fo r a ll p ay me nts during the hos pital stay of a be nefic iary who was e ligible to par

ticipate at the time of

hospitaliz ation,
e v e ni f t h a t b e n e f

i c i a r y b e c o m e s i n e l i g i b l e a ts o m e p o i n td u r i n g h i s o r

h e r h o s p i t a l s t ay. Ad dit ion a lly , th e Com mis sio n c on te nd s th a t, becaus e it was a c tin g wi thi n it s la wf ul a uth or ity to administer the Medic aid and CHI P prog rams, the tria l court lac ked jurisdiction to decl are that the C o m m i s s ion must retroac tively disenroll cer

tain benef

iciarie s and, moreove r, that any such d e c l ar a t i o ni s ana t t e mp tt o c o n t r o l s t a t e a c t i o n , w h i c h i s p r o h i b i t e d b y s o v e r e i g ni m m u n i t y.
DI SCU SSIO N Be cause subject m atter jurisdiction is essential to the authority of a court to decide
a ca se, we beg in with the C ommissi on’s s econd issue—its claim t hat the trial c ourt err ed in deny ing10

its plea to the jurisdiction on the basis of sovere ign immunity

. Se e Ma y he w v. Town of S

un ny v ale , 96 4 S. W.2 d 9 22 , 9 28 (T e x. 19 98 ); Texas Ass’n of B us. v. Texas Air Control Bd. , 852 S.W .2d 440, 443 (Tex. 1993).
P lea to the Jurisdiction based on Sovereign Im m uni ty

A pl eat o t h e j u ri s d i ct i o nch al l en ges t h e t ri al co u rt ’s au t h o ri t y t o d et erm i n e t he subjec t matter of a

specific cause of ac tion. Harris County v. Syke s , 136 S.W .3d 635, 638 (Tex

. 2004); Bland Indep. Sc h. Dist. v. Blue , 34 S.W .3d 547, 554 (Tex. 2000); Ry lan de r v . Ca ldw e ll , 23 S.W .3d 132 , 1 3 5 ( T e x. A p p . —

A u s ti n 2 0 0 0 , n o p e t. )

. Wh e th e r a c o u rt h a s s u b je c t matt e r ju

r isdic tion and whether a plaintiff ha s aff

irmatively

established subjec t matter jurisdiction are questions of law that
we revie w de novo. Texas De p’t of Parks &W

ildlif e v. M iranda , 133 S.W .3d 217, 226 (Tex. 2004); Mc Lan e Co. v . S

tra y ho rn , 148 S.W .3d 644, 649 (Tex. App.—Austin 2004, pet. denied). I n revie wing a trial c ourt’s ruling on a plea to the jurisdiction, we do not look at the merits of the ca s e; rather, we construe the pleading s in favor of the plaintiff, look to the pleade r’s intent, and ac cept the ple adin gs ’ fac tual alleg ations as true. Cou nty of C am e ro n v . B ro wn , 80 S.W. 3d 54 9, 55 5 ( Te x. 20 02 ); State v. 1165 Airport Blvd. Office Bldg., Ltd. , No. 03-05-00630- CV, 2006 Tex. App. L EXI S 7082, at *8-9 (Te x . App.—Austin Aug . 11, 2006, no pet.) (opinion).

Th e Com mis sio n is a state a g e nc y . Sov e re ig n immun ity g e ne ra lly pr ote c ts the State and its a g encie s from suit a bsent leg islative consent to sue the State. See Federal Sign v. Texas S. Un iv ., 95 1 S. W.2 d 4 01 , 4 05 (T e x. 19 97 ); Rylander , 23 S.W .3d at 135. In the abse nce of a wa iver of g ov e rnme nta l im mun ity , a c ourt ha s n o s ub

je c t matte r j ur isd ic tio n to ent ert a in a su it a g a ins t a g ov e rnme nta l un it. Texas De p’t of Transp. v. Jones , 8 S.W .3d 636, 638 (Tex. 1999).11 The Texas Supre me Court, how ever , has rec og nized that cer t ai n d ec laratory judgme nt actions do not impli cate the doctrine of sover eig n immunit y . T e x a s N atu ra l R e s. Conservation Comm’n v. I T-Davy , 7 4 S. W.3 d 8 49 , 8 55 (T e x. 20 02 ); see also Swee ney v. Je fferson , No. 03-04-00223- CV, 2006 Tex. App. L EXI S 6703, at *22-23 (Te x . App.—Austin J uly 28, 2006,
no pe t.) (o pin ion ). “ Pr ivate pa rt ie s may se e k de c larator

y re lie f ag a ins t sta te of

fi c ia ls w ho a lle g e dly
ac t wi t h out leg al or statutory authority .” IT-Davy , 7 4 S
. W
. 3 d a t8 5 5
. “ T h i s i s b e c a

u s e s uit s to c omp e l st a te of

fi c e rs to ac t w ith in t

he ir of fi c ia l c a pa c ity do no t atte mpt

to s ub je c t th e State t o l i ab i l i t y ” and are , there fore , “not ‘suits ag ainst the State.’” Id .; see also Ry lander , 23 S.W .3d at 135-37. Th e Un if

or m D e c larator

y Judg me nts Ac t ( UD JA) pr ov ide s o ne a ve nu e fo r a pa rt y whose right s have be en af fec ted by a statute to see k decla

ratory relief ag ainst the State. See Te x. Civ . Pr a c . & Re m. C od e Ann. §§ 37 .0 01 -. 01 1 ( Wes t 19 97 ). Th e UD JA is a re me dia l st a tut e de sig ne d “to se ttl e and to af fo rd re lie f f ro m un c e rt a int

y and ins e c ur ity

wi th r e sp e c t to ri g hts , s tatus , and other leg al re lations.” Id . § 37 .0 02 (b ); IT-Davy , 74 S
. W
. 3 d at 855. Specific ally , the UD JA pr ov ide s th a t: A per son interested unde r a de ed, will , written contra ct, or other writing s constituting a contr act or

whose rig hts, status, or other l ega l relations are a ffe cted by a statute, municipal ordinanc e, contr act, or fr an ch i s e may have de termined a

ny question of construction or validity arising under the instrument, statute, ordinance , contra ct, or fra nchise and obtain a declaration of rights, status, or ot her leg al re lations thereunde r.
T e x . C i v . P r a c . & R e m . C o d e A n n . § 3 7
. 0 0 4 ( a )

