In Re Novartis Pharmaceuticals Corporation v. the State of Texas
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Opinion
ACCEPTED 15-25-00207-CV Cause No. _________ FIFTEENTH COURT OF APPEALS AUSTIN, TEXAS 11/14/2025 4:30 PM IN THE CHRISTOPHER A. PRINE CLERK Court of Appeals for the FILED IN 15th COURT OF APPEALS
15th District of Texas AUSTIN, TEXAS 11/14/2025 4:30:06 PM CHRISTOPHER A. PRINE Clerk
IN RE NOVARTIS PHARMACEUTICALS CORPORATION, Relator.
_______________________________ ORIGINAL PROCEEDING FROM THE 71ST DISTRICT COURT, IN HARRISON COUNTY, TEXAS • CAUSE NO. 23-0276, THE HONORABLE BRAD MORIN PRESIDING
PETITION FOR WRIT OF MANDAMUS (ORAL ARGUMENT REQUESTED)
DANNY S. ASHBY ANTON METLITSKY (Texas Bar No. 01370960) ROSS B. GALIN O’MELVENY & MYERS LLP O’MELVENY & MYERS LLP 2801 N. Harwood Street, Suite 1600 1301 Avenue of the Americas, Dallas, Texas 75201 Suite 1700 Telephone: +1 972.360.1900 New York, New York 10019 Telephone: +1 212.326.2000 DERON R. DACUS (Applications for pro hac vice (Texas Bar No. 00790553) admission pending) THE DACUS FIRM, P.C. 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903.705.1117
Counsel for Relator Novartis Pharmaceuticals Corporation
TEMPORARY STAY REQUESTED
(800) 4-APPEAL • (814349) IDENTITY OF PARTIES AND COUNSEL
Pursuant to Texas Rule of Appellate Procedure 52.3(a), Relator
Novartis Pharmaceuticals Corporation certifies that the following is a
complete list of all parties and the names and firms of all counsel
appearing in the trial or appellate courts, as well as the mailing address,
telephone number, and email address for counsel currently appearing.
Relator Danny S. Ashby dashby@omm.com Defendant Novartis O’MELVENY & MYERS LLP Pharmaceuticals 2801 N. Harwood Street, Suite 1600 Corporation Dallas, Texas 75201 Telephone: +1 972 360 1900
Anton Metlitsky ametlitsky@omm.com Ross Galin rgalin@omm.com O’MELVENY & MYERS LLP 1301 Avenue of the Americas Suite 1700 New York, New York 10019 Telephone: +1 212 326 2000
Deron R. Dacus ddacus@dacusfirm.com THE DACUS FIRM, P.C. 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903 705 1117 Real Party in Interest Samuel F. Baxter sbaxter@mckoolsmith.com Jennifer L. Truelove
i Plaintiff Health Selection jtruelove@mckoolsmith.com Group, LLC MCKOOL SMITH P.C. 104 East Houston, Suite 300 Marshall, Texas 75670
Eric B. Halper ehalper@mckoolsmith.com Radu A. Lelutiu rlelutiu@mckoolsmith.com MCKOOL SMITH P.C. One Manhattan West 395 Ninth Avenue, 50th Floor New York, New York 10001
W. Mark Lanier WML@LanierLawFirm.com Harvey Brown Harvey.Brown@LanierLawFirm.com Benjamin Major Benjamin.Major@LanierLawFirm.com Zeke DeRose III Zeke.DeRose@LanierLawFirm.com Jonathan Wilkerson Jonathan.Wilkerson@LanierLawFirm.com THE LANIER FIRM 10940 W. Sam Houston Pkwy N, Suite 100 Houston, Texas 77064 Real Party in Interest Evan S. Greene Evan.Greene@oag.texas.gov State of Texas OFFICE OF THE TEXAS ATTORNEY GENERAL Civil Medicaid Fraud Division P.O. Box 12548, Capitol Station Austin, Texas 78711 Telephone: (512) 475-4196
ii Respondent The Hon. Brad Morin, 71st District Court, Harrison County
iii TABLE OF CONTENTS
Page
IDENTITY OF PARTIES AND COUNSEL.............................................. i INDEX TO APPENDIX ........................................................................... vi STATEMENT OF THE CASE ................................................................. 1 STATEMENT OF JURISDICTION ......................................................... 3 STATEMENT REGARDING ORAL ARGUMENT ................................. 3 ISSUES PRESENTED ............................................................................. 4 THE MANDAMUS RECORD AND APPENDIX ..................................... 4 STATEMENT OF FACTS ........................................................................ 5 A. Statutory Background................................................... 5 B. Facts and Trial Court Proceedings ............................... 9 C. Prior Court of Appeals and Supreme Court Proceedings ................................................................. 13 SUMMARY OF THE ARGUMENT ....................................................... 16 ARGUMENT .......................................................................................... 19 I. HSG Lacks Standing To Bring This Qui Tam Action ......... 19 A. The Constitution requires that a plaintiff demonstrate injury...................................................... 20 B. HSG has not suffered any injury. ............................... 21 C. HSG cannot sue as an assignee or representative of the State. ................................................................. 23 1. There is no damages claim to assign. ................ 23 2. Statutory standing does not satisfy or displace constitutional standing principles ....... 28 3. Representative standing has no application here. .................................................................... 30 II. The TMFPA’s Qui Tam Provisions Offend The Separation Of Powers .......................................................... 32
iv TABLE OF CONTENTS (continued) Page
A. The Texas Constitution exclusively assigns to State attorneys the power to bring and maintain suits for the State. ....................................................... 34 B. The TMFPA impermissibly authorizes private individuals to press suits that State attorneys decline to control. ........................................................ 43 1. The TMFPA allows for litigation that State attorneys affirmatively choose not to bring. ..... 43 2. There is no possible saving construction. .......... 48 3. The State does not maintain control over qui tam actions that it does not bring. .............. 50 C. History cannot salvage the TMFPA. .......................... 52 III. Section 51-A Of The Constitution Does Not Override Basic Separation-Of-Powers Principles ............................... 55 IV. The Court Should Grant Mandamus Relief ........................ 59 PRAYER ................................................................................................. 62 DECLARATION OF DANNY S. ASHBY .............................................. 64 CERTIFICATE OF COMPLIANCE ....................................................... 66 CERTIFICATION................................................................................... 67 CERTIFICATE OF SERVICE................................................................ 67
v TABLE OF CONTENTS (continued) Page
INDEX TO APPENDIX
Document Page Order Denying Defendant’s Plea to Jurisdiction and Motion to 001 Dismiss Order Denying Petition for Writ of Mandamus 004 Memorandum Opinion Denying Petition for Writ of 006 Mandamus Judgment Denying Petition for Writ of Mandamus 009 Novartis’s Petition for Writ of Mandamus in the 010 Supreme Court of the State of Texas HSG’s Combined Response to Petition for Writ of Mandamus 080 and Motion for Temporary Stay State’s Response to Relator’s Petition for Writ of Mandamus 106 Novartis’s Reply In Support of Petition for Writ of Mandamus 139 Novartis’s Brief on the Merits 158 Amicus Curiae Brief of US Chamber of Commerce In Support 227 of Petitioner HSG’s Responsive Brief on the Merits 267 State’s Responsive Brief on the Merits 344 Amicus Curiae Brief of Pharmaceutical Research and 383 Manufacturers of America In Support of Relator Novartis Pharmaceutical Corporation Novartis’s Reply Brief on the Merits 413 SCOTx Order Denying Petition 456 SCOTx Statement of Justices Young and Sullivan Respecting 485 the Denial of Writ of Mandamus
vi TABLE OF CONTENTS (continued) Page
Tex. Const. Art. I, § 13 495 Tex. Const. Art. II, § 1 496 Tex. Const. Art. IV, § 22 497 Tex. Const. Art. V, § 21 498 Tex. Hum. Res. Code § 36.101 499 Tex. Hum. Res.
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ACCEPTED 15-25-00207-CV Cause No. _________ FIFTEENTH COURT OF APPEALS AUSTIN, TEXAS 11/14/2025 4:30 PM IN THE CHRISTOPHER A. PRINE CLERK Court of Appeals for the FILED IN 15th COURT OF APPEALS
15th District of Texas AUSTIN, TEXAS 11/14/2025 4:30:06 PM CHRISTOPHER A. PRINE Clerk
IN RE NOVARTIS PHARMACEUTICALS CORPORATION, Relator.
_______________________________ ORIGINAL PROCEEDING FROM THE 71ST DISTRICT COURT, IN HARRISON COUNTY, TEXAS • CAUSE NO. 23-0276, THE HONORABLE BRAD MORIN PRESIDING
PETITION FOR WRIT OF MANDAMUS (ORAL ARGUMENT REQUESTED)
DANNY S. ASHBY ANTON METLITSKY (Texas Bar No. 01370960) ROSS B. GALIN O’MELVENY & MYERS LLP O’MELVENY & MYERS LLP 2801 N. Harwood Street, Suite 1600 1301 Avenue of the Americas, Dallas, Texas 75201 Suite 1700 Telephone: +1 972.360.1900 New York, New York 10019 Telephone: +1 212.326.2000 DERON R. DACUS (Applications for pro hac vice (Texas Bar No. 00790553) admission pending) THE DACUS FIRM, P.C. 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903.705.1117
Counsel for Relator Novartis Pharmaceuticals Corporation
TEMPORARY STAY REQUESTED
(800) 4-APPEAL • (814349) IDENTITY OF PARTIES AND COUNSEL
Pursuant to Texas Rule of Appellate Procedure 52.3(a), Relator
Novartis Pharmaceuticals Corporation certifies that the following is a
complete list of all parties and the names and firms of all counsel
appearing in the trial or appellate courts, as well as the mailing address,
telephone number, and email address for counsel currently appearing.
Relator Danny S. Ashby dashby@omm.com Defendant Novartis O’MELVENY & MYERS LLP Pharmaceuticals 2801 N. Harwood Street, Suite 1600 Corporation Dallas, Texas 75201 Telephone: +1 972 360 1900
Anton Metlitsky ametlitsky@omm.com Ross Galin rgalin@omm.com O’MELVENY & MYERS LLP 1301 Avenue of the Americas Suite 1700 New York, New York 10019 Telephone: +1 212 326 2000
Deron R. Dacus ddacus@dacusfirm.com THE DACUS FIRM, P.C. 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903 705 1117 Real Party in Interest Samuel F. Baxter sbaxter@mckoolsmith.com Jennifer L. Truelove
i Plaintiff Health Selection jtruelove@mckoolsmith.com Group, LLC MCKOOL SMITH P.C. 104 East Houston, Suite 300 Marshall, Texas 75670
Eric B. Halper ehalper@mckoolsmith.com Radu A. Lelutiu rlelutiu@mckoolsmith.com MCKOOL SMITH P.C. One Manhattan West 395 Ninth Avenue, 50th Floor New York, New York 10001
W. Mark Lanier WML@LanierLawFirm.com Harvey Brown Harvey.Brown@LanierLawFirm.com Benjamin Major Benjamin.Major@LanierLawFirm.com Zeke DeRose III Zeke.DeRose@LanierLawFirm.com Jonathan Wilkerson Jonathan.Wilkerson@LanierLawFirm.com THE LANIER FIRM 10940 W. Sam Houston Pkwy N, Suite 100 Houston, Texas 77064 Real Party in Interest Evan S. Greene Evan.Greene@oag.texas.gov State of Texas OFFICE OF THE TEXAS ATTORNEY GENERAL Civil Medicaid Fraud Division P.O. Box 12548, Capitol Station Austin, Texas 78711 Telephone: (512) 475-4196
ii Respondent The Hon. Brad Morin, 71st District Court, Harrison County
iii TABLE OF CONTENTS
Page
IDENTITY OF PARTIES AND COUNSEL.............................................. i INDEX TO APPENDIX ........................................................................... vi STATEMENT OF THE CASE ................................................................. 1 STATEMENT OF JURISDICTION ......................................................... 3 STATEMENT REGARDING ORAL ARGUMENT ................................. 3 ISSUES PRESENTED ............................................................................. 4 THE MANDAMUS RECORD AND APPENDIX ..................................... 4 STATEMENT OF FACTS ........................................................................ 5 A. Statutory Background................................................... 5 B. Facts and Trial Court Proceedings ............................... 9 C. Prior Court of Appeals and Supreme Court Proceedings ................................................................. 13 SUMMARY OF THE ARGUMENT ....................................................... 16 ARGUMENT .......................................................................................... 19 I. HSG Lacks Standing To Bring This Qui Tam Action ......... 19 A. The Constitution requires that a plaintiff demonstrate injury...................................................... 20 B. HSG has not suffered any injury. ............................... 21 C. HSG cannot sue as an assignee or representative of the State. ................................................................. 23 1. There is no damages claim to assign. ................ 23 2. Statutory standing does not satisfy or displace constitutional standing principles ....... 28 3. Representative standing has no application here. .................................................................... 30 II. The TMFPA’s Qui Tam Provisions Offend The Separation Of Powers .......................................................... 32
iv TABLE OF CONTENTS (continued) Page
A. The Texas Constitution exclusively assigns to State attorneys the power to bring and maintain suits for the State. ....................................................... 34 B. The TMFPA impermissibly authorizes private individuals to press suits that State attorneys decline to control. ........................................................ 43 1. The TMFPA allows for litigation that State attorneys affirmatively choose not to bring. ..... 43 2. There is no possible saving construction. .......... 48 3. The State does not maintain control over qui tam actions that it does not bring. .............. 50 C. History cannot salvage the TMFPA. .......................... 52 III. Section 51-A Of The Constitution Does Not Override Basic Separation-Of-Powers Principles ............................... 55 IV. The Court Should Grant Mandamus Relief ........................ 59 PRAYER ................................................................................................. 62 DECLARATION OF DANNY S. ASHBY .............................................. 64 CERTIFICATE OF COMPLIANCE ....................................................... 66 CERTIFICATION................................................................................... 67 CERTIFICATE OF SERVICE................................................................ 67
v TABLE OF CONTENTS (continued) Page
INDEX TO APPENDIX
Document Page Order Denying Defendant’s Plea to Jurisdiction and Motion to 001 Dismiss Order Denying Petition for Writ of Mandamus 004 Memorandum Opinion Denying Petition for Writ of 006 Mandamus Judgment Denying Petition for Writ of Mandamus 009 Novartis’s Petition for Writ of Mandamus in the 010 Supreme Court of the State of Texas HSG’s Combined Response to Petition for Writ of Mandamus 080 and Motion for Temporary Stay State’s Response to Relator’s Petition for Writ of Mandamus 106 Novartis’s Reply In Support of Petition for Writ of Mandamus 139 Novartis’s Brief on the Merits 158 Amicus Curiae Brief of US Chamber of Commerce In Support 227 of Petitioner HSG’s Responsive Brief on the Merits 267 State’s Responsive Brief on the Merits 344 Amicus Curiae Brief of Pharmaceutical Research and 383 Manufacturers of America In Support of Relator Novartis Pharmaceutical Corporation Novartis’s Reply Brief on the Merits 413 SCOTx Order Denying Petition 456 SCOTx Statement of Justices Young and Sullivan Respecting 485 the Denial of Writ of Mandamus
vi TABLE OF CONTENTS (continued) Page
Tex. Const. Art. I, § 13 495 Tex. Const. Art. II, § 1 496 Tex. Const. Art. IV, § 22 497 Tex. Const. Art. V, § 21 498 Tex. Hum. Res. Code § 36.101 499 Tex. Hum. Res. Code § 36.102 500 Tex. Hum. Res. Code § 36.104 502 Tex. Hum. Res. Code § 36.107 503 Tex. Hum. Res. Code § 36.113 505 Tex. Hum. Res. Code § 36.052 506 Tex. Res. Code § 36.104 (1997) 508 Tex. Hum. Res. Code § 36.104 (2007) 509
vii TABLE OF AUTHORITIES
Page(s)
Cases Agey v. American Liberty Pipe Line Co., 172 S.W.2d 972 (Tex. 1943).......................................................... passim Allen v. Fisher, 9 S.W.2d 731 (Tex. 1928)................................................................ 17, 31 American Liberty Pipeline Co v. Agey, 167 S.W.2d 580 (Tex. App. 1942) ............................................. 36, 40, 53 Armadillo Bail Bonds v. State, 802 S.W.2d 237 (Tex. Crim. App. 1990) ............................................... 32 Bell v. Low Income Women of Texas, 95 S.W.3d 253 (Tex. 2002).............................................................. 56, 57 Busbee v. Cnty. of Medina, 681 S.W.3d 391 (Tex. 2023).................................................................. 29 Bush v. Republic of Texas, 1 Tex. 455 (1846) .................................................................................. 53 Camp v. Gulf Prod. Co., 61 S.W.2d 773 (Tex. 1933)........................................................ 37, 40, 41 Charles Scribner’s Sons v. Marrs, 262 S.W. 722 (Tex. 1924)...................................................................... 44 Data Foundry, Inc. v. City of Austin, 620 S.W.3d 692 (Tex. 2021)............................................................ 20, 21 El Paso Elec. Co. v. Tex. Dep’t of Ins., 937 S.W.2d 432 (Tex. 1996)................................................ 33, 38, 42, 45 Farmers Tex. Cnty. Mut. Ins. Co. v. Beasley, 598 S.W.3d 237 (Tex. 2020)............................................................ 20, 29 Fin. Comm’n of Tex. v. Norwood, 418 S.W.3d 566 (Tex. 2013).................................................................. 22 Gabelli v. SEC, 568 U.S. 442 (2013) .............................................................................. 26 Gibbs v. State, 46 S.W. 645 (Tex. Crim. App. 1898) ..................................................... 53
viii TABLE OF AUTHORITIES (continued) Page(s)
Heckman v. Williamson Cnty., 369 S.W.3d 137 (Tex. 2012)................................................ 20, 21, 23, 30 Hill County v. Sheppard, 178 S.W.2d 261 (Tex. 1944)............................................................ 38, 45 Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939 (1997) .............................................................................. 46 In re Allcat Claims Serv., L.P., 356 S.W.3d 455 (Tex. 2011).................................................................. 22 In re Essex Ins. Co., 450 S.W.3d 524 (Tex. 2014).................................................................. 60 In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d 261 (Tex. 2021).................................................................. 60 In re J.B. Hunt Transport, Inc., 492 S.W.3d 287 (Tex. 2016).................................................................. 60 In re Lazy W Dist. No. 1, 493 S.W.3d 538 (Tex. 2016).................................................................. 22 In re Novartis Pharmaceuticals Corp., __ S.W.3d __, 2025 WL 2989490 (Tex. 2025) ............................... passim In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004)............................................................ 59, 60 In re Sanofi-Aventis U.S. LLC, 711 S.W.3d 732 (Tex. App. 2025) ..................................................... 3, 14 In re Shire PLC, 633 S.W.3d 1 (Tex. App. 2021) ............................................................. 60 In re Xerox Corp., 555 S.W.3d 518 (Tex. 2018).......................................................... passim Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) .............................................................................. 21 Malouf v. State ex rel. Ellis, 694 S.W.3d 712 (Tex. 2024).............................................................. 6, 45
ix TABLE OF AUTHORITIES (continued) Page(s)
Marsh v. Chambers, 463 U.S. 783 (1983) .............................................................................. 52 Maud v. Terrell, 200 S.W. 375 (Tex. 1918).............................................................. passim Morrison v. Olson, 487 U.S. 654 (1988) .............................................................................. 46 Mosaic Baybrook One, L.P. v. Simien, 674 S.W.3d 234 (Tex. 2023).................................................................. 20 Moyer v. Moyer, 183 S.W.3d 48 (Tex. App.—Austin 2005) ............................................ 31 NLRB v. Noel Canning, 573 U.S. 513 (2014) .............................................................................. 54 PPG Indus., Inc. v. JMB/Houston Cntrs. Partners Ltd. P’ship, 146 S.W.3d 79 (Tex. 2004).................................................................... 46 Quick v. City of Austin, 7 S.W.3d 109 (Tex. 1998)...................................................................... 50 Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749 (5th Cir. 2001) ................................................................ 52 S. Dakota v. Dole, 483 U.S. 203 (1987) .............................................................................. 59 Saldano v. State, 70 S.W.3d 873 (Tex. Crim. App. 2002) ................................................. 54 Southern Pac Co. v. Porter, 331 S.W.2d 42 (Tex. 1960).................................................................... 53 Sprint Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269 (2008) .............................................................................. 27 Staples v. State, 245 S.W. 639 (Tex. 1922).............................................................. passim State ex rel. Durden v. Shahan, 658 S.W.3d 300 (Tex. 2022).................................................................. 33
x TABLE OF AUTHORITIES (continued) Page(s)
State v. Lloyd, 994 S.W.2d 362 (Tex. App.—Waco 1999) ............................................. 42 State v. Moore, 57 Tex. 307 (1882) ................................................................................ 54 Tenet Hosps. Ltd. v. Rivera, 445 S.W.3d 698 (Tex. 2014).................................................................. 30 Terrell v. Sparks, 135 S.W. 519 (Tex. 1911)...................................................................... 38 Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993).................................................................. 21 Texas Boll Weevil Eradication Found., Inc. v. Lewellen, 952 S.W.2d 454 (Tex. 1997)...................................................... 45, 46, 47 Texas v. Yellen, 105 F.4th 755 (5th Cir. 2024) ............................................................... 59 TransUnion LLC v. Ramirez, 594 U.S. 413 (2021) ........................................................................ 26, 28 United States ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., 4 F.4th 255 (5th Cir. 2021) ............................................................. 11, 12 United States ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., No. 5:17-cv-123 (E.D. Tex. Dec. 17, 2018) .......................... 10, 11, 12, 47 United States ex rel. Health Selection Grp., LLC v. Novartis AG, et al., No. 5:18-cv-60 (E.D. Tex. Apr. 20, 2018)........................................ 11, 12 United States ex rel. Montcrief v. Peripheral Vascular Assocs., P.A., 133 F.4th 395 (5th Cir. 2025) ............................................................... 58 United States ex. rel. Carroll v. Planned Parenthood Gulf Coast, Inc., 21 F. Supp. 3d 825 (S.D. Tex. 2014)....................................................... 8
xi TABLE OF AUTHORITIES (continued) Page(s)
United States ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419 (2023) .................................................................. 52, 54, 58 United States ex rel. Zafirov v. Fla. Med. Assocs., LLC, 751 F. Supp. 3d 1293 ............................................................................ 58 United States of Am. ex rel. Gentry v. Encompass Health Rehab. Hosp. of Pearland, L.L.C., __ F.4th __, 2025 WL 3063921 (5th Cir. Nov. 3, 2025)........................ 58 Univ. of Tex. Health Sci. Ctr. at San Antonio v. Mata & Bordini, Inc., 2 S.W.3d 312 (Tex. App.—San Antonio 1999) ..................................... 42 University of Texas at Arlington v. Bishop, 997 S.W.2d 350 (Tex. App.—Fort Worth 1999) ................................... 42 Valley Forge Christian Coll. v. Americans United for Separation of Church & State, Inc., 454 U.S. 464 (1982) .............................................................................. 23 Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000) ...................................................................... passim Wal-Mart Stores, Inc. v. Forte, 497 S.W.3d 460 (Tex. 2016).................................................................. 26 Walz v. Tax Comm’n of City of N.Y., 397 U.S. 664 (1970) .............................................................................. 55 Statutes 2007 Tex. Sess. Law Serv. Ch. 29, § 4 (S.B. 362)...................................... 8 2023 Tex. Sess. Law Serv. Ch. 273 (S.B. 745) .......................................... 1 31 U.S.C. § 3729 et seq. ............................................................................. 9 31 U.S.C. § 3729(a) .................................................................................... 9 31 U.S.C. § 3729(a)(1)................................................................................ 9 34 Tex. Jur. 445 ....................................................................................... 38 42 U.S.C. § 1396h .................................................................................... 57
xii TABLE OF AUTHORITIES (continued) Page(s)
Tex. Civ. Prac. & Rem. Code § 64.001(a) ................................................ 31 Tex. Estates Code § 351.101 ................................................................... 30 Tex. Gov’t Code § 402.021 ....................................................................... 33 Tex. Hum. Res. Code § 36.051(a) .............................................................. 6 Tex. Hum. Res. Code § 36.052................................................................... 6 Tex. Hum. Res. Code § 36.101................................................................... 9 Tex. Hum. Res. Code § 36.101(a) .................................................... 1, 6, 49 Tex. Hum. Res. Code § 36.101(b) .............................................................. 8 Tex. Hum. Res. Code § 36.102(b) .............................................................. 6 Tex. Hum. Res. Code § 36.102(d) .............................................................. 6 Tex. Hum. Res. Code § 36.104(a)(1) .................................................... 7, 44 Tex. Hum. Res. Code § 36.104(a)(2) .............................................. 7, 44, 50 Tex. Hum. Res. Code § 36.104(b) .................................................... passim Tex. Hum. Res. Code § 36.104(b-1) ..................................................... 8, 51 Tex. Hum. Res. Code § 36.105............................................................. 7, 49 Tex. Hum. Res. Code § 36.107(b) .............................................................. 7 Tex. Hum. Res. Code § 36.107(c)............................................................... 7 Tex. Hum. Res. Code § 36.107(d) .............................................................. 7 Tex. Hum. Res. Code § 36.110(a) .............................................................. 8 Tex. Hum. Res. Code § 36.110(a-1) ........................................................... 8 Tex. Hum. Res. Code §§ 36.101-.132 ......................................................... 5 Other Authorities Constitutionality of the Qui Tam Provisions of the False Claims Act, 13 Op. O.L.C. 207 (1989) .................................................. 52 J. Randy Beck, The False Claims Act And The English Eradication of Qui Tam Legislation, 78 N.C. L. Rev. 539 (2000) .................................................................................................... 47
xiii TABLE OF AUTHORITIES (continued) Page(s)
Saikrishna Prakash, The Chief Prosecutor, 73 Geo. Wash. L. Rev. 521 (2005) ..................................................................................... 48 Rules Tex. R. App. P. 52.3 ................................................................................... 5 Tex. R. App. P. 52.7 ................................................................................... 5 Constitutional Provisions Tex. Const. art. I, § 13 ............................................................................. 20 Tex. Const. art. I, § 6 ............................................................................... 57 Tex. Const. art. II, § 1 ................................................................. 20, 32, 57 Tex. Const. art. III, § 10 .......................................................................... 57 Tex. Const. art. III, § 51-a(a)................................................................... 55 Tex. Const. art. III, § 51-a(b)................................................................... 56 Tex. Const. art. III, § 51-a(c) ............................................................. 56, 57 Tex. Const. art. IV, § 22 .......................................................................... 40 Tex. Const. art. V, § 21 ............................................................................ 40
xiv STATEMENT OF THE CASE
Nature of the Case: Health Selection Group, LLC (“HSG”) filed
this qui tam action against Novartis Pharmaceuticals Corporation
(“Novartis”) under the Texas Medicaid Fraud Prevention Act
(“TMFPA”) 1, which provides that “a person may bring a civil action for a
violation of Section 36.002 for the person and for the state” and such
“action shall be brought in the name of the person and of the state.”
Tex. Hum. Res. Code § 36.101(a). Novartis filed a Plea to the
Jurisdiction and Motion to Dismiss under Texas Rule of Civil Procedure
91a arguing that (i) the district court lacked subject-matter jurisdiction
over the action because HSG did not allege that it personally suffered
any injury from the conduct alleged in the First Amended Petition and
(ii) the TMFPA’s qui tam provisions are void—and thus deprive HSG of
any valid cause of action—because they violate Article IV, Section 22
and Article V, Section 21 of the Texas Constitution. The district court
summarily denied the Plea to the Jurisdiction and Motion to Dismiss.
1The statute was amended effective September 1, 2023, and is now called the Texas Health Care Program Fraud Prevention Act. See 2023 Tex. Sess. Law Serv. Ch. 273 (S.B. 745). The amendments broaden the healthcare programs subject to the Act but do not alter the provisions discussed in this brief. For ease of reference, Novartis refers to the statute as the TMFPA, because that statute forms the basis for this qui tam action.
1 Novartis sought mandamus relief in the Court of Appeals for the Sixth
District at Texarkana on February 2, 2024. That Court issued a two-
page memorandum opinion on March 1, 2024, denying the mandamus
petition. Novartis then sought mandamus relief in the Supreme Court.
On August 30, 2024, the Supreme Court granted Novartis’s request for
a temporary stay of trial proceedings and ordered the parties to file
briefing on the merits of Novartis’s mandamus petition. On October 24,
2025, the Supreme Court denied the petition. Justices Young and
Sullivan filed a separate statement respecting the denial suggesting
that this Court was the appropriate forum to consider Novartis’s
petition in the first instance.
Respondent: The Honorable Brad Morin, Presiding Judge of the
71st District Court, Harrison County, Texas; Cause No. 23-0276.
Ruling at Issue: The Order Denying Defendant’s Plea to
Jurisdiction and Motion to Dismiss, signed on the 15th day of December
2023.
Relief Requested: An order directing the district court to grant
Novartis’s Plea to the Jurisdiction and dismiss the petition with
prejudice as to HSG for lack of subject-matter jurisdiction or, in the
2 alternative, an order directing the district court to grant the Motion to
Dismiss and dismiss the petition with prejudice as to HSG for lack of a
legally valid cause of action.
STATEMENT OF JURISDICTION
This Court has jurisdiction under Article V of the Texas
Constitution and Tex. Govt. Code § 22.220(d)(1)&(2). See also In re
Sanofi-Aventis U.S. LLC, 711 S.W.3d 732, 736-38 (Tex. App. 2025); In re
Novartis Pharmaceuticals Corp., __ S.W.3d __, 2025 WL 2989490, at *3-
4 (Tex. 2025) (statement of Young and Sullivan, J.J.).2 The Court is
empowered under Tex. Govt. Code § 22.221(c-1) to issue writs that arise
out of matters over which Tex. Govt. Code § 22.221(d) vests the Court
with intermediate appellate jurisdiction.
STATEMENT REGARDING ORAL ARGUMENT
Novartis respectfully requests oral argument. Novartis believes
oral argument will aid the Court in deciding the “weighty” and
“important” constitutional issues presented by this original proceeding,
see In re Novartis, supra, at *1, *3, including (i) whether courts have
subject-matter jurisdiction over a statutory cause of action when the
2 All citations to the In re Novartis opinion are to the statement of Justices Young
and Sullivan.
3 plaintiff has suffered no injury from the alleged statutory violation, and
(ii) whether Texas Medicaid Fraud Prevention Act violates the
separation of powers by authorizing private parties to bring actions on
behalf of the State when the Texas Supreme Court has consistently held
that the Texas Constitution delegates that authority exclusively to the
State attorneys elected by the people of Texas.
ISSUES PRESENTED
1. Whether the courts have subject-matter jurisdiction over a
statutory cause of action when it is undisputed that the plaintiff itself
suffered no injury from the alleged statutory violation.
2. Whether the Texas Medicaid Fraud Prevention Act violates
Texas’s separation of powers by allowing private individuals to initiate
and maintain a civil action for and in the name of the State.
3. Whether the Court should grant mandamus relief.
THE MANDAMUS RECORD AND APPENDIX
Novartis has prepared a Mandamus Record consisting of sworn
copies of documents filed in the underlying proceeding that are material
to its claim for relief and hereby states that no testimony or evidence
was adduced at the hearing on its Plea to the Jurisdiction and Motion to
4 Dismiss. See Tex. R. App. P. 52.7(a). The Mandamus Record will be
cited as follows: (MR__).
In addition, Novartis has prepared an Appendix containing a
sworn copy of the order complained of and the text of the relevant
constitutional provisions and statutes on which its argument is based.
See Tex. R. App. P. 52.3(k)(1). The Appendix also includes the petition
and merits briefing in the Texas Supreme Court, as well as that Court’s
order denying the petition for mandamus and Justices Young and
Sullivan’s separate statement. See Tex. R. App. P. 52.3(k)(2). The
Appendix will be cited as follows: (APP__).
STATEMENT OF FACTS
A. Statutory Background
The Texas Medicaid Fraud Prevention Act (TMFPA), Tex. Hum.
Res. Code §§ 36.101-.132, generally prohibits false statements made in
connection with healthcare programs. See In re Xerox Corp., 555
S.W.3d 518, 533-34 (Tex. 2018).
The Attorney General is empowered by the statute to enforce the
TMFPA. “If the attorney general has reason to believe that a person is
committing, has committed, or is about to commit an unlawful act, the
attorney general may institute an action for an appropriate order to
5 restrain the person from committing or continuing to commit the act.”
Tex. Hum. Res. Code § 36.051(a). The Attorney General may also seek
monetary penalties for each violation. Id. § 36.052. Those penalties are
“significant,” “regardless of whether the State actually suffers any
financial loss.” Malouf v. State ex rel. Ellis, 694 S.W.3d 712, 721 (Tex.
2024).
This case concerns actions to enforce the TMFPA brought not by
the Attorney General or any other State attorney but by private
individuals. The Act provides that a “person may bring a civil action for
a violation” of the Act “for the person and for the state,” which “shall be
brought in the name of the person and of the state.” Tex. Hum. Res.
Code § 36.101(a). And the Act then sets out a multi-step process by
which such a private suit, known as a qui tam action, may move
forward.
Initially, the TMFPA gives the State time to decide how to handle
a private action. A private suit must be filed under seal and must
remain sealed for at least 180 days. Tex. Hum. Res. Code § 36.102(b);
see id. § 36.102(d) (providing for extensions). At the conclusion of that
period, the State must inform the court that it has determined to
6 “proceed with the action” or, alternatively, that it “declines to take over
the action.” Id. § 36.104(a)(1)-(2). If the State proceeds with the action,
the Attorney General may “contract with a private attorney to represent
the state.” Id. § 36.105.
If the State proceeds with the action, the private party’s rights
become very limited. The State may dismiss the action without the
private party’s consent. Tex. Hum. Res. Code § 36.107(b). With court
approval, it may settle the action over the objections of the private
person. Id. § 36.107(c). And if the State determines that the private
person’s participation is delaying “the state’s prosecution of the case,”
the court “may impose limitations on the person’s participation.” Id.
§ 36.107(d).
But if the State declines to take over the action, “the person
bringing the action may proceed without the state’s participation.” Tex.
Hum. Res. Code § 36.104(b). And while the State has considerable
power before the sealing period expires, it is significantly constrained
after it declines to proceed with the suit. To intervene in the litigation
after the sealing period, the State must make “a showing of good cause,”
7 and any intervention cannot “limit[] the status and right” of the private
person. Id. § 36.104(b-1).
The possibility that an action could continue without the State’s
participation is relatively new. For the first decade after its enactment,
the TMFPA provided that the court “shall dismiss the action” if the
State declined to bring it. Tex. Hum. Res. Code § 36.104(b) (2005). But
the Legislature amended the statute in 2007 to allow private
individuals to continue litigation without the State’s consent. 2007 Tex.
Sess. Law Serv. Ch. 29, § 4 (S.B. 362); see United States ex. rel. Carroll
v. Planned Parenthood Gulf Coast, Inc., 21 F. Supp. 3d 825, 837 (S.D.
Tex. 2014) (noting amendment).
If a private person succeeds in her qui tam action, the defendant
must pay the same civil penalties as if the State had brought the action
itself. Tex. Hum. Res. Code § 36.101(b). But the private person
receives a bounty out of that penalty award. That award varies based
on a number of factors. But it can be as high as “30 percent of the
proceeds of the action” (if the State does not take over the suit) or “25
percent of the proceeds of the action” (if the State does take over the
suit). Id. § 36.110(a)-(a-1).
8 The TMFPA is similar to the federal False Claims Act, 31 U.S.C.
§ 3729 et seq. But there are key differences, including that the federal
statute covers many different kinds of false claims against the
government, while the TMFPA is limited to false claims in the
healthcare context. Compare 31 U.S.C. § 3729(a), with Tex. Hum. Res.
Code § 36.101. Most relevant to this case, the federal False Claims Act
provides for both “damages” (which reflect the actual harm caused by
the unlawful conduct to the government’s property) and “civil
penalties,” 31 U.S.C. § 3729(a)(1), while the TMFPA authorizes only
civil penalties and does not permit an “action for the recovery of
damages,” In re Xerox Corp., 555 S.W.3d at 534.
B. Facts and Trial Court Proceedings
Novartis Pharmaceuticals Corporation develops medical
treatments designed to improve and extend lives through scientific
research and technological innovation. Novartis’s efforts focus in large
part on developing treatments in areas with high unmet patient needs,
including neuroscience, immunology, and oncology. Novartis employs
9 approximately 78,000 people, and its medications have reached more
than 296 million individuals. 3
Plaintiff Health Selection Group, LLC (HSG) is a subsidiary of a
professional qui tam plaintiff, National Health Care Analysis Group
(NHCAG). NHCAG is a New Jersey-based “research organization”
created to monetize federal and state qui tam statutes that permit
private parties to file civil actions on behalf of the government in return
for a percentage of the government’s recovery. See First Am. Pet. ¶ 21
(MR006); U.S. Mot. to Dismiss at 1-2, United States ex rel. Health
Choice Alliance, LLC v. Eli Lilly & Co., No. 5:17-cv-123 (E.D. Tex. Dec.
17, 2018), Dkt. 192 (describing NHCAG as a “professional relator”
“comprised of member limited liability companies formed by investors
and former Wall Street investment bankers”). NHCAG mines publicly
available Medicaid and Medicare data and conducts witness interviews
to identify sweeping theories of liability, and then creates entities, like
HSG, to seek astronomical qui tam penalties against pharmaceutical
companies. See First Am. Pet. ¶ 42 (MR011); see U.S. Mot. to Dismiss
3 See Novartis, About, https://www.novartis.com/about (last accessed November 14,
2025).
10 at 5-6, Eli Lilly, No. 5:17-cv-123 (describing NHCAG’s business model).
In one recent case, the Fifth Circuit noted that NHCAG brought 11 qui
tam actions under the federal False Claims Act against a total of 38
defendants, none of which survived dismissal. United States ex rel.
Health Choice Alliance, LLC v. Eli Lilly & Co., 4 F.4th 255, 259 & n.1
(5th Cir. 2021).
In April 2018, HSG filed a sealed qui tam action against
Novartis’s parent company in the United States District Court for the
Eastern District of Texas, alleging that Novartis violated the federal
False Claims Act and the analogous laws of 31 States, including the
TMFPA, by: (i) providing free “nurse educator” services to patients to
educate them about the proper use of six Novartis medications; (ii)
providing free “reimbursement support” services to assist patients with
obtaining coverage for certain Novartis prescriptions; and (iii)
contracting with third parties to employ nurses to market and educate
prescribers about the six medications. See Compl., United States ex rel.
Health Selection Grp., LLC v. Novartis AG, et al., No. 5:18-cv-60 (E.D.
Tex. Apr. 20, 2018), Dkt. 1. HSG’s theories largely mirrored those
brought by other NHCAG affiliates that the federal government moved
11 to dismiss because the government deemed the practices lawful and
beneficial to the federal healthcare programs. Eli Lilly & Co., 4 F.4th
at 260, 267-68; see U.S. Mot. to Dismiss at 2-3, 14-16, Eli Lilly, No. 5:17-
cv-123 (arguing that “federal healthcare programs have a strong
interest in ensuring that, after a physician has appropriately prescribed
a medication, patients have access to basic product support relating to
their medication”). After those suits were dismissed, HSG voluntarily
dismissed its federal lawsuit against Novartis AG and chose to pursue
TMFPA claims in Texas state court. See HSG Mot. to Dismiss, Health
Selection Grp., No. 5:18-cv-60 (E.D. Tex. Mar. 9, 2020), Dkt. 21.
On May 8, 2020, HSG filed this TMFPA suit against Novartis.4
The Original Petition substantially tracked HSG’s prior federal
complaint—again, based on the same conduct that the United States
intervened to dismiss in a parallel suit—in alleging that the three
business practices described above violate the TMFPA. The State of
Texas filed a notice declining to intervene in this action. The case was
subsequently unsealed but remained dormant for several years until it
4 The suit initially named Novartis AG, but was amended to seek relief instead
against Novartis Pharmaceuticals Corporation. MR001.
12 was transferred to the 71st Judicial District Court in Harrison County
in March 2023.
The next month, HSG filed an amended petition, see First Am.
Pet. (MR001-060), and Novartis then moved to dismiss the suit, arguing
that the district court should dismiss HSG’s qui tam action for two
reasons. First, Novartis argued that the district court should dismiss
the case for lack of subject-matter jurisdiction because HSG does not
have constitutional standing to sue Novartis for a statutory violation
that did not personally injure HSG. See MR072-079. Second, Novartis
argued that HSG’s qui tam action should be dismissed because the
TMFPA qui tam statute violates the Texas Constitution, which assigns
the authority to file suits for the State exclusively to State attorneys.
MR079-093. Both HSG and the State (through a statement of interest)
opposed dismissal of the action. The district court heard oral argument
and summarily denied Novartis’s motion. See Order Denying Def.’s
Plea to Jur. & Mot. to Dismiss (MR167).
C. Prior Court of Appeals and Supreme Court Proceedings
1. On February 2, 2024, Novartis sought mandamus and a
temporary stay of trial proceedings in the Court of Appeals for the Sixth
13 District of Texas. The Sixth District denied the mandamus petition and
stay request in a brief order, concluding that the purely legal
constitutional questions presented were somehow committed to the trial
court’s discretion. MR501.
2. Novartis sought review in the Supreme Court. On August 30,
2024, that Court granted Novartis’s request for a temporary stay of trial
proceedings and ordered the parties to file briefing on the merits of
Novartis’s mandamus petition. Novartis (supported by two amici) and
HSG (supported by the State) fully briefed the constitutional questions
presented.
On October 25, 2025, the Supreme Court denied the petition for
mandamus. The order denying the petition was accompanied by a
lengthy statement respecting the denial by Justices Young and
Sullivan, the upshot of which was that Novartis’s petition presents
“weighty” and “important” issues, In re Novartis, supra, at *1, *3, but
because this Court has determined that it has exclusive intermediate
appellate jurisdiction over TMFPA appeals like this one, see In re
Sanofi-Aventis U.S. LLC, 711 S.W.3d 732 (Tex. App. 2025), this Court
should hear Novartis’s mandamus petition in the first instance. See In
14 re Novartis, supra, at *1 (“This case presents weighty issues worthy of
our full attention,” but the “decision to deny the petition is
understandable given that there is a new statewide appellate court that
has already held that it has jurisdiction over disputes like this one”).
