Contractual Government Service Alone Does Not Authorize an Interlocutory Immunity Appeal

1. Introduction

This decision distinguishes a private government contractor’s possible entitlement to immunity from its statutory right to appeal before a final judgment. The Supreme Court of Texas held that Conduent State Healthcare, LLC could not immediately appeal the denial of its plea to the jurisdiction merely because it performed services for a state agency and asserted derivative sovereign immunity.

Two statutory limitations controlled. Under Texas Civil Practice and Remedies Code Section 51.014(a)(8), Conduent did not qualify as a “governmental unit”: its relevant status and authority came from its contract, not from legislation establishing it as an institution, agency, or organ of government. Under Section 51.014(a)(5), Conduent’s assertion of its own immunity was not an assertion by an “individual,” a term the Court construed to mean a natural person.

The underlying Medicaid dispute

The Texas Health and Human Services Commission contracted with Conduent, previously known as Xerox Corporation or ACS State Healthcare, LLC, to process requests for prior authorization of Medicaid-funded orthodontic services. Those requests required an assessment of whether treatment was medically necessary under Medicaid policy.

The arrangement generated extensive litigation. The State alleged that Conduent improperly approved authorization requests and sought civil penalties under the statute then called the Texas Medicaid Fraud Prevention Act. According to the briefs, Conduent ultimately paid $236 million to settle that litigation. Separately, the State pursued dentists and dental practices accused of submitting false authorization and payment requests.

Dr. Diana Malone, Dr. Scott Malone, and M&M Orthodontics, PA—the respondents collectively called “the Malones”—paid $2 million to settle the State’s claims against them. They then brought this action against Conduent and the State. Their allegations included that Conduent injured them by approving requests without adequately reviewing medical necessity. Their claims sounded in tort, including fraud and negligence.

The procedural controversy

The district court granted the State’s plea to the jurisdiction based on sovereign immunity but denied Conduent’s plea. Conduent asserted both derivative sovereign immunity and the Tort Claims Act’s election-of-remedies provisions.

A divided court of appeals affirmed the denial on the merits. The dissent argued that the court lacked jurisdiction over the interlocutory appeal. After granting review and requesting supplemental jurisdictional briefing, the Supreme Court agreed with the dissent’s threshold objection.

2. Summary of the Opinion

The Supreme Court reached four principal conclusions:

1. Appellate jurisdiction must be established before the merits are considered. The Court had authority—and an obligation—to determine whether the court of appeals properly exercised jurisdiction.
2. Conduent was not a “governmental unit” under Section 51.014(a)(8). Its government contract and statutory description as a “fiscal agent” did not supply the governmental status and authority required by Section 101.001(3)(D).
3. Conduent could not rely on Section 51.014(a)(5) through its own immunity assertion. Although a company is a “person,” it is not an “individual” within that provision. Conduent also had not based its plea on the official immunity of a qualifying human officer or employee.
4. The appellate decision had to be vacated. The Supreme Court vacated the court of appeals’ opinion and judgment and remanded the case to the district court for further proceedings.

The Court did not decide whether Conduent actually possessed derivative sovereign immunity, whether it qualified as a state employee for election-of-remedies purposes, or whether the Malones’ substantive claims should succeed. It suggested that the district court could consider permitting an interlocutory appeal under Section 51.014(d), subject to the applicable requirements.

3. Analysis: Legal Reasoning

A. Jurisdiction is an independent prerequisite, not an assumed consequence of an immunity claim

Ordinarily, appellate review follows a final judgment. An interlocutory order—such as a denial of a plea to the jurisdiction while the underlying case remains pending—is immediately appealable only through an authorized exception.

Conduent’s immunity arguments therefore presented two different questions:

• Does immunity protect Conduent from the Malones’ suit?
• Does a statute permit an immediate appeal of the order rejecting that argument?

The Supreme Court answered only the second question. A potentially substantial immunity defense cannot itself enlarge appellate jurisdiction. Nor can the parties’ willingness to litigate the merits eliminate the need for a statutory jurisdictional basis.

B. Section 51.014(a)(8) requires a qualifying governmental unit

Section 51.014(a)(8) authorizes an appeal from an interlocutory order granting or denying “a plea to the jurisdiction by a governmental unit,” with that term defined in Section 101.001.

