District Judge Amy Clark Meacham will decide—based on a two-hour hearing held in her court Thursday—whether Central Health can continue transferring $35 million of the property taxes it collects each year to the University of Texas at Austin for Dell Medical School.
The hearing stems from a lawsuit filed way back in October 2017 that seeks to stop Central Health from making those payments.
Central Health has so far transferred to UT Austin a total of $350 million and is scheduled to add another $35 million this year.
Judge Meacham did not announce a decision Thursday. She requested that the opposing attorneys submit proposed orders for her consideration in deciding the case.
Case overview
Plaintiffs are Rebecca Birch and Richard Franklin III, a married couple who live in far eastern Travis County, and Esther Govea, who lives in South Austin. All three are property taxpayers in Travis County and therefore help to fund Central Health through the taxes it levies. (Birch et al v. Central Health et al, Cause No. D-1-GN-17-005824)
Plaintiffs seek a temporary or permanent injunction to enjoin Central Health from expending funds for (1) anything not related to furnishing medical aid and hospital care to indigent and financially needy residents of Travis County, and (2) for any other purpose not expressly authorized in Chapter 61 of the Texas Health and Safety Code.
Defendant Central Health seeks to dismiss the lawsuit, stating the agency is protected by governmental immunity and asserting that its spending is within its constitutional and statutory authority.
The defendant’s presentation
Attorney Sinéad O’Carroll, a partner in the Austin law firm Reeves & Brightwell, represented defendant Central Health and presented key aspects of her client’s motion to dismiss the case.
“Plaintiffs are asking you (the judge) to micromanage Central Health’s expenditures,” she said.
“To deliver these types of services to its safety net population, Central Health must develop this infrastructure and partnerships,” she said. “This spending is expanding the healthcare infrastructure in Travis County and it’s benefiting Central Health patients.”
O’Carroll argued that services which may not fall specifically under the rubric of “clinical care” still lead to an expanded healthcare infrastructure that benefits low-income patients. She claimed that Central Health “payments are leading to expanded healthcare coverage and infrastructure.”
O’Carroll also stated that almost half of the graduates of the UT medical school have remained in Central Texas to practice medicine, which further aids in developing the healthcare infrastructure that can benefit low-income patients. She also emphasized that the 12-month waiting period to see an orthopedic specialist through the Medical Assistance Program (MAP) has been eliminated and access to prenatal care has improved.
“Medicine is a team sport,” she said. “Without the infrastructure created by the expenditure, Central Health would not be able to provide these services to their patients.”
At one point Judge Meacham interrupted O’Carroll during her presentation to ask about seemingly contradictory aims of the defense strategy. One being the merits of the healthcare provided by Central Health specifically benefitting lower income patients, the other regarding whether or not taxpayers are even allowed to bring these types of suits to court. “What does it matter, all of this, to your motion to dismiss for lack of jurisdiction, that this isn’t the type of thing that they have jurisdiction to sue for?”
“The merits and questions of jurisdiction overlap,” O’Carroll replied, drawing a sharp rebuttal from Judge Meacham: “Your conception of jurisdiction and mine may differ.”
Judge Meachum sought clarification, referencing the legal term ultra vires, which essentially means ‘beyond the limits of power’. Was the defense arguing that all the healthcare provided has benefited the poor, thereby satisfying the original intent of the 2012 bond, or were they saying that the plaintiffs do not have the standing to sue?
Meachum asked, “The issue comes down to, with your plea, that this isn’t the type of ultra vires case that a taxpayer can bring because it’s backward looking, not forward looking. Is that the nut or is it more this (the merits)?”
O’Carroll responded, “The nut is both, honestly.”
Judge Meachum described this as an ongoing legal issue that permeates her courtroom and beyond. “It just is a constant, never-ending conversation between the Travis County District Courts and the 3rd Court of Appeals and the Supreme Court.”
The plaintiffs’ presentation
Attorney Manuel Quinto-Pozos, a partner in the Austin firm of Deats Durst and Owen, took exception to how the defense described the services provided by Central Health. He claimed that only about 10 percent of the annual $35 million payments goes to clinical care and administration directly related to care.
