Texas Health and Human Services Commission v. Dimitria Pope and Shannon Pickett

Supreme Court of Texas
══════════
No. 20-0999
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Texas Health and Human Services Commission,
Petitioner,

v.

Dimitria Pope and Shannon Pickett,
Respondents

═══════════════════════════════════════
On Petition for Review from the
Court of Appeals for the Third District of Texas
═══════════════════════════════════════

Argued November 29, 2022

JUSTICE BUSBY delivered the opinion of the Court.

This case concerns when a public employee “reports a violation of
law by the employing governmental entity or another public employee”
under the Texas Whistleblower Act. Because the plaintiff employees did
not expressly report any legal violations by the Health and Human
Services Commission (HHSC) that could have led to their terminations,
and at most voiced disagreement regarding enforcement policies that
were within the discretion of HHSC management, their conduct was not
protected by the Whistleblower Act. Accordingly, we reverse the court
of appeals’ judgment and render judgment dismissing the suit.

BACKGROUND

Respondents Dimitria Pope and Shannon Pickett served as
Director and Associate Director of HHSC’s Medical Transportation
Program (MTP) from 2012 and 2013, respectively. The MTP works to
provide Medicaid beneficiaries with nonemergency transportation to
and from medical providers, as required by federal law. Specifically, the
MTP pays private contractors to provide the transportation and seeks
partial reimbursement from the federal government under the Medicaid
program. Federal and state Medicaid statutes and rules require that
children who are Medicaid beneficiaries be accompanied to be eligible to
receive transportation services and for the claim to be eligible for federal
Medicaid reimbursement. See 42 C.F.R. §§ 431.53, 440.170; TEX. HUM.
RES. CODE § 32.024(a); 1 TEX. ADMIN. CODE §§ 380.201, .207(4), .209.
Between 2012 and 2017, Pope and Pickett raised concerns that
LeFleur Transportation, a private nonemergency medical
transportation provider in South Texas, was transporting children
under 15 to medical appointments without an accompanying parent,
guardian, or adult authorized by a parent or guardian. In emails, phone
calls, and face-to-face meetings with HHSC’s Office of the Inspector
General (OIG), HHSC executives, the FBI, and the Texas Attorney
General’s Office (OAG), Pope and Pickett repeatedly discussed their
beliefs that LeFleur, its subcontractors, competitors, medical providers,
parents, and other individuals were violating the accompaniment
requirements. The alleged violations included: a single adult attending

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to multiple, unrelated children; drivers serving as accompanying adults;
employees of medical providers serving as accompanying adults; and
transportation of minors in vehicles owned or operated by the medical
providers. The correspondence included a February 2014 email from
Pope to OIG, which reported that some HHSC call center employees
were “allowing” unauthorized adults to accompany minors and that
some providers were encouraging parents to call the center repeatedly
until they received approval.
Before 2014, HHSC used a “fee-for-service” model to pay
contractors for each documented, eligible ride. HHSC then transitioned
to a “managed care” model, under which contractors are paid based on
the number of people served each month regardless of the actual number
of rides provided. Under the managed care model, providers are subject
to a profit cap and obligated to make “experience rebate” payments for
any profits above the cap, which OIG is charged with collecting on
HHSC’s behalf. See TEX. GOV’T CODE §§ 531.102, 533.014(a); 1 TEX.
ADMIN. CODE §§ 353.3, 371.11(a).
In October 2014, a federal audit by the United States Department
of Health and Human Services concluded that HHSC did not always
comply with federal and state requirements for reimbursement of
nonemergency medical transportation claims it had submitted in 2011.
The audit recommended that HHSC repay over $30 million in
reimbursements Texas had received from the federal government.
According to Pope, over $12 million of this amount was due to
noncompliance with the accompaniment requirement.

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In 2017, Pope and Pickett were helping OIG’s audit resolution
team respond to the federal audit. Given the lack of contemporaneous
documents showing compliance with requirements relating to the
transportation of minors, federal officials requested a letter from State
Medicaid Director Jami Snyder addressing compliance. Pope and
Pickett were part of the team helping to draft Snyder’s letter, which
asked that the claims at issue be considered allowable, thus removing
HHSC’s financial liability for repayment. Pickett sent her edits to the
draft letter by email to OIG’s Federal Audit Coordination Manager.
Pickett pointed out in her email that some statements in the draft letter
were not accurate, were not reported to federal officials by the program,
and could not be supported by documents in the MTP’s possession. The
federal audit manager later stated in a declaration that he believed
Pickett’s points to be “customary, appropriate responses from MTP
management to ensure the letter was correct,” and that he was “not
aware of Ms. Pickett reporting any violations of law by any party.”
Around the same time, OIG began investigating whether Pope
and Pickett had engaged in “official oppression” of LeFleur, and HHSC
managers became concerned about litigation risks if Pope and Pickett
continued to interact with LeFleur. Pope and Pickett were told to “stand
down” on their attempts to collect $5.6 million in experience rebate
payments that LeFleur had not timely paid HHSC. Meanwhile, HHSC
senior managers were negotiating directly with LeFleur to discuss
payment options that would allow LeFleur to stay in business while
making payments, cutting Pope and Pickett out of those discussions.

