Wainwright Dissent in
ERS of Texas v. Duenez, No. 07-0410 (Tex. Jul 3, 2009)(petition dismissed)(Brister) (administrative
agency exclusive jurisdiction doctrine held not to apply to subrogation claim, which involves collection
on a claim rather than payment thereof)(
from Calhoun County; 13th district (
13-05-00729 CV, ___ SW3d ___, 04-05-07 Opinion below)
Pursuant to Texas Rule of Appellate Procedure 59.1, after granting the petition for review and without
hearing oral argument, the Court dismisses the petition for want of jurisdiction.
Brister delivered the opinion of the Court, in which Chief Justice Jefferson, Justice O'Neill, Justice
Medina, Justice Green, and Justice Willett joined. [pdf]
Hecht delivered a dissenting opinion (arguing the court of appeals should have dismissed the
appeal for want of a
justiciable issue)
Wainwright delivered a dissenting opinion [14-page pdf opinion] favoring application of
exclusive jurisdiction doctrine to the subrogation dispute under different statutory interpretation of the
applicable law. Justice Johnson joined this dissent.
For the reasons discussed [in the dissenting opinion], I conclude that the Legislature
has granted ERS exclusive jurisdiction over this subrogation dispute.  [...] I would
reverse the court of appeals’ judgment and dismiss the case for want of jurisdiction.

ERS v. Duenez (Tex. 2009)(Wainwright, dissenting)

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. 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 Tex. R. Civ. P. 39(a) (permitting joinder of a party
necessary for the just adjudication of the lawsuit). ERS moved to dismiss the suit for want of jurisdiction,
arguing it has exclusive jurisdiction over this subrogation dispute.3 The trial court denied ERS’s motion, and
the court of appeals affirmed. 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. Igal v. Brightstar Info. Tech. Group, Inc., 250 S.W.3d 78,
92 (Tex. 2008). The Legislature may confer exclusive jurisdiction on an administrative body to hear and
decide disputes concerning the right created.4 Subaru of Am. v. David McDavid Nissan, Inc., 84 S.W.3d
212, 221 (Tex. 2002). When it does, a party must exhaust its administrative remedies before seeking review
in a trial court. Duenez I, 201 S.W.3d at 675. Until a party exhausts its administrative remedies, Texas trial
courts lack jurisdiction over the dispute and must dismiss claims within the agency’s exclusive jurisdiction.
Id.; 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. David McDavid Nissan, 84 S.W.3d at 221; Tex. Dep’t of Transp. v. Needham, 82 S.
W.3d 314, 318 (Tex. 2002). The Texas Employees Group Benefits Act (the Act) gives ERS exclusive
jurisdiction over “all questions relating to enrollment in or payment of a claim arising from . . . benefits
provided” under the Plan. 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:

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

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 Duenez I, 201 S.W.3d at 676 (quoting 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., Fortis Benefits v. Cantu, 234 S.W.3d 642, 644 (Tex. 2007) (involving a subrogation dispute in
which coverage was not disputed); 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.” Geters v. Eagle Ins. Co.,
834 S.W.2d 49, 50 (Tex. 1992); see also In re Tex. Dep’t of Family & Protective Servs., 210 S.W.3d 609,
612 (Tex. 2006). In this case, the ordinary meaning comports with the accepted legal meaning, in that both
definitions would only require the matter to have some connection with payment. See Webster’s New
Universal Unabridged Dictionary 1626 (1st ed. 1996) (defining “relate” as “to bring into or establish
association, connection, or relationship”); see also In re Morrison, 555 F.3d 473, 479 (5th Cir. 2009)
(defining bankruptcy courts’ jurisdiction over cases related to the bankruptcy estate). The Legislature
granted ERS’s executive director exclusive authority to determine questions that have a connection or
relationship to payment of a claim for benefits under the Plan—a definition that clearly extends beyond
merely determining the actual payment of a claim. See § 1551.352.

