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At a Glance:
Employees Retirement System of Texas v. Duenez
July 4, 2009
288 S.W.3d 905
Texas Supreme Court
Published Opinion

Employees Retirement System of Texas v. Duenez

Supreme Court of Texas.



Xavier DUENEZ and Irene Duenez, Respondents.

No. 07–0410.


July 3, 2009.

Attorneys & Firms

*906 Greg W. Abbott, Attorney General of Texas, Kristofer S. Monson, Asst. Solicitor Gen., Austin, TX, for Petitioner.

Ruth A. Kollman, Corpus Christi, TX, for Respondents.


Justice GREEN, and Justice WILLETT joined.

The curious question in this case is whether a state agency can demand dismissal of its own claim in court because it failed to exhaust administrative remedies in front of itself. The Employees Retirement System of Texas (“ERS”) asserts a subrogation claim against former member Xavier Duenez and his family, seeking reimbursement of funds it paid their health-care providers. After the claim was filed in court, ERS sought to dismiss it because it had exclusive jurisdiction of its own claim.

The Legislature granted ERS exclusive jurisdiction of questions relating to “payment of a claim,” but ERS’s subrogation suit seeks collection of a claim. When it pays claims, ERS holds the money and can require claimants to come and get it through the agency’s administrative processes. But when ERS collects claims, someone else holds the money and has no reason to join ERS’s administrative processes. That is why the first thing ERS’s agent had to do was file suit in court.

Exhaustion of administrative remedies cannot be a prerequisite to filing suit when filing suit is itself a prerequisite to exhausting those administrative remedies. Because ERS does not have exclusive jurisdiction of this claim, the court of appeals’ opinion does not conflict with any of our own, so we dismiss the petition for want of jurisdiction.

I. Background

These parties are not new to this Court. When the Duenezes were injured in a collision caused by a drunk driver, ERS paid benefits of more than $400,000 through its agent and administrator, Blue Cross Blue *907 Shield of Texas.1 But Blue Cross refused to pay for in-home nursing care for Ashley Duenez (deeming it custodial rather than medical), so the Duenezes filed suit in court without exhausting ERS’s administrative remedies. We held in Duenez I that ERS had exclusive jurisdiction of claims for benefits, and thus dismissed the suit until the Duenezes complied with those administrative procedures.2

In the meantime, the Duenezes sued and obtained a judgment for $44 million against the convenience store that sold beer to the drunk driver. On appeal, three of the Duenezes settled their claims with the convenience store for $35 million. In Duenez II, we reversed the judgment as to the remaining two and remanded for a new trial to include apportionment of liability.3 Neither Blue Cross nor ERS were parties in that case, but they hope to be reimbursed from the proceeds of the settlement.

Before we decided either Duenez I or Duenez II, ERS filed this suit for subrogation against the Duenezes. By then, the Duenezes were no longer participants in ERS: Xavier Duenez had left his employment with the state, obtained coverage from a new insurer, and dropped all claims for benefits from ERS.4

Blue Cross filed this suit on ERS’s behalf, specifically alleging that the funds it sought were for ERS’s benefit. Oddly, Blue Cross nevertheless named ERS as a defendant. And paradoxically, the suit sought both a court judgment and a declaration that no court had jurisdiction because ERS had exclusive jurisdiction.

ERS filed a plea to the jurisdiction demanding dismissal for the Duenezes to pursue their claims administratively even though they had no affirmative claims to pursue. The trial court denied ERS’s plea to the jurisdiction, and the court of appeals affirmed.5 ERS petitioned for review, asserting that the denial of its plea to the jurisdiction here conflicts with our opinion granting its plea to the jurisdiction in Duenez I.6

II. Does ERS Have Exclusive Jurisdiction of Subrogation?

The Legislature created ERS to attract and retain state employees by providing health, insurance, and retirement benefits.7 The powers granted ERS appear in the Texas Employees Group Benefits Act.8 The Act authorizes ERS to adopt a plan “reasonably necessary to implement this chapter and its purposes.”9 ERS adopted a 70–page “Employee Benefit Plan” that *908 included a subrogation provision on its penultimate page:

Subrogation/Right of Recovery

To the extent of such services provided, the Plan is subrogated to all rights of recovery the Participant has and the Plan may assert such rights independent of the Participant. Also, if the Participant has obtained or obtains a court judgment, settlement, arbitration, award, or other monetary recovery from another party, because of the injury or sickness, the Plan is entitled to reimbursement from the proceeds of recovery to the extent of benefits provided. If a recovery is made, the Plan shall have first priority over the Participant or any other party to receive from said recovery reimbursement of the benefits the Plan has provided....

In the event that the Participant fails to cooperate with the Plan or prejudices its subrogation rights, the Plan may deduct from any pending or subsequent claim made under the Plan any amounts the Participant owes the Plan until such time as cooperation is provided or the prejudice ceases.