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Two days after Pickett’s last email exchange with the federal audit
manager about Snyder’s letter, HHSC fired Pope and Pickett.
Pope and Pickett sued HHSC under the Texas Whistleblower Act,
alleging they were terminated in retaliation for their “good faith reports”
about “violations of law” by HHSC to various law enforcement agencies.
See TEX. GOV’T CODE § 554.002. According to Pope and Pickett, their
reports to OIG, OAG, and the FBI about LeFleur’s violations of the
accompaniment requirements also impliedly reported misconduct by
HHSC, which would have been receiving federal reimbursement for
ineligible claims. In a later filing, Pope and Pickett contended that they
reported further violations when they informed OIG about HHSC’s
failure to enforce the experience rebate requirements against LeFleur.
HHSC responded by filing a combined plea to the jurisdiction and
motion for summary judgment, arguing that Pope and Pickett failed to
demonstrate that they made “good faith reports” about an actual
“violation of law” by HHSC. 1 The trial court denied the plea and motion,
and the court of appeals affirmed, holding that Pope and Pickett “carried
their burden to establish a genuine issue of material fact on each of the
elements of their Whistleblower claim.” 646 S.W.3d 562, 577 (Tex.
App.—Austin 2020). The court of appeals reasoned that under the
federal Medicaid reimbursement scheme, the reports Pope and Pickett
made about LeFleur’s violations of law were “necessarily” reports of
violations by HHSC as well. Id. at 573. The court also agreed with Pope

1 HHSC also argued in the trial court and court of appeals that Pope
and Pickett failed to show that their alleged reports were a but-for cause of
their terminations. HHSC has not pressed that issue in this Court.

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and Pickett that they “could have reasonably believed in good faith that
HHSC was violating the law by allowing LeFleur to avoid pay[ing]” the
experience rebates. Id. at 574. We granted HHSC’s petition for review.

ANALYSIS

The Whistleblower Act provides that “[a] state or local
governmental entity may not suspend or terminate the employment of,
or take other adverse personnel action against, a public employee who
in good faith reports a violation of law by the employing governmental
entity or another public employee to an appropriate law enforcement
authority.” TEX. GOV’T CODE § 554.002(a). The Act defines “law” as a
“state or federal statute; an ordinance of a local governmental entity; or
a rule adopted under a statute or ordinance.” Id. § 554.001. It also
defines “public employee” as “an employee or appointed officer other
than an independent contractor who is paid to perform services for a
state or local governmental entity” and provides definitions for “state
governmental entity” and “local governmental entity.” Id. (emphasis
added).
Pope and Pickett contend that they were terminated for reporting
two types of violations of law: (1) violations of the accompaniment
requirement for nonemergency medical transportation that LeFleur
provided to minors, and (2) HHSC’s failure to collect experience rebate
payments owed by LeFleur. We address each theory in turn. Taking
the entire record into account, we conclude for the reasons below that
Pope and Pickett have not provided evidence to support a finding that
they made “good faith reports [of] a violation of law by the employing

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governmental entity or another public employee.” Id. § 554.002(a). The
trial court therefore erred in denying HHSC’s plea to the jurisdiction.

I. Standard of review

The State and its agencies, including HHSC, “are immune from
suit and liability in Texas unless the Legislature expressly waives
sovereign immunity.” State v. Lueck, 290 S.W.3d 876, 880 (Tex. 2009).
An agency may assert its immunity in a plea to the jurisdiction. Tex.
Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex.
2004); see also Hosner v. DeYoung, 1 Tex. 764, 769 (1847). Although
immunity from suit is a jurisdictional question generally distinct from
immunity from liability, we have held the two are interwoven in the
context of the Whistleblower Act, which requires plaintiffs to allege
jurisdictional facts giving rise to an actual violation of the Act to qualify
for the statutory waiver of immunity. Lueck, 290 S.W.3d at 881; see TEX.
GOV’T CODE §§ 554.003(a) (authorizing suit by public employee
terminated in violation of Act), .0035 (waiving immunity “to the extent
of liability for the relief allowed under this chapter for a violation of this
chapter”).
A plea to the jurisdiction presents a question of law that is
reviewed de novo on appeal, State v. Holland, 221 S.W.3d 639, 642 (Tex.
2007), mirroring the standard applied to a traditional motion for
summary judgment, City of San Antonio v. Maspero, 640 S.W.3d 523,
528 (Tex. 2022). When a plea to the jurisdiction challenges the existence
of alleged jurisdictional facts, such as those necessary to establish a
claim under the Whistleblower Act, “we must move beyond the
pleadings and consider evidence when necessary to resolve the