We are mindful that the Legislature enacted a comprehensive regulatory scheme to govern health
insurance for state employees. See Tex. Ins. Code § 1551.001, et seq. Its expressly stated purposes are
both to improve the state’s relations with its employees and to “provide uniformity in life, accident, and
health benefit coverages.” § 1551.002. The statute grants the Board of Trustees broad powers to
“implement this chapter and its purposes.” § 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

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 In re
Caballero, 272 S.W.3d 595, 600 (Tex. 2008); Columbia Med. Ctr. of Las Colinas, Inc. v. Hogue, 271 S.W.3d
238, 256 (Tex. 2008). The statute grants exclusive authority to determine “all questions relating to . . .
payment of a claim arising from . . . benefits provided under this chapter.” § 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 Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.
3d 765, 774 (Tex. 2007) (recognizing that subrogation depends on payment of a loss); Fortis Benefits, 234
S.W.3d at 644; Argonaut Ins. Co. v. Baker, 87 S.W.3d 526, 530 (Tex. 2002) (recognizing that a statutory
provision requiring employees to reimburse insurance carriers for payments made to the employees is a
subrogation provision); Medina v. Herrera, 927 S.W.2d 597, 604 (Tex. 1996) (“Generally, an insurer paying
a claim under a policy becomes equitably subrogated to any cause of action the insured may have against
a third party responsible for the injury.”). Subrogation arises from and depends on payment of a loss or
debt and is limited to the amount of payments made by the subrogee to the subrogor. Mid-Continent, 236 S.
W.3d at 774; 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. Tex. Ins. Code § 1551.352. The language of
the statute governs. City of Rockwell v. Hughes, 246 S.W.3d 621, 625 (Tex. 2008); Hogue, 271 S.W.3d at

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. ___ S.W.3d ___. 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. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 207–08 (Tex. 2002). This indicates
that the Legislature did not intend to grant exclusive jurisdiction over a certain type of claim. Id. Although I
believe the plain meaning of the ERS statute grants exclusive jurisdiction quite broadly, the effect would be
tempered by further analysis. For example, we held in Butnaru that the Motor Vehicle Board’s exclusive
jurisdiction did not extend to claims for tortious interference and declaratory judgment due to: (1) the Motor
Vehicle Code’s failure “to establish any procedure through which the Board may resolve [the claims],” and
(2) “the Board’s inability 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. Id. at 207. The plaintiffs asserted a tort claim that would have
to be proven under the common law. Id. at 208. We held that, because the types of claims asserted and the
damages sought were so unlike the types of cases the Board usually heard, nothing in the statutory scheme
suggested that the Legislature intended to replace common law remedies with administrative remedies. Id.
(citing 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 Fortis Benefits, 234 S.W.3d at 647 (emphasizing that “the policy declares the
parties’ rights and obligations”). The Plan is within ERS’s particular expertise. This contrasts with Butnaru,
where two independent parties unrelated to the agency sued in an agency proceeding based on
substantive tort law. On the other hand, probate, marital, and tax questions, which the Court fears would
also fall within ERS’s exclusive jurisdiction under our definition, would be more similar to the situation in
Butnaru. ERS has not attempted to exercise exclusive jurisdiction over such collateral matters, but if it did, it
would be clear that the Legislature did not intend to extend exclusive jurisdiction that far. 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 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 § 1551.052. The attorney general points out that the Legislature tied ERS’s
exclusive jurisdiction to “a pervasive regulatory scheme,” thus arguing that the lack of an express provision
for subrogation does not limit ERS’s jurisdiction. 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. 221 S.W.3d at 815; §§ 1551.101–.159, .202–.206. However, ERS’s
subrogation rights are available only under the Plan, not under the Act. The substantive right to subrogation
and the obligation to reimburse ERS are created by the Plan, and the agency and the Plan beneficiary are
both stakeholders in the dispute. In fact, no equitable defenses apply when subrogation rights arise from a
contract, as they do in this case. Fortis Benefits, 234 S.W.3d at 647. Rather, “the policy declares the
parties’ rights and obligations.” Id. Hence, the dispute is much different from the one addressed in 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. § 1551.352. The participant then has the opportunity to appeal the determination to the ERS
Board of Trustees. § 1551.351(d). Here, the Duenezes appealed to the Board of Trustees;6 however, the
trial court abated the agency proceeding pending a determination of its jurisdiction. Had the appeal
proceeded, the Duenezes would have been entitled to a contested case hearing by the ERS Board of
Trustees with the opportunity to present defenses. See Tex. Ins. Code §§ 1551.351(d), .355(d); see also
Tex. Gov’t Code §§ 2001.051–.103 (providing minimum standards of uniform procedure for administrative
hearings in contested cases). If still dissatisfied after the appeal, the Duenezes, having exhausted all of their
administrative remedies, would then be free to file suit in a trial court in Travis County.7 See Tex. Ins. Code
§ 1551.359 (“A person aggrieved by a final decision of the Employees Retirement System of Texas in a
contested case . . . is entitled to judicial review of the decision.”); Tex. Gov’t Code § 2001.171 (providing
that a person who has exhausted all administrative remedies available within an agency and is aggrieved by
a final decision in a contested case is entitled to judicial review); 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. 84 S.W.3d at 206. We held that the
agency’s inability to award monetary damages or a declaratory judgment undermined the argument that its
jurisdiction extended to those claims. Id. at 206–07. Unlike the agency in Butnaru, ERS has the authority to
obtain reimbursement of funds, the damages sought here. See Tex. Ins. Code § 1551.351(a)–(b) (allowing
reimbursement of funds obtained through fraudulent or quasi-fraudulent means). The remedies provided
under the Act “are the exclusive remedies available to an employee, participant, annuitant, or dependant.”
Id. § 1551.014; see Unigard Sec. Ins. Co. v. Schaefer, 572 S.W.2d 303, 307 (Tex. 1974) (“When the
Legislature specifies a particular extent of insurance coverage, any attempt to void or narrow such
coverage is improper and ineffective.”). Conspicuously absent from that list of parties is ERS. ERS has the
authority to bring an action under the statute and then to enforce that judgment in the trial court. See, e.g.,
Tex. Ins. Code § 1551.351(a); Tex. Gov’t Code § 2001.202. Therefore, ERS is not limited exclusively to the
remedies specifically provided in section 1551 and has the authority to fashion appropriate procedures and
remedies to be used in subrogation disputes. Tex. Ins. Code §§ 1551.014, .052.

