in Re Xerox Corporation and Xerox State Healthcare, LLC F/K/A ACS State Healthcare, LLC ( 2015 )

ACCEPTED
03-15-00401-CV
6493720
THIRD COURT OF APPEALS
AUSTIN, TEXAS
8/13/2015 6:32:28 PM
JEFFREY D. KYLE
CLERK
No. 03-15-00401-CV
IN THE COURT OF APPEALS FILED IN
3rd COURT OF APPEALS
FOR THE THIRD DISTRICT AUSTIN, TEXAS
AUSTIN, TEXAS 8/13/2015 6:32:28 PM
JEFFREY D. KYLE
Clerk
IN RE XEROX CORPORATION AND XEROX STATE HEALTHCARE,
LLC F/K/A ACS STATE HEALTHCARE, LLC,
Relators
On Petition for Writ of Mandamus
Original Proceeding from the 53rd Judicial District Court
Travis County, Texas, Cause No. D-1-GV-14-000581
The Honorable Stephen Yelenosky, Presiding
BRIEF IN RESPONSE TO PETITION FOR WRIT OF MANDAMUS
KEN PAXTON RAYMOND C. WINTER
Attorney General of Texas Assistant Attorney General
Chief, Civil Medicaid Fraud Division
CHARLES E. ROY Raymond.Winter@texasattorneygeneral.gov
First Assistant Attorney General State Bar No. 21791950
REYNOLDS B. BRISSENDEN
JAMES E. DAVIS Assistant Attorney General
Deputy Attorney General for Civil Managing Attorney, Civil Medicaid Fraud
Litigation Division
Reynolds.Brissenden@texasattorneygeneral.gov
State Bar No. 24056969
P. O. Box 12548
Austin, TX 78711-2548
Attorneys for Real Party in Interest
The State of Texas
Oral Argument Requested
IDENTITY OF PARTIES AND COUNSEL
The following is a complete list of all parties, as well as the names and addresses
of all counsel.
Relators Counsel
(Defendants in trial court)
Xerox Corporation; Eric J.R. Nichols
Xerox State Healthcare, LLC Gretchen Sween
f/k/a ACS State Healthcare, LLC Christopher R. Cowan
BECK REDDEN
515 Congress Avenue, Suite 1900
Austin, TX 78701
Constance H. Pfeiffer
BECK REDDEN
1221 McKinney Street, Suite 4500
Houston, TX 77010
Robert C. Walters
GIBSON, DUNN & CRUTCHER
2100 McKinney Avenue, Suite 1100
Dallas, TX 75201
C. Andrew Weber
KELLY HART & HALLMAN
301 Congress, Ste. 2000
Austin, TX 78701
Real Party in Interest/Respondent Counsel
(Plaintiff in trial court)
The State of Texas Office of the Attorney General
Raymond C. Winter
Reynolds B. Brissenden
Civil Medicaid Fraud Division
PO Box 12548
Austin, TX 78711-2548
ii
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL ........................................................... ii
TABLE OF CONTENTS ......................................................................................... iii
INDEX OF AUTHORITIES......................................................................................v
STATEMENT OF THE CASE CORRECTED ....................................................... ix
ISSUES CORRECTED .............................................................................................x
BRIEF IN RESPONSE TO PETITION FOR WRIT OF MANDAMUS .................1
STATEMENT OF FACTS CORRECTED ...............................................................4
1. Texas Medicaid provides a limited benefit for orthodontia. ............................4
2. Xerox, HHSC’s Prior Authorization vendor, had responsibility to review, and
approve or deny, each request for orthodontia services. ........................................6
3. The State brings the underlying law enforcement action against Xerox,
seeking civil remedies for the unlawful acts Xerox, and only Xerox, committed. 8
4. The trial court denied Xerox’s attempt to join third parties to the State’s law
enforcement action. ..............................................................................................10
SUMMARY OF THE ARGUMENT ......................................................................12
STANDARD OF REVIEW .....................................................................................12
ARGUMENT ...........................................................................................................14
I. Because CPRC Chapter 33 does not apply in a law enforcement action
brought by the State under the Texas Medicaid Fraud Prevention Act, the trial
court did not abuse its discretion in granting the State’s motion to strike Xerox’s
third party claims, or in denying Xerox’s motion for leave to designate
responsible third parties. .......................................................................................14
A. The TMFPA is not a “cause of action based on tort” and is therefore
outside the scope of Chapter 33. .......................................................................14
1. Essential tort law concepts are missing from the TMFPA. .....................15
2. The cases cited by Xerox are distinguishable, because the statutory
causes of action were either “based on tort,” or the issue was never reached by
the court, and are inapplicable here because none involved statutory law
enforcement actions. .........................................................................................20
3. The TMFPA was modeled after federal criminal law, not on ....................21
traditional tort law. ............................................................................................21
iii
4. The TMFPA lacks a single, indivisible injury. ............................................22
5. When a statutory conflict would result, courts have held that Chapter 33
cannot be applied to a statute. ...........................................................................24
B. The False Claims Act cases cited by Xerox do not assist the Court when
interpreting the TMFPA. ......................................................................................27
C. The civil remedies the State seeks to impose against Xerox for Xerox’s
violations of the TMFPA are based solely on Xerox’s conduct and are not the
“same alleged injury” for which the State seeks redress from dental providers. .29
D. Even if the TMFPA were a “statutory tort” to which Chapter 33 would
otherwise apply, the Legislature did not intend for Chapter 33 to apply to the
State suing in its sovereign capacity.....................................................................33
E. Applying CPRC Chapter 33 to the TMFPA would violate tenets of
statutory construction and lead to absurd and conflicting results. .......................37
II. Xerox has an adequate remedy at law because all of its complaints can be
addressed on appeal. ................................................................................................42
A. Only Xerox’s conduct as the State’s vendor is at issue in the instant matter,
and Xerox has an adequate remedy on appeal. ....................................................43
1. The reasoning in Andersen is inapplicable in a statutory law enforcement
case.. ..................................................................................................................43
2. Xerox fails to cite any case law to show it lacks an adequate remedy on
appeal. ...............................................................................................................46
B. Factors weigh in favor of affirming trial court’s rulings. ...........................49
PRAYER ..................................................................................................................50
CERTIFICATE OF COMPLIANCE .......................................................................51
CERTIFICATE OF SERVICE ................................................................................51
iv
INDEX OF AUTHORITIES
Cases
Acker v. Tex. Water Comm’n, 790 S.W.2d 299 (Tex. 1990) ...................................38
Argonaut Ins. Co. v. Baker, 87 S.W.3d 526 (Tex. 2002) .......................................38
Atacosa Cnty. v. Atacosa Cnty. Appraisal Dist., 990 S.W.2d 255 (Tex. 1999) ......37
Brookhouser v. State of California, 10 Cal. App. 4th 1665, 13 Cal. Rptr. 2d 658,
665 (1992).............................................................................................................19
Challenger Gaming Solutions, Inc. v. Earp, 402 S.W.3d 290 (Tex. App.—Dallas
2013, no pet.) ..................................................................................... 24, 25, 29, 31
City of Hutchins v. Prasifka, 450 S.W.2d 829 (Tex. 1970) .....................................41
Compton v. Sesso, 2006 Tex. App. LEXIS 6322, at 18-19 (Tex. App.—Austin July
21, 2006, no pet.) ..................................................................................................45
Cont’l Cas. Ins. Co. v. Functional Restoration Assocs., 19 S.W.3d 393 (Tex. 2000)
..............................................................................................................................38
Cunningham v. Blue Cross Blue Shield of Tex., No. 2-06-363-CV, 2008 WL
467399, at 5 (Tex. App.—Fort Worth Feb. 21, 2008, pet. denied) ......................19
Dollar Sav. Bank, 86 U.S. (19 Wall.) at 239 ...........................................................34
Dugger v. Arredondo, 408 S.W.3d 825 (Tex. 2013) ...............................................21
Equitable Recovery v. Heath Ins. Brokers of Tex., 235 S.W.3d 376 (Tex. App.–
Dallas 2007, pet. dism’d)......................................................................................29
F.F.P. Operating Partners v. Duenez, 237 S.W.3d 680 (Tex. 2007) ......................21
Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864 (Tex. 1999) ....36
Goose Creek Consol. Indep. School Dist. v. Jarrar's Plumbing, Inc., 74 S.W.3d
486 (Tex. App.—Texarkana 2002, pet. denied) ...................................................30
Grogan v. Garner, 498 U.S. 279 (1991) ..................................................................22
Henning v. One West Bank, 405 S.W.3d 950 (Tex. App.–Dallas 2013, no pet.) ....19
In re Altec Indus., No. 10-12-00207-CV, 2012 WL 2469542, at 2 (Tex. App.—
Waco June 22, 2012, orig. proceeding) (mem. op.) .............................................46
In re Arthur Andersen. 121 S.W.3d 471 (Tex. App.—Houston [14th Dist.] 2003,
orig. proceeding) ...................................................................................... 43, 45, 48
In re Brokers Logistics, 320 S.W.3d 402, 404 (Tex. App.—El Paso 2010, orig.
proceeding) ...........................................................................................................46
In re Columbia Med. Ctr., 290 S.W.3d 204 ( Tex. 2009).......................................13
In re Greyhound Lines, Inc., No. 05-13-01646-CV, 2014 WL 1022329, at 1-3
(Tex. App.—Dallas Feb. 21, 2014, orig. proceeding) (mem. op.) .......................46
In re Inv. Capital Corp. & Serv. Corp. Int’l, No. 14-09-00105-CV 2009 WL
310899, at 2 (Tex. App.—Houston [14th Dist.] Feb. 4, 2009, orig. proceeding) .48
v
In re License Plates of Tex., No. 03-13-00671-CV, 2013 WL 6466919, at 1 (Tex.
App.—Austin Nov. 27, 2013, no pet.) .......................................................... 42, 47
In re Masonite Corp., 997 S.W.2d 194 (Tex. 1999) ................................................49
In re Oncor Elec. Delivery Co., 355 S.W.3d 304 (Tex. App.–Dallas 2011, orig.
proceeding) ...........................................................................................................46
In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004).................. 13, 47, 49
In re State Line Fireworks, 387 S.W.3d 27, 31-33 (Tex. App.—Texarkana 2012,
orig. proceeding) ...................................................................................................47
In re State, 355 S.W.3d 611, 612 (Tex. 2011) .........................................................49
In re Taymax Fitness, No. 04-14-00119-CV, 2014 WL 1831100, (Tex. App.—San
Antonio May 7, 2014, orig. proceeding) ..............................................................47
In re Team Rocket, 256 S.W.3d 257 (Tex. 2008) ....................................................49
In re Unitec Elevator Servs. Co., 178 S.W.3d 53, 66 (Tex. App.—Houston [1st
Dist.] 2005, orig. proceeding)...............................................................................47
In re United Servs. Auto. Ass’n, 307 S.W.3d 299 (Tex. 2010) ................................50
In re Wilkerson, No. 14-08-00376-CV, 2008 WL 2777418, at 2 (Tex. App.—
Houston [14th Dist.] June 6, 2008, orig. proceeding) ..........................................48
Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323 (Tex.
2011) .....................................................................................................................20
JCW Elecs., Inc. v. Garza, 257 S.W.3d 701 (Tex. 2008) ........................... 21, 24, 25
JLG Trucking v. Garza, 2015 Tex. LEXIS 346, at 16 .............................................46
Jones v. Ray, 886 S.W.2d 817 (Tex. App.—Houston [1st Dist.] 1994, orig.
proceeding) ...........................................................................................................46
Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83 (Tex. 2006) .................................25
Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482 (Tex.1998) .38
Malouf v. State ex. rel. Ellis, 461 S.W.3d 641 (Tex. App.—Austin 2015, pet.
requested)....................................................................................................... 34, 38
Moore v. Collins, 897 S.W.2d 496 (Tex. App.—Houston [1st Dist.] 1995, no writ)
..............................................................................................................................15
Parex v. ERG Resources, 427 S.W.3d 407 (Tex. App.—Houston [14th] 2014, pet.
filed)......................................................................................................................45
Pemex Exploracion y Produccion v. BASF Corp., 2011 WL 9523407, at 13 (S.D.
Tex. Oct. 20, 2011) ...............................................................................................21
Pub. Util. Comm’n of Tex. v. Cofer, 754 S.W.2d 121 (Tex. 1988) .................. 20, 32
R.R. Comm'n v. United States, 290 S.W.2d 699 (Tex. Civ. App.—Austin 1956),
aff'd, 159 Tex. 197, 317 S.W.2d 927 (Tex. 1958) ......................................... 33, 34
Republicbank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605 (Tex. 1985) .............35
Schlumberger Tech. v. Swanson, 959 S.W.2d 171 (Tex. 1997) ..............................20
Simmons v. Arnim, 220 S.W. 66 (Tex. 1920) ..........................................................35
State v. Crawford, 771 S.W.2d 624 (Tex. App.—Dallas 1989, writ. denied) .........42
vi
State v. Durham, 860 S.W.2d 63 (Tex. 1993) .................................................. 32, 41
Stewart Title Guar. Co., v. Sterling, 822 S.W.2d 1 (Tex. 1991) .............................37
Sw. Bank v. Info. Support Concepts, Inc., 149 S.W.3d 104 (Tex. 2004).................24
Tex. Hum. Res. Code § 36.052(a)(1) .......................................................................23
Thomas v. State, 226 S.W.3d 697 (Tex. App.–Corpus Christi 2007, pet. dism’d) .32
U.S. v. Bollinger Shipyards, Inc., 775 F.3d 255 (5th Cir. 2014) .............................42
United States ex. rel. Hagwood v. Sonoma Cnty. Water Agency, 929 F.2d 1416 (9th
Cir. 1991) ..............................................................................................................16
United States ex. rel. Schwedt v. Planning Research Corp., 59 F.3d 196 (D.C. Cir.
