Immunity shielded entity and employee from tort claims but not contract claims for self-funded benefits plan

SOUTH COAST SPINE & REHABILITATION PA v. BROWNSVILLE INDEPENDENT SCHOOL DISTRICT, HECTOR G. AYALA JR., AND GWENDOLYN S. HAUGHT, 13-11-00270-CV (Tex. App. – Corpus Christy, April 30, 2014).

South Coast Spine & Rehabilitation, P.A. (“South Coast”) appeals the trial court’s grant of the Brownsville Independent School District’s (“BISD”) plea to the jurisdiction arising from claims for medical bills incurred by BISD employees under its self-funded benefit plan.

South Coast sued to collect on funds owed on 26 employees of BISD. It sued for breach of contract, civil conspiracy, concert of action, and a host of other causes of action, mainly sounding in tort. The trial court granted BISD’s plea to the jurisdiction noting it retained governmental immunity and South Coast appealed.

The court first held that providing a self-funded benefits plan which is required by statute is a governmental function over which BISD retained immunity.  It dismissed all of South Coast’s tort claims. However, the court then determined that BISD entered into a contract with its employees under the plan for services and therefore the Benefits Plan falls under the waiver of immunity found in Tex. Loc. Gov’t Code Ann. §271.152 (West 2014).  South Coast was a proper third-party beneficiary to the contract and could therefore bring suit under the statutory waiver. The court then noted the trial court was not required to have evidence of the actual written contract since it must construe the pleadings liberally and as true unless factually challenged. South Coast also sued a BISD employee, Haught. The court affirmed the dismissal of tort claims against Haught under the election of remedies provision in Tex. Civ. Prac. & Rem. Code Ann. §101.106 (West 2014).  However, the court held that the election only applies to torts or claims arising from the same subject matter.  As a result, South Coast could pursue contract claims against Haught individually.  So basically, all tort claims are dismissed against all defendants and all contract claims survive against all defendants. [Comment: I’m not sure the tort and contract claims are separate subject matters since the tort claims were all based on the fact BISD employees got medical services for free and BISD did not pay for the services rendered. That sounds like the same subject matter to me.  However, the court did not elaborate on why they are different.]

If you would like to read this opinion click here. Panel: Chief Justice Valdez, Justice Garza, Justice Longoria. Memorandum Opinion by Chief Justice Valdez. The attorney listed for South Coast is Keith T. Gilbert .   The attorneys listed for BISD are  Miguel Alberto Saldana,  Arturo G. Michel, and John Hopkins. The attorneys listed for Haught are Erin A. Hudson and Michael Rodriguez.