Carla Frew v. Thomas Suehs ( 2015 )


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  •      Case: 14-40048   Document: 00512959210     Page: 1   Date Filed: 03/05/2015
    
    
    
    
            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT     United States Court of Appeals
                                                        Fifth Circuit
    
                                                                             FILED
                                                                           March 5, 2015
                                     No. 14-40048
                                                                           Lyle W. Cayce
                                                                                Clerk
    CARLA FREW; CHARLOTTE GARVIN, as next friend of her minor children
    Johnny Martinez, Brooklyn Garvin and BreAnna Garvin; CLASS
    MEMBERS; NICOLE CARROLL, Class Representative,
    
                 Plaintiffs - Appellants
    
    v.
    
    KYLE JANEK, Commissioner of the Texas Health and Human Services
    Commission in his official capacity; KAY GHAHREMANI, State Medicaid
    Director of the Texas Health and Human Services Commission in her official
    capacity,
    
                 Defendants - Appellees
    
    
    
    
                    Appeal from the United States District Court
                         for the Eastern District of Texas
    
    
    Before JOLLY, WIENER, and CLEMENT, Circuit Judges.
    WIENER, Circuit Judge:
          This appeal arises from the district court’s termination of several
    provisions of a consent decree and the dissolution of a related corrective action
    order pursuant to the first clause of Federal Rule of Civil Procedure 60(b)(5)—
    that the judgment has been “satisfied, released, or discharged.” Plaintiffs
    represent a class of Texas children eligible for Medicaid’s Early and Periodic
    Screening, Diagnosis, and Treatment program (“EPSDT” or “the Program”).
    They concluded a consent decree (the “Decree”) with various Texas state
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                                            No. 14-40048
    officials    (“Defendants”)      in    1996   to   make     improvements        to   Texas’s
    implementation of the Program. In 2007, the parties agreed on a corrective
    action order to resolve Plaintiffs’ concerns with one part of the Decree.
    Defendants, believing their obligations to be satisfied, have now moved to
    dissolve that order and the associated Decree provisions under Rule 60(b)(5).
    The district court granted their motion. We affirm.
    
                                I.        Facts and Proceedings
    A.       Past Proceedings
             This action began in 1993 when Plaintiffs, representatives of a class of
    over 1.5 million Texas children eligible for EPSDT, sued Defendants under 42
    U.S.C. § 1983 for violations of federal Medicaid law in the state’s
    implementation of the Program. 1 As noted, the parties concluded a consent
    decree in 1996 in which Defendants promised to implement a number of
    changes, among which was a training program for participating health care
    providers. 2 A few years later, after little progress had been made, the district
    court found Defendants in violation of the Decree (“Frew I”). 3 We reversed,
    solely on Defendants’ challenge to the Decree’s validity under the Eleventh
    Amendment (“Frew II”). 4 The Supreme Court then reversed Frew II (“Frew
    III”).
             In Frew III, the Court noted that Defendants’ legitimate concerns over
    the Decree’s potential to “undermine the sovereign interests and accountability
    of state governments” were not properly addressed to the Eleventh
    Amendment but to the district court’s power, under Rule 60(b)(5), to grant
    
    
    
             Frew ex rel. Frew v. Hawkins, 
    540 U.S. 431
    , 434 (2004); Frew v. Gilbert, 
    109 F. Supp. 1
    
    2d 579, 587 (E.D. Tex. 2000).
           2 See Frew, 109 F. Supp. 2d at 588.
           3 See id. at 678.
           4 See Frazar v. Gilbert, 
    300 F.3d 530
    , 543 (5th Cir. 2002).
    
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    relief “if ‘it is no longer equitable that the judgment should have prospective
    application.’” 5 The Court reiterated the “flexible standard” for modification of
    institutional-reform consent decrees 6 found in Rufo v. Inmates of Suffolk
    County Jail 7 and urged district courts to return the “responsibility for
    discharging the State’s obligations” promptly to state officials once “the objects
    of the decree have been attained.” 8
              On remand, we returned the case to the district court (“Frew IV”). 9
    Defendants moved to dissolve the Decree under Rule 60(b)(5)’s third clause,
    claiming that its continued enforcement would be inequitable. 10 The district
    court, applying Rufo and Frew III, denied their motion, and we affirmed (“Frew
    V”). 11
              Back in the district court, the parties agreed on eleven corrective action
    orders, each aimed at bringing Defendants into compliance with a specific
    portion of the Decree.         CAO 637-8, the order at issue in this appeal,
    implemented ¶¶ 124–30 of the Decree, which concerned deficiencies in
    Medicaid-participating pharmacies’ understanding of EPSDT.               All eleven
    orders were entered into the record in 2007. 12
    B.        Consent Decree ¶¶ 124–30 and CAO 637-8
              1.    Consent Decree ¶¶ 124–30
              The 78-page Decree is organized into 308 paragraphs, of which only 7
    are involved in this appeal. Paragraphs 124–30 form one subsection of a larger
    
