Winter 2005

In This Issue

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Message from the General Counsel

So, here we are one year into The Foreseeable Future. In this direct communication to OGC’s clients, we’ve attempted to highlight key areas of concern, keep you apprised of new law, regulation and court decisions, identify trends in the law and generally give you – our clients – a few extra tools to face the daily onslaught and better interact with OGC.

Never ones to rest on our laurels, you will find this quarterly edition of The Foreseeable Future packed with more articles than usual and a couple new features. I hope you’ll enjoy our new “Spotlight on History” feature. Recently, we held the first-ever OGC Clean-up Day and as a result unearthed a few gems. Jim Phillips takes the role of storyteller to give you a glimpse of one of the things we found. In the future, we will give you a few more tidbits about the great history of UT System.

In this edition, you’ll also find a new feature entitled **Newsflash**. Things don’t always happen on a quarterly schedule and sometimes they are important enough that we need to get a quick word out as soon as possible. Rather than a more in-depth look at an issue, **Newsflash** is a quick hitter to alert you to a new law, regulation or court decision that may have immediate impact on campus operations.

So, there you have it. The Foreseeable Future – one year old and growing.

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Welcome to the newest feature of The Foreseeable Future – **Newsflash**. Here, on occasion, OGC will highlight late breaking developments with high potential to impact campus operations. Think of it as a slightly expanded version of that banner that runs across the bottom of the Fox News telecast. So, without further lead in here is your first **Newsflash **.

All colleges and universities are under the gun to comply with new federal regulations related to use of the Internet for online job searches. The new rule (see 41 CFR Part 60-1) actually went into effect on February 6, 2006, but the Department of Labor’s Office of Federal Contract Compliance Programs is giving all federal contractors 90 days past February 6 to fully comply. The new rule will increase the burden on colleges and universities to keep even more records related to Internet job searches and job applicants. Please call OGC if you need help interpreting or implementing this new federal regulation.

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Spotlight on History

"My clients don't want justice. They want their freedom."  -  Percy Foreman

Every File Has a Story

by Jim Phillips (Business Law Section)

File recycling day was approaching and each attorney in the Office of General Counsel was asked to review files that were beyond the period specified in our records retention schedule. Our records manager delivered a couple boxes of files to me and I had consigned most of the files to the recycling bin when I came to File # 29. The first document in the thin file looked routine, a letter dated July 28, 1986 instructing MBank Houston to return six parcels they had been safekeeping on behalf of UT System to the owner of the contents of the parcels. The use of the term “parcels” caught my attention so I flipped the page. The next item in the file was a sworn affidavit, asserting ownership of $3.05 million in bearer bonds, and attesting that “…I had left the same in my room number 1515 at the Texas State Hotel in Houston, Texas.” The affidavit was signed by Percy Foreman.

As I learned, the name Percy Foreman may not mean anything to some of my younger colleagues, so I must digress. Percy Foreman was a legendary trial lawyer in Houston, if not the best criminal defense lawyer in Texas history. Graduating from The University of Texas Law School in 1927, by 1958 he had defended 778 accused murderers. One was executed, 52 were sent to prison. The remaining 705 were acquitted. By 1968, he had defended another two hundred accused murderers and just one was sent to prison on a life sentence. Among his most famous clients were James Earl Ray, Jack Ruby, and Charles Harrelson. He became a multi-millionaire representing criminal defendants and handling society divorces.

As reported by the East Texas Historical Association:

He preferred his fees in cash, but would take anything of value. At one time he was the largest landowner in Harris County, holding title to more than forty homes and dozens of commercial buildings. He rented warehouses for the automobiles, furs, jewelry and other items with which cash-poor recreants paid their bills. He once even accepted circus elephants as payment for services rendered.