1995) .....................................................................................................................16
United States v. Sci. Applications Int’l Corp., 626 F.3d 1257 (D.C. Cir. 2010) .....28
United States v. Southland Mgmt. Corp., 326 F.3d 669 (5th Cir. 2003) .................42
United States v. United Mine Workers of Am., 330 U.S. 258 (1947) ......................33
Univ. of Tex. Sw. Med. Ctr. at Dallas v. Loutzenhiser, 140 S.W.3d 351 (Tex. 2004)
..............................................................................................................................39
Varljen v. Cleveland Gear, 250 F.3d 426 (6th Cir. 2001) .......................................16
Villareal v. Wells Fargo Brokerage Servs., 315 S.W.3d 109 (Tex. App.—Houston
[1st Dist. 2010], no pet.) .......................................................................................21
Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000) .33
Walker v. Packer, 827 S.W.2d 833 (Tex. 1992) ................................... 12, 13, 42, 49
Waller v. Sanchez, 618 S.W.2d 407 (Tex. App.—Corpus Christi 1981, no writ) ...41
Wheaton Van Lines, Inc. v. Mason, 925 S.W.2d 722 (Tex. App.—Fort Worth 1996,
writ denied) ...........................................................................................................19
Statutes
25 Tex. Admin. Code § 33.71 ....................................................................................5
31 U.S.C. § 3729(a) .................................................................................................28
31 U.S.C. § 3729(a)(1) .............................................................................................16
31 U.S.C. § 3729(a)(1)(A) .......................................................................................27
31 U.S.C. § 3729(a)(1)(B) .......................................................................................27
31 U.S.C. § 3729(a)(1)(E)........................................................................................27
42 U.S.C. § 1320a-7b, ..............................................................................................22
42 U.S.C. § 1396 ........................................................................................................4
CPRC § 33.001 ................................................................................................. 29, 40
CPRC § 33.002(a)(1) ...............................................................................................14
CPRC § 33.002(a)(2) ...............................................................................................14
CPRC § 33.003(a) ....................................................................................................39
CPRC § 33.004 ........................................................................................................39
Tex. Bus. & Com. Code § 27.01 ..............................................................................19
Tex. Gov’t Code § 311.021(2) .................................................................................38
vii
Tex. Gov’t Code § 311.021(5) .................................................................................40
Tex. Gov’t Code § 531.0055(b)(1) ............................................................................4
Tex. Gov’t Code ch. 311 ..........................................................................................39
Tex. Hum Res. Code § 36.002 ...................................................................................8
Tex. Hum Res. Code § 36.002(2) ............................................................................18
Tex. Hum Res. Code § 36.002(9) ............................................................................27
Tex. Hum Res. Code § 36.002(10)(c) ......................................................................27
Tex. Hum Res. Code § 36.012(a)(1) ........................................................................28
Tex. Hum. Res. Code § 36.052(a) ...........................................................................17
Tex. Hum. Res. Code § 36.052(a)(3) .......................................................................19
Tex. Hum. Res. Code § 36.115 ................................................................................29
Tex. Hum. Res. Code § 36.115(a)(2) .......................................................................29
Tex. Hum. Res. Code §§ 36.002(1) .........................................................................18
Tex. Hum. Res. Code §§ 36.052(a)(1)-(3) ...............................................................10
Tex. Hum. Res. Code Ann. § 11.002(b) ..................................................................36
Tex. Hum. Res. Code Ann. § 36.052 .......................................................................16
Tex. Hum. Res. Code Ann. § 36.131 (1995) ...........................................................22
Other Sources
2 William Blackstone, Commentaries .....................................................................34
3 N. Singer, Sutherland on Statutory Construction § 62:1, 377-78 (7th ed. 2008).34
82 C.S.J. Statutes § 389, 483-84 (2009) ..................................................................34
86 C.J.S. Torts § 2 ....................................................................................................15
Gregory J. Lensing, Proportionate Responsibility and Contribution Before and
After the Tort Reform of 2003, 35 Tex. Tech L. Rev. 1125, 1131 .......................15
Gus Hodges, Contribution and Indemnity among Tortfeasors, 26 Tex. L. Rev. 150
..............................................................................................................................30
Gus Hodges, Contribution and Indemnity among Tortfeasors, 26 Tex. L. Rev. 150,
..............................................................................................................................30
Justin Roberts & Randell Roberts, Can Immune Parties Really be Responsible?:
An Analysis of the Current Interpretation of the Responsible Third Party Statute
and Its Vulnerability to Constitutional Challenge, 43 St. Mary’s L.J. 559 (2012)
..............................................................................................................................34
viii
STATEMENT OF THE CASE CORRECTED
Nature of the Case: This is a mandamus action in which the Xerox
parties (“Xerox”) seek review of two orders issued
by the trial court. The underlying suit is a law
enforcement action brought on behalf of the State
of Texas (“the State”) by the Attorney General of
Texas pursuant to the Texas Medicaid Fraud
Prevention Act (“TMFPA”), a remedial public
welfare statute. The State seeks to recover civil
remedies against Xerox for the unlawful acts
Xerox, and only Xerox, committed against the
Texas Medicaid program. Xerox has attempted to
join dental providers as responsible third parties to
the State’s suit.
Trial Court: 345th Judicial District Court of Travis County, The
Hon. Stephen Yelenosky, Presiding.
Trial Court Disposition: The trial court has ruled repeatedly in this, and in
similar litigation, that Chapter 33 of the Civil
Practice & Remedies Code does not apply to the
State’s actions under the TMFPA.
The trial court granted the State’s motion to strike
Xerox’s third party claims under Rule 38 and
denied Xerox’s motion for leave to designate
responsible third parties.1 The trial court then
denied Xerox’s request to appeal the two rulings.
Xerox then filed this original proceeding.
1
In addition to striking Xerox’s third party claims against multiple dental providers and
denying Xerox’s motion for leave to designate responsible third parties, the trial court also
denied two attempts by Xerox to consolidate the underlying lawsuit in the instant proceeding
with other suits. Xerox, however, has failed to seek appellate relief from the trial court’s two
orders denying Xerox’s two motions to consolidate.
ix
ISSUES CORRECTED2
1. Because Chapter 33 of the Civil Practice & Remedies Code does not apply
in an action brought by the State under the Texas Medicaid Fraud
Prevention Act, the trial court did not abuse its discretion in granting the
State’s motion to strike Xerox’s third party claims, or in denying Xerox’s
motion for leave to designate responsible third parties.
2. Xerox has an adequate remedy at law because all of its complaints can be
addressed on appeal. Therefore, mandamus will not lie.
STATEMENT REGARDING ORAL ARGUMENT
The State of Texas requests oral argument.
2
See Tex. R. App. P. 38.2(a)(1)(B).
x
No. 03-15-00401-CV
IN THE COURT OF APPEALS
FOR THE THIRD DISTRICT
AUSTIN, TEXAS
IN RE XEROX CORPORATION AND XEROX STATE HEALTHCARE,
LLC F/K/A ACS STATE HEALTHCARE, LLC,
Relators
On Petition for Writ of Mandamus
Original Proceeding from the 53rd Judicial District Court
Travis County, Texas, Cause No. D-1-GV-14-000581
The Honorable Stephen Yelenosky, Presiding
BRIEF IN RESPONSE TO PETITION FOR WRIT OF MANDAMUS
TO THE HONORABLE THIRD COURT OF APPEALS:
The State of Texas (“State”), plaintiff in the trial court proceeding below and
the real party in interest in this action, respectfully submits this Response to the
Petition for Writ of Mandamus (“Petition”) filed by Xerox Corporation and Xerox
State Healthcare, LLC f/k/a ACS State Healthcare, LLC (collectively “Xerox”).
Xerox cannot meet either requirement for mandamus relief to be granted. In the
first place, Chapter 33 of the Civil Practice & Remedies Code (“CPRC”) does not
apply in a law enforcement action brought by the State under the Texas Medicaid
Fraud Prevention Act (“TMFPA”). Therefore, the trial court did not abuse its
discretion in granting the State’s motion to strike Xerox’s third party claims or in
denying Xerox’s motion for leave to designate responsible third parties into the
State’s law enforcement action against Xerox.
The underlying suit is a statutory law enforcement action brought by the
Attorney General of Texas against Xerox under the TMFPA. See generally
Plaintiff’s Original Petition (“State’s Petition”), at MR.1-23. The State’s claims
against Xerox are not “based on tort.” Instead, the TMFPA is a remedial public
welfare statute, designed by the Legislature to address the specific scourge of
unlawful acts against the Texas Medicaid program. See generally TMFPA, Tex.
Hum. Res. Code ch. 36. Although the name of the statute includes the word
“Fraud,” the causes of action created in the TMFPA are not a codification of the
doctrine of common law fraud or any other tort-based cause of action.
The State seeks to hold Xerox – and only Xerox – liable for Xerox’s false
statements and material misrepresentations – both affirmatively and by omission –
to the Texas Medicaid program. State’s Pet., at MR.1-23. The State does not seek
to hold Xerox responsible for the conduct of any other parties. Id. Although the
State has brought law enforcement actions against a few dental providers for their
conduct, the State is not seeking, as erroneously claimed by Xerox, “the same
damages” against dental providers that the State seeks against Xerox. See Xerox’s
Pet. 1, 8.
2
The State alleges that during the time at issue, Xerox made
misrepresentations to State officials, affirmatively and by omission, regarding its
actions administering the Texas Medicaid orthodontia Prior Authorization (“PA”)
function. Specifically, the State contends that Xerox (1) misrepresented that Xerox
staff reviewed diagnostic materials (e.g., x-rays, color photographs, cephalometric
tracings) submitted by providers along with PA requests to make clinical
determinations about whether the PA requests met Texas Medicaid standards for
medical necessity; (2) failed to disclose that the majority of its personnel working
on orthodontic PA requests had no dental education and only minimal training in
their job functions; and (3) misrepresented to the State that orthodontia PA
requests were being approved or denied by Xerox in accordance with Texas
Medicaid policy.
Contrary to Xerox’s erroneous assertion, the State does not seek “damages”
from Xerox under the TMFPA. See Xerox Pet. at, e.g., 1, 2, 5, 7, 8. Rather, the
State seeks to recover civil remedies from Xerox, including the amounts paid by
Texas Medicaid “directly or indirectly” as a result of Xerox’s unlawful acts, civil
penalties, costs, and attorney’s fees. Tex. Hum. Res. Code § 36.052.
Finally, Xerox has an adequate remedy at law because all of its complaints
can be addressed by appeal. Therefore, Xerox’s Petition should be denied.
3
STATEMENT OF FACTS CORRECTED
Xerox’s statement of facts contains argument, omits material facts, and
misstates facts. The State thus submits this corrected statement of facts. Tex. R.
App. P. 52.4(b).
1. Texas Medicaid provides a limited benefit for orthodontia.
The United States Congress enacted the Medicaid program in 1965 as a
cooperative undertaking between the federal and state governments to help provide
medical care to lower income individuals. Medicaid is funded jointly by the United
States and each of the fifty states, as mandated by federal law. 42 U.S.C. § 1396. In
Texas, the single state agency responsible for the administration of Medicaid is the
Health and Human Services Commission (“HHSC”). Tex. Gov’t Code §
531.0055(b)(1) (“[HHSC] shall “supervise the administration and operation of the
Medicaid program.”). 3
Texas Medicaid provides coverage for dental services, including, on a very
limited basis, orthodontic services. Only Medicaid-eligible children between the
ages of 12 and 21 who are diagnosed with severe handicapping malocclusion or
other related conditions described in the Texas Medicaid Provider Procedures
3
Currently more than 4.5 million Texans are enrolled in Medicaid. Texas, Monthly
Medicaid and CHIP Enrollment Data, Medicaid.gov, http://www.medicaid.gov/Medicaid-CHIP-
Program-Information/By-State/texas.html. In 2013, Medicaid comprised about 26.2 percent of
the Texas state budget, amounting to approximately $25.6 billion dollars total for state and
federal expenditures. “Pink Book,” Tex. Medicaid & CHIP in Perspective (10th ed.) 1-1,
http://www.hhsc.state.tx.us/medicaid/about/PB/PinkBook.pdf.
4
Manual (“TMPPM”) qualify to receive this limited orthodontic benefit. See 25
Tex. Admin. Code § 33.71.
Since 2003, the Texas Medicaid orthodontia benefit policy has covered
orthodontic services under three limited scenarios: (i) for children between the ages
of 12 and 21 who have a severe handicapping malocclusion, which is defined by a
Handicapping Labio-lingual Deviation (“HLD”) score of 26 points or greater; (ii)
children up to the age of 20 with cleft palate; or (iii) other medically necessary
circumstances such as a head injury involving severe traumatic deviation. TMPPM
(2009), Vol. 2, § 19.19, copy attached at Appendix A. The Texas Medicaid
program does not pay for cosmetic orthodontics. Id.
A treating provider (dentist or orthodontist) had to submit to Texas Medicaid
a prior authorization (“PA”) request and receive approval before providing
orthodontia services to a Medicaid patient. See 25 Tex. Admin. Code § 33.71.
Specifically, HHSC required providers to include with each PA request the
following documentation and diagnostic records: an orthodontic treatment plan;
cephalometric tracings; a completed HLD score sheet; facial photographs; and a
full series of radiographs or a panoramic radiograph. TMPPM at § 19.19.2, copy at
App. A.
5
2. Xerox, HHSC’s Prior Authorization vendor, had responsibility to
review, and approve or deny, each request for orthodontia services.
The Prior Authorization (“PA”) review process required HHSC’s vendor to
determine whether each request for orthodontia service met the criteria established
by Texas Medicaid. Specifically, the PA review was “a mechanism to determine
the medical necessity of selected non-emergency, Medicaid-covered, and medical
services prior to service delivery” and was meant to “serve as a utilization
management measure allowing payment for only those services that are medically
necessary, appropriate, and cost-effective, and reducing the misuse of specified
services.” State’s Pet. 5, at MR.5. A vendor was required to:
• Receive, correctly disposition (i.e., approve, deny, modify, or
determine incomplete) prior authorization requests for services.
• Ensure that non-covered services are not prior authorized.
• Conduct quality assurance reviews to ensure appropriateness of
Medicaid .PA analyst decisions.
• Ensure PA staff use well-defined processes and procedures for
analysis and research for PA approvals.
• Provide sufficient and adequate professional medical staff for staffing
and managing the PA function, including medically knowledgeable
PA analysts for processing requests and availability of licensed
medical professionals to provide consultative services regarding all
Medicaid ... covered service types.
• Implement a quality assurance process and establish procedures to
periodically sample and review dispositioned [sic] PA requests to
determine if PA policy and procedures are being followed.
State’s Pet. 5-6, at MR.5-6.
6
Xerox submitted a proposal to HHSC to become the Texas Medicaid vendor.
Xerox represented to Texas Medicaid that its PA review process would do the
following: (1) ensure the implementation of HHSC-approved dental criteria and
policy, prevent medically unnecessary services, and identify over-utilization of
services; (2) employ qualified PA staff who would review each request and
determine both whether the orthodontic PA request complied with Medicaid policy
and if the services were medically necessary; and (3) qualified clinical personnel
would use their medical expertise and HHSC-approved policy to evaluate medical
necessity and cost-effectiveness of requested services. Xerox also promised that it
would provide ongoing quality reviews of PA activities, including reviews of
accuracy of the PA determinations and adherence to documented procedures.
State’s Pet. 6, at MR.6.
Based on Xerox’s representations, Texas Medicaid employed Xerox as the
Texas Medicaid PA request review vendor, starting in January 2004. Medical
necessity for the requested treatment could be verified only by examination and
verification of the clinical documentation by a licensed dental professional. HHSC
expected and required the PA review process implemented by Xerox to include a
substantive review of the diagnostic materials providers submitted to verify the
patient actually had a severe handicapping maloclussion and the conditions stated
7
by the providers on the HLD score sheet and to verify that the providers’ proposed
treatment plan met all program requirements.
Instead, when Xerox received PA requests from providers for orthodontia
services, Xerox neither unboxed the diagnostic materials nor had qualified
personnel verifying whether the condition of the children’s mouths actually
qualified as a severe handicapping malocclusion. Xerox merely had clerical staff
review the HLD score sheet to check and see if the total score on the score sheet
was 26 or greater. From 2004 to 2012, Xerox approved over 500,000 PA requests
for orthodontia services. During this same time period, Xerox repeatedly
represented to Texas Medicaid and gave reassurances that qualified personnel were
indeed conducting substantive reviews of the PA requests.
3. The State brings the underlying law enforcement action against
Xerox, seeking civil remedies for the unlawful acts Xerox, and only
Xerox, committed.
The State brought the underlying statutory law enforcement action against
Xerox under the TMFPA for certain unlawful acts, including misrepresentations
Xerox made to HHSC. State’s Pet., at MR.1- 23. The State seeks civil remedies
under the TMFPA for these unlawful acts. State’s Pet. 3; Tex. Hum Res. Code §
36.002.
8
The State alleges that Xerox misrepresented facts and concealed material
facts, affirmatively and by omission, regarding Xerox’s discharge of its obligations
to HHSC. Specifically, the State alleges:
• Xerox represented to Texas Medicaid officials that its PA
review system ensured proper pre-determinations of medical
necessity and enforcement of Medicaid policy. Contrary to
those representations, Xerox knowingly failed to adequately
review the orthodontic PA requests and documentation
submitted by providers to obtain prior authorization for
orthodontic treatment.
• Unqualified Xerox employees routinely approved orthodontic
PA requests, without proper review. Vast numbers of these
orthodontic PA requests were for children who did not meet the
strict Medicaid criteria to qualify for orthodontic benefits from
Texas Medicaid.
• Xerox’s dental director failed to properly review PA requests,
and Xerox misrepresented to HHSC the director’s failure to
follow mandated procedures and policy.
State’s Pet. 3-4. The State further alleges that Xerox’s conduct violated the
TMFPA.4 Xerox's unlawful acts resulted in a breach of safeguards intended to
4
A person, or entity, commits an unlawful act under the TMFPA if a person:
• Knowingly makes or causes to be made a false statement or misrepresentation of
a material fact to permit a person to receive a benefit or payment under the
Medicaid program that is not authorized or that is greater than the benefit or
payment that is authorized.
• Knowingly conceals or fails to disclose information that permits a person to
receive a benefit or payment under the Medicaid program that is not authorized or
that is greater than the benefit or payment that is authorized.