Conduent could not plausibly fall within the provisions covering the State and its agencies, political subdivisions, or emergency service organizations. Its argument depended on Section 101.001(3)(D), which encompasses:

“any other institution, agency, or organ of government the status and authority of which are derived from the Constitution of Texas or from laws passed by the legislature under the constitution.”

The decisive inquiry was the source and character of Conduent’s authority. The Court contrasted legislative grants of governmental status or power with authority conferred through a commercial contract. Conduent performed work for the government, but that fact did not make Conduent itself an organ of government.

This distinction also prevented Conduent from relying merely on statutes authorizing HHSC to contract. Those statutes empowered the agency to procure services; they did not confer comparable governmental status and authority on every service provider it retained.

C. The statutory definition of “fiscal agent” did not confer governmental power

Conduent pointed to the Texas Health Care Program Fraud Prevention Act’s definition of a “fiscal agent,” which includes a person that receives, processes, and pays health-care-program claims through a contractual relationship with a state agency.

The Court treated that language as descriptive rather than constitutive. It identifies a category of persons for the Act’s purposes; it does not create a governmental institution or invest the contractor with governmental powers. The opinion reinforced this conclusion by observing that the Act uses “fiscal agent” only within its definitional provision and does not, for example, classify such contractors as governmental entities for public-information purposes.

The broader interpretive lesson is that statutory recognition of a contractor’s activities is not equivalent to a statutory grant of governmental status. The actual legal consequences of the legislation matter more than the governmental character of the work performed.

D. Asserting immunity does not satisfy the governmental-unit requirement

Conduent argued that precedent permitted any party asserting immunity in a plea to the jurisdiction to invoke Section 51.014(a)(8). The Court rejected that reading because it would replace the statute’s governmental-unit requirement with a much broader immunity-assertion requirement.

The Court’s prior private-entity cases had separately examined governmental-unit status even though each entity asserted immunity. Those inquiries would have been unnecessary if an immunity assertion alone established jurisdiction.

The resulting rule is carefully limited: private entities are not categorically excluded from Section 51.014(a)(8), but they must satisfy its incorporated statutory definition. Contractual government service alone does not do so.

E. Section 51.014(a)(5) distinguishes a “person” from an “individual”

Conduent’s alternative argument relied on Section 51.014(a)(5), which permits an appeal from an order denying a motion for summary judgment based on an assertion of immunity “by an individual who is an officer or employee of the state or a political subdivision of the state.”

The same provision begins by allowing “[a] person” to appeal. The Court gave the two different words different meanings:

• “Person” ordinarily includes both human beings and artificial legal entities, such as corporations and limited liability companies.
• “Individual” ordinarily means a natural person—a human being.

Conduent was therefore a “person,” but not an “individual.” Even if its disputed claim to be a state employee were accepted, that would not eliminate the separate natural-person requirement. The Court expressly declined to decide the employee-status question.

The reasoning rests on ordinary meaning, consistent statutory usage, and the principle that every enacted word must be given effect. Reading “individual” to encompass Conduent simply because it claimed employee status would deprive the term of its narrowing function.

F. The natural-person requirement concerns the underlying immunity, not necessarily the appellant

The Court avoided an important overstatement: Section 51.014(a)(5) does not require that the appellant itself be human. An organizational employer can sometimes appeal when its motion rests on an employee’s official immunity.

Conduent’s problem was different. Its plea invoked its own derivative sovereign immunity, not the official immunity of a qualifying individual working for the government. The opinion thus distinguishes an entity asserting its own immunity from an entity relying on a human employee’s immunity.

The decision does not hold that every company is barred from every appeal under Section 51.014(a)(5), nor does it comprehensively resolve when a plea rather than a summary-judgment motion may satisfy that provision. Its decisive analysis addressed whose immunity supported the asserted appellate route.

4. Analysis: Precedents Cited and Their Influence

A. The duty to examine jurisdiction

Qwest Commc'ns Corp. v. AT&T Corp., 24 S.W.3d 334 (Tex. 2000)

This case established the Supreme Court’s authority to determine whether a court of appeals correctly decided its jurisdiction over an interlocutory appeal. It supplied the immediate basis for reviewing the jurisdictional defect here, notwithstanding the absence of authority for the lower court’s merits review.