The Duenezes argue ERS had no authority to adopt this provision because the Act says nothing about subrogation. But the Act also says nothing about what services are covered or excluded, when preapproval is required, what range of charges are allowed, or how fast benefits must be paid—all important parts of a health benefits plan. Instead, the Act authorized ERS to specify these details in a plan that would “implement this chapter and its purposes.”10 The Act also expressly authorized ERS to “contain costs,”11 and to provide benefits “at least equal to those commonly provided in private industry.”12 As subrogation reduces costs,13 and private plans commonly include subrogation,14 we disagree that ERS was not authorized to include subrogation in the plan it adopted.

But allowing subrogation is not the same thing as granting exclusive jurisdiction of it. When an agency has exclusive jurisdiction of a dispute, the courts have no jurisdiction until administrative procedures are exhausted.15 In deciding whether an agency has exclusive jurisdiction, *909 we look to its authorizing legislation for an express grant of exclusive jurisdiction,16 or for “a pervasive regulatory scheme” indicating that was the Legislature’s intention.17 Exclusive jurisdiction is a question of law we review de novo.18

The Act here expressly grants ERS exclusive jurisdiction of disputes relating to payment of a claim:

The executive director has exclusive authority to determine all questions relating to enrollment in or payment of a claim arising from group coverages or benefits provided under this chapter other than questions relating to payment of a claim by a health maintenance organization.19

While the Act does not define “claim,” it uses the term only in connection with demands for benefits.20 Thus, we held in Duenez I that this provision granted ERS exclusive jurisdiction of claims “for payment of ERS-derived benefits.”21 But there is no claim for benefits in this suit. The Duenezes past medical bills have already been paid, and their future bills are the responsibility of a new insurer. The question here is not a member’s claim for payment of benefits (as it was in Duenez I ), but ERS’s claim for reimbursement of benefits it has already paid.22

Nor does the Act provide a detailed regulatory scheme suggesting ERS must have exclusive jurisdiction of its own subrogation claims. The Act provides many details about eligibility,23 dependents,24 coverage plans,25 and contributions,26 but there are no details suggesting a regulatory scheme for pursuing subrogation against third parties. To the contrary, the Act states that its administrative remedies “are the exclusive remedies available to an employee, participant, annuitant, or dependent,”27 but does not include ERS as a potential administrative claimant in that list. The Act also authorizes ERS to file suit (not an administrative claim) to resolve questions that might expose it to double liability.28 Viewing the Act as a whole, it appears the Legislature intended ERS’s administrative procedures to handle claims for benefits by employees, not claims against third parties by ERS.

Support for this conclusion also arises from ERS’s own plan.29 Of course, *910 exclusive jurisdiction must be granted by the Legislature; an agency cannot grant exclusive jurisdiction to itself.30 But when ERS adopted a plan providing for subrogation, it specified no administrative remedies except that “the Plan may deduct from any pending or subsequent claim made under the Plan any amounts the Participant owes the Plan.” Deducting subrogation from a benefits payment falls within ERS’s exclusive jurisdiction; pursuing money damages to reimburse benefits already paid is a different matter.

Moreover, ERS’s plan allowed it to assert subrogation against third parties “independent of the Participant.” So rather than suing the Duenezes after their settlement, ERS could have sued the convenience store independently or intervened in Duenez II.31 If ERS has exclusive jurisdiction of subrogation, then it could have demanded that the Dram Shop claim in Duenez II be dismissed for exhaustion of administrative remedies. We do not think the Legislature intended ERS to handle administratively every tort suit involving injured state employees.

Finally, we must avoid constitutionally suspect constructions of the Act if we can.32 Relegating common-law claims to administrative remedies implicates the Texas Constitution’s open-courts provision.33 We have rejected open-courts complaints when a grant of exclusive jurisdiction involved claims that did not exist at common law.34 But subrogation existed at common law long before ERS was created.35 We decline to construe the Act to relegate subrogation defendants to administrative procedures before ERS, especially when the claimant is ERS itself, and then have judicial access limited to substantial-evidence review.36

It is true that the Act provides for exclusive jurisdiction of questions “relating” to payment of claims, which arguably extends far beyond paying claims alone. But immediate problems arise if we construe the Act that broadly. Large insurance or retirement payments may attract the attention of creditors, former spouses, competing heirs, or tax collectors. The commercial, marital, probate, and tax questions in such cases could all arguably “relate” to the underlying payment of a claim, but nothing in the Act suggests the Legislature intended ERS to exercise expertise in all these areas. ERS’s expertise is in deciding payment of benefits, and we should not read “relating to” more broadly than that.