In particular, Justices Young and Sullivan criticized the Sixth
Court of Appeals for “provid[ing] no meaningful analysis of Novartis's
arguments about standing and separation of powers,” observing that
the Supreme Court “would surely benefit from thoughtful consideration
of these difficult questions by the lower courts.” Id. at *2.
“Fortunately,” the statement went on to explain, “the legislature
recently created the Fifteenth Court of Appeals,” which “came into
existence about five months after Novartis filed its mandamus petition
in [the Supreme Court],” and which “has held that it has jurisdiction
over mandamus petitions like this one.” Id. at *3 (citing In re Sanofi-
Aventis). Justices Young and Sullivan went on to note that the
“Fifteenth Court would greatly assist [the Supreme Court] by
presenting its analysis [of Novatis’s constitutional challenges] in a
written opinion. After the Fifteenth Court has weighed in, [the
15 Supreme Court] will be better positioned to provide an accurate and
definitive determination of the Act’s constitutionality.” Id. at *4.
Finally, Justices Young and Sullivan made clear that “we see no
reason that Novartis could not file a mandamus petition in the
Fifteenth Court raising its challenges to the Act.” Id. “Given that the
Sixth Court did not explain why Novartis’s petition lacked merit and
[the Supreme Court] did not opine on the merits at all, it might make
sense to give the court hearing any eventual appeal [i.e., this Court] an
opportunity to assess the Act’s constitutionality sooner rather than
later, assuming that the other prerequisites of mandamus review are
met to that court’s satisfaction.” Id. Justices Young and Sullivan
expressed the “hope that the court of appeals will take the issues
seriously enough to dispose of them in a written opinion.” Id.
SUMMARY OF THE ARGUMENT
I. The courts have no subject-matter jurisdiction over this suit
because HSG lacks standing. HSG has not been injured by the conduct
of which it complains, and so has not suffered the injury-in-fact
required to litigate in Texas courts.
16 There is no basis to except HSG from the ordinary injury
requirement here. HSG cannot establish standing as an assignee of the
State, because unlike the federal False Claims Act, the TMFPA does not
allow for damages claims, and the civil penalties contemplated by the
TMFPA cannot be assigned to a private person. HSG cannot establish
standing as a representative of the State because (i) it has no legal
relationship with the State, (ii) the State is entirely capable of bringing
a lawsuit itself, and (iii) the State alone has standing to bring suits
respecting matters of public concern.
II. Separately, the TMFPA’s provisions allowing a private party
to pursue public litigation violate the separation-of-powers principles
enshrined in Article IV, Section 22 and Article V, Section 21 of the
Texas Constitution. Those sections provide that only the Attorney
General and county and district attorneys may litigate on behalf of the
State. The Supreme Court has made clear that Article IV, Section 22
and Article V, Section 21 “mark the limits of legislative authority to
prescribe who shall represent the state and control its interests in a
lawsuit in the district court.” Allen v. Fisher, 9 S.W.2d 731, 732 (Tex.
1928).
17 The TMFPA breaks from that tradition. It allows a private
individual or entity to proceed with a qui tam action in the name of and
behalf of the State. It therefore devolves the public litigation power
onto those who are not authorized by the Constitution to wield it.
Neither the Supreme Court’s precedents nor any history of qui tam
litigation permits that unconstitutional result.
III. HSG’s contention that Article III, Section 51-a of the Texas
Constitution somehow overrides these basic constitutional principles
just described badly misreads that provision.
IV. The Court should grant mandamus relief. Mandamus is an
appropriate remedy where a suit cannot lawfully proceed. And here, if
HSG lacks standing or if this suit offends the separation of powers,
continuing with this litigation will simply waste the parties’ and courts’
resources. The questions presented here are purely legal and will not
benefit from further discovery or fact development. There is accordingly
no reason to delay resolving the constitutional questions presented by
this suit.
That is especially so, moreover, in light of the statement issued by
Justices Young and Sullivan in In re Novartis. As those Justices
18 explained, the Legislature created this Courtwhich has exclusive
intermediate appellate jurisdiction over disputes like this oneafter
Novartis had already filed its mandamus petition in the Supreme
Court. And Justices Young and Sullivan implored this Court to
consider Novartis’s constitutional challenges and address them “in a
written opinion.” In re Novartis, supra, at *4. This petition presents
the Court with an ideal opportunity to do so.
ARGUMENT
HSG’s qui tam suit suffers from two severe and independent
constitutional flaws. First, principles of standing prohibit HSG—which
has not been injured by the conduct of which it complains—from
pursuing this action. And second, the separation of powers does not
permit HSG to proceed with this litigation on behalf of the State. For
either or both reasons, this case must be dismissed, and mandamus
relief is warranted.
I. HSG LACKS STANDING TO BRING THIS QUI TAM ACTION
The first problem with this suit is that HSG lacks standing. It
does not allege that any of Novartis’s conduct injured it personally.
That lack of a personal stake in this controversy violates the Texas
19 Constitution, which allows only individuals who have suffered harm to
sue and provides no doctrinal basis to excuse HSG from meeting the
injury requirement that all other litigants must satisfy. Accordingly,
the case should be dismissed. See Heckman v. Williamson Cnty., 369
S.W.3d 137, 150-51 (Tex. 2012).
A. The Constitution requires that a plaintiff demonstrate injury.
“[S]tanding is a component of subject matter jurisdiction,” and is
thus “a threshold requirement to maintaining a lawsuit.” Farmers Tex.
Cnty. Mut. Ins. Co. v. Beasley, 598 S.W.3d 237, 240 (Tex. 2020). “In
Texas, the standing requirement stems from two constitutional
limitations on subject-matter jurisdiction.” Data Foundry, Inc. v. City of
Austin, 620 S.W.3d 692, 700 (Tex. 2021). The first is “the Texas
Constitution’s provision for separation of powers among the branches of
government, which denies the judiciary authority to decide issues in the
abstract.” Mosaic Baybrook One, L.P. v. Simien, 674 S.W.3d 234, 250
(Tex. 2023); see Tex. Const. art. II, § 1. The second is the Texas
Constitution’s “open courts provision, which provides court access only
to a ‘person for an injury done him.’” Id. (quoting Tex. Const. art. I,
§ 13).
20 From these two constitutional provisions, the Supreme Court has
held that Texas’s standing doctrine requires “(1) an injury in fact that is
both concrete and particularized,” “(2) that the injury is fairly traceable
to the defendant’s challenged action”; and “(3) that it is likely, as
opposed to merely speculative, that the injury will be redressed by a
favorable decision.” Data Foundry, 620 S.W.3d at 696 (quoting Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). The first element—
“injury in fact”—requires that “[t]he plaintiff . . . be personally injured—
he must plead facts demonstrating that he, himself (rather than a third
party or the public at large), suffered the injury.” Heckman, 369 S.W.3d
at 155 (emphasis in original).
B. HSG has not suffered any injury.
HSG’s suit fails this test. HSG does not allege that it personally
suffered any injury from the conduct alleged in the petition. See
generally MR001-60. Instead, it is asserting an injury to “the public at
large,” Heckman, 369 S.W.3d at 155—it alleges that Novartis’s conduct
defrauded the State. HSG therefore lacks standing, which is “a
constitutional prerequisite to suit.” Id. at 150; accord Tex. Ass’n of Bus.
v. Tex. Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993).
21 It makes no difference that the TMFPA purports to allow
individual litigants to sue on behalf of the State. For the reasons
explained below, there are fundamental separation-of-powers problems
with that grant of public litigation authority. See infra at 32-55. But
even setting those problems aside, it is settled that a statute cannot
“authorize a court to act without subject matter jurisdiction.” In re Lazy
W Dist. No. 1, 493 S.W.3d 538, 544 (Tex. 2016). A statutory right to sue
may not establish a lesser injury standard “than that set by the general
doctrine of standing.” Fin. Comm’n of Tex. v. Norwood, 418 S.W.3d 566,
582 n.83 (Tex. 2013). “If the grant of jurisdiction or relief authorized
[by] statute” exceeds constitutional limits, Texas courts construe the
Legislature’s enactments to “exercise [only] as much jurisdiction over
the case as the Constitution allows.” In re Allcat Claims Serv., L.P., 356
S.W.3d 455, 462 (Tex. 2011). Thus, regardless of whether HSG meets
the TMFPA’s requirements for bringing an action, it lacks
constitutional standing because it has not alleged that it was personally
injured by any alleged TMFPA violations. That should be the end of
22 The doctrine of standing exists to ensure that litigants do not
“roam the country in search of governmental wrongdoing.” Valley Forge
Christian Coll. v. Americans United for Separation of Church & State,
Inc., 454 U.S. 464, 487 (1982). Yet that is exactly what HSG has sought
to do here: As described above, it sifts through healthcare data to
initiate qui tam actions. See supra at 10-11. “[O]ur Constitution opens
the courthouse doors only to those who have or are suffering an injury,”
Heckman, 369 S.W.3d at 155, not uninjured profit-seeking entities like
HSG.
C. HSG cannot sue as an assignee or representative of the State.
At prior stages of this litigation, HSG and the State argued that
HSG has standing as the State’s assignee or representative. Each
theory fails.
1. There is no damages claim to assign.
HSG and the State’s primary argument for standing relies on the
Supreme Court of the United States’ holding in Vermont Agency of
Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000).
23 See HSG Resp. 14-27; State Resp. 8-14. 5 In that case, the Court held
that a qui tam relator satisfied federal Article III standing
requirements because the False Claims Act “can reasonably be regarded
as effecting a partial assignment of the Government’s damages claim.”
529 U.S. at 773. 6 And because assignees of a claim had historically
been understood as possessing standing to sue, the Court held that
federal qui tam relators likewise had Article III standing. Id.
But the logic of Stevens does not apply to the TMFPA. Unlike the
False Claims Act, the TMFPA cannot be construed as creating an
assignable claim for damages. The Texas Supreme Court has held that
the TMFPA is a civil-enforcement statute for civil penalties, “not an
action for recovery of damages.” In re Xerox Corp., 555 S.W.3d at 526.
The Court so held because the penalties authorized by the TMFPA are
“fixed without regard to any loss to the Medicaid program,” and because
the statute does not contain any language that might “imply a loss
measure or require the State to prove an actual loss.” Id. at 533-35.
5 “HSG Resp.” refers to HSG’s responsive brief on the merits in the Supreme Court.
“State Resp.” refers to the State’s responsive brief on the merits in the Supreme Court. 6 Stevens reserved the question of whether qui tam suits violate the federal
separation of powers. 529 U.S. at 778 n.8. The Texas counterpart of that issue is discussed below. See infra at 32-55.
24 In reaching that holding, the Court expressly declined to import
federal jurisprudence when construing the TMFPA. It held that
comparisons to the False Claims Act are “not probative” because, while
the statutes may be “similar in aim and tactic,” they “employ materially
different language, and the language of our statutes controls the
outcome here.” 555 S.W.3d at 535. Thus, the Court deviated from
False Claims Act doctrine in concluding that the TMFPA “employs a
penalty scheme and is not an ‘action for the recovery of damages.’” Id.
at 534.
That statutory difference eviscerates HSG’s and the State’s
reliance on Stevens. The TMFPA cannot be read “as effecting a partial
assignment of the Government’s damages claim” because there is no
damages claim to assign. 529 U.S. at 773. So—even assuming that
Texas standing doctrine otherwise tracked federal law—the logic of
Stevens cannot control here.
Recognizing this problem, HSG has argued that the distinction
between “penalties” and “damages” “makes no difference” because the
“focus of standing is the injury and not the relief.” HSG Resp. 22. The
State has similarly argued that Stevens “did not turn on the specific
25 type of claim assigned by the government to the private plaintiff or the
related remedy.” State Resp. 12.
In fact, though, Stevens used the word “damages” for a reason:
only damages, not civil penalties, are subject to assignment. A party
does not assign an injury; it assigns a claim for relief. Stevens, 529 U.S.
at 773; see TransUnion LLC v. Ramirez, 594 U.S. 413, 428 (2021). And
civil penalties are “different from compensatory damages” in ways that
mean they cannot be assigned. In re Xerox Corp., 555 S.W.3d at 529
(quoting Wal-Mart Stores, Inc. v. Forte, 497 S.W.3d 460, 465 (Tex.
2016)). Civil penalties “are intended to punish, and label defendants
wrongdoers.” Id. at 530 (quoting Gabelli v. SEC, 568 U.S. 442, 451-52
(2013)). They are a uniquely sovereign remedy that cannot be
“assigned” to private litigants.
Stevens itself recognized as much. In discussing the federal False
Claims Act, it noted that the law protected “both the injury to [the
United States’] sovereignty arising from violation of its laws” and “the
proprietary injury resulting from the alleged fraud.” 529 U.S. at 771.
The government may partially assign a claim vindicating its
proprietary interest just like anyone else can. See id. at 773; see also
26 Sprint Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 278
(2008) (explaining that courts have long recognized assignment of a
“chose in action,” such as a legal claim for money damages). But
neither Stevens nor any other case of which Novartis is aware suggests
that the State can assign a sovereign interest—a government could not,
for example, delegate a “criminal lawsuit” to a private individual,
Stevens, 529 U.S. at 771, because a sovereign interest is by definition an
interest that only the State can possess.
Take the example offered by Justices Young and Sullivan of “a
hypothetical law that encouraged people to report traffic violations that
caused no injury.” In re Novartis, supra, at *2. When someone violates
the traffic laws, the “State suffered an injury in law—the violation of
statutes that govern traffic. That is why we can be ticketed for speeding
or other legal violations even when there is no concrete harm that
results.” Id. But does this count as “an injury in fact” that the State
“could assign to a relator?” Id.
Justices Young and Sullivan do not answer the question, see id.,
but the answer is obvious: of course not. “[T]he public interest that
private entities comply with the law cannot be converted into an
27 individual right by a statute that denominates it as such, and that
permits all citizens (or, for that matter, a subclass of citizens who suffer
no distinctive concrete harm) to sue.” TransUnion, 594 U.S. at 428-29
(internal quotation marks omitted); see also infra at 32-55 (explaining
why such an assignment would independently violate the separation of
powers). That principle applies to the obvious traffic-violation example,
but it applies in exactly the same way to the TMFPA.
That is why Stevens spoke of assignment of damages, and it is
why the State and HSG’s efforts to ignore that language—and to import
the logic of Stevens into a statute that does not provide for damages but
that instead vindicates only the States’s nontransferable sovereign
interest—are doomed to failure.7
2. Statutory standing does not satisfy or displace constitutional standing principles
HSG has also argued that even if Stevens does not support its
standing, the TMFPA itself grants HSG authority to represent Texas
7 The Stevens Court also discussed early American history that supported its
standing holding. See 529 U.S. at 774-78. But the Court did not rest on history alone, focusing instead on the assignment of damages. And in any event, as explained below, there is no history of qui tam actions that could inform the meaning of the Texas Constitution. See infra at 52-55.
28 “in its capacity as relator.” HSG Resp. 28-29. The State has not
pressed this argument, and for good reason: it is just another way of
saying that the TMFPA allows HSG to ignore the rules of constitutional
standing.
To its credit, HSG has admitted that it is “aware of recent
opinions” rejecting that argument. HSG Resp. 33. While some Texas
courts have suggested that parties have “standing” because a statute
says they do, that is because “Texas courts often apply the label
‘standing’ to statutory or prudential considerations that do not
implicate subject-matter jurisdiction but rather determine whether a
plaintiff falls within the class of persons authorized to sue.” Busbee v.
Cnty. of Medina, 681 S.W.3d 391, 395 (Tex. 2023). By contrast,
constitutional standing—which is at issue in this case—“is a component
of subject matter jurisdiction,” and is thus “a threshold requirement to
maintaining a lawsuit” regardless of statutory-standing considerations.
See Novartis Br. 15 (quoting Farmers Tex. Cnty. Mut. Ins. Co. v.
Beasley, 598 S.W.3d 237, 240 (Tex. 2020)). Because HSG has not been
“personally injured,” it cannot satisfy this threshold jurisdictional
requirement regardless of whether it has a statutory cause of action to
29 bring its qui tam suit. Heckman v. Williamson Cnty., 369 S.W.3d 137,
155-56 (Tex. 2012).
3. Representative standing has no application here.
In prior briefing, HSG (but not the State) also argued that
“representative standing” could provide a basis for subject-matter
jurisdiction. HSG Resp. 27-32. In particular, it argued that a “relator’s
award can reasonably be characterized as payment for its services, akin
to payment that receivers, conservators, ad litems, and executors
receive for representing an entity or person with constitutional
standing.” Id. at 28.
But those representative suits on which HSG relies are obviously
different. Representatives such as guardians ad litem and executors
have fiduciary-type legal obligations to those they represent, who
cannot sue in their own names because they are incompetent to do so.
See, e.g., Tex. Estates Code § 351.101 (duty on executors); Tenet Hosps.
Ltd. v. Rivera, 445 S.W.3d 698, 705 (Tex. 2014) (duty on legal
guardians). And receivers—the example HSG cited repeatedly, HSG
Resp. 28, 29, 30—are “indifferent person[s], between the parties to a
cause, appointed by the court to receive and preserve the property or
30 fund in litigation pendente lite.” Moyer v. Moyer, 183 S.W.3d 48, 56
(Tex. App.—Austin 2005, no pet.); see Tex. Civ. Prac. & Rem. Code
§ 64.001(a) (prescribing various scenarios in which a receiver may be
appointed to preserve property).
A qui tam suit shares none of those features. HSG has no
fiduciary duty to act in the State’s interest. Unlike minors, the
deceased, and the like, the State is perfectly able to sue on its own
behalf—indeed, the TMFPA expressly contemplates that it will do so.
And unlike receivers, HSG was not appointed by the court, is certainly
not a neutral party, and is not seeking to preserve property pending the
outcome of litigation.
In short, there is no need for HSG to act as the sovereign’s
representative that might warrant a departure from ordinary standing
rules. And even if there were, the Supreme Court has repeatedly held
that the Texas Constitution lodges with the State attorneys the
exclusive authority to bring and maintain a suit for and in the name of
the State, and that a private plaintiff cannot be authorized to maintain
a suit that solely seeks to vindicate a matter of public concern. Allen, 9
S.W.2d at 732; Staples v. State, 245 S.W. 639, 641-42 (Tex. 1922).
31 II. THE TMFPA’S QUI TAM PROVISIONS OFFEND THE SEPARATION OF POWERS
Because HSG has suffered no injury, this suit should be dismissed
for lack of subject-matter jurisdiction. But if HSG somehow surmounts
that obstacle, there is a separate, fundamental problem with this suit:
the Constitution’s separation of powers prohibits HSG from litigating
this action on behalf of the State.
The Texas Constitution provides that “[t]he powers of the
Government of the State of Texas shall be divided into three distinct
departments”—Legislative, Executive, and Judicial—and that “no
person, or collection of persons, being one of these departments, shall
exercise any power properly attached to either of the others, except in
the instances herein expressly permitted.” Tex. Const. art. II, § 1. The
separation of powers “reflects a belief on the part of those who drafted
and adopted our state constitution that one of the greatest threats to
liberty is the accumulation of excessive power in a single branch of
government.” Armadillo Bail Bonds v. State, 802 S.W.2d 237, 239 (Tex.
Crim. App. 1990). It “also has the incidental effect of promoting
effective government by assigning functions to the branches that are
best suited to discharge them.” Id.
32 “The Texas Constitution authorizes the attorney general, county
attorneys, and district attorneys to represent the state in various
cases.” State ex rel. Durden v. Shahan, 658 S.W.3d 300, 303 (Tex. 2022)
(per curiam). Article IV, Section 22 vests the Attorney General with
authority to represent the State in the Supreme Court. And Article V,
Section 21 vests District and County Attorneys with authority to
represent the State in other proceedings. The Legislature is empowered
to assign additional responsibilities to the Attorney General, and has
done so by statute. El Paso Elec. Co. v. Tex. Dep’t of Ins., 937 S.W.2d
432, 438-39 (Tex. 1996); see, e.g., Tex. Gov’t Code § 402.021.
What the Legislature cannot do, however, is “divest these officials
of their collective constitutional authority by shifting representation to
some other attorney.” El Paso Elec. Co., 937 S.W.2d at 439. The
Supreme Court has never permitted a private litigant to wield litigation
power on behalf of the State, and its precedents resoundingly reject that
possibility. Yet that is what the TMFPA does: By authorizing a private
person to “proceed without the state’s participation,” Tex. Hum. Res.
Code § 36.104(b), it unconstitutionally devolves the State’s power to
individuals who may not exercise it. Nothing in the Constitution’s text,
33 precedent, or history permits that unprecedented action. The Court
should accordingly hold that the TMFPA’s qui tam provisions violate
the State’s separation of powers.
A. The Texas Constitution exclusively assigns to State attorneys the power to bring and maintain suits for the State.
1. Time and again, the Supreme Court has made clear that only
State attorneys, elected by the citizenry, may litigate actions on behalf
of the State.
The foundational case is Maud v. Terrell, 200 S.W. 375 (Tex.
1918). There, a statute authorized the Comptroller of Public Accounts
to appoint individuals to “sue for and collect” taxes. Id. at 377. The
Court had no trouble concluding that such a law would be
unconstitutional if it “deprive[d] the county attorneys and the Attorney-
General in their authority” to litigate on behalf of the State. Id. That is
because the “powers . . . conferred by the Constitution upon those
officials are exclusive,” such that the “Legislature cannot devolve them
upon others.” Id. at 376. The Court upheld the challenged statute only
because it could fairly be read to render the tax collectors as
“assistant[s]” to the State attorneys, operating under their control. Id.
34 at 378; see id. at 377 (“Upon its face this language would authorize the
collector to file the suit, but it cannot be assumed that the Legislature
so intended. It plainly means that he should cause the suit to be filed by
the official charged by law with that specific duty.”) (emphasis added).
Where possible, the Court has followed the approach set out in
Maud and construed state laws to subordinate individuals’ litigation
rights to the State’s. A prime example is Staples v. State, 245 S.W. 639
(Tex. 1922), which scrutinized a statute permitting individuals to bring
quo warranto actions to enforce the election laws. The private plaintiffs
in the case admitted “that they have no pecuniary interest in this suit
which is not common to all other citizens of the state. ” Id. at 640. And
the Court observed that a statute permitting suits “for the benefit of the
public at large” “cannot confer a right upon private individuals to act for
all where it is shown they have no interest different from all others.”
Id. at 641. The Court thus held that the individuals “were not
possessed of legal capacity or right to institute and maintain this
suit”—and that the only appropriate course was for them to present
their case to “a county attorney, a district attorney, or the Attorney
General,” who could pursue the litigation. Id. at 643.
35 The Supreme Court then took the same approach in Agey v.
American Liberty Pipe Line Co., 172 S.W.2d 972 (Tex. 1943). In the
court below, a Texas Court of Civil Appeals held that a private citizen
could not lawfully maintain a statutory cause of action that the plaintiff
had filed in his name and in the name of the State to recover penalties
against the defendant for discriminating against the plaintiff in the
purchase of oil. American Liberty Pipeline Co v. Agey, 167 S.W.2d 580,
580 (Tex. App. 1942). 8 The court of appeals observed that “such action
must be brought by the Attorney General or county attorney; and that
to construe the section as authorizing institution and prosecution of the
suit by and in the name of the aggrieved party for his own use and that
of the State would render it void, to that extent, as contravening”
Article IV, Section 22 and Article V, Section 21 of the Texas
Constitution. Id. at 581. Because the action was “one which insures to
the State,” the court concluded it was “maintainable only in the State’s
name and by its authorized officials, regardless of the fact that one-half
of the recovery may insure to the interested party.” Id. at 582.
8 Unlike HSG, the plaintiff in Agey suffered a concrete harm from the statutory
violation (the defendant discriminated against the plaintiff in refusing to purchase the plaintiff’s oil) that would have satisfied Texas’ constitutional standing requirements.
36 The Supreme Court subsequently affirmed “that the statute
clearly creates a single, indivisible cause of action, which must be
prosecuted in a single suit, instituted by the State through its proper
officials; and that [the plaintiff’s] rights are limited to sharing in the
recovery.” Agey, 172 S.W.2d at 975 (internal quotation marks omitted).
Because the statute did not purport to grant the aggrieved party a right
to file suit on behalf of himself and the state, without joinder of a State
attorney, the Court declined to decide whether the Legislature had the
power to do so. See id. at 974. But the Court reaffirmed that, under the
Texas Constitution, “[t]he Attorney General is the chief law officer of
the State” and “has the right to investigate the facts and exercise his
judgment and discretion regarding the filing of a suit.” Id.; see also,
e.g., Camp v. Gulf Prod. Co., 61 S.W.2d 773, 778 (Tex. 1933) (similarly
interpreting a statute to give State attorneys “the right to control the
litigation for the state just the same as in any ordinary suit to which the
state is a party”).
The Supreme Court has also blessed statutes that allow State
attorneys to hire private individuals to act directly under the State
attorneys’ control. Where a private individual acts “under the direction
37 and control of the Attorney General,” she or he may permissibly litigate
on behalf of the State. Terrell v. Sparks, 135 S.W. 519, 520 (Tex. 1911).
And “the Legislature may authorize an agency to retain private counsel
to prosecute actions, as long as such counsel’s authority is subordinate
to that of the Attorney General, County Attorney, or District Attorney.”
El Paso Elec. Co., 937 S.W.2d at 439.
What the Supreme Court has never done, though, is permit
another person to exercise the State’s litigation authority without a
State attorney’s direct control. And where a statute cannot be read to
avoid that outcome, that Court has struck it down. Thus, in Hill
County v. Sheppard, 178 S.W.2d 261 (Tex. 1944), the Court invalidated
a statute that “create[d] a statutory office to take over the duties of the
county attorney,” holding that the duties of the State attorney could not
be arrogated to another. Id. at 264. The Court explained: “Where
certain duties are imposed or specific powers are conferred upon a
designated officer, the Legislature cannot withdraw them nor confer
them upon others.” Id. (quoting 34 Tex. Jur. 445) (alteration adopted).
38 2. HSG’s Supreme Court opposition made a hash of these
precedents. 9 HSG tried to argue that Maud stands primarily for the
rule that “courts should not read statutes permitting individuals other
than State attorneys to represent the State as prohibiting State
attorneys from representing the State.” HSG Resp. 41. If that were the
only holding of Maud, it would not have needed to construe the statute
to “subordinat[e]” the private individuals’ authority to the State
attorneys’. 200 S.W. at 377. And it would not have expressly held that
only State officials could “cause the suit to be filed,” id.—language that
HSG ignored completely. See HSG Resp. 40-41.
The same problem plagued HSG’s discussion of Agey and Staples.
HSG again failed to acknowledge the language in those cases requiring
that the State attorney institute the suit. Instead, it insisted that what
is important is that neither case held the statutes at issue in those
cases to be unconstitutional. HSG Resp. 45, 47. But that is because the
Court construed those statutes to prohibit private control of State
litigation, precisely to avoid a constitutional question. Had such
9 The State, for its part, correctly recognized that Maud holds that private
individuals can bring State litigation only “in subordination to the authority” of the State attorney. State Resp. 19 (quoting Maud, 200 S.W. at 377).
39 constructions been impossible, the laws would have been struck down,
because a “statute cannot confer a right upon private individuals to act
for all where it is shown they have no interest different from all others.”
Staples, 245 S.W. at 641 (citing Tex. Const. art. IV, § 22; id. art. V, §
21).
HSG equally misread precedent when it claimed that Camp v.
Gulf Production Co., 61 S.W.2d 773 (Tex. 1933), “permit[s] private
persons to represent State interests in litigation.” HSG Resp. 42.
Camp provides no support for HSG’s prosecution of this civil
enforcement action. The statute in Camp allowed a prospective
purchaser of “unsurveyed” “public school land” to “file suit against the
county surveyor . . . to compel him to make the survey.” 61 S.W.2d at
775. So the question was whether “the state is a necessary party to this
action,” not whether the applicant could institute or maintain a suit for
the State without the Attorney General’s full participation. Id. at 780;
see Am. Liberty Pipe Line Co. v. Agey, 167 S.W.2d 580, 584 (Tex. App.—
Austin 1942, judgment affirmed) (noting “[s]uits with similar objective
have in later decisions been treated as suits against the State”). In
Agey, therefore, the Supreme Court agreed that Camp involved issues
40 far different from whether a private person could “institute and
prosecute such a suit in the name of the State without the joinder of the
Attorney General or some district or county attorney.” Agey, 172
S.W.2d at 974-75. The answer to that question is no, as Maud, Agey,
and Staples held. See supra at 34-37.
But even if Camp concerned whether private individuals can
prosecute an action on behalf of the State, the Supreme Court made
clear that they could do so only subject to complete State control. The
Court required that the relevant statute be construed to give State
attorneys “the right to control the litigation for the state just the same
as in any ordinary suit to which the state is a party.” Camp, 61 S.W.2d
at 778. In other words, it required that the private person be in a
traditional principal-“agent” relationship with the State attorney, who
had the “duty[] to appear in the case and represent the state.” Id. at
777-78. Only in those limited circumstances could the statute be
construed not to “curtail or abridge” the State attorneys’ prerogatives.
Id. Once more, that crucial language was absent from HSG’s brief. See
HSG Resp. 42-43.
41 Finally, the State (but not HSG) argued in the Supreme Court
that Novartis’s arguments “cannot be squared with” El Paso Electric Co.
v. Texas Department of Insurance, 937 S.W.2d 432 (Tex. 1996). State
Resp. 23. But the Court in that case “express[ed] no opinion” on any
question of “constitutional authority.” 937 S.W.2d at 439. All that the
Court did was repeat the rule of Maud that any private individual must
be “subordinate” to a State attorney, id. (citing Maud, 200 S.W. at 377-
78), which supports Novartis’s argument, not the State’s. 10
Supreme Court precedents, therefore, teach a consistent rule.
Under the Constitution, only State attorneys may litigate on behalf of
the State. Statutes that permit private individuals to pursue suits are
constitutional only if the individuals are subject to the State attorneys’
10 The State also cited three lower court cases. State Resp. 18. Each of them “addresse[d] the right of a private attorney to be compensated for efforts expended on behalf of a private client in an action against the responsible third party when an ‘insurance carrier’ . . . benefits from the recovery obtained by the attorney.” University of Texas at Arlington v. Bishop, 997 S.W.2d 350, 354 (Tex. App.—Fort Worth 1999, pet. denied); see Univ. of Tex. Health Sci. Ctr. at San Antonio v. Mata & Bordini, Inc., 2 S.W.3d 312, 318 (Tex. App.—San Antonio 1999, pet. denied) (“UTHSCSA”) (similar); State v. Lloyd, 994 S.W.2d 362, 366 (Tex. App.—Waco 1999, no pet.) (similar). They accordingly “d[id] not involve . . . a private attorney’s attempt to usurp the Attorney General’s right to control the representation of the State’s interest in the third-party action in the first instance,” and so have no relevance to this case. UTHSCSA, 2 S.W.3d at 318.
42 direct control—viz., employed by them. If the statute permits public
litigation in the absence of such control, it is void.
B. The TMFPA impermissibly authorizes private individuals to press suits that State attorneys decline to control.
The TMFPA fails the test set out in the precedent just described.
It authorizes private individuals to sue on behalf of the State in
circumstances where the State attorneys affirmatively decline to press
the litigation. It therefore devolves the State’s litigation authority to
individuals who, under the Constitution, are “not possessed of legal
capacity or right to institute and maintain” a suit on behalf of the State,
Staples, 245 S.W. at 643, and who usurp the Attorney General in the
performance of his duty to “investigate the facts and exercise his
judgment regarding the filing of suit” for the State, Agey, 172 S.W.2d at
974.
1. The TMFPA allows for litigation that State attorneys affirmatively choose not to bring.
It is beyond question that the TMFPA permits private individuals
to litigate without the State’s control. As explained above, see supra at
6-8, the TMFPA requires private individuals to file under seal and
present the State with a choice. After reviewing the sealed materials,
43 the State can either “proceed with the action” or “decline[] to take over
the action.” Tex. Hum. Res. Code § 36.104(a)(1)-(2).
In cases where the State (through its Attorney General) declines
to take over the action, the TMFPA impermissibly authorizes a private
party and its attorney to prosecute violations of state law in place of the
Attorney General. See Tex. Hum. Res. Code § 36.104(b). “[I]n the
matter of bringing suits the Attorney General must exercise judgment
and discretion, which will not be controlled by other authorities.”
Charles Scribner’s Sons v. Marrs, 262 S.W. 722, 727 (Tex. 1924); see
Agey, 172 S.W.2d at 974 (similar). Where the Attorney General (or a
county or district attorney) decide that a case is not worth litigating on
behalf of the State of Texas, that is the end of the matter because the
State attorneys who must control State litigation have decided not to
advance the case.
By nonetheless permitting a private litigant to proceed with that
action, the TMFPA careens over the boundary line set by the Supreme
Court’s cases. Maud holds that authority to litigate on behalf of the
State cannot be “devolve[d] . . . upon others,” but the TMFPA does just
that. 200 S.W. at 376. Staples and Agey confirm that the Legislature
44 may not assign the power to bring suit for the State to anyone other
than the duly-elected State attorneys, but the TMFPA expressly
permits a private individual to litigate when those State attorneys have
explicitly declined to bring the suit. Agey, 172 S.W.2d at 974; see
Staples, 245 S.W. at 643. The TMFPA is therefore precisely the sort of
statute the Legislature cannot enact, because it “divest[s] these [State]
officials of their collective constitutional authority by shifting
representation to some other attorney,” El Paso Elec. Co., 937 S.W.2d at
439; see Sheppard, 178 S.W.2d at 264.
The Supreme Court’s recent holding that the TMFPA is a “penal
statute” only accentuates the constitutional problems. Malouf, 694
S.W.3d at 721. The Court has previously observed that granting
private parties the “authority to impose penal sanctions strongly
suggests an improper private delegation.” Texas Boll Weevil
Eradication Found., Inc. v. Lewellen, 952 S.W.2d 454, 474 (Tex. 1997).
Yet the TMFPA authorizes private individuals to litigate and obtain
penal sanctions in cases where the State attorney has expressly
declined to pursue the case.
45 And this problem is not a mere debater’s point or technical foul: it
has real implications for Texans’ liberty. “The purpose of the separation
and equilibration of powers in general . . . was not merely to assure
effective government but to preserve individual freedom.” Morrison v.
Olson, 487 U.S. 654, 727 (1988) (Scalia, J., dissenting). “[T]he basic
concept of democratic rule under a republican form of government is
compromised when public powers are abandoned to those who are
neither elected by the people, appointed by a public official or entity,
nor employed by the government.” Tex. Boll Weevil, 952 S.W.2d at 469.
By placing the power to litigate on behalf of the State in the hands of
profit-seeking private entities, the TMFPA shifts public authority to
those “motivated primarily by prospects of monetary reward rather
than public good.” Hughes Aircraft Co. v. United States ex rel. Schumer,
520 U.S. 939, 949, 952 (1997); see PPG Indus., Inc. v. JMB/Houston
Cntrs. Partners Ltd. P’ship, 146 S.W.3d 79, 85 (Tex. 2004) (“It is one
thing to place the power of treble damages in the hands of aggrieved
parties or the attorney general; it is quite another to place it in the
46 hands of those considering litigation for commercial profit.”). 11 A
statute may certainly create a financial incentive for individuals to
discover frauds against the State that State officials then decide to sue
on. But it cannot allow private parties, who owe no duty of loyalty to
the State, to litigate the State’s claims on their own.
This case illustrates the concern. HSG filed this suit not out of
concern for the public good or the citizenry of Texas, but because its
business strategy is, in the federal government’s words, to enrich
“limited liability companies formed by investors and former Wall Street
investment bankers” by obtaining qui tam bounties. U.S. Mot. to
Dismiss at 1-2, Eli Lilly, No. 5:17-cv-123. As the Court has previously
observed, “private delegations clearly raise [] troubling constitutional
issues” precisely because “the private delegate may have a personal or
pecuniary interest which is inconsistent with or repugnant to the public
interest to be served.” Tex. Boll Weevil, 952 S.W.2d at 469. Avoiding
11 See also J. Randy Beck, The False Claims Act And The English Eradication of Qui
Tam Legislation, 78 N.C. L. Rev. 539, 616 (2000) (qui tam relators have “no incentive to consider the public impact of the litigation, the culpability of the defendants, the fairness of a particular litigation strategy, or similar matters that might influence a public prosecutor”).
47 that result is precisely why the Constitution prohibits turning over
State authority to self-interested private actors.
If the Legislature can assign the power to prosecute violations of
the TMFPA to private parties—even from outside Texas or the United
States—then nothing would prevent the Legislature from granting
private parties the ability to prosecute every violation of state law and
thereby subject the “executive power to death by a thousand cuts.”
Saikrishna Prakash, The Chief Prosecutor, 73 Geo. Wash. L. Rev. 521,
582 (2005). And if the Legislature can validly assign that power to self-
appointed relators, what prevents the Legislature from delegating that
power to a specific individual or association of individuals of its
choosing? A decision upholding the TMFPA’s qui tam provisions would
mean that the Legislature not only has the power to enact laws but also
the power to enforce the laws it enacts by delegating prosecutorial
power to any agent of its choosing. A more apparent violation of the
separation of powers is difficult to imagine.
2. There is no possible saving construction.
Unlike the statutes construed in Maud, Agey, and Staples, the
TMFPA’s constitutional infirmities cannot be cured through statutory
48 construction. The statutes in those cases left ambiguous whether a
private individual could litigate on behalf of the State, and the Court
resolved each of those cases by construing the statutes to prevent such
action. The TMFPA, by contrast, is crystal-clear on this point: the qui
tam provisions of the statute authorize a private person to bring and
maintain a suit “for” and “in the name . . . of the state.” Tex. Hum. Res.
Code § 36.101(a). That is plainly unconstitutional because the duty and
authority of the State’s attorneys to bring and maintain suit for the
State is exclusive.
If more were needed, the statutory context confirms that the
TMFPA cannot be read to avoid the separation-of-powers issue. A
provision of the statute, Tex. Hum. Res. Code § 36.105, states that
“[t]he attorney general may contract with a private attorney to
represent the state in an action under this subchapter with which the
state elects to proceed.” That provision illustrates that the Legislature
has tools to address healthcare fraud that operate within the bounds of
the law. But it also confirms that the qui tam provisions that kick in
when the State declines to proceed with the action are not such tools.
49 Those provisions may be severed from the portions of the TMFPA
that lawfully allow the State to press litigation on its own behalf. See
Quick v. City of Austin, 7 S.W.3d 109, 115 (Tex. 1998) (“[I]f any
provision of the statute is held to be invalid, the invalidity does not
affect other provisions that can properly be given effect in the absence
of the invalid provisions.”). This relief would not disrupt the State’s
ability to deter genuine healthcare fraud: on the contrary, all that it
would do is restore the statutory scheme to the way it operated before
2007. Until that time, the TMFPA provided that an action that the
State did not elect to pursue must be dismissed. See Tex. Hum. Res.
Code § 36.104(b) (2005); supra at 8. Restoring State control over State
litigation, therefore, will not eviscerate the TMFPA; it would simply
recreate the regime that existed when the statute was enacted, and that
was consistent with the separation of powers.
3. The State does not maintain control over qui tam actions that it does not bring.
The State’s main argument to the contrary has been based on the
assertion that none of the foregoing is a problem here because the State
maintains control over litigation that it “declines” to bring. Tex. Hum.
Res. Code § 36.104(a)(2); State Resp. 15-18; see also HSG Resp. 34-35.
50 The statutory language is clear: the private qui tam plaintiff “may
proceed without the state’s participation.” Tex. Hum. Res. Code
§ 36.104(b). The State cannot control litigation in which it is not
participating.
The contrary arguments that the State presented to the Supreme
Court fail. The State stressed that it may demand “ongoing
information” about declined cases. State Resp. 18; see Tex. Hum. Res.
Code § 36.104(b-1). That is true, but irrelevant: receiving information
about an action is not the same as “exercis[ing] . . . judgment and
discretion regarding the filing of a suit.” Agey, 172 S.W.2d at 974.
The State also emphasized that it can choose to intervene later.
State Resp. 18. But again, the Constitution requires that the State
attorney control the litigation—not merely that he have the possibility
to later participate in it. And regardless, the TMFPA provides that the
State can intervene in a suit that it declined to join only “on a showing
of good cause,” and only “without limiting the status and right of that
person.” Tex. Hum. Res. Code § 36.104(b-1). So if the State intervenes
later, it cannot assume full responsibility for the suit. That is not State
control of State litigation.
51 Finally, the State noted that it can “control any proposed
settlement.” State Resp. 18. But again, the core constitutional concern
is that a private litigant may pursue litigation for and in the name of
the State in an action that the State’s attorneys have expressly declined
to take over. See supra at 43-48. The State’s power to review
settlements does nothing to address that fundamental problem.
C. History cannot salvage the TMFPA.
At the federal level, defenders of the False Claims Act’s qui tam
provisions have emphasized the historical pedigree of the False Claims
Act. See, e.g., Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749, 753 (5th
Cir. 2001). At the same time, growing consensus—even in the federal
context—is that “the early history of federal qui tam statutes” cannot
“justify contemporary violations of constitutional guarantees.” United
States ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419, 450
(2023) (Thomas, J., dissenting) (quoting Marsh v. Chambers, 463 U.S.
783, 790 (1983)); see id. at 442 (Kavanaugh, J., joined by Barrett, J.,
concurring); Riley, 252 F.3d at 772-75 (Smith, J., dissenting);
Constitutionality of the Qui Tam Provisions of the False Claims Act, 13
Op. O.L.C. 207, 235 (1989).