Which brings us back to Room 1515 in the Texas State Hotel. Jim Wilson, currently Executive Director of Real Estate at UT Austin, had signed the 1986 letter as Manager, Endowment Real Estate, UT System. When I called Jim, all I had to do was mention “bearer bonds” and he instantly started relating the story of how his first assignment as the new Manager of Endowment Real Estate was to handle the foreclosure of the Texas State Hotel, a trust property in downtown Houston that had fallen on hard times. Most of the transient residents had finally left but a few rooms were left to be inspected, one of them having been rented to Percy Foreman for 30 years or more. The room was unoccupied and hadn’t had active use for some time.

During his inspection of the room, Jim found several briefcases in the closet. In the briefcases were millions of dollars of fully negotiable bearer bonds issued by various Texas municipalities. Including the interest that had accrued for a number of years, the bonds were then worth $5.4 million. Instead of leaving for Brazil, Jim transferred custody of the “parcels” to MBank until they could be reunited with Mr. Foreman. Jim later learned that the bonds were payment of Mr. Foreman’s fee for his representation in a Sakowitz divorce proceeding.

There is much more to the story but Jim Wilson has promised that all of the details will be recounted when he writes the memoirs of his career with the Real Estate Office. File #29 has been retained and not yet consigned to the recycling bin, even though the records retention schedule might suggest otherwise.

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Race-Restricted Educational Programs -- The Scrutiny Continues

by Esther L. Hajdar (General Law Section)

In July 2005, the U.S. Department of Justice (the Department ) informed Southern Illinois University (SIU) that it was investigating three of its fellowship programs and its minority hiring practices for possible violations of Title VII of the Civil Rights Act of 1964. A complaint from the Center for Equal Opportunity, a group advocating race-blind policies and programs, prompted the investigation.

The three programs under investigation (Bridge to the Doctorate, the Graduate Dean's Fellowship, and Proactive Recruitment of Multicultural Professionals for Tomorrow) are restricted to “members of an underrepresented minority group” or women who had overcome adversity. In addition, SIU had also stated on its web site and informed search committee members that certain faculty and administrative appointments were “targeted positions for women and minorities.”

In a November 4, 2005, letter, the Department informed SIU that it would sue SIU if it did not eliminate the three graduate fellowships that were allegedly discriminatory to whites, males and non-preferred minority groups. The Department also wrote that SIU might be in violation of the law "by recruiting and hiring only minorities and women for selected faculty positions." The Department and SIU then began discussions to settle the matter and avoid litigation. It presently appears that settlement is likely. SIU has agreed to open at least two of the questioned programs to all students regardless of race or gender. However, it is still not known whether the proposed consent decree would cover the Bridge to the Doctorate program, which is administered by a consortium of colleges and research organizations and is financially supported by the National Science Foundation.

The SIU case, of course, occurs against the back of Grutter and Gratz. On June 23, 2003, the U.S. Supreme Court held that the use of race as a factor in higher education admissions is permissible under the U.S. Constitution. Grutter v. Bollinger, 123 S.Ct. 2325 (2003); Gratz v. Bollinger, 123 S.Ct. 2411 (2003). The Supreme Court determined that the educational benefit derived from a diverse student body is a compelling governmental interest. However, the consideration of an applicant’s race in order to achieve a diverse student body must be very narrowly tailored. The Court approved of a “holistic” admission process that considered all the qualifications of an applicant of which race was only one factor of many. The Court disapproved of a process that relied on weighted factors and numerical scoring to determine admissions.  

Most colleges around the nation have opened minority programs up to other students in the face of pressure from advocacy groups and the Education Department's Office for Civil Rights, and in response to the Supreme Court's analysis in Grutter and Gratz, which made it harder for universities to legally justify operating race-exclusive programs.

The Bottom Line:   Ensure that any educational programs that consider an applicant or student’s race are not race-restricted, that all programs comply with all the requirements articulated in Supreme Court decisions, Grutter and Gratz, and that such programs have been approved by the UT System’s Office of General Counsel.

