Employee’s failure to provide benefits claims under self-insurance fund dismissed since Plan documents did not contain essential terms of agreement sufficient to waive immunity

The United Healthcare Choice Plus Plan for City of Austin Employees and The City of Austin v. Charles Lesniak, 03-15-00309-CV (Tex. App. – Austin, December 1, 2015)

This is an interlocutory appeal from the denial of a plea to the jurisdiction which the Austin Court of Appeals reversed.

The City established a self-funded insurance plan (“Plan”) to provide medical benefits to its eligible employees and contracted with United HealthCare Services, Inc. (“United”) to administer the Plan. City employee Lesniak’s daughter was a covered dependent. Lesniak sued the City and United for alleged wrongful denial of benefits. The City and United filed a plea to the jurisdiction which was denied. They appealed.

Pursuant to Chapter 2259, self-insurance funds of governmental entities are performing governmental versus proprietary functions. Immunity is not waived under Tex. Loc. Gov’t Code chapter 271 since the Plan Documents cannot reasonably be construed as (1) containing an agreement by any party to provide services to the City and (2) stating the “essential terms” of such agreement. The Plan Documents do not recite any consideration on the City’s part in exchange for the administrative services that United HealthCare is to provide—an essential term of any agreement for services.  The Plan Documents also do not provide any details of HealthCare’s obligations as Plan Administrator. Nor can the Plan Documents be reasonably construed as (1) containing an agreement by Lesniak to provide employment or other services to the City or (2) a unilateral contract on the part of the City or Plan because they do not identify any performance that covered persons must complete to be entitled to benefits.  No waiver of immunity therefore exists.

If you would like to read this opinion click here. Justice Puryear, Justice Goodwin and Justice Bourland.  Memorandum Opinion by Justice Puryear.