Foster v. Teacher Retirement Sys

In Foster v. Teacher Retirement Sys., 273 S.W.3d 883 (Tex. App.--Austin 2008, no pet.), Diana Foster, a retired teacher, was insured through the Teacher Retirement System of Texas (TRS), which is a state agency. Foster, 273 S.W.3d at 885. Pursuant to an agreement, TRS's insurance plan was administered by Aetna Life Insurance Company and Aetna Health Management, LLC (collectively referred to herein as "Aetna"). Id. After Aetna denied coverage for a claim for medical services submitted by Foster, Foster sued TRS and Aetna for breach of contract, breach of the duty of good faith and fair dealing, violations of the insurance code, and violations of the deceptive trade practices act. Id. TRS and Aetna filed pleas to the jurisdiction which the trial court granted. Id. at 886. The Austin court initially rejected Foster's argument that the legislature waived TRS's immunity, holding the statutory language on which Foster relied did not constitute a waiver. Id. at 886-87. The court then considered Foster's argument that Aetna was not shielded by sovereign immunity because it was a private entity. Id. at 888. The court noted Aetna was functioning as an agent of TRS and Aetna's involvement in the matter arose solely out of its actions on TRS's behalf. Id. at 888-89. The court also noted "all of Foster's claims make essentially the same argument -- that the medical services should have been covered under the terms of the insurance plan." Id. at 889. The court held that Aetna was immune from suit, reasoning: "Under the contract, Aetna simply provides administrative services to facilitate the provision of health care to retirees covered by TRS. The insurance plan is fully funded by the State, and Aetna has no financial stake in the approval or denial of a claim. TRS has the exclusive right to determine the terms of the plan and may amend or terminate the plan at any time. In relation to Foster's claims, Aetna was acting as an agent of TRS and in a fiduciary capacity for the benefit of the State, and Foster has not alleged that Aetna exceeded the scope of its delegated duty of determining claim coverage or committed fraud or a similar tort. Thus, TRS's immunity should protect Aetna from liability as well. To hold otherwise would implicate State funds and expose Aetna to liability from which its principal is protected and, more importantly, would undercut the public policy that favors allowing the State to contract with private entities to more efficiently provide services to government employees." Id. at 890.