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Community Colleges' Broad Authority to Assess Fees Affirmed by Texas Supreme Court

by Esther L. Hajdar (General Law Section)

The Texas Supreme Court recently affirmed a community college’s authority to assess a technology fee and student services fee. In Dallas County Community College District v. Bolton, --- S.W.3d ----, 2005 WL 3241846 (Tex. 2005), current and former students sued the Dallas County Community College District (District) alleging that the District did not have specific statutory authority to impose a technology fee and a student services fee. The students further alleged that the District failed to follow procedures required by statute prior to assessing the student services fee. The technology fee supported the purchase of technology related items for student use; the student services fee funded extracurricular activities. Both were mandatory fees. The trial court awarded the students a judgment of approximately $15 million. The District appealed the judgment to the court of appeals and then to the Texas Supreme Court.

The parties agreed that the District was authorized to charge fees under §130.123(c), Texas Education Code. The section provides that each junior college board “shall be authorized to fix and collect … fees from students and others for the occupancy, use, and/or availability of all or any of its property, buildings, structures, activities, operations, or facilities, of any nature, in such amounts and in such manner as may be determined by such board.” However, the students argued that other statutory provisions limited the District’s authority to assessing fees that were pledged to revenue bonds. The Texas Supreme Court rejected this interpretation. It held that “[a]lthough section 130.123(c) specifically authorizes junior colleges to set technology fees and in the language of this section allows junior colleges to pledge the fees to the payment of revenue bonds, it does not restrict the District from charging additional technology fees that are not pledged to revenue bonds.” The court determined that any other interpretation of the statute would be “at odds with the broad legislative grant of plenary authority to local public junior college boards.”

This opinion is noteworthy to all state public institutions because it acknowledges that governing boards, subject to statutes that regulate specific actions or set fees, exercise plenary authority over their operation. Additionally, it supports a broad interpretation of a governing board’s authority to establish fees under §55.16(a), Texas Education Code. Section 55.16(a) provides that “[e]ach board shall be authorized to fix and collect rentals, rates, and charges from students and others for the occupancy, services, use, and/or availability of all or any of its property, buildings, structures, activities, operations, or other facilities as provided by this section.” This language is substantially identical to the language found in §130.123(c), which was the basis of the community colleges’ authority to impose fees.

As to the student services fee, the students alleged that certain community colleges within the District failed to follow the requirement under §54.503(f), Texas Education Code, by not obtaining a majority vote of the students for certain fee increases greater than ten percent in one year. The Supreme Court sided with the District finding that the students were not entitled to a refund of the fees because the payments were voluntary and without duress. Among other things, the court determined that students had not sought a waiver of the fee and that they would not have been denied enrollment or credit for failing to pay the fee. The court held that “[p]ayment of the increased fee was not mandatory for any member of the Class; it was contingent on enrollment in a junior college in the Dallas County Community College District and selection of a certain number of credit hours for the semester.”

While the community college did not have a formal process in place for protesting the payment of a fee, a student who wants to protest a fee paid to a state university may file a written protest in accordance with §403.202, Texas Government Code.

The Bottom Line:  Subject to the statutes that regulate specific actions or set fees, UT institutions, with approval by the Board of Regents, have broad authority to implement fees for the effective and efficient operation of the institution.

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Twenty-Five Years After the Bayh-Dole Act

by BethLynn Maxwell (Intellectual Property Section)

Twenty-five years ago, Congress enacted the Patent and Trademark Law Amendments of 1980 (Public Law 96-517). Further amendments were included in Pubic Law 98-620 that was enacted into law in 1984. Commonly known as the Bayh-Dole Act in recognition of its two lead sponsors in the U.S. Senate, Birch Bayh (D-IN) and Bob Dole (R-KS), this act is probably the most inspired piece of legislation to be enacted in America over the past half-century. The Bayh-Dole Act had been credited with unlocking federally funded inventions and discoveries and providing platform technologies that have fueled our nation’s economic growth.

