Supreme Court
Image API, LLC v. Young
- Case number: 22-0308
- Legal category: Governmental Immunity
- Subtype: Ultra Vires Claims
- Set for oral argument: November 29, 2023
Case Summary
At issue is whether Section 32.0705(d) of the Human Resources Code imposes a mandatory one-year time limit for the Health and Human Services Commission to conduct external audits of “Medicaid contractors.”
Image API, LLC contracted with the Commission to provide document-processing services. The Commission later audited Image and demanded that Image repay over $400,000. Image sued, seeking a declaration that the audit was untimely and thus ultra vires because the audit was beyond the one-year time limit for external audits imposed by Section 32.0705(d). The Commission filed a plea to the jurisdiction and moved for summary judgment, arguing that Section 32.0705(d) either does not apply or is directory (and thus judicially unenforceable). The trial court denied the Commission’s plea but granted its summary-judgment motion.
The court of appeals reversed in part, holding that Section 32.0705 applies to the Commission’s audit because Image is a “Medicaid contractor” under that statute. The court of appeals also held that Section 32.0705(d) is merely a directory provision, not a mandatory one. Consequently, Section 32.0705(d) neither imposes a ministerial duty on the Commission to conduct audits within the one-year period nor prohibits an audit from being conducted beyond that period.
Image petitioned the Supreme Court for review, arguing that Section 32.0705(d) is mandatory. The Court granted Image’s petition.
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