While we reject ERS’s claim of exclusive jurisdiction over its own subrogation claims, that does not mean its administrative procedures could never play a role. One of several declarations the Duenezes *911 sought by counterclaim was a declaration that ERS “incorrectly determined that the amount owed” by the Duenezes was $113,174.76 for nursing services the trial court ordered ERS to pay. Had this declaration challenged the amounts ERS paid to health-care providers (a matter within its expertise), the doctrine of primary jurisdiction would require such a claim to be abated and referred to ERS for an initial determination.37 But the Duenezes’ pleadings and briefs do not challenge the amount of these charges, but whether they owe them.38 As the question is not whether ERS should have paid these benefits but whether the Duenezes should reimburse them, that is a subrogation question outside ERS’s exclusive jurisdiction.

Nor, of course, do we reject ERS’s claim for subrogation on the merits. ERS has apparently never pursued a subrogation claim either administratively or in court, perhaps because all members other than the Duenezes have complied with the Plan’s subrogation provisions. As we have noted with respect to workers’ compensation cases, “[a] carrier’s subrogation claim should hardly ever be contested” as “claimants should already know how much they have received in benefits.”39 The only defenses the Duenezes have raised to subrogation appear to be equitable defenses barred by the Plan under which they accepted benefits.40 But none of that provides exclusive jurisdiction for ERS to decide its own subrogation claims.

The dissenting opinions agree there is something odd about the procedural posture of this case, but fail to recognize that ERS and its agent Blue Cross had no other choice. Had no benefits been paid, ERS could have effectively invoked its administrative procedures by simply withholding payment and requiring the Duenezes or their providers to file administrative claims for them. But once the benefits were paid, ERS had no choice but to seek reimbursement in court.

Construing the Act as a whole,41 we conclude that the court of appeals’ opinion rejecting ERS’s claim of exclusive jurisdiction here does not conflict with this Court’s opinion in Duenez I affirming ERS’s exclusive jurisdiction of questions relating to payment of benefits. Accordingly, without argument,42 we dismiss the petition for want of jurisdiction.

Justice HECHT delivered a dissenting opinion.

*912 Justice WAINWRIGHT delivered a dissenting opinion, in which Justice JOHNSON joined.

Justice HECHT, dissenting.

Strange as it may seem, a state agency has sued itself to have its own jurisdiction declared exclusive, then moved to dismiss its action for want of jurisdiction, and now complains that the trial court denied its motion. To be clear: the agency does not contend that it should have won a declaratory judgment; it contends that its motion to dismiss its own action should have been granted. One may ask: why doesn’t the agency simply take a nonsuit? If the agency is trying to obtain judicial approval of its claim of exclusive jurisdiction, the plan has backfired: the court of appeals held against the agency.1 But a party’s dispute with itself is nonjusticiable.

There is much argument with citation of many cases to establish the long-recognized general principle that no person may sue himself. Properly understood the general principle is sound, for courts only adjudicate justiciable controversies. They do not engage in the academic pastime of rendering judgments in favor of persons against themselves.2

The court of appeals should have dismissed this interlocutory appeal.3

The Court’s opinion does not clearly set out the peculiar posture of this case, which is so unusual that it must be carefully understood. The Employees Retirement System of Texas (ERS), a state agency,4 provided health and accident benefits to Xavier Duenez, a state employee,5 under a plan administered by Blue Cross and Blue Shield of Texas (BCBST). The plan paid for health care for Duenez’s daughter Ashley, who along with her parents and siblings was injured in a car accident with a drunk driver. The driver had purchased beer at a convenience store just before the accident, and Duenez and his wife Irene sued the store owner under the Texas Dram Shop Act.6 The Duenezes obtained a substantial judgment, and BCBST requested a partial assignment to protect ERS’s right of subrogation. When the Duenezes refused, BCBST sued them as well as ERS, alleging that ERS was “a person whose joinder as a party to this litigation is needed for just adjudication.” BCBST requested the following relief: “[a] declaration of the respective rights and other legal relations of ERS, BCBST as ERS’ administering firm and manager, Xavier Duenez, Irene Duenez, and Ashley Duenez”; “[a] declaration that ERS/BCBST is entitled to have [the Duenezes] execute and deliver to ERS/BCBST ... an *913 appropriate partial assignment”; attorney fees; and costs. ERS answered with a general denial, characterizing itself as “Defendant ERS”.

The case languished for several years while the Dram Shop case was on appeal, until the Duenezes settled their claims for their injuries and Ashley’s for $35 million.7 The Duenezes then filed a pleading entitled “cross claim and third party action”, “seeking a judicial declaration that [the Duenezes] owe no subrogation to Blue Cross/Blue Shield”, or alternatively, “that any subrogation to which Plaintiff is entitled to [is] subject to the common fund doctrine”. The pleading did not mention ERS. ERS filed an amended answer to BCBST’s petition and “motion to dismiss for lack of jurisdiction”, asserting that its sovereign immunity from suit had not been waived, that by statute it had exclusive jurisdiction to determine its right to subrogation,8 and that administrative remedies had not been exhausted. ERS sought relief only against BCBST—that the court “dismiss the Plaintiff’s Petition” and “that Plaintiff take nothing”. ERS did not mention the Duenezes’ cross-claim.