. Im p o rt an t l y, h o w e v e r , t h e U D J A i s m e r e l y a proce dural de vice f

or dec iding matter s alrea dy within a court’s subjec t matter jurisdiction. Che na ultThe MCOs a lso c ited g overnme nt c ode section 2001.038 as a basis for de clar atory relief

. 12 Se c tio n 2 00 1. 03 8 a

uth or ize s dec larator

y re lie f f or the de te rm inatio n o f t

he va lid ity

or a pp lic a bil ity of an a g ency

rule if the pla intiff alleg es “that the rule or i ts threatened application interfe res with or impairs, or threa

tens to i n t er fere with or impair, a leg al rig ht or privileg e of the plaintiff.” Tex. Gov’t Code Ann. § 2001.038(a) (West 2000). A “rule” is define d as “a state ag ency

statement of g ener al applica

bility that .

. . implements, inter prets or presc ribes law or policy ” or “desc ribes the proce dure or

prac tice re quirements of a state ag en cy . ” Id . § 2001.003(6)( A) (West Supp. 2006). Although the Commi ssion has enac ted rules that relate to e ligibility and enr ollment of Medicaid a nd CHI P benefic iaries, the MCOs did not expressly challeng e any

s u c h r u le in s e eking decla

ratory relief

. I nstead, their de clar atory judgme nt action is based on the c laim that the Commi ss i o n has ac ted ou tsi de of its statut or

y a uth or ity

. Ac c or din g ly , we wi ll a na ly ze t he MCO s’ re qu e ste d r e lie f s ole ly under the UDJA. See Beac on Nat’l Ins. Co. v. Montemay or , 86 S.W .3d 260, 268 (Tex. App.—Austin 2002, no p et
. ) (s ec tion 2001.038 “cannot pr ovide jurisdiction beca use . . . [n] othing in B eac on’s complaints [that TDIhas exercise d authority bey ond that confe rre d on it by the le g isl a tur e ] qua lif

ie s a s an atta c k o n a

n a g e nc y ‘r ule ’ a s th e statut e de fi ne s th a t te rm ” ); se e als o Te x as De p’ t of Tra ns

p. v . City of Ama ri llo , No. 07-04-00485- CV, 2005 Tex. App. L EXI S 7882, at *4 (Te x . App.—Amar illo S ept. 27, 2005, pet. denie d) (mem. op.)

. 12 v. Phillips , 914 S.W .2d 140, 141 (Tex. 1996). I t “does not extend a trial cour t’s jurisdiction, and a litigant’s r equest for

decla ratory relief does not confe r jurisdiction on a cour t o r ch an ge a suit’s underlying nature.” IT-Davy , 74 S.W .3d at 855.

H e r e , t h e M C O s a s k e d

t h e t r i a l c o u rtt o i s s u e d e c l ar a t i o n s p u r s u an tt o t h e U D JA 12

re g ard ingthe Com mis sio n’ s d uti e s to de te rm ine ine lig ibl e and re tr oa c tiv e ly dis e nr oll SSI -e lig ibl e
c h i l dr e nf r o m C o m m u n i t y H e a l t h C h o i c e ’ s S T A R M C O ( b o t h w i t h i n an d o u t s i d e o f H ar r i s C o u n t y) and fr om El Paso First’s CHI P MCO ever y wher e in Texas. The declaratory relief reque sted by

the MCOs is based on their cla im that the Comm ission acts in v i o l at i o n o f fe dera l and state lawand wi tho ut s ta tut or

y a uth or ity by re fu sin g to d ise nr oll be ne fi c iari e s w ho have be c ome e lig ibl e fo r S SI be ne fi ts a nd , th us , in e lig ibl e to p art ic ipate in t he STA R or

CH I P MCO s.The Commi ssion relies on Eve rgreen Pre sbyterian Ministries v. Hood , 235 F.3d 908, 928- 13 29 (5th Cir. 2000), for this ar g ument. Eve rgreen he ld onl y that hea lth c are pr ov ide rs have no pr ivate ri g ht o f a c t i o nt o e n f

o r c e o n e s p e c i f

i c “ e qu a l a c c e s s ” p r o v i s i o no f t h e M e d i c a i d

A c t ; a c c o r d i n g to the Fif th Circuit, o nly

benef iciarie s can e nforc e that provision. Id . Other c ases, howe ver, ha ve de te rm ine d th a t pr ov ide rs have sta nd ing to sue the Commis sio n see kin g a de c lara tio n o f t he ir ri g hts under the Act. See, e .g., Equal Acce ss for El Paso, Inc ., 428 F. S u pp. 2d at 605 (provide rs had standing on claims reg ardinginadequate re imbursement rates).

See also State v . 1165 Airport Blvd. Office Bldg., Ltd. , No. 03-05-006 3 0 -CV, 2006 14 Te x. Ap p. L EX I S 70 82 , * 13 (T e x. Ap p. —Aus tin Au g . 11, 20 06 , no pe t.) (o pin ion ) ( “ c la im that st a te of fi c ia ls e xce e de d th e ir

statut or y a uth or ity in i mpo sin g the wa

rr ant h old is n ot a su it a g a ins t th e State and thus is not barre d by sovere ign immunity ”); Sweene y v. J efferson , No. 03-04-00223- CV, 2006 Tex. App. L EXI S 6703, at *23 (Tex. App.—Austin J uly 28, 2006, no pet.) (opinion) ( district court had jurisdiction to enter

tain Confeder ate Vetera

ns’ claims for decla

ratory relief based on a lleg ations that st a te of

fi c ia ls a c te d “ wi tho ut the a pp ro va l of

the Te xas H ist or ic a l Co mmi ssi on or any oth e r s tate ag ency befor e re moving the orig inal plaques from the lobby of the Supreme Court B uilding and that this action was taken without leg al authority in violation of . . . the natural re source s code a nd . . . the g overnme nt code” ); City of El Paso v. He inrich , 198 S.W .3d 400, 407 (Tex. App—El Paso 2006,