• Knowingly makes, causes to be made, induces, or seeks to induce the making of a
false statement or misrepresentation of material fact concerning information
required to be provided by a federal or state law, rule, regulation, or provider
agreement pertaining to the Medicaid program.
9
protect taxpayer dollars, maintain the integrity of Medicaid policies, and ensure the
appropriate delivery of services to Medicaid clients. Moreover, because of its
misrepresentations, Xerox received tens of millions of dollars for services Xerox
did not actually perform. State’s Pet. 3.
The TMFPA provides statutory remedies to redress the conduct of a
defendant. Tex. Hum. Res. Code § 36.052. In the underlying suit, the State seeks to
recover from Xerox, and only Xerox: (l) the amount of any payments or the value
of any monetary or in-kind benefits provided under the Medicaid program, directly
or indirectly, as a result of Xerox’s unlawful acts; (2) pre-judgment interest on the
amount of the payments or the value of such payments; (3) two times the amount
of the payments or the value of such payments; (4) civil penalties in an amount not
less than $5,500 or more than $11,000 for each unlawful act committed by Xerox;
and (5) costs, attorney’s fees, and expenses. See State’s Pet. 4; Tex. Hum. Res.
Code §§ 36.052(a)(1)-(3).
4. The trial court denied Xerox’s attempt to join third parties to the
State’s law enforcement action.
Xerox responded to the State’s allegations, by, among other things, casting
blame on dental providers who had submitted the PA requests that Xerox
approved. Xerox’s First Am. Original Answer and Original Third-Party Pet. 2-9, at
MR.67-74. In response, the State filed its Motion to Strike. MR.77-97. The trial
Tex. Hum. Res. Code Ann. §§ 36.002(l), (2), (4)(B) (eff. Sept. 1, 2005).
10
court granted the State’s motion to strike Xerox’s third-party petition. See Order,
dated Mar. 31, 2015, at MR.629-30; see also trial court letter, dated Feb. 10, 2015,
at MR.232-34 (explaining reasoning for subsequent decision).5
Xerox then sought leave to designate responsible third parties, under Chapter
33. See Xerox’s Mot. for Leave to Designate Responsible Third Parties, at
MR.235-606. The State filed an Objection to Xerox’s motion. MR.607-28. The
trial court denied Xerox’s motion. See Order Denying the Xerox Parties’ Mot. for
Leave to Designate Responsible Third Parties, dated Apr. 15, 2015, at MR.631.
See also court’s letter, dated Sept. 26, 2014 (“The State is . . . entitled to pursue a
Medicaid Fraud claim against a defendant to the exclusion of all other parties . .
.”). MR.210-11. After the trial court denied Xerox’s request to take an
interlocutory appeal, Xerox initiated this mandamus proceeding. 6
5
The court, in explaining its decision to strike Xerox’s third-party petition, wrote:
There is no authority for treating an enforcement action by the State as a statutory
tort, and the civil remedy in the TMFPA is not a damage provision. Each
wrongful actor is liable for a civil remedy and penalty in multiples of the State's
actual loss that is undiminished by the civil remedy and penalty assessed on or
paid by another actor. What Xerox characterizes as a “novel theory” is the plain
meaning of the statute. There is no comparative fault, joint-and-several liability,
contribution, single-satisfaction, or settlement credit in a TMFPA action. If there
is any right to contribution, it must be pursued in a separate action between
alleged wrongdoers.
Decision Letter, p. 1, at MR.232.
6
Xerox erroneously asserts that a separate law enforcement action brought by the State
against several dental providers is “inextricably intertwined” with the instant suit; however, the
State’s allegations against the dental providers are factually and legally distinct from the State’s
allegations against Xerox in the instant underlying suit. See Xerox’s Pet. 8; State v. Nazari,
Cause No. D-1-GN-14-005380 (53rd Dist. Ct., Travis County, Tex.). In the State’s law
11
SUMMARY OF THE ARGUMENT
The Court should deny Xerox’s petition for writ of mandamus because the
trial court correctly ruled that the State’s law enforcement action, brought under
the TMFPA, is not based on tort, the State does not seek “damages” capable of
apportionment, and, thus, CPRC Chapter 33 does not apply in the underlying case.
The trial court, therefore, did not abuse its discretion in striking Xerox’s third party
claims or in denying Xerox’s motion for leave to designate responsible third
parties. Also, Xerox has an adequate remedy at law on appeal.
STANDARD OF REVIEW
“Mandamus is an extraordinary remedy, available only when a trial court
clearly abuses its discretion and when there is no adequate remedy on appeal.”
Walker v. Packer, 827 S.W.2d 833, 839-40, n.7 (Tex. 1992). A clear abuse of
discretion is only found when the dispute had but one reasonable answer and the
enforcement actions against several dental providers, the liability rests only upon each dental
provider’s acts and omissions, and whether the dental providers submitted false statements to
Texas Medicaid. In contrast, the only conduct at issue in this matter, and that will be considered
by the trier of fact, is Xerox’s, and only Xerox’s acts and omissions.
In the Nazari matter, the dental provider defendants sought to name Xerox as a
responsible third party. The trial court denied the dental providers’ attempt to join Xerox as a
third party. The dental providers now seek interlocutory appellate relief from this Court. See No.
03-15-00252-CV, Nazari v. State of Texas. In its Appellee’s Brief in 03-15-00252-CV, Xerox
argues that this Court should decide the merits of the Nazari appeal alongside the merits of this
original proceeding. On that point, the State and Xerox agree. The Court should deny Nazari’s
interlocutory appeal at the same time it declines to issue this mandamus. See State’s appellee’s
brief in No. 03-15-00252-CV (discussing reasons Nazari’s interlocutory appeal should be
denied).
12
court chose another. See id at 839-40 (“A trial court clearly abuses its discretion if
it reaches a decision so arbitrary and unreasonable as to amount to a clear and
prejudicial error of law.”) (internal quotation omitted).
Mandamus should only be granted if the relator has no other adequate
remedy at law. In re Columbia Med. Ctr., 290 S.W.3d 204, 207 (Tex. 2009)
(“Generally, mandamus will issue only to correct a clear abuse of discretion or the
violation of a duty imposed by law, . . . when an adequate remedy by appeal does
not exist. . . . . Mandamus should not issue to correct grievances that may be
addressed by other remedies.”) (citations omitted); see also Walker v. Packer, 827
S.W.2d at 841 (“The requirement that mandamus issue only where there is no
adequate remedy by appeal is sound, and we reaffirm it today.”).
Courts look to the particular circumstances to determine that an adequate
appellate remedy is available. In re Prudential Ins. Co. of Am., 148 S.W.3d 124,
137 (Tex. 2004) ("Whether an appellate remedy is ‘adequate’ so as to preclude
mandamus relief depends heavily on the circumstances presented and is better
guided by general principles than by simple rules.”). And such “considerations
implicate both public and private interests.” Id. at 136.
13
ARGUMENT
I. Because CPRC Chapter 33 does not apply in a law enforcement action
brought by the State under the Texas Medicaid Fraud Prevention Act, the
trial court did not abuse its discretion in granting the State’s motion to
strike Xerox’s third party claims, or in denying Xerox’s motion for leave to
designate responsible third parties.
A. The TMFPA is not a “cause of action based on tort” and is
therefore outside the scope of Chapter 33.
CPRC Chapter 33 applies only (1) to an action “based on tort,” in which a
trier of fact can apportion, among a defendant and others, responsibility for a harm,
or (2) to an action brought under the DTPA in which “a defendant, settling person,
or responsible third party is found responsible for a percentage of the harm.”
CPRC §§ 33.002(a)(1), (2).7
Xerox argues that because the TMFPA has the word “fraud” in its title, and
because fraud is a tort, the TMFPA is a statutory tort. See Xerox’s Pet. 13. In
support of this argument, Xerox points to cases that have applied Chapter 33 to
statutory causes of action, and to some federal False Claims Act (“FCA”) cases in
which the FCA is described as a tort or sounding in tort. Id. at 14. For the
following reasons, and as the trial court correctly determined, the TMFPA is not a
statutory tort. First, the TMFPA lacks the requisite elements of tort law, such as
7
The fact that the Legislature specifically included the DTPA within the scope of Chapter
33’s reach illustrates that it did not intend to include the TMFPA or other public welfare statutes.
If the Legislature had wanted Chapter 33 to apply to the TMFPA, it would have said so – clearly
and unambiguously.
14
reliance, causation, and damages. Second, the TMFPA is not a codification of the
common law tort of fraud, and there is no “single indivisible injury” to apportion
among joint tortfeasors, as contemplated by Chapter 33.8 And third, the TMFPA is
fundamentally different from the False Claims Act, and comparisons to the False
Claims Act are not instructive in this instance.
1. Essential tort law concepts are missing from the TMFPA.
“The basic elements necessary to state any tort claim are duty; breach of
duty; causation between the breach of the duty and the injury; and actual damage.”
86 C.J.S. Torts § 2. A civil wrong or breach of duty imposed by law “is called a
tort only if the harm that has resulted is capable of being compensated in an action
at law for damages.” Moore v. Collins, 897 S.W.2d 496, 501 (Tex. App.—Houston
[1st Dist.] 1995, no writ) (noting that a tort is a breach of some duty, other than a
contractual or quasi-contractual duty, which gives rise to an action for damages).
To establish liability under the TMFPA, the State has no obligation to show an
independent duty on the part of Xerox. However, even assuming that the TMFPA
imposes a legal duty and Xerox has breached that duty, other essential elements of
8
See Gregory J. Lensing, Proportionate Responsibility and Contribution Before and After
the Tort Reform of 2003, 35 Tex. Tech L. Rev. 1125, 1131 (“In sum, the proportionate-
responsibility principles set forth in Chapter 33 will govern virtually any Texas tort case
(possibly excluding statutory causes of action) in which more than one party (including the
plaintiff) is alleged to have caused or contributed to cause a single, indivisible injury through the
violation of any legal duty ‘based on tort.’”) (emphasis added).
15
a tort-based cause of action – e.g., causation, injury, and damages – are not present
in the TMFPA and are not required for the State to prevail on its TMFPA claims.
For a defendant to be liable under the TMFPA, the State must prove that the
defendant committed an unlawful act as described in section 36.002. Tex. Hum.
Res. Code § 36.002. Section 36.002 defines proscribed conduct for which the State
may recover civil remedies, without regard to whether or not the proscribed
conduct caused the State any harm. Put another way, the defendant’s liability to the
State is established once a violation of the TMFPA is established and the State
need not show actual monetary loss in order to recover civil remedies. 9 Tex. Hum.
Res. Code § 36.052.
Additionally, for a defendant to be held liable for civil remedies, the
TMFPA does not require the defendant to have actually received a benefit or a
payment from the State. A benefit or payment may have gone to a third party, and
the defendant may still be liable to the State for that benefit or payment. Tex. Hum.
Res. Code Ann. § 36.052(a)(1) (authorizing the State to recover “the amount of
9
See § 36.052: “CIVIL REMEDIES. (a) …[A] person who commits an unlawful act is
liable to the state . . .” Tex. Hum. Res. Code Ann. § 36.052 (2011) (emphasis added). See also
31 U.S.C. § 3729(a)(1) (a person who presents a false claim “is liable to the United States
Government . . .”); Varljen v. Cleveland Gear, 250 F.3d 426, 429-30 (6th Cir. 2001) (“Recovery
under the FCA is not dependent upon the government’s sustaining monetary damages.”); United
States ex. rel. Schwedt v. Planning Research Corp., 59 F.3d 196, 199 (D.C. Cir. 1995)
(“regardless whether the submission of the claim actually causes the government any damages . .
. its very submission is a basis for liability”); United States ex. rel. Hagwood v. Sonoma Cnty.
Water Agency, 929 F.2d 1416, 1421 (9th Cir. 1991) (holding that government need not show
damages in order to recover civil penalties under FCA).
16
any payment or the value of any monetary or in-kind benefit provided under the
Medicaid program, directly or indirectly, as a result of the unlawful act, including
any payment made to a third party”) (emphasis added). The State is also entitled to
recover a civil penalty for each unlawful act. Tex. Hum. Res. Code §
36.0052(a)(3). See generally Tex. Hum. Res. Code § 36.052(a) (containing scope
of civil remedies to which the State is entitled under TMFPA).
Importantly, the TMFPA provides for recovery of the amount paid by Texas
Medicaid, not the amount paid in error or in overpayment, and not the amount paid
less any benefit that may have been received by the Medicaid program. Tex. Hum.
Res. Code § 36.052(a)(1). The amount the State may recover as civil remedies is
therefore measured by the amount the state paid, without reference to whether the
State sustained any actual loss or “damage” from the unlawful conduct. The
TMFPA unambiguously includes all of the payment made by the State, even if, but
for the unlawful conduct, the State would have made the same payment at a
different time, or made some payment in a lesser amount. Under the TMFPA,
therefore, any remedies owed to the State are a measure of the magnitude of the
defendant’s unlawful conduct, and not a measure of any tort-based concept of
damages. See Tex. Hum. Res. Code § 36.052(a)(1).
Likewise, in a TMFPA action the State does not have to show causation – a
necessary element in tort-based causes of action. As previously described, a
17
defendant “is liable” to the State for civil remedies once the State has proved the
unlawful act. See Tex. Hum. Res. Code § 36.052(a). Yet Xerox argues that the “as
a result of” language in the civil remedies portion of the statute, section
36.052(a)(1), is the equivalent of a tort-based causation standard and is a
prerequisite to the State establishing liability. It is not.
First, in the liability section of the TMFPA, there is no causation
requirement. A person is liable if he knowingly makes a false statement, regardless
of whether that misrepresentation actually caused injury or harm to the State. See,
e.g., Tex. Hum. Res. Code §§ 36.002(1) (affirmative false statements), 36.002(4)
(false statements regarding information required by law). 10
Second, by using, in the remedies section, the phrases “directly or
indirectly” and “as a result of” the unlawful act, the Legislature defined the scope
of the benefits or payments the State may recover from an already-liable
defendant. Should the State fail to show the payment or benefit was made “as a
result of” the unlawful act, the State may not recover those amounts, but the
defendant is nonetheless liable for the unlawful act, and for a civil penalty for the
10
The words “to permit” found in 36.002(2) do not require the State to show that a
defendant’s unlawful conduct caused harm; rather, “to permit” refers to the fact that the
defendant’s unlawful conduct may “open the door” to allow a person to obtain a benefit. See
Tex. Hum. Res. Code § 36.002(2). The State has no obligation to demonstrate, for liability
purposes, that anyone actually received an unauthorized benefit. See id.
18
unlawful act. See Tex. Hum. Res. Code § 36.052(a)(3) (prescribing minimum
penalty of $5,500 per unlawful act).11
In contrast, with a tort cause of action there can be no liability without
causation of damages. See Cunningham v. Blue Cross Blue Shield of Tex., No. 2-
06-363-CV, 2008 WL 467399, at *5 (Tex. App.—Fort Worth Feb. 21, 2008, pet.
denied) (citing Wheaton Van Lines, Inc. v. Mason, 925 S.W.2d 722, 728 (Tex.
App.—Fort Worth 1996, writ denied) (“In any cause of action, whether grounded
in tort, contract, or a hybrid of the two, causation is the essential element necessary
to attribute fault for one's injuries to another.”)); Brookhouser v. State of
California, 10 Cal. App. 4th 1665, 1677, 13 Cal. Rptr. 2d 658, 665 (1992) (“It is
axiomatic that a defendant cannot be held liable in tort for an injury he or she did
not cause.”).
The TMFPA also lacks any element of reliance. Fraud causes of action, even
some statutory frauds, include an element of reliance. Indeed, the elements of
statutory fraud are essentially the same as those of common-law fraud, except that
the plaintiff need not prove the defendant’s knowledge or recklessness. See
Henning v. One West Bank, 405 S.W.3d 950, 963 (Tex. App.–Dallas 2013, no pet.)
(comparing elements of statutory fraud under Tex. Bus. & Com. Code § 27.01 to
11
The civil penalty provision contains no “as a result” language. A person who commits an
unlawful act is subject to a mandatory civil penalty regardless whether there was any payment by
the Medicaid program as a result of the unlawful act. Tex. Hum. Res. Code § 36.052(a)(3).