Steel Co. v. Citizens for a Better Env't, 523 U.S. 83 (1998)

The Court cited this decision to emphasize that determining jurisdiction is a duty, not merely an available option. It supports addressing adjudicative authority before substantive legal questions.

Bender v. Williamsport Area Sch. Dist., 475 U.S. 534 (1986)

This authority states an appellate court’s special obligation to examine both its own jurisdiction and that of the lower courts, even when the parties are willing to concede jurisdiction. It directly explains why the Supreme Court independently required supplemental briefing.

City of Houston v. Rhule, 417 S.W.3d 440 (Tex. 2013)

This Texas precedent reinforces the same obligation to verify jurisdiction. Its role is to anchor the jurisdiction-first approach in Texas law as well as federal authority.

Cross-Sound Ferry Servs., Inc. v. ICC, 934 F.2d 327 (D.C. Cir. 1991)

The opinion quotes Justice Thomas’s concurrence in part for the proposition that universal interest in resolving a dispute cannot create jurisdiction. The cited passage is concurring reasoning, not a majority holding, and serves as persuasive reinforcement of the jurisdictional limit.

Rush Truck Ctrs. of Tex., L.P. v. Sayre, 718 S.W.3d 233 (Tex. 2025)

This decision supplies both the ordinary final-judgment rule and the concluding maxim, “Jurisdiction always comes first.” It frames statutory interlocutory appeals as exceptions requiring an affirmative legal basis.

B. Earlier Medicaid litigation and the unresolved immunity defense

In re Xerox, 555 S.W.3d 518 (Tex. 2018)

This earlier litigation concerned the State’s Medicaid-fraud claims against Conduent and its attempt to designate dentists as responsible third parties. The Supreme Court rejected that procedural effort. Here, the case provides background concerning Conduent’s authorization work and the related litigation; it does not establish jurisdiction over this appeal.

Nazari v. State, 561 S.W.3d 495 (Tex. 2018)

In related proceedings against dental defendants, sovereign immunity barred counterclaims against the State, and jurisdiction was lacking over an interlocutory appeal concerning dismissed third-party claims against Conduent. The present opinion uses the case to explain the litigation’s history and illustrate that related claims do not necessarily come with immediate appellate review.

Lab'y Corp. of Am. Holdings v. State, 738 S.W.3d 482 (Tex. 2026)

This decision is cited for the approximately 2023 change in the fraud-prevention statute’s name. Its function is contextual; no substantive holding from that case determines the jurisdictional result.

Nettles v. GTECH Corp., 606 S.W.3d 726 (Tex. 2020)

This case explains the derivative sovereign-immunity theory Conduent invoked: a private contractor may be protected when the plaintiff’s claims would “override the substance” of the agency’s underlying decisions. The Court did not apply that merits standard here. Its citation highlights the distinction between a potentially available immunity defense and statutory permission to appeal its rejection immediately.

C. Private entities that possess statutory governmental status

LTTS Charter School, Inc. v. C2 Construction, Inc., 342 S.W.3d 73 (Tex. 2011)

An open-enrollment charter school qualified as a governmental unit because legislation categorically made such schools part of Texas’s public school system, granted them public-school powers, and subjected them to governmental regulatory requirements. These features were legislative grants and obligations, not merely contractual assignments. The comparison shows why Conduent’s service contract was insufficient.

University of the Incarnate Word v. Redus, 518 S.W.3d 905 (Tex. 2017)

A private university operating a campus police department qualified for the appellate provision because legislation authorized governmental policing powers, empowered licensed officers to enforce law, and treated the department as governmental for public-information purposes. The case demonstrates that private ownership does not prevent governmental-unit status, but specific statutory powers remain essential to the analysis.

CPS Energy v. Electric Reliability Council of Texas, Inc., 671 S.W.3d 605 (Tex. 2023)

ERCOT’s statutory position as the certified independent system operator supplied authority over transmission facilities, market coordination, planning, and reliability. The present Court contrasted that legislatively structured authority with Conduent’s contract-derived responsibilities. It also noted that ERCOT’s assertion of immunity alone had not resolved appellate jurisdiction.