13 We disag ree with the Commi ssion’s claim that the MCOs have no standingto seek a dec laration c onstruing the se statutes beca use, as pr ovided by

the UDJA, the MCOs’ rig hts are 13 aff ecte d by the statutes—deter

miningwh e th e r

th e Co mm is s io n

mu s t d is e nr o llin e li g ib le b e n e f ic ia ries in t ur n d e te rm ine s w he the r t

he MCO s a

re ob lig a te d to pa

y fo r he a lth c are se rv ic e s r e nd e re d to the se benef iciarie s once they

have be come SSIelig ible. See Tex. Ci v. Prac. & Rem. Code Ann. § 37.004. The purpose of the M C Os ’ decla ratory judgme nt action is to determine the pr oper
c on str uc tio n o f t

he a pp lic a ble statut e s and to obt a in a de c laratio n of t he ir ri g hts un de r t

he statut e s. I t is not a sui t to impose liability ag ainst the State. Consequently , the MCOs’ re quested de clar ations fall squar ely

within the supreme c ourt’s desc ription of the ty pe of su it ag ainst the State that is not ba rr ed b y so vere ign i mm un it y

—a s ui t f or d ecl arat ory

rel ief again st off

ici al s tat e act ors who all egedly

a c t w ith ou t le g a l or

statut or y a uth or ity in atte mpt

to c omp e l th e state o ff

ic ia ls t o a c t w ith in t

he ir officia l capa city

. See I

T-Davy , 74 S.W .3d at 855. 14pet. filed) ( suit to declare whether statute entitled plaintiff to rec eive be nefits that vested upon husband’s death was not barr ed by sovere ign immunity); Houston Mun. Employe es Pension Sy s. v. Fe rre ll , 177 S.W .3d 502, 511 (Tex. App.—Housto n [ 1 st Dist.] 2005, pet. g rante d) (“ Be cause the plaintiffs have broug ht a d ec l ar atory judgme nt action to deter mine the prope r construc tion of the applicable s t at u tes and to obtain a de clar ation of their r ights, status and le g al re lations under the statutes to establish their entitlement to pension benef its in HMEPS, we hold that their ac tion does no t im pli c a te the do c tr ine of

g ov e rnme nta l im mun ity .” ); Ry lan de r v . Ca ldw e ll , 23 S.W .3d 132, 136- 37 (Tex. App.—Austin 2000, no pe t.) (suit to declar e g overnme nt code pr ovision unconstitut ional wa s p erm i t t edaga i n s tC o mp t ro l l er b ec a u s e i t fe l l “s qu ar el y wi t h i nt h i s ex ce p t i o nt o s o v er ei gn immunit y ”). 14

Fur ther, the MCOs expressly asser ted that they

wer e not seek i n g money damag es from the Commi ssion a

nd that they wer e not suing for brea ch of contra ct. Althoug h the Commiss ion
re lie s o n c on tr a c tua l pr ov isi on s a s e vid e nc e that it ha s n o d uty to r e tr oa c tiv e ly dise nr oll ine lig ibl e be ne fi c iari e s, the MCO s’ su it d oe s n ot s e e k to e nf or c e the c on tr a c t or hol d th e Com mis sio n li a ble under it—rather, the MCOs cla im that the contract provisi ons cited by the Commiss ion are contra ry to the fede ral a

nd state laws g overningMedica id an d C HIP
. We conclude that the trial court had jurisdi ct i o n to enterta in the MCOs’ claims for de clar atory relief . The Commission’s second issue is overrule d.

Havingdeter

mined that the trial cour

t properly denied the Commission’s plea to the jurisdiction, we now turn to Commi ssion’s first issue and consider t he merits of t he dec laratory relief g ra nte d b y the c ourt
. De c lar at or y J udgm e nt

After conductinga hea

ring on the Commiss ion’s plea t o t h e jurisdiction and the MCO s’ mot ion

fo r s umm ary

jud g me nt, the tr ia l c ourt iss ue d its fin a l ju dg me nt g ra nti ngthe MCO s’
re qu e st f or de c lar ati on s c on c e rn ingthe ine lig ibi lity and re tr oa c tiv e dis e nr oll me nt o f S SI -e lig ibl eFor clar ity and consistency with the rest of our

discussion, where the trial cour t used the 15 ph ra se “ STA R HM O, ” we su bs tit ute “ STA R MCO ,” wh ic h is h owCom mun ity He a lthCho ic e la

be ls itself in its appellate brief

. 15 children f rom (1) the S T AR MCO in Harris County , (2) the STAR MCO in all counties besides Har ris County , and (3) the CHI P MCO eve ry wher e in Texas. On appe al, the Commissi on argues that the trial cour

t erre d by decla ring that the C ommissi on must retroa ctively disenroll any

benef iciary from these prog rams bec ause nothingin the fede ral or state law r equire s such re troac tive disenrollment and bec aus e t h e Commissi on’s contra cts with the MCOs demonstrate that no suc h action is requir ed. The specific issue prese nted by the Commiss ion’s claim, t h erefore , is whether the tr ia l c ourt

e rr e d b y makin g the fo llo wi ngthr e e de c laratio ns :
1. Me dic a id b e ne fi c iari e s tw e nty -o ne y e ars of a g e and un de r who re sid e in H arr is County and who are e lig ibl e fo r S up ple me nta l Se c ur ity I nc ome (“ SSI ” ) .

. . if enrolled in a

STAR [ MCO] at the time SSA makes its de termination, must be 15 dis e nr oll e d f

ro m th e STA R [MCO ] re tr oa c tiv e to t he date the be ne fi c iary

be c a me elig ible for SSIso that they may [elect either to e nroll in the ST AR +P L US p r o g r a m o r

b e e n r o ll e d

in th e ST A R P CC M ]. 2. Medica id be nefic iaries who are elig ible for SSI and who reside in an y Texas c o u n t y o u t s i d e o f H ar

r i s C o u n t y . . . i f e n r o l l e d i n a S T A R [M C O ] a t th e tim e SSA makes its determination, must b e d i senrolled f rom the STAR [M CO] retroa ctive to the date the bene ficiar y beca m e elig ible for SSIso that they may [e le c t w h e th e r

to v o lu n ta r il y p arti c ip a te in

a ST A R M CO ]. 3. A c hil d e nti tle d to Me dic a id b e ne fi ts i s n o lo ng e r e lig ibl e for CH I P be ne fi ts, eff ective on the day

the child bec omes entitled to Medica id benef its, and mus t be d i s e n r o l l e d

f r o m C H IP r e t r o a c t i v e t o t h e d a t e t h e c h i l d b e c a m e e l i g i b l e f o r S S I.16