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jurisdictional issues, even if the evidence implicates both subject-matter
jurisdiction and the merits of a claim.” Alamo Heights Indep. Sch. Dist.
v. Clark, 544 S.W.3d 755, 770-71 (Tex. 2018).
A defendant that files a plea to the jurisdiction has the initial
burden of meeting the summary judgment standard of proof for its
assertion that the courts lack jurisdiction; if it does so, the plaintiff must
then “show that a disputed material fact exists regarding the
jurisdictional issue.” Mission Consol. Indep. Sch. Dist. v. Garcia, 372
S.W.3d 629, 635 (Tex. 2012). When a fact issue exists, the plea to the
jurisdiction should be denied. Id. If the plaintiff fails to raise a fact
question on the jurisdictional issue or the relevant evidence supporting
the defendant’s assertion is undisputed, the plea to the jurisdiction must
be granted as a matter of law. Id. “[I]n determining whether a material
fact issue exists, we must take as true all evidence favorable to the
plaintiff, indulging every reasonable inference and resolving any doubts
in the plaintiff’s favor.” Alamo Heights, 544 S.W.3d at 771. In doing so,
“we cannot disregard evidence necessary to show context, and we cannot
disregard evidence and inferences unfavorable to the plaintiff if
reasonable jurors could not.” Id.

II. Accompaniment requirement

A. Implied reports are not “reports [of] a violation of
law by the employing governmental entity” under
the Act.

Pope and Pickett’s primary position is that they reported
“violations of law by the employing governmental entity” when they
made extensive and well-documented reports to various law

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enforcement authorities of violations by LeFleur, its subcontractors,
competitors, and various medical providers in South Texas relating to
the transportation of minors without accompanying parents, guardians,
or other authorized adults. As discussed above, they made these reports
to HHSC leadership, OIG, OAG, and the FBI.
HHSC does not contest in this Court that these recipients
included “appropriate law enforcement authorit[ies]” under the
Whistleblower Act, and it mostly does not challenge at this stage (with
one exception we discuss below) whether the reports were a cause of
Pope’s and Pickett’s terminations. Rather, the parties disagree about
whether these reports satisfied the Whistleblower Act’s requirement
that they reported a “violation of law” by HHSC, the “employing
governmental entity.” TEX. GOV’T CODE § 554.002(a).
The court of appeals agreed with Pope and Pickett’s arguments
that these reports against LeFleur were also “impliedly” made against
HHSC because of the structure of Medicaid’s federal reimbursement
scheme. 646 S.W.3d at 572-73. We disagree and hold that the
Whistleblower Act protects only express reports to an appropriate law
enforcement authority that unambiguously identify the employing
governmental entity or another public employee as the violator.
Viewing the record in the light most favorable to Pope and
Pickett, we assume that their complaints stemmed from a commendable
desire to keep the program in compliance with federal and state law so
that HHSC would not have to repay millions of dollars in federal
reimbursements. Indeed, the federal audit report shows that their
concerns were well founded.

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But the Whistleblower Act excludes from its scope violations of
law by independent contractors such as LeFleur, protecting only reports
of violations by the “employing governmental entity” or other “public
employee[s].” TEX. GOV’T CODE § 554.002(a). Neither description
applies to Pope’s and Pickett’s reports about misconduct by LeFleur.
Pope and Pickett were employed by HHSC (not LeFleur), and the statute
carves out independent contractors from the definition of “public
employee.” Id. § 554.001(4) (defining “public employee” as a paid
“employee or appointed officer other than an independent contractor”
who performs services for a governmental entity). 2
Nor can Pope’s and Pickett’s reports of violations by LeFleur be
treated as reports of violations by their employer HHSC under the
statutory text and this Court’s precedents. Although the court of
appeals reasoned that Pope and Pickett had also reported a violation of
law by HHSC because they “would be aware that by reporting LeFleur’s
violation of law, they would necessarily be reporting HHSC’s violation
of law,” 646 S.W.3d at 573, this “implied report” theory cannot be
squared with the text of the Act.
Rather, the Act requires the reporting employee to make an
actual, express statement of acts or omissions “by” the entity or other
public employee. TEX. GOV’T CODE § 554.002(a) (emphasis added). A

2 Other federal and state courts have likewise held that the Act does not
protect reports of misconduct by independent contractors or outside vendors
because they are not employing governmental entities or public employees. See
Denton v. Morgan, 136 F.3d 1038, 1045-46 (5th Cir. 1998); City of Houston v.
Smith, No. 01-14-00789-CV, 2015 WL 4967020, at *5-8 (Tex. App.—Houston
[1st Dist.] Aug. 20, 2015, no pet.); Saldivar v. Tex. Dep’t of Assistive & Rehab.
Servs., No. H-08-1820, 2009 WL 3386889, at *13 (S.D. Tex. Oct. 13, 2009).