    
    
    
             Frew, 540 U.S. at 441 (quoting FED. R. CIV. P. 60(b)(5)).
              5
    
             Id.
              6
           7 
    502 U.S. 367
     (1992).
           8 Frew, 540 U.S. at 442.
           9 See Frazar v. Hawkins, 
    376 F.3d 444
    , 447 (5th Cir. 2004).
           10 See Frew v. Hawkins, 
    401 F. Supp. 2d 619
    , 631 (E.D. Tex. 2005).
           11 See Frazar v. Ladd, 
    457 F.3d 432
    , 434 (5th Cir. 2006).
           12 In 2009, the case was transferred by Judge William Wayne Justice, who had
    
    overseen the case from its inception, to Judge Richard Schell.
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    section that calls for a variety of training initiatives for healthcare providers.
    Of these 7 paragraphs, 2 mandate that Defendants perform specific actions:
           129. By January 31, 1996, Defendants will implement an
           initiative to effectively inform pharmacists about EPSDT, and in
           particular about EPSDT’s coverage of items found in pharmacies.
           The effort will include presentations at meetings of the Texas
           Pharmaceutical Association and other appropriate organizations,
           if possible, articles in the TPA newsletter, if possible, and at least
           one mail out to all pharmacists who participate in the Medicaid
           program. The mail out will be designed to attract pharmacists’
           attention, explain EPSDT coverage clearly and encourage
           pharmacists to provide the full gamut of covered pharmaceutical
           products to recipients as needed.
    
           130. By July 31, 1996, Defendants will conduct a professional and
           valid evaluation of pharmacists’ knowledge of EPSDT coverage of
           items commonly found in pharmacies. They will report the results
           of the evaluation to Plaintiffs by September 1, 1996. If the parties
           agree that pharmacists’ understanding of the program is
           acceptable, Defendants will continue the initiative described above
           to inform pharmacists about EPSDT. If the parties do not agree,
           or if pharmacists’ understanding is unacceptable, Defendants will
           conduct an initiative to orally inform pharmacists about EPSDT’s
           coverage. Plaintiffs will not unreasonably disagree about whether
           pharmacists’ understanding is acceptable. 13
    
           Plaintiffs contend that three other paragraphs of the Decree are
    relevant: ¶ 3, which declares that “[r]ecipients are also entitled to all needed
    follow up health care services that are permitted by federal Medicaid law”; ¶ 6,
    which describes the purpose of the Decree as “[t]o address the parties’ concerns,
    
    
    
           13 Paragraph 124 describes the critical role that pharmacies play in the Program.
    Paragraph 125 introduces Plaintiffs’ complaints: Pharmacists do not understand EPSDT’s
    requirements, such as the fact that over-the-counter medications are covered if prescribed by
    a doctor. Paragraph 126 states that EPSDT also covers medically necessary infant formula,
    diapers, and other supplies and equipment “commonly sold in pharmacies.” Paragraph 127
    continues Plaintiffs’ complaints: Pharmacies that do not understand EPSDT require
    Medicaid recipients to pay in cash; recipients often do not have cash or end up erroneously
    paying for covered items. Paragraph 128 states Defendants’ disagreement with these facts.
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    to enhance recipients’ access to health care, and to foster the improved use of
    health care services by Texas EPSDT recipients”; and ¶ 190, which states that
    “EPSDT recipients served by managed care organizations are entitled to timely
    receipt of the full range of EPSDT services, including but not limited to medical
    and dental check ups.” 14
          2.     CAO 637-8
          This corrective action order begins by referencing ¶¶ 3, 129, and 130 of
    the Decree. It then describes Plaintiffs’ main complaint with pharmacists’
    understanding of EPSDT’s prescription drug program: When EPSDT
    recipients seek to fill prescriptions for drugs that are not listed on the
    Program’s Preferred Drug List (“PDL”), pharmacists may fill them only if they
    have “prior authorization” from the prescribing physicians. If a prescribing
    physician does not provide the authorization or could not be reached, the
    pharmacist must dispense a 72-hour emergency supply so that the class
    member is not deprived of needed medication. Many pharmacists, however,
    did not know that the stopgap measure was available or treated it as optional
    and improperly withheld class members’ prescriptions.
          To remedy the pharmacists’ misunderstanding, CAO 637-8 established
    a detailed series of action items, elaborating on and expanding the
    requirements found in ¶¶ 124–30 of the Decree. CAO 637-8 is divided into 12
    bullet points, of which 9 require specific actions by Defendants. Particularly
    contested in this appeal are their obligations in bullet points 6 and 10. 15
    