The money is “supposed to provide healthcare for poor people, which it does do, but it goes beyond that—which is illegal.”
Quinto-Pozos cited Chapter 281 of the Texas Health and Safety Code, and stated Central Health is required to provide healthcare services for the needy, but cannot go beyond that mission. ‘When they go beyond, they are acting ultra vires,” he said. “That’s our beef,” added attorney Fred Lewis, who is also representing the plaintiffs. “We think, after getting $35 million, you can do better than that.”
Judge Meachum seemed to acknowledge some merit to the plaintiffs’ objections by stating, “If I had the power to right every political wrong in this court, my job would be vastly more fun than it is at times.” She then posed a question to their attorneys, “Why is your case a lawsuit and not a political argument?”
“It’s not one or the other,” Quinto-Pozos replied. “There have been efforts to implement safeguards via (Central Health’s) Board of Managers on how the money is to be spent, and those efforts have not been fruitful.”
Quinto-Pozos said that plaintiffs had asked Central Health for information about how the $35 million a year was being spent, adding, “They have spent money on documented things that are not healthcare. These are all fine things to have, but it’s not fine for taxpayer money that is provided only for healthcare for the poor, to pay for those things.”
He pointed out that plaintiffs were not seeking to undo any expenditures that have already been made, but only “prospective relief” to prevent future unlawful spending.
Otherwise, he added, “There’s no reason to think that their ultra vires actions will stop in future expenditures.”
Quinto-Pozos concluded by saying, “The case law and attorney general provisions are clear that the expenditures must be used only for the original intent.”
Defense rebuttal
O’Carroll said the fact that Central Health can terminate the affiliation agreement that requires payments of $35 million a year “signals adequate control.”
“Central Health is trying to get people in the door, so it’s all related. It’s not completely divorced.”
Plaintiffs’ request for injunction
Attorney Fred Lewis presented the plaintiffs’ case for granting an injunction that would halt the $35 million in annual payments.
“This is not about politics,” he said. “It’s about whether or not Central Health has the authority to fund a medical school and things that are not related to healthcare for poor people.”
“The whole purpose of the hospital district is to assume responsibility for healthcare for the poor,” Lewis said.
He said it was true that Central Health was providing a medical assistance program for many patients—but not for all, adding, “If they spent the money on what the attorney general said is their duty, they’d be able to cover everyone.”
Lewis said, “Nobody defines medical care as education or research—only treatment of a person, and it’s hard to say that education of a medical student is treatment or medical care for a poor person.”
“We’re only complaining about the money that’s not going to the poor,” he said. “Central Health has discretion to choose doctors, facilities, where to emphasize medical care—they do not have authority to redefine medical care. UT Medical School is not a licensed medical facility.”
Lewis said that only 10 percent of the $35 million a year that was given to UT for medical school was used to pay for clinical care. “Everything else was, by precise definition, not medical care.”
He criticized the Affiliation Agreement executed in 2014 that requires the annual payments of $35 million to UT for the medical school. “You can’t expand the government’s authority by agreement without legislative approval.”
“I don’t know how (Central Health) can say it has financial controls when it has no right to audit” how UT spends that money.
“This entity (Central Health) has one express purpose. It’s to establish a hospital system for healthcare for the indigent. There are no provisions for anything else,” Lewis said.
Defense rebuttal
Attorney O’Carroll replied to Lewis’s presentation, saying that the medical school was developing resources. “That’s the language that allows for spending outside of clinical care and clinical administration.”
She said there are more providers and services, not that UT has medical services and healthcare infrastructure.
“Central Health has multiple strategies for care. Plaintiffs have no evidence that you could get the same specialists to come to town without the medical school.”
O’Carroll said, “Plaintiffs seem to take the position that by getting rid of payments (to the medical school) that low-income residents would get better care, and that’s just not true. If the relationship between UT and Central Health were severed, low-income residents would suffer.”