52 The Court need not wade into this dispute because the federal
history does not control the constitutionality of this Texas statute. And
there is no history of qui tam litigation in Texas. The provisions of the
TMFPA that allow a qui tam plaintiff to pursue a suit when the State
declines to take over the case were not even enacted until 2007. See
supra at 8. Before then, no law enacted under the current Texas
Constitution purported to allow a private plaintiff to bring and
maintain suits for the State. 12 To the contrary, the Supreme Court has
regularly construed statutes to prevent that possibility, and explained
that any statute that could be read to authorize a contrary result must
be struck down. See supra at 27-32.
Nor is it plausible that the early American history of qui tam
litigation informs the meaning of the Texas Constitution. See Southern
Pac Co. v. Porter, 331 S.W.2d 42, 45 (Tex. 1960) (“Texas was never a
12 There were a handful of qui tam statutes enacted under prior constitutional
regimes. See, e.g., Bush v. Republic of Texas, 1 Tex. 455 (1846). But the constitutions then in effect “did not contain the invoked provisions [of Article IV and Article V], and “therefore the question here presented was not there in issue.” Am. Liberty Pipe Line Co., 167 S.W.2d at 581-82. And the decisions by the Supreme Court “during the reconstruction period” that blessed qui tam litigation were quickly disregarded once this Constitution was enacted. See Gibbs v. State, 46 S.W. 645, 646 (Tex. Crim. App. 1898) (“We are of opinion that while proceedings in qui tam actions may have been by the informer, by the commonwealth, or by the state in other jurisdictions, under the provisions of our constitution, it being an offense, the prosecution must run in the name of the state.”).
53 British colony nor an American territory.”). The framers of the 1876
Constitution, which contains the relevant separation-of-powers
guarantees, aimed to “define[] the duties of the attorney general or of
district or county attorneys” more “specifically” than prior constitutions.
State v. Moore, 57 Tex. 307, 316 (1882). Indeed, the 1876 Constitution
assigns public litigation duties in much more detail than its federal
counterpart, which says nothing specific about who may litigate on
behalf of the United States. There is simply no reason to believe that
the same framers who carefully assigned litigation responsibility to
State officials meant to allow for an unwritten qui tam carveout to the
provisions that they wrote.
The bottom line is that “tradition . . . cannot provide authority
that the law does not.” Saldano v. State, 70 S.W.3d 873, 883 (Tex.
Crim. App. 2002). There is no “adverse-possession theory” of
constitutional meaning, NLRB v. Noel Canning, 573 U.S. 513, 570
(2014) (Scalia, J., concurring in the judgment), and so a law may be
invalid even “when the practice in question ‘covers our entire national
existence and indeed predates it.’” Polansky, 599 U.S. at 450 (Thomas,
J., dissenting) (quoting Walz v. Tax Comm’n of City of N.Y., 397 U.S.
54 664, 678 (1970)). Here, where qui tam statutes have never been used
under Texas’ current constitution, the tradition is of no relevance at all.
The TMFPA is unconstitutional, and a smattering of eighteenth-century
history cannot save it.
III. SECTION 51-A OF THE CONSTITUTION DOES NOT OVERRIDE BASIC SEPARATION-OF-POWERS PRINCIPLES
For the first time in its Supreme Court merits brief, HSG made an
entirely new argument based on Article III, Section 51-a of the Texas
Constitution, which empowers the Legislature to provide “for assistance
grants” to vulnerable populations. According to HSG, that provision
means that the TMFPA can violate the State’s separation of powers and
permit suits brought by plaintiffs without constitutional standing. HSG
Br. 8-13. The State does not join this absurd argument.
Section 51-a(a) authorizes the Legislature to permit “assistance
grants to needy dependent children and the caretakers of such children,
needy persons who are totally and permanently disabled because of a
mental or physical handicap, needy aged persons and needy blind
persons.” Tex. Const. art. III, § 51-a(a). That provision authorizes
Texas to participate in Medicaid, which it has done since 1967. See Bell
55 v. Low Income Women of Texas, 95 S.W.3d 253, 256 (Tex. 2002). Section
51-a(b), however, imposes limitations on the amount the Legislature
can spend. Tex. Const. art. III, § 51-a(b). Section 51-a(c), in turn,
provides “that if the limitations and restrictions herein contained”i.e.,
the spending limitations set forth in Section 51-a(b)conflict with
federal law and jeopardize federal matching funds, “the Legislature is
specifically authorized and empowered to prescribe such limitations and
restrictions and enact such laws as may be necessary in order that such
federal matching money will be available for assistance and/or medical
care for or on behalf of needy persons.” Id. § 51-a(c).
HSG’s argument before the Supreme Court was that Section 51-
a(c) does not merely empower the Legislature to alter the spending
limitations set forth in subsection (b) to maintain matching federal
funds, but also to ignore other unrelated constitutional provisions and
limitationssuch as standing and separation-of-powers principlesif
applying them would jeopardize federal funds. That is not what
subsection (c) says. The “limitations and restrictions herein contained”
in subsection (c) refer to the spending limitations and restrictions in
Section 51-a(b)not in the entire constitution. If it were otherwise, the
56 Legislature could, for example, discriminate on the basis of religion, see
id. art. I, § 6, or pass bills without a quorum, see id. art. III, § 10, if
doing so was necessary to maintain matching federal funds. That,
obviously, is wrong, which is why the Supreme Court explained in the
very case on which HSG relied that subsection (c) “authoriz[es] the
Legislature to alter constitutional limits on spending for medical care
for the indigent ‘in order that ... federal matching money will be
available.’” Bell, 95 S.W.3d at 256 (quoting Tex. Const. art. III, § 51-
a(c)) (emphasis added). No authority holds that the Legislature can
violate other constitutional provisions to achieve that goal. Just as the
Legislature is not empowered to discriminate on the basis of religion to
secure federal funds, it cannot violate the State’s separation of powers,
see id. art. II, § 1. HSG did not provide any authority or analysis to the
contrary.
It is thus not relevant to the constitutional questions in this case
whether, under the federal Medicaid Act, “[i]f the TMFPA’s qui tam
provisions are stricken, Texas will no longer receive a ten percent bonus
from the federal government for Medicaid fraud recoveries secured by
the State.” HSG Resp. 10; see 42 U.S.C. § 1396h. There is no
57 interpretive canon suggesting that this State’s Constitution should be
construed to maximize federal matching funds. If standing doctrine or
the separation of powers precludes qui tam litigation, that result will
not change because a federal law encourages states to authorize qui tam
suits.
Regardless, HSG’s sky-is-falling argument is likely wrong. For
starters, a federal court recently invalidated the False Claims Act’s qui
tam provisions; if that ruling is affirmed on appeal (as Justice Thomas
indicates that it should be), then every state will have a qui tam regime
that is “at least as effective” as the federal statute. United States ex rel.
Zafirov v. Fla. Med. Assocs., LLC, 751 F. Supp. 3d 1293, 1324 (M.D. Fla.
Sept. 30, 2024); see Polansky, 599 U.S. at 449-52 (Thomas, J.,
dissenting); see also United States of Am. ex rel. Gentry v. Encompass
Health Rehab. Hosp. of Pearland, L.L.C., __ F.4th __, 2025 WL 3063921,
at *5 (5th Cir. Nov. 3, 2025) (Ho., J., concurring) (noting that qui tam
provision presents “constitutional concerns” and that the court “should
revisit whether there are serious constitutional problems with the qui
tam provisions of the False Claims Act”); United States ex rel. Montcrief
v. Peripheral Vascular Assocs., P.A., 133 F.4th 395, 412 (5th Cir. 2025)
58 (Duncan, J., concurring) (explaining that “the qui tam device violates
the Take Care Clause by allowing private persons like Montcrief to
initiate and prosecute suits to enforce federal law”).
And even if the federal qui tam provisions remain, Congress lacks
power under the Federal Constitution to force this State to choose
between following its separation of powers and receiving federal
matching funds. See, e.g., S. Dakota v. Dole, 483 U.S. 203, 210 (1987)
(spending “power may not be used to induce the States to engage in
activities that would themselves be unconstitutional”); Texas v. Yellen,
105 F.4th 755, 767 (5th Cir. 2024) (“Congress may not use its spending
power to functionally commandeer the states.”). As Texas v. Yellen
shows, the State Attorney General is adept at litigating such suits,
which may explain why the State did not raise the same objections as
does HSG.
IV. THE COURT SHOULD GRANT MANDAMUS RELIEF
Mandamus relief is appropriate when a trial court commits an
error of law for which there is no “adequate remedy by appeal.” In re
Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004). Because
the trial court allowed this constitutionally infirm suit to go forward, it
59 committed an error of law. See supra Parts I-II. And there is no
adequate remedy by appeal for the constitutional infirmities with this
suit: Requiring the parties to undergo cost-intensive discovery just for
Novartis to later obtain reversal on a threshold legal question would
constitute a “gross and unnecessary waste of economic and judicial
resources.” In re J.B. Hunt Transport, Inc., 492 S.W.3d 287, 298-99
(Tex. 2016). For this reason, the Supreme Court has explained that
“[m]andamus relief is appropriate” when the trial court improperly
denies a “motion to dismiss.” See, e.g., In re Farmers Tex. Cnty. Mut.
Ins. Co., 621 S.W.3d 261, 266 (Tex. 2021); In re Essex Ins. Co., 450
S.W.3d 524, 528 (Tex. 2014); cf. In re Shire PLC, 633 S.W.3d 1, 27 (Tex.
App. 2021) (“[A]n incorrect denial of a Rule 91a motion to dismiss would
expose the defendant to the time and resources necessary to defend a
claim that can only end in a defense verdict.”). That is true even when
the “issue of law” presented is “one of first impression.” In re
Prudential Ins. Co. of Am., 148 S.W.3d at 138.
Nor is there any reason for the Court to delay deciding the
constitutional questions presented in this petition. The issues are
purely legal; they do not turn on any facts specific to this qui tam suit.
60 So nothing will be gained from further proceedings that—if Novartis is
correct in its legal arguments—cannot constitutionally proceed.
Moreover, the separate statement of Justices Young and Sullivan
in In re Novartis confirms that resolution of the “weighty” and
“important” constitutional questions presented here, In re Novartis,
supra, at *1, *3, is important not just for the parties before the Court
but for the State of Texas generally. Those Justices specifically
criticized the Sixth District Court of Appeals for “provid[ing] no
meaningful analysis of Novartis’s arguments about standing and
separation of powers,” id. at *2; noted that the Supreme Court “would
surely benefit from thoughtful consideration of these difficult questions
by the lower courts,” id.; and stated that “Fifteenth Court would greatly
assist this Court by presenting its analysis [of Novartis’s constitutional
challenges] in a written opinion,” id. at *4; see also id. (explaining that
this Court can consider these questions in a mandamus petition).
The fundamental constitutional questions presented in this
petition are crucially important, as Justices Young and Sullivan
explained at length. This Court has exclusive intermediate appellate
jurisdiction to consider them. See supra at 14-15. This Court should
61 address these issues “in a written opinion,” In re Novartis, supra, at *4,
and because the TMFPA’s qui tam provision violates basic standing and
separation-of-powers principles, that opinion should declare the qui tam
provision unconstitutional and direct the district court to dismiss HSG’s
claims.
PRAYER
For the foregoing reasons, the Court should issue a writ of
mandamus directing the district court to dismiss HSG’s claims.
62 Dated: November 14, 2025 Respectfully submitted,
O’MELVENY & MYERS LLP
/s/ Danny S. Ashby Danny S. Ashby Texas Bar No. 01370960 dashby@omm.com 2801 North Harwood Street, Suite 1600 Dallas, Texas 75201 Telephone: +1 972 360 1900 Facsimile: +1 972 360 1901
Anton Metlitsky ametlitsky@omm.com Ross Galin rgalin@omm.com 1301 Avenue of the Americas, 17th Floor New York, NY 10019 Telephone: +1 212 326 2000 (Application for pro hac vice pending)
THE DACUS FIRM, P.C.
Deron R. Dacus Texas Bar No. 00790553 ddacus@dacusfirm.com 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903 705 1117
63 DECLARATION OF DANNY S. ASHBY
I, Danny S. Ashby, hereby declare under penalty of perjury the
following:
1. I am counsel of record for Relator Novartis Pharmaceuticals
Corporation (“Novartis”) in connection with the Petition for Writ of
Mandamus styled In re Novartis Pharmaceuticals Corporation, filed
concurrently herewith, in the Court of Appeals for the Fifteenth District of
Texas.
2. In compliance with Texas Rule of Appellate Procedure
52.3(k)(1), I have reviewed and hereby verify that the Order Denying
Defendant’s Plea to Jurisdiction and Motion to Dismiss in this Appendix is
a true and correct copy of the Order Denying Defendant’s Plea to
Jurisdiction and Motion to Dismiss filed on December 15, 2023, in the
underlying district court proceeding, Case No. 23-0276, in the 71st Judicial
District Court, Harrison County, Texas, the Honorable Brad Morin
presiding.
64 3. My birthdate is October 1, 1964, and my firm address is 2801
North Harwood Street, Suite 1600, Dallas, Texas 75201.
Executed in Dallas County, Texas on November 14, 2025.
Danny S. Ashby
65 CERTIFICATE OF COMPLIANCE
Based on a word count run in Microsoft Word for Microsoft 365,
this Petition for Writ of Mandamus contains 12,538 words, excluding
the portions of the brief exempt from the word count under Texas Rule
of Appellate Procedure 9.4(i)(1).
/s/ Danny S. Ashby Danny S. Ashby
66 CERTIFICATION
I certify that I have reviewed the Petition and concluded that
every factual statement in the Petition is supported by competent
evidence included in the Appendix or Mandamus Record.
CERTIFICATE OF SERVICE
I hereby certify that on November 14, 2025, a true and correct
copy of the foregoing brief has been filed and served on counsel of record
through electronic service via www.efiletexas.gov.
67 APPENDIX 23-0276 Filed 12/15/2023 9:01 PM Sherry Griffis District Clerk Harrison County, Texas Heather Henigan CAUSE NO. 23-0276 Deputy
THE STATE OF TEXAS, IN THE DISTRICT COURT ex rel. 71ST JUDICIAL DISTRICT HEALTH SELECTION GROUP, LLC HARRISON COUNTY, TEXAS Plaintiff,
v.
NOVARTIS PHARMACEUTICALS CORPORATION,
Defendant.
ORDER DENYING DEFENDANT’S PLEA TO JURISDICTION AND MOTION TO DISMISS
Before the Court is Defendant’s Plea to Jurisdiction and Motion to Dismiss Pursuant to
Rule 91a (the “Motion”).
Upon consideration of the parties’ briefs and oral argument, the Court is of opinion that the
Motion should be DENIED.
IT IS SO ORDERED. 15 Dec SIGNED this ______ day of ___________, 2023.
Hon. Brad Morin Judge Presiding
4871-9059-1383
APP001 Copy from re:SearchTX Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.
Envelope ID: 82601915 Filing Code Description: Proposed Order Filing Description: ORDER DENYING DEFENDANT'S PLEA TO JURISDICTION AND MOTION TO DISMISS Status as of 12/15/2023 10:28 AM CST
Associated Case Party: HEALTH SELECTION GROUP, LLC
Name BarNumber Email TimestampSubmitted Status
Samuel Baxter sbaxter@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Jennifer L.Truelove jtruelove@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Eric B.Halper ehalper@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Radu A. Lelutiu rlelutiu@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Mark Lanier WML@LanierLawFirm.com 12/14/2023 9:01:09 PM SENT
Alex J.Brown Alex.Brown@LanierLawFirm.com 12/14/2023 9:01:09 PM SENT
Joel Leach jleach@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Kim Shoults kshoults@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Denise Lopez dlopez@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Zeke DeRose Zeke.DeRose@LanierLawFirm.com 12/14/2023 9:01:09 PM SENT
Jonathan Wilkerson Jonathan.Wilkerson@LanierLawFirm.com 12/14/2023 9:01:09 PM SENT
Associated Case Party: THE STATE OF TEXAS
Lynne Kurtz-Citrin Lynne.Kurtz-Citrin@oag.texas.gov 12/14/2023 9:01:09 PM SENT
Jonathan D.Bonilla Jonathan.Bonilla@oag.texas.gov 12/14/2023 9:01:09 PM SENT
Jordan Underhill Jordan.Underhill@oag.texas.gov 12/14/2023 9:01:09 PM SENT
Case Contacts
Kimberly Grotenrath kgrotenrath@omm.com 12/14/2023 9:01:09 PM SENT
APP002 Copy from re:SearchTX Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.
Envelope ID: 82601915 Filing Code Description: Proposed Order Filing Description: ORDER DENYING DEFENDANT'S PLEA TO JURISDICTION AND MOTION TO DISMISS Status as of 12/15/2023 10:28 AM CST
Kimberly Grotenrath kgrotenrath@omm.com 12/14/2023 9:01:09 PM SENT
Dianne Adams dadams@dacusfirm.com 12/14/2023 9:01:09 PM SENT
Associated Case Party: NOVARTIS AG
Ross Galin rgalin@omm.com 12/14/2023 9:01:09 PM SENT
Danny S.Ashby dashby@omm.com 12/14/2023 9:01:09 PM SENT
Meredith N.Garagiola mgaragiola@omm.com 12/14/2023 9:01:09 PM SENT
Deron Dacus ddacus@dacusfirm.com 12/14/2023 9:01:09 PM SENT
Megan Whisler mwhisler@omm.com 12/14/2023 9:01:09 PM SENT
APP003 Copy from re:SearchTX FILE COPY
CHIEF JUSTICE Court of Appeals CLERK SCOTT E. STEVENS Sixth Appellate District DEBRA K. AUTREY
JUSTICES State of Texas BI-STATE JUSTICE BUILDING CHARLES VAN CLEEF 100 NORTH STATE LINE AVENUE #20 TEXARKANA, TEXAS 75501 JEFF RAMBIN (903) 798-3046 Friday, March 1, 2024
Sam F. Baxter Jessica Weltge McKool Smith, PC Office of the Attorney General of Texas 104 E Houston St, Ste 300 P O Box 12548, Capitol Station Marshall, TX 75670 Austin, TX 78711-2548 * DELIVERED VIA E-MAIL * * DELIVERED VIA E-MAIL *
Megan Whisler Jennifer Truelove O'Melveny & Myers LLP McKool Smith, PC 2801 N Harwood St, Ste 1600 104 E Houston St, Ste 300 Dallas, TX 75201 Marshall, TX 75670 * DELIVERED VIA E-MAIL * * DELIVERED VIA E-MAIL *
Danny S. Ashby Zeke DeRose III O'Melveny & Myers LLP The Lanier Law Firm 2801 N Harwood St, Ste 1600 10940 W Sam Houston Pkwy N, Ste 100 Dallas, TX 75201 Houston, TX 77064 * DELIVERED VIA E-MAIL * * DELIVERED VIA E-MAIL *
Deron R. Dacus Jordan Underhill The Dacus Firm, PC Office of Attorney General of Texas 821 ESE Loop 323, Ste 430 P O Box 12548, Capitol Station Tyler, TX 75701 Austin, TX 78711-2548 * DELIVERED VIA E-MAIL * * DELIVERED VIA E-MAIL *
W. Mark Lanier Ross B. Galin The Lanier Law Firm O'Melveny & Myers LLP 10940 W Sam Houston Pkwy N, Ste 100 7 Time Square Houston, TX 77064 New York, NY 10036 * DELIVERED VIA E-MAIL * * DELIVERED VIA E-MAIL *
Jonathan Wilkerson Jonathan Bonilla The Lanier Law Firm Office of the Attorney General of Texas 10940 W Sam Houston Parkway N, Ste 100 P O Box 12548, Capitol Station Houston, TX 77064 Austin, TX 78711 * DELIVERED VIA E-MAIL * * DELIVERED VIA E-MAIL *
Meredith N. Garagiola O'Melveny & Myers LLP 1625 Eye Street, NW Washington, DC 20006 * DELIVERED VIA E-MAIL *
APP004 FILE COPY
RE: Appellate Case Number: 06-24-00005-CV Trial Court Case Number: 23-0276
Style: In re Novartis Pharmaceuticals Corporation
The Court entered its order this date in the referenced proceeding whereby Relator’s Petition for Writ of Mandamus was DENIED.
A true copy of this Court’s Opinion and Judgment is enclosed.
Respectfully submitted,
Debra K. Autrey, Clerk
·j ~ ~
l. ___________________________ By: Kim Robinson, Deputy Clerk
cc: Hon. Brad Morin, Judge, Respondent (DELIVERED VIA E-MAIL)
APP005 In the Court of Appeals Sixth Appellate District of Texas at Texarkana
No. 06-24-00005-CV
IN RE NOVARTIS PHARMACEUTICALS CORPORATION
Original Mandamus Proceeding
Before Stevens, C.J., van Cleef and Rambin, JJ. Memorandum Opinion by Chief Justice Stevens
APP006 MEMORANDUM OPINION
Relator Novartis Pharmaceuticals Corporation has filed a petition for a writ of mandamus
seeking to dismiss a lawsuit filed in Harrison County under the Texas Medicaid Fraud
Prevention Act (TMFPA)1 arguing both that (1) the real party in interest, Health Selection
Group, LLC (HSG), does not have standing to maintain this lawsuit and (2) the TMFPA’s
qui tam provisions are unconstitutional under the Texas Constitution.
The trial court denied Novartis’s plea to the jurisdiction and motion to dismiss pursuant
to Rule 91a of the Texas Rules of Civil Procedure, which sought dismissal of HSG’s case on
these two bases. Because we find no abuse of discretion in the trial court’s denial of relief under
Rule 91a of the Texas Rules of Civil Procedure, we deny the petition.2
I. Standard for Mandamus
“Mandamus is an extraordinary remedy requiring the relator to show that (1) the trial
court abused its discretion and (2) the relator lacks an adequate remedy on appeal.” In re USAA
Gen. Indem. Co., 624 S.W.3d 782, 787 (Tex. 2021) (orig. proceeding) (citing In re Prudential
Ins. Co. of Am., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding)). “Mandamus relief is
only appropriate when the relators have established that only one outcome in the trial court was
permissible under the law.” In re Murrin Bros. 1885, Ltd., 603 S.W.3d 53, 56 (Tex. 2019) (orig.
proceeding). Mandamus relief may be available when a trial court denies a Rule 91a motion to
1 Act of May 26, 1995, 74th Leg., R.S., ch. 824, 1995 Tex. Gen. Laws 4202 (amended 1997, 2005, 2011, 2015, 2023) (current version at TEX. HUM. RES. CODE §§ 36.001–.132). The TMFPA was amended effective September 1, 2023, and it is now known as the Texas Health Care Program Fraud Prevention Act. Act of April 3, 2023, 88th Leg., R.S., ch. 273, §§ 2–15, 2023 Tex. Sess. Law Serv. 585, 585–89 (codified at TEX. HUM. RES. CODE §§ 36.001– .132). Novartis brings this action under a prior version of the act, the TMFPA. 2 In conjunction with the petition for a writ of mandamus, Novartis filed a motion for a temporary stay of the trial court’s proceedings. Because we deny the petition, that motion is also denied. 2 APP007 dismiss. See In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d 261, 266 (Tex. 2021) (orig.
proceeding) (recognizing “[m]andamus relief is appropriate when the trial court abuses its
discretion in denying a Rule 91a motion to dismiss”); see also In re Shire PLC, 633 S.W.3d 1, 11
(Tex. App.—Texarkana 2021, orig. proceeding).
“When reviewing matters committed to a trial court’s discretion, an appellate court may
not substitute its own judgment for the trial court’s judgment.” In re Nitla S.A. de C.V., 92
S.W.3d 419, 422 (Tex. 2002) (per curiam) (orig. proceeding) (citing Walker v. Packer, 827
S.W.2d 833, 839 (Tex. 1992) (orig. proceeding)). As a result, we may not “set aside the trial
court’s [order] unless it is clear from the record that the trial court could only reach one
decision.” Id.
II. Conclusion
Having examined and fully considered the mandamus petition and record, the responses,
the reply, and the applicable law, the Court is of the opinion that the mandamus petition should
be denied.
Scott E. Stevens Chief Justice
Date Submitted: February 29, 2024 Date Decided: March 1, 2024
3 APP008 Court of Appeals Sixth Appellate District of Texas
JUDGMENT
In re Novartis Pharmaceuticals Corporation Original Mandamus Proceeding
No. 06-24-00005-CV Panel consists of Chief Justice Stevens and Justices van Cleef and Rambin. Memorandum Opinion delivered by Chief Justice Stevens.
As stated in the Court’s opinion of this date, we find that Relator is not entitled to the relief sought. Therefore, we deny the petition.
RENDERED MARCH 1, 2024 BY ORDER OF THE COURT SCOTT E. STEVENS CHIEF JUSTICE
ATTEST: Debra K. Autrey, Clerk
APP009 FILED 24-0239 3/27/2024 7:27 PM tex-86047088 SUPREME COURT OF TEXAS BLAKE A. HAWTHORNE, CLERK Cause No. _________
In the
Supreme Court of the
State of Texas
_______________________________________ ORIGINAL PROCEEDING FROM THE 71st DISTRICT COURT IN HARRISON COUNTY, TEXAS • CAUSE NO. 23-0276 THE HONORABLE BRAD MORIN PRESIDING
DANNY S. ASHBY ANTON METLITSKY (Texas Bar No. 01370960) ROSS GALIN O’MELVENY & MYERS LLP O’MELVENY & MYERS LLP 2801 N. Harwood Street, Suite 1600 7 Times Square Dallas, Texas 75201 New York, NY 10036 Telephone: +1 972.360.1900 Telephone: +1 212.326.2000 DERON R. DACUS (Applications for pro hac vice (Texas Bar No. 00790553) admission pending) THE DACUS FIRM, P.C. 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903.705.1117 Counsel for Relator Novartis Pharmaceuticals Corporation TEMPORARY STAY REQUESTED
COUNSEL PRESS ∙ (800) 3-APPEAL PRINTED ON RECYCLED PAPER
APP010 IDENTITY OF PARTIES AND COUNSEL
Pursuant to Texas Rule of Appellate Procedure 52.3(a), Relator Novartis
Pharmaceuticals Corporation certifies that the following is a complete list of all
parties and the names and firms of all counsel appearing in the trial or appellate
courts, as well as the mailing address, telephone number, and email address for
counsel currently appearing.
Relator Danny S. Ashby dashby@omm.com Defendant Novartis O’MELVENY & MYERS LLP Pharmaceuticals Corporation 2801 N. Harwood Street, Suite 1600 Dallas, Texas 75201 Telephone: +1 972 360 1900 Anton Metlitsky ametlitsky@omm.com 7 Time Square New York, NY 10036 Telephone: +1 212 326 2000 (Application for pro hac vice admission pending) Ross Galin rgalin@omm.com O’MELVENY & MYERS LLP 7 Times Square New York, New York 10036 Telephone: +1 212 326 2000 Deron R. Dacus ddacus@dacusfirm.com THE DACUS FIRM, P.C. 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903 705 1117
i APP011 Megan Whisler (formerly with O’MELVENY & MYERS LLP) Real Party in Interest Samuel F. Baxter sbaxter@mckoolsmith.com Plaintiff Health Selection Group, Jennifer L. Truelove LLC jtruelove@mckoolsmith.com MCKOOL SMITH P.C. 104 East Houston, Suite 300 Marshall, Texas 75670
Eric B. Halper ehalper@mckoolsmith.com Radu A. Lelutiu rlelutiu@mckoolsmith.com MCKOOL SMITH P.C. One Manhattan West 395 Ninth Avenue, 50th Floor New York, New York 10001
W. Mark Lanier WML@LanierLawFirm.com Alex J. Brown Alex.Brown@LanierLawFirm.com Zeke DeRose III Zeke.DeRose@LanierLawFirm.com Jonathan Wilkerson Jonathan.Wilkerson@LanierLawFirm.com THE LANIER FIRM 10940 W. Sam Houston Pkwy N, Suite 100 Houston, Texas 77064
Kenneth W. Starr Chris Gadoury Ryan Ellis THE LANIER FIRM 10940 W. Sam. Houston Pkwy N, Suite 100 Houston, Texas 77064 Real Party in Interest Jordan Underhill Jordan.Underhill@oag.texas.gov State of Texas Jonathan D. Bonilla ii
APP012 Jonathan.Bonilla@oag.texas.gov Lynn Kurtz-Citrin Lynne.Kurtz-Citrin@oag.texas.gov OFFICE OF THE TEXAS ATTORNEY GENERAL Civil Medicaid Fraud Division P.O. Box 12548, Capitol Station Austin, Texas 78711 Telephone: (512) 475-4196
Cynthia Lu (formerly with the Office of the Texas Attorney General) Respondent The Hon. Brad Morin, 71st District Court, Harrison County
iii
APP013 TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL .........................................................i INDEX TO APPENDIX ........................................................................................vi TABLE OF AUTHORITIES .............................................................................. vii STATEMENT OF THE CASE ..............................................................................1 STATEMENT OF JURISDICTION .....................................................................2 STATEMENT REGARDING ORAL ARGUMENT ..........................................3 ISSUES PRESENTED ............................................................................................4 THE MANDAMUS RECORD AND APPENDIX ...............................................5 STATEMENT OF FACTS .....................................................................................6 SUMMARY OF THE ARGUMENT ..................................................................11 ARGUMENT .........................................................................................................13 I. HSG Does Not Have Constitutional Standing. ..............................14 A. “Constitutional standing” is a separate inquiry from “statutory standing” and cannot be conferred by statute. ........ 15 B. HSG does not have “representative standing” to sue for an injury to the State. ...............................................................17 C. U.S. Supreme Court precedent addressing federal courts’ jurisdiction to hear a federal qui tam action does not provide grounds for disregarding or overruling this Court’s precedent. ....................................................................18 II. The TMFPA Qui Tam Action Is Unconstitutional And Void. .....21 A. The Texas Constitution exclusively assigns the power to bring and maintain suits for the State to the State attorneys elected by Texans. ....................................................21 B. The TMFPA qui tam statute authorizes private parties to bring and maintain a suit for the State in violation of the Texas Constitution. ..................................................................24 C. The Real Parties’ inapposite authority cannot save the TMFPA qui tam statute from invalidation under the Texas Constitution. ..................................................................26
iv APP014 TABLE OF CONTENTS (continued) Page
PRAYER ................................................................................................................28 DECLARATION OF DANNY S. ASHBY .........................................................30 CERTIFICATE OF COMPLIANCE .................................................................32 CERTIFICATION ................................................................................................32 CERTIFICATE OF SERVICE ...........................................................................33
v APP015 TABLE OF CONTENTS (continued) Page
Document Page Order Denying Defendant’s Plea to Jurisdiction and Motion to Dismiss 001 Order Denying Petition for Writ of Mandamus 004 Memorandum Opinion Denying Petition for Writ of Mandamus 006 Judgment Denying Petition for Writ of Mandamus 009 Tex. Const. Art. I, § 13 010 Tex. Const. Art. II, § 1 011 Tex. Const. Art. IV, § 22 012 Tex. Const. Art. V, § 21 013 Tex. Hum. Res. Code § 36.101 014 Tex. Hum. Res. Code § 36.102 015 Tex. Hum. Res. Code § 36.104 017 Tex. Hum. Res. Code § 36.107 018 Tex. Hum. Res. Code § 36.113 020 Tex. Hum. Res. Code § 36.052 021 Tex. Res. Code § 36.104 (1997) 023 Tex. Hum. Res. Code § 36.104 (2007) 024
vi APP016 TABLE OF AUTHORITIES Page(s)
CASES Agey v. Am. Liberty Pipe Line Co., 172 S.W.2d 972 (Tex. 1942) ......................................................................... 25 Allen v. Fisher, 9 S.W.2d 731 (Tex. Comm’n App. 1928) .................. 4, 12, 13, 17, 20, 22, 27 Am. Liberty Pipe Line Co. v. Agey, 167 S.W.2d 580 (Tex. App. 1942), aff’d, 172 S.W.2d 972 (Tex. 1943) ...................................................................20, 23 Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845 (Tex. 2005) ...................................................................17, 18 Bellamy v. City of Brownsville, 2023 WL 413583 (Tex. App. Jan. 26, 2023, no pet.) .................................... 17 Berry v. Berry, 646 S.W.3d 516 (Tex. 2022) ......................................................................... 15 Brown v. De La Cruz, 156 S.W.3d 560 (Tex. 2004) ...................................................................26, 27 Busbee v. Cnty. Of Medina, 681 S.W.3d 391 (Tex. 2023) ......................................................................... 15 Charles Scribner’s Sons v. Marrs, 262 S.W. 722 (Tex. 1924) ............................................................................. 25 City of Dallas v. Stewart, 361 S.W.3d 562 (Tex. 2012) ......................................................................... 27 Data Foundry, Inc. v. City of Austin, 620 S.W.3d 692 (Tex. 2021) .............................................................14, 16, 20 Davenport v. Garcia, 834 S.W.2d 4 (Tex. 1992) ............................................................................. 27 Elliott v. City of Coll. Station, 674 S.W.3d 653 (Tex. App. 2023, pet. filed) ................................................ 21 Farmers Tex. Cnty. Mut. Ins. Co. v. Beasley, 598 S.W.3d 237 (Tex. 2020) ......................................................................... 14 Fin. Comm’n of Tex. v. Norwood, 418 S.W.3d 566 (Tex. 2013) ......................................................................... 16
vii APP017 TABLE OF AUTHORITIES (continued) Page(s) Garcia v. Laughlin, 285 S.W.2d 191 (Tex. 1955) ......................................................................... 22 Heckman v. Williamson Cnty., 369 S.W.3d 137 (Tex. 2012) .......................................... 11, 13, 14, 15, 17, 18 Hill Cnty. v. Sheppard, 178 S.W.2d 261 (Tex. 1944) .................................................12, 13, 22, 24, 27 Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939 (1997)....................................................................................... 25 In re Abbott, 601 S.W.3d 802 (Tex. 2020) ......................................................................... 18 In re Allcat Claims Serv., L.P., 356 S.W.3d 455 (Tex. 2011) ......................................................................... 16 In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d 261 (Tex. 2021) ......................................................................... 28 In re Houston Specialty Ins. Co., 569 S.W.3d 138 (Tex. 2019) ......................................................................... 28 In re J.B. Hunt Transp., Inc., 492 S.W.3d 287 (Tex. 2016) ......................................................................... 14 In re John G. & Marie Stella Kenedy Mem’l Found., 315 S.W.3d 519 (Tex. 2010) ......................................................................... 20 In re Kappmeyer, 668 S.W.3d 651 (Tex. 2023) ......................................................................... 13 In re Lazy W Dist. No. 1, 493 S.W.3d 538 (Tex. 2016) ...................................................................11, 16 In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004) ...................................................................13, 14 In re Xerox Corp., 555 S.W.3d 518 (Tex. 2018) ......................................................................... 19 In re YRC Inc., 646 S.W.3d 805 (Tex. 2022) ......................................................................... 13 Maud v. Terrell, 200 S.W. 375 (Tex. 1918) .................................................................22, 23, 27
viii APP018 TABLE OF AUTHORITIES (continued) Page(s) Mosaic Baybrook One, L.P. v. Simien, 674 S.W.3d 234 (Tex. 2023) ......................................................................... 16 Neeley v. W. Orance-Cove Consol. Indep. Sch. Dist., 176 S.W.3d 746 (Tex. 2005) ......................................................................... 14 Nephrology Leaders & Assocs. v. Am. Renal Assocs. LLC, 573 S.W.3d 912 (Tex. App. 2019, no pet.) ................................................... 15 OAIC Com. Assets, L.L.C. v. Stonegate Village, L.P., 234 S.W.3d 726 (Tex. App. 2007, no pet.) ................................................... 19 Perry v. Del Rio, 67 S.W.3d 85 (Tex. 2001) ............................................................................. 25 Pike v. Tex. EMC Mgmt. LLCh, 610 S.W.3d 763 (Tex. 2020) ......................................................................... 15 Staples v. State ex rel. King, 245 S.W. 639 (Tex. 1922) .............................................. 12, 13, 17, 20, 23, 27 State v. Stephens, 664 S.W.3d 293 (Tex. Crim. App. 2022) ...................................................... 26 Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993) ......................................................................... 14 Tex. Med. Res., LLP v. Molina Healthcare of Tex., Inc., 659 S.W.3d 424 (Tex. 2023) ...................................................................15, 16 United States ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., 4 F.4th 255 (5th Cir. 2021) ......................................................................6, 7, 8 United States ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., 2019 WL 4727422 (E.D. Tex. Sept. 27, 2019), aff’d, 4 F.4th 255 (5th Cir.) ............................................................................. 8 United States ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., No. 5:17-cv-123-RWS-JBB (E.D. Tex. Dec. 17, 2018) .............................. 6, 8 United States ex rel. Health Selection Grp., LLC v. Novartis AG, et al., No. 5:18-cv-60-RWS-CMC (E.D. Tex. Apr. 20, 2018) .............................. 7, 8 United States ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419 (2023)....................................................................................... 27 Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000)...........................................................................18, 19, 20
ix APP019 TABLE OF AUTHORITIES (continued) Page(s) US Fax L. Ctr. Inc. v. iHire, Inc., 476 F.3d 1112 (10th Cir. 2007) ...............................................................19, 20 CONSTITUTIONS Texas Constitution, Article IV, § 22 .................................................................passim Texas Constitution, Article V, § 21 ..................................................................passim U.S. Constitution, Article II, §27 STATUTES Gov’t Code § 22.002 .................................................................................................... Tex. Hum. Res. Code § 36.002 .................................................................................. 8 Tex. Hum. Res. Code § 36.101 ............................................................1, 8, 19, 24, 25 Tex. Hum. Res. Code § 36.104 ..........................................................................24, 25 RULES Tex. R. App. P. 52.3............................................................................................... 1, 5 Tex. R. App. P. 52.7................................................................................................... 5
x APP020 STATEMENT OF THE CASE
Nature of the Case: Health Selection Group, LLC (“HSG”) filed this qui tam action against Novartis Pharmaceuticals Corporation (“Novartis”) pursuant to the Texas Medicaid Fraud Prevention Act (“TMFPA”)1, which states that “a person may bring a civil action for a violation of Section 36.002 for the person and for the state” and such “action shall be brought in the name of the person and of the state.” Tex. Hum. Res. Code § 36.101(a).
Novartis filed a combined Plea to the Jurisdiction and Rule 91a Motion to Dismiss on the ground that (i) the district court lacks subject-matter jurisdiction over the action because HSG did not personally suffer any injury from the conduct alleged in the First Amended Petition and (ii) HSG lacks a valid cause of action because the TMFPA qui tam action violates Article IV, Section 22 and Article V, Section 21 of the Texas Constitution.
Respondent: Hon. Brad Morin, 71st District Court, Harrison County, Texas; Cause No. 23-0276.
Course of Judge Morin summarily denied the Plea to the Jurisdiction Proceedings: and Motion to Dismiss on December 15, 2023.
Novartis sought mandamus relief in the Sixth Court of Appeals at Texarkana on February 2, 2024. The Court of Appeals issued a two-page memorandum opinion on March 1, 2024, denying the mandamus petition. In Re Novartis Pharmaceuticals Corp., No. 06-24-00005-CV, 2024 WL 874686 (Tex. App.—Texarkana Mar. 1, 2024, mand. filed). Chief Justice Stevens authored the opinion, in which Justices van Cleef and Rambin joined.
1 While the Texas Medicaid Fraud Prevention Act was amended effective September 1, 2023, and is now known as the Texas Health Care Program Fraud Prevention Act, Novartis refers to the prior TMFPA which forms the basis for HSG’s claims and this qui tam action against Novartis.
1 APP021 STATEMENT OF JURISDICTION
The Court has jurisdiction over this original proceeding pursuant to Texas
Government Code § 22.002(a). This petition previously was presented to the Sixth
Court of Appeals at Texarkana, which denied relief. Tex. R. App. P. 52.3(e).
2 APP022 STATEMENT REGARDING ORAL ARGUMENT
Novartis respectfully requests oral argument. Novartis believes oral argument
will aid the Court in deciding the important constitutional issues presented by this
original proceeding, including (i) whether the Legislature has the power to authorize
a private plaintiff to file suit for a statutory violation that did not personally injure
the plaintiff and (ii) whether the Legislature can authorize a private plaintiff to file
suit for and in the name of the State of Texas when Article IV, Section 22 and Article
V, Section 21 of the Texas Constitution delegate that power and authority
exclusively to the State attorneys elected by the people of Texas.
3 APP023 ISSUES PRESENTED
1. Whether the district court has subject-matter jurisdiction to hear a
plaintiff’s statutory cause of action when it is undisputed that the plaintiff itself
2. Whether the Texas Medicaid Fraud Prevention Act’s qui tam
provisions, which authorize any “person” to initiate and maintain a civil action for
and in the name of the State, violate Article IV, Section 22 and Article V, Section
21 of the Texas Constitution, which the Court has held “mark the limits of legislative
authority to prescribe who shall represent the state and control its interests in a
lawsuit in the district court.” Allen v. Fisher, 9 S.W.2d 731, 732 (Tex. Comm’n
App. 1928).
3. Whether the district court clearly abused its discretion by failing to
correctly apply this Court’s binding precedent in resolving the foregoing issues of
law and denying Novartis’s Plea to the Jurisdiction and Motion to Dismiss.
4 APP024 THE MANDAMUS RECORD AND APPENDIX
Novartis has prepared a Mandamus Record consisting of sworn copies of
documents filed in the underlying proceeding that are material to its claim for relief
and hereby states that no testimony or evidence was adduced at the hearing on its
Plea to the Jurisdiction and Motion to Dismiss. See Tex. R. App. P. 52.7(a). The
Mandamus Record will be cited as follows: (MR__).
In addition, Novartis has prepared an Appendix containing a sworn copy of
the orders complained of and the text of the relevant constitutional provisions and
statutes on which its argument is based. See Tex. R. App. P. 52.3(k). The Appendix
will be cited as follows: (APP__).