    
    
          14  In March 2012, the EPSDT prescription drug program was transferred from direct
    state control to the control of managed care organizations. All Texas EPSDT recipients are
    now served by managed care organizations.
            15 CAO 637-8 also requires Defendants to (1) change the Program’s electronic
    
    prescription processing system so that it reminds pharmacists of the 72-hour emergency
    policy; (2) “work with the Texas Pharmacy Association to explain” the policy; (3) make
    available a PDL database service that doctors may use online or download to a handheld
    device for reference while providing care; (4) “begin encouraging all Medicaid-enrolled
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           Bullet point 6 required Defendants to “provide intensive, targeted
    educational efforts to those pharmacies for which the data suggests a lack of
    knowledge of the 72-hour emergency prescriptions policy.” 16 In addition to
    these “intensive, targeted” efforts for particular noncompliant pharmacies,
    Defendants were also to “continue . . . educational efforts with respect to all
    Medicaid pharmacies.”
           Bullet point 10 required Defendants to train staff at their ombudsman’s
    office “about the emergency prescription standards,” including “what steps to
    take to immediately address class members’ problems when pharmacies do not
    provide emergency medicines.”
    C.     Current Proceedings
           In 2012, Plaintiffs moved to enforce the pharmacy aspects of the Decree
    and CAO 637-8, contending that further action was required because the
    training efforts had not been effective. They asked the court to “require that
    Defendants develop a plan thorough and vigorous enough to eradicate the
    severe systemic dysfunction” still remaining in the interaction between
    pharmacies and EPSDT.            Defendants countered, claiming that they had
    “satisfied the terms of the CAO,” and moved to dissolve CAO 637-8 and Decree
    ¶¶ 124–30 “under the first ground set forth in Rule 60(b)(5).” They did not
    seek relief pursuant to the Rule’s second or third grounds.
    
    
    
    pharmacies to also become Medicaid-enrolled providers of durable medical equipment”; (5)
    provide information about the 72-hour policy and Medicaid’s coverage of durable medical
    equipment every time a pharmacy signs a new, renewed, or amended contract to participate
    in Medicaid; and (6) encourage managed care organizations to train the nurses who staff
    their patient hotlines about the 72-hour and durable medical equipment policies.
           16 The previous bullet point had required Defendants to identify these target
    
    pharmacies by performing an analysis of all pharmacies’ claims histories, which would reveal
    those that processed zero or a lower-than-expected number of 72-hour emergency
    prescriptions. Within two years of completing this analysis, Defendants were to repeat it.
    The final bullet point in CAO 637-8 required the parties to confer after the second analysis
    was complete “to determine what, if any, further action [was] required.”
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           After a hearing, the district court agreed that Defendants had
    “substantially complied with the terms of CAO 637-8 and Decree [¶¶] 124–130”
    and granted their Rule 60(b)(5) motion. The court also found that Plaintiffs
    had conceded Defendants’ compliance with all action items besides those in
    bullet points 6 and 10.
    
    
                                          II.    Analysis
    A.     Standard of Review
           “Consent decrees are subject to Federal Rule of Civil Procedure 60(b).” 17
    We review a district court’s decision to grant or deny relief pursuant to Rule
    60(b) for abuse of discretion. 18 Under this standard, the district court’s ruling
    is “entitled to deference,” but we review de novo “any questions of law
    underlying the district court’s decision.” 19
           Plaintiffs urge that Frew I, in which Judge Justice construed various
    provisions of the Decree, is entitled to deference as “the law of the case.” They
    appear to find this rule in a line of Sixth Circuit cases that apply “deferential
    de novo” review to interpretations of consent decrees by the judges who initially
    approved them. 20 We have never followed this rule. Moreover, the law of the
    case doctrine “generally operates to preclude a reexamination of issues decided
    on appeal.” 21 The only decisions that form the law of this case are the Supreme
    Court’s opinion in Frew III and our previous panel opinions in Frew II, Frew
    IV, and Frew V. None of these interpret ¶¶ 124–30 of the Decree; CAO 637-8
    
    
    
           17 League of United Latin Am. Citizens, Dist. 19 v. City of Boerne, 
    659 F.3d 421
    , 437
    (5th Cir. 2011).
           18 Id.
           19 Frazar v. Ladd, 
    457 F.3d 432
    , 435 (5th Cir. 2006).
           20 Shy v. Navistar Int’l Corp., 
    701 F.3d 523
    , 528 (6th Cir. 2012); see also, e.g., Brown
    
    v. Neeb, 
    644 F.2d 551
    , 558 n.12 (6th Cir. 1981).
           21 Conway v. Chem. Leaman Tank Lines, Inc., 
    644 F.2d 1059
    , 1061 (5th Cir. Unit A
    