Rosenberg Dev. Corp. v. Imperial Performing Arts, Inc., 571 S.W.3d 738 (Tex. 2019)

This case involved a Type B economic development corporation expressly defined by another statute as a governmental unit. The Court described it as an especially straightforward example. It illustrates how an explicit legislative classification can establish eligibility without the more elaborate analysis required under Section 101.001(3)(D).

D. Official-capacity suits do not erase statutory classifications

Texas A&M University System v. Koseoglu, 233 S.W.3d 835 (Tex. 2007)

This was Conduent’s principal authority. It permitted an official sued in an official capacity to pursue an interlocutory appeal under Section 51.014(a)(8), because such a suit is effectively an action against the governmental entity represented by the official.

The Court rejected Conduent’s effort to generalize that holding into an entitlement for every party asserting immunity. An official-capacity action against a state official is not equivalent to a tort action against a private contractor. The later private-entity decisions’ careful examination of governmental-unit status confirmed this narrower reading.

Kentucky v. Graham, 473 U.S. 159 (1985), and Monell v. Dep't of Soc. Servs., 436 U.S. 658 (1978)

These decisions appear through the explanation in Texas A&M University System v. Koseoglu: an official-capacity suit is another way of pleading an action against the entity for which the official acts. Their significance is confined to that representational relationship; they do not classify ordinary contractors as governmental units.

Texas Department of Criminal Justice v. Simons, 140 S.W.3d 338 (Tex. 2004)

This decision interprets “plea to the jurisdiction” by reference to the substance of the issue raised rather than a particular procedural label. But appellate jurisdiction was itself lacking there. The present opinion uses it to show why flexibility concerning procedural form does not eliminate the statutory limits on who or what qualifies for interlocutory review.

E. Entity appeals based on an individual employee’s official immunity

City of Beverly Hills v. Guevara, 904 S.W.2d 655 (Tex. 1995)

A city could appeal when its summary-judgment motion was based on its employees’ or agents’ official immunity. This precedent prevents construing “individual” as a restriction on the identity of the appellant itself. Conduent nevertheless could not benefit because its plea asserted derivative sovereign immunity rather than a qualifying individual’s official immunity.

William Marsh Rice Univ. v. Refaey, 459 S.W.3d 590 (Tex. 2015)

This decision confirms that an employer may rely on an employee’s immunity assertion to invoke Section 51.014(a)(5). Its role is to preserve that established route while distinguishing Conduent’s assertion of immunity in its own right.

F. Statutory interpretation and the meaning of “individual”

Malouf v. State ex rels. Ellis, 694 S.W.3d 712 (Tex. 2024)

The Court relied on the presumption that the Legislature uses the same words consistently and different words to convey different meanings. Because Section 51.014(a)(5) uses both “person” and “individual,” treating them as interchangeable would contradict this interpretive principle.

Colorado County v. Staff, 510 S.W.3d 435 (Tex. 2017)

This case supports treating “individual” as narrower than “person.” It contributes to the Court’s conclusion that the broad category of permissible appellants does not expand the narrower category of immunity-bearing officers or employees specified in the provision.

Mohamad v. Palestinian Authority, 566 U.S. 449 (2012)

This decision construed “individual” to encompass only natural persons. It provides persuasive support for the ordinary-meaning analysis, alongside dictionaries and Texas statutes expressly defining the term.

Hegar v. Health Care Serv. Corp., 652 S.W.3d 39 (Tex. 2022)

The cited statement comes from Justice Blacklock’s dissent and observes that “individual” typically refers to a natural person rather than a business entity. It is supporting commentary, not a majority holding independently controlling the present case.

Tex. Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628 (Tex. 2010)

This precedent supplies the presumption that the Legislature selects statutory language carefully and uses every word for a purpose. It supports giving “individual” an operative narrowing effect rather than treating it as dispensable.

