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Exhaustion of Administrative Remedies in Texas

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Exhaustion of Administrative Remedies in Texas The University of Texas School of Law 2013 Advanced Texas Administrative Law Seminar August 29-30, 2013 Austin, TX EXHAUSTION OF ADMINISTRATIVE REMEDIES IN TEXAS FIRST PRINCIPLES AND RECENT DEVELOPMENTS Steven Baron Susan A. Kidwell Steven Baron Susan A. Kidwell Steven Baron Consulting & Locke Lord LLP Legal Services 600 Congress Avenue Post Office Box 5573 Suite 2200 Austin, Texas 78763 Austin, Texas 78701 (512) 535-3104 (512) 305-4766 (512) 479-8070 (fax) (512) 391-4766 (fax) [email protected] [email protected] © 2013 Steven Baron, Susan A. Kidwell TABLE OF CONTENTS Page I. Introduction .................................................................................................................... 1 II. Foundation of the Exhaustion-of-Administrative-Remedies Doctrine .......................... 1 A. The Exhaustion Requirement and its Rationale ................................................. 1 B. Exhaustion as a Corollary of Exclusive Jurisdiction .......................................... 3 1. Determining whether an agency has exclusive jurisdiction .......................... 4 2. Impact on the availability of other court claims and remedies ..................... 6 3. Primary jurisdiction distinguished ................................................................ 8 C. Exhaustion as a Corollary of Sovereign and Governmental Immunity .............. 9 III. Exceptions to the Exhaustion Requirement ................................................................. 10 A. Exhaustion is not required when an agency is acting outside its statutory powers ................................................................................................ 10 1. Conceptual ambiguity ................................................................................. 11 2. A practical consideration – irreparable harm .............................................. 12 B. Exhaustion is not required when judicial intervention is necessary to prevent irreparable harm ................................................................................... 13 C. Exhaustion might not be required when a “substantial constitutional question” is presented ....................................................................................... 15 D. Exhaustion might not be required when a “pure question of law” is presented ........................................................................................................... 18 E. Exhaustion is not required for challenges to the validity or applicability of an agency rule ............................................................................................... 19 IV. Consequences of Failure to Exhaust Administrative Remedies .................................. 20 A. Dismissal with prejudice for lack of jurisdiction .............................................. 20 B. Opportunity to cure the jurisdictional defect .................................................... 23 ii C. Avoiding dismissal when exhaustion is mandatory but not jurisdictional ....... 25 V. Recent Applications of the Exhaustion Doctrine ......................................................... 26 A. Exhaustion under the Administrative Procedure Act ....................................... 27 1. Contested Cases .......................................................................................... 27 2. Rulemaking ................................................................................................. 32 B. Exhaustion under the Tax Code ........................................................................ 32 1. Exhaustion is required for each and every tax year .................................... 33 2. A failure to exhaust administrative remedies under the Tax Code cannot be easily justified by asserting constitutional claims ...................... 34 3. Exhaustion of administrative remedies under the Tax Code is not required when the agency exceeds its statutory powers ............................. 36 4. Exhaustion is not required for affirmative defenses in tax cases ................ 37 C. Exhaustion under the Workers’ Compensation Act ......................................... 38 1. Chapter 410 Disputes Regarding Compensability and Extent of Injury ........................................................................................................... 39 2. Chapter 413 Disputes Regarding Preauthorization and Fees ...................... 43 D. Exhaustion under the Whistleblower Act ......................................................... 48 E. Exhaustion under the Texas Commission on Human Rights Act .................... 51 1. The 180-day deadline to file an administrative complaint ......................... 