Strong support for plaintiffs evident
About 20 people were present in court during the hearing in support of the litigation. Many of them have been active for years in trying to get Central Health to provide greater accountability for the $35 million a year that goes to fund Dell Medical School.
In addition, on the morning of the hearing, attorney Marisa Perales of the Austin firm Perales Allmon & Ice filed a 10-page amicus brief in support of the plaintiffs. The brief was filed on behalf of Health for Travis County (HTC), a community based coalition focused on healthcare justice.
“HTC has appeared numerous times over the years before the Central Health Board of Managers to request that Central Health discontinue the transfer of public funds to the Dell Medical School in order to appropriately spend this annual $35 million on patient care for the poor. Those efforts have been unsuccessful,” the brief states.
The brief states that about 300,000 people in Travis County are without health insurance and that Latinos make up more than 39 percent of those uninsured. It further notes that lack of coverage results in increased mortality.
“HTC’s primary concern is that Central Health is not serving its targeted population,” the brief states. “Central Health has diverted public funds to Dell Medical School without any accountability to serve the poverty and indigent healthcare population, as it is legally required to do.”
Comments after the hearing
In response to the judge implying that this perhaps should be a political fight and not a legal one, Fred Lewis told the Bulldog, “We tried the legislature, we tried the City Council, we tried Central Health, we tried the county. Nobody was interested in taking on the University of Texas.
“I think the hearing went well,” Lewis added.“We got our day in court. The judge listened carefully and we’re hopefully optimistic.”
Manuel Quinto-Pozos told the Bulldog, “We were pleased with how the argument went. We did all we could to bring to the court’s attention the legal restrictions under which Central Health has to function. And how the evidence we obtained via the litigation shows that Central Health is not complying with its mandate to provide healthcare for poor inhabitants of Travis County.”
Trust indicators: This is Erik Mauck’s first assignment for the Bulldog. Editor Ken Martin has been doing investigative reporting in the three-county Austin metro area since 1981. See more on Ken on the About page. Email [email protected].
Related documents:
Plaintiffs’ original petition, Birch et al v Central Health et al, Cause No. D-1-GN-17-005824, October 18, 2017 (7 pages)
Plaintiffs’ First Amended Original Petition, Birch et al v Central Health et al, Cause No. D-1-GN-17-005824, March 21, 2022 (10 pages)
Defendants’ Motion to Dismiss for Lack of Subject Matter Jurisdiction and Brief in Support of Amended Plea to Jurisdiction, Birch et al v Central Health et al, Cause No. D-1-GN-17-005824, April 18, 2024 (37 pages)
Plaintiffs’ Motion for Final Summary Judgment, Birch et al v Central Health et al, Cause No. D-1-GN-17-005824, March 18, 2024 (76 pages)
Plaintiffs’ Third Amended Petition, Birch et al v Central Health et al, Cause No. D-1-GN-17-005824, April 22, 2024 (12 pages)
Defendants’ Summary Judgment Response, Birch et al v Central Health et al, Cause No. D-1-GN-17-005824, May 2, 2024 (68 pages)
Plaintiffs’ Response to Defendants’ Motion to Dismiss for Lack of Subject Matter Jurisdiction and to the Amended Plea to the Jurisdiction, Birch et al v Central Health et al, Cause No. D-1-GN-17-005824, May 2, 2024 (62 pages)
Amicus Curiae Brief in Support of Plaintiffs, Birch et al v Central Health et al, Cause No. D-1-GN-17-005824, May 9, 2024 (10 pages)
Related Bulldog coverage:
Commissioners approve Central Health performance audit, April 5, 2023
Watson circumvented law to fund new medical school, November 1, 2022
Central Health’s quest for medical school accountability blocked by 2014 agreement, August 5, 2022
Central Health’s $35 million payments to Dell Medical School an unlawful gift of public funds that exceed statutory authority, June 30, 2022
New documentary takes aim at diversion of indigent healthcare funds, November 15, 2021
Lawsuit challenges Central Health spending, October 18, 2017
Great article and a great fight for accountability at Central Health. This was a very clearly stated argument, so nice work, Mauck!