    May 1981) (emphasis added).
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    did not even exist at the time of Frew V. We thus decline Plaintiffs’ invitation
    to apply our law of the case doctrine here.
    B.     Rule 60(b)(5)
           Consent decrees, like other judgments, may be modified or terminated
    pursuant to Rule 60(b)(5), which provides three independent, alternative
    grounds for relief: “[1] the judgment has been satisfied, released, or discharged;
    [2] it is based on an earlier judgment that has been reversed or vacated; or
    [3] applying it prospectively is no longer equitable.” 22 As the party seeking
    relief, Defendants must bear the burden of showing that Rule 60(b)(5)
    applies. 23
           The vast majority of motions for modification and termination of consent
    decrees, especially those involving institutional reform, invoke Rule 60(b)(5)’s
    third clause. 24 In contrast, the first clause of Rule 60(b)(5) is raised far less
    often—typically when there is a dispute over the amount of the judgment 25—
    
    
    
    
           22  FED. R. CIV. P. 60(b)(5); see also Horne v. Flores, 
    557 U.S. 433
    , 454 (2009)
    (“Satisfaction of an earlier judgment is one of the enumerated bases for Rule 60(b)(5) relief—
    but it is not the only basis for such relief. . . . Use of the disjunctive ‘or’ makes it clear that
    each of the provision’s three grounds for relief is independently sufficient . . . .”).
            23 See League of United Latin Am. Citizens, Dist. 19 v. City of Boerne, 
    659 F.3d 421
    ,
    
    438 (5th Cir. 2011).
            24 See 11 CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL
    
    PRACTICE & PROCEDURE § 2863 (3d ed. 2012) (“The significant portion of Rule 60(b)(5) is the
    final ground, allowing relief if it is no longer equitable for the judgment to be applied
    prospectively.”); see also Horne, 557 U.S. at 447 (applying the third clause); Agostini v. Felton,
    
    521 U.S. 203
    , 215 (1997) (same); Rufo v. Inmates of Suffolk Cnty. Jail, 
    502 U.S. 367
    , 376
    (1992) (noting that one party sought modification of a consent decree on the basis of alleged
    changes in law and fact, which pertain to Rule 60(b)(5)’s third clause).
            25 See, e.g., Bryan v. Erie Cnty. Office of Children & Youth, 
    752 F.3d 316
    , 321 (3d Cir.
    
    2014); BUC Int’l Corp. v. Int’l Yacht Council Ltd., 
    517 F.3d 1271
    , 1274 (11th Cir. 2008);
    Zamani v. Carnes, 
    491 F.3d 990
    , 995 (9th Cir. 2007); Newhouse v. McCormick & Co., 
    157 F.3d 582
    , 584 (8th Cir. 1998); Redfield v. Ins. Co. of N. Am., 
    940 F.2d 542
    , 544 (9th Cir. 1991);
    Torres-Troche v. Municipality of Yauco, 
    873 F.2d 499
    , 501 (1st Cir. 1989); Sunderland v. City
    of Phila., 
    575 F.2d 1089
    , 1090 (3d Cir. 1978).
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    and is almost never applied to consent decrees. 26 As such, we find very little
    applicable precedent interpreting this clause.
           Defendants urge us to import the principles of Frew III to this case, as
    the Decree implicates the exact same federalism concerns as before. Plaintiffs’
    response—that Frew III’s hortatory language about state accountability
    pertains only to Rule 60(b)(5)’s third clause—is technically accurate, but fails
    to account for Rule 60(b)’s expansive scope:
           We have repeatedly noted that Rule 60(b) is to be given a liberal
           construction: “In analyzing the 60(b) aspect, [w]e recognize that
           Rule 60(b) is to be construed liberally to do substantial justice. The
           rule is broadly phrased and many of the itemized grounds are
           overlapping, freeing Courts to do justice in hard cases where the
           circumstances generally measure up to one or more of the itemized
           grounds.” 27
    
    In light of this statement and the lack of other precedent, we deem it
    reasonable to consider Defendants’ motion with reference to the Supreme
    Court’s unambiguous instructions in Frew III.
    C.     Consent Decree Interpretation
           Consent decrees are construed according to “general principles of
    contract interpretation.” 28 “The primary concern of a court in construing a
    written contract is to ascertain the true intentions of the parties as expressed
    