The Duenezes amended their cross-claim to seek the identical relief against ERS as well as BCBST, and to request abatement of any administrative proceedings before ERS, pending conclusion of the lawsuit. ERS responded to this pleading only by reasserting its claim to exclusive jurisdiction, not by moving to dismiss the Duenezes’ cross-claim. BCBST amended its petition to request declarations:

• “that ERS has exclusive jurisdiction ... to determine whether the group health care coverages and benefits provided by ERS ... with administrative support from Blue Cross are or are not subject to ... any ... legal or equitable doctrine”;

• “that the statutory remedies provided to Xavier Duenez with respect to ERS’ decisions regarding subrogation for benefits paid to Xavier Duenez are exclusive”;

• “that ERS/Blue Cross is entitled to recover its full subrogation interest from Defendants”; and

• “of the respective rights and other legal relations of ERS, Blue Cross as ERS’ administering firm, Xavier Duenez, Irene Duenez, and Ashley Duenez”.

BCBST added a request for “[m]onetary judgment in favor of ERS/Blue Cross for the full amount of the ERS subrogation interest”. The amount of that interest, as asserted in letters from ERS to the Duenezes’ counsel, was $295,105.57.9

At the hearing on ERS’s motion to dismiss, the trial court was puzzled why BCBST would sue yet assert that the only remedy was administrative. The court asked BCBST’s counsel: “If you thought you had administrative relief, why did you file a case in District Court?” Though counsel’s answer was not entirely clear, he said this:

When we found out about [the judgment in the Dram Shop case], we thought, what is the best way to preserve whatever right we have, whatever subrogation right we have. They [i.e., the Duenezes] had already indicated to the ERS that they didn’t think ERS had jurisdiction *914 over anything, and it became clear to us that we were not going to be able to get their attention proceeding through administrative proceedings only. Therefore, we decided the way to preserve whatever subrogation interest there is—they say there really isn’t one, we say there’s a dollar-for-dollar one—the best way to preserve that is to file a lawsuit.... Now, ERS did not join in that lawsuit, we, Blue Cross, as the administering firm, filed what we, as Blue Cross, thought would be the best thing to do at the time. Now, for the record today, we are on board with ERS in terms of the ERS exclusive authority....

The trial court denied ERS’s motion to dismiss and ordered that administrative proceedings be abated.

The court of appeals recognized that BCBST and ERS have identical interests in this case:

Although ERS is named as a defendant by BCBS’s live petition, ERS is a defendant in name only. ERS is not adverse to BCBS’s claims. In fact, BCBS’s claims have been pled for the express benefit of ERS.... Not only are the parties not adverse to each other, they also have an ongoing agency relationship controlled by statute....

BCBS brings its lawsuit in its capacity “as ERS’s administrating firm”—as an agent for ERS. In addition, ERS maintains on appeal that BCBS has no right or interest in the settlement proceeds, a contention that BCBS has not contested.... Based on its pleadings, it is unclear why BCBS named ERS as a defendant.

ERS moved to dismiss this lawsuit. The trial court denied its request. In this appeal, ERS argues that it has exclusive jurisdiction over subrogation disputes, including the subrogation claim filed by BCBS on its behalf. BCBS has not filed an appellate brief with this Court. It is worth noting, however, that BCBS’s live petition requests from the district court, in the alternative to a money judgment, “[a] declaration that ERS has primary jurisdiction and authority” over the parties’ subrogation dispute. It therefore appears that the interests of BCBS and ERS are fully aligned in this litigation, even though BCBS has named ERS as a defendant.10

The court of appeals nevertheless proceeded to tackle the issue of ERS’s statutory authority because ERS and the Duenezes disagree. But ERS never moved to dismiss the Duenezes’ cross-claim. ERS’s motion to dismiss was expressly directed at BCBST’s suit. The Duenezes certainly have no standing to support the trial court’s jurisdiction over BCBST’s suit. Were BCBST’s suit dismissed, the Duenezes claim would be unaffected unless they were somehow in privity with BCBST, and they are not. To be sure, the Duenezes are interested in the extent of ERS’s authority to decide subrogation issues, but they are no more interested in a dispute between BCBST and ERS than an amicus curiae would be. Indeed, it would be to the Duenezes’ benefit if BCBST’s suit were dismissed—including its claim against the Duenezes for $295,105.57, attorney fees, and costs.

ERS’s interlocutory appeal from the trial court’s order denying its motion to dismiss BCBST’s suit raised no justiciable issue. We should grant ERS’s petition for review, vacate the court of appeals’ judgment, and dismiss the appeal.11 Because *915 the Court does not do so, I respectfully dissent.

Justice WAINWRIGHT, joined by Justice JOHNSON, dissenting.