Bexar Appraisal Dist. v. Johnson, 691 S.W.3d 844 (Tex. 2024), and State v. Shumake, 199 S.W.3d 279 (Tex. 2006)

These authorities reinforce the prohibition against reading enacted words out of a statute. They support the Court’s final rejection of an interpretation that would allow Conduent’s corporate identity to satisfy the natural-person requirement.

The Court also consulted Scalia and Garner’s Reading Law: The Interpretation of Legal Texts, dictionaries, the Code Construction Act, and other statutory definitions. These nonjudicial sources reinforced the distinction between the broad legal category “person” and the ordinarily human category “individual.” The reference to Spaceballs was a rhetorical device introducing the abbreviated litigation history, not legal authority.

5. Analysis: Potential Impact

A. Government contractors must establish an appellate route separately from immunity

The principal practical effect is to prevent derivative sovereign immunity from becoming an automatic gateway to immediate appellate review. Contractors must identify a statutory basis that covers their legal status and the particular order appealed.

For Section 51.014(a)(8), future disputes will likely focus on whether legislation actually grants governmental status and authority, rather than merely authorizing an agency to purchase services. A contractor’s public function, government funding, or statutory description will not necessarily answer that question.

B. The decision preserves, rather than overrules, the private-entity precedents

Charter schools, campus-police institutions, ERCOT, and expressly classified governmental corporations remain important comparators. The opinion does not impose a public-ownership requirement. It instead insists on the statutory source of the claimed governmental character.

C. Corporate appellants must identify whose immunity supports Section 51.014(a)(5)

An entity relying on that provision must distinguish its own claimed immunity from a qualifying individual’s official immunity. Corporate appellants remain possible, but the underlying statutory conditions cannot be satisfied simply by describing the corporation itself as a state employee.

D. The substantive contractor-immunity questions remain open in this case

The vacatur removes the court of appeals’ merits analysis from the case’s operative appellate resolution. It does not establish that Conduent lacks immunity or that the election-of-remedies defense fails. Nor does it disturb the district court’s denial through a merits reversal. Those defenses remain matters for further proceedings and any properly authorized review.

E. Permissive appeals remain a potential alternative

The Court’s reference to Section 51.014(d) identifies a possible route for obtaining early review when the automatic appeal provisions do not apply. Section 51.014(h) also allows Supreme Court direction to accept such an appeal when the statutory requirements are satisfied.

This suggestion was not permission already granted and did not retroactively validate the defective appeal. Any permissive appeal must independently satisfy its governing requirements.

6. Complex Concepts Simplified

Interlocutory appeal

An appeal taken before the trial court finishes the case. Because it interrupts ongoing litigation, it generally requires specific authorization.

Plea to the jurisdiction

A request asking the court to dismiss because it lacks legal authority to hear the claim. An immunity assertion may supply the asserted jurisdictional defect.

Sovereign immunity

A doctrine that generally protects the State and its agencies from suit unless immunity has been waived or an applicable exception permits the action.

Derivative sovereign immunity

Protection a private contractor may claim because litigation against it would interfere with governmental decisions. Its possible availability does not automatically make the contractor a governmental unit.

Official immunity

A distinct protection associated with government officers or employees. An employer may sometimes rely on an employee’s official immunity, which explains why an entity can qualify for an appeal grounded in an individual’s immunity.

Official-capacity suit

A claim against an official as the representative of a governmental entity, rather than against the official personally. This relationship explains the result in Texas A&M University System v. Koseoglu.

Election of remedies

Rules under the Tort Claims Act that can make a plaintiff’s choice to sue a governmental unit bar related claims against its employees. Whether those rules protected Conduent was not decided.

Vacatur

Setting aside a judicial decision. Here, the appellate opinion and judgment were vacated because the court of appeals lacked jurisdiction, not because the Supreme Court resolved the underlying defenses differently.

7. Conclusion

The decision’s central lesson is that immunity and immediate appealability are separate questions. A private contractor does not become a governmental unit merely by performing government work under contract, and a company’s own immunity assertion is not an assertion by an “individual” under Section 51.014(a)(5).

By vacating the appellate decision without reaching Conduent’s defenses, the Supreme Court preserved the statutory boundaries of interlocutory review. The merits remain unresolved; any early appellate consideration must proceed through a valid statutory route.