    
    
    
           26  See 11 WRIGHT, MILLER & KANE, supra note 24, § 2863 (“The first of the grounds
    set out in Rule 60(b)(5), that the judgment has been satisfied, released or discharged, has
    been relied on very rarely.”).
            27 Johnson Waste Materials v. Marshall, 
    611 F.2d 593
    , 600 (5th Cir. 1980) (quoting
    
    Laguna Royalty Co. v. Marsh, 
    350 F.2d 817
    , 823 (5th Cir. 1965)).
            28 Dean v. City of Shreveport, 
    438 F.3d 448
    , 460 (5th Cir. 2006). Furthermore, the
    
    court “look[s] to state law to provide the rules of contract interpretation.” Clardy Mfg. Co. v.
    Marine Midland Bus. Loans Inc., 
    88 F.3d 347
    , 352 (5th Cir. 1996). Plaintiffs cite to Texas
    contract law, and we have previously applied Texas law in cases involving consent decrees
    concluded between Texas parties. See, e.g., City of El Paso, Tex. v. El Paso Entm’t, Inc., 464
    F. App’x 366, 372 (5th Cir. 2012) (per curiam) (unpublished).
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    in the instrument.” 29 Thus, courts examine the “unambiguous language in a
    contract” and enforce “‘the objective intent’ evidenced by the language used.” 30
    This reliance on the written terms must include consideration of all the terms:
    “[C]ourts should examine and consider the entire writing in an effort to
    harmonize and give effect to all the provisions of the contract so that none will
    be rendered meaningless.” 31 “Indeed, courts must be particularly wary of
    isolating from its surroundings or considering apart from other provisions a
    single phrase, sentence, or section of a contract.” 32
           Plaintiffs contend that the district court erred in focusing narrowly on
    Defendants’ satisfaction of specific provisions of CAO 637-8 and not
    considering the Decree’s broader goals, as found in ¶¶ 3, 6, and 190. The
    purpose of the Decree, according to Plaintiffs, is results-oriented: It is not
    enough for Defendants to perform the required action items mechanically; the
    court must also find that these actions were effective in improving EPSDT
    recipients’ access to health care. Plaintiffs conclude that, because the district
    court failed to construe the Decree as a whole document, it misapplied the rules
    of contract interpretation and erred as a matter of law.
           Plaintiffs’ recitation of the rules of contract interpretation is correct, but
    interpreting the Decree as an entire writing does not give Plaintiffs the victory
    they seek. In ¶¶ 3 and 190, the Decree states the uncontroversial position that
    Plaintiffs, including those served by managed care organizations, are entitled
    to EPSDT benefits as mandated by Medicaid. In ¶¶ 4 and 5, the Decree opines
    that Texas’s implementation of EPSDT could and should be improved. Then,
    in ¶ 6, the Decree introduces the “changes and procedures” agreed to by the
    
    
           29Texas v. Am. Tobacco Co., 
    463 F.3d 399
    , 407 (5th Cir. 2006) (emphasis added).
           30Clardy, 88 F.3d at 352.
          31 Coker v. Coker, 
    650 S.W.3d 391
    , 393 (Tex. 1983).
          32 Am. Tobacco Co., 463 F.3d at 408 (quoting State Farm Life Ins. Co. v. Beaston, 
    907 S.W.2d 430
    , 433 (Tex. 1995)) (internal quotation marks omitted).
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    parties to effectuate this improvement, noting that these actions are in place
    “[t]o address the parties’ concerns, to enhance recipients’ access to health care,
    and to foster the improved use of health care services by Texas EPSDT
    recipients.”     These introductory paragraphs do not guarantee specific
    outcomes; rather, they show that the Decree is aimed at supporting EPSDT
    recipients in obtaining the health care services they are entitled to, by
    addressing concerns, enhancing access, and fostering use of services.
            Defendants therefore fulfill the purpose of the Decree by implementing
    the broad range of supportive initiatives memorialized in the Decree. 33 The
    whole point of negotiating and agreeing on a plethora of specific, highly
    detailed action plans was to establish a clearly defined roadmap for attempting
    to achieve the Decree’s purpose. In other words, the parties already agreed
    that substantial compliance with this roadmap would achieve their common
    goal.
            To read the Decree as implying a secondary assessment of the impact of
    each action item would introduce a new requirement to which the parties never
    agreed. The Decree makes no guarantees of success and sets no results-based
    milestones; neither do ¶¶ 124–30 establish any objective standard that
    pharmacists must achieve before Defendants’ educational efforts may be
    considered successful.
            Plaintiffs have not pointed to any discrete endpoint for CAO 637-8 or
    these Decree paragraphs.            Indeed, they may never be satisfied with
    Defendants’ educational efforts: In their 2012 motion to enforce the Decree and
    CAO 637-8, Plaintiffs appeared to have given up on pharmacist training
    entirely. Acknowledging that “[n]o amount of education will cure the pervasive
    