On a nation-wide basis, the Bayh-Dole Act has promoted a substantial increase in technology transfer – moving technology from the laboratory to the market place - from universities to industry, and ultimately to the public. Certainty of title to inventions made under federal funding is perhaps the most important incentive for commercialization.  Implementation of uniform patenting and licensing procedures, however, combined with the ability of universities to grant exclusive licenses, are also significant ingredients for success.  This combination of factors led to a tremendous introduction of new products through university technology transfer activities. The licensing of new technologies has led to the creation of new companies, thousands of jobs and educational opportunities and the development of entirely new industries.

A university owning the inventions it creates with Federal funding has another significant benefit -- it protects the right of scientists to continue to use and to build on a specific line of inquiry.  This is very important to research-focused institutions because of the way research is typically funded -- with multiple funding sources. Title to inventions to the university/institution is the only way to ensure that the institution will be able to accept funding from interested research partners in the future.

Congressional intent of Bayh-Dole Act was to:

  • Increase American innovation
  • Promote commercialization of inventions
  • Encourage participation of small businesses

Major provisions of the Bayh-Dole Act:

  • Inventions conceived or reduced to practice using federal funds are owned by the University – not the Federal Government
  • Universities are encouraged to collaborate with commercial concerns to promote the utilization of inventions arising from federal funding
  • Universities are expected to file patents on inventions they elect to own
  • Universities are expected to give licensing preference to small businesses
  • Manufacturing should be in the United States
  • The government retains a non-exclusive license to practice the patent throughout the world

But, the Bayh-Dole Act is not without its critics; many of whom argue that it does little more than give industry carte blanche to acquire intellectual property rights on technologies supported by taxpayers, thereby giving away taxpayer rights to the inventions. They have also argued that the commingling of academia and commercial enterprises has turned the American university into a sort-of-school-corporation entity that stifles innovation in pursuit of licensing revenue -- which could lead to bias in scientific findings and undermine public trust. And, its critics also say that it slows and hampers research because data that would otherwise be openly shared, is now tied up in patent rights that prevent other researchers from making use of it.

In spite of its critics, most would agree the Bayh-Dole Act continues to be a national success story, representing a successful merger between government, universities, and industry.

The Bottom Line:   Twenty-five years after its creation, the Bayh-Dole Act continues to be a national success story, representing a successful merger between government, universities, and industry. Also, technology transfer is alive and well in the United States – due in most part to the Bayh-Dole Act.

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Universities and Environmental Law

by Jim Phillips (Business Law Section)

When people think about environmental law and its applications, the college and university setting is not necessarily the first thing that comes to mind. As the Environmental Protection Agency found during a round of inspections between 1994 and 2003 at sixteen New England colleges and universities, compliance with environmental regulations was apparently not the first thing that came to mind to university staff and administrators, either. Violations were noted primarily in hazardous waste management, spill prevention and storm water protection. Some air and toxic substance control issues were also found. Enforcement actions resulting from these inspections have led to penalties ranging from $300,000 to over $1 million and were heavily publicized in the press. See College and University Initiative Overview.

Unlike other universities around the country, The University of Texas System and its institutions have taken our environmental obligations to heart and have instituted strong systems to assure compliance. The Office of General Counsel and the Office of Risk Management support the Environmental Health and Safety Advisory Committee (EHSAC), which is made up of the EH&S Directors at the fifteen institutions, which serves as a forum on environmental issues.

