CITY EMPLOYEE CAN’T SUE RISK POOL FOR DENYING CANCER TREATMENT

Stegall v. TML Multistate Intergovernmental Employee Benefits Risk Pool, Inc.
Dallas Court of Appeals, No. 05-18-00239-CV (October 2, 2019)
Justices Whitehill, Pedersen (Opinion linked here), and Partida-Kipness (Dissent linked here)
The Dallas Court of Appeals, in a 2-1 decision, held a municipal risk pool providing health benefits for city employees cannot be sued for wrongfully denying medical treatment.

Joe Stegall was the CFO for Royse City, and participated in the city’s medical-benefits plan provided through the TML Risk Pool. When Mr. Stegall was diagnosed with liver cancer, TML refused to authorize the use of a specific drug prescribed by his oncologist, and threatened to terminate coverage entirely if he used the drug without its authorization. Although TML later reversed its position, Mr. Stegall died several weeks later. His widow sued TML for “wrongful denial of medical benefits and additional acts of interference with the decedent’s access to prescribed chemotherapy.” TML filed a plea to the jurisdiction asserting governmental immunity from suit, which the trial court granted, dismissing the case. The Dallas Court of Appeals affirmed.

Writing for the Court, Justice Pedersen described the case as “an emotional and tragic scenario,” but held Texas law granted TML immunity from suit. The Court first determined TML was a distinct governmental entity, “an intergovernmental self-insurance risk pool that operates under the Interlocal Cooperation Act,” Government Code chapter 791. It then rejected the argument that TML’s “claims-adjusting” involved “proprietary,” not “governmental” functions, which would have meant immunity did not attach. Municipalities are immune from suit when exercising their governmental functions, but not when the actions are proprietary, i.e., discretionary actions that can be, and often are, performed by private parties. The Court held, however, the distinction did not apply to TML, which, like other political subdivisions created by the legislature for public purposes, performs only governmental functions.

In dissent, Justice Partida-Kipness argued the governmental-proprietary distinction applied to TML, and that although creating and participating in the risk pool was a governmental function, claims adjusting and coverage decisions were proprietary functions not subject to immunity. She criticized the majority opinion as reaching “an absurd result—the removal of logic and humanity from application of the law.”

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