    
             See id. at 407 (“The primary concern of a court in construing a written contract is
            33
    
    to ascertain the true intentions of the parties as expressed in the instrument.” (emphasis
    added)).
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    dysfunction in Defendants’ deeply flawed system,” Plaintiffs instead wanted
    Defendants to “propose a further action plan” to effectuate “systematic change”
    to the prescription drug program itself.               Neither the rules of contract
    interpretation nor Frew III’s instruction to “promptly” return state programs
    to state control countenance this rewriting of the Decree.
           Plaintiffs also point to the word “effectively” in ¶ 129: Defendants were
    required to “implement an initiative to effectively inform pharmacists about
    EPSDT.”      Plaintiffs reason that if many EPSDT recipients are still not
    receiving their prescription drug benefits, Defendants’ educational initiative
    must not have been effective. Reading ¶ 129 as a whole, however, reveals that
    “effectively” functions to require that all “presentations,” “articles,” and “mail
    out” initiatives conducted by Defendants convey information effectively.
    Paragraph 129 even provides some guidelines for effective communication,
    instructing Defendants to design mailings “to attract pharmacists’ attention”
    and “explain EPSDT coverage clearly.”                 Defendants were obligated to
    communicate information in an effective manner, no more.                       To infer a
    wholesale, results-oriented reevaluation of Defendants’ efforts from this one
    word, taken out of context, would be wholly inconsistent with the rules of
    contract interpretation. 34
           Finally, Plaintiffs rely heavily on the Ninth Circuit’s opinion in Jeff D. v.
    Otter, which held that “[e]xplicit consideration of the goals of [the consent
    decree], and whether those goals have been adequately served, must be part of
    the determination to vacate.” 35 But Jeff D. is inapposite for two reasons. First,
    
    
    
    
           34  See id. at 408 (“Indeed, courts must be particularly wary of isolating from its
    surroundings or considering apart from other provisions a single phrase, sentence, or section
    of a contract.” (quoting State Farm, 907 S.W.2d at 433) (internal quotation marks omitted)).
            35 
    643 F.3d 278
    , 289 (9th Cir. 2011).
    
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    the Ninth Circuit’s reasoning rested on two school desegregation cases, 36 which
    present unique issues in consent decree jurisprudence, 37 and on a case that
    appears to have considered the flexible standard for modifying consent decrees,
    a standard associated with the third clause of Rule 60(b)(5). 38 Thus, Jeff D.’s
    persuasiveness is limited.         Second, the consent decree at issue in Jeff D.
    “provided for continuing jurisdiction by the district court for five years ‘or until
    [the district court was] satisfied by stipulation or otherwise that the claims as
    alleged in the Complaint have been adequately addressed.’” 39 The Jeff D.
    parties bargained for a termination condition that included an independent
    assessment by the district court of whether the plaintiffs’ complaints had been
    resolved.    Thus, when the district court vacated the consent decree after
    assessing compliance with the specific action items only, it did not give the
    plaintiffs the benefit of their bargain. 40 Although the Ninth Circuit did not
    emphasize this fact, we find Jeff D. to be distinguishable on this basis.
           In conclusion, we reject Plaintiffs’ contention that the district court
    incorrectly interpreted the Decree in deciding Defendants’ motion to terminate
    CAO 637-8 and Decree ¶¶ 124–30. If the Decree had explicitly guaranteed
    
    
           36 See id. at 288 (citing Freeman v. Pitts, 
    503 U.S. 467
     (1992); Youngblood v. Dalzell,
    
    925 F.2d 954
     (6th Cir. 1991)).
           37 In Frew V, Defendants contended that the proper legal standard for terminating
    
    consent decrees was that found in the Supreme Court’s school desegregation cases, but we
    expressly declined to rule on that question. See Frazar v. Ladd, 
    457 F.3d 432
    , 440 (5th Cir.
    2006). No party relies on the desegregation cases in this appeal. Owing to school
    desegregation’s unique legal history, the consent decree modification standards articulated
    in Freeman and similar cases may be of limited applicability. We have cited Freeman almost
    exclusively in other school desegregation cases.
           38 See Jeff D., 643 F.3d at 288 (citing United States v. City of Miami, 
    2 F.3d 1497
     (11th
    
    Cir. 1993) (considering the “flexible standard” from Rufo)).
           39 Id. at 281 (emphasis added).
           40 No similar provision exists in the Decree or in CAO 637-8. The closest analogue is
    