19
elements of common law fraud). In a fraud case, including a statutory fraud case,
the defendant can show the plaintiff’s knowledge of the fraudulent conduct to
negate the element of reliance.12 But the State’s knowledge is not relevant in this
case because reliance is not an element of a TMFPA claim. 13 The absence of a
reliance element in the TMFPA is further indication that it is not a “statutory
fraud” to which Chapter 33 applies.
2. The cases cited by Xerox are distinguishable, because the
statutory causes of action were either “based on tort,” or the issue
was never reached by the court, and are inapplicable here because
none involved statutory law enforcement actions.
As a preliminary matter, none of the cases that Xerox cites in support of
applying Chapter 33 to the TMFPA involve statutory law enforcement actions
brought by the State in its sovereign capacity to enforce a public welfare statute.
Nor could the State identify such a case. 14 This is not surprising because, as will be
discussed below, the State in a TMFPA enforcement action is not a “person” to
whom Chapter 33 applies. In the cases Xerox cites, the courts either took pains to
analyze the particular statute at issue and determine, on a statute-by-statute basis,
12
Schlumberger Tech. v. Swanson, 959 S.W.2d 171, 181 (Tex. 1997); see also Italian
Cowboy Partners v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 336-37 (Tex. 2011).
13
See Pub. Util. Comm’n of Tex. v. Cofer, 754 S.W.2d 121, 124 (Tex. 1988) (orig.
proceeding) (holding that a court may not write special exceptions into a statute to make the
statute inapplicable under certain circumstance not mentioned in the statute).
14
The undersigned counsel conducted a diligent search and could find no Texas case where
a court applied Chapter 33 to a statutory law enforcement action brought by the State in its
sovereign capacity.
20
whether the statutory cause of action was “based on tort” within the meaning of
Chapter 33, or failed to reach the issue at all.15
Regarding the statutes to which the Texas Supreme Court has applied
Chapter 33, each requires a plaintiff to prove the necessary elements of a tort cause
of action: duty, breach, causation, and damages. Consequently, none of the cases
cited by Xerox are binding on this Court, and none of the findings translate to the
TMFPA or are persuasive given the particular statutory scheme adopted by the
Legislature in the TMFPA.
3. The TMFPA was modeled after federal criminal law, not on
traditional tort law.
The enumerated unlawful acts in the TMFPA have their roots in criminal
law, and are not a codification of any common law or traditional tort-based causes
15
See Dugger v. Arredondo, 408 S.W.3d 825 (Tex. 2013) (holding that Wrongful Death
Act is based on tort); F.F.P. Operating Partners v. Duenez, 237 S.W.3d 680 (Tex. 2007)
(recognizing previous holding that Dram Shop Act incorporates essential elements of negligence
action and holding that it thus sounds in tort); JCW Elecs., Inc. v. Garza, 257 S.W.3d 701 (Tex.
2008) (holding that UCC Article 2 breach of implied warranty claim is tort based, as claim for
implied warranty a traditional basis for product liability claim); Villareal v. Wells Fargo
Brokerage Servs., 315 S.W.3d 109 (Tex. App.—Houston [1st Dist. 2010], no pet.) (applying
CPRC § 33.004(e) to Texas Securities Act and Texas Trust Act claims because real parties in
interest failed to argue that acts were not based on tort); Pemex Exploracion y Produccion v.
BASF Corp., H-10-1997, H-11-2019, 2011 WL 9523407, at *13 (S.D. Tex. Oct. 20, 2011)
(applying CPRC Chapter 33 to Theft Liability Act (“TLA”) to permit designation of responsible
third parties under section 33.004(j)).
Regarding the TLA, the Texas Supreme Court has not yet been asked to determine
whether Chapter 33 might apply to the TLA, or portions thereof. The TLA allows a civil remedy
for certain theft offenses, several of which have a corresponding common law tort-based cause of
action, such as conversion, quantum merit, and trespass to personal property. CPRC §§ 134.001-
.005. The Pemex court did not identify the penal code violation(s) made the basis of the TLA
claims in the suit Pemex, 2011 WL 9523407, at *11.
21
of action. The majority of the unlawful acts in section 36.002 of the TMFPA,
including all of the provisions at issue in this case, do not derive from or codify
existing tort law, but rather were created from 42 U.S.C. § 1320a-7b, entitled
“Criminal penalties for acts involving Federal health care programs.” Moreover,
prior to the repeal of section 36.131 of the Human Resources Code in 2005, prior
versions of the TMFPA specified that committing an unlawful act under section
36.002 constituted a criminal offense.16 The fact that the TMFPA now provides
only civil remedies and penalties for violations of the Act does not change the
underlying statutory, non-tort based nature of the causes of action. 17
4. The TMFPA lacks a single, indivisible injury.
Unlike the tort-based statutes to which Chapter 33 has been previously
applied, under the TMFPA there is no single, indivisible injury to apportion among
joint tortfeasors. First, as noted earlier, the State need not show actual injury in
order to hold Xerox liable for its unlawful acts. Second, Xerox can only be held
liable for payments made directly or indirectly as a result of its unlawful acts. See
16
See § 36.131 Tex. Hum. Res. Code Ann. (1995) (providing that a violation of section
36.002 constituted at least a Class C misdemeanor and up to a first degree felony depending on
the total amount of payments made as a result of the unlawful act).
17
Xerox argues that “claims to recover damages for overpayments based on false
statements for Medicaid reimbursement [under the FCA] are ‘“substantive causes of action for
fraud’” and cites to Grogan v. Garner, 498 U.S. 279, 288 (1991) for this proposition. The
Grogan court, however, even though citing the FCA as one of several federal “fraud” statutes,
did not undertake to analyze whether the FCA is “based in tort.” See Xerox Pet. at p. 16. The
State discusses the differences between the TMFPA and the FCA, in section I.B., below.
22
Tex. Hum. Res. Code § 36.052(a)(1). Therefore, Xerox can never be held liable
under the TMFPA for the actions of third parties and cannot be held liable for
payments made, directly or indirectly, as the result of someone else’s conduct. See
id.
Additionally, the Legislature intended to allow the State to recover from a
defendant payments the State made to third parties. See Tex. Hum. Res. Code §
36.052(a)(1) (“a person who commits an unlawful act is liable to the state for the
amount of any payment or the value of any monetary or in-kind benefit provided
under the Medicaid program, directly or indirectly, as a result of the unlawful act,
including any payment made to a third party”). The State may recover the full
amount of the “payment” under section 36.052, without regard to whom the
payment was made and without reference to any alleged “harm” or “injury” to the
State. That the State may recover these dollars as a statutory remedy does not mean
Xerox is paying some other violator’s “proportionate share,” or discharging the
liability of third parties such that a contribution claim would be available.18
18
Xerox also contends that TRCP Rule 38 permits Xerox to join potentially responsible
contribution defendants. See Xerox’s Pet. 26. While Rule 38 provides the procedural mechanism
for joining contribution defendants, it does not create a cause of action for contribution. Rule 38
neither creates a cause of action nor confers an independent right of contribution. See Tex. Gov’t
Code § 22.004(a) (“The supreme court has the full rulemaking power in the practice and
procedure in civil actions, except that its rules may not abridge, enlarge, or modify the
substantive rights of a litigant.”). Contribution is a statutory creation. Consequently, absent an
independent, substantive right to contribution, Rule 38 alone has no legal effect.
23
Permitting “contribution defendants,” such as dental providers, to be joined
or named as responsible third parties under Chapter 33 would undermine this
language in the TMFPA, which expressly permits the State to recover, from Xerox,
any “payments made to third parties” as a result of Xerox’s unlawful acts. Tex.
Hum. Res. Code § 36.052(a)(1). Such a result is contrary to the unambiguous
language of the statute, would dramatically alter the legislative liability scheme
inherent in the TMFPA, and would have sweeping implications for every TMFPA
case.
5. When a statutory conflict would result, courts have held that
Chapter 33 cannot be applied to a statute.
The Dallas Court of Appeals’ analysis in declining to apply Chapter 33 to
the Uniform Fraudulent Transfers Act (“UFTA”) is instructive. See Challenger
Gaming Solutions, Inc. v. Earp, 402 S.W.3d 290, 296 (Tex. App.—Dallas 2013, no
pet.) (holding that Chapter 33 “has no applicability in an UFTA claim”). 19 The
same result should occur here.
In Challenger, a lender sued a borrower’s ex-wife under the UFTA. Id. at
291. The ex-wife moved to designate the borrower as a responsible third party
under Chapter 33, and the trial court allowed the designation. Id. The jury found
the borrower 50% responsible for Challenger’s damages, and reduced the award to
19
The court also provided a cogent analysis of two cases cited by Xerox. See JCW Elecs.,
Inc. v. Garza, 257 S.W.3d 701 (Tex. 2008); Sw. Bank v. Info. Support Concepts, Inc., 149
S.W.3d 104 (Tex. 2004).
24
Challenger against the ex-wife. Id. On appeal, Challenger argued that Chapter 33
did not apply to the UFTA. Id. at 296-99.
In determining that Chapter 33 does not apply to the UFTA, the court noted
that the UFTA “delineates what types of transfers and obligations are fraudulent,
enumerates the remedies available to a creditor, prescribes the measure of liability
to a transferee, and lists the defenses and protections afforded to a transferee.” Id.
at 294.20 The court noted that “the proportionate responsibility statute [Chapter 33]
conflicts with the liability scheme in the UFTA and cannot be reconciled.” Id. at
299. When two statutes conflict and cannot be reconciled, the specific statute
controls over the more general. Challenger, 402 S.W.3d at 295 (citing to Tex.
Gov’t. Code Ann. § 311.026(b), Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83,
86 (Tex. 2006)).
As in Challenger, allowing the application of Chapter 33 to TMFPA cases
would turn the Legislature’s intended effectiveness of the TMFPA on its head. For
20
Interestingly, in reaching its decision the court did not find JCW Electronics dispositive:
In contrast…an UFTA claim does not lend itself to a fault-allocation scheme.
Rather the focus of an UFTA claim is to ensure the satisfaction of a creditor’s
claim when the elements of a fraudulent transfer are proven. Specifically, the
UFTA provides several different forms of equitable relief designed to follow and
reach assets…. Also, the UFTA provides for a money judgment that does not
exceed the value of the asset transferred or the amount necessary to satisfy the
creditor’s claim….Further the UFTA allows recovery against the debtor, the
transferee, or the person for whose benefit the transfer was made, but does not
distinguish the forms of relief based on culpability….That is, “[i]t operates
against the title of an ‘innocent’ transferee who has not paid value just as fully as
against the title of a transferee who has participated in a fraud.
Id. at 298-99 (citing JCW Elecs., Inc. v. Garza, 257 S.W.3d 701).
25
instance, in a TMFPA case involving off-label promotion of pharmaceutical rugs
by a pharmaceutical company, the potential “contribution defendants” could
number in the thousands, with pharmaceutical companies seeking to join every
Texas Medicaid provider who prescribed the drug and each pharmacy as “causing
or contributing to cause the harm for which damages is sought.” When the
Legislature limited participation in TMFPA actions to the Attorney General
(subchapter B) and qui tam relators (subchapter C), the Legislature foreclosed the
participation in an action of any other “private persons,” including third-party
contribution defendants.
In sum, the concept of “joint tortfeasors” combining to violate the TMFPA
and causing the State one indivisible injury is not supported by the TMFPA’s plain
language. Xerox seeks to have the fact-finder consider the “proportionate
responsibility” of dental providers for false statements contained in their PA
requests for orthodontia services. Those false statements, so goes Xerox’s theory,
caused or contributed to cause injury to the State. But Xerox’s defense necessarily
fails because Xerox is liable under the TMFPA for its own independent unlawful
conduct – whether that conduct caused injury to the State or not and whether an
assertion made by a dental provider in its PA request was accurate or not. In this
way, the goal of the TMFPA is not merely to make the State whole but also to
deter future unlawful acts.
26
B. The False Claims Act cases cited by Xerox do not assist the Court
when interpreting the TMFPA.
The False Claims Act (“FCA”) cases as cited by Xerox are neither
instructive nor persuasive when analyzing the TMFPA. 21 The TMFPA is far more
specific than the FCA in its enumeration of unlawful acts, and broader in terms of
the proscribed conduct that it reaches. Moreover, apart from the use of the word
“Fraud” in the title, the word appears only twice in the body of the TMFPA. 22 In
contrast, the FCA requires presentment of a false or fraudulent claim. 31 U.S.C. §§
3729(a)(1)(A), (B). The TMFPA does not have this requirement, nor makes any
reference to a “fraudulent” claim. The FCA also references an actor’s intent “to
defraud” the government, and provides that “no proof of specific intent to defraud
is required.” Id. at §§ 3729(a)(1)(E), (b)(1)(B). With respect to the latter provision,
the Legislature considered this exact language, but ultimately did not include it in
the 2005 amendments to the TMFPA. 23 Of particular significance to Chapter 33’s
21
The FCA and the TMFPA differ in many important ways, but briefing constraints
preclude an exhaustive analysis of the differences.
22
See Tex. Hum Res. Code § 36.002(9) (making it an unlawful act to enter into a
“conspiracy to defraud the state by obtaining or aiding another person in obtaining an
unauthorized payment or benefit from the Medicaid program or fiscal agent”); Tex. Hum Res.
Code § 36.002(10)(c) (making it an unlawful act to “engage in a fraudulent activity in connection
with the enrollment of an individual eligible under the Medicaid program in the organization’s
managed care plan or in connection with marketing the organization’s services to an individual
eligible under the Medicaid program”).
23
The introduced version of SB 563, which would become the 2005 amendments to the
TMFPA, originally defined the culpable mental state now contained in section 36.0011 as “the
person’s specific intent to defraud. . . .” This language was amended to read “the person’s
27
inapplicability to the TMFPA, the government’s recovery under the FCA is
couched in terms of “damage” to the government. 24 Hence, it is the harm to the
government in a FCA case, not the amount the government paid, that is considered.
The TMFPA makes no such reference to “damage” in connection with the State’s
recovery. 25
But Xerox argues that because section 36.1021 references damages, and
because the State has made reference to “damages” at various times in the record,
that the State seeks damages in a TMFPA action. See Xerox’s Pet. 22. That the
State is not seeking “damages” in a TMFPA action is covered below, but for
purposes of distinguishing the TMFPA from the FCA, it is important to note that
section 36.1021 is referencing both the State’s recovery of civil remedies and
penalties, and a qui tam relator’s recovery of damages.
Section 36.1021 reads: “STANDARD OF PROOF. In an action under this
subchapter, the state or person bringing the action must establish each element of
the action, including damages, by a preponderance of the evidence.” As discussed
below, there is no requirement that the State prove damage or harm to prevail in a
specific intent to commit an unlawful act” prior to the passage of the bill. Compare Tex. S.B.
563, 79th Leg., R.S. (2005) (introduced version), with Tex. Hum Res. Code § 36.0011.
24
31 U.S.C. § 3729(a) (permitting the government to recover a civil penalty “plus 3 times
the amount of damages which the Government sustains because of the act of that person.”)
(emphasis added). This provision has been interpreted to allow for evidence of the government’s
net economic harm to be presented. See United States v. Sci. Applications Int’l Corp., 626 F.3d
1257, 1279 (D.C. Cir. 2010).
25
Compare Tex. Hum Res. Code § 36.012(a)(1), with 31 U.S.C. § 3729(a).
28
TMFPA case, and “damages” is not an element of the State’s claim. The TMFPA
contains a retaliation provision: A private person relator may choose to assert a
claim for damages as a result of any retaliation or discrimination for bringing the
unlawful conduct to the State’s attention. See Tex. Hum. Res. Code § 36.115. It is
in this context that the word “damages” appears again. In addition to reinstatement,
a person who is retaliated against for bringing a TMFPA action is entitled to “two
times the amount of back pay, interest on the back pay, and compensation for any
special damages sustained as a result of the discrimination . . .” See Tex. Hum.
Res. Code § 36.115(a)(2). The damages reference, made in this context, is limited
to the potential damages awarded to a qui tam relator for wrongful termination, and
does not operate to transform the plain language of section 36.052 into a
“damages” provision.