A drunk driver injured the Duenezes in an automobile accident. The Employees Retirement System of Texas (ERS) benefits plan paid approximately $400,000 in medical benefits to the family. ERS then sought to recover the benefits it paid to the Duenezes after they recovered $35 million from the tortfeasor who caused the injuries. ERS’s right to seek reimbursement of the medical benefits paid arises by virtue of contractual subrogation rights in the benefits plan. The question in this case is a narrow one: Is the Duenezes’ dispute of ERS’s subrogation claim subject to the exclusive statutory jurisdiction of ERS to determine whether to pay “claims” under the plan and to decide issues “relating to” the payment of claims? I would hold that the statute and benefits plan vest ERS with exclusive jurisdiction over this dispute. Because the Court does not, I respectfully dissent.

I. Factual and Procedural Background

Xavier Duenez, a state employee, applied for benefits under ERS’s HealthSelect of Texas Managed Care Plan (the Plan) for injuries he and his family sustained in an automobile accident with a drunk driver. As administrator of the Plan, Blue Cross Blue Shield of Texas (BCBS) certified that the requested care was covered and began paying benefits.1 BCBS ultimately paid the Duenezes approximately $400,000 in benefits before the Duenezes changed insurers.

While BCBS was paying benefits to the Duenezes under the Plan, the Duenezes sued to recover damages for the injuries sustained in the accident and obtained a $35 million settlement from the tortfeasor.2 The executive director of ERS sent the Duenezes’ attorney a letter asserting a right to recoupment of approximately $400,000—$300,000 for subrogation claimed and a little over $100,000 for overpayment of medical benefits. It appears from the record that the approximately $100,000 in improperly paid benefits at issue here was also the subject of Duenez I, in which we held that ERS has exclusive jurisdiction over coverage decisions. *916 201 S.W.3d at 676. Upon learning of the settlement, BCBS sued under both subrogation and overpayment theories to recoup the $400,000 it paid to the Duenezes in benefits under the Plan and for declaratory judgment. BCBS’s subrogation rights in this case arise from a provision in article IX of the Plan, which entitles the Plan to reimbursement from the proceeds of a settlement for any benefits provided by the Plan.

BCBS joined ERS as a co-defendant in the lawsuit. See 221 S.W.3d 809, 815.

II. Employees Retirement System’s Exclusive Jurisdiction

When the Legislature creates an administrative right that did not exist at common law, it can prescribe the procedures for pursuing and enforcing the right. Thomas v. Long, 207 S.W.3d 334, 340 (Tex.2006).

A. Statutory Interpretation

Whether ERS has exclusive jurisdiction over this subrogation dispute is a matter of statutory interpretation, which we review de novo. TEX. INS.CODE § 1551.352.5 Neither party disputes that ERS paid medical benefits to the Duenezes in accordance with the Plan and has exclusive jurisdiction to determine the benefits to be paid.

The Plan also contractually governs subrogation. It provides as follows:

*917 a. This provision applies when another party (person or organization) is or may be considered responsible for payment because of a Participant’s injury or sickness for which benefits under the Plan have been provided.

b. To the extent of such services provided, the Plan is subrogated to all rights of recovery the Participant has[,] and the Plan may assert such rights independent of the Participant. Also, if the Participant has obtained or obtains a court judgment, settlement, arbitration, award, or other monetary recovery from another party, because of the injury or sickness, the Plan is entitled to reimbursement from the proceeds of recovery to the extent of benefits provided.

The Plan expressly provides ERS with a right to subrogation from the Duenezes’ recovery obtained from a tortfeasor, whether through settlement or otherwise.

By disputing ERS’s plea to the jurisdiction, the Duenezes contest ERS’s jurisdiction to decide the right to recover both portions of the benefits paid through its subrogation rights. Their argument first depends on a holding that ERS does not have exclusive jurisdiction over the dispute of the alleged overpayment of $100,000 in medical benefits. This argument directly attacks ERS’s decision to pay, or to decide not to pay, benefits under the Plan. The statute is clear that ERS has exclusive jurisdiction over “all questions relating to ... payment of a claim.” See TEX. INS.CODE § 1551.352). The Court agrees, but then determines that because the Duenezes are no longer insureds of the Plan, ERS loses its ability to enforce its decision regarding the payment of benefits. The Court’s holding allows easy circumvention of ERS’s exclusive jurisdiction to decide the very issue of payment of Plan benefits. Surely the Legislature did not intend that an insured would be able to avoid its reimbursement obligation by simply changing insurers before ERS can seek subrogation. The Court’s approach presents a simple roadmap for former Plan participants to circumvent the statute and improperly move to the courts claims to retain overpayments of medical benefits.

The Duenezes also argue that, because subrogation is collateral to payment and coverage under the Plan, ERS’s assertion of exclusive jurisdiction to determine whether it should be reimbursed the $300,000 in legitimate benefits paid pursuant to its contractual subrogation rights is not related to payment of a claim. See, e.g., Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 213 (Tex.2003) (same).

This point raises a question of the scope of the legislative grant of exclusive authority. The statute’s grant of jurisdiction over “all questions relating to ... payment of a claim” is broader than the Duenezes argue and the Court holds. In interpreting a statute, we “give words their ordinary meaning.” § 1551.352.