5 APP025 STATEMENT OF FACTS
Plaintiff HSG is an affiliate of National Health Care Analysis Group
(“NHCAG”), a “research organization” based in New Jersey that was created to
monetize federal and state qui tam statutes that permit private parties to file civil
actions on behalf of the government in return for a percentage of the government’s
recovery. See First Am. Pet. ¶ 21 (MR006); U.S. Mot. to Dismiss at 1-2, United
States ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., No. 5:17-cv-123-RWS-
JBB (E.D. Tex. Dec. 17, 2018), Dkt. 192 (explaining NHCAG is a “professional
relator” “comprised of member limited liability companies formed by investors and
former Wall Street investment bankers”). NHCAG mines publicly-available
Medicaid and Medicare data and conducts witness interviews to identify broad-
ranging theories of anti-kickback liability and then creates entities, like HSG, to file
qui tam actions, seeking astronomical penalties against pharmaceutical companies.
See First Am. Pet. ¶ 42 (MR011); see also U.S. Mot. to Dismiss at 5–6, Eli Lilly,
No. 5:17-cv-123 (describing NHCAG’s business model); United States ex rel.
Health Choice Alliance, LLC v. Eli Lilly & Co., 4 F.4th 255, 259 (5th Cir. 2021)
(entities created by NHCAG brought 11 qui tam actions under the federal False
6 APP026 Claims Act against a total of 38 defendants alleging violations of the Anti-Kickback
Statute2).
In April 2018, HSG filed a sealed qui tam action against Novartis AG in the
United States District Court for the Eastern District of Texas, alleging that Novartis
AG violated the federal False Claims Act (“FCA”) and the false claim analogues for
31 states, including the TMFPA, by engaging in three business practices: (i)
providing free “nurse educator” services to patients to educate them about the proper
use and administration of six Novartis medications; (ii) providing free
“reimbursement support” services to assist patients with navigating coverage issues
to obtain coverage for certain Novartis prescriptions; and (iii) contracting with third
parties to employ nurses to market and educate prescribers about the six medications.
See generally Compl., United States ex rel. Health Selection Grp., LLC v. Novartis
AG, et al., No. 5:18-cv-60-RWS-CMC (E.D. Tex. Apr. 20, 2018), Dkt. 1. HSG’s
theories largely mirrored those brought by other NHCAG affiliates against other
pharmaceutical companies; the federal government moved to dismiss that action
because it lacked sufficient merit and the federal government deemed the challenged
practices lawful and beneficial to the federal healthcare programs. See, e.g., Eli Lilly
2 The Fifth Circuit decision notes that the nine other federal qui tam actions not addressed in Eli Lilly were dismissed for various reasons. See 4 F.4th at 259 n.1 (four cases dismissed on government’s motion to dismiss; four cases dismissed on voluntary consent of the relator and the government; and one court granted defendant’s unopposed motion to dismiss for failure to state a claim).
7 APP027 & Co., 4 F.4th at 260, 267–68 & n.1; U.S. Mot. to Dismiss at 2–3, 14–16, Eli Lilly,
No. 5:17-cv-123 (stating that “federal healthcare programs have a strong interest in
ensuring that, after a physician has appropriately prescribed a medication, patients
have access to basic product support relating to their medication” and “HHS-OIG
has advised that the provision of educational materials or informational programs to
patients, without more, does not constitute ‘remuneration.’”). After the Eastern
District of Texas granted the United States’s motion to dismiss that action, see
United States ex rel. Health Choice Alliance LLC v. Eli Lilly & Co., 2019 WL
4727422 (E.D. Tex. Sept. 27, 2019), aff’d, 4 F.4th 255 (5th Cir.), HSG voluntarily
dismissed its materially identical federal lawsuit against Novartis AG in favor of
pursuing its TMFPA claims in Texas state court. See HSG Mot. to Dismiss, Health
Selection Grp., No. 5:18-cv-60 (E.D. Tex. Mar. 9, 2020), Dkt. 21.
On May 8, 2020, HSG filed its Original Petition against Novartis AG under
seal in the Travis County District Court under Texas Human Resources Code
§ 36.101. (MR070). The Original Petition substantially tracked HSG’s prior federal
complaint, alleging that the three above-described business practices violate the
Texas anti-kickback statute and, by extension, Section 36.002(13) of the
TMFPA. Id. After the State of Texas (“State”) filed its notice declining to intervene
in the action on October 1, 2020, the case was unsealed but remained dormant for
several years until the case was transferred to the 71st Judicial District Court in
Harrison County. Id.
8 APP028 In April 2023, HSG filed a First Amended Petition to drop Novartis AG and
add Novartis Pharmaceuticals Corporation as defendant. See generally First Am.
Pet. (MR001). On September 15, 2023, Novartis timely filed a Plea to the
Jurisdiction and Motion to Dismiss the First Amended Petition, arguing that the
district court should dismiss HSG’s qui tam action for two reasons. (MR061). First,
Novartis argued that the district court should grant its Plea to the Jurisdiction to
dismiss the case for lack of subject-matter jurisdiction, because HSG does not have
constitutional standing to sue Novartis for a statutory violation that did not
personally injure HSG. See id. at 5–12 (MR072–079). In addition, Novartis argued
that HSG’s qui tam action should be dismissed under Texas Rule of Civil Procedure
91a because the TMFPA qui tam statute violates the Texas Constitution—which this
Court has held exclusively assigns the authority to file suits for the State to the State
attorneys identified in Article IV, Section 22 and Article V, Section 21—and thus
HSG lacks a valid cause of action. See id. at 12–26 (MR080–093). On December
7, 2023, HSG filed a Response to Defendant’s Plea to the Jurisdiction and Motion
to Dismiss (“Resp.,” MR098), and the State filed a Statement of Interest in Response
to Defendant’s Plea to the Jurisdiction and Motion to Dismiss (“SOI,” MR116). On
December 11, 2023, Novartis filed a Reply in Support of its Plea to the Jurisdiction
and Motion to Dismiss (MR139). The district court heard oral argument on the Plea
to the Jurisdiction and Motion to Dismiss on December 14 and summarily denied it
9 APP029 the following day, on December 15, 2023. See Order Denying Def.’s Plea to Jur. &
Mot. To Dismiss (“Order,” MR267; APP001).
Novartis filed a Petition for Writ of Mandamus in the Court Appeals for the
Sixth District of Texas, arguing that the district court’s denial of Novartis’ Plea to
the Jurisdiction and Motion to Dismiss constituted a clear error of law because it
permits HSG to maintain a statutory cause of action for which it lacks constitutional
standing and otherwise violates provisions of the Texas Constitution that exclusively
confer on the State attorneys (the Attorney General and District and County
Attorneys) the authority to bring suit for and in the name of the State. (MR170).
The Court of Appeals denied the Petition on the ground that these jurisdictional and
constitutional questions were committed to the trial court’s discretion: “‘[w]hen
reviewing matters committed to a trial court’s discretion, an appellate court may not
substitute its own judgment for the trial court’s judgment.’ As a result, we may not
‘set aside the trial court’s [order] unless it is clear from the record that the trial court
could only reach one decision.’” (MR501) (second alteration in original) (citations
omitted).
10 APP030 SUMMARY OF THE ARGUMENT
The Texas Constitution and this Court’s precedent preclude HSG’s qui tam
action twice over: first, for lack of standing, and second, for want of a legally valid
cause of action. In concluding otherwise, the district court failed to analyze or
correctly apply binding precedent.
This Court has made clear that a plaintiff “must be personally injured—he
must plead facts demonstrating that he, himself (rather than a third party or the public
at large), suffered [an] injury” for a Texas court to hear his claims under the Texas
Constitution. Heckman v. Williamson Cnty., 369 S.W.3d 137, 155 (Tex. 2012).
Because it is undisputed that HSG itself suffered no injury from the conduct alleged
in its First Amended Petition, only one outcome was permissible under Texas law:
dismissal for lack of subject-matter jurisdiction.
The Legislature lacks the power to enact a statute to excuse a plaintiff from
satisfying constitutional standing requirements for courts’ jurisdiction under the
Texas Constitution. See In re Lazy W Dist. No. 1, 493 S.W.3d 538, 544 (Tex. 2016)
(orig. proceeding) (“For the Legislature to attempt to authorize a court to act without
subject matter jurisdiction would violate the constitutional separation of powers.”).
As this Court has long recognized, a “statute cannot confer a right upon private
individuals to act for all where it is shown they have no interest different from all
others” because the State alone has standing to bring suit respecting matters of public
11 APP031 concern. Staples v. State ex rel. King, 245 S.W. 639, 641 (Tex. 1922); see also Allen
v. Fisher, 9 S.W.2d 731, 732 (Tex. Comm’n App. 1928). Because allegations of
harm to the State do not support a finding that HSG suffered an injury redressable
by Texas courts, the district court lacks subject-matter jurisdiction to hear HSG’s
lawsuit. Such claims must be brought, if at all, by the party who allegedly suffered
the injury: the State of Texas.
HSG’s suit also should have been dismissed because HSG lacks a legally valid
cause of action. This Court has consistently held that Article IV, Section 22 and
Article V, Section 21 of the Texas Constitution exclusively assign the duty and
authority to bring and maintain a suit for the State to the Attorney General and the
District and County Attorneys, and “‘the Legislature cannot withdraw them nor
confer them upon others nor abridge them or interfere with the officer’s right to
exercise them unless the Constitution expressly so provides.’” Hill Cnty. v.
Sheppard, 178 S.W.2d 261, 264 (Tex. 1944). Neither HSG nor the State have
identified an express constitutional provision that authorizes the Legislature to enact
a qui tam statute that permits any “person” to bring and maintain a “civil law
enforcement action” in the name of the State. HSG’s self-described “civil law
enforcement action” is legally invalid under the Texas Constitution and should have
been dismissed. (MR002).
12 APP032 ARGUMENT
A party is entitled to mandamus relief when a trial court commits a clear abuse
of discretion and the party lacks an adequate remedy by appeal to correct the district
court’s error. In re YRC Inc., 646 S.W.3d 805, 808 (Tex. 2022) (orig. proceeding).
Both requirements are met here to warrant this Court’s intervention. In summarily
denying the Plea and Motion, the district court abused its discretion by failing to
correctly apply the law. In re Kappmeyer, 668 S.W.3d 651, 655 (Tex. 2023) (orig.
proceeding). This Court has consistently held that Texas courts do not have subject-
matter jurisdiction over claims brought by unharmed plaintiffs, and it is undisputed
that HSG itself suffered no harm from the conduct alleged in the First Amended
Petition. See Heckman, 369 S.W.3d at 150, 155; Staples, 245 S.W. at 641, 643;
Allen, 9 S.W.2d at 732. Moreover, the Court’s precedent is clear that the Legislature
cannot enact a statute to authorize a private plaintiff, like HSG, to bring suit for the
State because Article IV, Section 22 and Article V, Section 21 of the Texas
Constitution explicitly and exclusively assign that duty to the State attorneys. See
Staples, 245 S.W. at 641; Allen, 9 S.W.2d at 732; Sheppard, 178 S.W.2d at 264.
Mandamus relief is thus necessary to prevent the waste of time and resources
litigating a doomed proceeding and to preserve the Executive department’s
jurisdiction from interference. See In re Prudential Ins. Co. of Am., 148 S.W.3d 124,
13 APP033 136 (Tex. 2004) (orig. proceeding); see In re J.B. Hunt Transp., Inc., 492 S.W.3d
287, 298–99 (Tex. 2016) (orig. proceeding).
I. HSG Does Not Have Constitutional Standing.
In Texas, “[s]tanding is a threshold requirement to maintaining a lawsuit,”
Farmers Tex. Cnty. Mut. Ins. Co. v. Beasley, 598 S.W.3d 237, 240 (Tex. 2020), that
“stems from two constitutional limitations on subject-matter jurisdiction,” Data
Foundry, Inc. v. City of Austin, 620 S.W.3d 692, 700 (Tex. 2021). The Separation
of Powers provision in Article II, Section 1 of the Texas Constitution prohibits courts
“from issuing advisory opinions, because doing so invades the function of the
executive rather than judicial department.” Id.; see also Tex. Ass’n of Bus. v. Tex.
Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993). And the Open Courts provision
in Article I, Section 13 “opens the courthouse doors only to those who have or are
suffering an injury.” Heckman, 369 S.W.3d at 155; see also Tex. Ass’n of Bus., 852
S.W.2d at 444. The Court has held that these constitutional provisions “limit[]
[courts’] subject matter jurisdiction to cases involving a distinct injury to the plaintiff
and a real controversy between the parties, which will be actually determined by the
judicial declaration sought.” Neeley v. W. Orance-Cove Consol. Indep. Sch. Dist.,
176 S.W.3d 746, 774 (Tex. 2005) (quotation omitted). To satisfy the injury
requirement for standing, the Court has emphasized that “[t]he plaintiff must be
personally injured—he must plead facts demonstrating that he, himself (rather than
14 APP034 a third party or the public at large), suffered the injury.” Heckman, 369 S.W.3d at
155. Because the plaintiff that brought this action—HSG—did not suffer any injury
from the violations alleged in the First Amended Petition, the Court should grant
mandamus relief to correct the district court’s clear error of law in failing to dismiss
this action.
A. “Constitutional standing” is a separate inquiry from “statutory standing” and cannot be conferred by statute.
The Real Parties’ contention that HSG need not show a personal injury
because HSG has “statutory standing” to sue under the TMFPA reflects a
fundamental misunderstanding of the distinction between a plaintiff’s statutory right
to sue and a plaintiff’s constitutional standing to sue. Resp. at 5–6 (MR103–04);
SOI at 8 (MR123).
As this Court has repeatedly explained, Texas courts’ use of the phrase
“statutory standing” is a misnomer because a plaintiff’s statutory authority to sue
“go[es] to the merits of the plaintiff’s claim, not the plaintiff’s standing to sue in the
jurisdictional sense.” Busbee v. Cnty. Of Medina, 681 S.W.3d 391, 395 (Tex. 2023);
see also Pike v. Tex. EMC Mgmt. LLC, 610 S.W.3d 763, 773 (Tex. 2020); Berry v.
Berry, 646 S.W.3d 516, 527 & n.3 (Tex. 2022); Tex. Med. Res., LLP v. Molina
Healthcare of Tex., Inc., 659 S.W.3d 424, 439–41 (Tex. 2023); see also Nephrology
Leaders & Assocs. v. Am. Renal Assocs. LLC, 573 S.W.3d 912, 915–17 & n.5 (Tex.
App. 2019, no pet.). While older opinions use standing “as a short-hand reference
15 APP035 for a plaintiff’s ability to fulfill some statutory prerequisite to bringing suit or
recovering on a claim,” the Court has deemed such phrasing “regrettable” because
it “has tangled the line demarcating issues that truly implicate a trial court’s subject-
matter jurisdiction from those pertaining to the merits.” Tex. Med. Res., 659 S.W.3d
at 439-40.
What matters for subject-matter jurisdiction is the plaintiff’s ability to show
that (i) “the plaintiff suffered an injury,” (ii) “this injury is fairly traceable to the
defendant’s conduct,” and (iii) “this injury is likely to be redressed by the requested
relief.” Mosaic Baybrook One, L.P. v. Simien, 674 S.W.3d 234, 250-51 (Tex. 2023)
(quotation omitted). Because those requirements for standing “stem[] from two
constitutional limitations on [courts’] subject-matter jurisdiction,” the Legislature
cannot render them “irrelevant,” as the Real Parties contended below. Data
Foundry, Inc., 620 S.W.3d at 700; see Fin. Comm’n of Tex. v. Norwood, 418 S.W.3d
566, 582 n.83 (Tex. 2013). “For the Legislature to attempt to authorize a court to
act without subject matter jurisdiction would violate the constitutional separation of
powers,” which is why Texas courts construe the Legislature’s enactments to
incorporate the Texas Constitution’s jurisdictional requirements. In re Lazy W. Dist.
No. 1, 493 S.W.3d at 544; see In re Allcat Claims Serv., L.P., 356 S.W.3d 455, 462
(Tex. 2011) (orig. proceeding). If the plaintiff does not satisfy the personal injury
16 APP036 requirement for constitutional standing, then Texas courts do not have subject-matter
jurisdiction to hear the plaintiff’s claim.
That is especially true where, as here, the plaintiff seeks to vindicate an
alleged injury to the State. See Heckman, 369 S.W.3d at 155 (plaintiff “must plead
facts demonstrating that he, himself (rather than a third party or the public at large),
suffered the injury”); Bellamy v. City of Brownsville, 2023 WL 413583, at *3 (Tex.
App. Jan. 26, 2023, no pet.) (plaintiff’s “allegations about harm to the City and its
citizens could not support a finding that he would suffer an irreparable injury” for
standing). For well over a century, this Court has held that a private party lacks
standing to vindicate a matter of public concern unless he can show an injury
particular to himself, and the Legislature cannot enact a statute to “confer a right
upon private individuals to act for all where it is shown they have no interest different
from all others.” Staples, 245 S.W. at 641; see also Allen, 9 S.W.2d at 732.
B. HSG does not have “representative standing” to sue for an injury to the State.
HSG’s efforts to circumvent that authority by analogizing to “representative
standing” cases is also unpersuasive. Setting aside that Allen and Staples squarely
foreclose that result, Texas courts have only recognized a plaintiff’s “representative
standing” to sue on behalf of another where the injured party with standing to sue
lacks the legal authority or capacity to bring suit for their injury. Austin Nursing
Ctr., Inc. v. Lovato, 171 S.W.3d 845, 849 (Tex. 2005). “For example,” because
17 APP037 “minors and incompetents are considered to be under a legal disability and are
therefore unable to sue or be sued in their individual capacities[,] such persons are
required to appear in court through a legal guardian, a ‘next friend,’ or a guardian ad
litem.” Id. Likewise, because “a decedent’s estate is not a legal entity and may not
properly sue or be sued as such,” “the law therefore grants another party”—the
estate’s personal representative—“the capacity to sue on [its] behalf.” Id. (quotation
That rationale for “representative standing” has no application here. If the
State suffered an injury, as HSG alleges, then the State has the legal authority and
capacity to bring a civil law enforcement action against Novartis; it simply chose not
to do so. Because HSG is not a party that was “genuinely, personally affected” by
the alleged TMFPA violations, this Court’s precedent precludes the district court
from hearing its claims. See Heckman, 369 S.W.3d at 150; In re Abbott, 601 S.W.3d
802, 809 (Tex. 2020) (orig. proceeding) (Texas’ “standing jurisprudence” requires
parties to particular cases “who are genuinely, personally affected.”)
C. U.S. Supreme Court precedent addressing federal courts’ jurisdiction to hear a federal qui tam action does not provide grounds for disregarding or overruling this Court’s precedent.
Finding no support for HSG’s constitutional standing under Texas law, the
State instead argued that the U.S. Supreme Court’s decision in Vermont Agency of
Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000), “controls”
18 APP038 HSG’s standing to bring this civil law enforcement action under the Texas
Constitution. That, too, is wrong. The U.S. Supreme Court’s rationale in Stevens
for Article III jurisdiction over a FCA qui tam action finds no support in the TMFPA
or Texas’s constitutional standing jurisprudence.
First, the standing-by-assignment theory that Stevens adopted for FCA qui tam
actions does not work under Texas law. As this Court noted in In re Xerox Corp.,
the FCA and TMFPA are similar in aim and tactic, but they are fundamentally
different statutes that “employ materially different language.” 555 S.W.3d 518, 535
(Tex. 2018). While the FCA creates a statutory tort for the recovery of damages to
the United States, Texas argued in In re Xerox—and the Court agreed—that the
TMFPA does not; rather, the TMFPA is an enforcement statute for civil penalties.
Id. at 524. Thus, in contrast to the FCA, the TMFPA cannot “reasonably be regarded
as effecting a partial assignment of the [State’s] damages claim,” Stevens, 529 U.S.
at 773, because the TMFPA is not “an action for the recovery of damages” that is
capable of assignment, In re Xerox., 555 S.W.3d at 527 n.56. But even if it were,
the standing-by-assignment theory would still fail because an assignment contingent
on a party’s performance of an act that violates the Texas Constitution—that is, filing
a civil action for and in the name of the State, see Tex. Hum. Res. Code §
36.101(a)— cannot confer standing. See, e.g., OAIC Com. Assets, L.L.C. v.
Stonegate Village, L.P., 234 S.W.3d 726, 746 (Tex. App. 2007, no pet.); US Fax L.
19 APP039 Ctr. Inc. v. iHire, Inc., 476 F.3d 1112, 1120 (10th Cir. 2007). Unlike the U.S.
Constitution, the Texas Constitution explicitly lodges with the State’s attorneys the
exclusive authority to bring and maintain a suit for the State. See Allen, 9 S.W.2d at
732; Staples, 245 S.W. at 642.
The State’s reliance on Stevens’ second rationale for Article III jurisdiction,
based on the historical pedigree of federal qui tam actions, also finds no support in
Texas. SOI at 10–11 (MR125–126). Stevens held that Article III’s “Cases” and
“Controversies” requirement encompasses “‘cases and controversies of the sort
traditionally amenable to, and resolved by, the judicial process.’” 529 U.S. at 774–
77. But the Texas Constitution does not contain any “Cases” and “Controversies”
language, and no Texas court has ever followed that aspect of federal standing
jurisprudence to resolve its subject-matter jurisdiction. Nor should it, given that the
Texas Constitution—including its Open Courts and Separation of Powers
provisions—governs the scope of Texas courts’ subject-matter jurisdiction. See
Data Foundry, 620 S.W.3d at 700. Ex parte Wolters, 144 S.W. 531, 587 (Tex. Crim.
App. 1911). That courts in England and Colonial America had jurisdiction over qui
tam actions under the English parliamentary system says nothing about Texas
courts’ jurisdiction to hear such actions under the Texas Constitution. See Am.
Liberty Pipe Line Co. v. Agey, 167 S.W.2d 580, 581–82 (Tex. App. 1942), aff’d, 172
S.W.2d 972 (Tex. 1943) (rejecting as irrelevant plaintiff’s contention that qui tam
20 APP040 actions had been permitted prior to the 1876 Texas Constitution). And even if
historical practices were relevant to resolving Texas courts’ subject-matter
jurisdiction, the Real Parties have not identified any historical practice in the decades
following the Texas Constitution’s ratification of qui tam actions to vindicate the
State’s injuries.
HSG’s claims should have been dismissed for lack of standing. That the
district court did not do so constitutes a clear error of law and abuse of discretion
that merits mandamus relief. See In re John G. & Marie Stella Kenedy Mem’l
Found., 315 S.W.3d 519, 522 (Tex. 2010) (orig. proceeding) (“Mandamus is proper
if a trial court issues an order that exceeds its jurisdictional authority.”).
II. The TMFPA Qui Tam Action Is Unconstitutional And Void.
The district court also abused its discretion in denying the Motion to Dismiss
because the TMFPA qui tam provisions violate Article IV, Section 22 and Article
V, Section 21 of the Texas Constitution, and an unconstitutional statute cannot
provide a basis for any right or relief. See Elliott v. City of Coll. Station, 674 S.W.3d
653, 656 (Tex. App. 2023, pet. filed).
A. The Texas Constitution exclusively assigns the power to bring and maintain suits for the State to the State attorneys elected by Texans.
It is a fundamental and well-settled principle of Texas constitutional law that,
where the Texas Constitution confers certain duties or powers upon a designated
officer, the Legislature cannot confer those duties or powers upon others or interfere
21 APP041 with the officer’s right to exercise them unless the Constitution expressly so
provides. Sheppard, 178 S.W.2d at 261; Garcia v. Laughlin, 285 S.W.2d 191, 194
(Tex. 1955). Applying that principle, this Court has recognized for well over a
century that Article IV, Section 22 and Article V, Section 21 confer an “exclusive”
power on the Attorney General and District and County Attorneys to represent the
State and thus “mark the limits of legislative authority to prescribe who shall
represent the state and controls its interests in a lawsuit in the district court.” Allen,
9 S.W.2d at 732. “The Legislature cannot devolve them upon others. Nor can it
interfere with the right to exercise them.” Maud v. Terrell, 200 S.W. 375, 376 (Tex.
1918).
In the first half of the twentieth century, the Court addressed several cases
where it was argued that the Legislature had enacted a statute to authorize another
person to bring suit for the State in violation of Article IV, Section 22 and Article V,
Section 21. Those cases were resolved in one of two ways. Where possible, the
Court construed the statute to require the State attorneys to bring suit for the State
consistent with the Texas Constitution. But if the statute reflected an unambiguous
intent to authorize another to bring suit for the State, then the Court held the statute
was void under the Texas Constitution. The Court has never upheld a statute to
permit anyone other than the duly-elected State attorneys to bring suit for the State.
22 APP042 The Court in Maud recognized that a statute permitting a tax collector to bring
suit for the State would violate the Texas Constitution’s assignment of that power
and duty to the State attorneys. 200 S.W. at 376. But the Court found that the statute
was susceptible to a different construction that would render it valid under the
Constitution. See id. Rather than construe the statute to authorize the tax collector
to file suit himself, the Court construed the statute to provide that the tax collector
“should cause the suit to be filed by the official charged by law with that specific
duty”—i.e., the Attorney General. Id. at 377; see also Agey, 167 S.W.2d at 583.
A few years later, the Court followed Maud in rejecting the contention that
the Legislature could enact a statute authorizing private citizens to bring and
prosecute a suit in the name of the State. Staples, 245 S.W. at 640–42.
To give the section the meaning contended for by [plaintiffs] would be to seriously infringe upon the mandate of section 21, art. 5, of the Constitution, that ‘the county attorneys shall represent the state in all cases in their respective counties,’ and of section 22, art. 4, relating to the Attorney General.
Id. at 642. Because the Court “presumed that the Legislature desired and intended
to enact a constitutional law,” the Court construed the statute to require private
citizens to solicit “the proper officer of the state” to bring suit for the State. Id. at
641.
But when the Court was confronted with a statute that unambiguously
conferred that power on someone other than the State attorneys selected by the Texas
23 APP043 Constitution, the Court did not hesitate to declare the enactment unconstitutional.
The Court in Sheppard invalidated a statute that purported to create an extra-
constitutional office for a “Criminal District Attorney” for Hill County. 178 S.W.2d
at 261–62. Because Article V, Section 21 of the Constitution “carefully apportions
the duties of representing the State in district and inferior courts (other than those
conferred upon the Attorney General by Article IV, Section 22) among the
constitutional officers of district attorney . . . and county attorney,” the Court held it
“well settled” that “the Legislature, in the absence of other constitutional authority
therefor, could not create a statutory office with power to take over and exercise such
functions.” Id. at 264. For the reasons explained directly below, that is the precise
effect of the TMFPA qui tam statute.
B. The TMFPA qui tam statute authorizes private parties to bring and maintain a suit for the State in violation of the Texas Constitution.
The Legislature’s enactment of a qui tam action, authorizing any “person” to
bring and maintain a suit “for the state” and “in the name . . . of the state” for a
violation of the TMFPA, cannot be sustained under the Texas Constitution. See Tex.
Hum. Res. Code § 36.101 (APP014); Tex. Hum. Res. Code § 36.104(b) (APP017).
The Legislature has essentially created an extra-constitutional office comprised of
self-appointed private attorney generals who exercise a power that the Texas
Constitution explicitly and exclusively confers on the State attorneys. “[I]n the
matter of bringing suits,” this Court has held, “the Attorney General must exercise
24 APP044 judgment and discretion, which will not be controlled by other authorities.” Charles
Scribner’s Sons v. Marrs, 262 S.W. 722, 727 (Tex. 1924); see also Agey v. Am.
Liberty Pipe Line Co., 172 S.W.2d 972, 382 (Tex. 1942) (Attorney General is the
“chief law officer of the State” and “has the right to investigate the facts and exercise
his judgment and discretion regarding the filing of a suit”). Yet, the TMFPA
purports to grant such control to qui tam relators to file suit for the State. See Tex.
Hum. Res. Code § 36.101 (APP014).
In addition, if the Attorney General declines to intervene in the qui tam action,
the TMFPA impermissibly authorizes an unharmed private party and its attorney to
prosecute violations of state law in place of the Attorney General. See Tex. Hum.
Res. Code § 36.104(b) (APP017); Perry v. Del Rio, 67 S.W.3d 85, 92 (Tex. 2001).
In short, the TMFPA qui tam action hands over a sovereign power for the vindication
of public interests to private individuals who owe no duty of loyalty to the State and
are “motivated primarily by prospects of monetary reward rather than public good.”
Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 949, 952 (1997).
That the Attorney General may, as the Real Parties contended below, agree
with or support this reassignment of his constitutional duty cannot save it from
invalidation. A branch of government cannot cede to other branches or private
parties one of its exclusive powers, any more than other branches or private parties
could seize such powers themselves. The turmoil of the Reconstruction era
25 APP045 prompted the framers of the 1876 Texas Constitution to “decentralize the state
government” by “precisely defin[ing] the rights, powers, and prerogatives of the
various governmental departments and agencies.” State v. Stephens, 664 S.W.3d
293, 294 (Tex. Crim. App. 2022) (quotation omitted). The Texas Constitution
exclusively assigns the power to represent the State to the State attorneys identified
in Article IV, Section 22 and Article V, Section 21, and grants the people of Texas
the right to choose those officers. The Attorney General cannot—either by
agreement, on his own or with the consent of the Legislature—delegate or limit his
constitutional duty to represent the State in a manner not provided in the Texas
Constitution.
C. The Real Parties’ inapposite authority cannot save the TMFPA qui tam statute from invalidation under the Texas Constitution.
Against this weight of authority, the Real Parties argued that the TMFPA qui
tam action should be upheld based on this Court’s decision in Brown v. De La Cruz,
156 S.W.3d 560 (Tex. 2004), and federal precedent upholding federal qui tam
statutes under the federal constitution. Not so.
The Real Parties’ claims that Brown “settled” the constitutionality of Texas
qui tam statutes are completely baseless. SOI at 2, 13–14 (MR117, 128–129); Resp.
at 2, 7–8 (MR100, 105–106). Brown did not involve a qui tam statute or, for that
matter, address the constitutionality of any statute. Brown merely recognized that
the Legislature can create a private cause of action for a purchaser who suffered an
26 APP046 injury to recover a statutory penalty “beyond the damages that a purchaser is likely
to suffer,” but held that if the Legislature intends to create such a private cause of
action, “it must do so clearly.” 156 S.W.3d at 566. Brown says nothing about the
constitutionality of a statute that purports to authorize a private party to maintain a
civil law enforcement action for the State to vindicate the State’s injury.
Nor do the Real Parties explain how federal law could determine whether a
Texas qui tam statute comports with the Texas Constitution’s unique provisions.3
See City of Dallas v. Stewart, 361 S.W.3d 562, 573–74 (Tex. 2012); Davenport v.
Garcia, 834 S.W.2d 4, 12 (Tex. 1992). Unlike the U.S. Constitution, the Texas
Constitution explicitly assigns to a specific government actor the duty and power to
represent the government’s interest in litigation. This Court has held that the Texas
Constitution exclusively confers the duty and authority to represent the State’s
litigation interests on the State attorneys identified in Article IV, Section 22 and
Article V, Section 21. See Sheppard, 178 S.W.2d at 264; Allen, 9 S.W.2d at 732;
Staples, 245 S.W. at 641–43; Maud, 200 S.W. at 376. There is no similar provision
in the U.S. Constitution, and thus no U.S. Supreme Court precedent that could
possibly ratify the Legislature’s enactment of the TMFPA qui tam statute.
3 Moreover, the continuing vitality of those federal decisions is uncertain given that Justices Thomas, Kavanaugh, and Barrett recently raised concerns, sua sponte, about the constitutionality of the FCA’s qui tam provisions under Article II of the U.S. Constitution. United States ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419, 449 (2023) (Thomas, J., dissenting); id. at 442 (Kavanaugh, J., concurring).
27 APP047 Mandamus relief is warranted to correct the district court’s clear abuse of
discretion in failing to dismiss this legally invalid action. See In re Farmers Tex.
Cnty. Mut. Ins. Co., 621 S.W.3d 261, 266 (Tex. 2021) (orig. proceeding); In re
Houston Specialty Ins. Co., 569 S.W.3d 138, 142 (Tex. 2019) (orig. proceeding).
Novartis respectfully requests that the Court issue a writ of mandamus
directing the district court to dismiss HSG’s claims.
28 APP048 Dated: March 27, 2024 Respectfully submitted, O’MELVENY & MYERS LLP /s/ Danny S. Ashby Danny S. Ashby Texas Bar No. 01370960 dashby@omm.com 2801 North Harwood Street, Suite 1600 Dallas, Texas 75201 Telephone: +1 972 360 1900 Facsimile: +1 972 360 1901 Anton Metlitsky ametlitsky@omm.com 7 Time Square New York, NY 10036 Telephone: +1 212 326 2000 (Application for pro hac vice admission pending)
Ross Galin rgalin@omm.com 7 Times Square New York, NY 10036 Telephone: +1 212 326 2000 (Application for pro hac vice admission pending) THE DACUS FIRM, P.C. Deron R. Dacus Texas Bar No. 00790553 ddacus@dacusfirm.com 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903 705 1117
29 APP049 DECLARATION OF DANNY S. ASHBY
I, Danny S. Ashby, hereby declare under penalty of perjury the following:
1. I am counsel of record for Relator Novartis Pharmaceuticals
Corporation (“Novartis”) in connection with the Petition for Writ of Mandamus
styled In re Novartis Pharmaceuticals Corporation, filed concurrently herewith, in
the Supreme Court of Texas.
2. In compliance with Texas Rule of Appellate Procedure 52.3(k)(1)(A),
I have reviewed and hereby verify that the Order Denying Defendant’s Plea to
Jurisdiction and Motion to Dismiss in this Appendix is a true and correct copy of the
Order Denying Defendant’s Plea to Jurisdiction and Motion to Dismiss filed on
December 15, 2023, in the underlying district court proceeding, Case No. 23-0276,
in the 71st Judicial District Court, Harrison County, Texas, the Honorable Brad
Morin presiding.
3. In compliance with Texas Rule of Appellate Procedure 52.3(k)(1)(B),
I have reviewed and hereby verify that the Order Denying Relator’s Petition for Writ
of Mandamus and corresponding Judgment and Memorandum Opinion in this
Appendix are true and correct copies of the Order Denying Relator’s Petition for
Writ of Mandamus and corresponding Judgment and Memorandum Opinion filed
on March 1, 2024, in the Court of Appeals for the Sixth Appellate District, Case No.
30 APP050 06-24-00005-CV, the Honorable Scott E. Stevens, Jeff Rambin, and Charles van
Cleef presiding.
4. My birthdate is October 1, 1964, and my firm address is 2801 North
Harwood Street, Suite 1600, Dallas, Texas 75201.
Executed in Dallas County, Texas on March 26, 2024.
31 APP051 CERTIFICATE OF COMPLIANCE
Based on a word count run in Microsoft Word for Microsoft 365, this Petition
for Writ of Mandamus contains 4,405 excluding the portions of the brief exempt
from the word count under Texas Rule of Appellate Procedure 9.4(i)(1).
CERTIFICATION
I certify that I have reviewed the Petition and concluded that every factual
statement in the Petition is supported by competent evidence included in the
Appendix or Mandamus Record.
32 APP052 CERTIFICATE OF SERVICE
This will certify that a true and correct copy of the foregoing Petition for Writ
of Mandamus has been forwarded this 27th day of March, 2024, to the following
attorneys of record via electronic service:
Samuel F. Baxter Jordan Underhill Jennifer L. Truelove Jonathan D. Bonilla MCKOOL SMITH P.C. Lynne Kurtz-Citrin 104 East Houston, Suite 300 Office of the Attorney General Marshall, Texas 75670 Civil Medicaid Fraud Division sbaxter@mckoolsmith.com P.O. Box 12548, Capitol Station jtruelove@mckoolsmith.com Austin, Texas 78711 Jordan.Underhill@oag.texas.gov Eric B. Halper Jonathan.Bonilla@oag.texas.gov Radu A. Lelutiu Lynne.Kurtz-Citrin@oag.texas.gov MCKOOL SMITH P.C. One Manhattan West Counsel for the State of Texas 395 9th Avenue, 50th Floor New York, New York 10001 ehalper@mckoolsmith.com rlelutiu@mckoolsmith.com W. Mark Lanier Alex J. Brown Zeke DeRose III Jonathan Wilkerson THE LANIER FIRM 10940 W. Sam Houston Pkwy N., Suite 100 Houston, Texas 77064 WML@LanierLawFirm.com Alex.Brown@LanierLawFirm.com Zeke.DeRose@LanierLawFirm.com Jonathan.Wilkerson@LanierLawFirm.com Counsel for Health Selection Group, LLC
33 APP053 APPENDIX
APP054 23-0276 Filed 12/15/2023 9:01 PM Sherry Griffis District Clerk Harrison County, Texas Heather Henigan CAUSE NO. 23-0276 Deputy
THE STATE OF TEXAS, IN THE DISTRICT COURT ex rel. 71ST JUDICIAL DISTRICT HEALTH SELECTION GROUP, LLC HARRISON COUNTY, TEXAS Plaintiff,
ORDER DENYING DEFENDANT’S PLEA TO JURISDICTION AND MOTION TO DISMISS
Before the Court is Defendant’s Plea to Jurisdiction and Motion to Dismiss Pursuant to
Upon consideration of the parties’ briefs and oral argument, the Court is of opinion that the
IT IS SO ORDERED. 15 Dec SIGNED this ______ day of ___________, 2023.
APP55 Copy from re:SearchTX Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.
Envelope ID: 82601915 Filing Code Description: Proposed Order Filing Description: ORDER DENYING DEFENDANT'S PLEA TO JURISDICTION AND MOTION TO DISMISS Status as of 12/15/2023 10:28 AM CST
Samuel Baxter sbaxter@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Jennifer L.Truelove jtruelove@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Eric B.Halper ehalper@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Radu A. Lelutiu rlelutiu@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Alex J.Brown Alex.Brown@LanierLawFirm.com 12/14/2023 9:01:09 PM SENT
Kim Shoults kshoults@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Denise Lopez dlopez@mckoolsmith.com 12/14/2023 9:01:09 PM SENT
Zeke DeRose Zeke.DeRose@LanierLawFirm.com 12/14/2023 9:01:09 PM SENT
Jonathan Wilkerson Jonathan.Wilkerson@LanierLawFirm.com 12/14/2023 9:01:09 PM SENT
Lynne Kurtz-Citrin Lynne.Kurtz-Citrin@oag.texas.gov 12/14/2023 9:01:09 PM SENT
Jonathan D.Bonilla Jonathan.Bonilla@oag.texas.gov 12/14/2023 9:01:09 PM SENT
Jordan Underhill Jordan.Underhill@oag.texas.gov 12/14/2023 9:01:09 PM SENT
Kimberly Grotenrath kgrotenrath@omm.com 12/14/2023 9:01:09 PM SENT
APP56 Copy from re:SearchTX Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.
Envelope ID: 82601915 Filing Code Description: Proposed Order Filing Description: ORDER DENYING DEFENDANT'S PLEA TO JURISDICTION AND MOTION TO DISMISS Status as of 12/15/2023 10:28 AM CST
Kimberly Grotenrath kgrotenrath@omm.com 12/14/2023 9:01:09 PM SENT
Meredith N.Garagiola mgaragiola@omm.com 12/14/2023 9:01:09 PM SENT
APP57 Copy from re:SearchTX FILE COPY
CHIEF JUSTICE Court of Appeals CLERK SCOTT E. STEVENS Sixth Appellate District DEBRA K. AUTREY
JUSTICES State of Texas BI-STATE JUSTICE BUILDING CHARLES VAN CLEEF 100 NORTH STATE LINE AVENUE #20 TEXARKANA, TEXAS 75501 JEFF RAMBIN (903) 798-3046 Friday, March 1, 2024
Sam F. Baxter Jessica Weltge McKool Smith, PC Office of the Attorney General of Texas 104 E Houston St, Ste 300 P O Box 12548, Capitol Station Marshall, TX 75670 Austin, TX 78711-2548 * DELIVERED VIA E-MAIL * * DELIVERED VIA E-MAIL *
Megan Whisler Jennifer Truelove O'Melveny & Myers LLP McKool Smith, PC 2801 N Harwood St, Ste 1600 104 E Houston St, Ste 300 Dallas, TX 75201 Marshall, TX 75670 * DELIVERED VIA E-MAIL * * DELIVERED VIA E-MAIL *
Danny S. Ashby Zeke DeRose III O'Melveny & Myers LLP The Lanier Law Firm 2801 N Harwood St, Ste 1600 10940 W Sam Houston Pkwy N, Ste 100 Dallas, TX 75201 Houston, TX 77064 * DELIVERED VIA E-MAIL * * DELIVERED VIA E-MAIL *
Deron R. Dacus Jordan Underhill The Dacus Firm, PC Office of Attorney General of Texas 821 ESE Loop 323, Ste 430 P O Box 12548, Capitol Station Tyler, TX 75701 Austin, TX 78711-2548 * DELIVERED VIA E-MAIL * * DELIVERED VIA E-MAIL *
W. Mark Lanier Ross B. Galin The Lanier Law Firm O'Melveny & Myers LLP 10940 W Sam Houston Pkwy N, Ste 100 7 Time Square Houston, TX 77064 New York, NY 10036 * DELIVERED VIA E-MAIL * * DELIVERED VIA E-MAIL *
Jonathan Wilkerson Jonathan Bonilla The Lanier Law Firm Office of the Attorney General of Texas 10940 W Sam Houston Parkway N, Ste 100 P O Box 12548, Capitol Station Houston, TX 77064 Austin, TX 78711 * DELIVERED VIA E-MAIL * * DELIVERED VIA E-MAIL *
Meredith N. Garagiola O'Melveny & Myers LLP 1625 Eye Street, NW Washington, DC 20006 * DELIVERED VIA E-MAIL *
APP58 FILE COPY
RE: Appellate Case Number: 06-24-00005-CV Trial Court Case Number: 23-0276
The Court entered its order this date in the referenced proceeding whereby Relator’s Petition for Writ of Mandamus was DENIED.
A true copy of this Court’s Opinion and Judgment is enclosed.