As an example, to assist our institutions and to reduce costs by using our bargaining power, UT System manages several system-wide waste disposal contracts to assure proper storage, use and disposal of regulated waste streams. (For information on these contracts, contact Lance Zurawski in the Risk Management Office.) Hazardous waste, regulated by the EPA under the Resource Conservation and Recovery Act (RCRA) and the Texas Commission on Environmental Quality under the Texas Solid Waste Disposal Act, can be generated by numerous university activities, including research, medical care, chemistry labs and physical plant activities. There are strict container closure and labeling requirements, storage limits based on both time and quantity and intricate transportation and disposal requirements. Last year, over 940,000 pounds of hazardous waste was disposed of, at a cost in excess of $934,000. Medical waste is regulated by both the State Department of Health Services (pretreatment) and TCEQ (disposal). Last year, the System disposed of over 3 million pounds of medical waste at a cost in excess of $430,000. Radioactive waste disposal is regulated on the federal level by the Nuclear Regulatory Commission and by the TCEQ on the state level. Although the System disposed of only 917 pounds of radioactive waste last year, it cost over $188,000 to do so, more than $205/lb. Without the flexibility provided by the low-level radioactive waste storage facility operated by West Texas Operations, costs would be even higher.

There is significant incentive to properly dispose of waste streams. Proper characterization of waste is no small task and can require significant expertise. Without proper characterization, it is impossible to know which regulatory scheme may apply to any given container. The RCRA system is described as a “cradle to grave” regulatory scheme, and the waste generator is not able to transfer liability to a transporter, contractor or disposal facility. If we ship waste (or a contractor ships our waste) to a facility or site that later is named a Superfund site by EPA or the TCEQ under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), we can be held jointly and severally liable to reimburse EPA or TCEQ for all of the clean-up costs associated with the site, which can run tens of millions of dollars. We are currently participating as a “potentially responsible party” at a radioactive waste Superfund site because a couple of professors in the ‘80s shipped research waste without using the approved disposal contract. Although we shipped a de minimus amount of waste to the site, the EPA demanded immediate payment of $6.7 million, with future liability expected to exceed $15 million, based on the joint and several liability provisions of CERCLA. We are confident we will be able to settle the action for a reasonable amount, but only because there are a number of “deep pockets” who have stepped up to the plate and are willing to negotiate a de minimus settlement with us.

Waste disposal is only one environmental area in which the EH&S professionals must work with professors, researchers and students, with Physical Plant staff, and with OFPC. The federal and state Clean Water Acts require permitting and best management practices at construction sites to prevent pollution from stormwater. The Clean Water Act also requires us to pay close attention to what students may be pouring down drains in the chemistry labs. Operation of underground petroleum storage tanks requires permitting and leak prevention measures. Above-round storage of chemical and petroleum products creates spill prevention planning and reporting requirements, as well as construction of secondary containment. Lasers and radioactive devices used in medical and research activities must be permitted and operated in accordance with regulatory requirements.

The federal and state Clean Air Acts requires the permitting of boilers, power plants, paint shops and other sources of air contaminants, together with substantial recordkeeping and reporting responsibilities, especially for institutions in the Houston and Dallas “non-attainment” areas. Repairs and renovations of buildings can trigger inspection and reporting requirements if there is the possibility of asbestos-containing materials or lead paint being present. Building design and operations can create indoor air quality issues.

The complexity of our compliance effort is magnified by the complexity of our operations. Each of our campuses is, in effect, a self-contained city engaging in both cutting edge research using exotic equipment and materials and also providing basic services, such as drinking water, light, heat and indoor and outdoor air quality. One of our “cities” is in a very environmentally sensitive area, over the Edwards Aquifer, with protected endangered species on-site. Many of our activities have the potential to cause contamination to air, water and soil as well as endangering the health and safety of our faculty, staff, students and visitors. For all these reasons, the EPA decided a new focus and emphasis on university compliance was warranted.

Because of the professionalism and diligence of our EH&S staff, together with the support and cooperation of institution administration, faculty, staff and students, it is unlikely that UT System will face the same kind of embarrassment and sizeable financial penalties the New England colleges and universities faced. Many UT institutions are showing true environmental leadership, through extensive recycling and waste reduction programs, the development of environmental management systems, the use of environmental peer reviews, self-audits and sophisticated training and education efforts.

The Bottom Line:   Environmental regulations pervade university life and the UT System is a national leader in achieving and assuring compliance. These efforts not only protect the health and safety of our students, faculty, staff, visitors and surrounding communities but also provide lessons in proper environmental stewardship for the leaders of tomorrow we are educating.