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reporting employee’s unspoken belief that her statements about conduct
by a third party will necessarily be understood by the receiving law
enforcement authority as a report of conduct by the employing entity or
another employee as well is not sufficient.
As we recently held in City of Fort Worth v. Pridgen, a report must
“convey information that exposes or corroborates a violation of law or
otherwise provide relevant, additional information that will help
identify or investigate illegal conduct.” 653 S.W.3d 176, 184 (Tex. 2022).
To serve these functions, the report must specify whose conduct is
violating the law. We have also held that the “report must be direct” in
the sense that it must be made “directly” to an “appropriate law
enforcement authority.” Tex. Comm’n on Env’t Quality v. Resendez, 450
S.W.3d 520, 521, 523 (Tex. 2014). The same reasoning applies with
equal force to the report being “directly” about the misconduct of “the
employing governmental entity or another public employee.” Id. at 521;
TEX. GOV’T CODE § 554.002(a).
Similarly, when the Act was passed, Black’s Law Dictionary
defined “report” as “[a]n official or formal statement of facts or
proceedings. To give an account of, to relate, to tell, to convey or
disseminate information.” 3 Official or formal statements of facts and
proceedings are not presented by implication or with the expectation
that the recipient will “read between the lines.”
The “good faith” element of the Whistleblower Act does not steer
Pope and Pickett’s claims toward a safer harbor. Although our

3 Report, Black’s Law Dictionary (6th ed. 1990).

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precedents explain that the Act protects employees who honestly and
reasonably believe they are reporting an “actual violation of law,” even
where what is reported does not actually amount to a violation, these
precedents all recognize that an actual report has to be made. City of
Elsa v. Gonzalez, 325 S.W.3d 622, 627 n.3 (Tex. 2010); Tex. Dep’t of
Transp. v. Needham, 82 S.W.3d 314, 320 (Tex. 2002) (emphasis added).
The conduct must be “reported,” not implied or insinuated.
Put another way, employees can be protected by the
Whistleblower Act for reporting only perceived—rather than actual—
violations of the law, City of Elsa, 325 S.W.3d at 627 n.3, when their
report is consistent with the subjective and objective prongs of the good
faith standard, Wichita County v. Hart, 917 S.W.2d 779, 784 (Tex. 1996).
But employees cannot earn the Act’s protection if they only perceive that
they reported misconduct by the “employing governmental entity or
another public employee.” TEX. GOV’T CODE § 554.002(a). They must
actually make an express report.
Indeed, the Act’s structure relies on the report being made to an
“appropriate law enforcement authority” with the power to enforce the
law alleged to be violated or to investigate or prosecute criminal
violations. TEX. GOV’T CODE § 554.002(b); see, e.g., Resendez, 450 S.W.3d
at 523; Tex. Dep’t of Hum. Servs. v. Okoli, 440 S.W.3d 611, 616-17 (Tex.
2014); Univ. of Hous. v. Barth, 403 S.W.3d 851, 857 (Tex. 2013). It is
hard to understand how a report could be implied “to” such an authority.
For these bodies to conduct their investigations properly, they must
have access to reports that concretely identify the alleged misconduct
and the responsible party, rather than being left to rely on guesswork,

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innuendo, and “reading between the lines” as they try to figure out what
exactly they are being asked to investigate.
Our cases emphasize that the Texas Whistleblower Act does not
protect purely internal reports because, unlike federal and other state
whistleblower statutes, the Act only “protects those who report to
authorities that issue legal directives, not authorities that follow them.”
Univ. of Tex. Sw. Med. Ctr. v. Gentilello, 398 S.W.3d 680, 686-87 (Tex.
2013); cf. 5 U.S.C. § 2302(f)(1); N.Y. LAB. LAW § 740(2) (McKinney 2022).
Just as internal reports to supervisors fail to provide “authorities that
issue legal directives” with the information needed for them to carry out
their investigative and enforcement functions, reports that rely on
innuendo and implication also fail to provide such authorities with the
information necessary to act on reports of alleged misconduct.
Gentilello, 398 S.W.3d at 686. Thus, for the same reason that the
Whistleblower Act protects only direct reports of a violation of law, it
also protects only express reports of a violation of law. See Resendez,
450 S.W.3d at 523.
Pope’s and Pickett’s reports of accompaniment violations do not
meet these standards, as the conduct reported was LeFleur’s—not
HHSC’s. In addition, as we explain below, none of these reports
identified an act or omission by HHSC that gave rise to a “violation of
law.”