___________________________ By: Kim Robinson, Deputy Clerk
cc: Hon. Brad Morin, Judge, Respondent (DELIVERED VIA E-MAIL)
APP59 In the Court of Appeals Sixth Appellate District of Texas at Texarkana
Before Stevens, C.J., van Cleef and Rambin, JJ. Memorandum Opinion by Chief Justice Stevens
APP60 MEMORANDUM OPINION
Relator Novartis Pharmaceuticals Corporation has filed a petition for a writ of mandamus
seeking to dismiss a lawsuit filed in Harrison County under the Texas Medicaid Fraud
Prevention Act (TMFPA)1 arguing both that (1) the real party in interest, Health Selection
Group, LLC (HSG), does not have standing to maintain this lawsuit and (2) the TMFPA’s
qui tam provisions are unconstitutional under the Texas Constitution.
The trial court denied Novartis’s plea to the jurisdiction and motion to dismiss pursuant
to Rule 91a of the Texas Rules of Civil Procedure, which sought dismissal of HSG’s case on
these two bases. Because we find no abuse of discretion in the trial court’s denial of relief under
Rule 91a of the Texas Rules of Civil Procedure, we deny the petition.2
“Mandamus is an extraordinary remedy requiring the relator to show that (1) the trial
court abused its discretion and (2) the relator lacks an adequate remedy on appeal.” In re USAA
Gen. Indem. Co., 624 S.W.3d 782, 787 (Tex. 2021) (orig. proceeding) (citing In re Prudential
Ins. Co. of Am., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding)). “Mandamus relief is
only appropriate when the relators have established that only one outcome in the trial court was
permissible under the law.” In re Murrin Bros. 1885, Ltd., 603 S.W.3d 53, 56 (Tex. 2019) (orig.
proceeding). Mandamus relief may be available when a trial court denies a Rule 91a motion to
1 Act of May 26, 1995, 74th Leg., R.S., ch. 824, 1995 Tex. Gen. Laws 4202 (amended 1997, 2005, 2011, 2015, 2023) (current version at TEX. HUM. RES. CODE §§ 36.001–.132). The TMFPA was amended effective September 1, 2023, and it is now known as the Texas Health Care Program Fraud Prevention Act. Act of April 3, 2023, 88th Leg., R.S., ch. 273, §§ 2–15, 2023 Tex. Sess. Law Serv. 585, 585–89 (codified at TEX. HUM. RES. CODE §§ 36.001– .132). Novartis brings this action under a prior version of the act, the TMFPA. 2 In conjunction with the petition for a writ of mandamus, Novartis filed a motion for a temporary stay of the trial court’s proceedings. Because we deny the petition, that motion is also denied. 2 APP61 dismiss. See In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d 261, 266 (Tex. 2021) (orig.
proceeding) (recognizing “[m]andamus relief is appropriate when the trial court abuses its
discretion in denying a Rule 91a motion to dismiss”); see also In re Shire PLC, 633 S.W.3d 1, 11
“When reviewing matters committed to a trial court’s discretion, an appellate court may
not substitute its own judgment for the trial court’s judgment.” In re Nitla S.A. de C.V., 92
S.W.3d 419, 422 (Tex. 2002) (per curiam) (orig. proceeding) (citing Walker v. Packer, 827
S.W.2d 833, 839 (Tex. 1992) (orig. proceeding)). As a result, we may not “set aside the trial
court’s [order] unless it is clear from the record that the trial court could only reach one
Having examined and fully considered the mandamus petition and record, the responses,
the reply, and the applicable law, the Court is of the opinion that the mandamus petition should
Date Submitted: February 29, 2024 Date Decided: March 1, 2024
3 APP62 Court of Appeals Sixth Appellate District of Texas
In re Novartis Pharmaceuticals Corporation Original Mandamus Proceeding
No. 06-24-00005-CV Panel consists of Chief Justice Stevens and Justices van Cleef and Rambin. Memorandum Opinion delivered by Chief Justice Stevens.
As stated in the Court’s opinion of this date, we find that Relator is not entitled to the relief sought. Therefore, we deny the petition.
RENDERED MARCH 1, 2024 BY ORDER OF THE COURT SCOTT E. STEVENS CHIEF JUSTICE
APP63 § 13. Excessive bail or fines; cruel or unusual punishment;..., TX CONST Art. 1, § 13
Vernon's Texas Statutes and Codes Annotated Constitution of the State of Texas 1876 (Refs & Annos) Article I. Bill of Rights (Refs & Annos)
Vernon's Ann.Texas Const. Art. 1, § 13
§ 13. Excessive bail or fines; cruel or unusual punishment; open courts; remedy by due course of law
Currentness
Excessive bail shall not be required, nor excessive fines imposed, nor cruel or unusual punishment inflicted. All courts shall be open, and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy by due course of law.
Credits Adopted Feb. 15, 1876.
Vernon's Ann. Texas Const. Art. 1, § 13, TX CONST Art. 1, § 13 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP64 1 § 1. Separation of powers of government among three departments, TX CONST Art. 2, § 1
Vernon's Texas Statutes and Codes Annotated Constitution of the State of Texas 1876 (Refs & Annos) Article II. The Powers of Government
Vernon's Ann.Texas Const. Art. 2, § 1
§ 1. Separation of powers of government among three departments
The powers of the Government of the State of Texas shall be divided into three distinct departments, each of which shall be confided to a separate body of magistracy, to wit: those which are Legislative to one, those which are Executive to another, and those which are Judicial to another; and no person, or collection of persons, being of one of these departments, shall exercise any power properly attached to either of the others, except in the instances herein expressly permitted.
Vernon's Ann. Texas Const. Art. 2, § 1, TX CONST Art. 2, § 1 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP65 1 § 22. Attorney General, TX CONST Art. 4, § 22
Vernon's Texas Statutes and Codes Annotated Constitution of the State of Texas 1876 (Refs & Annos) Article IV. Executive Department
Vernon's Ann.Texas Const. Art. 4, § 22
§ 22. Attorney General
The Attorney General shall represent the State in all suits and pleas in the Supreme Court of the State in which the State may be a party, and shall especially inquire into the charter rights of all private corporations, and from time to time, in the name of the State, take such action in the courts as may be proper and necessary to prevent any private corporation from exercising any power or demanding or collecting any species of taxes, tolls, freight or wharfage not authorized by law. He shall, whenever sufficient cause exists, seek a judicial forfeiture of such charters, unless otherwise expressly directed by law, and give legal advice in writing to the Governor and other executive officers, when requested by them, and perform such other duties as may be required by law.
Credits Adopted Feb. 15, 1876. Amended Nov. 3, 1936; Nov. 2, 1954; Nov. 7, 1972; Nov. 2, 1999.
Vernon's Ann. Texas Const. Art. 4, § 22, TX CONST Art. 4, § 22 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP66 1 § 21. County attorneys; district attorneys, TX CONST Art. 5, § 21
Vernon's Texas Statutes and Codes Annotated Constitution of the State of Texas 1876 (Refs & Annos) Article V. Judicial Department
Vernon's Ann.Texas Const. Art. 5, § 21
§ 21. County attorneys; district attorneys
A County Attorney, for counties in which there is not a resident Criminal District Attorney, shall be elected by the qualified voters of each county, who shall be commissioned by the Governor, and hold his office for the term of four years. In case of vacancy the Commissioners Court of the county shall have the power to appoint a County Attorney until the next general election. The County Attorneys shall represent the State in all cases in the District and inferior courts in their respective counties; but if any county shall be included in a district in which there shall be a District Attorney, the respective duties of District Attorneys and County Attorneys shall in such counties be regulated by the Legislature. The Legislature may provide for the election of District Attorneys in such districts, as may be deemed necessary, and make provision for the compensation of District Attorneys and County Attorneys. District Attorneys shall hold office for a term of four years, and until their successors have qualified.
Credits Adopted Feb. 15, 1876. Amended Nov. 2, 1954.
Vernon's Ann. Texas Const. Art. 5, § 21, TX CONST Art. 5, § 21 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP67 1 § 36.101. Action by Private Person Authorized, TX HUM RES § 36.101
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
V.T.C.A., Human Resources Code § 36.101
§ 36.101. Action by Private Person Authorized
(a) A person may bring a civil action for a violation of Section 36.002 for the person and for the state. The action shall be brought in the name of the person and of the state.
(b) In an action brought under this subchapter, a person who violates Section 36.002 is liable as provided by Section 36.052.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997.
V. T. C. A., Human Resources Code § 36.101, TX HUM RES § 36.101 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP68 1 § 36.102. Initiation of Action; Consent Required for Dismissal, TX HUM RES § 36.102
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
V.T.C.A., Human Resources Code § 36.102
§ 36.102. Initiation of Action; Consent Required for Dismissal
Effective: September 1, 2019 Currentness
(a) A person bringing an action under this subchapter shall serve a copy of the petition and a written disclosure of substantially all material evidence and information the person possesses on the attorney general in compliance with the Texas Rules of Civil Procedure.
(b) The petition shall be filed in camera and, except as provided by Subsection (c-1) or (d), shall remain under seal until at least the 180th day after the date the petition is filed or the date on which the state elects to intervene, whichever is earlier. The petition may not be served on the defendant until the court orders service on the defendant.
(c) The state may elect to intervene and proceed with the action not later than the 180th day after the date the attorney general receives the petition and the material evidence and information.
(c-1) At the time the state intervenes, the attorney general may file a motion with the court requesting that the petition remain under seal for an extended period.
(d) The state may, for good cause shown, move the court to extend the 180-day deadline under Subsection (b) or (c). A motion under this subsection may be supported by affidavits or other submissions in camera.
(e) An action under this subchapter may be dismissed only if the court and the attorney general consent in writing to the dismissal and state their reasons for consenting.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997. Amended by Acts 2005, 79th Leg., ch. 806, § 10, eff. Sept. 1, 2005; Acts 2019, 86th Leg., ch. 97 (H.B. 2004), §§ 1, 2, eff. Sept. 1, 2019.
V. T. C. A., Human Resources Code § 36.102, TX HUM RES § 36.102 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP69 1 § 36.102. Initiation of Action; Consent Required for Dismissal, TX HUM RES § 36.102
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP70 2 § 36.104. State Decision; Continuation of Action, TX HUM RES § 36.104
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
V.T.C.A., Human Resources Code § 36.104
§ 36.104. State Decision; Continuation of Action
Effective: September 1, 2013 Currentness
(a) Not later than the last day of the period prescribed by Section 36.102(c) or an extension of that period as provided by Section 36.102(d), the state shall:
(1) proceed with the action; or
(2) notify the court that the state declines to take over the action.
(b) If the state declines to take over the action, the person bringing the action may proceed without the state's participation. A person proceeding under this subsection may recover for an unlawful act for a period of up to six years before the date the lawsuit was filed, or for a period beginning when the unlawful act occurred until up to three years from the date the state knows or reasonably should have known facts material to the unlawful act, whichever of these two periods is longer, regardless of whether the unlawful act occurred more than six years before the date the lawsuit was filed. Notwithstanding the preceding sentence, in no event shall a person proceeding under this subsection recover for an unlawful act that occurred more than 10 years before the date the lawsuit was filed.
(b-1) On request by the state, the state is entitled to be served with copies of all pleadings filed in the action and be provided at the state's expense with copies of all deposition transcripts. If the person bringing the action proceeds without the state's participation, the court, without limiting the status and right of that person, may permit the state to intervene at a later date on a showing of good cause.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997. Amended by Acts 2005, 79th Leg., ch. 806, § 12, eff. Sept. 1, 2005; Acts 2007, 80th Leg., ch. 29, §§ 3, 4, eff. May 4, 2007; Acts 2013, 83rd Leg., ch. 572 (S.B. 746), § 2, eff. Sept. 1, 2013.
V. T. C. A., Human Resources Code § 36.104, TX HUM RES § 36.104 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP71 1 § 36.107. Rights of Parties if State Continues Action, TX HUM RES § 36.107
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
V.T.C.A., Human Resources Code § 36.107
§ 36.107. Rights of Parties if State Continues Action
(a) If the state proceeds with the action, the state has the primary responsibility for prosecuting the action and is not bound by an act of the person bringing the action. The person bringing the action has the right to continue as a party to the action, subject to the limitations set forth by this section.
(b) The state may dismiss the action notwithstanding the objections of the person bringing the action if:
(1) the attorney general notifies the person that the state has filed a motion to dismiss; and
(2) the court provides the person with an opportunity for a hearing on the motion.
(c) The state may settle the action with the defendant notwithstanding the objections of the person bringing the action if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all the circumstances. On a showing of good cause, the hearing may be held in camera.
(d) On a showing by the state that unrestricted participation during the course of the litigation by the person bringing the action would interfere with or unduly delay the state's prosecution of the case, or would be repetitious, irrelevant, or for purposes of harassment, the court may impose limitations on the person's participation, including:
(1) limiting the number of witnesses the person may call;
(2) limiting the length of the testimony of witnesses called by the person;
(3) limiting the person's cross-examination of witnesses; or
(4) otherwise limiting the participation by the person in the litigation.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP72 1 § 36.107. Rights of Parties if State Continues Action, TX HUM RES § 36.107
(e) On a showing by the defendant that unrestricted participation during the course of the litigation by the person bringing the action would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense, the court may limit the participation by the person in the litigation.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997.
V. T. C. A., Human Resources Code § 36.107, TX HUM RES § 36.107 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP73 2 § 36.113. Certain Actions Barred, TX HUM RES § 36.113
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
V.T.C.A., Human Resources Code § 36.113
§ 36.113. Certain Actions Barred
(a) A person may not bring an action under this subchapter that is based on allegations or transactions that are the subject of a civil suit or an administrative penalty proceeding in which the state is already a party.
(b) The court shall dismiss an action or claim under this subchapter, unless opposed by the attorney general, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed in a Texas or federal criminal or civil hearing in which the state or an agent of the state is a party, in a Texas legislative or administrative report, or other Texas hearing, audit, or investigation, or from the news media, unless the person bringing the action is an original source of the information. In this subsection, “original source” means an individual who:
(1) prior to a public disclosure under this subsection, has voluntarily disclosed to the state the information on which allegations or transactions in a claim are based; or
(2) has knowledge that is independent of and materially adds to the publicly disclosed allegation or transactions and who has voluntarily provided the information to the state before filing an action under this subchapter.
(c) Repealed by Acts 2013, 83rd Leg., ch. 572 (S.B. 746), § 6.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997. Amended by Acts 2011, 82nd Leg., ch. 398 (S.B. 544), § 5, eff. Sept. 1, 2011; Acts 2013, 83rd Leg., ch. 572 (S.B. 746), §§ 4, 6, eff. Sept. 1, 2013.
V. T. C. A., Human Resources Code § 36.113, TX HUM RES § 36.113 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP74 1 § 36.052. Civil Remedies, TX HUM RES § 36.052
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter B. Action by Attorney General (Refs & Annos)
This section has been updated. Click here for the updated version.
V.T.C.A., Human Resources Code § 36.052
§ 36.052. Civil Remedies
Effective: April 2, 2015 to August 31, 2023
(a) Except as provided by Subsection (c), a person who commits an unlawful act is liable to the state for:
(1) 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;
(2) interest on the amount of the payment or the value of the benefit described by Subdivision (1) at the prejudgment interest rate in effect on the day the payment or benefit was received or paid, for the period from the date the benefit was received or paid to the date that the state recovers the amount of the payment or value of the benefit;
(3) a civil penalty of:
(A) not less than $5,500 or the minimum amount imposed as provided by 31 U.S.C. Section 3729(a), if that amount exceeds $5,500, and not more than $15,000 or the maximum amount imposed as provided by 31 U.S.C. Section 3729(a), if that amount exceeds $15,000, for each unlawful act committed by the person that results in injury to an elderly person, as defined by Section 48.002(a)(1), a person with a disability, as defined by Section 48.002(a)(8)(A), or a person younger than 18 years of age; or
(B) not less than $5,500 or the minimum amount imposed as provided by 31 U.S.C. Section 3729(a), if that amount exceeds $5,500, and not more than $11,000 or the maximum amount imposed as provided by 31 U.S.C. Section 3729(a), if that amount exceeds $11,000, for each unlawful act committed by the person that does not result in injury to a person described by Paragraph (A); and
(4) two times the amount of the payment or the value of the benefit described by Subdivision (1).
(b) In determining the amount of the civil penalty described by Subsection (a)(3), the trier of fact shall consider:
(1) whether the person has previously violated the provisions of this chapter;
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP75 1 § 36.052. Civil Remedies, TX HUM RES § 36.052
(2) the seriousness of the unlawful act committed by the person, including the nature, circumstances, extent, and gravity of the unlawful act;
(3) whether the health and safety of the public or an individual was threatened by the unlawful act;
(4) whether the person acted in bad faith when the person engaged in the conduct that formed the basis of the unlawful act; and
(5) the amount necessary to deter future unlawful acts.
(c) The trier of fact may assess a total of not more than two times the amount of a payment or the value of a benefit described by Subsection (a)(1) if the trier of fact finds that:
(1) the person furnished the attorney general with all information known to the person about the unlawful act not later than the 30th day after the date on which the person first obtained the information; and
(2) at the time the person furnished all the information to the attorney general, the attorney general had not yet begun an investigation under this chapter.
(d) An action under this section shall be brought in Travis County or in a county in which any part of the unlawful act occurred.
(e) The attorney general may:
(1) bring an action for civil remedies under this section together with a suit for injunctive relief under Section 36.051; or
(2) institute an action for civil remedies independently of an action for injunctive relief.
Credits Added by Acts 1995, 74th Leg., ch. 824, § 1, eff. Sept. 1, 1995. Redesignated from V.T.C.A., Human Resources Code § 36.004 by Acts 1997, 75th Leg., ch. 1153, § 4.01(b), eff. Sept. 1, 1997. Amended by Acts 1997, 75th Leg., ch. 1153, § 4.04, eff. Sept. 1, 1997; Acts 2005, 79th Leg., ch. 806, § 7, eff. Sept. 1, 2005; Acts 2007, 80th Leg., ch. 29, § 1, eff. May 4, 2007; Acts 2011, 82nd Leg., ch. 398 (S.B. 544), § 3, eff. Sept. 1, 2011; Acts 2015, 84th Leg., ch. 1 (S.B. 219), § 4.183, eff. April 2, 2015.
V. T. C. A., Human Resources Code § 36.052, TX HUM RES § 36.052 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP76 2 § 36.104. Continuation or Dismissal of Action Based on..., TX HUM RES § 36.104
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Medicaid Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
This section has been updated. Click here for the updated version.
§ 36.104. Continuation or Dismissal of Action Based on State Decision
Effective: [See Text Amendments] to August 31, 2005
(a) Not later than the last day of the period prescribed by Section 36.102(c), the state shall:
(2) notify the court that the state declines to take over the action.
(b) If the state declines to take over the action, the court shall dismiss the action.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997.
V. T. C. A., Human Resources Code § 36.104, TX HUM RES § 36.104 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP77 1 § 36.104. State Decision; Continuation of Action, TX HUM RES § 36.104
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
This section has been updated. Click here for the updated version.
Effective: May 4, 2007 to August 31, 2013
(a) Not later than the last day of the period prescribed by Section 36.102(c) or an extension of that period as provided by Section 36.102(d), the state shall:
(2) notify the court that the state declines to take over the action.
(b) If the state declines to take over the action, the person bringing the action may proceed without the state's participation. On request by the state, the state is entitled to be served with copies of all pleadings filed in the action and be provided at the state's expense with copies of all deposition transcripts. If the person bringing the action proceeds without the state's participation, the court, without limiting the status and right of that person, may permit the state to intervene at a later date on a showing of good cause.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997. Amended by Acts 2005, 79th Leg., ch. 806, § 12, eff. Sept. 1, 2005; Acts 2007, 80th Leg., ch. 29, §§ 3, 4, eff. May 4, 2007.
V. T. C. A., Human Resources Code § 36.104, TX HUM RES § 36.104 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
© 2024 Thomson Reuters. No claim to original U.S. Government Works. APP78 1 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below:
Court Services on behalf of Danny Ashby Bar No. 1370960 ommsvc2@omm.com Envelope ID: 86047088 Filing Code Description: Petition Filing Description: PETITION FOR WRIT OF MANDAMUS Status as of 3/28/2024 8:16 AM CST
Associated Case Party: Novartis Pharmaceuticals Corporation
Joshua Goode jgoode@omm.com 3/27/2024 7:27:20 PM SENT
Deron R.Dacus ddacus@dacusfirm.com 3/27/2024 7:27:20 PM SENT
Anton Metlitsky ametlitsky@omm.com 3/27/2024 7:27:20 PM SENT
Ross Galin rgalin@omm.com 3/27/2024 7:27:20 PM SENT
Danny S.Ashby dashby@omm.com 3/27/2024 7:27:20 PM SENT
Meredith N.Garagiola mgaragiola@omm.com 3/27/2024 7:27:20 PM SENT
Associated Case Party: State of Texas
Lynne Kurtz-Citrin 24081425 lynne.kurtz-citrin@oag.texas.gov 3/27/2024 7:27:20 PM SENT
Jonathan Bonilla 24073939 Jonathan.Bonilla@oag.texas.gov 3/27/2024 7:27:20 PM SENT
Jordan Underhill 24102586 jordan.underhill@oag.texas.gov 3/27/2024 7:27:20 PM SENT
Jonathan Wilkerson 24050162 jonathan.wilkerson@lanierlawfirm.com 3/27/2024 7:27:20 PM SENT
Zeke DeRose 24057421 zeke.derose@lanierlawfirm.com 3/27/2024 7:27:20 PM SENT
W. MarkLanier WML@LanierLawFirm.com 3/27/2024 7:27:20 PM SENT
Radu A.Lelutiu rlelutiu@mckoolsmith.com 3/27/2024 7:27:20 PM SENT
Eric B.Halper ehalper@mckoolsmith.com 3/27/2024 7:27:20 PM SENT
Alex Jerome Brown 24026964 alex.brown@lanierlawfirm.com 3/27/2024 7:27:20 PM SENT
Jennifer Leigh Truelove 24012906 jtruelove@mckoolsmith.com 3/27/2024 7:27:20 PM SENT
Samuel F. Baxter 1938000 sbaxter@mckoolsmith.com 3/27/2024 7:27:20 PM SENT
APP079 FILED 24-0239 7/17/2024 5:08 PM tex-89894584 SUPREME COURT OF TEXAS BLAKE A. HAWTHORNE, CLERK
No. 24-0239
IN THE SUPREME COURT OF TEXAS
IN RE NOVARTIS PHARMACEUTICALS CORPORATION, Relator
Original Mandamus Proceeding From the 71st District Court in Harrison County Cause 23-0276, The Honorable Brad Morin, Presiding
COMBINED RESPONSE TO PETITION FOR WRIT OF MANDAMUS AND MOTION FOR TEMPORARY STAY
Samuel F. Baxter Mark Lanier Jennifer L. Truelove Zeke DeRose McKool Smith, P.C. Jonathan Wilkerson 104 East Houston, Suite 300 THE LANIER FIRM Marshall, Texas 75670 10940 W. Sam Houston Pkwy N, Suite 100 (903) 923-9000 Houston, TX 77064 Fax: (903) 923-9099 (800) 723-3216 Fax: (713) 659-2204 Eric B. Halper (PHV to be filed) Radu A. Lelutiu (PHV to be filed) McKool Smith, P.C. 1301 Avenue of the Americas New York, New York 10019 (212) 402-9400 Attorneys for Plaintiff and Real-Party-in- Fax: (212) 402-9444 Interest Health Selection Group, LLC
4894-1897-6977
APP080 TABLE OF CONTENTS
INTRODUCTION ...........................................................................................................................1
RELEVANT STATUTORY BACKGROUND ..............................................................................2
ARGUMENT ...................................................................................................................................3
I. THE PETITION SHOULD BE DENIED BECAUSE NOVARTIS HAS AN ADEQUATE REMEDY ON APPEAL. .................................................................................................................4
II. THE PETITION SHOULD BE DENIED BECAUSE THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN DENYING NOVARTIS’S 91A MOTION. .......................................................4
A. HSG HAS STANDING TO PURSUE CLAIMS ON BEHALF OF THE STATE..........................................................................5
B. THE TMFPA IS CONSTITUTIONAL. ....................................................10
III. THERE IS NO BASIS FOR A STAY. ..................................................................15
CONCLUSION ..............................................................................................................................15
ii
APP081 TABLE OF AUTHORITIES
Cases Bickham v. Dallas Cnty., 612 S.W.3d 663 (Tex. App.—Dallas 2020, pet. denied)....................................11
Bittakis v. City of El Paso, 480 F. Supp. 2d 895 (W.D. Tex. 2007) ..............................................................11
Brown v. De La Cruz, 156 S.W.3d 560 (Tex. 2004) ........................................................................10, 11
Burkett v. City of El Paso, 513 F. Supp. 2d 800 (W.D. Tex. 2007) ..............................................................11
In Interest of C.J.N.-S, 540 S.W.3d 589 (Tex. 2018) ................................................................................ 8
Camp v. Gulf Prod. Co., 61 S.W.2d 773 (Tex. 1933).................................................................................12
Child. of the Kingdom v. Cent. Appraisal Dist. of Taylor Cnty., 674 S.W.3d 407 (Tex. App.—Eastland 2023, pet. denied) ..............................8, 9
El Paso Elec. Co. v. Tex. Dep't of Ins., 937 S.W.2d 432 (Tex. 1996) ..............................................................................12 Everett v. TK-Taito, L.L.C., 178 S.W.3d 844 (Tex. App.—Fort Worth 2005, no pet.)..................................... 9
Ferreira v. Butler, 575 S.W.3d 331 (Tex. 2019) ................................................................................8
Food & Drug Admin. v. All. for Hippocratic Med., 602 U.S. 367 (2024) ..............................................................................................7
In re Gibson, 533 S.W.3d 916 (Tex. App.—Texarkana 2017, no pet.)..................................3, 4 iii
APP082 Heckman v. Williamson Cty., 369 S.W.3d 137 (Tex. 2012) ................................................................................ 7
Hernandez v. Truck Ins. Exch., 553 S.W.3d 689 (Tex. App.—Fort Worth 2018, pet. denied) ............................10
Hill County v. Sheppard, 178 S.W.2d 261 (Tex. 1944) ..............................................................................12
Marauder Corp. v. Beall, 301 S.W.3d 817 (Tex. App.—Dallas 2009, no pet.) ..................................8, 9, 10
Maud v. Terrell, 200 S.W. 375 (Tex. 1918).............................................................................11, 12
Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765 (Tex. 2007) ................................................................................ 8 Nephrology Leaders & Assocs. v. Am. Renal Assocs., LLC, 573 S.W.3d 912 (Tex. App.—Houston [1st Dist.] 2019, no pet.) ........................ 9 Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763 (Tex. 2020) ................................................................................ 5 United States, ex rel. Polansky v. Executive Health Res., Inc., 599 U.S. 419 (2023) ............................................................................................14 Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749 (5th Cir. 2001) ..............................................................................14 Sankaran v. VFS Services (USA) Inc., 2023 WL 5543308 (Tex. App.—Houston [14th Dist.] Aug. 29, 2023, no pet. h.) ..................................................................................................11
Scribner v. Treger, 2022 WL 714654 (Tex. App.—Fort Worth Mar. 10, 2022, no pet.).................. 11
In re Shire PLC, 633 S.W.3d 1 (Tex. App.—Texarkana 2021, orig. proceeding [mand. denied]) .............................................................................................1, 3, 5
iv
APP083 In re Sullivan, 157 S.W.3d 911 (Tex. App.—Houston [14th Dist.] 2005, orig. proceeding) .......................................................................................................8, 9 In re Van Waters & Rogers, Inc., 145 S.W.3d 203 (Tex. 2004) ................................................................................ 4 Vermont Agency of Nat. Res. v. U.S. ex rel. Stevens, 529 U.S. 765 (2000) ......................................................................................5, 6, 7 In re Xerox Corp., 555 S.W.3d 518 (Tex. 2018) ............................................................................1, 6 Zaatari v. City of Austin, 615 S.W.3d 172 (Tex. App.—Austin 2019, pet. denied) ..................................... 8
v
APP084 STATEMENT OF THE CASE Nature of the case: This is a case filed by Health Selection Group, LLC
(“HSG”) on behalf of the State of Texas (the “State” or “Texas”) under the Texas
qui tam statute, the Texas Health Care Program Fraud Prevention Act, fka Texas
Medicaid Fraud Prevention Act (“TMFPA”). 1 It concerns two illegal marketing
programs employed by defendant Novartis Pharmaceuticals Corporation
(“Novartis”) to drive prescription for certain of its products.
On December 15, 2023, after extensive briefing and a Zoom hearing, the
District Court denied Novartis’s plea to jurisdiction and motion to dismiss pursuant
to Rule 91a (the “91a Motion”), rejecting arguments that (i) HSG lacks standing;
and (ii) the TMFPA is unconstitutional. The District Court declined to certify an
interlocutory appeal pursuant to Texas Rule of Civil Procedure 168.
Novartis thereafter filed a mandamus petition and motion to stay with the
Court of Appeals for the Sixth Judicial District. After briefing, the Court of Appeals
denied mandamus. This Petition (“Petition” or “Pet.”) and Motion for Temporary
Stay (“Stay Motion”) followed.
Respondent: The Honorable Brad Morin, Presiding Judge of the 71st
1 In the briefing below and the Petition, the parties referred to the statute using its previous acronym—the TMFPA. For consistency, HSG does the same here. vi
APP085 Judicial District Court, Harrison County; Case No. 23-0276.
Rulings at issue: The District Court’s order dated December 15, 2023.
Relief sought: An order denying Novartis’s Petition and Stay Motion.
STATEMENT REGARDING ORAL ARGUMENT Because, on its face, the Petition lacks merit, HSG does not believe that oral
argument is necessary. If the Court nevertheless determines that oral argument
would be helpful, HSG respectfully requests an opportunity to participate.
STATEMENT OF JURISDICTION HSG agrees that the Court has jurisdiction over the Petition, but disputes that
Novartis is entitled to the extraordinary writ it has requested.
QUESTIONS PRESENTED 1. Whether a private citizen like HSG—who stands in the shoes of the
Texas Medicaid program and is expressly authorized to enforce the TMFPA—has
constitutional standing to prosecute this lawsuit on behalf and for the benefit of the
State of Texas.
2. Whether the TMFPA is constitutional.
MANDAMUS RECORD HSG agrees that the record presented with the Petition (cited herein using the
prefix MR) includes all of the materials that are pertinent here.
vii
APP086 INTRODUCTION The TMFPA “is a powerful tool for targeting fraud against the Texas
Medicaid program and securing the program’s integrity. The statute imbues the
attorney general with broad investigative and enforcement authority and—via qui
tam provisions—deputizes private citizens to pursue a TMFPA action on the
government’s behalf.” In re Xerox Corp., 555 S.W.3d 518, 525 (Tex. 2018).2 Since
2000, Texas has recovered approximately $2.5 billion for taxpayers under the
TMFPA. MR102. One such recovery—$42.7 million—was obtained last year in a
lawsuit filed against Shire PLC, by an affiliate of HSG. Id. 3
Novartis is an egregious, repeat offender of the TMFPA and the federal False
Claims Act (“FCA”). MR099. Over the past 15 years, Novartis has paid nearly $1.5
billion to resolve allegations that it paid kickbacks to promote its products at
taxpayers’ expense. Id. & n.1. But rather than reform its conduct, Novartis now seeks
to evade all accountability by upending well-settled law with baseless attacks.
Specifically, Novartis contends that (i) whistleblowers—like HSG—lack
constitutional standing to commence suit under the TMFPA; and (ii) the TMFPA
violates the Texas Constitution.
2 Unless otherwise indicated, emphases herein were supplied by HSG. 3 The Petition includes veiled attacks on HSG and the merits of its claims. The Sixth Court of Appeals reviewed and rejected similar arguments in In re Shire PLC, 633 S.W.3d 1, 29-34 (Tex. App.—Texarkana 2021, orig. proceeding [mand. denied]).
1 4894-1897-6977
APP087 The Petition fails for both procedural and substantive reasons. It fails because
even if the District Court had erred, mandamus review is not warranted. And it fails
because the District Court acted well within its discretion to reject Novartis’s
unsupportable arguments. Finally, because the Petition lacks merit, the Stay Motion
should be denied.
REFLEVANT STATUTORY BACKGROUND The TMFPA contains a number of provisions that are relevant here. First, it
unambiguously confers standing upon “private person[s]”—aka “relators”—to file
suit “for the state.” Tex. Hum. Res. Code § 36.101 (“A person may bring a civil
action for a violation of Section 36.002 for the person and for the state.”). Second, it
requires relators to go through specific steps to initiate suit and make specific
disclosures to maintain it. Tex. Hum. Res. Code § 36.102(a)-(b) (requiring service
of “petition and a written disclosure of substantially all material evidence” on the
Office of the Attorney General (“OAG”) and the sealing of the petition for period of
at least 180 days). Third, it gives OAG the right to “proceed with the action” and, in
the absence of intervention, authorizes the relator to “proceed without the state’s
participation.” Tex. Hum. Res. Code § 36.104 (a)-(b). Fourth, it requires the relator
to keep the State informed, if the State requires it, of developments. Tex. Hum. Res.
Code § 36.104(b-1) (mandating that, if requested, the relator provide copies of all
pleadings and depositions). Fifth, upon a showing of “good cause” and
2 4894-1897-6977
APP088 notwithstanding an initial declination decision, it allows the State to intervene and
assume the prosecution of the lawsuit at any time. Id. Sixth, it prohibits the dismissal
of the action unless “the attorney general consent[s] in writing.” Tex. Hum. Res.
Code § 36.102(e). Finally, it provides certain parameters for how “proceeds of the
action” are to be distributed between the State and the relator/“private plaintiff”—
with the vast majority of the proceeds going to the State. Tex. Hum. Res. Code §
36.110.
ARGUMENT Mandamus is an extraordinary writ and “[a]bsent extraordinary circumstances
. . . , a denial of a motion to dismiss or a plea in abatement is a ruling incident to the
ordinary trial process which will not be corrected by mandamus, but by . . . the
ordinary appellate process.” In re Gibson, 533 S.W.3d 916, 920 (Tex. App.—
Texarkana 2017, no pet.). “A party is entitled to a writ of mandamus when it
demonstrates that the trial court abused its discretion and that it does not have an
adequate remedy at law.” In re Shire, 633 S.W.3d at 10 (citing Walker v. Packer,
827 S.W.2d 833, 840-41 (Tex. 1992)). “The failure to establish either element will
defeat a petitioner’s request for mandamus relief.” Id. at 11.
Because Novartis cannot satisfy either element required to invoke this Court’s
mandamus jurisdiction, the Petition and Stay Motion should both be denied.
3 4894-1897-6977
APP089 I. THE PETITION SHOULD BE DENIED BECAUSE NOVARTIS HAS AN ADEQUATE REMEDY ON APPEAL. Novartis cannot show that it lacks an adequate remedy on appeal. While it
asserts that “[m]andamus relief is . . . necessary to prevent the waste of time and
resources” (Pet. at 13), “[a]n appellate remedy is not inadequate because it may
involve more expense or delay than obtaining an extraordinary writ.” In re Gibson,
533 S.W.3d at 920 (quoting In re Lumbermen’s Underwriting All., 421 S.W.3d 289,
295 (Tex. App.—Texarkana 2014, no pet.); Walker, 827 S.W.2d at 842)). Rather,
“an appeal is inadequate [only] when the parties are in danger of permanently losing
substantial rights.” In re Van Waters & Rogers, Inc., 145 S.W.3d 203, 211 (Tex.
2004). Indeed, “[t]he most frequent use we have made of mandamus relief involves
cases in which the very act of proceeding to trial—regardless of the outcome—would
defeat the substantive right involved.” In re Shire, 633 S.W.3d at at 11 (quoting In
re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 465 (Tex. 2008) (orig. proceeding)).
Novartis has not identified any substantive rights—there are none—it would
lose if it pursues its claims of error in due course. As such, the Petition fails out of
the gate.
II. THE PETITION SHOULD BE DENIED BECAUSE THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN DENYING NOVARTIS’S 91A MOTION. The Petition also fails because Novartis cannot show that the District Court
abused its discretion when it denied the 91a Motion. “A trial court abuses its
4 4894-1897-6977
APP090 discretion when it reaches a decision so arbitrary and unreasonable as to amount to
a clear and prejudicial error of law.” In re Shire, 633 S.W.3d at 10 (quoting Walker,
827 S.W.2d at 839). The District Court correctly rejected Novartis’s 91a Motion.
But even if it erred, it clearly did not act arbitrarily in upholding the TMFPA—a
statute that has been on the books for decades and whose constitutionality has
heretofore never been questioned.
A. HSG Has Standing to Pursue Claims on Behalf of the State. As this Court recently noted in a case Novartis cites in its Petition (Pet. at 15),
“[b]ecause Texas’s test for constitutional standing parallels the federal test for
Article III standing, we look to federal standing jurisprudence for guidance.” Pike v.
Tex. EMC Mgmt., LLC, 610 S.W.3d 763, 776 (Tex. 2020). Under federal law,
however, it has long been held constitutional for a Sovereign to assign to private
citizens its right to pursue a claim in the context of a qui tam action.
Most relevantly here, in Vermont Agency of Nat. Res. v. U.S. ex rel. Stevens,
529 U.S. 765 (2000), the U.S. Supreme Court considered, under federal law, the very
question presented by Novartis’s Petition: whether the FCA—the federal statute that
served as the blueprint for the TMFPA—passed muster under the U.S. Constitution’s
Article III standing doctrine. Writing for a majority of the court (with not a single
5 4894-1897-6977
APP091 justice expressing disagreement on the question relevant here), 4 Justice Scalia held
that it did because “adequate basis for the relator’s suit . . . is to be found in the
doctrine that the assignee of a claim has standing to assert the injury in fact suffered
by the assignor.” Id. at 773. Stated differently, the “injury in fact” of the United
States was sufficient to “confer standing on [the relator].” Id.
Stevens is dispositive here. Novartis nonetheless argues (Pet. at 19-21) that its
holding is not controlling because (i) this Court noted in In re Xerox that the TMFPA
is not a “damages” statute; and (ii) the U.S. Constitution and the Texas Constitution
are materially different. Neither assertion passes muster.
First, Novartis’s observation that the “TMFPA is not ‘an action for the
recovery of damages’ that is capable of assignment” (Pet. at 19 (quoting In re Xerox,
555 S.W.3d at 527 n.56)) elevates form over substance. While this Court has indeed
held that a lawsuit under the TMFPA is not an “action for the recovery of damages,”
In re Xerox, 555 S.W.3d at 534, nothing in Stevens ties the relator’s standing to
“damages” sustained by a federal program. Rather, Stevens ties the assignee’s
standing (here, HSG) to an “injury” suffered by the assignor (there, the United
States; here, Texas) that is sought to be redressed. And here there can be no doubt
4 Stevens was a 7-2 decision (with a concurrence by Justice Ginsburg, in which she agreed with the majority’s reasoning regarding standing). Notably, however, the two dissenters (Justices Stevens and Souter) did not take issue with the majority’s analysis of the issue of Article III standing.
6 4894-1897-6977
APP092 that HSG (i) has alleged an “injury” to the Texas Medicaid program; and (ii) is
seeking redress on behalf of the program.
Second, the differences between the U.S. Constitution and the Texas
Constitution highlighted by Novartis are immaterial here. Novartis argues that, while
the Stevens court found that a qui tam relator’s standing is grounded in Article III’s
“Cases” or “Controversies” requirement, the Texas Constitution “does not include
any [like] language.” Pet. at 20. But, as relevant here, the Texas Constitution’s Open
Courts provision, which “opens the courthouse doors only to those who have or are
suffering an injury,”5 is functionally equivalent to the U.S. Constitution’s case-or-
controversy provision. See Food & Drug Admin. v. All. for Hippocratic Med., 602
U.S. 367, 380 (2024) (“To establish standing . . . a plaintiff must demonstrate (i) that
she has suffered or likely will suffer an injury in fact, (ii) that the injury likely was
caused or will be caused by the defendant, and (iii) that the injury likely would be
redressed by the requested judicial relief. . . . Those specific standing requirements
constitute an essential and unchanging part of the case-or-controversy requirement
of Article III.”) (internal citations omitted).
And, contrary to Novartis’s protestations, the concept of representative
standing is well recognized by Texas precedent. Parents sue on behalf of children;
executors sue on behalf of estates; and insurers sue on behalf of insureds. See
5 Heckman v. Williamson Cty., 369 S.W.3d 137, 155 (Tex. 2012)
7 4894-1897-6977
APP093 generally In Interest of C.J.N.-S, 540 S.W.3d 589 (Tex. 2018) (holding that parents
have standing to sue on behalf of children); Ferreira v. Butler, 575 S.W.3d 331, 334
(Tex. 2019) (“[T]he common law is clear: an executor ‘stands in the shoes’ of the
decedent.”); Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765, 774
(Tex. 2007) (“[T]he insurer stands in the shoes of the insured, obtaining only those
rights held by the insured against a third party”). 6
Indeed, this Court’s precedent is clear that “standing may be conferred by
statute.” Marauder Corp. v. Beall, 301 S.W.3d 817, 820 (Tex. App.—Dallas 2009,
no pet.) (citing Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000)).
See also Child. of the Kingdom v. Cent. Appraisal Dist. of Taylor Cnty., 674 S.W.3d
407, 414 (Tex. App.—Eastland 2023, pet. denied); In re Sullivan, 157 S.W.3d 911,
915 (Tex. App.—Houston [14th Dist.] 2005, orig. proceeding); Zaatari v. City of
Austin, 615 S.W.3d 172, 182-83 (Tex. App.—Austin 2019, pet. denied).
And, contrary to Novartis’s arguments, “[w]hen standing is conferred by
statute, the common-law criteria regarding standing do[] not apply.” Child. of the
Kingdom, 674 S.W.3d at 414. Rather, “[i]n statutory standing cases, . . . the analysis
is a straight statutory construction of the relevant statute to determine upon whom
6 Novartis asserts that the concept of representative standing is only recognized in Texas “where the injured party with standing to sue lacks the legal authority or capacity to bring suit for their injury.” Pet. at 17-18. Not true, as Mid-Continent Insurance demonstrates.
