Opinion ID: 894529
Heading Depth: 2
Heading Rank: 2

Heading: Republication

Text: TWCC published proposed Rule 134.201 in the October 20, 1995 issue of the Texas Register to notify persons of the agency's intent to adopt the Medical Fee Guideline and to allow interested parties to comment on the rule. 20 Tex. Reg. 8573-75 (1995). The proposed Guideline included a section on durable medical equipment. Id. at 8573-74. After receiving comments from over one hundred seventy individuals and businesses, TWCC made changes to the Guideline, including modifications to the durable medical equipment section, and then adopted the Guideline. 21 Tex. Reg. at 2361, 2365-66. TWCC explained in the order adopting Rule 134.201 that these changes were in response to public comment. Id. at 2365. In the proposed rule, TWCC stated that reimbursement for durable medical equipment would be based on documentation of procedure rather than on the MARs. 20 Tex. Reg. at 8574. The final rule adopted by TWCC, however, set reimbursement for durable medical equipment at the amount pre-negotiated between the provider and carrier, or if there was no pre-negotiated rate, at the fair and reasonable amount. 21 Tex. Reg. at 2363, 2365. PAT argues that the changes to the durable medical equipment section expanded the coverage of Rule 134.201 to include categories of persons not previously affected by the proposed rule, and therefore, TWCC was required to republish Rule 134.201 and provide a new period for public comment before the agency could legally adopt the Guideline. The APA requires a state agency to give at least thirty days' notice of its intention to adopt a rule before adopting the rule. Tex. Gov't Code § 2001.023(a). The agency must file notice of the proposed rule with the secretary of state for publication in the Texas Register. Id. § 2001.023(b). Notice of a proposed rule consists of, among other things, a brief explanation of the proposed rule, the text of the proposed rule, and a request for comments on the proposed rule from any interested person. Id. § 2001.024(a)(1)-(2), (7). The court of appeals, following the standard espoused in State Board of Insurance v. Deffebach, 631 S.W.2d 794, 801 (Tex. App.-Austin 1982, writ ref'd n.r.e.), held that TWCC did not violate the notice requirement of the APA by not republishing the modified Guideline. 80 S.W.3d at 74-75. In Deffebach, the sole published opinion of a Texas court on this issue, the court indicated that if a proposed rule is changed to incorporate public comments and no new subjects of regulation or persons besides those previously given notice are affected, then no further purpose would be served by requiring republication of the proposed rule. 631 S.W.2d at 801. The notice requirements of the federal Administrative Procedure Act are similar. See 5 U.S.C. § 553. An agency's notice of proposed rulemaking must include either the terms or substance of the proposed rule or a description of the subjects and issues involved. Id. § 553(b)(3). A majority of federal courts of appeals have held that under the federal APA the original notice is adequate if the modified final rule is a logical outgrowth of the published provisions. Am. Med. Ass'n v. United States, 887 F.2d 760, 767 (7th Cir.1989); Brazos Elec. Power Coop. v. Southwestern Power Admin., 819 F.2d 537, 543 (5th Cir.1987); Nat'l Black Media Coalition v. FCC, 791 F.2d 1016, 1022 (2d Cir.1986); AFL-CIO v. Donovan, 757 F.2d 330, 338 (D.C.Cir.1985); Chocolate Mfrs. Ass'n v. Block, 755 F.2d 1098, 1105 (4th Cir.1985); BASF Wyandotte Corp. v. Costle, 598 F.2d 637, 642 (1st Cir.1979). Stated differently, if the final rule does not materially alter the issues addressed in the proposed rule, then notice will be deemed sufficient. Chocolate Mfrs., 755 F.2d at 1105; see also Chrysler Corp. v. Dep't of Transp., 515 F.2d 1053, 1061 (6th Cir.1975) (a final rule is valid if it does not embrace any major subjects that were not described in the proposed rule). The standard for proper notice announced in Deffebach and the logical outgrowth test employed by the federal courts are not inconsistent. A final rule that significantly changes the issues involved in the rulemaking process raises new subjects and likely affects different persons than those previously given notice. The relevant inquiry under both standards is whether the agency's notice fairly apprises affected parties of the pertinent issues to allow them to comment and participate in the rulemaking process in a meaningful and informed manner. See Deffebach, 631 S.W.2d at 800-801; see also Am. Med. Ass'n, 887 F.2d at 767; Brazos, 819 F.2d at 543; Nat'l Black Media, 791 F.2d at 1022; Chocolate Mfrs., 755 F.2d at 1104; California v. Block, 690 F.2d 753, 772 (9th Cir.1982); BASF Wyandotte, 598 F.2d at 642; Am. Iron & Steel Inst. v. EPA, 568 F.2d 284, 293 (3d Cir.1977). We hold that a rule adopted by an administrative agency is a logical outgrowth of the proposed rule if the final rule does not materially alter the issues raised in the proposed rule. If an agency adopts a rule that comports with this standard, then the notice requirement of section 2001.023(a) is satisfied. This approach supports the rationale of the notice and comment requirement which is the expectation that the final rules will be somewhat different and improved from the rules originally proposed by the agency. Trans-Pacific Freight Conf. v. Fed. Mar. Comm'n, 650 F.2d 1235, 1249 (D.C.Cir. 1980). In the instant case, both the proposed rule and the final rule adopting the Guideline addressed durable medical equipment. 20 Tex. Reg. at 8573-74; 21 Tex. Reg. at 2361, 2363-65. The proposed rule apprised affected parties of TWCC's intention to change the method for determining durable medical equipment reimbursements and indicated the method the agency was contemplating. 20 Tex. Reg. at 8573-74. In response to comments TWCC received from affected parties, the final rule modified the approach for calculating reimbursements for durable medical equipment. 21 Tex. Reg. at 2365. This change, however, did not materially alter the issues raised in the proposed rule or affect persons other than those previously on notice. We are therefore persuaded that Rule 134.201 was a logical outgrowth of the published provisions.