C. The civil remedies the State seeks to impose against Xerox for
Xerox’s violations of the TMFPA are based solely on Xerox’s
conduct and are not the “same alleged injury” for which the State
seeks redress from dental providers.
Because Chapter 33’s sole purpose is to apportion “proportionate
responsibility,” the statute “requires the trier of fact to determine the percentage of
responsibility of each claimant.” CPRC § 33.001; Challenger Gaming, 402 S.W.3d
at 292. See also Equitable Recovery v. Heath Ins. Brokers of Tex., 235 S.W.3d
376, 387 (Tex. App.–Dallas 2007, pet. dism’d) (“Contribution and indemnity are
methods by which the burden of paying damages to a plaintiff is shifted from one
29
defendant to another, both of whom are jointly liable to the plaintiff on the same
claim.”) (emphasis added); Goose Creek Consol. Indep. School Dist. v. Jarrar's
Plumbing, Inc., 74 S.W.3d 486, 492 (Tex. App.—Texarkana 2002, pet. denied)
(third-party actions under Tex. R. Civ. P. 38(a) “join a party who may be liable to
the defendant or to the plaintiff for all or part of the plaintiff's claims against the
defendant”).26
Here, there is no “joint liability” between Xerox and any dental providers,
somehow resulting in one indivisible injury to Texas, such that Xerox can “shift”
its TMFPA liability onto these putative third parties. Xerox’s violations of the
TMFPA stand alone and do not depend on whether dental providers also violated
the TMFPA. 27 For example, Xerox’s misrepresentations to HHSC regarding
Xerox’s prior authorization (PA) review process violated the TMFPA without
regard or reference to the veracity of dental providers’ submissions to Xerox.
Additionally, Xerox’s failure to provide trained personnel to review PA requests
has no factual nexus with any conduct attributable to dental providers. Xerox’s
26
See also Gus Hodges, Contribution and Indemnity among Tortfeasors, 26 Tex. L. Rev.
150, 150 (“Historically neither the common law courts nor the legislative bodies have been
sympathetic with the plight of wrongdoers in the adjustment of their affairs.”). Not until 1917 did
Texas adopt a statute which expressly provided for contribution. Id. at 151.
27
Here Xerox attempts to join as third parties twenty-seven dental providers. See Xerox’s
First Am. Original Answer and Original Third-Party Pet., at MR.68-71. But these are not the
only dentists who treated Medicaid patients, and they are not the only dentists who the State
alleges have committed unlawful acts. It appears that Xerox’s attempt to implead these dentists is
retaliatory, after these dentists first cast blame on Xerox.
30
focus on the potential measure of the remedy mandated by section 36.052(a)(1),
rather than on the nature of its own, independent liability under the TMFPA, is
misdirected. The fact that one potential measure of the civil remedies prescribed by
the TMFPA for Xerox’s unlawful conduct is the dollars paid to providers is not
germane to the question of whether joint liability exists. Because there is no joint
liability between Xerox and the third party providers, Xerox can never be
responsible for more than its own injury-causing conduct. See Challenger Gaming,
402 S.W.3d at 292.
While Xerox may deem it a harsh reality, the TMFPA does not provide for
common law or equitable defenses. As the State has explained:
Allowing the Xerox Parties and Providers to Consolidate Texas’s
TMFPA case with other cases involving common law claims, where
all claims would be tried to the same jury and damages awarded
accordingly, would indeed allow the Xerox Parties and providers to
assert equitable and common law defenses and introduce such
concepts as comparative fault and responsible third-party liability and
contribution into the same jury trial, addressing Texas’s TMFPA
claims. Consolidating these cases into a single case would circumvent
this Court’s and other Travis County Court’s consistent holdings that
equitable and common law defenses and concepts do not apply to the
TMFPA and allowing such would cause jury confusion and be
substantially prejudicial to Texas.
See State of Texas’s Opp’n to Xerox Parties’ Mot. to Consolidate, at p. 8, copy
attached at Appendix B.
Furthermore, the right to contribution has its origins in equity. Texas courts
have consistently held that the State of Texas in its sovereign capacity is not
31
subject to equitable defenses, including laches, estoppel, quasi-estoppel, and
ratification. See State v. Durham, 860 S.W.2d 63, 67-68 (Tex. 1993). The rationale
behind this policy is to allow governmental entities to pursue claims and enforce
statutes intended to protect the public interest. Thomas v. State, 226 S.W.3d 697,
710 (Tex. App.–Corpus Christi 2007, pet. dism’d). Like other Texas law
enforcement statutes, the TMFPA is a statute that sets forth all violations and
available defenses. A violation of a statute is limited to the terms of the statute
itself. Likewise, the only defenses available are those specifically set forth in the
statute; common law defenses are simply not applicable. See, e.g., Pub. Util.
Comm’n of Tex. v. Cofer, 754 S.W.2d 121, 124 (Tex. 1988) (“when the Legislature
has spoken on a subject, its determination is binding upon the courts unless the
Legislature has exceeded its constitutional authority”). And, Travis County courts,
when interpreting the TMFPA, have held that equitable and common law defenses
and concepts are not available.28
28
See Exs. A - E to the State’s Opp’n to Xerox Parties’ Mot. to Consolidate, at App. B.
(Ex. A, Order from The Honorable Judge Yelenosky granting Pls.’ Traditional and No-Evidence
Mot. for Partial Summ. J. on Defs.’ Waiver Defense; Ex. B, Order from The Honorable Judge
Yelenosky granting Pls.’ Traditional Mot. for Partial Summ. J. on Defs.’ Equitable Defenses; Ex.
C, Order from Judge John K. Dietz on Cross-Motions for Summ. J. (granting, inter alia,
Plaintiffs’ Motion for Partial Summary Judgment on Defendants’ Defenses to the [TMFPA] at 3-
4 (“The Court finds that equitable defenses and defenses or limitations found in the [CPRC] do
not apply to the Plaintiffs’ claims under TMFPA”); Ex. D, Order from Judge Lora Livingston on
Motions for Summ. J. (granting, inter alia, Plaintiffs’ Traditional Motion for Partial Summary
Judgment on Certain Defenses (ratification, failure to mitigate, good faith, industry practice,
proximate cause and intervening/superseding acts) and Plaintiffs’ No-Evidence Motion for
Partial Summary Judgment as to All Defendants (waiver and selective enforcement)) at 2-3; and
Ex. E, Order from Judge Suzanne Covington granting Pl.’s First Am. Mot. for Partial Summ. J.).
32
D. Even if the TMFPA were a “statutory tort” to which Chapter 33
would otherwise apply, the Legislature did not intend for Chapter
33 to apply to the State suing in its sovereign capacity.
Under the common law, there is a “longstanding interpretive presumption
that ‘person’ does not include the sovereign,” which “may be disregarded only
upon some affirmative showing of statutory intent to the contrary.” See Vt. Agency
of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 780–81 (2000)
(applying Supreme Court’s “longstanding interpretive presumption that ‘person’
does not include the sovereign” to term “person” in federal False Claims Act and
noting that presumption “may be disregarded only upon some affirmative showing
of statutory intent to the contrary”); United States v. United Mine Workers of Am.,
330 U.S. 258, 275 (1947) (“In common usage [‘person’] does not include the
sovereign, and statutes employing it will ordinarily not be construed to do so.”);
see also R.R. Comm'n v. United States, 290 S.W.2d 699, 702 (Tex. Civ. App.—
Austin 1956), aff'd, 159 Tex. 197, 317 S.W.2d 927 (Tex. 1958) (stating common-
law rule that the sovereign “shall not be bound unless the statute is made by
express words to extend to [the sovereign]” and noting that “ordinary legislation is
intended merely to regulate the acts and rights of individuals” (citation and internal
quotation marks omitted)). 29
29
“Statutory provisions which are written in such general language that they are reasonably
susceptible to being construed as applicable both to the government and to private parties are
subject to a rule of construction which exempts the government from their operation in the
33
Indeed, this Court recently ruled that CPRC Chapter 74, the Texas Medical
Liability Act, (“TMLA”) does not apply to the TMFPA because the State is not a
“person” as included in the definition of “claimant” in the TMLA. See Malouf v.
State ex. rel. Ellis, 461 S.W.3d 641 (Tex. App.—Austin 2015, pet. requested). The
Court also considered the conflicts that would result from a forced application of
the TMLA onto the TMFPA. Id. n.3 This Court should similarly hold that the State
is not a claimant for the purposes of analyzing CPRC 33. 30
To allow a TMFPA defendant to apply Chapter 33 would be to interfere with
the State’s right to manage its fiscal affairs. The sovereign is generally not a
“person” under statutes that would restrict the sovereign’s rights and interests:
It is a familiar principle that the King is not bound by any act of the
Parliament unless he be named therein by special and particular
words. The most general words that can be devised (for example, any
person or persons, bodies politic or corporate) affect not him in the
least, if they may tend to restrain or diminish any of his rights and
interests.
Dollar Sav. Bank, 86 U.S. (19 Wall.) at 239 (emphasis added); accord 2 William
Blackstone, Commentaries *253; see also, e.g., R.R. Comm’n, 290 S.W.2d at 702.
absence of other particular indicia supporting a contrary result in particular instances.” 3 N.
Singer, Sutherland on Statutory Construction § 62:1, 377-78 (7th ed. 2008). This “general rule
applies with special force to statutes by which prerogatives, rights, titles, or interests of the
government would be divested or diminished,” and “[i]f there is doubt as to the construction of
the statute, the doubt should be resolved in favor of the government.” 82 C.S.J. Statutes § 389,
483-84 (2009).
30
Interestingly, appellant Dr. Malouf in No. 03-14-00036-CV is one of the dentists Xerox
seeks to have designated as a responsible third party in the State’s underlying case against Xerox.
See Xerox’s Mot. for Leave to Designate Responsible Third Parties, MR.250-52.
34
As already discussed, applying Chapter 33 to the State’s claims would severely
restrict its rights and interests, and no “particular words” in Chapter 33 include the
State. 31
The assertion that failing to apply Chapter 33 would permit a “double
recovery” by the State, see Xerox Pet. 19, also misstates both the legislative intent
of the TMFPA and the nature of the State’s claims. The TMFPA represents a
specific statutory framework for deterring unlawful conduct and obtaining civil
remedies for the Texas Medicaid program. In enacting the TMFPA, the Legislature
deliberately limited the State’s burden to establish a violation of the statute and
recover civil remedies and penalties. And courts must defer to the plain language
of a statute:
‘Courts must take statutes as they find them. More than that, they
should be willing to take them as they find them. They should search
out carefully the intendment of a statute, giving full effect to all of its
terms. But they must find its intent in its language and not elsewhere. .
. .They are not responsible for omissions in legislation.’
Republicbank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605, 607 (Tex. 1985)
(quoting Simmons v. Arnim, 220 S.W. 66 (Tex. 1920)). See also Fitzgerald v.
31
Xerox may argue that a governmental unit may be named as a responsible third party
under Chapter 33, and is therefore a “person” within the meaning of Chapter 33. Whether the
sovereign may be named as a responsible third party in situations in which it is immune from suit
is open to debate, but is ultimately not relevant to whether a TMFPA defendant may assert
Chapter 33 to thwart the State’s rights and interests in protecting its fiscal well-being through
enforcement of a public welfare statute. See generally Justin Roberts & Randell Roberts, Can
Immune Parties Really be Responsible?: An Analysis of the Current Interpretation of the
Responsible Third Party Statute and Its Vulnerability to Constitutional Challenge, 43 St. Mary’s
L.J. 559 (2012).
35
Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 867 (Tex. 1999) (holding that
courts “may add words into a statutory provision only when necessary to give
effect to clear legislative intent. Only truly extraordinary circumstances showing
unmistakable legislative intent should divert us from enforcing the statute as
written”).
Xerox argues that the TMFPA’s silence as to whether it permits “double
recoveries” is somehow indicative of the legislature’s intent that Chapter 33 should
apply to the TMFPA, and to the State suing in its sovereign capacity. 32 Precisely
the opposite is true. As the trial court noted:
Each wrongful actor is liable for a civil remedy and penalty in
multiples of the State’s actual loss that is undiminished by the civil
remedy and penalty assessed on or paid by another actor. What Xerox
characterizes as a ‘novel theory’ is the plain meaning of the statute.
There is no comparative fault, joint-and-several liability, contribution,
single-satisfaction, or settlement credit in a TMFPA action.
Decision Letter, dated Feb. 10, 2015, at MR.232.
A person who commits an unlawful act does not escape liability because
there may be multiple violators. Indeed, the unlawful acts listed in section 36.002
specifically contemplate multiple violators. See §§ 36.002(1), (2), (4), (9), (12).
And because the TMFPA is a remedial statute subject to the liberal construction
required by the Human Resources Code, it must be read broadly to ensure that its
32
See Xerox’s Pet. 26 (claiming that “[t]he TMFPA’s silence regarding contribution, single
satisfaction, et cetera cannot be interpreted as expressly permitting a double recovery.”).
36
purposes are accomplished. See Tex. Hum. Res. Code Ann. § 11.002(b) (“This title
shall be liberally construed in order that its purpose may be accomplished as
equitably, economically, and expeditiously as possible.”). In addition to relying
primarily on the plain meaning, a court may not accept interpretations of a statute
that defeat the purpose of the legislation, “so long as another reasonable
interpretation exists.” Atacosa Cnty. v. Atacosa Cnty. Appraisal Dist., 990 S.W.2d
255, 258 (Tex. 1999).
Also, as explained above, in a TMFPA action there is no “single, indivisible
injury” committed by “joint tortfeasors.” Consequently, there can be no “double
recovery” to the State. As the Texas Supreme Court has noted:
The one satisfaction rule applies to prevent a plaintiff from obtaining
more than one recovery for the same injury. Appellate courts have
applied the one satisfaction rule when the defendants commit the same
act as well as when defendants commit technically differing acts
which result in a single injury.
Stewart Title Guar. Co., v. Sterling, 822 S.W.2d 1 (Tex. 1991) (emphasis added).
Therefore, Chapter 33 does not, and cannot, apply to a law enforcement action
brought by the State in its sovereign capacity, specifically in a TMFPA suit, and
the trial court, therefore, did not abuse its discretion.
E. Applying CPRC Chapter 33 to the TMFPA would violate tenets of
statutory construction and lead to absurd and conflicting results.
A court’s objective in construing a statute is to determine and give effect to
the Legislature's intent. Cont’l Cas. Ins. Co. v. Functional Restoration Assocs., 19
37
S.W.3d 393, 402 (Tex. 2000) (citing Liberty Mut. Ins. Co. v. Garrison Contractors,
Inc., 966 S.W.2d 482, 484 (Tex.1998)). In doing so, it is helpful to consider the
purpose behind a statute, as stated by the Legislature.
In 1995, the Legislature enacted the TMFPA, chapter 36 of the Human
Resources Code. By enacting the TMFPA, the Legislature provided the State with
a robust statute to investigate, prosecute, and deter fraud, waste, and abuse in the
Texas Medicaid system, including providing specific investigative authority to the
Office of Attorney General and stiff remedies and penalties for violations of the
statute. The Legislature adopted chapter 36 to safeguard the public treasury and to
protect the health and welfare of Medicaid recipients by preventing the diversion
of Medicaid funding to private purposes.
In 1995, the Legislature also enacted certain provisions of CPRC Chapter
33, namely section 33.004 (Designation of Responsible Third Parties) and
subsequently in 2003 significantly amended other provisions of Chapter 33 in its
efforts to address tort reform. 33 Presumably, the Legislature was aware of both
measures 34 and intended both of its enactments to be effective.35 The application
33
In 2003 the Amendments to Chapter 33 by the Texas Legislature were part of the same
legislation enacting Chapter 74 of the CPRC (the Texas Medical Liability Act), which this Court
recently found did not apply to the TMFPA. Malouf v. State ex. rel. Ellis, 461 S.W.3d 641 (Tex.
App.—Austin 2015, pet. requested).
34
See Argonaut Ins. Co. v. Baker, 87 S.W.3d 526, 530-31 (Tex. 2002) (quoting Acker v.