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Confidentiality of Student Health Information: Which Law Governs?

by Jan Ferguson (Health Law Section)
Updated by Barbara Holthaus, September 19, 2008 (General Law Section)

Many student health staff and other school officials assume that all medical records maintained by a student health center are subject to FERPA. This belief stems from the fact that all records maintained by a University that are “directly related” to a past or present student are subject to FERPA . However, FERPA's definition of “education record” specifically excludes records on a student 18 years or older, or is attending an institution of post-secondary education that are:

    (i) made or maintained by a physician, psychiatrist, psychologist or other recognized professional or paraprofessional acting in his or her professional capacity or assisting in a paraprofessional capacity;

    (ii) made, maintained or used only in connection with treatment of the student; and,

    (iii) disclosed only to individuals providing the treatment. For purposes of this definition, treatment” does not include remedial educational activities or activities that are part of the program of instruction at the agency or institution.

Therefore, if a student health record is available to someone other than the persons providing treatment, it becomes an education record and subject to FERPA. For example, if a student's medical record is used for purposes other than treatment, such as a disclosure, with the student's consent to the campus ADA office to establish that the student is entitled to an accommodation, the portion of the record so disclosed would become an education record subject to FERPA. However, if a medical record has never been shared by the treating provider with anyone other than his or her own staff or another treating provider, the records are not subject to FERPA.

Many healthcare providers and lawyers who know about HIPAA assume that medical records maintained by a student health center are subject to HIPAA. However, the HIPAA rules specifically exempt such records from the definition of patient information that is subject to HIPAA. 45 CFR 160.103. Another common HIPAA misconception is that if the health center is housed at an institution that is a covered entity under HIPAA or the health center is a HIPAA covered entity itself (because it provides services to non-students and engages in third party billing for these non-students), the student medical records are covered by HIPAA until they are shared for a “non-treatment” purpose at which time they become subject to FERPA.1 Comments issued by the drafters of the HIPAA rules have expressly rejected this argument:

“With regard to [student records] we considered requiring health care providers engaged in HIPAA transactions to comply with the privacy regulation up to the point these records were used or disclosed for purposes other than treatment… We chose not to adopt this approach because it would be unduly burdensome to require providers to comply with two different, yet similar, sets of regulations and inconsistent with the policy in FERPA that these records be exempt from regulation to the extent the records were used only to treat the student.”

45 CFR Parts 160 and 164 Standards for Privacy of Individually Identifiable Health Information; Final Rule, December 28, 2000, Federal Register, Vol. 65, No. 25, p. 82483.

So, what law governs a student health centers medical records if they are disclosed only to individuals providing treatment? The answer is the applicable state medical records laws and applicable federal medical records law or regulations, if any. In Texas, this will include applicable sections of the Texas Occupations Code and the Texas Health & Safety Code.

State and federal requirements governing medical records generally permit health care providers to share patient medical record with other health care providers participating in the diagnosis, evaluation, or treatment with the patient's consent. See §159.004(7), Texas Occupations Code; §611.004(a)(7), Texas Health & Safety Code.2 This means that health care providers can normally share information about a student patient with other providers within or outside of the health center as long as the disclosure is for purposes of diagnosis, evaluation, or treatment.

If a student’s records have been accessed for non-treatment purposes and have become subject to FERPA, the student health center has an obligation to comply with both FERPA and applicable state medical records laws, if possible. Many of the exceptions available for sharing student education records under FERPA permit, rather than require, disclosure of student education records. State medical records laws are more likely to prohibit disclosure. In such cases, the student health center can comply with the more restrictive state law requirements without violating FERPA. However, in the event that a University cannot comply with both applicable state laws and FERPA, FERPA would preempt application of the state law and the health center would have to abide by the applicable FERPA requirements. In such cases, the FERPA regulations require the University to report the conflict to the Department of Education.3 Your institution’s legal counsel and/or the Office of General Counsel are always available to assist you when you are confronted with such a conflict or any other questions regarding the release of a student’s medical records.