Stan dard of Revie w

Dec laratory

judgme nts are r eviewe d unde r th e s a me s ta n dards a s other judg ments and decr ees. See Te x. Civ . Pr a c . & Re m. C od e Ann. § 3 7. 01 0; City of Au sti n v . G ar za , 124 S.W .3d 867, 871 (Tex. App.—Austin 2003, no pet.). We look to the proce dure used to r esolve the issue at trial t o deter mine the standar d of re view on appe al. Armstrong v. Hixon , N o . 1 3

- 0 5
- 0 0 3 2 0

- CV , 2006 Te x. Ap p. L EX I S 94 56 , at *6 (T e x. Ap p. —Co rp us Chr ist i O c t. 2 6, 20 06 , n o pe t.) (o pin ion ); Ga rza , 1 2 4 S
. W
. 3 d at 8 7 1
. He re , b ec au s e t h e t ri al co u rt d et erm i n edt h e d ec l ar at o ry j u d gm en ti s s u e t h ro u gh summary judgme nt pr ocee dings, we revie w the propriety of the trial court’s de clar ations under the same standa

rds we a pply to summary

judgme nt. See Lidawi v. Progressive County M ut. Ins. Co. , 112 S.W .3d 725, 730 (Tex. App.—Houston [14t h Dist.] 2003, no pet.).

T h e M CO s ’ mo ti o nw a s b a s e d o ntr a d it io n a l s u mm ar

y ju d g me n t gr ounds. See Tex. R. C iv. P. 166a(c). I n a tra d i tional summary

judgme nt, the movant bear s the burden of de mon str a tin g tha

t no g e nu ine iss ue of

mate ri a l f

a c t re ma ins and

that it is e nti tle d to jud g me nt a s a matter of la

w. Id .; Am e ric an Tob ac c o Co. v . G rin ne ll , 9 51 S.W. 2d 42 0, 42 5 ( Te x. 19 97 ). B e c a us e the proprie ty

of a summar

y judgme nt is a question of law, we revie w the trial c ourt’s dec ision de novo. Va le nc e Op e ra tin g Co . v . D or se tt , 164 S.W .3d 656, 661 (Tex. 2005). He re , n e ith e r p art

y c on te nd s th a t a g e nu ine iss ue of mate ri a l fa c t e xists . Rathe r, bo th the Commi s s io n an d th e M CO s p r e s e n t th e ir ar g u me n ts a s p u r e ly le g a l qu e s ti o n s inv o lv ing the construction of state and fe dera l statutes and rule s reg ardingMedica id, CHI P, and SSI and of va rious provisions in their contrac ts. Thus, we will review eac h of the c ontested dec larations de novo by
con str uin g the a

pp lic a ble pr ov isi on s to de te rm ine wh e the r the de c lara tio ns we re c or

re c t a s a17

matter of la

w. City of San Antonio v. Ci ty of Boerne , 1 1 1 S
. W
. 3 d 2 2 , 25-26 (Te x . 2003) (conduc ting de novo revie w of de clar atory judgme nt pursuant to statutory construction ana ly sis). I f re versa l is warra

nted, t h e material fac ts are e stablished, and ther e ar e no fur ther proce eding s nece ssitating a r emand, then this Court has a duty to rende r the judg ment the trial cour t should have re ndere d. See R osen v. W el l s F a rgo Bank Tex., N.A. , 114 S.W .3d 145, 149 (T e x. Ap p. —Aus tin 20 03 , pe t. f ile d) ; McAllen Police Officers’ U nion v. Tamez , 81 S.W .3d 401, 405 (T e x. Ap p. —Co rp us Chr ist i 20 02 , pe t. dis m’ d) (c iti ng Te x. R. Ap p. P. 4 3. 3) ; City of Galveston v. Giles , 9 02 S.W. 2d

16 7, 17 2 ( Te x. Ap p. —H ou sto n [1s t D ist .] 19 95 , n o w ri t) . H ow e ve r, if the re is
no err or of law

in the trial court’ s decla rations, we must aff

irm the judg ment. Se e Ga rza , 124 S.W .3d at 868.

The Commi ssion is corr ect that no sing le statutory provision expressly

states that the C o m m i s s i o nm u s tr e t r o a c t i v e l y d i s e n r o l l u n d e r

w e i g h tn e w b o r

n s f r o m t h e S T A R

M C O o r C H IP MCO from the time the new borns bec ome elig ible for SS I
. I f there wer e such a statute, the MCOs would not have ne eded to se ek a de clar ation of their rig hts and the Commissi on’s re sponsibili ties
un de r t he law. Ev e n s til l, wh e n the re le va nt pr ov isi on s of va

ri ou s state and

fe de ra l st a tut e s and

ru le s, the Commi ssion’s c ontrac ts, a nd its sec tion 1915( b) waiver are rea d in conjunction with one another , the mos t lo g ic a l inte rp re tatio n is that th e Com mis si on is oblig a te d to re tr oa c tiv e ly dis e nr oll benef iciarie s who have become ineligible to pa rticipate in a

STAR MCO or CHI P MCO based on their SSI elig ibilit y . See Te x. Go v’ t Co de Ann. § 3 11 .0 21 (We st 2 00 5) (i n c on str uin g stat utes , pr e su me that ju st and reason a ble re su lt w a s in te nd e d) ; Marcus Cable Assocs., L.P. v. Krohn , 90 S. W
. 3 d 697, 706 (Tex. 2002) (must attempt to harmonize statute’s various provisions);18

Helena Che m. Co. v. W

ilkins , 4 7 S. W.3 d. 48 6, 49 3 ( Te x. 20 01 ) ( must c on sid e r s tatut e a s w ho le

and mus t pr e sume le g isl a tur e int e nd s e nti re statut e to be effe c tiv e and that ju st a

nd re a so na ble result is intended).

