Bellamy v. Allegiance Benefit Plan Mgmt., Inc.

696 S.W.3d 751

Amanda BELLAMY, Appellant

v.ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC., Appellee

No. 11-23-00105-CV

Court of Appeals of Texas, Eastland.

Opinion filed July 25, 2024

On Appeal from the 238th District Court, Midland County, Texas, Trial Court Cause CV58440, Elizabeth Leonard, Judge

James D. Schull, Law Office of James D. Schull, 8507 Benbrook Blvd. Suite F, Benbrook, TX 76126, for appellant.

Gino J. Rossini, Ryan Owen, Thomas M. Horan II, Thompson, Coe, Cousins & Irons L.L.P., Plaza of the Americas, 700 N. Pearl St. 25^th Floor, Dallas, TX 75201, for appellee.

Panel consists of: Bailey, C.J., Trotter, J., and Williams, J.

OPINION

W. STACY TROTTER, JUSTICE

This appeal concerns (1) the propriety of the trial court’s reconsideration, and subsequent grant, of the plea to the jurisdiction filed by Appellee, Allegiance Benefit Plan Management, Inc. (Allegiance), (2) the application of the principle of derivative governmental immunity, and (3) whether the trial court erred when it dismissed the causes of action made against Allegiance by Appellant, Amanda Bellamy, as alleged in her pleadings.¹

In the underlying action, Bellamy sued Allegiance and others (who are not parties to this appeal) for damages arising from the City of Midland’s (the City) denial of the healthcare claim that she submitted to the City under the City’s self-funded insurance plan (the Plan).² Allegiance answered and filed its plea to the jurisdiction contending that the trial court did not have subject-matter jurisdiction over Bellamy’s asserted causes of action because (1) Bellamy’s pleadings affirmatively negated the trial court’s subject-matter jurisdiction to hear and decide the case, and (2) the jurisdictional evidence established that Allegiance is immune from liability and suit because it operated and functioned as a third-party administrator to the Plan. See Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226–27 (Tex. 2004). After a hearing, the trial court denied Allegiance’s plea. Allegiance filed a motion to reconsider, and, upon reconsideration, the trial court subsequently granted Allegiance’s plea and dismissed the causes of action that Bellamy asserted against Allegiance with prejudice.

Bellamy raises two issues on appeal: (1) the trial court abused its discretion when it reconsidered its previous denial of Allegiance’s plea; and (2) the trial court erred when it subsequently granted Allegiance’s plea because Allegiance is not immune from suit as a third-party administrator to the Plan. We affirm.

I. Factual Background

The City of Midland operates the Plan for its eligible employees and their eligible dependents. The terms of the Plan are outlined in the "Summary Plan Description" document that is contained in the City’s medical benefits booklet. The City is the "Plan Sponsor" and is vested with the exclusive authority to make final claim and coverage determinations. The Plan, the "Summary Plan Description," and the "Administrative Services Agreement" that was executed by and between the City and Allegiance, designate Allegiance as the "Plan Supervisor" and describe Allegiance’s role within the Plan—to process insurance claims and to assist in the development, maintenance, and administration of the Plan.

The duties that the City delegated to Allegiance are ministerial in nature—akin to how a third-party administrator operates. The "Administrative Services Agreement" states that the City "wishes to contract with an independent third-party administrator to perform certain administrative services with respect to the Plan" and repeatedly refers to Allegiance—who is a licensed third-party administrator—as a "TPA."

At the time her healthcare claim was submitted, Bellamy participated in and was insured under the Plan.³ In her plead- ings, Bellamy alleges that she has experienced "pain on her left side, specifically the neck and shoulder" which prompted her to consult with a physician regarding the cause of her symptoms. Bellamy alleges that her chosen physician recommended that she undergo surgery, the purpose of which was two-fold: (1) to alleviate her symptoms and (2) to remove the surgical hardware that had been inserted in her spine from a prior surgery. Pursuant to the Plan’s requirements, Bellamy filed a claim and requested that the Plan cover the costs associated with this surgery. According to Bellamy, around September 21, 2020, she was notified by Allegiance that her claim was denied, based on the determination that the recommended surgery was "not medically necessary." Bellamy appealed the denial of her claim to a "First Level of Benefit Determination Review," as described in the Plan; however, on December 22, 2020, her claim was denied at this stage of the process.