53 2. The 180-day period for the TWC either to resolve or dismiss the complaint or to issue a right-to-sue letter ................................................... 54 3. The 60-day deadline and two-year statute of limitations to file a civil action ................................................................................................... 56 4. The scope of a TCHRA action .................................................................... 57 5. Determining whether additional (non-TCHRA) administrative remedies must be exhausted ........................................................................ 60 iii F. Exhaustion Under the Education Code ............................................................. 61 1. Claims against a district arising under the “school laws of this state” ....... 62 2. Claims arising under a contract ................................................................... 64 3. Suits against school district employees ...................................................... 68 G. Exhaustion by Indigent Inmates Under Chapter 14 of the Civil Practice and Remedies Code .......................................................................................... 69 H. Other Recent Exhaustion Cases ........................................................................ 73 VI. Conclusion .................................................................................................................... 76 iv TABLE OF CASES Page(s) AGAP Life Offerings, LLC v. Tex. State Secs. Bd., No. 03-11-00535-CV (submitted May 9, 2012) ................................................................ 31 Alcala-Garcia v. City of La Marque, No. 14-12-00175-CV, 2012 WL 5378118 (Tex. App.—Houston [14th Dist.] Nov. 1, 2012, no pet.) ........................................................................................................... 51, 52 Am. Capitol Ins. Co. v. Montemayor, No. 03-02-00658-CV, 2003 WL 1561451 (Tex. App.—Austin 2003 Mar. 27, 2003, no pet.) ..................................................................................................................... 20 Am. Motorists Ins. v. Fodge, 63 S.W.3d 801 (Tex. 2001) .................................................................................... 23, 24, 40 Assignees of Best Buy v. Combs, 395 S.W.3d 847 (Tex. App.—Austin 2013, pet. filed) ...................................................... 23 Atl. Shippers of Tex., Inc. v. Jefferson Cnty., 363 S.W.3d 276 (Tex. App.—Beaumont 2012, no pet.) ....................................... 18, 34, 35 Austin Indep. Sch. Dist. v. Lowery, 212 S.W.3d 827 (Tex. App.—Austin 2006, pet. denied) ............................................. 63, 64 Autry v. Thayler, No. 12-11-00360-CV, 2013 WL 776309 (Tex. App.—Tyler Feb. 28, 2013, no pet.) .............................................................................................................................. 71, 72 Ayers v. Smith, No. 02-11-00254-CV, 2012 WL 3499807 (Tex. App.—Fort Worth Aug. 16, 2012, no pet.) ............................................................................................................................... 70 Baldonado v. Tex. Dep’t of Health & Human Servs. Comm’n, No. 13-11-00167-CV, 2012 WL 1073278 (Tex. App.—Corpus Christi March 29, 2012, pet. denied) ............................................................................................................... 57 Bean v. Tex. Mut. Ins. Co., No. 09-11-00123-CV, 2012 WL 5450826 (Tex. App.—Beaumont Nov. 8, 2012, no pet.) (mem. op.) ......................................................................................................... 7, 38 Big Three Indus., Inc. v. R.R. Comm’n of Tex., 618 S.W.2d 543 (Tex. 1981) .............................................................................................. 28 v Blue Cross Blue Shield of Tex. v. Duenez, 201 S.W.3d 674 (Tex. 2006) .................................................................................... 5, 14, 15 Booker v. City of Austin, No. 03-09-00088-CV, 2013 WL 1149559 (Tex. App.—Austin Mar. 13, 2013, no pet.) .............................................................................................................................. 21, 60 Brennan v. City of Willow Park, 376 S.W.3d 910 (Tex. App.—Fort Worth 2012, pet. denied) ............................... 11, 12, 36 Burke v. Cent. Educ. Agency, 725 S.W.2d 393 (Tex. App.—Austin 1987, writ ref’d n.r.e.) ............................................ 22 Cameron Appraisal Dist. v. Rourk, 194 S.W.3d 501 (Tex. 2006) .................................................................................. 17, 18, 19 Cash Am. Int’l, Inc. v. Bennett, 35 S.W.3d 12 (Tex. 2000) ........................................................................................ 1, 2, 4, 8 Castillo v. State, No. 03-11-00503-CV, 2012 WL 3793276 (Tex. App.—Austin
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