8 4894-1897-6977
APP094 the Texas Legislature conferred standing and whether the claimant in question falls
in that category.” In re Sullivan, 157 S.W.3d at 915; Marauder, 301 S.W.3d at 820
(“The standing analysis begins and ends with the statute itself.”); Nephrology
Leaders & Assocs. v. Am. Renal Assocs., LLC, 573 S.W.3d 912, 915-16 (Tex.
App.—Houston [1st Dist.] 2019, no pet.); Everett v. TK-Taito, L.L.C., 178 S.W.3d
844, 850 (Tex. App.—Fort Worth 2005, no pet.) (stating that, “[w]hen standing has
been statutorily conferred, the statute itself serves as the proper framework for a
standing analysis”).
Here, Novartis has not made a showing that HSG lacks “the right to make a
claim” under the TMFPA, and there is no question that it does. As such, Novartis’s
arguments that HSG has not alleged an injury to itself are legally irrelevant. Child.
of the Kingdom, 674 S.W.3d at 415 (“[The plaintiff] is not required to prove a
concrete and particularized injury, as [the defendants] assert, because the common-
law criteria does not apply when a statute confers such authority upon an appraisal
district to bring suit. Thus, [the plaintiff] has standing to bring suit against [the
defendants] for the collection of the delinquent taxes.”); Everett, 178 S.W.3d at 850
(“To establish common law standing, a plaintiff must show a distinct injury to the
plaintiff and a real controversy between the parties, which . . . will be actually
determined by the judicial declaration sought. In conferring statutory standing,
however, the legislature may by statute exempt litigants from proof of the ‘special
9 4894-1897-6977
APP095 injury’ required to establish common law standing.”) (internal citations omitted);
Hernandez v. Truck Ins. Exch., 553 S.W.3d 689, 698 (Tex. App.—Fort Worth 2018,
pet. denied) (“[T]he legislature may exempt litigants from the common law injury
requirement, making the statute itself the proper analytical framework to determine
standing.”); Marauder, 301 S.W.3d at 820 (“Under the statute, a person may sue for
an injunction to ‘prevent or restrain’ a violation of the TDCA. The statute is broadly
written. [The defendant] contends that [the plaintiff] lacks standing because she has
no cognizable interest in any bond proceeds. The statute, however, does not require
that she have such an interest.”) (internal citations omitted).
B. The TMFPA Is Constitutional. Novartis’s arguments that the TMFPA itself is unconstitutional fare no better.
The law in Texas is settled. Consistent with the Texas Constitution, “the Legislature
may grant [private citizens] standing to bring [qui tam] actions, but it must do so
clearly.” Brown v. De La Cruz,156 S.W.3d 560, 566 (Tex. 2004) (citing Agey v. Am.
Liberty Pipe Line Co., 172 S.W.32d 972, 974 (Tex. 1943)).
The Texas Supreme Court’s holding in Brown thus plainly permits qui tam
provisions in penalty statutes, where such private rights of action are clearly
articulated. As noted above, the TMFPA is an example of a statute providing for the
recovery of penalties, with a clear grant of standing for private whistleblowers to
bring suit, either with or without the State’s active participation, and subject to
10 4894-1897-6977
APP096 control by OAG. See Tex. Hum. Res. Code §§ 36.101, 36.104, 36.052(a)(3). The
Brown holding affirms the legitimacy of the TMFPA as a qui tam statute.
Further, the holding in Brown—which eviscerates Novartis’s arguments—has
been cited repeatedly by both Texas and federal courts for the proposition that,
consistent with the Texas Constitution, the Legislature can in fact grant standing for
individuals to pursue actions for violations of Texas statutes. See, e.g., Burkett v.
City of El Paso, 513 F. Supp. 2d 800, 824-25 (W.D. Tex. 2007); Bittakis v. City of
El Paso, 480 F. Supp. 2d 895, 922-23 (W.D. Tex. 2007); Bickham v. Dallas Cnty.,
612 S.W.3d 663, 670 (Tex. App.—Dallas 2020, pet. denied); Sankaran v. VFS
Services (USA) Inc., 2023 WL 5543308, at *4 (Tex. App.—Houston [14th Dist.]
Aug. 29, 2023, no pet. h.); Scribner v. Treger, 2022 WL 714654, at *10 (Tex. App.—
Fort Worth Mar. 10, 2022, no pet.).
Novartis’s reliance on purportedly contrary precedent—some of it over 100
years old—is unavailing. Novartis cites (Pet. at 22-23) Maud v. Terrell, 200 S.W.
375, 376 (Tex. 1918), but that case supports HSG’s position. Maud involved a statute
authorizing the Texas Comptroller to appoint private individuals to collect
inheritance taxes. Id. at 375-76. The Maud court held that the statute at issue was
constitutional and valid. Id. at 377-78. After reviewing the statute, this Court found
that it—similar to the TMFPA—empowered the appointed person, among other
things, to: “sue for and collect” inheritance taxes; “aid in every possible way in the
11 4894-1897-6977
APP097 collection of such taxes[;]” and “represent the State . . . to enforce the collection” of
inheritance taxes. Id. at 377. The court found that since “[t]hese provisions do not
unequivocally supplant the county attorneys and the Attorney-General in their
authority to prosecute the suits of the State for the recovery of the taxes” therefore
the statute is constitutional, and “cannot be pronounced invalid.” Id. at 377-78; see
also El Paso Elec. Co. v. Tex. Dep't of Ins., 937 S.W.2d 432, 439 (Tex. 1996) (citing
Maud); Camp v. Gulf Prod. Co., 61 S.W.2d 773, 777-78 (Tex. 1933) (citing Maud).
The Texas Supreme Court in Maud therefore sets a demanding standard for a statute
to violate separation of powers: that the legislation must “unequivocally supplant”
the authority of the OAG. The TMFPA does no such thing.
Novartis also cites (Pet. at 24) Hill County v. Sheppard, 178 S.W.2d 261, 264
(Tex. 1944), but that case involved an effort by the Legislature to create a statutory
office to “take over” the duties of county attorneys. This Court held, unremarkably,
that “since the Constitution imposed certain duties upon the county attorney, the
Legislature, in the absence of other constitutional authority therefor, could not create
a statutory office with power to take over and exercise such functions.” Id. at 264.
Nothing in the TMFPA authorizes private citizens to “take over” OAG’s prerogative
to enforce the TMFPA.
In an effort to distract attention from the fact that its own cited cases undercut
its arguments, Novartis argues that, with the TMFPA, “the Legislature has
12 4894-1897-6977
APP098 essentially created an extra-constitutional office comprised by self-appointed private
attorney generals who exercise a power that the Texas Constitution explicitly and
exclusively confers on the State attorneys.” Pet. at 24. All of Novartis’s arguments
miss the mark.
First, Novartis asserts that, in enacting the TMFPA, the Legislature usurped
OAG of “the right to investigate the facts and exercise his judgment and discretion
regarding the filing of a suit.” Pet. at 25 (quoting Agey, 172 S.W.32d at 974). Not
true. As explained above, the TMFPA contains multiple provisions that protect
OAG’s autonomy to investigate and prosecute (or not prosecute) suits as it sees fit.
The relator must file the petition under seal, it must make extensive disclosure to
OAG, and then, while the petition remains sealed, wait for OAG to investigate the
claims and decide whether to take over the lawsuit. Upon review of the relator’s
petition, OAG is free to intervene, decline intervention, or dismiss the action
altogether. See Tex. Hum. Res. Code §§ 36.102, 36.103, 36.104.11. Contrary to
Novartis’s assertions, a private TMFPA plaintiff neither supplants OAG’s role with
respect to, nor does it “control,” the litigation. Rather, “control” and prosecutorial
discretion remain with OAG at all times.
Second, Novartis argues “if the Attorney General declines to intervene in the
qui tam action, the TMPFA impermissibly authorizes an unharmed private party and
its attorney to prosecute violations of state law in place of the Attorney General.”
13 4894-1897-6977
APP099 Pet. at 25. Also not true. Irrespective of how a lawsuit is initiated or, indeed, of
OAG’s initial intervention/nonintervention decision, OAG retains complete
discretion to proceed only with the TMFPA cases that it chooses. To be sure, if OAG
deems a TMFPA case unmeritorious, it can dismiss the relator’s case even over the
objections of the relator. See Tex. Hum. Res. Code § 36.107(b). Indeed, the
government’s power to dismiss and settle a qui tam action over the objection of the
person who brought it was recently described by an 8-1 majority of the Supreme
Court as being “uncommon, even extraordinary.” See United States, ex rel. Polansky
v. Executive Health Res., Inc., 599 U.S. 419, 430 (2023).
At bottom, the notion that the TMFPA requires OAG to “cede” anything to a
private relator is fictional. In intervened and nonintervened actions alike, OAG
retains absolute control and authority over all material aspects of the litigation.
Indeed, in Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749 (5th Cir. 2001), when
describing the similarly broad authority of the federal government in prosecuting
actions under the FCA, the Fifth Circuit rejected the very arguments Novartis is
making here:
[T]he powers of a qui tam relator to interfere in the Executive’s overarching power to prosecute and to control litigation are seen to be slim indeed when the qui tam provisions of the FCA are examined in the broad scheme of the American judicial system.
Id. at 756.
14 4894-1897-6977
APP100 * * *
As a recidivist offender, Novartis has every interest to have the TMFPA and
other qui tam statutes declared unconstitutional. At bottom, however, Novartis’s
purported concerns about the Texas Constitution ring hollow. The Court should see
Novartis’s efforts for what they are—a cynical attempt to void the very statutes that
have brought taxpayers justice for Novartis’s long history of unlawful conduct.
III. THERE IS NO BASIS FOR A STAY. Novartis’s Stay Motion is predicated on the supposed merit of its Petition.
Because the Petition fails for procedural and substantive reasons, there is no basis
for the Court to grant the Stay Motion.
CONCLUSION For the foregoing reasons, the writ and motion for temporary stay should be
denied.
15 4894-1897-6977
APP101 Dated: July 17, 2024 Respectfully submitted,
/s/ Sam Baxter /s/ Mark Lanier Samuel F. Baxter (co-lead counsel) Mark Lanier (co-lead counsel) sbaxter@mckoolsmith.com Zeke DeRose Jennifer L. Truelove Jonathan Wilkerson jtruelove@mckoolsmith.com THE LANIER FIRM MCKOOL SMITH P.C. 10940 W. Sam Houston Pkwy N 104 East Houston, Suite 300 Houston, TX 77064 Marshall, Texas 75670 (800) 723-3216 (903) 923-9000 Fax: (713) 659-2204 Fax: (903) 923-9099
Eric B. Halper (PHV to be filed) Radu A. Lelutiu (PHV to be filed) McKool Smith, P.C. 1301 Avenue of the Americas New York, New York 10019 (212) 402-9400 Fax: (212) 402-9444
ATTORNEYS FOR PLAINTIFF/REAL-PARTY-IN- INTEREST HEALTH SELECTION GROUP, LLC
16 4894-1897-6977
APP102 CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the above and
foregoing document has been served on July 17, 2024 to counsel of record.
/s/ Samuel F. Baxter Samuel F. Baxter
CERTIFICATE OF COMPLIANCE
Based on a word count run in Microsoft Word 2016, this Combined Response
to Petition for Writ of Mandamus and Motion to Stay contains 3,607 words,
excluding the portions of the brief exempt from the word count under Texas Rule of
Appellate Procedure 9.4(i)(1).
I certify that I have reviewed the forgoing pleading and concluded that every
factual statement is supported by competent evidence included in the record.
17 4894-1897-6977
APP103 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below:
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Lynne Kurtz-Citrin 24081425 lynne.kurtz-citrin@oag.texas.gov 7/17/2024 5:08:14 PM SENT
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APP105 FILED 24-0239 7/17/2024 7:26 PM tex-89897964 SUPREME COURT OF TEXAS BLAKE A. HAWTHORNE, CLERK
Cause No. 24-0239 In the
ORIGINAL PROCEEDING FROM THE 71st DISTRICT COURT IN HARRISON COUNTY, TEXAS • CAUSE NO. 23-0276 THE HONORABLE BRAD MORIN PRESIDING
STATE’S RESPONSE TO RELATOR’S PETITION FOR WRIT OF MANDAMUS
KEN PAXTON JONATHAN D. BONILLA Attorney General of Texas State Bar No. 24073939 BRENT WEBSTER JORDAN UNDERHILL First Assistant Attorney General State Bar No. 24102586 JAMES LLOYD LYNNE KURTZ-CITRIN Deputy Attorney General for Civil State Bar No. 24081425 Litigation Assistant Attorneys General ELIZABETH BROWN FORE Office of the Attorney General Chief, Healthcare Program Healthcare Program Enforcement Division Enforcement Division Phone: (512) 936-1410 Fax: (512) 936-0674 Counsel for the State of Texas/ Real Party in Interest
APP106 TABLE OF CONTENTS Page TABLE OF CONTENTS .................................................................................. i TABLE OF AUTHORITIES ............................................................................ii STATEMENT REGARDING ORAL ARGUMENT.................................... 1 ISSUES PRESENTED CORRECTED ........................................................... 2 SUMMARY OF THE ARGUMENT ............................................................... 3 ARGUMENT ..................................................................................................... 4 I. Novartis Has an Adequate Remedy by Appeal. .................................... 4 II. The Trial Court Has Subject Matter Jurisdiction. ............................... 6 A. The Court Should Look to Federal Precedent to Resolve in this Case. ....................................................................................... 7 1. Federal Precedence Resolves the Question of Standing in Qui Tam Suits.......................................................................... 9 2. Texas Law Allows Standing-By-Assignment. ........................ 12 B. This Court Has Recognized Exceptions to the Injury Requirement. .................................................................................. 13 III. The Trial Court Did Not Clearly Abuse Its Discretion by Upholding the Constitutionality of the TMFPA. .................................................. 14 A. Qui Tam Statutes Do Not Violate Article IV or Article V of the Texas Constitution. ............................................................. 14 B. The TMFPA Properly Authorizes Private Individuals to Bring Suits on the State’s Behalf. ............................................. 19 PRAYER ............................................................................................................ 22 CERTIFICATE OF COMPLIANCE ............................................................. 24 CERTIFICATE OF SERVICE ....................................................................... 25
i APP107 TABLE OF AUTHORITIES Page(s) Cases
Abbott v. Mexican American Legislative Caucus, Texas House of Representatives, 647 S.W.3d 681, 690 (Tex. 2022) ........................................................................... 8
Agey v. Am. Liberty Pipe Line Co., 172 S.W.2d 972 (1943) ......................................................................................... 19
Am. Liberty Pipe Line Co. v. Agey, 167 S.W.2d 580 (Tex. App.—Austin 1942).......................................................... 19
Bell Helicopter Textron, Inc. v. Walker, 787 S.W.2d 954 (Tex. 1990) ............................................................................... 3, 5
Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547 (Tex. 2000) ............................................................................. 13, 14
Brooks v. Northglen, 141 S.W.3d 158, 169 (Tex.2004) ............................................................................ 7
Camp v. Gulf Prod. Co., 122 Tex. 383, 61 S.W.2d 773 (1933) .................................................................... 17
City of Dallas v. Texas Prudential Ins. Co., 291 S.W.2d 693, 696 (1956) ................................................................................... 3
City of Houston v. Houston Prof’l. Fire Fighters' Ass'n, Loc. 341, 664 S.W.3d 790 (Tex. 2023), reh’g denied (June 23, 2023) ................................... 7
Curtis v. Gibbs, 511 S.W.2d 263 (Tex. 1974) ................................................................................... 5
Data Foundry, Inc. v. City of Austin, 620 S.W.3d 692 (Tex. 2021) ............................................................................... 7, 8
EBS Sols., Inc. v. Hegar, 601 S.W.3d 744 (Tex. 2020) ................................................................................... 7
ii APP108 TABLE OF AUTHORITIES (continued) Page(s)
El Paso Elec. Co. v. Tex. Dep't of Ins., 937 S.W.2d 432 (Tex. 1996) ........................................................................... 15, 16
Hill County v. Sheppard, 178 S.W.2d 261 (1944) ................................................................................... 17, 18
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (Tex. 2001) ............................................................................. 12, 13
Hooks v. Fourth Ct. of Appeals, 808 S.W.2d 56 (Tex. 1991) ................................................................................. 5, 6
Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333 (1977) .......................................................................................... 8, 14
In re Christianson Air Conditioning & Plumbing, LLC, 639 S.W.3d 671 (Tex. 2022) ................................................................................... 3
In re Facebook, Inc., 625 S.W.3d 80, 86 (Tex. 2021) ............................................................................... 6
In re Kappmeyer, 668 S.W.3d 651, 655 (Tex. 2023) ........................................................................... 6
In re Prudential Ins. Co. of Am., - 148 S.W.3d 124 (Tex. 2004) ............................................................................... 4, 6
In re SWEPI, L.P., 85 S.W.3d 800 (Tex. 2002) ..................................................................................... 5
In re Xerox Corp., 555 S.W.3d 518 (Tex. 2018) ............................................................................. 3, 19
Jackson v. Thweatt 883 S.W.2d 171, 174 (Tex. 1994) ......................................................................... 13
iii APP109 TABLE OF AUTHORITIES (continued) Page(s)
Johnson v. Fourth Ct. of Appeals, 700 S.W.2d 916 (Tex. 1985) .................................................................................. 3
Jones v. Turner, 646 S.W.3d 319 (Tex. 2022) ................................................................................. 14
Koy v. Schneider, 110 Tex. 369, 221 S.W. 880 (1920) ........................................................................ 6
Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ................................................................................................ 8
Lujan, Vermont Natural Resources v. U.S. ex rel. Stevens, 529 U.S. 765, 787 (2000) ....................................................................... 9, 11, 12, 13
Malouf v. State ex rels. Ellis, No. 22-1046, 2024 WL 3075672 (Tex. June 21, 2024) ................................................................. 3
Maud v. Terrell, 109 Tex. 97, 200 S.W. 375 (1918) ................................................. 15, 16, 17, 20, 21
Nazari v. State, 561 S.W.3d 495 (Tex. 2018) ................................................................................... 3
Perez v. Turner, 653 S.W.3d 191 (Tex. 2022), reh’g denied (Oct. 21, 2022) .................................. 14
Sw. Bell Tel. Co. v. Mktg. on Hold Inc., 308 S.W.3d 909 (Tex. 2010) ........................................................................... 12, 13
Sprint Communications Co., L.P. v. APCC Services, Inc., 554 U.S. 269 (2008) ...................................................................................11, 12, 13
Staples v. State, 112 Tex. 61, 245 S.W. 639 (1922) .............................................................15, 16, 17
iv APP110 TABLE OF AUTHORITIES (continued) Page(s)
Stockton v. Offenbach, 336 S.W.3d 610, 618 (Tex. 2011) ........................................................................... 7
Terrazas v. Ramirez, 829 S.W.2d 712, 721 (Tex. 1991) ......................................................................... 15
Terrell v. Sparks, 104 Tex. 191, 135 S.W. 519 (1911) ...................................................................... 20
Texas Association of Business v. Texas Air Control Board, 852 S.W.2d 440 (Tex. 1993) ................................................................................... 8
Warth v. Seldin, 422 U.S. 490, 511 (1975) ...................................................................................... 14
Statutes
31 U.S. Code § 3730(d)(1).................................................................................... 11
31 U.S. Code §3730(d)(2) .................................................................................... 11
Tex. Hum. Res. Code § 36.052(a) ........................................................................ 10
Tex. Hum. Res. Code §§ 36.102-36.104............................................................... 17
Tex. Hum. Res. Code § 36.102(a) ........................................................................ 17
Tex. Hum. Res. Code § 36.102(e) ........................................................................ 21
Tex. Hum. Res. Code § 36.104(b-1) ..................................................................... 21
Tex. Hum. Res. Code § 36.107(b), (c) .................................................................. 21
Tex. Hum. Res. Code § 36.108 ............................................................................. 21
Tex. Hum. Res. Code § 36.109 ............................................................................. 21
v APP111 STATEMENT REGARDING ORAL ARGUMENT
The State does not believe that oral argument is necessary, as Novartis’s Mandamus
Petition fails to meet the appropriate standard. If the Court nevertheless determines
that oral argument would be helpful, the State respectfully requests the opportunity
to participate.
1 APP112 ISSUES PRESENTED CORRECTED
1. Whether mandamus is proper when Novartis has an adequate remedy by
appeal for the denial of its combined Plea to the Jurisdiction/Motion to
Dismiss.
2. Whether the trial court abused its discretion by finding that plaintiff has
standing under the Texas Medicaid Fraud Prevention Act (“TMFPA”) 1,
which authorizes it to bring a claim on behalf of the State.
3. Whether the trial court clearly abused its discretion by refusing to invalidate
the TMFPA on constitutional grounds.
1 Chapter 36 of the Human Resources Code was renamed, effective September 1, 2023, to the Texas Health Care Program Fraud Prevention Act. Because the filings in this case use the previous title, this response will continue to refer to Chapter 36 as the Texas Medicaid Fraud Prevention Act.
2 APP113 SUMMARY OF THE ARGUMENT
Texas courts “adhere to the well-settled rule that a law will not be declared
unconstitutional unless it is clearly so.” City of Dallas v. Texas Prudential Ins. Co.,
291 S.W.2d 693, 696 (1956). Yet, in its Petition for a Writ of Mandamus, Novartis
makes an audacious claim: that a trial court abused its discretion by not invalidating,
on constitutional grounds, a frequently enforced 2, nearly thirty-year-old statute.
To obtain a writ of mandamus Novartis must satisfy two elements: (1) that
there is no adequate remedy by appeal, and (2) that trial court abused its discretion.
In re Christianson Air Conditioning & Plumbing, LLC, 639 S.W.3d 671, 681 (Tex.
2022) (citing Johnson v. Fourth Ct. of Appeals, 700 S.W.2d 916, 917 (Tex. 1985)).
Novartis does not satisfy either of these elements.
First, courts “lack jurisdiction to issue writs of mandamus to supervise or
correct incidental rulings of a trial judge when there is an adequate remedy by
appeal.” Bell Helicopter Textron, Inc. v. Walker, 787 S.W.2d 954, 955 (Tex. 1990).
Here, Novartis challenges an incidental ruling and has an adequate remedy by
appeal, making mandamus improper.
2 See, e.g., Nazari v. State, 561 S.W.3d 495 (Tex. 2018), In re Xerox Corp., 555 S.W.3d 518 (Tex. 2018), Malouf v. State ex rels. Ellis, No. 22-1046, 2024 WL 3075672 (Tex. June 21, 2024).
3 APP114 Second, the trial court did not abuse its discretion by denying Novartis’s
Motion. Novartis cites no instance in which either this Court or an appellate court
found that a trial court abused its discretion by failing to hold a law facially
unconstitutional. On the contrary, the trial court adhered to Texas law by presuming
the constitutionality of the TMFPA and refusing to follow Novartis’s meritless
arguments. Novartis’s attempt to misuse the mandamus process should be rejected.
I. Novartis Has an Adequate Remedy by Appeal.
While Novartis pays lip-service to the mandamus standard, it offers nothing
more than a conclusory statement that mandamus is appropriate here. See Petition
at 13. Novartis’s failure to explain why its appellate remedy is inadequate is
demonstrative: the Court should reject this Petition without reaching the merits.
“Mandamus review of incidental, interlocutory rulings by the trial courts
unduly interferes with trial court proceedings, distracts appellate court attention to
issues that are unimportant both to the ultimate disposition of the case at hand and
to the uniform development of the law, and adds unproductively to the expense and
delay of civil litigation.” In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex.
2004). Thus, pleas to the jurisdiction “will not ordinarily be reviewed by mandamus,
because they are incidental trial rulings for which the relator generally has an
4 APP115 adequate appellate remedy.” In re SWEPI, L.P., 85 S.W.3d 800, 808 (Tex. 2002)
(citing Bell Helicopter, 787 S.W.2d at 955).
The denial of Novartis’s Motion is not an issue that “eludes answer by
appeal.” Id. at 138. “Absent extraordinary circumstances…a denial of a motion to
dismiss or a plea in abatement is a ruling incident to the ordinary trial process which
will not be corrected by mandamus, but by the legal remedy of the ordinary appellate
process.” Hooks v. Fourth Ct. of Appeals, 808 S.W.2d 56, 59 (Tex. 1991) (emphasis
in original).
This Court has identified extraordinary instances where the denial of a plea to
the jurisdiction warrants mandamus review, such as when a court interferes with
another’s jurisdiction. See Curtis v. Gibbs, 511 S.W.2d 263, 267 (Tex. 1974) (“If the
second court ... attempts to interfere with the prior action, this court has the power
to act by mandamus or other appropriate writ to settle the conflict of jurisdiction.”);
In re SWEPI, 85 S.W.3d at 809 (mandamus relief proper because the probate court
transferred suit to itself without statutory authority, interfering with another court’s
jurisdiction).
This Court has likewise noted that “mandamus relief is often unavailable to
correct the erroneous denial of a motion to dismiss” but that such relief may be
“warranted if a litigant would suffer ‘impairment or loss’ of ‘important substantive
5 APP116 ... rights’ while awaiting the error's correction on appeal.” In re Facebook, Inc., 625
S.W.3d 80, 86 (Tex. 2021) (quoting In re Prudential, 148 S.W.3d at 136).
Novartis identifies no extraordinary circumstances nor any “important
substantive rights” that it risks losing. While Novartis is presumably unhappy about
litigating this case, the “cost or delay of having to go through trial and the appellate
process does not make the remedy at law inadequate, and hence mandamus will not
lie.” Hooks 808 S.W.2d at 60 (emphasis in original).
II. The Trial Court Has Subject Matter Jurisdiction.
“A trial court abuses its discretion when it acts with disregard of guiding rules
or principles or in an arbitrary or unreasonable manner.” In re Kappmeyer, 668
S.W.3d 651, 655 (Tex. 2023). Further, “an error of law or an erroneous application
of law to facts is always an abuse of discretion.” In re Facebook, 625 S.W.3d at 86.
Novartis does not challenge the application of the law to the facts, but the law
itself. Thus, the only way that the trial court could have granted Novartis’s Motion
would be by holding the TMFPA facially unconstitutional. But a statute “should not
be held invalid unless its unconstitutionality be made to appear beyond any
reasonable doubt.” Koy v. Schneider, 221 S.W. 880, 888 (Tex. 1920). Indeed, when
“evaluating whether a statute is constitutionally infirm, we presume at the outset that
it is constitutional. A party challenging a statute as unconstitutional bears a heavy
6 APP117 burden to overcome this presumption.” City of Houston v. Houston Professional Fire
Fighters' Association, Local 341, 664 S.W.3d 790, 798 (Tex. 2023), reh’g denied (June
23, 2023) (emphasis added). “In line with this presumption, if a statute is susceptible
to two interpretations—one constitutional and the other unconstitutional—then the
constitutional interpretation will prevail.” EBS Sols., Inc. v. Hegar, 601 S.W.3d 744,
754 (Tex. 2020); see also Stockton v. Offenbach, 336 S.W.3d 610, 618 (Tex. 2011)
(“We presume that when enacting legislation, the Legislature intends to comply
with the state and federal constitutions, Tex. Gov't Code § 311.021(1), and ‘we are
obligated to avoid constitutional problems if possible.’” (quoting Brooks v. Northglen
Association, 141 S.W.3d 158, 169 (Tex.2004)).
The trial court did precisely as obligated: presumed the constitutionality of the
TMFPA. Unable to rebut this presumption, Novartis now invites this Court to short-
circuit the appellate process. Though this Court need not consider the merits given
Novartis’s failure to explain why an appeal is inadequate, if it does, this Court should
deny Novartis’s Petition for the following reasons.
A. The Court Should Look to Federal Precedent to Resolve in this Case.
In Novartis’s Motion, it argued that “Texas standing doctrine parallels ‘the
federal requirements for standing.’” MR073, quoting Data Foundry, Inc. v. City of
Austin, 620 S.W.3d 692, 696 (Tex. 2021). The State agrees. This Court has
7 APP118 “adopted the federal requirements for standing as set forth by the United States
Supreme Court in Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 119
L.Ed.2d 351 (1992).” Data Foundry, 620 S.W.3d at 696. “To maintain standing, a
plaintiff must show: (1) an injury in fact that is both concrete and particularized and
actual or imminent, not conjectural or hypothetical; (2) that the injury is fairly
traceable to the defendant's challenged action; and (3) that it is likely, as opposed to
merely speculative, that the injury will be redressed by a favorable decision.” Id.
(citing Lujan, 504 U.S. at 560-61).
With that framework in mind, this Court has previously used federal
precedent to resolve novel issues of standing. In Texas Association of Business v. Texas
Air Control Board, 852 S.W.2d 440 (Tex. 1993), the Court adopted the U.S.
Supreme Court’s standard for associational standing. 3 That decision was recently
reaffirmed in Abbott v. Mexican American Legislative Caucus, Texas House of
Representatives, 647 S.W.3d 681, 690 (Tex. 2022). Because the test for standing
under Texas law is identical to the test for Article III, this Court should follow the
U.S. Supreme Court’s jurisprudence on this issue.
3 “The United States Supreme Court has articulated a standard for associational standing that lends itself to our use. We adopt that test today.” Id. at 447 (citing Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333 (1977)).
8 APP119 1. Federal Precedence Resolves the Question of Standing in Qui Tam Suits.
Decided in the wake of Lujan, Vermont Natural Resources v. U.S. ex rel. Stevens,
529 U.S. 765, 787 (2000) held that a private individual has Article III standing to
maintain a qui tam action under the federal False Claims Act (FCA). Writing for the
majority, Justice Scalia held that “adequate basis for the relator's suit for his bounty
is to be found in the doctrine that the assignee of a claim has standing to assert the
injury in fact suffered by the assignor.” Id. at 773. The United States’s “injury in
fact” was sufficient to “confer standing on [the qui tam relator].” Id. at 774.
Novartis takes issue with the Supreme Court’s acknowledgement that the
FCA “can reasonably be regarded as effecting a partial assignment of the
Government's damages claim…” Id. at 765-66. Novartis argues that the TMFPA is
a civil enforcement statute and that, by providing for civil penalties rather than
“damages,” the reasoning in Stevens is inapplicable. See Petition at 19. Novartis’s
argument fails for several reasons.
First, nothing in Stevens limits the underlying holding—that a qui tam relator
has constitutional standing by assignment—to qui tam actions for “damages.” The
Supreme Court focuses on the assignment of the injury-in-fact by the government,
which is defined as “the injury to its sovereignty arising from violation of its laws …
and the proprietary injury resulting from the alleged fraud.” Id. at 771. In concluding
9 APP120 that “the United States’ injury in fact suffices to confer standing on [the qui tam
relator],” id. at 774, the Stevens Court does not differentiate between the two
injuries-in-fact being assigned, such that an obviously non-pecuniary injury-in-fact—
the violation of the government’s sovereignty—is part of that assignment. Thus,
while the Supreme Court used the word “damages” in describing the relator’s
claim, this is a mere recitation of the FCA, which provides for the recovery of
damages, and not because damages are a requirement for the assignment.
Second, while the TMFPA is an action for civil remedies and penalties, 4 the
FCA and other qui tam laws also include civil penalties as part of their remedy. As
the Supreme Court notes in Stevens, a defendant is “liable for up to treble damages
and a civil penalty of up to $10,000 per claim.” Id. at 769 (emphasis added). This is
far from unusual. The Court references an extensive list of historical qui tam
provisions that use words such as “penalty” and “fine,” instead of or in addition to
“damages.” See Id. at n. 6 and 7.
The Supreme Court did not hold that the assignment of a claim extended only
to the treble damages and not the civil penalty. Under the FCA, a qui tam relator is
eligible to collect a portion of the civil penalty and damages. 5 The qui tam relator’s
4 See Tex. Hum. Res. Code §36.052(a). 5 See §3730(d)(1) and §3730(d)(2).
10 APP121 award is apportioned from the entire amount recovered. See 31 U.S. Code §
3730(d)(1). So, when the Stevens Court acknowledges that the FCA functions as a
“partial assignment of the Government’s damages claim…” it is proper to conclude
that this assignment includes the civil penalties.
Novartis’s argument is similarly imperiled by Sprint Communications Co., L.P.
v. APCC Services, Inc., 554 U.S. 269 (2008), which expanded the standing-by-
assignment doctrine outlined in Stevens. Sprint addressed the question of whether
“an assignee of a legal claim for money owed has standing to pursue that claim in
federal court, even when the assignee has promised to remit the proceeds of the
litigation to the assignor.” Id. at 271.
Answering this question affirmatively, the Court cited Stevens, noting that
“within the past decade we have expressly held that an assignee can sue based on his
assignor's injuries.” Id. at 286. The Court also examined a centuries-spanning
judicial history which “make[s] clear that courts have long found ways to allow
assignees to bring suit; that where assignment is at issue, courts—both before and
after the founding—have always permitted the party with legal title alone to bring
suit; and that there is a strong tradition specifically of suits by assignees for
collection.” Id. at 285. So, even though it was “true that the [assignees] did not
originally suffer any injury caused by the [defendants]; the [assignors] did” and “the
11 APP122 [assignors] assigned their claims to the [assignees] lock, stock, and barrel.” Id. at 286.
2. Texas Law Allows Standing-By-Assignment.
Though Novartis argues that the Stevens case is inconsistent with the Texas
law, this Court has already cited Stevens in a prior case involving standing-by-
assignment in the class action context. In Southwestern Bell Telephone Company v.
Marketing on Hold Inc., 308 S.W.3d 909 (Tex. 2010), the Court considered a class
action suit in which the plaintiff, STA, entered into assignment agreements on behalf
of several Southwestern Bell customers and then sued Southwestern Bell.
Southwestern Bell challenged STA’s standing, arguing that STA lacked
contractually valid assignments and suffered “no common class injury.” Id. at 915,
918. In rejecting this argument, this Court noted that “[b]ecause STA holds
contractually valid assignments, STA steps into the shoes of the claim-holders and
is considered under the law to have suffered the same injury as the assignors and
have the same ability to pursue the claims.” Id. at 916. (citing Holy Cross Church of
God in Christ v. Wolf, 44 S.W.3d 562, 572 (Tex. 2001) and Stevens, 529 U.S. at 773).
The Court further noted that it is “well-settled that a valid assignee of a claim has
standing to be a member of a class action related to that claim.” Id. at 927.
Southwestern built on two prior decisions that cited the common law maxim
that “[a]n assignee stands in the shoes of his assignor.” See Holy Cross, 44 S.W.3d at
12 APP123 572 and Jackson v. Thweatt, 883 S.W.2d 171, 174 (Tex. 1994). This maxim is
perfectly in line with both Stevens and Sprint. Thus, contrary to Novartis’s
argument, U.S. Supreme Court jurisprudence is not inconsistent with Texas law.
Instead, Stevens and Sprint settle the standing issue entirely by permitting the partial
assignment of the State’s interest in the qui tam lawsuit to the plaintiff/relator,
thereby fulfilling the constitutional standing requirement.
B. This Court Has Recognized Exceptions to the Injury Requirement.
Novartis does not dispute that the State suffered an injury due to Novartis’s
alleged unlawful conduct. However, because Novartis argues that a particularized
injury is always required to establish constitutional standing 6, it is worth noting that
this Court has recognized important exceptions to this requirement.
Consider taxpayer standing, which is the subject of a long line of decisions. In
Bland Independent School District v. Blue, this Court noted that:
Unless standing is conferred by statute, taxpayers must show as a rule that they have suffered a particularized injury distinct from that suffered by the general public in order to have standing to challenge a government action or assert a public right. But in Texas law there is a long-established exception to this general rule: a taxpayer has standing to sue in equity to enjoin the illegal expenditure of public funds, even without showing a distinct injury.
34 S.W.3d 547, 555-56 (Tex. 2000) (emphasis added). As recently as 2022, this
6 See Petition at 11.
13 APP124 Court reaffirmed this point, stating in Perez v. Turner that “taxpayer standing is an
exception to the usual particularized injury requirement.” 653 S.W.3d 191, 200
(Tex. 2022). Likewise, in Jones v. Turner, 646 S.W.3d 319, 323 (Tex. 2022) the
Court acknowledged that “Texas law recognizes a ‘long-established exception’ for
taxpayers, who may sue ‘to enjoin the illegal expenditure of public funds’ without
showing a particularized injury.” (quoting Bland, 34 S.W.3d at 555–56).
Further, the aforementioned standard for associational standing does not
require that the association itself suffer a concrete injury. See Warth v. Seldin, 422
U.S. 490, 511 (1975) (“Even in the absence of injury to itself, an association may
have standing solely as the representative of its members.”); Hunt, 432 U.S. at 342
(1977) (“…this Court has recognized that an association may have standing to assert
the claims of its members even where it has suffered no injury from the challenged
activity…”).
III. The Trial Court Did Not Clearly Abuse Its Discretion by Upholding the Constitutionality of the TMFPA.
A. Qui Tam Statutes Do Not Violate Article IV or Article V of the Texas Constitution.
Novartis misconstrues several cases to argue that the TMFPA violates Article
IV, Section 22 and Article V, Section 21 of the Texas Constitution. But Maud,
Staples, and others establish the Attorney General’s “broad discretionary power in
14 APP125 conducting his legal duty and responsibility to represent the State.” Terrazas v.
Ramirez, 829 S.W.2d 712, 721 (Tex. 1991) (citing, among others, Maud v. Terrell,
109 Tex. 97, 200 S.W. 375 (1918)). This includes the power to enlist private parties
for assistance.
In Maud v. Terrell, the Court upheld a statute authorizing the Texas
Comptroller to appoint individuals to collect certain taxes. The Court noted that the
Legislature “may provide assistance for the proper discharge by [the Attorney
General and county and district attorneys] of their duties” but cannot “obtrude
other persons upon them and compel the acceptance of their services.” Id. at 376.
This Court explained that a statute violates the separation of powers under the Texas
Constitution, when it “unequivocally supplant[s] the county attorneys and the
Attorney-General in their authority to prosecute the suits of the State.” Id. at 377-
378.
More recently, this Court stated that “[w]e made clear in Maud…that the
Legislature may authorize an agency to retain private counsel to prosecute actions,
as long as such counsel's authority is subordinate to that of the Attorney General,
County Attorney, or District Attorney.” El Paso Electric Company v. Texas
Department of Insurance, 937 S.W.2d 432, 439 (Tex. 1996). “Further, a statute
authorizing an agency to hire outside counsel should, if possible, be construed as
15 APP126 complying with this constitutional requirement, even if the statute does not
expressly recognize the authority of the Attorney General.” Id. The statute in Maud
was upheld “because the statutory language did not ‘unequivocally supplant the
county attorneys and the Attorney–General in their authority to prosecute the suits
of the State for the recovery of the taxes.’” Id. (quoting Maud, 200 S.W. at 377).
Likewise, the qui tam provisions of the TMFPA do not “unequivocally supplant”
the Attorney General in his prosecution of healthcare fraud.
Staples v. State, 245 S.W. 639 (Tex. 1922)—miscited by Novartis as
supportive of their arguments—was a quo warranto suit instituted by litigants “in the
name of the state of Texas” and “in their own names” to prevent the placement of
a political candidate’s name on a ballot. The respondents argued that the statute was
unconstitutional because it infringed upon the exclusive authority of the County
Attorneys, District Attorneys, and the Attorney General. Id. at 639-40. Citing Maud,
the Staples court disagreed, holding that the statute was “not in violation of section
21, art. 5, and section 22, art. 4, of the [Texas] Constitution,” Id. at 643, though the
court noted that the litigants lacked the “legal capacity or right to institute” their
suit. Id. The Court construed the statute as providing safeguards to the
constitutional powers of the Attorney General and county and district attorneys, so
quo warranto suits could be related through a private citizen if the suits were first
16 APP127 presented to, and approved by, the State’s authorized agents and officers. Id.
This is comparable to how qui tam suits function. When a relator files a qui
tam suit, they do so under seal and must deliver a copy of the petition and all material
evidence and information to the State. 7 The State can then investigate the allegations
and decide how to proceed (e.g., by intervening, dismissing the case, or allowing the
relator to proceed without the State’s intervention). See Tex. Hum. Res. Code §§
36.102-36.104. This enables the State to exercise its prosecutorial discretion before
the case is unsealed.
In Camp v. Gulf Prod. Co., 122 Tex. 383, 394, 61 S.W.2d 773, 777 (1933),
this Court cited Maud and Staples to uphold a statute authorizing an individual to
bring suit on behalf of the state. The Camp Court held that “an act will not be held
unconstitutional” under Texas Const. Section 22, Art. 4, and Section 21, Art. 5,
“unless it, by plain and unambiguous language, deprives the county and district
attorneys and the Attorney General of their authority to represent the state in the
suits prosecuted under such act.” Id.
Novartis also misreads Hill County v. Sheppard, 178 S.W.2d 261 (1944). At
issue in Sheppard was a statute that appeared internally inconsistent, purporting to
create an office of criminal district attorney even though “[t]he Legislature hardly
7 Tex. Hum. Res. Code § 36.102(a).
17 APP128 could have used stronger or plainer language to indicate its positive intention not to
create a constitutional office of any kind…” 8 Sheppard, 178 S.W.2d at 263–64
(emphasis added). Because no constitutional office was created, the Court
considered what the effect would be if the statute instead “create[d] a statutory
office to take over the duties of the county attorney.” Id. at 264. Put more clearly,
the question was whether, in a county where there was not a constitutional office of
criminal district attorney, the Legislature could create a statutory office of criminal
district attorney that would supplant the already existing county attorney’s duties.
See id. at 261-62. The Court answered this question in the negative, holding that
“the Legislature could not create a statutory office with authority to take over the
duties of county attorney.” Id. at 265.
But no statutory office is created by the TMFPA. Nor is the Attorney
General’s authority supplanted in any way. Rather, the TMFPA “imbues the
attorney general with broad investigative and enforcement authority and—via qui
tam provisions—deputizes private citizens to pursue a TMFPA action on the
8 Contrary to how Novartis presents the Sheppard case, Article V, Section 21 of the Texas Constitution explicitly mentions a “criminal district attorney.” The Court noted that “it is our opinion that the term criminal district attorney refers to a class or kind of district attorneys, and that a criminal district attorney is a district attorney within the meaning of the Constitution.” Sheppard, 178 S.W.2d at 263.