For more information about FERPA exceptions applicable to sharing student records, please see the OGC July 10, 2007 memorandum, Sharing Information About Potentially Dangerous Students.

1Many healthcare providers and lawyers who know about HIPAA assume that medical records maintained by a student health center are subject to HIPAA. However, the HIPAA rules specifically exempt such records from the definition of patient information that is subject to HIPAA. 45 CFR 160.103. This makes sense because HIPAA only applies to health care providers who engage in certain (HIPPA) electronic transactions such as third party billing only a student health center meets the definition of a covered entity under HIPAA or is housed at an institution of higher education that s itself a covered entity under HIPAA.

2Certain alcohol and drug abuse records created in connection with certain federally funded programs subject to 42 CFR Part 2, 2.12 (c) (3) may only be shared for treatment purposes in the event of an emergency.

334 CFR Section 99.61

The Bottom Line:  State medical privacy laws, rather than HIPAA, apply to the disclosure of student medical records. FERPA does not apply to student medical records if the records are only available to health care providers. If medical records have been shared for non-treatment purposes, compliance with both state medical privacy laws and FERPA is required if possible. If compliance with both laws is not possible, the University is required to make a report to the division of the Department of Education responsible for FERPA compliance. If you have questions about this or any other legal issues involving the release of student medical records, always contact your institution's legal counsel and/or the Office of General Counsel first!

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Statutes of Limitation -- What Impact on System Actions?

by Kevin Brown (Claims & Bankruptcy Section)

Is it ever too late for UT System or its institutions to pursue a cause of action or a debt? Generally, limitations do not run against the state unless a statute specifically states otherwise. Brown v. Sneed, 14 S.W. 248 (Tex. 1890). This rule was partially codified in §16.061, Texas Civil Practice & Remedies Code, which protects the interests of the State by exempting it from the most common statutes of limitation. As state entities, the System and its institutions are covered by this statute. However, there may be limitations to this broad exemption.

When determining whether pursuit of a particular cause of action or debt is barred, your legal counsel should go through the following analysis, which assumes the System or an institution is the holder of the action/debt. Other actions, such as subrogation causes, may require a different analysis.

First, identify the time limitation that applies to the cause of action/debt you want to pursue. Depending on the action, a specific state or federal law could potentially take precedence over any general statute of limitation you may think is applicable. The Office of General Counsel is available to aid in determining whether there is a particular law that would override our sovereignty in a given situation.

Next, does the relevant limitations statute provide (either directly or indirectly, by definition) that it applies to the state? If not, the rule of the Brown case dictates that you are not bound by the limitation and you can pursue the claim. But, if the statute does limit state claims, does §16.061 (or another statute) specify that the state is not barred by that particular limitation? If so, you are still free to pursue the debt. If not, you may be out of luck. For example, in Tarrant County Hosp. Dist. v. GE Automotive Svcs, Inc., 156 S.W.3d 885 (Tex. App.– Ft. Worth, 2005), the court held that since the controlling limitation statute was §2.725, Texas Business & Commerce Code (TBCC), the state was barred, as §2.725 is not one of the limitations listed in §16.061 from which the state is exempt. Under the definitions used in the TBCC, the state was included as a “person” subject to its limitations.

While it is nice to be able to fall back on protections from limitations if necessary, timely action prior to the running of any limitation is always preferable and should increase the likelihood and amount of recovery. Prompt action increases the chance that funds are available to pay the debt, that the address you have is still good and that you have sufficient evidence to prove your cause of action.

The Bottom Line:    Refer any debt or matter that may give rise to a cause of action promptly to legal counsel for review. Even if the matter is old, don’t assume that it is automatically barred by a statute of limitations.

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Resources from this e-Newsletter

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