Tex. Water Comm’n, 790 S.W.2d 299, 301 (Tex. 1990) (“A statute is presumed to have been
enacted by the legislature with complete knowledge of the existing law and with reference to it”).
38
of CPRC Chapter 33 to the TMFPA would violate these tenets of statutory
construction. Moreover, common sense dictates that the Legislature would not
have enacted the TMFPA on the one hand to combat and deter fraud, waste and
abuse in the Medicaid system, but on the other hand restrict the State’s ability to
enforce the TMFPA and limit its effect by subjecting the State and the TMFPA to
the limitations and restrictions set forth in CPRC Chapter 33.
The forced application of Chapter 33 to the TMFPA fails because it would
lead to absurd results and conflicts, not only within the two statutes but also with
other Texas law. Any attempt at reconciliation leads inexorably to an absurd result
that cannot have been the intent of the Legislature. See, e.g., Univ. of Tex. Sw.
Med. Ctr. at Dallas v. Loutzenhiser, 140 S.W.3d 351, 356 (Tex. 2004) (“Courts
should not read a statute to create such an absurd result.”) (internal quotation
omitted). Therefore, the Court must resort to Code Construction Act provisions for
resolution of conflicting provisions. See generally Tex. Gov’t Code ch. 311.
Consideration of these principles leads only to the conclusion that Chapter 33 was
not intended to apply to the TMFPA.
One absurd result from the forced application of Chapter 33 to the TMFPA,
is that a defendant like Xerox could designate not just several Texas Medicaid
providers as responsible third parties under Chapter 33, section 33.004, but
35
Tex. Gov’t Code § 311.021(2).
39
designate hundreds, if not thousands, of Texas Medicaid providers from around the
State of Texas who received even one payment over the eight year period Xerox
was HHSC’s vendor. Allowing a defendant in a TMFPA action to designate
hundreds of Medicaid providers from across the State would require the trier of
fact – a single jury – “to determine the percentage of responsibility, stated in whole
numbers . . . for each defendant and for each responsible third party who has been
designated.” See CPRC § 33.003(a). Allowing such a designation would favor a
defendant’s private pecuniary interests over the public interest in punishing and
deterring unlawful acts by a defendant against the Texas Medicaid program. This
result violates Tex. Gov’t Code § 311.021(5) and the presumption that the public
interest is favored over the private.
Another absurd result from the forced application of Chapter 33 to the
TMFPA would arise from the application of section 33.003(a) requiring the trier of
fact to determine the percentage of responsibility of the “claimant.” In other words,
the forced application of Chapter 33 to the TMFPA would require a jury to
determine the percentage of responsibility of the State of Texas itself, and could, in
essence, make the State responsible for defendants’ unlawful acts. Such a result
would require a jury to focus not just on the unlawful acts of the defendant but to
also focus and assess the general responsibility of any State employee or State
40
official. This forced application would impermissibly abrogate the sovereign
immunity of the State.
Moreover, if section 33.001 were applied to the jury’s determination, the
State of Texas would be barred from recovering any civil remedies whatsoever
from a defendant (and even potentially civil penalties as well) in a TMFPA
enforcement case if the jury found the State of Texas’s percentage of responsibility
to be greater than 50 percent. See CPRC § 33.001. In other words, even if a jury
found a defendant to have committed an “unlawful act” under the TMFPA, the
State could not recover any civil remedies or penalties if the jury found the State
more than 50 percent responsible. This forced application of CPRC sections
33.003(a) and 33.001 directly conflict with the TMFPA provisions addressing civil
remedies and civil penalties.
These absurd results would not only undermine the Legislature’s intended
purpose of enacting a robust and effective TMFPA statute but would also conflict
with case law recognizing that certain similar equitable and common law concepts
and defenses do not apply to the State. For example, equitable defenses of
limitations, estoppel and laches do not apply to the State in its sovereign capacity,36
36
State v. Durham, 860 S.W.2d 63, 67 (Tex. 1993); see also City of Hutchins v. Prasifka,
450 S.W.2d 829, 835-36 (Tex. 1970); Waller v. Sanchez, 618 S.W.2d 407, 409 (Tex. App.—
Corpus Christi 1981, no writ).
41
the affirmative defense of implied waiver does not run against the State,37 and the
so-called “government knowledge” defense is not an affirmative defense a
defendant can assert. 38 And yet, the forced application of Chapter 33 to the
TMFPA would allow a defendant to inject these defenses into a TMFPA
enforcement action under the auspices of allocating proportionate responsibility.
Such a result was not and could not have been the intent of the Legislature.
II. Xerox has an adequate remedy at law because all of its complaints can
be addressed on appeal.
Regardless of whether the trial court somehow clearly abused its discretion,
the Court should still deny the request for mandamus relief because Xerox has
failed to show that it lacks an adequate remedy by appeal. See Walker v. Packer,
827 S.W. 2d. at 840. See also In re License Plates of Tex., No. 03-13-00671-CV,
2013 WL 6466919, at *1 (Tex. App.—Austin Nov. 27, 2013, no pet.) (holding that
relator had adequate remedy by ordinary appeal of trial court’s denial of leave to
designate two state agencies as responsible third parties).
37
Texas courts have recognized that the affirmative defense of implied waiver is not
applicable to the State. State v. Crawford, 771 S.W.2d 624, 629-630 (Tex. App.—Dallas 1989,
writ. denied). The defense of waiver can only be established against the State by evidence of the
intentional relinquishment of the State’s known rights by an authorized representative. Id.
38
Federal Courts have made clear that a defendant cannot assert the so-called “government
knowledge defense” as a defense in an FCA case. See U.S. v. Bollinger Shipyards, Inc., 775 F.3d
255, 263 (5th Cir. 2014) (citing United States v. Southland Mgmt. Corp., 326 F.3d 669, 682 n.8
(5th Cir. 2003) (“This defense is inaptly named because it is not a statutory defense to FCA
liability but a means by which the defendant can rebut the government’s assertion of the
‘knowing’ presentation of a false claim.”)).
42
A. Only Xerox’s conduct as the State’s vendor is at issue in the instant
matter, and Xerox has an adequate remedy on appeal.
As a threshold matter, Xerox has an adequate remedy at law. The State seeks
to only hold Xerox liable, for Xerox’s conduct. Nevertheless, if Xerox believes
some unknown number of potential parties is somehow responsible for Xerox’s
unlawful acts, Xerox is free to sue those parties (bringing common law, non-
statutory causes of action). In fact, there are four lawsuits pending, brought by four
dental providers against Xerox, in which Xerox is free to bring counterclaims. 39
Xerox is also free to initiate any number of lawsuits against providers for recovery
of some alleged harm.
1. The reasoning in Andersen is inapplicable in a statutory law
enforcement case.
None of the cases, or the reasoning, on which Xerox relies support Xerox’s
argument. The principal case upon which Xerox relies is In re Arthur Andersen.
121 S.W.3d 471 (Tex. App.—Houston [14th Dist.] 2003, orig. proceeding). Xerox
cites Andersen for the proposition that there is no adequate remedy at law when a
trial court erroneously denies a defendant the opportunity to join responsible third
parties in a complex case where damage is caused by multiple tortfeasors. But
Andersen is readily distinguishable.
39 The four cases, all in Travis County District Court are: (1) Harlingen Family Dentistry v.
ACS State Healthcare, Cause No. D-1-GN-14-000319; Antoine Dental Center v. ACS State
Healthcare, Cause No. D-1- GN-14-000320; (3) M&M Orthodontics v. ACS State Healthcare,
Cause No. D-1-GN-14-000321; (4) Dr. Paul Dunn, DDS v. ACS State Healthcare, Cause No. D-
1-GN-14-000322.
43
Most importantly, the causes of action in Andersen are different from the
State’s TMFPA claims. Here, the only causes of action are codified in the TMFPA,
none of which are based on tort, and only concern the acts and omissions of Xerox
acting as HHSC’s PA authorization vendor and whether Xerox misrepresented to
HHSC Xerox’s PA review process. In stark contrast, in Arthur Andersen a group of
investors who had lost money in the Enron collapse sued the accounting firm
Arthur Andersen for three common law causes of action: negligent
misrepresentation, fraud, and conspiracy. Id. at 475. Each of the claims asserted by
the plaintiffs are based on tort; and no party contested the applicability of chapter
33 in the Andersen proceedings.
The plaintiffs accused Andersen of providing “false and misleading
information and misleading public information regarding Enron’s financial
condition.” Andersen claimed it had been misled by Enron executives and
attempted to name responsible third parties and to join third parties, particularly
other financial institutions.40 Id. The trial court denied Andersen’s motion, and the
company sought mandamus relief. Id. In granting mandamus relief, the Andersen
court noted that the investor-plaintiffs made “broad sweeping allegations”
regarding financial entities other than Andersen and other named defendants, and
these unnamed entities would “play a pivotal role in the stories the Plaintiffs will
40
Andersen sought leave to name responsible third parties under an earlier version of
chapter 33. Id. at n.18.
44
tell the jury.” Id. at 480-81. Regarding the latter two causes of action of fraud and
conspiracy, the court reasoned that the other financial institutions were necessarily
implicated in the allegations against Andersen.41 Id. at 481-82 (holding that
Andersen had shown that third parties were “implicated” in the plaintiffs’ claims
“to such an extent that the Plaintiffs could have sued each third party, and that each
third party ‘may’ be liable to the Plaintiffs for all or a part of the ‘damages
claimed’ against Andersen and the other defendants”).
Here, the State seeks to hold Xerox liable for only Xerox’s conduct, not the
conduct of third parties. The State does not seek remedies from Xerox for any
unlawful acts committed by third parties. Therefore, the reasoning and holding in
Andersen, which focused on common-law fraud and conspiracy, are inapplicable
here.42 Additionally, any law enforcement action the State might bring against a
41
For fraud, “third parties . . . need not have made representations directly to the Plaintiffs.”
Id. at 481 (noting that “each party to a fraudulent scheme is responsible for the acts of the other
participants done in furtherance of the scheme and liable for fraud”). As for conspiracy, the court
dismissed plaintiffs’ claims that a third party “cannot be liable for conspiracy to commit fraud
without being liable for the underlying fraud.” Id. at 482-82 (noting that “[a] party may be liable
for conspiracy to commit fraud without being liable for the underlying fraud).
42
In most of the other 33 Texas cases citing Andersen, courts reference the opinion when
analyzing the causes of action of either common law fraud or conspiracy. See, e.g., Parex v. ERG
Resources, 427 S.W.3d 407, 440 (Tex. App.—Houston [14th] 2014, pet. filed) (noting that “[f]or
a party to be liable for fraud, it need not have made representations directly to the plaintiff”).
This Court has cited to Andersen only once, in a case in which the Court had to determine
whether a trial court correctly ruled whether a third party may be held jointly and severally liable
for common-law fraud. See Compton v. Sesso, 2006 Tex. App. LEXIS 6322, at *18-19 (Tex.
App.—Austin July 21, 2006, no pet.) (noting that a “party who benefits from a fraudulent
transaction may be a principal in the fraud and may be held liable as such”).
The Texas Supreme Court also only cites to Andersen once, and only in reference to the
proposition that parties may plead conflicting claims and defenses if they “have a reasonable
45
dental provider would only, and separately, implicate that provider’s
misrepresentations or omissions and have no bearing on Xerox’s own unlawful
conduct.
2. Xerox fails to cite any case law to show it lacks an adequate
remedy on appeal.
Xerox also makes several other arguments that fail to show it lacks an
adequate remedy on appeal. First, the cases cited by Xerox for the proposition that
not being allowed to name a responsible third party would somehow “skew” the
proceedings are inapposite because the cases are all common-law negligence cases,
none are statutory law enforcement cases brought by the State in its sovereign
capacity. 43
basis in fact [and] law.” JLG Trucking v. Garza, 13-0978, 2015 Tex. LEXIS 346, at *16 (Tex.
Apr. 24, 2015). This issue is not before the Court.
43
See In re Altec Indus., No. 10-12-00207-CV, 2012 WL 2469542, at *2 (Tex. App.—
Waco June 22, 2012, orig. proceeding) (mem. op.) (design defect, negligence, premises liability,
and failure to warn) (noting that not naming responsible third party would “potentially affect the
outcome of the litigation, and compromise the presentation of the defense in ways unlikely to be
apparent in the appellant record”); see also In re Oncor Elec. Delivery Co., 355 S.W.3d 304
(Tex. App.–Dallas 2011, orig. proceeding) (negligence) (after parents named owner of lifting
apparatus as causing their child’s injuries, defendant sought to name the individual who operated
the apparatus as a Responsible third party); In re Brokers Logistics, 320 S.W.3d 402, 404 (Tex.
App.—El Paso 2010, orig. proceeding) (negligence) (relator-defendant, as premises owner,
sought leave to name doctor whose negligent treatment proximately caused plaintiff’s injuries);
Jones v. Ray, 886 S.W.2d 817 (Tex. App.—Houston [1st Dist.] 1994, orig. proceeding)
(negligence) (holding that part of a group of healthcare providers who may have all contributed
to plaintiff’s paralysis could not sever case); In re Greyhound Lines, Inc., No. 05-13-01646-CV,
2014 WL 1022329, at *1-3 (Tex. App.—Dallas Feb. 21, 2014, orig. proceeding) (mem. op.)
(personal injury suit) (holding that where passenger sued bus company but not the owners of the
other vehicle involved in crash, bus company could name owner of other vehicle as responsible
third party).
46
Second, contrary to Xerox’s assertion, no bright line rule exists in
determining that an adequate appellate remedy is available. See In re Prudential,
148 S.W.3d at 136 (whether an adequate remedy by appeal exists “is not an
abstract or formulaic” inquiry and “resists categorization”).44 In Prudential, the
trial court’s ruling would have forced the parties to have sixteen unnecessary trials
and subject the parties to jury trials that had been waived in the underlying
contract. Id. at 137-38. Here, even if the Court were to determine that Chapter 33
could apply, there could only be one trial—to determine only Xerox’s liability.
Xerox would still, therefore, have an adequate remedy by appeal.
In fact, this Court has held that an adequate remedy on appeal exists when a
trial court denies leave to name a responsible third party. See In re License Plates
of Tex., No. 03-13-00671-CV, 2013 WL 6466919, at *1 (Tex. App.—Austin Nov.
27, 2013, orig. proceeding) (holding that adequate remedy on appeal existed after
trial court denied leave to name responsible third parties).45 And, Xerox cannot
44
See Xerox Pet. 30-31 (erroneously asserting that “[o]ther courts have adopted bright-line
holdings that a trial court’s improper denial of leave to designate a responsible third party can
never be adequately remedied on appeal").
45
Other Texas intermediate courts have also held the same. See, e.g., In re State Line
Fireworks, 387 S.W.3d 27, 31-33 (Tex. App.—Texarkana 2012, orig. proceeding) (products
liability) (holding that relator had adequate remedy on appeal where relator-defendant, if found
liable, could then file suit against other parties); In re Unitec Elevator Servs. Co., 178 S.W.3d 53,
66 (Tex. App.—Houston [1st Dist.] 2005, orig. proceeding) (negligence, gross negligence)
(noting that, in holding to deny mandamus, “whether mandamus relief is appropriate ‘depends
heavily on the circumstances presented’” (quoting In re Prudential, 148 S.W.3d at 137)); In re
Taymax Fitness, No. 04-14-00119-CV, 2014 WL 1831100, (Tex. App.—San Antonio May 7,
2014, orig. proceeding) (personal injury claim) (holding that relator failed to show lack of
47
establish it lacks a remedy on appeal. See, e.g., id.; see also supra note 42 (list of
cases in which other intermediate courts have similarly denied mandamus after a
trial court denied leave to name third parties).
Xerox then argues that the underlying instant matter is some unsettled area
of the law, as mentioned in Andersen. In Andersen the question was whether
Chapter 33 permits a “tortfeasor subject to a judgment to bring a post-judgment
contribution claim against a tortfeasor who was not a party to the original suit.”