After this denial, Bellamy sought a "Second Level of Benefit Determination Review" or a "second level appeal" to the Director of Administrative Services of the City, which also included a review by an independent company, Advanced Medical Reviews, to determine whether the surgical procedure recommended by her chosen physician was "medically necessary." After conducting its independent review, Advanced Medical Reviews determined that the recommended surgery was not medically necessary because it was deemed to be "[e]xperimental/[i]nvestigational" as defined by the Plan. On March 24, 2021, the Director of Administrative Services of the City sent a letter to Bellamy notifying her that after a "second level appeal" consideration, her claim and request for coverage and benefits for the recommended surgery was, again, denied. In this letter, Bellamy was also informed that she could pursue an independent external medical review of the denial determinations under the terms of the Plan, but she did not do so.

On August 11, 2022, Appellant filed her first amended petition and joined Allegiance and the City as defendants to her suit. On August 19, 2022, Allegiance filed its original answer to Bellamy’s first amended petition and its plea to the jurisdiction; on August 25, 2022, the City filed its plea to the jurisdiction. The trial court scheduled a hearing for both pleas for September 22, 2022.

The day before the hearing, Bellamy filed her second amended petition—which included five additional causes of action that she asserted against the City and Allegiance—and a response to both pleas. On the day of the hearing, multiple documents were filed by the parties, including (1) the City’s supplemental plea; (2) Bellamy’s third amended petition; (3) Allegiance’s joinder to the City’s original and supplemental pleas; (4) Allegiance’s reply brief to Bellamy’s response to its plea; and (5) the City’s second supplemental plea. The trial court then held the hearing on the pleas later that day. Following the hearing, the City filed supplemental evidence in support of its plea.

On October 5, 2022, the trial court signed its order granting the City’s plea and denying Allegiance’s plea. Following the trial court’s rulings, the City filed a motion to sever, which the trial court granted, so that the trial court’s written ruling in the City’s favor could become final and appealable. In light of the severance, the only remaining parties to the underlying suit were Bellamy and Allegiance. On January 20, 2023, Allegiance filed a motion for reconsideration requesting that the trial court reconsider its previous denial of Allegiance’s plea. The trial court set a hearing on Allegiance’s motion for March 2, 2023; however, on February 8, 2023, the trial court signed its order granting Allegiance’s motion for reconsideration and plea to the jurisdiction. This appeal followed.

II. Standards of Review and Applicable Law

A. Motion for Reconsideration

[1, 2] We review a trial court’s decision to grant or deny a motion for reconsideration under an abuse of discretion standard. Tex. Petroleum Land Mgmt., LLC v. McMillan, 641 S.W.3d 831, 850 (Tex. App.—Eastland 2022, no pet.); Methodist Hosps. of Dallas v. Corp. Communicators, Inc., 806 S.W.2d 879, 883 (Tex. App.—Dallas 1991, writ denied); see also Udcoff v. Castille, No. 11-04-00274-CV, 2006 WL 2075244, at *9 (Tex. App.—Eastland July 27, 2006, no pet.) (mem. op.). A trial court abuses its discretion if it acts arbitrarily, unreasonably, or without regard to guiding legal principles in reaching its ruling, or if its ruling is not supported by legally or factually sufficient evidence. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985); Kendrick v. Garcia, 171 S.W.3d 698, 703 (Tex. App.—Eastland 2005, pet. denied) (citing Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex. 1992)).

B. Plea to the Jurisdiction

[3–5] Before a trial court may decide a case, it is essential that the trial court possess subject-matter jurisdiction. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 553–54 (Tex. 2000). A plea to the jurisdiction is a dilatory plea and a proper method by which to challenge a trial court’s subject-matter jurisdiction. Id. at 554. Whether a trial court has subject-matter jurisdiction to decide a case is a question of law that we review de novo. Harris Cnty. v. Annab, 547 S.W.3d 609, 612 (Tex. 2018) (citing Miranda, 133 S.W.3d at 226); Ector Cnty. v. Breedlove, 168 S.W.3d 864, 865 (Tex. App.—Eastland 2004, no pet.).

[6, 7] The purpose of a plea to the jurisdiction is to defeat a pleaded cause of action without reaching the merits. Blue, 34 S.W.3d at 554. A plea to the jurisdiction can take two forms: (1) a challenge to the plaintiff's pleadings regarding the allegations of jurisdictional facts, or (2) an evidentiary challenge to the existence of jurisdictional facts. Mission Consol. Indep. Sch. Dist. v. Garcia, 372 S.W.3d 629, 635 (Tex. 2012); Miranda, 133 S.W.3d at 226–27. Thus, the plea may challenge the pleadings, the existence of jurisdictional facts, or both.⁴ Alamo Heights Indep. Sch. Dist. v. Clark, 544 S.W.3d 755, 770 (Tex. 2018); City of Merkel v. Copeland, 561 S.W.3d 720, 723 (Tex. App.—Eastland 2018, pet....