We are mindful that the Legislature enacted a comprehensive regulatory scheme to govern health insurance for state employees. See § 1551.052. Because this case relates to the recoupment of benefits paid under the Plan, I believe it falls within the broad scheme created by the Legislature to “provide uniformity.”

In addition, ERS asserts its claim for subrogation in this case alongside a claim for overpayment of benefits, over which ERS would clearly have jurisdiction as a “question relating to ... payment of a claim.” ERS will have to parse the benefits paid, first by determining how much of the benefits were overpaid, which is clearly within ERS’s jurisdiction, and then determining whether the Duenezes owe subrogation on the remaining amount. When two claims are so intertwined, it would not only be inefficient, but also against the Legislature’s goal of promoting uniformity, to allow ERS to exercise its exclusive jurisdiction over part of the dispute and the trial court to decide the remainder, perhaps changing or nullifying ERS’s payment decisions. This is untenable. Courts have the authority to change ERS’s decisions, but only on appeal from ERS’s final decision under a substantial evidence scope of review. TEX. GOV’T CODE §§ 2001.171, .174.

To interpret this provision as the Duenezes suggest would nullify a portion of the statute. See § 1551.352. This statutory language encompasses more than the payment of benefits-it encompasses payment of a claim arising from benefits provided.

Subrogation relates to the payment of a claim. See Argonaut, 87 S.W.3d at 530. In other words, subrogation determines who ultimately pays the claim-ERS or the third party, such as the tortfeasor in this case. Whether the payment comes from the Plan or a plan participant’s recovery should be ERS’s initial decision to make.

Because subrogation relates to payment of the Plan participants’ claims, contractual subrogation claims under the Plan should fall within ERS’s exclusive jurisdiction. Hogue, 271 S.W.3d at 256.

*919 The Court seems to suggest that BCBS and ERS colluded on a plan to sue in court and then seek dismissal for lack of jurisdiction. Nothing in the record suggests that ERS and BCBS had such a plan, and nothing in the Plan or statute requires a lawsuit as a predicate to administrative subrogation. Even if BCBS made a litigation misstep by bringing its claim in a court of law and joining ERS as a defendant, BCBS’s misstep does not mean that ERS demanded dismissal of “its own claim,” as the Court asserts. 288 S.W.3d at 906. And such a misstep does not change the language of the statutes vesting ERS with exclusive authority to adjudicate matters relating to payment of claims or the language of the health care plan under which the Duenezes received hundreds of thousands of dollars.

B. Exercise of Jurisdiction

Even if a statute appears to grant an agency exclusive jurisdiction over certain claims, such jurisdiction may be limited if the agency lacks procedural mechanisms to resolve the claims and the agency is unable to award monetary damages. Id. at 207–08.

The jurisdiction of the Motor Vehicle Board at issue in Butnaru extended to “Code-based claims,” such as the denial of an application for a dealership. Cash Am. Int’l Inc. v. Bennett, 35 S.W.3d 12, 18 (Tex.2000)). Whether ERS has the capability to resolve the types of claims asserted bears on the scope of the legislative grant of jurisdiction.

In this case, the Plan creates the subrogation claim asserted by ERS, which arises from ERS’s payment of benefits to the Duenezes. See Butnaru, 84 S.W.3d at 208.

It is true that ERS has not adopted substantive rules specifically governing the resolution of administrative subrogation proceedings; however, this appears to be the first such subrogation dispute a Plan beneficiary has pursued through the courts. ERS presumably determines the *920 majority of subrogation claims through the administrative process without dispute. Importantly, the enabling statute grants ERS the authority to adopt rules “it considers necessary to implement this chapter and its purposes,” including the rules governing subrogation proceedings. See In re Entergy Corp., 142 S.W.3d 316, 321–22 (Tex.2004). I agree.

As the court of appeals and the Court note, the lack of substantive guidance on subrogation disputes stands in contrast to other matters within ERS’s exclusive jurisdiction, such as eligibility for benefits and coverage, both covered by the Act. Butnaru. See 84 S.W.3d at 206.

Further, unlike the Motor Vehicle Code at issue in Butnaru, the Act provides a general framework for ERS to resolve contested subrogation issues. The statute directs that the executive director make all determinations over which he has jurisdiction, which, in this case, came in the form of a letter to the Duenezes. Cash. Am. Int’l, 35 S.W.3d at 15 (“When the Legislature vests exclusive jurisdiction in an agency, exhaustion of administrative remedies is required.”).8 The procedures through which ERS resolves other disputes based on the Plan are already in place and can accommodate the subrogation dispute at issue here.

Second, in Butnaru, the plaintiffs sought monetary damages based on the common law claim of tortious interference and a declaratory judgment for a breach of contract claim. TEX. INS.CODE §§ 1551.014, .052.

