Texas Supreme Court Denies Petition for Review in Important Governmental Immunity Case
Texas Political Subdivisions Joint Self-Insurance Fund v. TDI-DWC, 03-22-00241-CV (Tex. 2024).
On February 2, 2024, the Supreme Court of Texas denied TPS’s petition for review, upholding the decision of the Austin Court of Appeals in this case.
In October 2023 the Austin court originally held that Texas political subdivisions cannot use governmental immunity to avoid administrative penalties for failing to timely pay workers’ compensation benefits.
DWC sought sanctions against the Self-Insurance Fund in November 2019 after an audit identified multiple instances where the Fund had failed to accurately pay death benefits or accurately report claim data. The DWC also sought penalties against the Fund for failing to timely pay benefits to an injured worker.
DWC initiated two separate cases before an ALJ at the State Office of Administrative Hearings (SOAH), and the ALJ ultimately determined the Fund had underpaid death benefits in three cases by a total of $384,132 and levied $125,000 in administrative penalties. The ALJ agreed with the DWC that the benefit payments were late and levied a $7,500 sanction against the Fund.
The Fund sought judicial review in a Travis County district court where the district court judge upheld the sanctions. The Fund appealed.
The Austin Court of Appeals upheld the trial court’s ruling that the Fund pay $132,500 in administrative penalties and attorney’s fees. The Fund argued that lawmakers did not waive immunity until they passed Senate Bill 2551 in 2019. The DWC countered, arguing that the statute simply clarified existing law. The appellate judges agreed with the DWC noting the primary purpose of SB 2551 was to change the claim process for first responders’ cancer claims. One provision of the new statute states that political subdivisions that self-insure are liable for administrative penalties and other sanctions. The court further noted that it previously ruled in 2020 that political subdivisions are subject to administrative penalties assessed by the DWC.
The Austin Court of Appeals did not address other potential theories of immunity, however, as they were not raised by TPS. The City of San Antonio argued in favor of the self-insurance fund in an amicus brief, asserting that it was intrinsic in the constitutional framework that political subdivisions share with the state the immunities granted by the people, including protection from fines, while executing government functions imposed on them as involuntary agents of the state. “Just as the state cannot punish itself, there is no authority within the constitutional framework to punish those involuntary agents acting in its stead.” However, the Court of Appeals did not address this argument and TPS did not make it in its appeal to the Supreme Court. This and other arguments are, therefore, still available.
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