B. Pope’s February 2014 email reporting conduct by
other HHSC employees is too remote to support
causation.

The closest Pope and Pickett came to expressly reporting
violations of law by HHSC or other public employees is a February 2014

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email from Pope to the OIG Inspector General, which included a report
that some HHSC call center employees were “allowing” unauthorized
adults to accompany minors and that some providers were encouraging
parents to call the center repeatedly until they received approval. The
email does not mention LeFleur by name, even though it does name
several other medical providers in South Texas.
HHSC argues that rather than providing evidence of HHSC
employee misconduct, the email shows HHSC’s victimization at the
hands of providers trying to manipulate the system and confuse HHSC
employees. There is some evidence to support this characterization. But
when the email is viewed most favorably to Pope and Pickett, it also
suggests that there was actual misconduct by some HHSC employees in
“allowing” unauthorized trips, and that this misconduct was expressly
reported to an appropriate law enforcement authority.
But more than three and a half years passed between this report
and Pope’s and Pickett’s firings. Thus, we agree with HHSC that the
report is too remote to support a finding that it caused their
terminations. See Alamo Heights, 544 S.W.3d at 790 (explaining that
an eight-month gap between protected activity and termination has
“little, if any, probative value” in proving causation for a retaliation
claim).

C. Pickett’s edits to Snyder’s letter did not report a
violation of law.

Pickett also contends that her email providing comments on
Snyder’s draft letter qualifies as a report of a legal violation by HHSC
or another employee. In her email, Pickett said that some specific

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statements in the draft were unsupported by documentation or were
inaccurate.
These suggested revisions do not report a violation of law for
several reasons. Pickett’s email never expressed disagreement with the
draft letter’s recommendation—made in the very same sentence—that
the claims at issue “be considered to be allowable.” If the federal
government agreed with that recommendation, HHSC would no longer
be obligated to repay the reimbursement it received for those claims.
Nor were Pickett’s comments perceived by OIG’s federal audit manager,
who received them, as “report[ing] a violation of law.” When the letter
is considered in context, as it must be in a plea to the jurisdiction, see id.
at 771, there is simply no way in which Pickett’s suggested edits can
meet the Pridgen standard of conveying actionable “information.” 653
S.W.3d at 184.
Pickett’s email also did not provide information that would “assist
in identifying or investigating a violation of law,” as we have held that
the Act requires. Id. at 186 n.7. Instead, Pickett took no issue with the
letter’s ultimate conclusion that the claims at issue were eligible for
federal reimbursement and thus HHSC had no financial liability to the
federal government. Pickett’s expression of concern regarding some
statements another employee suggested to support that conclusion,
which appeared in a proposed draft letter that had not yet been sent to
the federal government, identified no misconduct by HHSC that
amounted to a “violation of law” as defined by the Whistleblower Act.
Pickett’s edits were not, and in context could not, be viewed as “ferreting
out government mismanagement” with an eye toward “protecting the

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public,” which we recently explained are the only types of reports
protected under the Whistleblower Act. See id. at 184 (citing
Neighborhood Ctrs., Inc. v. Walker, 544 S.W.3d 744, 748 (Tex. 2018)).

D. The record shows no report that OIG violated the
law by failing to investigate or enforce the
accompaniment requirements.

Pope additionally contends that she reported OIG’s failure to act
on the information about the accompaniment problems with LeFleur. In
her view, this failure violated OIG’s “responsib[ility]” to investigate
abuse and enforce the law under section 531.102(a) of the Government
Code.
But the record reveals that Pope’s report instead concerned the
failure to collect experience rebates, which we discuss in Part III. The
court of appeals agreed that during Pope’s interview with OIG, she
“complained of HHSC’s failure to collect the experience-rebate
payments.” 646 S.W.3d at 567.
Moreover, Pope’s argument misreads section 531.102(a). That
statute outlines OIG’s jurisdiction—the matters it is “responsible for”; it
does not establish absolute obligations that OIG has no discretion to
tailor based on enforcement priorities, resources, or administrative
realities. TEX. GOV’T CODE § 531.102(a). Pope and Pickett seem to view
OIG’s “responsib[ility] for the prevention, detection, audit, inspection,
review, and investigation of fraud, waste, and abuse in the provision and
delivery of all health and human services in the state” as fully self-
executing. Id. But the same statute goes on to require HHSC to “set
clear objectives, priorities, and performance standards for [OIG] that
emphasize” matters such as “coordinating investigative efforts,”

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“allocating resources to [particular] cases,” and “maximizing [certain]
opportunities.” Id. § 531.102(b). Hence, although section 531.102(a)
does articulate OIG’s mission, it does not transform OIG into an
omnipotent “roving commission,” A.L.A. Schechter Poultry Corp. v.
United States, 295 U.S. 495, 551 (1935) (Cardozo, J., concurring), that is
statutorily obliged to deploy the full brunt of its enforcement powers
whenever the specter of someone committing healthcare fraud
somewhere in the state is raised.