The Court relies on its assertion that ERS’s procedures were never designed for collecting a claim. 288 S.W.3d at 909. However, ERS must have the procedures for recovering money already paid in benefits, because the statute explicitly allows them to do so in another context. TEX. GOV’T CODE § 2001.202 (stating that the attorney general may, at the request of ERS, represent its interest in trial court to “compel compliance with the final order,” but that representation by the attorney general “is in addition to any other remedy provided by law”).

III. Conclusion

For the reasons discussed above, I conclude that the Legislature has granted ERS exclusive jurisdiction over this subrogation dispute. TEX.R.APP. P. 59.1.



See Blue Cross Blue Shield of Tex. v. Duenez (Duenez I), 201 S.W.3d 674, 676 (Tex.2006).


Duenez I, 201 S.W.3d at 676–77.


See F.F.P. Operating Partners, L.P. v. Duenez (Duenez II), 237 S.W.3d 680, 694 (Tex.2007).


See Duenez I, 201 S.W.3d at 675.


221 S.W.3d 809.


See U.S. v. Interstate Commerce Comm’n, 337 U.S. 426, 430, 69 S.Ct. 1410, 93 L.Ed. 1451 (1949) (holding that “courts must look behind names that symbolize the parties to determine whether a justiciable case or controversy is presented”).


TEX. INS.CODE § 1551.002.


Id. §§ 1551.001–.407.


Id. § 1551.052(b).


Id. § 1551.052(b).


Id. § 1551.055(13).


Id. § 1551.002(2).


Mandatory–Litigation Class Action: The Only Option for Mass Tort Cases, 115 HARV. L.REV. 831, 882 n. 99 (2002) (“The widespread use of insurance subrogation strongly indicates that individuals benefit from avoiding not only the moral hazard costs, but also the lost utility from paying for duplicative coverage.”).


See, e.g., to as subrogation clauses....”); Paul R. Thomson, III, Insurance Subrogation—A Subrogation Clause in a Health Insurance Policy is Enforceable Even Though the Insured Has Not Been Made Whole, 16 U. ARK. LITTLE ROCK L.REV. 475, 476 (1994) (“Clauses permitting subrogation commonly appear in insurance and construction contracts....”).


Duenez I, 201 S.W.3d at 675.


See, e.g., Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 223 (Tex.2002).


E.g., Thomas v. Long, 207 S.W.3d 334, 340 (Tex.2006).


David McDavid Nissan, 84 S.W.3d at 222.


TEX. INS.CODE § 1551.352 (emphasis added).


See, e.g., id. §§ 1551.059, .062, .211, .215, .216, .259, .351, .354, .401.


Duenez I, 201 S.W.3d at 676.


See Butnaru v. Ford Motor Co., 84 S.W.3d 198, 207–08 (Tex.2002) (holding exclusive jurisdiction of agency to regulate relations between car manufacturers and dealership owners did not include tortious interference claim by prospective buyer).


See TEX. INS.CODE §§ 1551.101–.114.


Id. §§ 1551.151–.159.


Id. §§ 1551.201–.206, .251–.259.


Id. §§ 1551.301–.324.


Id. § 1551.014.


Id. § 1551.354.


See Pub. Util. Comm’n of Tex. v. City Pub. Serv. Bd., 53 S.W.3d 310, 316 (Tex.2001) (noting that we consider an agency’s interpretation of its own powers “if that interpretation is reasonable and not inconsistent with the statute”).


See id. (“An agency may not, however, exercise what is effectively a new power, or a power contradictory to the statute, on the theory that such a power is expedient for administrative purposes.”).


Guillot v. Hix, 838 S.W.2d 230, 232 (Tex.1992).


Marcus Cable Assocs. v. Krohn, 90 S.W.3d 697, 706 (Tex.2002).


See TEX. CONST. art I, § 13.


Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 227 (Tex.2002).


See, e.g., Faires v. Cockrill, 88 Tex. 428, 31 S.W. 190, 194 (1895) (“Perhaps the courts of no state have gone further in applying the doctrine of subrogation than has the court of this state.”).


See TEX. INS.CODE § 1551.359.


See David McDavid Nissan, 84 S.W.3d at 221 (holding courts should defer to administrative agencies under doctrine of primary jurisdiction when “(1) an agency is typically staffed with experts trained in handling the complex problems in the agency’s purview; and (2) great benefit is derived from an agency’s uniformly interpreting its laws, rules, and regulations, whereas courts and juries may reach different results under similar fact situations”).


We disagree with JUSTICE WAINWRIGHT’S interpretation that the Duenezes are “directly attack[ing] ERS’s decision to pay, or to decide not to pay” these benefits. 288 S.W.3d at 917. To the contrary, the Duenezes insisted that ERS pay these charges, and got the trial court to order ERS to do so.


Tex. Mut. Ins. Co. v. Ledbetter, 251 S.W.3d 31, 37 (Tex.2008).