18 APP129 government's behalf.” In re Xerox Corp., 555 S.W.3d 518, 525 (Tex. 2018). The
additional assistance provided by the qui tam provisions is of paramount importance
because “[t]he Medicaid system's size and complexity, the limited time and financial
resources of governmental regulators, and the increasing sophistication of Medicaid
scams make chicanery difficult to uncover.” Id.
The two Agey cases are likewise misrepresented by Novartis. The appellate
case, American Liberty Pipe Line Co. v. Agey, 167 S.W.2d 580 (Tex. App.—Austin
1942), was superseded by the Texas Supreme Court in Agey v. American Liberty Pipe
Line Co., 172 S.W.2d 972 (1943). Unlike the TMFPA, the statute at issue in the Agey
cases lacked a qui tam provision and did not explicitly authorize a private right of
action. See Agey, 172 S.W.2d at 974 (“If the Legislature had intended by this Act to
authorize an individual to file a suit on behalf of himself and on behalf of the State,
without the joinder of the Attorney General or some district or county attorney, it
could have expressed such intention in clear language. This it did not do.”).
B. The TMFPA Properly Authorizes Private Individuals to Bring Suits on the State’s Behalf.
Novartis argues that if the Attorney General declines to intervene in a case,
the TMFPA “impermissibly authorizes an unharmed private party and its attorney
19 APP130 to prosecute violations of state law in place of the Attorney General.” 9 But the State
remains a real party in interest in a declined case and retains the authority to exercise
significant control over the proceeding. Additionally, this Court has recognized the
right of the Attorney General to secure outside assistance in the prosecution of State
In Terrell v. Sparks, 135 S.W. 519, 521 (1911), the Court acknowledged that
the Attorney General may appoint an outside attorney to assist with the discharge of
his duties. Terrell addressed a statute which appropriated money that the Attorney
General could use at his discretion to pursue various State claims. See id. at 519-20.
The Attorney General used a portion of that money to contract with a private
attorney, who worked on various public lawsuits for the State. See id. As is often the
case with State claims, the Court acknowledged that “the Legislature regarded it as
impossible for [the Attorney General] to perform this vast amount of professional
work…” Id. at 522. Thus, the Court found no constitutional issue with the statute
or contract between the Attorney General and private attorney, noting that “[t]he
Governor and the Attorney General were authorized to determine the necessity of
employing special counsel to assist the Attorney General…” Id.
Maud says the same thing: that when the provision of outside assistance is
9 Petition at 25.
20 APP131 made available, “it is the constitutional right of the Attorney-General and the county
and district attorneys to decline them or not at their discretion, and, if availed of, the
services are to be rendered in subordination to their authority.” 200 S.W. at 376.
The TMFPA provides numerous mechanisms by which the State remains in
ultimate control of the litigation. For example, the State is entitled to ongoing
information about declined cases and can choose to intervene later. 10 The State also
remains the “real party in interest” and may submit Statements of Interest and
appear at hearings to advocate for its rights.
Likewise, the State can pursue its claims through an alternate remedy in a
separate proceeding; 11 can stay the relator’s ability to conduct discovery that would
interfere with the State’s investigations or prosecutions; 12 and retains the ultimate
authority to consent to—or veto—a proposed settlement. 13 The State may also
intervene in a case even if it initially declines, allowing the State to prosecute,
dismiss, or settle the action over the objections of the relator. 14 Because the State
retains the ultimate authority to guide the prosecution, the relator serve’s at the
10 Tex. Hum. Res. Code § 36.104(b-1). 11 Tex. Hum. Res. Code § 36.109. 12 Tex. Hum. Res. Code § 36.108. 13 Tex. Hum. Res. Code § 36.102(e). 14 Tex. Hum. Res. Code §§ 36.104(b-1); 36.107(b), (c).
21 APP132 State’s discretion and may only proceed with a TMFPA action without the State’s
participation when the State permits the relator to do so.
For the foregoing reasons, the State respectfully requests that the Court
deny Novartis’s Petition.
Dated: July 17, 2024
KEN PAXTON Attorney General of Texas
BRENT WEBSTER First Assistant Attorney General
JAMES LLOYD Deputy Attorney General for Civil Litigation
ELIZABETH BROWN FORE Chief, Healthcare Program Enforcement Division
/s/ Jordan Underhill JORDAN UNDERHILL Texas State Bar No. 24102586 JONATHAN D. BONILLA Texas State Bar No. 24073939 LYNNE KURTZ-CITRIN Texas State Bar No. 24081425
22 APP133 Assistant Attorneys General Office of the Attorney General Healthcare Program Enforcement P.O. Box 12548 Austin, Texas 78711-2548 (512) 936-1410 (Office) (512) 936-0674 (Fax) jordan.underhill@oag.texas.gov lynne.kurtz-citrin@oag.texas.gov jonathan.bonilla@oag.texas.gov
ATTORNEYS FOR THE STATE OF TEXAS
23 APP134 CERTIFICATE OF COMPLIANCE
Based on a word count run in Microsoft Word, this Response contains 4,473 words,
excluding the portions exempt from the word count under Texas Rule of Appellate
Procedure 9.4(i)(1).
/s/ Jordan Underhill
Jordan Underhill
24 APP135 CERTIFICATE OF SERVICE
I hereby certify on July 17, 2024 a true and correct copy of the foregoing
document was served to the following counsel of record via electronic service:
Samuel F. Baxter Danny S. Ashby Jennifer L. Truelove O’MELVENY & MYERS LLP MCKOOL SMITH P.C. 2501 North Harwood Street, Suite 1700 104 East Houston, Suite 300 Dallas, Texas 75201-1663 Marshall, Texas 75670 dashby@omm.com sbaxter@mckoolsmith.com mwhisler@omm.com jtruelove@mckoolsmith.com Ross Galin Eric B. Halper O’MELVENY & MYERS LLP Radu A. Lelutiu 1301 Avenue of the Americas, Suite 1700 MCKOOL SMITH P.C. New York, NY 10019 One Manhattan West rgalin@omm.com 395 9th Avenue, 50th Floor New York, New York 10001 Anton Melitsky ehalper@mckoolsmith.com O’MELVENY & MYERS LLP rlelutiu@mckoolsmith.com 1301 Avenue of the Americas, Suite 1700 New York, NY 10019 W. Mark Lanier mgaragiola@omm.com Alex J. Brown Zeke DeRose III Deron R. Dacus Jonathan Wilkerson THE DACUS FIRM, P.C. THE LANIER FIRM 821 ESE Loop 323, Suite 430 10940 W. Sam Houston Pkwy N, Suite 100 Tyler, Texas 75701 Houston, Texas 77064 ddacus@dacusfirm.com WML@LanierLawFirm.com Alex.Brown@LanierLawFirm.com ATTORNEY FOR RELATOR Zeke.DeRose@LanierLawFirm.com NOVARTIS PHARMACEUTICALS Jonathan.Wilkerson@LanierLawFirm.com CORPORATION
ATTORNEYS FOR REAL PARTY IN INTEREST HEALTH SELECTION GROUP, LLC
25 APP136 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below:
Janice Garrett on behalf of Jonathan Bonilla Bar No. 24073939 Janice.Garrett@oag.texas.gov Envelope ID: 89897964 Filing Code Description: Response to Petition Filing Description: States Response to Relators Petition for Writ of Mandamus Status as of 7/18/2024 8:01 AM CST
Jonathan Wilkerson 24050162 jonathan.wilkerson@lanierlawfirm.com 7/17/2024 7:26:33 PM SENT
Samuel Baxter 1938000 sbaxter@mckoolsmith.com 7/17/2024 7:26:33 PM SENT
Zeke DeRose 24057421 zeke.derose@lanierlawfirm.com 7/17/2024 7:26:33 PM SENT
Jennifer Truelove 24012906 jtruelove@mckoolsmith.com 7/17/2024 7:26:33 PM SENT
Alex Brown 24026964 alex.brown@lanierlawfirm.com 7/17/2024 7:26:33 PM SENT
Eric B.Halper ehalper@mckoolsmith.com 7/17/2024 7:26:33 PM SENT
Radu A.Lelutiu rlelutiu@mckoolsmith.com 7/17/2024 7:26:33 PM SENT
W. MarkLanier WML@LanierLawFirm.com 7/17/2024 7:26:33 PM SENT
Lynne Kurtz-Citrin 24081425 lynne.kurtz-citrin@oag.texas.gov 7/17/2024 7:26:33 PM SENT
Jonathan Bonilla 24073939 Jonathan.Bonilla@oag.texas.gov 7/17/2024 7:26:33 PM SENT
Jordan Underhill 24102586 jordan.underhill@oag.texas.gov 7/17/2024 7:26:33 PM SENT
Mary JoToupin MaryJo.Toupin@oag.texas.gov 7/17/2024 7:26:33 PM SENT
Janice Garrett Janice.Garrett@oag.texas.gov 7/17/2024 7:26:33 PM SENT
Meredith N.Garagiola mgaragiola@omm.com 7/17/2024 7:26:33 PM SENT
Danny S.Ashby dashby@omm.com 7/17/2024 7:26:33 PM SENT
Ross Galin rgalin@omm.com 7/17/2024 7:26:33 PM SENT
APP137 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below:
Janice Garrett on behalf of Jonathan Bonilla Bar No. 24073939 Janice.Garrett@oag.texas.gov Envelope ID: 89897964 Filing Code Description: Response to Petition Filing Description: States Response to Relators Petition for Writ of Mandamus Status as of 7/18/2024 8:01 AM CST
Anton Metlitsky ametlitsky@omm.com 7/17/2024 7:26:33 PM SENT
Deron R.Dacus ddacus@dacusfirm.com 7/17/2024 7:26:33 PM I I SENT
APP138 FILED 24-0239 8/2/2024 4:48 PM tex-90501011 SUPREME COURT OF TEXAS BLAKE A. HAWTHORNE, CLERK
Original Proceeding From The 71st District Court in Harrison County, Texas, Cause No. 23-0276 The Honorable Brad Morin Presiding
REPLY IN SUPPORT OF PETITION FOR WRIT OF MANDAMUS
TEMPORARY STAY REQUESTED ORAL ARGUMENT REQUESTED
DANNY S. ASHBY ANTON METLITSKY Texas Bar No. 01370960 ROSS GALIN O’MELVENY & MYERS LLP O’MELVENY & MYERS LLP 2801 N. Harwood Street, Suite 1600 7 Times Square Dallas, Texas 75201 New York, NY 10036 Telephone: +1 972 360 1900 Telephone: +1 212 326 2000 (Applications for pro hac vice admission pending)
DERON R. DACUS Texas Bar No. 00790553 THE DACUS FIRM, P.C. 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903 705 1117 Counsel for Relator Novartis Pharmaceuticals Corporation
APP139 TABLE OF CONTENTS
PRELIMINARY STATEMENT ..............................................................................1 ARGUMENT ............................................................................................................3 I. Mandamus Relief Is Appropriate. ........................................................3 II. The Trial Court Lacks Subject Matter Jurisdiction. .............................5 III. HSG’s Qui Tam Action is Void. ..........................................................7 PRAYER .................................................................................................................10 CERTIFICATE OF COMPLIANCE ......................................................................12 CERTIFICATION ..................................................................................................12 CERTIFICATE OF SERVICE ...............................................................................13
i APP140 TABLE OF AUTHORITIES
Cases Agey v. Am. Lib. Pipe Line Co., 172 S.W.2d 972 (Tex. 1943) ..................................................................................9 Am. Lib. Pipe Line Co. v. Agey, 167 S.W.2d 580 (Tex. App.—Austin 1942) ........................................................10 Brown v. De La Cruz, 156 S.W.3d 560 (Tex. 2004) ..............................................................................2, 7 Busbee v. Cnty. Of Medina, 681 S.W.3d 391 (Tex. 2023) ..................................................................................7 Camp v. Gulf Prod. Co., 122 Tex. 383 (1933) ...............................................................................................9 Fin. Comm’n Tex. v. Norwood, 418 S.W.3d 566 (Tex. 2013) ..................................................................................7 Food & Drug Admin. v. All. for Hippocratic Med., 602 U.S. 367 (2024) ...............................................................................................6 Hill Cnty. v. Sheppard, 178 S.W.2d 261 (Tex. 1944) ..................................................................................9 Hooks v. Fourth Ct. of Appeals, 808 S.W.2d 56 (Tex. 1991) ....................................................................................4 In re Gibson, 533 S.W.3d 916 (Tex. App.—Texarkana 2017, no pet.) .......................................4 In re Houston Specialty Ins. Co., 569 S.W.3d 138 (Tex. 2019) ..................................................................................4 In re J.B. Hunt Transp., Inc., 492 S.W.3d 28 (Tex. 2016) ................................................................................3, 4 In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004) ......................................................................... 1, 3, 4 In re Van Waters & Rogers, Inc., 145 S.W.3d 203 (Tex. 2004) ..................................................................................4 Maud v. Terrell, 200 S.W. 375 (Tex. 1918) ............................................................................. 2, 6, 8 Southwestern Bell Tel. Co. v. Mktg. on Hold Inc., 308 S.W.3d 909 (Tex. 2010) ..................................................................................5
ii APP141 TABLE OF AUTHORITIES (continued) Page(s)
Sprint Comm’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269 (2008) ...............................................................................................5 Staples v. State, 245 S.W. 639 (Tex. 1922) ......................................................................................8 Terrell v. Sparks, 135 S.W. 519 (1911) ............................................................................................10 TransUnion LLC v. Ramirez, 594 U.S. 413 (2021) ...........................................................................................5, 6 U.S. ex rel. Polansky v. Exec. Health Res. Inc., 599 U.S. 419 (2023) ...............................................................................................6 Vermont Agency of Nat’l Res. V. United States ex. rel. Stevens, 529 U.S. 765 (2000) ...........................................................................................1, 5 Statutes Tex. Hum. Res. Code § 36.101 ..................................................................................8
iii APP142 PRELIMINARY STATEMENT
HSG and the State fail to rebut what Novartis established in its Petition: HSG
lacks both constitutional standing and a valid cause of action, thus warranting
mandamus relief.
Novartis’s Petition easily satisfies the balancing test enumerated in In re
Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004) (orig. proceeding). In
suggesting otherwise, the Real Parties obfuscate the relevant standard, relying either
on cases that applied the mandamus standard abrogated by Prudential or on cases
with dramatically different facts.
The Real Parties’ standing arguments fail too. Having argued below that the
TMFPA grants HSG statutory standing even without an injury, the Real Parties now
change course, relying on a strained reading of standing-by-assignment under
federal law, as discussed in Vermont Agency of Nat’l Res. v. United States ex. rel.
Stevens, 529 U.S. 765, 773 (2000). But as Novartis explained (Pet. 18–21), this
argument fails twice over. First, the TMFPA—unlike the FCA, which creates a
statutory tort for recovering damages—is an enforcement statute for civil penalties
only, so it cannot create “a partial assignment of the [State’s] damages claim.”
Stevens, 529 U.S. at 773. And the Real Parties cannot hide from that distinction by
arguing that the U.S. Supreme Court misspoke when it said “damages.” Second, the
Stevens Court’s reliance on the historical practice of qui tam actions under English
1 APP143 and federal law does not extend to Texas, and the Real Parties do not show otherwise.
And while the Real Parties point to representative and statutory standing in support
of their position, these arguments quickly collapse because the
representative-standing doctrine has no application here, and statutory standing
cannot replace constitutional standing.
The Real Parties’ defense of the constitutionality of the TMFPA’s qui tam
provisions also fails. While HSG, though not Texas, claims that Brown v. De La
Cruz, 156 S.W.3d 560 (Tex. 2004) settled the question, that is simply not true.
Brown did not even involve a qui tam statute, and it says nothing about the
Legislature’s authority to authorize a private citizen to file a lawsuit on the State’s
behalf, as the TMFPA purports to do. By contrast, this Court for over a century has
recognized that the Texas Constitution commits the authority and duty to initiate and
prosecute claims that injure the State exclusively to the State’s attorneys. See Maud
v. Terrell, 200 S.W. 375, 376 (Tex. 1918) (“T]he powers thus conferred by the
Constitution upon these officials are exclusive. The Legislature cannot devolve
them upon others.”).
The Court should grant the Petition and order the district court to dismiss
HSG’s legally invalid “civil law enforcement action.” (MR002).
2 APP144 ARGUMENT I. Mandamus Relief Is Appropriate.
In claiming that mandamus relief is unwarranted because Novartis has an
adequate remedy on appeal, the Real Parties ignore the applicable standard: an
appellate remedy may preclude mandamus relief “when any benefits to mandamus
review are outweighed by the detriments.” In re Prudential, 148 S.W.3d at 136.
The “determination is not an abstract or formulaic one; it is practical and prudential,”
requiring a “careful balance of jurisprudential considerations,” which “implicate
both public and private interests.” Id. In particular, it retains “flexibility” to “spare[]
private parties and the public” the “time and money utterly wasted enduring eventual
reversal of improperly conducted proceedings.” In re J.B. Hunt Transp., Inc., 492
S.W.3d 287, 299 (Tex. 2016) (orig. proceeding).
That is precisely what will happen here without mandamus relief. Permitting
a case to proceed absent subject-matter jurisdiction or a legally valid cause of action
would waste significant public and private resources on litigation destined for
dismissal and would violate the separation of powers by intruding on executive
jurisdiction. Prudential, 148 S.W.3d at 136 (mandamus appropriate to avoid
“grinding through proceedings that were certain to be ‘little more than a fiction’”)
(citation omitted).
3 APP145 While the Real Parties argue that expense and delay are insufficient for
mandamus relief, they rely on cases applying the “inflexible understanding of an
adequate remedy on appeal” that the Court “abrogate[d]” in Prudential. J.B. Hunt,
492 S.W.3d at 299; see Hooks v. Fourth Ct. of Appeals, 808 S.W.2d 56, 59 (Tex.
1991) (State 5); In re Gibson, 533 S.W.3d 916, 920 (Tex. App.—Texarkana 2017,
no pet.) (HSG 4) (relying on pre-Prudential authority). This Court’s recent
clarifications that “mandamus relief is appropriate” to prevent wasted resources by
“private parties and the public” supersede older authority. In re Houston Specialty
Ins. Co., 569 S.W.3d 138, 142 (Tex. 2019).
The Real Parties also cite cases holding that mandamus relief is appropriate
in other situations—e.g., to prevent a litigant from losing substantial rights or a court
from interfering with another court’s jurisdiction (HSG 4; State 5–6)—but these are
not the only scenarios in which mandamus relief is appropriate, particularly in light
of Prudential’s “practical” balancing test. 148 S.W.3d at 136.1 To deny mandamus
relief would result in a “gross and unnecessary waste of economic and judicial
resources” if this case is tried to judgment only to be reversed on appeal for lack of
subject-matter jurisdiction or a valid cause of action. J.B. Hunt, 492 S.W.3d at 298.
1 HSG adds the word “only” to In re Van Waters & Rogers, Inc., 145 S.W.3d 203 (Tex. 2004) (4), but Rogers did not hold that loss of substantial rights was the “only” scenario warranting mandamus relief.
4 APP146 II. The Trial Court Lacks Subject Matter Jurisdiction. As Novartis explained (Pet. 14–15), HSG lacks constitutional standing
because it did not personally suffer any injury. The Real Parties’ arguments to the
contrary are unavailing.
They argue that HSG has standing as the State’s assignee, citing Stevens, 529
U.S. at 773, but this theory collapses under Texas law for two reasons. Pet. 19. First,
contrary to the Real Parties’ suggestion, the U.S. Supreme Court did not misspeak
when it said that “[t]he FCA can reasonably be regarded as effecting a partial
assignment of the Government’s damages claim.” Stevens, 529 U.S. at 773
(emphasis added). While the State insists (at 9) that the Stevens Court “focuse[d]”
on the assignment of the government’s injury-in-fact, this ignores the Court’s
unambiguous description of the relator as “partial assignee” of the government’s
“damages claim.” Stevens, 529 U.S. at 773 n.4. And this interpretation makes sense:
an assignor does not assign its injury; it assigns its claim for relief. 2 Id. at 773.
TransUnion LLC v. Ramirez confirms as much. 594 U.S. 413 (2021). There,
the Court explained that standing to sue for violations of a federal statute is limited
2 The State’s reliance (11–13) on cases involving assignment of claims by private parties for compensatory damages under common law theories—not statutory penalties under qui tam statutes—is therefore misplaced. See Sprint Comm’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269 (2008) (assignees had “legal title” by written agreement to claims for damages under common law theories); Southwestern Bell Tel. Co. v. Mktg. on Hold Inc., 308 S.W.3d 909 (Tex. 2010) (assignee had standing to pursue claims for customer “overcharges” by telephone company).
5 APP147 to those who establish a “concrete harm.” Id. at 428 (“[If] . . . Article III did not
require plaintiffs to demonstrate a ‘concrete harm,’ Congress could authorize
virtually any citizen to bring a statutory damages suit against virtually any defendant
who violated virtually any federal law. Such an expansive understanding of Article
III would flout constitutional text, history, and precedent.”) (citations omitted).
Construing Stevens as assigning “injury-in-fact”—as the Real Parties suggest—
would convert the “public interest that private entities comply with the law” into “an
individual right” that “permits all citizens . . . to sue.” Id. at 428–29 (quotations and
citations omitted). And even if assignment in Stevens were not limited to damages
claims, the TMFPA cannot create an assignable claim for the enforcement of civil
penalties because the Texas Constitution grants the State’s own attorneys the
“exclusive” power to sue for the State—a power the Legislature “cannot devolve . . .
upon others.” Maud, 200 S.W. at 376; Pet. 19, 21–24.3
Second, the Real Parties fail to explain how Stevens’s second rationale for
Article III jurisdiction—the history of federal qui tam actions—finds support in
Texas. Pet. 20–21. HSG suggests (at 7) that the Texas Constitution’s Open Courts
provision is “functionally equivalent” to the federal “Cases” and “Controversies”
requirement, but it cites no authority for this claim other than Food & Drug Admin.
3 That several members of the U.S. Supreme Court recently questioned, sua sponte, the constitutionality of the FCA’s qui tam provision further undermines the Real Parties’ reliance on Stevens. See U.S. ex rel. Polansky v. Exec. Health Res. Inc., 599 U.S. 419, 442–52 (2023).
6 APP148 v. All. for Hippocratic Med., 602 U.S. 367, 380 (2024), which simply recites Article
III’s standing requirements. As Novartis explained (Pet. 20–21), Stevens’s reliance
on history does not extend to the TMFPA.
The Real Parties’ remaining arguments fare no better. HSG claims (at 8–10)
that the TMFPA itself confers standing, but this conflates constitutional standing
and statutory standing; the latter goes only “to the merits of the plaintiff’s claim,
not the plaintiff’s standing to sue in the jurisdictional sense.” Busbee v. Cnty. Of
Medina, 681 S.W.3d 391, 395 (Tex. 2023); Pet. 15–16. The same defect
forecloses the State’s vague plea (at 6) to taxpayer standing; taxpayers must still
satisfy constitutional standing because “courts’ constitutional jurisdiction cannot
be enlarged by statute.” See, e.g., Fin. Comm’n Tex. v. Norwood, 418 S.W.3d 566,
582 n.83 (Tex. 2013). Finally, HSG’s suggestion that it has representative
standing fails because the State has legal authority and capacity to sue, as Novartis
explained. Pet. 17–18.
III. HSG’s Qui Tam Action is Void.
The TMFPA qui tam provisions violate Article IV, Section 22 and Article V,
Section 21 of the Texas Constitution, rendering HSG’s cause of action void. Pet.
21–26. HSG’s and the State’s arguments in response fall flat.
HSG first claims (at 10) that Brown v. De La Cruz, 156 S.W.3d 560 (Tex.
2004) resolved this issue, but Brown did not address a qui tam statute—or the
7 APP149 propriety of any statute under the Texas Constitution. Pet. 26–27. Brown concerned
the Legislature’s creation of a private cause of action to recover statutory penalties
for an individual injury; it says nothing about the constitutionality of a statute
purporting to authorize a private party to bring a civil law enforcement action for the
State to remedy the State’s alleged injury.4
The Real Parties then try to salvage the TMFPA’s qui tam provisions by
contorting this Court’s jurisprudence. They claim that because this Court found that
the statutes at issue in Maud, 200 S.W. 375, and Staples v. State, 245 S.W. 639 (Tex.
1922), do not conflict with the Texas Constitution, the Court should do the same
here. HSG 11–12; State 16–17. But this ignores the differences in the statutes at
issue. The TMFPA qui tam provisions unambiguously permit “a person” to “bring
a civil action . . . for the state” for violations that injure only the state. Tex. Hum.
Res. Code § 36.101. By contrast, the statutes in Maud and Staples lack the same
“unambiguous language” granting individuals the authority to sue for the State,
permitting constructions that did not conflict with Texas’ Constitution. Maud, 200
S.W. at 377 (holding statute granting various authority to tax collector only
authorized tax collector to “cause the suit to be filed by the [State’s attorney],” not
file it himself); Staples, 245 S.W. at 640 (statute authorizing quo warranto
4 HSG’s observation (at 11) that Texas and federal courts have cited Brown for the proposition that the Legislature may create a private cause of action for violations of Texas statutes misses the point: the Legislature cannot confer on private parties the authority to sue for the State. See, e.g., Maud, 200 S.W. at 376.
8 APP150 proceedings to enforce campaign-finance law permitted suits only “through the
proper officer of the state”). The Real Parties fail to explain how the Court could
construe the TMFPA qui tam provisions’ unambiguous language as intending
anything other than allowing a person to sue on the State’s behalf.
The State’s attempt to distinguish Novartis’s other authority fails. The State
observes (at 18) that, unlike the statute in Hill Cnty. v. Sheppard, the TMFPA does
not create a “statutory office,” but this misses the point: the Sheppard statute was
“invalid” because it purported to shift to a third party an authority the Texas
Constitution confers exclusively on the State’s attorneys—precisely what the
TMFPA does. 178 S.W.2d 261, 262 (Tex. 1944). The State then notes (at 19) that
the statute in Agey lacked a qui tam provision and did not explicitly authorize a
private right of action. But this omits that Agey involved a civil-penalties statute that
authorized “suit[s] to be brought in the name of” private parties on the state’s behalf,
and the Court held that plaintiff could not lawfully “maintain his cause of action”
under the Texas Constitution. Agey v. Am. Lib. Pipe Line Co., 172 S.W.2d 972, 974
(Tex. 1943). The same is true here.
Finally, the State’s authority is easily distinguished. First, it cites Camp v.
Gulf Prod. Co., 122 Tex. 383 (1933) (at 17), wrongly claiming that this Court upheld
a statute authorizing an individual to sue on the State’s behalf. Camp involved an
action akin to a mandamus proceeding that courts have understood to constitute
9 APP151 “suits against the State.” Am. Lib. Pipe Line Co. v. Agey, 167 S.W.2d 580, 583–84
(Tex. App.—Austin 1942). Camp involved “an applicant [seeking] to purchase
alleged unsurveyed school land . . . to compel the county supervisor to make an
official survey of the land.” Id. at 583. Camp thus provides no support for the State’s
contention that the Legislature may authorize private parties to institute or maintain
a suit for the State.
Likewise, the State’s reliance on Terrell v. Sparks, 135 S.W. 519 (1911) is
misplaced. Terrell involved a statute authorizing the Attorney General to employ
outside counsel to work “under the direction and control of the Attorney General.”
Id. at 520–22. But that is nothing like the TMFPA qui tam provisions, which plainly
grants any person—from Texas or elsewhere—unfettered discretion and authority to
institute a civil law enforcement action for and in the name of the State.
PRAYER Novartis respectfully requests that the Court issue a writ of mandamus
10 APP152 Dated: August 2, 2024 Respectfully submitted, O’MELVENY & MYERS LLP /s/ Danny S. Ashby Danny S. Ashby Texas Bar No. 01370960 dashby@omm.com 2801 North Harwood Street, Suite 1600 Dallas, Texas 75201 Telephone: +1 972 360 1900 Facsimile: +1 972 360 1901 Anton Metlitsky ametlitsky@omm.com 7 Time Square New York, NY 10036 Telephone: +1 212 326 2000 (Application for pro hac vice admission pending)
Ross Galin rgalin@omm.com 7 Times Square New York, NY 10036 Telephone: +1 212 326 2000 (Application for pro hac vice admission pending) THE DACUS FIRM, P.C. Deron R. Dacus Texas Bar No. 00790553 ddacus@dacusfirm.com 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903 705 1117
11 APP153 CERTIFICATE OF COMPLIANCE Based on a word count run in Microsoft Word for Microsoft 365, this Reply
in support of a Petition for Writ of Mandamus contains 2,399, excluding the portions
of the brief exempt from the word count under Texas Rule of Appellate Procedure
9.4(i)(1).
CERTIFICATION I certify that I have reviewed this Reply and concluded that every factual
statement in this Reply is supported by competent evidence included in the Appendix
or Mandamus Record.
12 APP154 CERTIFICATE OF SERVICE This will certify that a true and correct copy of the foregoing Reply in Further
Support of Petition for Writ of Mandamus has been forwarded this 2nd Day of
August, 2024, to the following attorneys of record via electronic service:
Samuel F. Baxter Jordan Underhill Jennifer L. Truelove Jonathan D. Bonilla MCKOOL SMITH P.C. Lynne Kurtz-Citrin 104 East Houston, Suite 300 Office of the Attorney General Marshall, Texas 75670 Civil Medicaid Fraud Division sbaxter@mckoolsmith.com P.O. Box 12548, Capitol Station jtruelove@mckoolsmith.com Austin, Texas 78711 Jordan.Underhill@oag.texas.gov Eric B. Halper Jonathan.Bonilla@oag.texas.gov Radu A. Lelutiu Lynne.Kurtz-Citrin@oag.texas.gov MCKOOL SMITH P.C. One Manhattan West Counsel for the State of Texas 395 9th Avenue, 50th Floor New York, New York 10001 ehalper@mckoolsmith.com rlelutiu@mckoolsmith.com W. Mark Lanier Alex J. Brown Zeke DeRose III Jonathan Wilkerson THE LANIER FIRM 10940 W. Sam Houston Pkwy N., Suite 100 Houston, Texas 77064 WML@LanierLawFirm.com Alex.Brown@LanierLawFirm.com Zeke.DeRose@LanierLawFirm.com Jonathan.Wilkerson@LanierLawFirm.com Counsel for Health Selection Group, LLC
13 APP155 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below:
Court Services on behalf of Danny Ashby Bar No. 1370960 ommsvc2@omm.com Envelope ID: 90501011 Filing Code Description: Reply to Petition Filing Description: REPLY IN SUPPORT OF PETITION FOR WRIT OF MANDAMUS Status as of 8/2/2024 4:54 PM CST
Meredith N.Garagiola mgaragiola@omm.com 8/2/2024 4:48:26 PM SENT
Deron R.Dacus ddacus@dacusfirm.com 8/2/2024 4:48:26 PM SENT
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APP156 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below:
Court Services on behalf of Danny Ashby Bar No. 1370960 ommsvc2@omm.com Envelope ID: 90501011 Filing Code Description: Reply to Petition Filing Description: REPLY IN SUPPORT OF PETITION FOR WRIT OF MANDAMUS Status as of 8/2/2024 4:54 PM CST
Lynne Kurtz-Citrin 24081425 lynne.kurtz-citrin@oag.texas.gov 8/2/2024 4:48:26 PM SENT
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APP157 FILED 24-0239 9/30/2024 2:32 PM tex-92607044 SUPREME COURT OF TEXAS BLAKE A. HAWTHORNE, CLERK
_______________________________________ SIXTH DISTRICT COURT OF APPEALS CASE NO. 06-24-00005-CV, FROM THE 71ST DISTRICT COURT IN HARRISON COUNTY, TEXAS CAUSE NO. 23-0276 • THE HONORABLE BRAD MORIN PRESIDING
RELATOR NOVARTIS PHARMACEUTICALS CORPORATION’S BRIEF ON THE MERITS
DANNY S. ASHBY ANTON METLITSKY (Texas Bar No. 01370960) ROSS GALIN O’MELVENY & MYERS LLP O’MELVENY & MYERS LLP 2801 N. Harwood Street, Suite 1600 7 Times Square Dallas, Texas 75201 New York, NY 10036 Telephone: +1 972.360.1900 Telephone: +1 212.326.2000 (Admitted Pro Hac Vice) DERON R. DACUS (Texas Bar No. 00790553) THE DACUS FIRM, P.C. 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903.705.1117 Counsel for Relator Novartis Pharmaceuticals Corporation f @ COUNSEL PRESS · (213) 680-2300 PRINTED ON RECYCLED PAPER
APP158 IDENTITY OF PARTIES AND COUNSEL
Relator Danny S. Ashby Defendant Novartis O’MELVENY & MYERS LLP Pharmaceuticals 2801 N. Harwood Street, Suite 1600 Corporation Dallas, Texas 75201
Anton Metlitsky Ross Galin O’MELVENY & MYERS LLP 1301 Avenue of the Americas, 17th Floor New York, NY 10019 (Admitted pro hac vice)
Meredith Garagiola O’MELVENY & MYERS, LLP 1625 Eye Street, NW Washington, DC 20006
Deron R. Dacus THE DACUS FIRM, P.C. 821 ESE Loop 323, Suite 430 Tyler, Texas 75701
Megan Whisler (formerly with O’Melveny & Myers LLP)
Real Party in Interest Samuel F. Baxter Plaintiff Health Selection Jennifer L. Truelove Group, LLC MCKOOL SMITH P.C. 104 East Houston, Suite 300 Marshall, Texas 75670
Eric B. Halper Radu A. Lelutiu MCKOOL SMITH P.C. One Manhattan West
i APP159 395 Ninth Avenue, 50th Floor New York, New York 10001
W. Mark Lanier Alex J. Brown Zeke DeRose III Jonathan Wilkerson THE LANIER FIRM 10940 W. Sam Houston Pkwy N, Suite 100 Houston, Texas 77064
Chris Gadoury Ryan Ellis THE LANIER FIRM 10940 W. Sam. Houston Pkwy N, Suite 100 Houston, Texas 77064
Kenneth W. Starr (formerly with The Lanier Firm)
Real Party in Interest Ken Paxton State of Texas Brent Webster James Lloyd Elizabeth Brown Fore Jordan Underhill Jonathan D. Bonilla Lynn Kurtz-Citrin OFFICE OF THE TEXAS ATTORNEY GENERAL P.O. Box 12548, Capitol Station Austin, Texas 78711
Cynthia Lu (formerly with the Office of the Texas Attorney General)
Respondent
ii APP160 The Hon. Brad Morin, 71st District Court, Harrison County
iii APP161 TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL............................................ vi TABLE OF CONTENTS ....................................................................... viv TABLE OF AUTHORITIES .................................................................... vi STATEMENT OF THE CASE ............................................................... xii RECORD REFERENCES ...................................................................... xii STATEMENT OF JURISDICTION ...................................................... xiii ISSUES PRESENTED .......................................................................... xiv INTRODUCTION ..................................................................................... 1 STATEMENT OF FACTS ........................................................................ 3 A. Statutory Background ............................................................ 3 B. Facts and Proceedings Below................................................. 7 SUMMARY OF ARGUMENT ................................................................ 12 ARGUMENT .......................................................................................... 14 I. HSG Lacks Standing To Bring This Qui Tam Action. ................. 15 A. The Constitution requires that a plaintiff demonstrate injury. ................................................................................... 15 B. HSG has not suffered any injury. ........................................ 16 C. HSG cannot sue as an assignee or representative of the State. .................................................................................... 18 1. There is no damages claim to assign. ......................... 19 2. Representative standing has no application here. ..... 23 II. The TMFPA’s Qui Tam Provisions Offend The Separation Of Powers. .......................................................................................... 25 A. The Texas Constitution exclusively assigns to State attorneys the power to bring and maintain suits for the State. .................................................................................... 27 B. The TMFPA impermissibly authorizes private individuals to press suits that State attorneys decline to control. .............................................................................. 32 iv
APP162 TABLE OF CONTENTS (continued) Page
1. The TMFPA allows for litigation that State attorneys affirmatively choose not to bring................ 33 2. There is no possible saving construction. ................... 38 3. HSG and the State’s contrary arguments lack merit. ........................................................................... 39 C. History cannot salvage the TMFPA. ................................... 44 III. The Court Should Grant Mandamus Relief. ................................ 47 CONCLUSION AND PRAYER .............................................................. 49 CERTIFICATE OF COMPLIANCE ....................................................... 51 CERTIFICATE OF SERVICE................................................................ 52
APP163 TABLE OF AUTHORITIES
Cases
Agey v. American Liberty Pipe Line Co., 172 S.W.2d 972 (Tex. 1943).......................................................... passim
Allen v. Fisher, 9 S.W.2d 731 (Tex. 1928)................................................................ 13, 25
American Liberty Pipeline Co v. Agey, 167 S.W.2d 580 (Tex. App. 1942) ............................................. 29, 30, 46
Armadillo Bail Bonds v. State, 802 S.W.2d 237 (Tex. Crim. App. 1990) ......................................... 25, 26
Brown v. De La Cruz, 156 S.W.3d 560 (Tex. 2004)............................................................ 40, 41
Bush v. Republic of Texas, 1 Tex. 455 (1846) .................................................................................. 45
Camp v. Gulf Prod. Co., 61 S.W.2d 773 (Tex. 1933).................................................................... 30
Charles Scribner’s Sons v. Marrs, 262 S.W. 722 (Tex. 1924)...................................................................... 33
Data Foundry, Inc. v. City of Austin, 620 S.W.3d 692 (Tex. 2021)............................................................ 15, 16
El Paso Elec. Co. v. Tex. Dep’t of Ins., 937 S.W.2d 432 (Tex. 1996)...................................................... 26, 31, 34
Farmers Tex. Cnty. Mut. Ins. Co. v. Beasley, 598 S.W.3d 237 (Tex. 2020).................................................................. 15
Fin. Comm’n of Tex. v. Norwood, 418 S.W.3d 566 (Tex. 2013).................................................................. 17
Gabelli v. SEC, 568 U.S. 442 (2013) .............................................................................. 21
vi APP164 Gibbs v. State, 46 S.W. 645 (Tex. Crim. App. 1898) ..................................................... 46
Heckman v. Williamson Cnty., 369 S.W.3d 137 (Tex. 2012)................................................ 15, 16, 17, 18
Hill County v. Sheppard, 178 S.W.2d 261 (Tex. 1944)...................................................... 31, 32, 34
Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939 (1997) .............................................................................. 35
In re Allcat Claims Serv., L.P., 356 S.W.3d 455 (Tex. 2011).................................................................. 17
In re Essex Ins. Co., 450 S.W.3d 524 (Tex. 2014).................................................................. 48
In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d 261 (Tex. 2021).................................................................. 48
In re J.B. Hunt Transport, Inc., 492 S.W.3d 287 (Tex. 2016).................................................................. 48
In re Lazy W Dist. No. 1, 493 S.W.3d 538 (Tex. 2016).................................................................. 17
In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004)............................................................ 47, 48
In re Shire PLC, 633 S.W.3d 1 (Tex. App. 2021) ............................................................. 48
In re Xerox Corp., 555 S.W.3d 518 (Tex. 2018).......................................................... passim
Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) .............................................................................. 16
Malouf v. State ex rel. Ellis, 694 S.W.3d 712 (Tex. 2024).............................................................. 4, 34
vii APP165 Marsh v. Chambers, 463 U.S. 783 (1983) .............................................................................. 45
Maud v. Terrell, 200 S.W. 375 (Tex. 1918).......................................................... 27, 28, 34
Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765 (Tex. 2007).................................................................. 24
Morrison v. Olson, 487 U.S. 654 (1988) .............................................................................. 35
Mosaic Baybrook One, L.P. v. Simien, 674 S.W.3d 234 (Tex. 2023).................................................................. 16
NLRB v. Noel Canning, 573 U.S. 513 (2014) .............................................................................. 47
Perez v. Turner, 653 S.W.3d 191 (Tex. 2022).................................................................. 23
PPG Indus., Inc. v. JMB/Houston Cntrs. Partners Ltd. P’ship, 146 S.W.3d 79 (Tex. 2004).................................................................... 36
Quick v. City of Austin, 7 S.W.3d 109 (Tex. 1998)...................................................................... 39
Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749 (5th Cir. 2001) ................................................................ 45
Saldano v. State, 70 S.W.3d 873 (Tex. Crim. App. 2002) ................................................. 47
Southern Pac Co. v. Porter, 331 S.W.2d 42 (Tex. 1960).................................................................... 46
Sprint Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269 (2008) .............................................................................. 22
Staples v. State, 245 S.W. 639 (Tex. 1922).............................................................. passim
viii APP166 State ex rel. Durden v. Shahan, 658 S.W.3d 300 (Tex. 2022).................................................................. 26
State v. Moore, 57 Tex. 307 (1882) ................................................................................ 46
Tenet Hosps. Ltd. v. Rivera, 445 S.W.3d 698 (Tex. 2014).................................................................. 24
Terrell v. Sparks, 135 S.W. 519 (Tex. 1911)...................................................................... 31
Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993).................................................................. 17
Texas Boll Weevil Eradication Found., Inc. v. Lewellen, 952 S.W.2d 454 (Tex. 1997)............................................................ 35, 37
TransUnion LLC v. Ramirez, 594 U.S. 413 (2021) ........................................................................ 21, 22
United States ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., 4 F.4th 255 (5th Cir. 2021) ............................................................... 9, 10
United States ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419 (2023) ........................................................................ 45, 47
United States ex. rel. Carroll v. Planned Parenthood Gulf Coast, Inc., 21 F. Supp. 3d 825 (S.D. Tex. 2014)....................................................... 6
Valley Forge Christian Coll. v. Americans United for Separation of Church & State, Inc., 454 U.S. 464 (1982) .............................................................................. 18
Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000) ...................................................................... passim
Wal-Mart Stores, Inc. v. Forte, 497 S.W.3d 460 (Tex. 2016).................................................................. 21
Walz v. Tax Comm’n of City of N.Y., 397 U.S. 664 (1970) .............................................................................. 47
ix APP167 Constitutional Provisions
Tex. Const. art. I, § 13 ............................................................................. 16
Tex. Const. art. II, § 1 ....................................................................... 16, 25
31 U.S.C. § 3729(a) .................................................................................... 7
Tex. Estates Code § 351.101 ................................................................... 24
Tex. Gov’t Code § 402.021 ....................................................................... 26
Tex. Hum. Res. Code § 36.051(a) .............................................................. 4
Tex. Hum. Res. Code § 36.052................................................................... 4
Tex. Hum. Res. Code § 36.101(a) .................................................... x, 4, 38
Tex. Hum. Res. Code § 36.101(b) .............................................................. 6
Tex. Hum. Res. Code § 36.102(b) .............................................................. 5
Tex. Hum. Res. Code § 36.102(d) .............................................................. 5
Tex. Hum. Res. Code § 36.104(a)(1) .......................................................... 5
Tex. Hum. Res. Code § 36.104(a)(2) ........................................................ 42
Tex. Hum. Res. Code § 36.104(b) .................................................... passim
Tex. Hum. Res. Code § 36.104(b-1) ..................................................... 6, 43
Tex. Hum. Res. Code § 36.105............................................................. 5, 38
Tex. Hum. Res. Code § 36.107(b) .............................................................. 5
Tex. Hum. Res. Code § 36.107(c)............................................................... 5
Tex. Hum. Res. Code § 36.107(d) .............................................................. 5
Tex. Hum. Res. Code § 36.110(a) .............................................................. 7
x APP168 Tex. Hum. Res. Code § 36.110(a-1) ........................................................... 7
Tex. Hum. Res. Code § 36.104(a)(1) ........................................................ 33
Tex. Hum. Res. Code § 36.104(a)(2) ........................................................ 33
Tex. Hum. Res. Code § 36.104(b-1) ......................................................... 44
Rules
Tex. R. App. P. 52.3(e) .............................................................................. xi
Other Authorities
2007 Tex. Sess. Law Serv. Ch. 29, § 4 (S.B. 362)...................................... 6
2023 Tex. Sess. Law Serv. Ch. 273 (S.B. 745) .......................................... 3
34 Tex. Jur. 445 ....................................................................................... 32
Constitutionality of the Qui Tam Provisions of the False Claims Act, 13 Op. O.L.C. 207 (1989) ........................................................................... 45
J. Randy Beck, The False Claims Act And The English Eradication of Qui Tam Legislation, 78 N.C. L. Rev. 539 (2000)................................ 36
Novartis, About, https://www.novartis.com/about (last accessed September 30, 2024) ............................................................................... 8
Saikrishna Prakash, The Chief Prosecutor, 73 Geo. Wash. L. Rev. 521 (2005) .................................................................................................... 37
U.S. Mot. to Dismiss, United States ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., No. 5:17-cv-123 (E.D. Tex. Dec. 17, 2018), Dkt. 192 ............................................................................................... 37
xi APP169 STATEMENT OF THE CASE
Nature of the Case: Health Selection Group, LLC (HSG) filed this qui tam action against Novartis Pharmaceuticals Corporation pursuant to the Texas Medicaid Fraud Prevention Act (TMFPA), which states that “a person may bring a civil action for a violation of Section 36.002 for the person and for the state” and that “the person bringing the action may proceed without the state’s participation” if the State declines to join the suit. Tex. Hum. Res. Code §§ 36.101(a), .104(b).