E. Pope and Pickett did not report any violation of law
by the Executive Commissioner.

Finally, Pope and Pickett contend that they also reported a failure
to act by HHSC executive leadership that violated the law. The court of
appeals appears to have agreed, citing a provision of the Texas Human
Resources Code charging HHSC’s Executive Commissioner with
promulgating rules “requir[ing], as a condition for eligibility for
reimbursement . . . , that a child younger than 15 years of age be
accompanied at the visit or screening by (A) the child’s parent or
guardian; or (B) another adult . . . authorized by the child’s parent or
guardian to accompany the child.” TEX. HUM. RES. CODE § 32.024(s).
But the Commissioner fulfilled this statutory obligation by
promulgating a rule that Pope and Pickett knew about and were seeking
to enforce against LeFleur and other providers. See 1 TEX. ADMIN. CODE
§ 380.207(4). Therefore, this statute cannot provide the basis for a
report that a “violation of law” took place.

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Pope and Pickett also argue that HHSC’s Executive
Commissioner fell short of his legal obligations under section 321.022 of
the Government Code. This section provides:
If the administrative head of a department or entity that is
subject to audit by the state auditor has reasonable cause
to believe that money received from the state by the
department or entity or by a client or contractor of the
department or entity may have been lost, misappropriated,
or misused, or that other fraudulent or unlawful conduct
has occurred in relation to the operation of the department
or entity, the administrative head shall report the reason
and basis for the belief to the state auditor. The state
auditor may investigate the report or may monitor any
investigation conducted by the department or entity.
TEX. GOV’T CODE § 321.022(a).
Pope and Pickett do not explain how this statute would apply
absent a state audit or an independent statute identifying unlawful
conduct by the Commissioner. Moreover, there is no record of Pope or
Pickett actually reporting to a law enforcement authority that the
Executive Commissioner failed to notify the state auditor about LeFleur
defrauding the State when he had an obligation to do so. This argument
therefore fails for lack of an express “report” of a violation of law.
For these reasons, the evidence that Pope and Pickett reported
violations of the accompaniment requirement does not support a finding
that they reported a violation of law by HHSC or other public employees
to an appropriate law enforcement authority, or (in the case of the 2014
call center employee report) that any such violation could have led to
their 2017 terminations. The trial court therefore erred to the extent it
denied HHSC’s plea to the jurisdiction based on these reports.

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III. Experience rebates

We next address Pope and Pickett’s separate theory that they
were terminated for reporting HHSC’s failure to enforce experience
rebate payments owed by LeFleur. In their view, HHSC’s delay in
recovering the rebates was a “violation of law” that they properly
reported under the Whistleblower Act. We disagree.
The record includes evidence that both Pope and Pickett reported
to OIG investigators that HHSC had not enforced experience rebates
owed by LeFleur. But as explained below, OIG was the entity
responsible for enforcement, and there is no evidence that they reported
a violation by OIG. In addition, Pope and Pickett did not report
violations of law because when and how to collect the rebates was an
enforcement decision properly within the discretion of HHSC
leadership. Indeed, given Pope’s and Pickett’s training and experience,
it would not be reasonable for them to think that the agency was
violating the law in the way it handled the experience rebates. Agency
leaders’ choice to work with LeFleur so that it could continue to stay in
business while paying off the sums owed did not run afoul of any legal
obligations identified by Pope and Pickett that are binding on HHSC.
Thus, Pope’s and Pickett’s communications about this issue with OIG
were not “good faith reports [of] a violation of law” under the Act. TEX.
GOV’T CODE § 554.002(a).