The Court relies on its assertion that ERS’s procedures were never designed for collecting a claim. ___ S.W.
3d ___. 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. §§ 1551.351(b)(3), (5) (quasi-fraudulent
conduct). After receiving a final judgment in the administrative proceeding, ERS would enforce its judgment
in the trial court in the same manner it would enforce the recovery of payments made based on quasi-
fraudulent conduct or any other administrative decision. See 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. In re Entergy Corp., 142 S.W.3d at 322. I would reverse the court of appeals’
judgment and dismiss the case for want of jurisdiction. Tex. R. App. P. 59.1.

Dale Wainwright




1 After initially certifying coverage, BCBS later informed the Duenezes that the care was not covered and
that BCBS planned to discontinue paying benefits. Blue Cross Blue Shield of Tex. v. Duenez (Duenez I), 201
S.W.3d 674, 675 (Tex. 2006). The Duenezes pursued a declaratory judgment that the care was covered. Id.
We held that ERS has exclusive jurisdiction over coverage decisions and dismissed the case for want of
jurisdiction. Id. at 676.

2 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. F.F.
P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680, 682–83 (Tex. 2007) (Duenez II). While F.F.P.’s
petition was pending before this Court, the Duenezes settled the claims of Xavier, Irene, and Ashley
Duenez. Id. We reversed and remanded the remaining claims of Carlos and Pablo Duenez for a new trial,
holding that the trial court abused its discretion when it severed F.F.P.’s claims against the drunk driver and
when it refused to submit jury questions to allow the jury to determine the drunk driver’s proportionate
responsibility. Id. at 683, 694.

3 In City of Corpus Christi v. Public Utilities 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.
51 S.W.3d 231, 261 (Tex. 2001). In that case, although the Commission’s interpretation allowed for over-
collection of transition charges, we held that the Commission did not err. Id.; see also State v. Pub. Utils.
Comm’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”).

4 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.

5 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.

6 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”).

7 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.

8 Clearly, then, filing suit is not a prerequisite to exhausting administrative remedies, as the Court suggests.
___ S.W.3d ___. 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.