We f ir st c on sid e r t

he tr ia l c ourt ’s de c laratio ns re lated to t he Com mis sio n’ s d

uty to retroa ctively

disenroll SSI -elig ible children f rom Communit y

Hea lth Choi ce’ s STAR MC O.
De c larations re

ga rd ing Community

He alt h Cho ic e ’s STA R MCO Section 533.0075 of the Texas Governme nt Code provides that “[t] he commission shall: . . . (3) re tain responsibility for e nrollment and disenrollment of r ecipi ents in manag ed ca re plans.” Te x . Gov’t Code Ann. § 533.0075(3) (West 2004). Thus, the leg islature has c ommunicated an intent for the Commi ssion to bear the r esponsibility of disenrolling b en ef

i ci ar i es fr om STAR MCO s, wh ic h is inc lus ive of the re sp on sib ili ty to dis e nr oll be ne fi c iari e s w ho have be c ome ine lig ibl e to participate

. Se e id . The Commissio n has re cog nized this duty in section 14.2.1 of its Gene ral Con tr a c t f

o r S e r v i c e s w i t h t h e M C O s , w h i c h s t a t e s t h a t th e C o m m i s s i o n “ h a s t h e ri g ht and responsibilit

y to enro l l and dis e nr oll e lig ibl e ind ivi du a ls i nto the STA R pr og ra m.” (E mph a sis

a dd e d. ) T he Com mis sio n a lso a dmi tte d in re sp on se to the MCO s’ re qu e sts fo r ad mis sio ns that it

is the ag ency

“re sponsible f

or enrolling and disenrolling rec ipients into manag ed car e.” Simi larly , the Com mis sio n’ s a dmi nis tr a tiv e ru le tit le d “ STA R Enro llm e nt” pr ov ide s th a t th e Com mis sio n “ sh a ll
c on du c t e nr oll me nt a

nd dis e nr oll me nt a c tiv iti e s o r c on tr a c t w ithano the r a g e nc y or c on tr a c tor

to assume administration o f these f unctions.” 1 Tex. Admin. Code § 353.403(c) ( 2004). More sp e c if ic a lly , th e Com mis sio n’ s 1 91 5( b) wa ive r s tate s th a t:The de finition of “childre n with special ne eds” in the 1 9 1 5 (b) wa iver include s 16 “blind/disabled children a nd related populations (elig ible for SSIunder Title XV I ).” Se e su pra footnote 10. 17 19 The State performs functions in the enrollmen t / disenrollment process for children with special needs

. . . . T he State ’s Enrol lm ent Brok e r, MA XI MU S, Inc ., is 16 re sp on sib le for pe rf

or min g a ll f un c tio ns of

the e nr oll me nt p ro c e ss o f a ll M e dic a id manag ed ca

re e ligible s , i n cluding children w ith special nee ds. Disenrollment functions ar e per formed by the Enrollment B roker

under the su p ervision of the State. . . . The

fin al d e c isi on to d

ise nr oll a m e mb e r fr om a m an age d c ar e pla n r ests so le ly with theSta te . (Emphasis adde d.) These provisions establish that if a child is enrolled in a STAR MCO and then become s ineligible to pa

rticipate in that prog ram, the Commission is responsible for (1) makingthat elig ibilit y deter mination and (2) disenrolling the ineligible c hild from the STAR MCO.

17 Mo re imp or

tantl y , un de r thi s statut or

y sc he me , th e se un de rw e ig ht n e wb or ns sh ou ld
never be enrolled in the S TAR MCO to beg in with. Government c ode sec tion 533.0075 provides that th e Com mis sio n s ha ll: (4) develop and implement a n expedited pr ocess for deter mining elig ibilit y for a

nd enrolling preg nant women and newbor n infants in manag ed ca

re pla ns; . . . and (6) temporar ily

assig n Medica id-elig ible newbor n infants to the traditional fe e-forservice component of the state Medicaid prog ram [ i.e., P CCM] for a period not to exceed the e arlier

of: (A) 60 day s; or (B ) t h e d at e on which the Texas De pa rtme nt of H uma

n Se rv ic e s h a s c omp le te d th e ne wb or n’ s Me dic a id e lig ibi lity de te rm inatio n, inc lud inga ssi g nme nt o f t he ne wb or

n’ s Me dic a id elig ibilit y number.Th e a pp lic a ble pr ov isi on s o f s e c tio n 53 3. 00 75 we re pr e vio us ly dis c us se d by thi s Co ur t in 18 Vista Health Plan , 2004 Tex. Ap p . L E XIS 4529, at *13-15. In that case , howeve r, we simply set forth the pa

rties’ competing interpretations of t he st atute and declined to express an opinion on the merits. See id. at *9 n.7. No other court ha s addre ssed sec tion 533.0075. See Tex. Gov’t Code Ann. § 533.0075 (West 2004). It w o u l d , i n f

a c t , v i o l a t e f

e d e r a l l aw t o m a

n d a t e t h a tc e rt a i ni n f

an t s ( t h o s e e l i g i b l e f

o r S S I) 19 be enr olled in a Medica id manag ed ca re pla n. See 42 U.S.C.A. § 1369u-2(a )(2) (A)( i) (West 2003). 20 Tex. Gov’t Code Ann. § 533.0075(4), ( 6) (West 2004). By these provisi o n s, the leg islature has 18

re c og nize d the ne e d to imm e diate ly pr ov ide c ov e ra g e fo r i nf ants bo rn to l ow -i nc ome mot

he rs . Y e t, the le g isl a tur e ha s not mandated that the i nfants mus t rec eive their cover ag e fr om a STAR MCO. 19 Rather, the le g islature expressly char g ed the Commi ssion with the r esponsibility to first determine wh e the r su c h in

fan ts a re e lig ibl e to be enr olled in a manag ed ca re pla n. See id. § 533.0075(4). Duringthe time that the eligibility deter mination is being made , the Commiss ion should enroll the infants in a PCC M plan—not a STAR MCO. See id. § 5 33 .0 07 5( 6) ; se e als o 1 Tex. Admin. C ode § 3 5 3
. 6 0 3 (c). This is reflec ted in the Commiss ion’s 1915(b) wa iver, whic h states that “the [Comm iss ion ’s ] auto- a ssi g nme nt p ro c e ss f or c hil dr e n w ithsp e c ia l he a lth c are ne e ds [int o a PCCM plan] ensures that no child bec omes a membe r of a capitate d M C O d el ivere d model without an aff irmative ele ction.”