A. Pope and Pickett did not report a violation of law by
OIG, which was responsible for enforcing rebates.

Pope and Pickett identify a variety of statutes and rules that
speak to OIG’s enforcement powers, arguing that their complaints about

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HHSC’s failure to recover the experience rebates from LeFleur
implicated a “violation of law” by HHSC. In particular, they rely on
section 531.102(f)(1) of the Government Code, which requires OIG to
conduct a preliminary investigation into any complaint or allegation of
Medicaid fraud or abuse from any source, id. § 531.102(f)(1), as well as
section 531.102(a), which provides that OIG is “responsible for the
prevention, detection, audit, inspection, review and investigation of
fraud, waste, and abuse in the provision and delivery of all health and
human services in the state . . . and the enforcement of state law relating
to the provision of those services.” Id. § 531.102(a); see also 1 TEX.
ADMIN. CODE § 371.11(a).
But Pope and Pickett did not “report a violation of law” involving
OIG’s failure to investigate LeFleur’s nonpayment of the experience
rebates. Rather, the record shows that they reported only the failure of
HHSC and its executive management to collect the rebates owed. This
is an important distinction because section 531.102(a) and rule 371.11(a)
place the responsibility for enforcing rebate requirements in the hands
of OIG. See TEX. GOV’T CODE § 531.102(a); 1 TEX. ADMIN. CODE §
371.11(a). Thus, there is an institutional mismatch between Pope’s and
Pickett’s reports and the law. Furthermore, the responsibility to pay
the experience rebates rested on LeFleur, see 1 TEX. ADMIN. CODE §
353.3, which we have previously explained is neither an “employing
governmental entity” nor “another public employee” under the Act.
Pope and Pickett also contend that they reported a violation of
section 533.014 of the Government Code, which addresses profit sharing
by managed care organizations such as LeFleur. See TEX. GOV’T CODE

20
§ 533.014. This contention has the same flaw discussed in Part II.E.
above: it treats HHSC’s statutory obligation to “adopt rules regarding”
the profit-sharing experience rebates, id., which the agency did, as if it
required HHSC to enforce those rules in a particular way. To the
contrary, the text of the rule HHSC adopted does not establish binding
legal obligations for OIG, HHSC, or any other state actor whatsoever.
Instead, it simply requires that a managed care organization “pay to the
state an experience rebate calculated according to” its contract with
HHSC. 1 TEX. ADMIN. CODE § 353.3.

B. HHSC and OIG have discretion regarding how to
enforce experience rebates.

Even if Pope and Pickett had reported a failure to recover the
experience rebates by the responsible entity, OIG, they would not have
reported a “violation of law” because Texas law is clear that HHSC and
OIG have discretion regarding the enforcement of experience rebates.
As discussed in Part II.D., section 531.102(a) establishes the scope of
OIG’s jurisdiction and authority to conduct investigations and enforce
laws; it does not establish a binding obligation on OIG to exercise its
jurisdiction in a particular manner or in any particular set of
circumstances. 4 See TEX. GOV’T CODE § 531.102(a). As we have
observed, “[t]he complexity of regulatory enforcement requires that a
state agency retain broad discretion in carrying out its statutory
functions.” State v. Malone Serv. Co., 829 S.W.2d 763, 767 (Tex. 1992).

4 See, e.g., Okoli, 440 S.W.3d at 619 (describing OIG’s authority to
conduct civil and criminal investigations).

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Indeed, the remainder of section 531.102 expressly confers broad
discretion on OIG in exercising this authority. For example, section
531.102(a-5) allows OIG to use multiple tools in performing its
functions, “including audits, utilization reviews, provider education, and
data analysis.” TEX. GOV’T CODE § 531.102(a-5). Section 531.102(g)(1)
requires that OIG report a provider suspected of falsifying records to the
Medicaid fraud control unit, but it also grants OIG discretion in
continuing to investigate and impose appropriate sanctions on such a
provider. Id. § 531.102(g)(1). And section 531.102(b) provides that
HHSC
. . . in consultation with the inspector general, shall set
clear objectives, priorities, and performance standards for
the office that emphasize . . . (2) allocating resources to
cases that have the strongest supportive evidence and the
greatest potential for recovery of money; and
(3) maximizing opportunities for referral of cases to the
office of the attorney general . . . .
Id. § 531.102(b). Thus, HHSC’s and OIG’s use of discretion to allocate
administrative and enforcement resources is mandated by statute.
Pope and Pickett have not pointed to, and we have not located,
any statute or rule that establishes an obligation by HHSC or OIG to
collect the experience rebate in any particular manner. Such a law is an
essential part of their claim under the Act: for an employee to report a
violation of law, there must be a statute, rule, or ordinance that
prohibits the action taken or requires action to be taken. Put another
way, the “employee must have a good-faith belief that a law, which in
fact exists, was violated.” City of Houston v. Cotton, 171 S.W.3d 541,
547 n.10 (Tex. App.—Houston [14th Dist.] 2005, pet. denied) (citing