    CAO 637-8’s instruction for “counsel . . . [to] confer to determine what, if any, further action
    is required” after Defendants complete the second study of pharmacists’ claims history. If
    the parties cannot agree, then the court may step in. There is nothing, however, instructing
    the court to resolve the dispute with reference to the Decree’s overall purpose.
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         Case: 14-40048       Document: 00512959210          Page: 14      Date Filed: 03/05/2015
    
    
    
                                            No. 14-40048
    pharmacists’ compliance, provided an objective standard for assessing the
    effectiveness of Defendants’ actions, or set termination conditions referencing
    satisfaction of the Decree’s overall purpose, Plaintiffs might legitimately
    complain about the district court’s approach. As it is, the district court did not
    err in interpreting CAO 637-8 and ¶¶ 124–30 to mandate specific actions only,
    the performance of which would automatically satisfy the parties’ intent in
    concluding these agreements.
    D.     Dissolution of Consent Decree ¶¶ 124–30 and CAO 637-8
           Plaintiffs also challenge the district court’s conclusion that Defendants
    have substantially complied with CAO 637-8 and Decree ¶¶ 124–30.                              In
    determining that a party to a contract has fulfilled its contractual obligations,
    Texas law allows substantial compliance. 41 “Substantial compliance excuses
    deviations from a contract’s provisions that do not severely impair the
    contractual provision’s purpose.” 42
           The district court found that Defendants had substantially complied
    with the requirements of bullet points 6 and 10 in CAO 637-8 and ¶¶ 124–30
    of the Decree. It did not make any specific findings with respect to the other
    bullet points in the CAO, as it determined that “[a]t the court’s hearing on
    these motions, Plaintiffs acknowledged that Defendants substantially
    complied with all but two of the paragraphs of CAO 637-8.”
           Plaintiffs dispute that they made this concession, but their brief
    acknowledges that, during the hearing on Defendants’ motion, their counsel
    agreed with the court that “some discrete efforts took place.” A review of the
    hearing transcript confirms the propriety of the district court’s ruling. Counsel
    
    
    
           41 See Turrill v. Life Ins. Co. of N. Am., 
    753 F.2d 1322
    , 1326 (5th Cir. 1985).
           42 Interstate Contracting Corp. v. City of Dall., Tex., 
    407 F.3d 708
    , 727 (5th Cir. 2005);
    see also id. (noting that substantial compliance is not the legal equivalent of strict compliance
    if the contract expressly calls for the latter).
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        Case: 14-40048        Document: 00512959210          Page: 15      Date Filed: 03/05/2015
    
    
    
                                            No. 14-40048
    agreed that Defendants had (1) made a Medicaid PDL service available;
    (2) implemented an electronic system for filling EPSDT prescriptions;
    (3) worked with the Texas Pharmacy Association to educate its members;
    (4) conducted two studies of pharmacies’ claims histories; 43 (5) encouraged
    pharmacies to provide durable medical equipment; (6) provided EPSDT
    materials to pharmacies when concluding new contracts; and (7) encouraged
    managed care organizations to train their personnel in EPSDT. Although
    counsel consistently disputed the effectiveness of Defendants’ efforts, the
    relevant issue for determining substantial compliance is completion, and
    Plaintiffs have conceded that Defendants completed all but two of the bullet
    points in CAO 637-8.
           As for the two disputed bullet points, the district court’s determination
    that Defendants have substantially complied with their obligations is
    consistent with the record. With respect to bullet point 6, which required
    Defendants to educate pharmacies that filled below-expected numbers of 72-
    hour emergency prescriptions in an “intensive, targeted” manner, Plaintiffs
    assert that Defendants’ efforts were not sufficiently “intensive.”                    But the
    district court found Defendants’ actions—mailing certified letters to 822
    pharmacies, visiting or calling the ones that did not receive the letter, and
    contacting corporate chain offices—to be sufficient. During oral argument,
    Plaintiffs’ counsel also took issue with the content of the certified letter,
    contending that it “never told the pharmacists that they must provide the 72-
    hour prescription.” According to counsel, the letter left out “the critical part”
    of the program—that this 72-hour emergency prescription was mandatory, not
    
    
    
           43Plaintiffs’ counsel agreed that “[t]hey have conducted two studies fairly close to
    what the corrective action order required,” noting that the studies were “not compliant with
    [CAO 637-8], but fairly close.” The district court did not abuse its discretion to hold that this
    statement demonstrated a concession of substantial compliance. See id.
                                                  15
         Case: 14-40048   Document: 00512959210     Page: 16   Date Filed: 03/05/2015
    
    
    