Th e Com mis sio n o ve rl oo ks thi s poin t in arguin g that it ha s no d uty to r e tr oa c tiv e ly disenroll these be nefic iaries. I f t he C ommissi on had followed the m andate in section 533.0075(6) and its section 1915(b) waiver to beg in with and automatically assig ned SSI -elig ible children to a STAR PC CM, then the Commi ssion would not have to retroa cti v ely disenroll ineligible c hildren from the STAR MCO. After a child’s elig ibilit y

is determined ( which will take, at most, 60 day s), the n th e c hil d may e ith e r re ma in in the STA R PCCM or make a vo lun tary

e le c tio n to pa

rt ic ipate inThis p ro vis ion c on tin ue s o n to say

“ or until su c h ti me tha

t th e re is a

los s o f M e dic a id 20 e lig ibi lity .” Th is ph ra se is ir re le va nt fo r purp os e s of thi s c a se , ho we ve r, be c a us e no part y

cla ims the se un de rw e ig ht n e wb or ns are ine lig ibl e fo r Me dic a id. Ra the r, the y re ma in Me dic a id e lig ibl e bu t, ba se d o n th e ir

SSI e lig ibi lity , th e y

may no t r e c e ive Me dic a id s e rv ic e s thro ug h a Medic a id M CO (a STAR MCO), at a ll in Harris Co u n t y , or abse nt a voluntary elec tion in all other counties. See 42 U.S.C.A. § 1369u-2(a) (2)( A)(i)

. 21 a STAR MCO (outsi d e o f Ha rr is County ) or a STAR+PL US plan (inside of Ha rris County). Nonethele ss, if an infant is e nrolled at birth in a STAR MCO beca use of its mother’ s participation in t he pla n, bu t th e inf

ant i s d e e me d in e lig ibl e to p art ic ipate in t hat pl an b e c aus e it is elig ibl e to
rec eive SS I , then—as discussed above—the Commi ssion should di senroll the infa nt from the STAR MCO , p e rm ane ntl y

in H arr is C ounty , or un til a vo lun tary e le c tio n c an be ma de in a ll o the r c ounti e s. See Tex. Gov’t Code Ann. § 533.0075(3); 1 Te x . Admin. Code § 353.403(c)

.

I n arguing that the trial court’s decla rations wer e in e rror , the Commiss ion relies on tw o p ro vis ion s in

its Ge ne ra l Co ntr a c t f

or Se rv ic e s:
6. 1. 1: [MCO ] mus t pay fo r o r r e imb ur se fo r a ll c ov e re d s e rv ic e s p ro vid e d to mandatory -enr olled Members f or whom [MCO] is paid capitation. 6.3.1: The pa

y or re sponsible for the hospit al / facility char g es at the star

t of an inp a tie nt sta

y re ma ins re sp on sib le fo r h os pit a l/f a c ili ty c ha rg e s unti l th e tim e of dischar g e. . . . 20
Ac c or din g to t

he Com mis sio n, the se se c tio ns e sta bli shthat th e MCO s ar e re sp on sib le fo r a ll c os ts incurre d during the hospital stay of an infa

nt who is enrolled in a STAR MCO at t h e t i m e of hospitaliz ation (i.e., birth), e ven if the infa nt is born or bec omes elig ible for SS I and is, there fore , not an elig ible participa

nt of the STAR MCO (1) at a ll in H ar ri s C o u nty or (2) absent a

voluntary22

elec tion in all other counties. The Commi ssion a sserts that this is a risk knowingly undertaken by the MCOs in enteringa “r isk comprehe nsive” c ontrac t with the Comm ission. W e disag ree .

First, sec tion 6.1.1 is ex pressly limit ed to “m a

n d a to r y - e nr o ll e d M e mb e r s . ” Re g a

r d ing the STA R MCO , th is c ann ot i nc lud e SSI -e lig ibl e c hil dr e n b e c a us e fede ral lawpr oh ibi ts t he State f r o m ma n d a to r il y e n r o ll in g th e m in M e d ic a id ma n a g e d c ar e p r o g r a ms. See 4 2 U.S.C.A. § 1 36 9u -2 (a )( 2) (A )( i)

. Se c on d, the Com mis sio n misin te rp re ts s e c tio n 6 .3 .1 by fa ili ngto r e a d it

in l i gh to f t h e s t at u t o ry

an d ad m i n i s t ra t i v e s ch em e r eq u i ri n g t h e C o m m i s s i o nt o au t o m at i ca l l y as s i gn Medica id-elig ible children to a STAR PC CM, not a STAR MC O. See Tex. Gov’ t Code Ann. § 533.0075(6); 1 Tex. Admin. Code § 353.603(c)

. I f the Commi ssion complies with thi s proce dure, the STA R MCO wi ll n ever wi nd up in t he po sit ion

c omp la ine d o f i n th is s uit —i. e ., be inghe ld responsible for

pay ment of hea lthcare service s rende red to a n underw eig ht n ew b o rn who is an ine lig ibl e be ne fi c iary . F ur the rm or e , e ve n if

the Com mis sio n e nrolls a n und e rw e ig ht, SSI -e lig ibl e
ne wb or n in a STA R MCO , n oth ingin s e c tio n 6 .3 .1 re le a se s th e Com mis sio n f ro m th e re sp on sib ili ty pla c e d o n it

by g ov e rnme nt c od e se c tio n 5 33 .0 07 5( 3) to d ise nr oll ine lig ibl e be ne fi c iari e s. To re a d sect io n 6. 3. 1 a s su g g e ste d b y the Com mis sio n w ou ld r e qu ir e SSI -e lig ibl e children to pa

rticipate in a

STAR MCO, which fede ral law p ro h i b its both wit hin and outside of Har ris County

. See 42 U. S.C. A. § 13 69 u- 2( a )( 2) (A )( i)

. Th is i s n ot a log ic a l in te rp re tatio n b e c a us e the di scre tion aff

orded the Commi ssion to administer t he st ate Medicaid prog ram is not unlimit ed. Ra the r, i t i s qu a l i f

i e d b y t h e r e qu i r e m e n t t h a t a s t a t e o p t i n g t o p art i c i p a t e i n M e d i c a i d m u st f ull y comply wi t h t h e federal statutes a nd regulations gove rning the prog ram. See Sc hweiker v . GrayMedica id is a federal-state assistance prog ram, run by state g overnme nts within federa l 21 g uidelines, to provide h ea l t h ca re service s to eligible, low- income re cipients. See 42 U.S.C.A. §§ 1396-1396v (W est 2003 & Supp. 2006). A s tate ’s pa rt ic ipatio n in