121 S.W.3d at 485. Here, there are no tortfeasors. Rather, Xerox’s–and only
Xerox’s–misrepresentations and omissions are at issue. Under the TMFPA, the
trier of fact will only be able to determine Xerox’s liability, and there will not be,
and cannot be, an apportionment of liability to anyone else besides Xerox.
Moreover, as discussed above, Chapter 33 does not apply to law enforcement
actions brought by the State in its sovereign capacity.
Lastly, Xerox makes a curious argument that because the State’s recovery
might be large, an adequate remedy on appeal is somehow not available. See Xerox
Pet. 28. No case law supports this reasoning.
adequate remedy on appeal); In re Inv. Capital Corp. & Serv. Corp. Int’l, No. 14-09-00105-CV
2009 WL 310899, at *2 (Tex. App.—Houston [14th Dist.] Feb. 4, 2009, orig. proceeding)
(negligence, gross negligence, premises liability) (distinguishing Andersen, not because of the
type of case, but because the facts were, unlike in Andersen, “relatively straightforward and the
trial court’s error, if any, can be corrected through the regular appellate process”); In re
Wilkerson, No. 14-08-00376-CV, 2008 WL 2777418, at *2 (Tex. App.—Houston [14th Dist.]
June 6, 2008, orig. proceeding) (negligence) (in denying mandamus, holding that relator had
adequate remedy by appeal).
48
B. Factors weigh in favor of denying Xerox’s Petition.
Denying Xerox’s Petition will actually save money—for both the State and
Xerox. Cf. Walker v. Packer, 827 S.W.2d at 842 (“An appellate remedy is not
inadequate merely because it might involve more delay or cost than mandamus.”).
Here, by trying the instant underlying law enforcement action with Xerox as the
only defendant will result in less delay and less expense. 46
And, in considering the public interest, the State has an interest in having its
claims timely heard and not being unnecessarily subjected to potentially hundreds
of putative third parties being improperly designated and/or added to its lawsuit
against Xerox. See In re Prudential, 148 S.W.3d at 136 (weighing whether denying
mandamus would “spare . . . the public the time and money utterly wasted
enduring eventual reversal of improperly conducted proceedings”). Unnecessarily
46
Of the three cases Xerox cites to support its position, one of the cases actually supports
the State’s position: denying mandamus will save both parties and the judicial system
unnecessary time, expense, and extra trials; and the latter two are inapposite—focusing on
improper venue transfer. See In re State, 355 S.W.3d 611, 612 (Tex. 2011) (holding that trial
court abused discretion in ordering severance of state’s condemnation suit into eight separate
proceedings after landowner subdivided the one parcel into eight tracts); see also In re Team
Rocket, 256 S.W.3d 257 (Tex. 2008) (holding that wrongful death action was improperly
transferred to different venue); In re Masonite Corp., 997 S.W.2d 194 (Tex. 1999) (granting
mandamus relief after trial court granted motion to transfer venue of non-residents homeowners
in defective building materials suit).
Here, denying mandamus will not result in multiple identical trials regarding the same
facts; rather, the only liability to be determined in this suit is Xerox’s liability as the State’s
vendor. And any potential suit the State might bring against a dental provider will only concern
that particular provider’s actions, and only that provider’s liability to the State. See trial court
letter, dated Apr. 28, 2015 (“State v. Xerox will proceed to trial more quickly without third
parties, and the trial will be shorter and less complicated . . .”), at MR.633.
49
expanding this case beyond the existing two parties would exponentially increase
the costs to the State and would significantly delay the resolution of the case. See
In re United Servs. Auto. Ass’n, 307 S.W.3d 299, 314 (Tex. 2010) (“wasted trials
are not the most efficient use of the state’s judicial resources”). The USAA court
also considered, as one of the factors in whether to deny mandamus, if granting of
mandamus would “thwart the legislative intent” of the statute in question. Id. at
314. Here, granting mandamus and applying Chapter 33 to the TMFPA would
thwart the Legislature’s intent of having an effective statute, the TMFPA, to
combat and deter unlawful acts against the Texas Medicaid program.
PRAYER
Because the third party claims asserted in Xerox's First Amended Answer
and Original Third Party Petition have no basis in law, the trial court did not abuse
its discretion in striking those claims, pursuant to Texas Rule of Civil Procedure
38. Xerox’s allegations, even if true, do not entitle Xerox to the relief it sought
from the trial court. Moreover, Xerox has an adequate remedy on appeal. The State
prays the Court will deny Xerox’s Petition.
Respectfully submitted,
KEN PAXTON
Attorney General of Texas
CHARLES E. ROY
First Assistant Attorney General
50
JAMES E. DAVIS
Deputy Attorney General for Civil Litigation
/s/ Raymond C. Winter____________
RAYMOND C. WINTER
State Bar No. 21791950
Chief, Civil Medicaid Fraud Division
(512) 936-1709 direct
raymond.winter@texasattorneygeneral.gov
REYNOLDS B. BRISSENDEN
State Bar No. 24056969
(512) 936-2158 direct
reynolds.brissenden@texasattorneygeneral.gov
Assistant Attorneys General
P. O. Box 12548
Austin, Texas 78711-2548
(512) 499-0712 facsimile
CERTIFICATE OF COMPLIANCE
I certify that this Brief in Response to Petition for Writ of Mandamus has
13,984 words.
/s/ Raymond C. Winter
Raymond C. Winter
CERTIFICATE OF SERVICE
I certify that I have on this 13th day of August 2015, served copies of this
Response to Petition for Writ of Mandamus to the following:
Via efile:
Eric J.R. Nichols Constance H. Pfeiffer
Gretchen Sween Beck Redden LLP
Christopher R. Cowan 1221 McKinney St., Suite 4500
Beck Redden LLP Houston, Texas 77010
515 Congress Ave. Suite 1900 cpfeiffer@beckredden.com
Austin, Texas 78701 COUNSEL FOR RELATORS
51
enichols@beckredden.com
gsween@beckredden.com
ccowan@beckredden.com
COUNSEL FOR RELATORS
Robert C. Walters C. Andrew Weber
Gibson, Dunn & Crutcher LLP Kelly Hart & Hallman LLP
2100 McKinney Ave., Ste 1100 301 Congress Ave., Suite 2000
Dallas, Texas 75201 Austin, Texas 78701
rwalters@bigsondunn.com andrew.weber@kellyhart.com
COUNSEL FOR RELATORS COUNSEL FOR RELATORS
/s/ Raymond C. Winter
Raymond C. Winter
52
Append¡x A
Dear Manual User:
Welcome to the 2009 Texas Medicaid Provider Procedures Manual. To enhance usability, this manual
is available on a searchable CD-ROM and on the TMHP website at www.tmhp.com.
Note: Alt users who access www,tmhp.com are requìred to accept the American Medical Association
(AMA) End-user Agreement on the use of Current Procedural Terminology (CPT). For each computer that
accesses the TMHP website, the agreement must be accepted every 30 days from the last date on
which the agreement was accepted by the user. lf the end-user agreement is not accepted on a
particular computer every 30 days, no user will be able to enter the webs¡te from that computer, For
additional information about the AMA and CPT, refer to www.ama-assn.org/ama/pub/category
/3113.htm\.
A Ctaims Fiting Resources table is located at the end of each service section with page references to all
claim instructions, appendices, Medicaid forms, and claim form examples associated with the service.
This manual contains both the Primary Care Case Management (PCCM) and Texas Health Steps
(THSteps) manuals. PCCM information can befound primarily in Section 7, though relevant information
can be found in othersections. THSteps information is contained in Section 43 and throughoutthe
manual.
Texas Medicaid policy published ¡n this manual represents policy implemented on or before October 31,
2008. Policy updates effective after October 31, 2008, are published bimonthly in the lexas Medicaid
Bulletin.
The November/December 2OO8 Texas Medicaid Bulletin and all Texas Medicaid Bulletins through and
including the September/October 2OO9 Texas Medicaid Bulletin supplement the 2009 Texas Medicaid
Provider Procedures Manual and update the policy contained herein.
The Texas Medicaid Provider Procedures Manualserves as a comprehensive guide for Texas Medicaid
providers, and contains information aboutTexas Medicald benefits, policies, and procedures. The
manual also includes an overview of the State of Texas Medicaid Managed Care programs to include
the State of Texas Access Reform (STAR), STAR+PLUS, PCCM, and NorthSTAR. The information
regarding the State of Texas Medicaid Managed Care programs, including Section 7, is not an
exhaustive policies and procedures guide. Forspecific managed care information, contactthe individual
health plans participating in STAR, STAR+PLUS, and NorthSTAR. For PCCM, refer to the TMHP
Telephone and Address Guide included in this manual.
Provider Manual Overview
The 2008 Texas Medicaid Provider Procedures Manual is divided into three pafts, including:
Part l: Provider lnformation
The information in Part I is for all health-care providers who are enrolled in Texas Medicaid and provide
services to Texas Medicaid clients. ln Part l, providers find instructions for providing allowable services
and receiving appropriate reimbursementforservices. The followingsections are included in Part l:
. lntroduction
. TMHP Telephone and Address Guide
. Section 7. Provider Enrollment and Responsibilitles
. Section 2. Texas Medicaid Reimbursement
. Section 3. TMHP Electronic Data lnterchange (EDl)
. Section 4. Client Eligibility
. Section 5. Claims Flling
. Section 6. Appeals
. Section Z. Managed Care
Part ll: Texas Medicaid Services
Parl ll contains a section for each Texas lvledicaid service with information on health-care policy, proce-
dures, and claims filing peftaìning to each provìder type.
CP-f on y coDynght 2008 American il,4edical Assoclation All rrghts reserued
Denta I
L9.4.2 THSteps Dental Eligibility . Dental prophylaxis, if appropriate
The client must be Medicaid- and THSteps-eligible (birth . Topical fluoride application using fluoride varnish, if
through 20 years ofage) atthe time ofthe service request appropriate
and service delivery. However, Medicaid-approved . Caries risk assessment
orthodontic services already in progress may be continued . Dental anticipatory guidance
even after the client loses Medicaid eligibility if the
orthodontic treatment is begun before the loss of Procedure code D0145 bundles the above services for
Medicaid eligibility and before the day of the client's 21st THSteps clients age 6 months of age through 35 months
birthday and is completed within 36 months. Medicaid- of age. THSteps dentists and Federally Qualified
approved orthodontic services already in progress may be Healthcare Centers (FQHCs) that have completed training
continued even afterthe client loses Medicaid eligibility if and been certified to participate in the First Dental Home
the orthodontic treatment is: initiative may be reimbursed for procedure code D0145.
. FQHC providers attending the training will be certified at
Begun before the loss of Medicaid eligibility
the facility level.
. Begun before the day of the client's 21st birthday
Procedure code D0120, D0150, Dtt2O, D1203, or
. Completed within 36 months. DL206 are denied if procedure code D0145 is billed on
The client is not eligible for THSteps dental preventive or the samê date of service by any provider. A First Dental
therapeutic benefits if the client's Medicaid ldentification Home examination is limited to ten services per client
Form (Form H3087) or Medicaid Eligibility Verification lifetime with at least 60 days between visits. This service
Form (Forms H7O27 and HLO27-A-C) states any of the is limited to once per day.
following:
. Emergency care only
. Presumptive eligibility (PE)
19.5 ICF-MR Dental Services
ICF-MR dental services are mandated by Medicaid, and
. Qualified Medicare beneficiary (QMB) reimbursement is provided for treatment of dental
. Women's Health Program problems for Medicaid-eligible residents of ICF-MR facil-
A check mark will be present ¡n the "Dental" column of the ities who are 2tyears of age or older. Residents of ICF-MR
client's Medicaid ldentification Form (Form H3087) to facilities who are 20 years of age or younger receive
indicate that the client is eligible for dental services. A services through the regular THSteps Program. Eligibility
message (THSteps Dental checkup due) may appear for ICF-MR services is determined þy DADS.
below the client's name on the monthly client Medicaid Procedure codes without a CCP designation in the limita-
ldentification Form (Form H3087) statingthe client is due tions column of the dental fee schedule may be billed in a
for a dental checkup, which serves as a reminder to routine manner for ICF-MR clients.
parents to contact their child's dentist and schedule an
These procedures must be documented as medically
appointment for their periodic dental checkup. This necessary and appropriate. ICF-MR clients are not subject
message is printed on the H3087 when the client has not to periodicity for preventive care.
received any dental services (diagnostic, preventive,
therapeutic, or orthodontic) for a period of six months. For procedure codes with a CCP designation, a provider
may request authorization with documentation or provide
Clients are not eligible for CCP services on or after their documentation on the submitted claim.
21st birthday, but are eligible for non{CP THSteps dental
services (see fee schedule for CCP and nonCCP Refer to: "Medicaid Dental Fee Schedule" on page 19-11.
reimbursed services)through the end of the month of their
21st birthday.
Note: lf a client has a birthday on any day except the first 19.6 THSteps and ¡CF-MR Provision
day during the month, the new eligibility period is of Services
considered to begin on the first day of the following All THSteps and ICF-MR dental services shall be
month. peformed by the Med icaid-en rol led denta I provide r except
for permissible work delegated to a licensed dental
hygienist, dental assistant, or dental technician in a
L9.4.3 First Dental Home dental laboratory on the premises where the dentist
First Dental Home is an initiative designed to establish a practices, or in a commercial laboratory registered with
dental home, provide preventive care, identify oral health the Texas State Board of Dental Examiners (TSBDE). The
problems, and provide treatment and parenlal/ guardian Texas Dental Practice Actand the rules and regulations of
oral health instruct¡ons as early as possible. the TSBDE (22f AC, Part 5) define the scope of work that
dental auxiliary personnel may perform. Any deviations
A First Dental Home visit includes, but is not limited to:
from these practice limitations shall be reported to the
. Comprehensive oral examination TSBDE and HHSC, and could result in sanctions or other
. Oral hygiene instruction with primary caregiver actions imposed agalnst the provider.
CDf only copyíght 2008 American Dental Association- All rights reseryed 19-5
Section 19
19.18 Hospitalization and ASG/HASC Exception: Retained deciduous teeth and cleft palates
with gross malocclusion that will benefit from early
Dental services performed in an ASC, hospital ambulatory treatment. Cleft palate cases do not have to meet the HLD
surgical center (HASC), or a hospital (either as an 26-point scoring requirement. However, it is necessary to
inpatient or an outpatient) may be benefits of THSteps submit a sufficient narrative and,/or outline of the
based on the medical or behavioraljustification provided, proposed treatment plan when request¡ng authorization
or if one of the following conditions exist: for orthodontic services on cleft palate cases,
. The procedures cannot be performed in the dental . Crossbite therapy.
office.
. . Head injury involving severe traumatic deviation.
The client is severely disabled.
The following l¡mitat¡ons apply for orthodontic services:
Contact the individual HMO for precertification require-
ments related to the hospital procedure. lf services are
. Orthodontic services for cosmetic purposes only are
precertified, the provider receives a precertification not a benefit of Texas Medicaid or THSteps.
number effective for 90 days. . Orthognathic surgery, to include extractions, required or
ln those areas of the state with Medicaid managed care, provided in conjunction with the application of braces
the provider should contact the managed care plan for must be completed while the client is Medicaid-eligible
specific requirements or limitations. lt is the dental in order for reimbursement to be considered.
provider's responsibility to obtain precertification from the . Except for D8660, all orthodontic procedures require
client's HMO or managed care plan for facility and general prior authorization for consideration of reimbursement.
anesthesia services if it is required. . The THSteps client must be Medicaid/THSteps€ligible
To be reimbursed by the HMO, the provider must use the when authorization is requested and the orthodontic
HMO's contracted facility and anesthesia provider. These treatment plan is initiated. lt is the provider's responsi-
services are included in the capitation rates paid to bility to see that the client has a current Medicaid
HMOs, and the facility/anesthesiologist risk nonpayment ldentification Form (Form H3087) or Medicaid Eligibility
from the HMO without such approval. Coordination of all Verification Form (Forms HLO27 and H1O27-A-C) and
specialty care is the responsibility of the client's primary that the date of birth on the form indicates the client ¡s
care provider. The primary care provider must be notified 20 years of age or younger and no limitations are
bythe dentist and/or the HMO of the planned services. indicated.