                                     No. 14-40048
    discretionary. Thus, “the whole system fell apart” because “the pharmacists
    think they have discretion, or they don’t have to, or it’s only permissive that
    they provide the 72-hour medication.” After reviewing the mailing, however,
    we see no basis for this complaint. The letter told pharmacies that they “should
    dispense the 72-hour emergency supply”; the enclosed “Texas Medicaid
    Pharmacists’ Guide to Dispensing 72-Hour Emergency Prescriptions” clearly
    stated that “[f]ederal and Texas law requires that a 72-hour emergency
    supply of a prescribed drug be provided.” The district court did not err in
    concluding that Defendants have fulfilled their obligations under bullet point
    6.
           With respect to bullet point 10, which required Defendants to train
    personnel in their ombudsman’s office, Plaintiffs’ complaints, essentially, are
    that any evidence of training is insufficiently detailed and conclusional. The
    district court relied on three declarations from state employees who testified
    that multiple training sessions occurred for ombudsman’s office staff.
    Although Plaintiffs would prefer the district court not to credit these
    statements, absent any indicia of unreliability other than Plaintiffs’
    unsubstantiated accusations of bias, the court’s decision to do so is not clearly
    erroneous.
           Finally, Plaintiffs contend that the district court erred in dissolving
    Decree ¶¶ 124–30 because it did not find that Defendants’ actions were
    effective. As already discussed, the word “effectively” in ¶ 129 applies to the
    Defendants’ communication obligation, not to the participating pharmacies’
    compliance. The district court rejected Plaintiffs’ contention that the phrase
    “Defendants will implement an initiative to effectively inform pharmacists
    about EPSDT” meant ensuring that all Texas EPSDT recipients actually
    received all of their pharmacy benefits. The court noted that Plaintiffs had
    agreed that Defendants had completed the discrete, information-conveying
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       Case: 14-40048    Document: 00512959210      Page: 17   Date Filed: 03/05/2015
    
    
    
                                     No. 14-40048
    actions required by this section of the Decree. This determination was not
    clearly erroneous.
    
    
                                  III.   Conclusion
          Defendants have fulfilled their obligations to provide training on and
    make improvements to EPSDT’s prescription drug program. The district court
    did not abuse its discretion in dissolving CAO 637-8 and ¶¶ 124–30 of the
    Decree pursuant to Defendant’s motion for relief under the first clause of Rule
    60(b)(5). Accordingly, the judgment of the district court is AFFIRMED.
    
    
    
    
                                          17
    

Document Info

DocketNumber: 14-40048

Filed Date: 3/6/2015

Precedential Status: Precedential

Modified Date: 3/6/2015

Authorities (26)

Clardy Mfg Co v. Marine Midland Bus , 88 F.3d 347 ( 1996 )

Frazar v. Ladd , 376 F.3d 444 ( 2004 )

Inter Contr Corp v. City of Dallas Texas , 407 F.3d 708 ( 2005 )

State of Texas v. American Tobacco Co , 463 F.3d 399 ( 2006 )

BUC Intern. Corp. v. International Yacht Council , 517 F.3d 1271 ( 2008 )

Rufo v. Inmates of Suffolk County Jail , 502 U.S. 367 ( 1992 )

Freeman v. Pitts , 503 U.S. 467 ( 1992 )

Agostini v. Felton , 521 U.S. 203 ( 1997 )

Frew v. Hawkins , 540 U.S. 431 ( 2004 )

Horne v. Flores , 557 U.S. 433 ( 2009 )

Jeff D. v. Otter , 643 F.3d 278 ( 2011 )

Laguna Royalty Company v. Clarence L. Marsh Et Ux. , 350 F.2d 817 ( 1965 )

charles-sunderland-v-city-of-philadelphia-and-philadelphia-gas-works-and , 575 F.2d 1089 ( 1978 )

Johnson Waste Materials v. F. Ray Marshall, Secretary of ... , 611 F.2d 593 ( 1980 )

25-fair-emplpraccas-267-25-empl-prac-dec-p-31593-angus-brown-v , 644 F.2d 551 ( 1981 )

Ruby Conway v. Chemical Leaman Tank Lines, Inc. , 644 F.2d 1059 ( 1981 )

Albert Mills Turrill v. Life Insurance Co. Of North America , 753 F.2d 1322 ( 1985 )

Carlos Torres-Troche v. Municipality of Yauco , 873 F.2d 499 ( 1989 )

tilford-youngblood-ralph-nichols-individually-and-on-behalf-of-the-class , 925 F.2d 954 ( 1991 )

Fremont G. Redfield v. Insurance Company of North America , 940 F.2d 542 ( 1991 )

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