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Llanes v. Corpus Christi Indep. Sch. Dist., 64 S.W.3d 638, 643 (Tex.
App.—Corpus Christi–Edinburg 2001, pet. denied)). A report
“express[ing] disagreement with remedial measures taken” or “internal
policy recommendation[s] . . . is not a report of a violation of law that the
Whistleblower Act was designed to protect.” Lueck, 290 S.W.3d at 885. 5
Nor does the Act protect a “prediction of possible regulatory
noncompliance,” id., or a complaint that internal administrative policies
were not followed, see Barth, 403 S.W.3d at 854; Harris Cnty. Precinct
Four Constable Dep’t v. Grabowski, 922 S.W.2d 954, 956 (Tex. 1996).
For these reasons, even if Pope and Pickett had made any
“reports” about OIG’s failure to enforce LeFleur’s rebate obligation,
those reports would not be covered by the Act. Because Pope and Pickett
were expressing their disagreement with their superiors’ discretionary
choices regarding enforcement, they were not reporting violations of
law. Like the reports of possible regulatory noncompliance in Lueck,
Pope’s and Pickett’s reports about HHSC’s failure to collect the
experience rebates merely reiterated what the agency already knew:
that LeFleur was not in compliance with its monetary obligations to the
State. The only questions before HHSC were discretionary ones
regarding whether, when, and how to collect the payments from LeFleur,
not whether it could collect the payments.

See also Coll. of the Mainland v. Meneke, 420 S.W.3d 865, 870 (Tex.
5

App.—Houston [14th Dist.] 2014, no pet.) (“Other complaints and grievances,
including alleged violations of an agency’s internal procedures and policies,
will not support a claim.” (citing Mullins v. Dall. Indep. Sch. Dist., 357 S.W.3d
182, 188 (Tex. App.—Dallas 2012, pet. denied))).

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The absence of any “law” obligating OIG and HHSC to collect the
experience rebates using any particular method or timeline also means
that Pope’s and Pickett’s experience rebate reports cannot satisfy the
objective prong of the “good faith” standard for evaluating
Whistleblower Act claims. See Hart, 917 S.W.2d at 784. 6 Given Pope’s
and Pickett’s training and experience, including their years of service at
the MTP and in government, as well as Pickett’s training as an attorney,
it was not reasonable for them to believe that OIG and HHSC had an
obligation to enforce the experience rebates in any particular manner or
on any specific timeframe, or that HHSC’s senior leadership had an
obligation to keep the two of them informed about how that collection
process was being facilitated. Simply put, no “reasonably prudent
employee in similar circumstances would have believed that the facts as
reported were a violation of law.” Id. at 785.
Other employees’ failure to tell Pope and Pickett how OIG and
HHSC were planning to collect the rebates from LeFleur does not
undermine the agency’s discretion or in any way change the “good faith
report[] [of] a violation of law” analysis. TEX. GOV’T CODE § 554.002(a).
Instead, it merely underscores that the issue was handled at a higher
level of HHSC’s senior leadership and through its legal staff. The record
includes evidence that these leaders took over communications with
LeFleur because its relationship with Pope and Pickett had deteriorated

6 It is also unclear whether Pope intended her Whistleblower Act claims
to reach the failure to collect experience rebates. In her deposition, Pope
explicitly disavowed the experience rebates being “a part of the lawsuit,”
stating that she believed her termination was caused by her and Pickett
“report[ing] violations of law with respect to parental accompaniment.”

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to the point that the leaders were concerned about litigation risk. The
risk is illustrated by the letter from LeFleur’s counsel to HHSC senior
leaders detailing conduct by Pope and Pickett that counsel characterized
as “highly unprofessional” and requesting that Pope and Pickett cease
all contact with LeFleur personnel on matters unrelated to the
transition/winding down of LeFleur’s contracts with the state—which
would necessarily include Pope and Pickett not contacting LeFleur
about the experience rebates.
In sum, evidence that Pope and Pickett reported the
nonenforcement of LeFleur’s experience rebate obligations does not
support a finding that they reported a violation of law by OIG. The trial
court therefore erred to the extent it denied HHSC’s plea to the
jurisdiction based on these reports.

CONCLUSION

The Texas Whistleblower Act protects only express “reports of a
violation of law” by an agency employer or another public employee, not
reports based on implications that the appropriate law enforcement
agency must then decode. Accordingly, Pope’s and Pickett’s reports of
misconduct by LeFleur in failing to comply with the accompaniment
requirements cannot support a Whistleblower Act claim against HHSC.
In addition, their reports that LeFleur’s experience rebate obligations
were not being enforced were expressions of disagreement with internal
policy decisions on remedial measures, not reports that OIG violated the
law. The trial court therefore erred in denying HHSC’s plea to the

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jurisdiction and motion for summary judgment. We reverse the court of
appeals’ judgment and render judgment dismissing the suit.

J. Brett Busby
Justice

OPINION DELIVERED: May 5, 2023

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