February 24, 1999 

William R. Archer III, M.D. 

Commissioner of Health 

Texas Department of Health 

1100 West 49th Street 

Austin, Texas 78756-3 199 

Opinion No. K-0003 

Re: Binding effect of government agency rules 

on other state entities (RQ-1201) 

Dear Commissioner Archer: 

Your predecessor asked this office whether rules promulgated by the Texas Department of 

Health (the “department”) as administrator of the Texas Medical Assistance (Medicaid) Program 

were binding on state entities participating in that program as health care providers. We answer in 

the affirmative. So long as a state agency’s rules are within the power granted to it by the legislature 

and have been properly promulgated, they have the force of law. See Lewis v. Jacksonville Bldg. 

& Loan Ass’n, 540 S.W.2d 307, 310 (Tex. 1976). The mere fact that an entity engaged in the 

conduct governed by those rules is a state agency, board, department, or political subdivision no 

more exempts that entity from the rule than it would be from a legislative enactment. See City of 

Lubbockv.Public Util. Comm’n, 705 S.W.2d329,330-31 (Tex. App.-Austin 1986, writrefdnre.). 

As your predecessor explained the situation, the department promulgates rules for 

participation in the Medicaid Program, including inter alia deadlines for tiling claims which are 

codified at volume 25, section 29.3 of the Texas Administrative Code. Health care providers enter 

into contracts with the department “whereby the entities agree[] to provide services in compliance 

with Medicaid Program rules and regulations.” Letter from Patti J. Patterson, M.D., Tex. Dept. of 

Health, to Hon. Dan Morales, Office of the Tex. Att’y Gen. (July 7,1997) (on file with the Opinion 

Comm.). Certain of these providers, including Texas Tech University Health Sciences Center and 

the University of Texas Medical Branch at Galveston, as we understand it, have taken the position 

that because they are state entities, they are not subject to the rules promulgated by the department. 

It is, we are given to understand, that assertion and that assertion alone which you wish this 

office to consider. We will therefore assume, without deciding, that the rule in question is within 

the statutory authority of the department; that the rule has been properly promulgated; and that the 

entities in question are making no claim that an exemption for them is to be found somewhere else 

in the statute. We are considering only the bare proposition that a state entity may assert, merely 

because it is a state entity, that it is exempt from what would otherwise be a binding regulation 

properly promulgated by a state agency which had the necessary rule-making authority. 
William R. Archer III, M.D. - Page 2 (JC-0003) 

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We know of no authority for this novel and indeed startling proposition of law. Indeed, the 

contrary view that properly promulgated state agency rules bind all parties subject to them, save the 

United States, is so well established as to be beyond question. Such rules, when within the powers 

granted by the legislature, have the force of law. See Lewis, 540 S.W.2d at 310. 

A somewhat similar argument is to be found in City of Lubbock. While in that case a rule 

promulgated by the Public Utility Commission was found not to apply to the city involved because 

of a specific statutory exemption, the Third District Court of Appeals made it clear that absent such 

statutory exemption the city would have been bound: 

[T]he City does not challenge the validity of this rule, but instead challenges 

its application to municipal regulatory authorities under PURA. The courts 

must assume that facts exist which justify the promulgation of the rule and 

establish its general validity. A valid administrative rule is ordinarily 

construed like a statute and has the force and effect of legislation. 

Accordingly, absent a statutory directive to the contrary, the court assumes 

that [the rule] does indeed apply to municipal regulatory authorities. 

City oflubbock, 705 S.W.2d at 330-31 (citations omitted). 

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If a political subdivision or other state entity could assert that its mere political status 

exempted it from an agency regulation, then the rest of the City of Lubbock court’s analysis would 

have been supererogatory. Such is plainly not the case. An agency, a city, a board or department, 

a state university: any such entity is as bound by a properly promulgated rule as it would be by 

legislative enactment. 

We find the assertion to the contrary particularly troubling in light of the fact that, as we 

understand it, the rules in question are incorporated in the contract between the department and the 

health care providers. A rule providing that a state entity could, in effect, avoid a contract term it 

found onerous for no other reason than its political nature might at first blush seem an attractive one 

from the state’s point of view. But we imagine that, were such a rule part of the common law, 

private parties would be loath to contract with the state on account of it. No such rule, of course, 

exists; and we do not intend to expound it. But such a rule would be the necessary consequence of 

the proposition which the health care providers have argued to you. 

Accordingly, we conclude that state entities, like other parties, are bound by rules properly 

promulgated by an administrative agency to which the legislature has given the necessary regulatory 

authority, unless specifically exempted therefrom. 

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William R. Archer III, M.D. - Page 3 (JC-0003) 

SUMMARY 

State entities, like other parties, are bound by rules properly promulgated 

by an administrative agency to which the legislature has given the necessary 

regulatory authority, unless specifically exempted therefrom. 

Attorney General of Texas 

ANDY TAYLOR 

First Assistant Attorney General 

CLARK RENT ERVIN 

Deputy Attorney General - General Counsel 

- ELIZABETH ROBINSON 

Chair, Opinion Committee 

Prepared by James E. Tourtelott 

Assistant Attorney General