Me dic a id i s v olu

nta ry , b ut i f a state c hooses to participate, it must comply with cer tain statutory

and re g ulatory

require ments. See W ilder v. Virginia Hosp. Assoc ., 49 6 U. S. 49 8, 50 2 (1 99 0)

. To qu a lif y fo r fe de ra l a ssi sta

nc e , a state must submi t and have approve d a “plan for medical assistance ,” which must e stablish a scheme for reimbursinghealth ca

re pr oviders for

medical se rvice s provided to Medica id recipients. El Pa so Coun t y Ho s p . Dist. v. Texas He alth & Human Serv s. Comm’n , 161 S.W .3d 587, 589 (Tex. App.—Austin 2005, pet. filed). 23 Pa nth e rs , 453 U.S. 34, 36-37 (1981) ; see also Ame rican Transit ional Care Ct rs. of Tex., Inc. v

. 21 Palacios , 4 6 S
. W
. 3 d 8 7 3 , 8 7 7 -7 8 (T ex . 2 0 0 1 ) ( qu o t i n g McBridev. Clayton , 166 S.W .2d 125, 128 (Tex. 1942)) (“ All statutes are presumed to be enac ted by the leg islature with full knowledg e of the exis ting c ondition of the law and w ith refe renc e to it.”). As stated by the Seventh Circuit, “a state’s dis c re tio n in

a dmi nis te ri ngthe Me dic a id p ro g ra m do e s no t sh e lte r i t f

ro m ju dic ia l a c tio n o n th os e
occa si o n s wher e it has transg resse d the stricture s of the Social Secur ity Act.” Smith v. Miller , 665 F.2d 172, 178 ( 7th Cir. 1981).

Acc ording ly , as a ma t t er o f law, the c ourt did not err in de clar ing that children
e nr oll e d in

a STA R MCO wh o a

re de te rm ine d to be SSI

e lig ibl e and

(1 ) who re sid e in H arr is C ounty must be disenrolled by the C ommissi on from the STAR MCO retroa ctive to the date the benef iciary beca me elig ible for SSI so that the benef iciary may elec t e ither to e nroll i n t h e S T AR +PL US prog ram or be enrolled in the STAR PCCM, a nd (2) who reside any

wher e else in T exa s m u s t be dis e nr oll e d b y

the Com mis sio n f

ro m th e STA R MCO re tr oa c tiv e to t he date the be ne fi c iary

be c a me elig ible for SSI so that the benef iciary may elec t whether to voluntar ily participate in a STAR MCO.24

De c laration re

ga rd ing El P as o Fi rst ’s CHI P M CO We now t urn t o the t rial court’s decla ration t hat, when a child become s elig ible for Me dic a id/ SSI , th e c hil d is no long e r el ig ibl e fo r CHI P, an d th e Com mis sio n mu st d ise nr oll the c hil d from the CHI P MCO retroac tive to th e date the c hild became elig ible for SSI . The Commission challeng es this declar ation in the same fa shion as it challenges t h e S T ARMCO declar ations—by

arguin g that no thi ngin t

he fe de ra l or state statut e s r e qu ir e s th e Com mis sio n to re tr oa c tiv e ly dis e nr oll ineligible benef

iciarie s and that sec tions 6.1.1 and 6.3.1 of the Contrac t for Ge nera l Services

a ff ir mativ e ly de mon str a te that the MCO s sh ou ld re ma in re sp on sib le fo r pa y me nt, e ve n if

the c hil d is d e te rm ine d to be ine lig ibl e fo r C HI P. A g a in, ba se d o n a c oll e c tiv e re a din g of

the a pp lic a ble statutory , administrative, and c ontrac tual provisions, we disag ree .

As with th e S T ARM C Os , t h e l egi s l at u re h as ex p re s s edi t s i n t en tt h at the Commissi on be re sponsible for the e nrollment proce ss relate d to CHI P MCOs. Section 62.104 of the he alth and safe ty code pr ovides that the Commissi on “shall deve l o p . . . enrollment proc edure s for c hildren that c omp ly

wi th t he re qu ir e me nts of

42 U. S.C. Se c tio n 13 97 bb ,” and the se “ pr oc e dure s sh a ll
e ns ur e that Me di cai d-e lig ibl e c hil dr e n a re ide nti fi e d a

nd re fe rr e d to the Me dic a id p ro g ra m” Te x. He a lth & Sa fe ty

Cod e Ann. § 6 2. 10 4( a ); see 42 C.F.R. § 457.350 (state a g ency must ensure that children f ound elig ible for Me dicaid throug h CHI P eligibility scre ening are enr o l l ed in Medica id, not C HIP). The Commi ssion acknowledg ed this responsibility by admitting that it is the ag ency “re sponsible for enr olling and dise nrolling r ecipients into CHI P.” There fore , upon deter mining that an under weig ht newborn is elig i ble for SSI/Medicaid a nd, hence , ineligible f

or CHI P, the Commi ssion is obl igated to disenroll that child from the CHI P MCO.25 We are not persuade d by t h e Commi ssion’s argument that sections 6.1.1 and 6.3.1 of its g e ne ra l c on tr a c t w iththe MCO s d isc ha rg e it of the r e sp on sib ili ty to d ise nr oll ine lig ibl e be ne fi c iari e s f

ro m th e CH I P MCO a t the mo men t of S S Ie lig ibi lity . A s st a te d, se c tio n 6 .1 .1 is
e x p r e s s l y l i m i t e d t o “ m an d a t o r

y - e n r o l l e d

M e mb e r s . ” R e g ar d i n g C H IP , t h i s c an n o ti n c l u d e S S Ie lig ibl e c hildren because the re le va nt s tate and

fe de ra l pr ov isi on s e xpre ssl y pr oh ibi t SSI -e lig ibl e children f rom participating in CHI P. See 42 U.S.C.A. § 1397bb(b)(3) (A), § 139 7 j j (b)( 2)(C); Tex. He al t h & S af