The ERS plan provided for subrogation “even though the third-party payment does not compensate the Participant for his or her whole loss,” and that it “shall not be defeated by any so-called ‘Fund Doctrine,’ or ‘Common Fund Doctrine.’ ” See Fortis Benefits v. Cantu, 234 S.W.3d 642, 650 (Tex.2007) (“We agree with those courts holding that contract-based subrogation rights should be governed by the parties’ express agreement and not invalidated by equitable considerations that might control by default in the absence of an agreement.”).


TEX. GOV’T CODE § 311.021(2).


See TEX.R.APP. P. 59.1.


221 S.W.3d 809 (Tex.App.-Corpus Christi–Edinburg 2007).


United States Fid. & Guar. Co. v. Goudeau, 272 S.W.3d 603, 612 (Tex.2008) (Green, J., joined by Jefferson, C.J., and Johnson, J., dissenting)).


See Texas Ass’n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 445–446 (Tex.1993) (standing, as a matter of subject matter jurisdiction, may be raised for the first time on appeal).


Texas Government Code. Section 811.003 provides that “[t]he retirement system is a public entity.”


Benefits were provided under the Texas Employees Uniform Group Insurance Benefits Act, Act of April 21, 1975, 64th Leg., R.S., ch. 79, 1975 Tex. Gen. Laws 208, as amended, formerly TEX. INS.CODE §§ 1551.001–.407.




According to the Duenezes, settlement funds were allocated $12,644,000 to Ashley, $6,104,000 to Irene, $3,052,000 to Xavier, and $13,200,000 to attorney fees and expenses. The judgment for the claims of two other Duenez family members injured in the accident was reversed and remanded by this Court in F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (Tex.2007).


ERS cited TEX. INS.CODE § 1551.352.


ERS also asserted that it overpaid $113,174.76 in benefits that Duenez improperly claimed.


221 S.W.3d 809, 812 (Tex.App.-Corpus Christi–Edinburg 2007) (citations and footnote omitted).


See Brown v. Todd, 53 S.W.3d 297, 306 (Tex.2001).


After initially certifying coverage, BCBS later informed the Duenezes that the care was not covered and that BCBS planned to discontinue paying benefits. Id. at 676.


The Duenezes sued the drunk driver and the owner of the convenience store that sold the drunk driver alcohol on the day of the accident, obtaining a $35 million jury verdict that the court of appeals affirmed. Id. at 683, 694.


In City of Corpus Christi v. Public Utility Commission, we held that an agency’s interpretation of a statute is entitled to deference if: (1) it is reasonable, and (2) it does not conflict with the statute’s plain language. State v. Pub. Util. Com’n, 883 S.W.2d 190, 196 (Tex.1994) (holding, in a case about the PUC’s authority to provide a remedy that the Legislature did not specifically include, that “the contemporaneous construction of a statute by the administrative agency charged with its enforcement is entitled to great weight”).


Texas trial courts have “exclusive, appellate, and original jurisdiction of all actions, proceedings, and remedies, except in cases where exclusive, appellate, or original jurisdiction may be conferred by this Constitution or other law on some other court, tribunal, or administrative body.” TEX. CONST. art. V, § 8.


When this case arose, the Act was codified at article 3.50–2 of the Texas Insurance Code. The Act was later repealed and recodified with non-substantive revisions. See Act of May 22, 2001, 77th Leg., R.S., ch. 1419, §§ 3, 31(b)(6), 2001 Tex. Gen. Laws 4153, 4209 (current version at TEX. INS.CODE § 1551). Citations are to the current version of the Act.


If the participant failed to file a timely appeal, his or her administrative remedies would similarly be exhausted. Just as an appeal to the Board of Trustees would qualify as a contested case, so too would the decision of a participant not to appeal. See TEX. GOV’T CODE § 2001.003(1) (“ ‘Contested case’ means a proceeding ... in which the legal rights, duties, or privileges of a party are to be determined by a state agency after an opportunity for adjudicative hearing.” (emphasis added)); see 25 WILLIAM V. DORSANEO III, TEXAS LITIGATION GUIDE § 423.02 (2007). If the participant failed to appeal the determination of the executive director of ERS, such determination must necessarily represent the final determination of the administrative agency. See § 2001.144. At that point, ERS would be able to enforce its judgment in the trial court. See § 2001.202 (stating that the attorney general may, at the request of ERS, represent its interest in a trial court to “compel compliance with the final order,” but that representation by the attorney general “is in addition to any other remedy provided by law”).


If the Board of Trustees finds in favor of the participant, ERS could request that the attorney general bring an action in trial court on its behalf. See TEX. GOV’T CODE § 2001.202.


Clearly, then, filing suit is not a prerequisite to exhausting administrative remedies, as the Court suggests. 288 S.W.3d at 906. Suit would be filed only after the administrative process has concluded, either by the Duenezes, unhappy with the result, or by ERS, to enforce the decision of the administrative body.

End of Document