Dentists providing sedation/anesthesia services must . Prior authorization is issued to the requesting provider
have the appropriate current permit from the TSBDE for only and is not transferable to another provider. lf the
the level of sedation/anesthesia provided. client changes providers or if the provider stops
The dental provider must be in compliance with the guide- practicing dentistry in Texas Medicaid for whatever
lines detailed in "Dental Therapy Under General reason, a new prior authorization must be requested.
Anesthesia" on page 19-35. Refer to: "Transfer of Orthodontic Services" on page 19-
Note: Post-treatment authorization will not be approved 40.
for codes that require mandatory prior authorization. The following procedure codes, policies, and limitations
are applied to the processing and payment of o¡thodontic
services under THSteps dental services:
19.19 Orthodontic Services . Procedure code D8660 is allowed when:
(THSteps) . The client is referred to an ofthodontistfora determi-
Orthodontic services for cosmetic purposes only are not a nation of whether orthodontic services are indicated
benefit of Texas Medicaid. Orthodontic services are and to determine the appropriate time to initiate
limited to the treatment of children t2years of age or such services.
older with severe handicapping malocclusion, children . The client is referred to an ofthodontist and elects to
birth through 20 years of age with cleft palate, or other receive services from another orthodontic provider
special medically necessary circumstances as outlined in because of justifiable reasons.
Benefits and Lim¡tations below.
. Repeat visits at different age levels are required to
determine the appropriate time to initiate
19.19.1 Benefits and Limitations orthodontic treatme nt.
Orthodontic services include the following:
. Procedure code D8680 is payable for one retainer per
arch, per lifetime, and each retainer may be replaced
. Correction of severe handicapping malocclusion as once because of loss or breakage (prior authorization is
measured on the Handicapping Labiolingual Deviation required).
(HLD) lndex. Refer to page 79-45 for information on
how to score the HLD. A minimum score of 26 points is
. Procedure code D8670 should be billed only when an
required for full banding approval (only permanent adjustment to the appliances is provided and may not
dentition cases are considered). be billed before the date the orthodontic adjustment
was performed. The number of visits for monthly adjust-
19-38 CDf only copyright 2O08 American Denta¡ Assoc¡at¡on All righls reseryed
Dental
ments to the appliances is restricted to the number L9.L9.2 Mandatory Prior Authorization
that was authorized in the treatment plan. However, the Prior authorization is required for all THSteps orthodontic
number of monthly visits may be amended with appro- services except for procedure code D8660. The prior
priate documentation of medical necessity while the authorization request must contain the DOS that the
client is Medicaid eligible. orthodontic diagnostic tools were produced. lf the request
. Procedure code D8670 is paid only in conjunction with is approved, the date that the records were produced is
a history of braces (code 08080), unless special considered to be the date on which orthodontic treatment
circumstances exist. begins.
. All orthodontic codes and appliances are global fees. Refer to: "THSteps Dental Mandatory Prior Authorization
. Request Form" on page 8-111.
Separate fees for adjustments to retainers are not
payable. lf orthodontic treatment is medically indicated, providers
. The appropriate code should be billed for those appli- are responsible for obtaining prior authorization for a
ances required as part of the treatment of cleft palate complete orthodont¡c treatment plan while the client is
cases. eligible for Medicaid and THSteps and 20 years of age or
younger.
Special orthodontic appliances may also be used with full
banding and crossbite therapy with approval by the TMHP Submission of diagnostic casts are not required when
Dental Director. requesting prior authorization for procedure codes
08050, D8060, or D8080.
. Procedure codes D5951, 05952, D5953, D5954,
Prior authorization is a condition for reimbursement; it is
D5955, D5958, D5959, and D5960 are to be used as
applicable with documentation of medical necessity. not a guarantee of payment.
Otherwise, use the appropriate special orthodontic Upon receipt of prior authorization of complete treatment
appliance code. plans, providers are to advise clients that they will be able
. Full banding is allowed on permanent dentition only, to receive the approved treatment services (e.9.
and treatment should be accomplished in one stage orthodontic adjustments, bracket replacements and
and is allowed once per lifetime. retainers), even if they lose Medicaid elieiibility or reach
27 years of age. Approved ofthodontic treatment must be
Exception: Cases of mixed dentition when the treatment initiated before the loss of Medicaid eligibility and
plan includes extractions of remaining primary teeth or completed within 36 months of the authorization date.
cleft palate.
Note: Providers must submit all orthodontic services for
. Crossbite therapy is allowed for primary, mixed, or Medicaid managed care clients following these guide'
permanent dentition. lines. STAR and STAR+PLUS are not responsible for
. Providers must not request crossbite correction (limited orthodontic services.
orthodontics) for a mixed dentition client when there is Requests for orthodontic services must be accompanied
a need for full banding in the adult teeth. Crossbite by all of the following documentation:
therapy is an inclusive charge for treating the crossbite . An orthodontic treatment plan. The treatment plan
to complet¡on, and additional reimbursement is not
provided for adjustments or maintenance.
must include all procedures required to complete full
treatment (such as, extractions, ofthognathic surgery,
. lf a case is not approved, the dentist may file a claim upper and lower appliance, monthly adjustments, ant¡c-
for payment of the diagnostic workup necessary to ipated bracket replacements, appliance removal if
obta¡n the authorization using procedure codes D0330, indicated, special orthodontic appliances, etc.). The
D0340, D0350, and D0470. The dentist may receive treatment plan should incorporate only the minimal
payment underthese procedure codes for no more than number of appliances required to properly treat the
two cases out of every ten cases denied. The dentist case. Requests for multiple appliances to treat an
should determine if the client's condition meets individual arch are reviewed for duplication of purpose.
orthodontic benefit criteria before performing a . Cephalometric radiograph with tracing models.
diagnost¡c workup.
. . Completed and scored HLD sheet with diagnosis of
Procedure codes D8080, D8O5O, and 08060, are
Angle class (26 points required for approval of noncleft
limited to one per lifetime.
palate cases).
. Comprehensive orthodontic services (procedure code . Facial photographs.
D8080) are restricted to clients who are !2 years of
age or older or clients who have exfol¡ated all primary . Full series of radiographs or a panoramic radiograph;
dentition. Crossbite therapy includes diagnosic cast diagnosticauality films are required (copies are
services. accepted and radiographs will not be returned to the
provider).
CDT only copyright 2008 American Dental Association All rjghls reseryed 19-39
Section 19
. Any additional pertinent information as determined by The following supporting documentation must accompany
the dent¡st or requested by TMHP's Dental Director the new request for orthodontia services and must include
Requests for crossbite therapy require properly the DOS the ofthodontic diagnostic tools were produced:
trimmed models to be retained in the office and must . All of the documentation as required for the original
demonstrate the following criteria: provider.
. Posterior teeth. Not end to end, but buccal cusp of . The reason the client left the previous provider, if
upper teeth should be lingual to buccal cusp of lower known.
teeth.
. An explanation of the treatment status.
. Anterior teeth. The incisal edge of upper should be
.
lingual to the incisal of the opposing arch. A compete treatment plan addressing all procedures for
which authorization is being requested (such as the
The dentist should be certain that radiographs, photo- number of monthly adjustments or reta¡ners required to
graphs, and other information are properly packaged to complete the case).
avoid damage. TMHP is not responsible for lost or
damaged materials.
. A full diagnostic workup (D8080) with an HLD lndex.
The score of 26 points will be modified according to any
Refer to: "THSteps Dental Mandatory Prior Authorization progress achieved.
Request Form" on page 8-111.
Exception:The prior authorization requests for clients
who initiate orthodontic services before becoming eligible
19.19.3 Gompletion of Treatment Plan for Medicaid do not requ¡re models or the HLD score
sheet, nor does the client have to meet the HLD lndex of
lf a client reaches 2tyears of age or loses Medicaid eligi- 26 points, However, a complete plan of treatment is
bility before the authorized orthodontic treatment is required.
completed, reimbursement is provided to complete the
orthodontic treatment that was authorized and initiated Note: Medicaid clients who initiate orthodontic services
while the client was 20 years of age or younger, eligible for privately (e.9. pay out of pocket for the ofthodontic workup
Medicaid and THSteps, and completed within 36 months. and/or ¡n¡t¡al banding, etc.) wh¡le Medicaid eligible due to
Any orthodontic-related service requested (e.9., extrac- not meeting the HLD index 26-points, are not eligible to
tions or surgeries) must be completed before the loss of have their orthodontic services transferred to and
client eligibility. Serv¡ces cannot be added or approved reimbursed by Medicaid.
after Medicaid/THSteps eliÉibility has expired. To request prior authorization for completion of the
orthodontic treatment initiated by another provider,
complete a THSteps Dental Mandatory Prior Authorization
L9.L9.4 Premature Removal of Appliances Request Form and send it with the complete plan of
The overall fee for orthodontic treatment (D8080) treatment and appropriate documentation for orthodontic
includes the removal of orthodontic brackets and/or services and/or crossbite therapy to the TMHP Dental
treatment appliances. Procedure code D7997 may be Director at the following address:
used only when the appliances were placed by a different Texas Medicaid & Healthcare Partnership
provider with an unaffiliated practice (not a partner or THSteps and ICF-MR Dental Authorization and lnformation
office-sharing arrangement) and one of the following PO Box 2O29L7
conditions exist: Austin, TX 78720-2977
. There is documentation of a lack of cooperation from
the client.
. The client requests premature removal and a release
19.19.6 Gomprehens¡ve Orthodontic
form has been signed by the parent, guardian, or client Treatment
if he is at least 18 years of age. Comprehensive orthodontic services (procedure code
D8080) are restricted to cl¡ents who are t2years o1 age
Providers must keep a copy of the release form on file and
or older or clients who have exfoliated all primary
are responsible for this documentation during a review
dent¡tion.
process.
National procedure codes do not allow for any work-in-
progress or partial billing by separating the three
19.19.5 Transfer of Orthodontic Services orthodontic components: diagnostic workup, orthodontic
Prior authorization issued to a dental provider for
appliance (upper), or orthodontic appliance (lower).
orthodontic services is not transferable to another dental When billing for comprehensive orthodontic treatment,
provider. The new provider must subm¡t to TMHP a new D8080, three local codes must be submitted as remarks
prior authorization request in order to be approved to codes along with code D8080. Local codes (72OO9,
complete the orthodontic treatment initiated by the Dia gnostic worku p a pproved, Z2OI1-, O rthodontic
original provider.
19-40 CDf only copyright 2008 Ame.ican Dental Association. All rights reseryed
Section 19
L9.2L.L HLD Score Sheet
This sheet and a Boley Gauge are required to score.
Procedure:
. Occlude client or models in centric position.
. Record all measurements rounded-off to the nearest millimeter.
. Enter a score of 0 if the condition is absent.
. Overjet is measured from the most protrusive inc¡sor.
. Overbite is measured from the labio-incisal edge of overlapped anterior tooth or teeth to point of
maximum coverage.
. Ectopic eruption and anterior crowding: Do not double-score. Record the more serious condition.
PLEASE PRINT CLEARLY:
Client Name: Date of birth Medicaid lD:
Address: (Street/City/County/State/Zip Code)
CONDITIONS OBSERVED HLD SCORE
Cleft Palate Score 15
Severe Traumatic Deviations Score 15
Trauma/Accident related only
Overjet in mm. Minus 2 mm.
Example: I mm. - 2 mm. = 6 points
Overbite in mm. Minus 3 mm.
Example: 5 mm. - 3 mm. = 2 points
Mandibular Protrusion in mm. x5
See definitions/instructions to score (previous page)
Open Bite in mm. x4
See definitions/instructions to score (previous page)
Ectopic Eruption (Anteriors Only) Each tooth x3
Reminder: Points cannot be awarded on the same arch
for Ectopic Eruptíon and Crowding
Anterior Crowding Max. Mand = 5 pts. each
1O point maximum total for both arches arch
combined
Labio-lingual Spread in mm
TOTAL
Diagnosis For TMHP use only
Authorizat¡on Number
Examiner: ,Recorder:
Provider's Signature
Please submit this score sheet with records
19-46 CDI only copyr¡ght 2008 American Dental Associatron All ri8hts reserued
Append¡x B
9/8/2014 6:43:30 PM
Amalia Rodriguez-Mendoza
District Clerk
Travis County
D-1-GV-14-000581
II. ARGUMENT
A. The TMFP A Does Not Allow for Intervention or Consolidation of Other
Parties' Claims into a TMFPA Case
Twenty providers, all represented by the same counsel who also represent the
seven providers in the four Separately Filed Provider Cases, 2 have wrongly intervened in
Texas's TMFPA Case. Texas has properly filed a Motion to Strike their interventions.
See Motion to Strike Petitions in Intervention, Answer and Pleas to the Jurisdiction filed
June 9, 2014, in Texas's TMFPA Case (the arguments set forth therein are re-alleged and
incorporated by reference herein). As explained in the Motion to Strike Intervention,
there is no basis for the providers to intervene in Texas's TMFPA case. See Id. at pp. 9-
13. Likewise, consolidation of Texas's TMFPA Case is not a permissible alternative to
wrongly intervening in a case. Furthermore, consolidation of the providers' common law
claims and Xerox's contribution claims do not make them any more relevant or common
to Texas's TMFPA Case against Xerox. See Section C, infra.
Furthermore, twenty providers wrongly intervened in Texas HHSC's Injunction
Case and HHSC has properly filed a Motion to Strike their intervention. See Motion to
Strike Intervention filed September 3, 2014, in Texas HHSC' s Injunction Case (the
arguments set forth therein are re-alleged and incorporated by reference herein).
Consolidating these cases would allow the providers to wrongly intervene in a case and
2
The following cases are collectively referred to as the 4 Separately Filed Provider Cases: (1) Harlingen
Family Dentistry, P.C., et al. v. ACS State Healthcare, LLC, Cause No. D-GN-14-000319 ("Harlingen");
(2) Antoine Dental Center v. ACS State Healthcare, LLC, Cause No. D-GN-14-000320 ("ADC"); (3)
M&M Orthodontics, PA, et al. v. ACS State Healthcare, LLC, Cause No. D-GN-14-000320 ("M&M");
(4) Dr. Paul Dunn, DDS v. ACS State Healthcare, LLC, Cause No. D-GN-14-000322 ("Dunn").
Texas' Response in Opposition to Motion to Consolidate Page3
successfully circumvent the Court's ruling on Texas's Motion to Strike Intervention in
Texas HHSC' s Injunction Case by also seeking consolidation.
B. Consolidation of Six Separate Cases Into a Single Case For Trial Will Not
Promote Judicial Economy or Convenience, and Will Create An Unwieldy
Single Case Resulting in Jury Confusion and Prejudice.
1. Consolidation will promote jury confusion.
In deciding whether to consolidate cases, a trial court must weigh the judicial
economy and convenience that may be gained by the consolidation, against the risk of an
unfair outcome because of prejudice or jury confusion. TEX. R. CIV. P. 174; In re Van
Waters & Rogers, Inc., 145 S.W.3d 203, 208 (Tex. 2004) ("In determining whether
various claims are appropriate for consolidation, 'the dominant consideration in every
case is whether the trial will be fair and impartial to all parties"); Owens-Corning
Fiberglass Corp. v. Martin, 942 S.W.2d 712, 716 (Tex. App. -Dallas 1997).
"Consolidation should be avoided if it would cause 'confusion or prejudice as to render
the jury incapable of finding the facts on the basis of the evidence."' In re Van Waters &
Rogers, Inc., 145 S.W.3d at 208.
The providers in the 4 Separately Filed Provider Cases intervened in both Texas'
TMFPA Case and Texas HHSC' s Injunction Case. See Pleas in Intervention filed by
Harlingen, ADC, M&M, and Dunn on May 15, 2014 in Texas's TMFPA Case, and
Petition in Intervention filed by Intervenors in Texas HHSC' s Injunction Case on
September 3, 2014 at 2 (identifying the Harlingen, ADC, M&M and Dunn providers as
Intervenors). Consolidating these 4 Separately Filed Provider Cases with the two Texas
cases against Xerox, would result in a single case consisting of Texas, the Xerox Parties
Texas' Response in Opposition to Motion to Consolidate Page4
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E