ety Code Ann. § 62.101(a )(2) ; Tex. Hum. R es. Code Ann. § 32.025( a); 1 Tex. Admin. C ode § 370.45 (2006) . Reg arding section 6.3.1, the broad statement that the “pa y or responsible . . . at the start of a n inpatient stay

rema ins responsible

. . . until the tim e of discha rg e,” which appe ars in the Commission’s standard for m contrac t for ser

vices with all mana g ed ca re pr og ra ms, is c on tr oll e d b y

the mor e na

rr ow pr ov isi on s in th e Com mis sio n’ s sp e c if ic c on tr a c t w ith El Paso First. See Forbau v. Ae tna Lif e Ins. Co. , 876 S.W .2d 132, 133-34 (Te x . 1994) (r ecog nizi ng
ru le of c on tr a c t c on str

uc tio n th a t sp e c if

ic c on tr ols g e ne ra l) ; C

. M. A s f a h l Agency

v. Tensor, Inc

. , 135 S.W .3d 768, 782 (Tex. App.—Houston [1s t Dist.] 2004, no pet.) (sa me). Section 11.01(c) of t he amended contract between El Paso First and the Commi ssion, wh ic h d e a ls e xpre ssl y

wi th “ pr e g na

nt m e mbe rs and

inf ants ,” state s th a t: [M] ember s who are d etermined to be Medica id eligible w ill be disenrolled from [El P aso F irst] . Medica id cover ag e will be coor dinated to beg in immediately afte r CH I P e lig ibi lity

e nd s so that th e re is n o g a p in he a lt h care cover a g e . . . . Mo st ne wb or ns bo rn to CH I P me mbe rs or CH I P he a ds of

ho us e ho ld w ill be Me dic a id elig ible. Eligibil ity of newborns must be determine d for CHIP before e nrollment can occur .Section 11.01(a) of the El Paso F irst contrac t permits the Commi ssion to contract with a 22 third party

for the a ctual proc ess of en ro l l ing a nd disenrolling me mbers. Ne verthe less, the Commi ssion remains ultimately responsible to ensure that ineligible me mbers ar e disenrolled f rom the CHI P MCO in acc ordanc e with fede ral and state l aw prohibiti ng SSI /Medicaid e ligible c hildren from re ceivingCHI P b enef its. See Tex. Health & Safety Code Ann. § 62.055(a )(1) , (e) (1) (West 2001) (“c ommissi on may contra ct with . . . a third par ty administrator to provide e nrollment and re la te d s e rv ic e s und e r t

he state c hil d h e a lthpla

n, ” bu t mu st “ re ta in a ll p oli c y makin g a uth or ity over the state child hea lth plan”). 26 (Emphasis adde d.) The Com mission’s adminis trative rule s define “ enrollment” a s “the proc ess by which a c hild determine d to be eligible for CHIP is enrolled in a CHI P health plan.” 1 Te x . Admin. Code § 370.4(13) ( 2006) (e mphasis added) . Fur th er m o re , s ection 11.04 of the Commi ssion’s contra ct with El Paso First contemplate s that members will be dise n ro l l ed upon becoming ineligible f

o r C HI P and states that “[d]i senrollment due to loss of elig ibilit y includes but is not limit ed to . . . [d] ata matc h wit h t h e Medicaid sy stem indicates dual- enrollment in Medica id and CHI P.” This is ex pressly ref err ed to in the contra ct as “ retroa ctive disenrollment.” W e r e a d t h e s e p r o v i s i o n s t o m e ant h atn e w b o r n s s h o u l d n o tb e e n r o l l e d

i nt h e C H IP MCO until the Commi ssion de termines that they are elig ible and that, if a child who has a lrea dy been enrolled in a CHI P MCO is de termined to be elig ible for SSI /Medicaid, then the child should be d i s e n r o l l e d

f r o m t h e C H IP M C O
. T h e C o m m i s s i o n h a s a dm i t t e d

t h a ti ti s r e s p o n s i b l e f

o r C H IP enrollment and disenrollment, and the contra ct ex pressly provides that the C ommissi on or its ag ent will be responsible for “enr oll[ ing] and dis enroll[ing] elig ible individuals into and out of CHI P.” 22

Thu s

— p u rsuant to t he re levant state a nd fede ral statutes a

nd rules, as w ell as the

a pp lic a ble pr ov isi on s o f t

he Com mis sio n’ s c on tr a c t w ithEl Pa so F ir st— the tr ia l c ourt

did no t e rr in decla ring that a “c hild entitled to Medicaid bene fits is no longer elig ible for CHI P benefits, ef fec tive27

o nt h e d ay

t h e c h i l d b e c o m e s e n t i t l e d

t o M e d i c a i d b e n e f

i t s , an d m u s tb e d i s e n r o l l e d

f r o m C H IP retroa ctive to the date the child bec ame e ligible f or SSI .” Ba sed on our de termination that none of the declarations issued by the t rial cour t and challeng ed by

the Commi ssion on appeal we re inc orre ct as a matter of la

w, we ove rrule the Commi ssion’s first issue.
CO NC LU SION

Th e tr ia l c ourt

c or re c tly den ied the Com mis sio n’ s p le a to t he jur isd ic tio n b e c a

us e
sovere ign immunity does not pr otect a state ag ency from a suit broug ht by a party claiming that the state ag ency has acted out side of i ts authority and seeking to determine the proper construction of the applicable statutes and to obtain a declaration of the party ’s rig hts under the statutes. See I T-Davy , 74 S.W .3d at 855. On this basis, we ove rruled the Commi ssion’s second issue.

The de clar ations issued by the trial cour

t re gar d ing the elig ibilit y and re troac tive dis e nr oll me nt o f S SI -e lig ibl e c hil dr e n f ro m Co mmunit

y He a lthCho ic e ’s STA R MCO , b oth wi thi n and outside of Ha

rris County , an d fr o m El Paso First’s CHI P MCO across Texas wer e consistent with the applicable provisions in the state and fe dera l statutes, administrative rules, and va rious contra cts g overningthese pa rties. On this basis, we ove rruled the Commi ssion’s first issue. Havingoverr

uled both issues raised by the C ommissi on on appea l, we af firm the trial
c ourt ’s jud g me nt.28 W. Kenneth L aw, Chief Justice Be fore Chief J ustice L aw, Justi ces Patter son and Pury ear Affir med Filed: January

11, 2007