Novartis filed a combined Plea to the Jurisdiction and Rule 91a Motion to Dismiss on the ground that (i) the district court lacks subject-matter jurisdiction over the action because HSG did not personally suffer any injury from the conduct alleged in the First Amended Petition and (ii) HSG lacks a valid cause of action because the TMFPA’s qui tam provisions violate Article IV, Section 22 and Article V, Section 21 of the Texas Constitution.
Respondent: Hon. Brad Morin, 71st District Court, Harrison County, Texas; Cause No. 23-0276.
Course of Judge Morin summarily denied the Plea to the Proceedings: Jurisdiction and Motion to Dismiss on December 15, 2023.
Novartis sought mandamus relief in the Sixth Court of Appeals at Texarkana on February 2, 2024. The Court of Appeals issued a two-page memorandum opinion on March 1, 2024, denying the mandamus petition.
RECORD REFERENCES
The Record In Support of Petition for Mandamus is cited as “MR.”
xii APP170 STATEMENT OF JURISDICTION
The Court has jurisdiction over this original proceeding pursuant
to Texas Government Code § 22.002(a). This petition previously was
presented to the Sixth Court of Appeals at Texarkana, which denied
relief. Tex. R. App. P. 52.3(e).
xiii APP171 ISSUES PRESENTED
1. Whether the courts have subject-matter jurisdiction over a
statutory cause of action when it is undisputed that the plaintiff itself
Texas’s separation of powers by allowing private individuals to initiate
and maintain a civil action for and in the name of the State.
xiv APP172 INTRODUCTION
Health Selection Group LLC (HSG), the plaintiff in this case, is an
entity organized for the sole purpose of bringing qui tam suits under the
federal False Claims Act and similar state statutes, including the Texas
Medicaid Fraud Prevention Act (TMFPA). HSG alleges that certain of
Novartis’s practices related to some of its prescription medications
defrauded the State of Texas. HSG has not been harmed by any of the
alleged conduct. In fact, nobody has been—when HSG brought a nearly
identical suit against a different pharmaceutical manufacturer under
the federal False Claims Act, the federal government intervened to
dismiss the suit because the alleged conduct is beneficial to healthcare
administration. Presumably for that reason, Texas filed its notice
declining to intervene in the action.
HSG’s suit is statutorily authorized by the TMFPA, which (as
amended in 2007) allows qui tam plaintiffs to maintain suits alleging
fraud against the State even when the plaintiff has suffered no injury
itself, and even when the Attorney General has declined to participate
in the suit. The question in this case is whether the TMFPA’s scheme is
1 APP173 consistent with the Texas Constitution. The answer is no, for two
reasons.
First, HSG has not suffered any injury and thus has no standing
to bring this suit. The TMFPA does not require private qui tam
plaintiffs to have suffered any injury, but the State’s Constitution does.
The injury-in-fact requirement is a bedrock constitutional principle, and
the TMFPA cannot erase that limitation on the courts’ subject-matter
jurisdiction.
Second, in Texas, the power to enforce the law on behalf of the
State is vested in State attorneys—the Attorney General and county
and district attorneys—who are elected by the people, accountable to
the people, and motivated to serve the people. The Constitution has, for
nearly a century-and-a-half, precluded private parties from purporting
to bring suit on behalf of the State. The TMFPA marks a sharp and
unfortunate break from that constitutional tradition. Since 2007, the
statute has authorized any person to bring and maintain a suit “in the
name . . . of the state” and “without the state’s participation.” Tex.
Hum. Res. Code §§ 36.101, .104(b). There is no constitutional basis for
turning over the State’s public litigation power to private actors, and
2 APP174 this Court’s cases have repeatedly rejected such a possibility. Because
the Attorney General has chosen not to prosecute this action, the
separation of powers compels the suit’s dismissal.
This Court should grant mandamus relief to correct the
fundamental constitutional defects with this TMFPA litigation.
Proceeding with this unconstitutional suit will waste the parties’ and
the courts’ resources. And the only issues here are purely legal ones
that will not benefit from additional factual development. There is
therefore no basis to allow this fundamentally flawed litigation to
proceed.
Res. Code §§ 36.101-.132, generally prohibits false statements made in
connection with healthcare programs. See In re Xerox Corp., 555
S.W.3d 518, 533-34 (Tex. 2018).1
1 The statute was amended effective September 1, 2023, and is now called the Texas
Health Care Program Fraud Prevention Act. See 2023 Tex. Sess. Law Serv. Ch. 273 (S.B. 745). The amendments broaden the healthcare programs subject to the Act but do not alter the provisions discussed in this brief. For ease of reference, Novartis refers to the statute as the TMFPA, because that statute forms the basis for this qui tam action.
3 APP175 The Attorney General is empowered by the statute to enforce the
TMFPA. “If the attorney general has reason to believe that a person is
committing, has committed, or is about to commit an unlawful act, the
attorney general may institute an action for an appropriate order to
restrain the person from committing or continuing to commit the act.”
Tex. Hum. Res. Code § 36.051(a). The Attorney General may also seek
monetary penalties for each violation. Id. § 36.052. Those penalties are
“significant,” “regardless of whether the State actually suffers any
financial loss.” Malouf v. State ex rel. Ellis, 694 S.W.3d 712, 721 (Tex.
This case concerns actions to enforce the TMFPA brought not by
the Attorney General or any other State attorney but by private
individuals. The Act provides that a “person may bring a civil action for
a violation” of the Act “for the person and for the state,” which “shall be
brought in the name of the person and of the state.” Tex. Hum. Res.
Code § 36.101(a). And the Act then sets out a multi-step process by
which such a private suit, known as a qui tam action, may move
4 APP176 Initially, the TMFPA gives the State time to decide how to handle
a private action. A private suit must be filed under seal and must
remain sealed for at least 180 days. Tex. Hum. Res. Code § 36.102(b);
see id. § 36.102(d) (providing for extensions). At the conclusion of that
period, the State must inform the court that it has determined to
“proceed with the action” or, alternatively, that it “declines to take over
the action.” Id. § 36.104(a)(1)-(2). If the State proceeds with the action,
the Attorney General may “contract with a private attorney to represent
If the State proceeds with the action, the private party’s rights
become very limited. The State may dismiss the action without the
private party’s consent. Tex. Hum. Res. Code § 36.107(b). With court
approval, it may settle the action over the objections of the private
person. Id. § 36.107(c). And if the State determines that the private
person’s participation is delaying “the state’s prosecution of the case,”
the court “may impose limitations on the person’s participation.” Id.
But if the State declines to take over the action, “the person
bringing the action may proceed without the state’s participation.” Tex.
5 APP177 Hum. Res. Code § 36.104(b). And while the State has considerable
power before the sealing period expires, it is significantly constrained
after it declines to proceed with the suit. To intervene in the litigation
after the sealing period, the State must make “a showing of good cause,”
and any intervention cannot “limit[] the status and right” of the private
The possibility that an action could continue without the State’s
participation is relatively new. For the first decade after its enactment,
the TMFPA provided that the court “shall dismiss the action” if the
State declined to bring it. Tex. Hum. Res. Code § 36.104(b) (2005). But
individuals to continue litigation without the State’s consent. 2007 Tex.
Sess. Law Serv. Ch. 29, § 4 (S.B. 362); see United States ex. rel. Carroll
v. Planned Parenthood Gulf Coast, Inc., 21 F. Supp. 3d 825, 837 (S.D.
If a private person succeeds in her qui tam action, the defendant
must pay the same civil penalties as if the State had brought the action
itself. Tex. Hum. Res. Code § 36.101(b). But the private person
receives a bounty out of that penalty award. That award varies based
6 APP178 on a number of factors. But it can be as high as “30 percent of the
proceeds of the action” (if the State does not take over the suit) or “25
percent of the proceeds of the action” (if the State does take over the
The TMFPA is similar to the federal False Claims Act, 31 U.S.C.
§ 3729 et seq. But there are key differences, including that the federal
statute covers many different kinds of false claims against the
government, while the TMFPA is limited to false claims in the
healthcare context. Compare 31 U.S.C. § 3729(a), with Tex. Hum. Res.
Code § 36.101. Most relevant to this case, the federal False Claims Act
provides for both “damages” (which reflect the actual harm caused by
the unlawful conduct to the government’s property) and “civil
penalties,” 31 U.S.C. § 3729(a)(1), while the TMFPA authorizes only
civil penalties and does not permit an “action for the recovery of
B. Facts and Proceedings Below
treatments designed to improve and extend lives through scientific
research and technological innovation. Novartis’s efforts focus in large
7 APP179 part on developing treatments in areas with high unmet patient needs,
including neuroscience, immunology, and oncology. Novartis employs
approximately 78,000 people, and its medications have reached more
than 284 million individuals.2
Plaintiff Health Selection Group, LLC (HSG) is a subsidiary of a
professional qui tam plaintiff, National Health Care Analysis Group
created to monetize federal and state qui tam statutes that permit
private parties to file civil actions on behalf of the government in return
for a percentage of the government’s recovery. See First Am. Pet. ¶ 21
(MR006); U.S. Mot. to Dismiss at 1-2, United States ex rel. Health
Choice Alliance, LLC v. Eli Lilly & Co., No. 5:17-cv-123 (E.D. Tex. Dec.
17, 2018), Dkt. 192 (describing NHCAG as a “professional relator”
“comprised of member limited liability companies formed by investors
and former Wall Street investment bankers”). NHCAG mines publicly
available Medicaid and Medicare data and conducts witness interviews
to identify sweeping theories of liability, and then creates entities, like
2 See Novartis, About, https://www.novartis.com/about (last accessed September 30,
8 APP180 HSG, to seek astronomical qui tam penalties against pharmaceutical
companies. See First Am. Pet. ¶ 42 (MR011); see U.S. Mot. to Dismiss
at 5-6, Eli Lilly, No. 5:17-cv-123 (describing NHCAG’s business model).
In one recent case, the Fifth Circuit noted that NHCAG brought 11 qui
tam actions under the federal False Claims Act against a total of 38
defendants, none of which survived dismissal. United States ex rel.
Health Choice Alliance, LLC v. Eli Lilly & Co., 4 F.4th 255, 259 & n.1
Novartis’s parent company in the United States District Court for the
Eastern District of Texas, alleging that Novartis violated the federal
False Claims Act and the analogous laws of 31 States, including the
TMFPA, by: (i) providing free “nurse educator” services to patients to
educate them about the proper use of six Novartis medications; (ii)
providing free “reimbursement support” services to assist patients with
obtaining coverage for certain Novartis prescriptions; and (iii)
contracting with third parties to employ nurses to market and educate
prescribers about the six medications. See Compl., United States ex rel.
Health Selection Grp., LLC v. Novartis AG, et al., No. 5:18-cv-60 (E.D.
9 APP181 Tex. Apr. 20, 2018), Dkt. 1. HSG’s theories largely mirrored those
brought by other NHCAG affiliates that the federal government moved
to dismiss because the government deemed the practices lawful and
beneficial to the federal healthcare programs. Eli Lilly & Co., 4 F.4th
at 260, 267-68; see U.S. Mot. to Dismiss at 2-3, 14-16, Eli Lilly, No. 5:17-
cv-123 (arguing that “federal healthcare programs have a strong
interest in ensuring that, after a physician has appropriately prescribed
a medication, patients have access to basic product support relating to
their medication”). After those suits were dismissed, HSG voluntarily
dismissed its federal lawsuit against Novartis AG and chose to pursue
TMFPA claims in Texas state court. See HSG Mot. to Dismiss, Health
Selection Grp., No. 5:18-cv-60 (E.D. Tex. Mar. 9, 2020), Dkt. 21.
On May 8, 2020, HSG filed this TMFPA suit against Novartis.3
The Original Petition substantially tracked HSG’s prior federal
complaint—again, based on the same conduct that the United States
intervened to dismiss in a parallel suit—in alleging that the three
business practices described above violate the TMFPA. The State of
3 The suit initially named Novartis AG, but was amended to seek relief instead
10 APP182 Texas filed a notice declining to intervene in this action. The case was
subsequently unsealed but remained dormant for several years until it
was transferred to the 71st Judicial District Court in Harrison County
Pet. (MR001-060), and Novartis then moved to dismiss the suit, arguing
that the district court should dismiss HSG’s qui tam action for two
reasons. First, Novartis argued that the district court should dismiss
the case for lack of subject-matter jurisdiction because HSG does not
have constitutional standing to sue Novartis for a statutory violation
that did not personally injure HSG. See MR072-079. Second, Novartis
argued that HSG’s qui tam action should be dismissed because the
TMFPA qui tam statute violates the Texas Constitution, which assigns
the authority to file suits for the State exclusively to State attorneys.
MR079-093. Both HSG and the State (through a statement of interest)
opposed dismissal of the action. The district court heard oral argument
and summarily denied Novartis’s motion. See Order Denying Def.’s
11 APP183 On February 2, 2024, Novartis sought mandamus and a
temporary stay of trial proceedings in the Court of Appeals for the Sixth
District of Texas. The Court of Appeals denied the mandamus petition
and stay request in a brief order, concluding that the purely legal
constitutional questions presented were somehow committed to the trial
Novartis sought review in this Court.4 And, on August 30, 2024,
this Court granted Novartis’s request for a temporary stay of trial
proceedings and ordered the parties to file briefing on the merits of
Novartis’s mandamus petition.
SUMMARY OF ARGUMENT
I. The courts have no subject-matter jurisdiction over this suit
because HSG lacks standing. HSG has not been injured by the conduct
of which it complains, and so has not suffered the injury-in-fact
There is no basis to except HSG from the ordinary injury
requirement here. HSG cannot establish standing as an assignee of the
4 After Novartis filed its mandamus petition in this Court, HSG filed an amended
petition. The amended petition primarily adds new factual allegations and does not alter the legal questions presented in this Court. See Letter to Blake A. Hawthorne, Clerk of Court, from Danny S. Ashby (Apr. 29, 2024).
12 APP184 State, because unlike the federal False Claims Act, the TMFPA does not
allow for damages claims, and the civil penalties contemplated by the
TMFPA cannot be assigned to a private person. And HSG cannot
establish standing as a representative of the State because (i) it has no
legal relationship with the State, (ii) the State is entirely capable of
bringing a lawsuit itself, and (iii) the State alone has standing to bring
suits respecting matters of public concern.
II. Separately, the TMFPA’s provisions allowing a private party
to pursue public litigation violate the separation-of-powers principles
enshrined in Article IV, Section 22 and Article V, Section 21 of the
Texas Constitution. Those sections provide that only the Attorney
General and county and district attorneys may litigate on behalf of the
State. This Court has made clear that Article IV, Section 22 and Article
V, Section 21 “mark the limits of legislative authority to prescribe who
shall represent the state and control its interests in a lawsuit in the
district court.” Allen v. Fisher, 9 S.W.2d 731, 732 (Tex. 1928).
The TMFPA breaks from that tradition. It allows a private
individual or entity to proceed with a qui tam action in the name of and
behalf of the State. It therefore devolves the public litigation power
13 APP185 onto those who are not authorized by the Constitution to wield it.
Neither this Court’s precedents nor any history of qui tam litigation
permits that unconstitutional result.
III. The Court should grant mandamus relief. Mandamus is an
appropriate remedy where a suit cannot lawfully proceed. And here, if
HSG lacks standing or if this suit offends the separation of powers,
continuing with this litigation will simply waste the parties’ and courts’
resources. The questions presented here are purely legal and will not
benefit from further discovery or fact development. There is accordingly
no reason to delay resolving the constitutional questions presented by
constitutional flaws. First, principles of standing prohibit HSG—which
has not been injured by the conduct of which it complains—from
pursuing this action. And second, the separation of powers does not
permit HSG to proceed with this litigation on behalf of the State. For
either or both reasons, this case must be dismissed, and mandamus
14 APP186 I. HSG LACKS STANDING TO BRING THIS QUI TAM ACTION.
The first problem with this suit is that HSG lacks standing. It
does not allege that any of Novartis’s conduct injured it personally.
That lack of a personal stake in this controversy violates the Texas
Constitution, which allows only individuals who have suffered harm to
sue and provides no doctrinal basis to excuse HSG from meeting the
injury requirement that all other litigants must satisfy. Accordingly,
the case should be dismissed. See Heckman v. Williamson Cnty., 369
A. The Constitution requires that a plaintiff demonstrate injury.
“[S]tanding is a component of subject matter jurisdiction,” and is
thus “a threshold requirement to maintaining a lawsuit.” Farmers Tex.
Cnty. Mut. Ins. Co. v. Beasley, 598 S.W.3d 237, 240 (Tex. 2020). “In
Texas, the standing requirement stems from two constitutional
limitations on subject-matter jurisdiction.” Data Foundry, Inc. v. City of
Austin, 620 S.W.3d 692, 700 (Tex. 2021). The first is “the Texas
Constitution’s provision for separation of powers among the branches of
government, which denies the judiciary authority to decide issues in the
abstract.” Mosaic Baybrook One, L.P. v. Simien, 674 S.W.3d 234, 250
15 APP187 (Tex. 2023); see Tex. Const. art. II, § 1. The second is the Texas
Constitution’s “open courts provision, which provides court access only
to a ‘person for an injury done him.’” Id. (quoting Tex. Const. art. I,
From these two constitutional provisions, this Court has held that
Texas’s standing doctrine requires “(1) an injury in fact that is both
concrete and particularized,” “(2) that the injury is fairly traceable to
the defendant’s challenged action”; and “(3) that it is likely, as opposed
to merely speculative, that the injury will be redressed by a favorable
decision.” Data Foundry, 620 S.W.3d at 696 (quoting Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). The first element—
“injury in fact”—requires that “[t]he plaintiff . . . be personally injured—
he must plead facts demonstrating that he, himself (rather than a third
party or the public at large), suffered the injury.” Heckman, 369 S.W.3d
HSG’s suit fails this test. HSG does not allege that it personally
suffered any injury from the conduct alleged in the petition. See
generally MR001-60; HSG Resp. 5-10. Instead, it is asserting an injury
16 APP188 to “the public at large,” Heckman, 369 S.W.3d at 155—it alleges that
Novartis’s conduct defrauded the State. HSG therefore lacks standing,
which is “a constitutional prerequisite to suit.” Id. at 150; accord Tex.
Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993).
Contrary to HSG’s prior arguments, it makes no difference that
the TMFPA purports to allow individual litigants to sue on behalf of the
State. See HSG Resp. 8-10. For the reasons explained below, there are
fundamental separation-of-powers problems with that grant of public
litigation authority. See infra at 25-47. But even setting those
problems aside, it is settled that a statute cannot “authorize a court to
act without subject matter jurisdiction.” In re Lazy W Dist. No. 1, 493
S.W.3d 538, 544 (Tex. 2016). A statutory right to sue may not establish
a lesser injury standard “than that set by the general doctrine of
standing.” Fin. Comm’n of Tex. v. Norwood, 418 S.W.3d 566, 582 n.83
(Tex. 2013). “If the grant of jurisdiction or relief authorized [by]
statute” exceeds constitutional limits, Texas courts construe the
Legislature’s enactments to “exercise [only] as much jurisdiction over
the case as the Constitution allows.” In re Allcat Claims Serv., L.P., 356
S.W.3d 455, 462 (Tex. 2011). Thus, regardless of whether HSG meets
17 APP189 the TMFPA’s requirements for bringing an action, it lacks
constitutional standing because it has not alleged that it was personally
injured by any alleged TMFPA violations. That should be the end of
The doctrine of standing exists to ensure that litigants do not
“roam the country in search of governmental wrongdoing.” Valley Forge
Christian Coll. v. Americans United for Separation of Church & State,
Inc., 454 U.S. 464, 487 (1982). Yet that is exactly what HSG has sought
to do here: As described above, it sifts through healthcare data to find
potential statutory violations, and uses that research to initiate qui tam
actions. See supra at 8-9. “[O]ur Constitution opens the courthouse
doors only to those who have or are suffering an injury,” Heckman, 369
S.W.3d at 155, not uninjured profit-seeking entities like HSG.
C. HSG cannot sue as an assignee or representative of the State.
At prior stages of this litigation, HSG and the State argued that
HSG has standing as the State’s assignee or representative. Each
18 APP190 1. There is no damages claim to assign.
HSG and the State’s primary argument for standing relies on the
Supreme Court of the United States’ holding in Vermont Agency of
Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000).
See HSG Resp. 5-7; State Resp. 9-11. In that case, the Court held that a
qui tam relator satisfied federal Article III standing requirements
because the False Claims Act “can reasonably be regarded as effecting a
partial assignment of the Government’s damages claim.” 529 U.S. at
773.5 And because assignees of a claim had historically been
understood as possessing standing to sue, the Court held that federal
qui tam relators likewise had Article III standing. Id.
But the logic of Stevens does not apply to the TMFPA. Unlike the
False Claims Act, the TMFPA cannot be construed as creating an
assignable claim for damages. This Court has held that the TMFPA is
a civil-enforcement statute for civil penalties, “not an action for recovery
of damages.” In re Xerox Corp., 555 S.W.3d at 526. The Court so held
because the penalties authorized by the TMFPA are “fixed without
5 Stevens reserved the question of whether qui tam suits violate the federal
separation of powers. 529 U.S. at 778 n.8. The Texas counterpart of that issue is discussed below. See infra at 25-47.
19 APP191 regard to any loss to the Medicaid program,” and because the statute
does not contain any language that might “imply a loss measure or
require the State to prove an actual loss.” Id. at 533-35.
In reaching that holding, the Court expressly declined to import
federal jurisprudence when construing the TMFPA. It held that
comparisons to the False Claims Act are “not probative” because, while
the statutes may be “similar in aim and tactic,” they “employ materially
different language, and the language of our statutes controls the
outcome here.” 555 S.W.3d at 535. Thus, the Court deviated from
False Claims Act doctrine in concluding that the TMFPA “employs a
penalty scheme and is not an ‘action for the recovery of damages.’” Id.
reliance on Stevens. The TMFPA cannot be read “as effecting a partial
assignment of the Government’s damages claim” because there is no
damages claim to assign. 529 U.S. at 773. So—even assuming that
Texas standing doctrine otherwise tracked federal law—the logic of
20 APP192 Recognizing this problem, HSG and the State ask this Court to
ignore the critical language in Stevens. The State, for its part, suggests
that “nothing in Stevens limits the underlying holding . . . to qui tam
actions for ‘damages.’” State Resp. 9. And HSG accuses Novartis of
“elevat[ing] form over substance” through its arguments. HSG Resp. 6.
In fact, though, Stevens used the word “damages” for a reason:
only damages, not civil penalties, are subject to assignment. A party
does not assign an injury; it assigns a claim for relief. Stevens, 529 U.S.
at 773; see TransUnion LLC v. Ramirez, 594 U.S. 413, 428 (2021). And
civil penalties are “different from compensatory damages” in ways that
mean they cannot be assigned. In re Xerox Corp., 555 S.W.3d at 529
(quoting Wal-Mart Stores, Inc. v. Forte, 497 S.W.3d 460, 465 (Tex.
2016)). Civil penalties “are intended to punish, and label defendants
wrongdoers.” Id. at 530 (quoting Gabelli v. SEC, 568 U.S. 442, 451-52
Stevens itself recognized as much. In discussing the federal False
Claims Act, it noted that the law protected “both the injury to [the
United States’] sovereignty arising from violation of its laws” and “the
21 APP193 proprietary injury resulting from the alleged fraud.” 529 U.S. at 771.
proprietary interest just like anyone else can. See id. at 773; see also
Sprint Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 278
(2008) (explaining that courts have long recognized assignment of a
“chose in action,” such as a legal claim for money damages). But
neither Stevens nor any other case of which Novartis is aware suggests
that the State can assign a sovereign interest—a government could not,
for example, delegate a “criminal lawsuit” to a private individual,
Stevens, 529 U.S. at 771, because a sovereign interest is by definition an
interest that only the State can possess. “[T]he public interest that
private entities comply with the law cannot be converted into an
individual right by a statute that denominates it as such, and that
permits all citizens (or, for that matter, a subclass of citizens who suffer
no distinctive concrete harm) to sue.” TransUnion, 594 U.S. at 428-29
(internal quotation marks omitted); see also infra at 25-47 (explaining
why such an assignment would independently violate the separation of
powers). That is why Stevens spoke of assignment of damages, and it is
why the State and HSG’s efforts to ignore that language—and to import
22 APP194 the logic of Stevens into a statute that does not provide for damages but
that instead vindicates only the States’s nontransferable sovereign
interest—are doomed to failure.6
2. Representative standing has no application here.
At the petition stage, HSG (but not the State) also argued that
“representative standing” could provide a basis for subject-matter
jurisdiction. HSG Resp. 7-8.7 It noted, for example, that “[p]arents sue
on behalf of children; executors sue on behalf of estates; and insurers
sue on behalf of insureds.” Id. at 7. It suggests it is similarly situated
to those sorts of plaintiffs.
But those circumstances are obviously different. Parents and
executors have fiduciary-type legal obligations to those they represent,
6 The Stevens Court also discussed early American history that supported its
standing holding. See 529 U.S. at 774-78. But the Court did not rest on history alone, focusing instead on the assignment of damages. And in any event, as explained below, there is no history of qui tam actions that could inform the meaning of the Texas Constitution. See infra at 44-47.
7 For its part, the State observed that the Court “has recognized important
exceptions” to the injury requirement. State Resp. 13. But it does not urge the Court to create a new exception here, or explain how any such exception would comport with Texas’ Constitution. Nor does it explain why the idiosyncratic doctrine of taxpayer standing—a concept relevant only to “drastic” suits in which a plaintiff seeks to “enjoin the illegal expenditure of public funds,” Perez v. Turner, 653 S.W.3d 191, 199 (Tex. 2022) (internal quotation marks omitted)—has any relevance to this case.
23 APP195 who cannot sue in their own names because they are incompetent to do
so. See, e.g., Tex. Estates Code § 351.101 (duty on executors); Tenet
Hosps. Ltd. v. Rivera, 445 S.W.3d 698, 705 (Tex. 2014) (duty on legal
guardians). And insurers have their own injuries—the possibility of
payment—that they advance when they sue on behalf of an insured.
See Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765, 774
(Tex. 2007). This qui tam suit has none of those features. Unlike
parents and executors, HSG has no fiduciary duty to act in the State’s
interest. Unlike insurers, HSG has suffered no injury of its own. And
unlike minors and the deceased, the State is perfectly able to sue on its
own behalf—indeed, the TMFPA expressly contemplates that it will do
so.
representative that might warrant a departure from ordinary standing
rules. And even if there were, the Court has repeatedly held that the
Texas Constitution lodges with the State attorneys the exclusive
authority to bring and maintain a suit for and in the name of the State,
and that a private plaintiff cannot be authorized to maintain a suit that
24 APP196 solely seeks to vindicate a matter of public concern. Allen, 9 S.W.2d at
732; Staples v. State, 245 S.W. 639, 641-42 (Tex. 1922).
II. THE TMFPA’S QUI TAM PROVISIONS OFFEND THE SEPARATION OF POWERS.
Because HSG has suffered no injury, this suit should be dismissed
for lack of subject-matter jurisdiction. But if HSG somehow surmounts
that obstacle, there is a separate, fundamental problem with this suit:
the Constitution’s separation of powers prohibits HSG from litigating
Government of the State of Texas shall be divided into three distinct
departments”—Legislative, Executive, and Judicial—and that “no
person, or collection of persons, being one of these departments, shall
exercise any power properly attached to either of the others, except in
the instances herein expressly permitted.” Tex. Const. art. II, § 1. The
separation of powers “reflects a belief on the part of those who drafted
and adopted our state constitution that one of the greatest threats to
liberty is the accumulation of excessive power in a single branch of
government.” Armadillo Bail Bonds v. State, 802 S.W.2d 237, 239 (Tex.
Crim. App. 1990). It “also has the incidental effect of promoting
25 APP197 effective government by assigning functions to the branches that are
“The Texas Constitution authorizes the attorney general, county
attorneys, and district attorneys to represent the state in various
cases.” State ex rel. Durden v. Shahan, 658 S.W.3d 300, 303 (Tex. 2022)
(per curiam). Article IV, Section 22 vests the Attorney General with
authority to represent the State in this Court. And Article V, Section 21
vests District and County Attorneys with authority to represent the
State in other proceedings. The Legislature is empowered to assign
additional responsibilities to the Attorney General, and has done so by
statute. El Paso Elec. Co. v. Tex. Dep’t of Ins., 937 S.W.2d 432, 438-39
(Tex. 1996); see, e.g., Tex. Gov’t Code § 402.021.
What the Legislature cannot do, however, is “divest these officials
of their collective constitutional authority by shifting representation to
some other attorney.” El Paso Elec. Co., 937 S.W.2d at 439. This Court
has never permitted a private litigant to wield litigation power on
behalf of the State, and its precedents resoundingly reject that
possibility. Yet that is what the TMFPA does: By authorizing a private
person to “proceed without the state’s participation,” Tex. Hum. Res.
26 APP198 Code § 36.104(b), it unconstitutionally devolves the State’s power to
individuals who may not exercise it. Nothing in the Constitution’s text,
precedent, or history permits that unprecedented action. The Court
should accordingly hold that the TMFPA’s qui tam provisions violate
A. The Texas Constitution exclusively assigns to State attorneys the power to bring and maintain suits for the State.
Time and again, this Court has made clear that only State
attorneys, elected by the citizenry, may litigate actions on behalf of the
State.
1918). There, a statute authorized the Comptroller of Public Accounts
to appoint individuals to “sue for and collect” taxes. Id. at 377. The
unconstitutional if it “deprive[d] the county attorneys and the Attorney-
General in their authority” to litigate on behalf of the State. Id. That is
because the “powers . . . conferred by the Constitution upon those
officials are exclusive,” such that the “Legislature cannot devolve them
upon others.” Id. at 376. The Court upheld the challenged statute only
27 APP199 because it could fairly be read to render the tax collectors as
“assistant[s]” to the State attorneys, operating under their control. Id.
at 378; see id. at 377 (“Upon its face this language would authorize the
collector to file the suit, but it cannot be assumed that the Legislature
so intended. It plainly means that he should cause the suit to be filed by
the official charged by law with that specific duty.”) (emphasis added).
Where possible, the Court has followed the approach set out in
Maud and construed state laws to subordinate individuals’ litigation
rights to the State’s. A prime example is Staples v. State, 245 S.W. 639
(Tex. 1922), which scrutinized a statute permitting individuals to bring
quo warranto actions to enforce the election laws. The private plaintiffs
in the case admitted “that they have no pecuniary interest in this suit
which is not common to all other citizens of the state. ” Id. at 640. And
the Court observed that a statute permitting suits “for the benefit of the
public at large” “cannot confer a right upon private individuals to act for
all where it is shown they have no interest different from all others.”
Id. at 641. The Court thus held that the individuals “were not
possessed of legal capacity or right to institute and maintain this
suit”—and that the only appropriate course was for them to present
28 APP200 their case to “a county attorney, a district attorney, or the Attorney
The Court then took the same approach in Agey v. American
Liberty Pipe Line Co., 172 S.W.2d 972 (Tex. 1943). In the court below, a
Texas Court of Civil Appeals held that a private citizen could not
lawfully maintain a statutory cause of action that the plaintiff had filed
in his name and in the name of the State to recover penalties against
the defendant for discriminating against the plaintiff in the purchase of
oil. American Liberty Pipeline Co v. Agey, 167 S.W.2d 580, 580 (Tex.
App. 1942).8 The court of appeals observed that “such action must be
brought by the Attorney General or county attorney; and that to
construe the section as authorizing institution and prosecution of the
suit by and in the name of the aggrieved party for his own use and that
of the State would render it void, to that extent, as contravening”
Article IV, Section 22 and Article V, Section 21 of the Texas
Constitution. Id. at 581. Because the action was “one which insures to
the State,” the court concluded it was maintainable only in the State’s
8 Unlike HSG, the plaintiff in Agey suffered a concrete harm from the statutory
violation (the defendant discriminated against the plaintiff in refusing to purchase the plaintiff’s oil) that would have satisfied Texas’ constitutional standing requirements.
29 APP201 name and by its authorized officials, regardless of the fact that one-half
of the recovery may insure to the interested party.” Id. at 582.
This Court subsequently affirmed “that the statute clearly creates
a single, indivisible cause of action, which must be prosecuted in a
single suit, instituted by the State through its proper officials; and that
[the plaintiff’s] rights are limited to sharing in the recovery.” Agey, 172
S.W.2d at 975 (internal quotation marks omitted). Because the statute
did not purport to grant the aggrieved party a right to file suit on behalf
of himself and the state, without joinder of a State attorney, the Court
declined to decide whether the Legislature had the power to do so. See
id. at 974. But the Court reaffirmed that, under the Texas
Constitution, “[t]he Attorney General is the chief law officer of the
State” and “has the right to investigate the facts and exercise his
judgment and discretion regarding the filing of a suit.” Id.; see also,
e.g., Camp v. Gulf Prod. Co., 61 S.W.2d 773, 778 (Tex. 1933) (similarly
interpreting a statute to give State attorneys “the right to control the
litigation for the state just the same as in any ordinary suit to which the
30 APP202 The Court has also blessed statutes that allow State attorneys to
hire private individuals to act directly under the State attorneys’
control. Where a private individual acts “under the direction and
control of the Attorney General,” she or he may permissibly litigate on
behalf of the State. Terrell v. Sparks, 135 S.W. 519, 520 (Tex. 1911).
And “the Legislature may authorize an agency to retain private counsel
to prosecute actions, as long as such counsel’s authority is subordinate
to that of the Attorney General, County Attorney, or District Attorney.”
What the Court has never done, though, is permit another person
to exercise the State’s litigation authority without a State attorney’s
direct control. And where a statute cannot be read to avoid that
outcome, the Court has struck it down. Thus, in Hill County v.
Sheppard, 178 S.W.2d 261 (Tex. 1944), the Court invalidated a statute
that “create[d] a statutory office to take over the duties of the county
attorney,” holding that the duties of the State attorney could not be
arrogated to another. Id. at 264. The Court explained: “Where certain
duties are imposed or specific powers are conferred upon a designated
31 APP203 officer, the Legislature cannot withdraw them nor confer them upon
others.” Id. (quoting 34 Tex. Jur. 445) (alteration adopted).
The precedents of this Court, therefore, teach a consistent rule.
Under the Constitution, only State attorneys may litigate on behalf of
the State. Statutes that permit private individuals to pursue suits are
constitutional only if the individuals are subject to the State attorneys’
direct control—viz., employed by them. If the statute permits public
B. The TMFPA impermissibly authorizes private individuals to press suits that State attorneys decline to control.
The TMFPA fails the test set out in this Court’s cases. It
authorizes private individuals to sue on behalf of the State in
circumstances where the State attorneys affirmatively decline to press
the litigation. It therefore devolves the State’s litigation authority to
individuals who, under the Constitution, are “not possessed of legal
capacity or right to institute and maintain” a suit on behalf of the State,
Staples, 245 S.W. at 643, and who usurp the Attorney General in the
performance of his duty to “investigate the facts and exercise his
judgment regarding the filing of suit” for the State, Agey, 172 S.W.2d
at 974.
32 APP204 1. The TMFPA allows for litigation that State attorneys affirmatively choose not to bring.
It is beyond question that the TMFPA permits private individuals
to litigate without the State’s control. As explained above, see supra at
5-6, the TMFPA requires private individuals to file under seal and
present the State with a choice. After reviewing the sealed materials,
the State can either “proceed with the action” or “decline[] to take over
In cases where the State (through its Attorney General) declines
to take over the action, the TMFPA impermissibly authorizes a private
party and its attorney to prosecute violations of state law in place of the
Attorney General. See Tex. Hum. Res. Code § 36.104(b). “[I]n the
matter of bringing suits the Attorney General must exercise judgment
and discretion, which will not be controlled by other authorities.”
Charles Scribner’s Sons v. Marrs, 262 S.W. 722, 727 (Tex. 1924); see
Agey, 172 S.W.2d at 974 (similar). Where the Attorney General (or a
county or district attorney) decide that a case is not worth litigating on
behalf of the State of Texas, that is the end of the matter because the
33 APP205 State attorneys who must control State litigation have decided not to
By nonetheless permitting a private litigant to proceed with that
action, the TMFPA careens over the boundary line set by this Court’s
cases. Maud holds that authority to litigate on behalf of the State
cannot be “devolve[d] . . . upon others,” but the TMFPA does just that.
200 S.W. at 376. Staples and Agey confirm that the Legislature may not
assign the power to bring suit for the State to anyone other than the
duly-elected State attorneys, but the TMFPA expressly permits a
private individual to litigate when those State attorneys have explicitly
declined to bring the suit. Agey, 172 S.W.2d at 974; see Staples, 245
S.W. at 643. The TMFPA is therefore precisely the sort of statute the
Legislature cannot enact, because it “divest[s] these [State] officials of
their collective constitutional authority by shifting representation to
some other attorney,” El Paso Elec. Co., 937 S.W.2d at 439; see
Sheppard, 178 S.W.2d at 264.
This Court’s recent holding that the TMFPA is a “penal statute”
only accentuates the constitutional problems. Malouf, 694 S.W.3d at
721. The Court has previously observed that granting private parties
34 APP206 the “authority to impose penal sanctions strongly suggests an improper
private delegation.” Texas Boll Weevil Eradication Found., Inc. v.
Lewellen, 952 S.W.2d 454, 474 (Tex. 1997). Yet the TMFPA authorizes
private individuals to litigate and obtain penal sanctions in cases where
the State attorney has expressly declined to pursue the case.
And this problem is not a mere debater’s point or technical foul: it
has real implications for Texans’ liberty. “The purpose of the separation
and equilibration of powers in general . . . was not merely to assure
effective government but to preserve individual freedom.” Morrison v.
Olson, 487 U.S. 654, 727 (1988) (Scalia, J., dissenting). “[T]he basic
concept of democratic rule under a republican form of government is
compromised when public powers are abandoned to those who are
neither elected by the people, appointed by a public official or entity,
nor employed by the government.” Tex. Boll Weevil, 952 S.W.2d at 469.
By placing the power to litigate on behalf of the State in the hands of
profit-seeking private entities, the TMFPA shifts public authority to
those “motivated primarily by prospects of monetary reward rather
than public good.” Hughes Aircraft Co. v. United States ex rel. Schumer,
520 U.S. 939, 949, 952 (1997); see PPG Indus., Inc. v. JMB/Houston
35 APP207 Cntrs. Partners Ltd. P’ship, 146 S.W.3d 79, 85 (Tex. 2004) (“It is one
thing to place the power of treble damages in the hands of aggrieved
parties or the attorney general; it is quite another to place it in the
hands of those considering litigation for commercial profit.”).9 A statute
may certainly create a financial incentive for individuals to discover
frauds against the State that State officials then decide to sue on. But
it cannot allow private parties, who owe no duty of loyalty to the State,
to litigate the State’s claims on their own.
This case illustrates the concern. HSG filed this suit not out of
concern for the public good or the citizenry of Texas, but because its
business strategy is, in the federal government’s words, to enrich
“limited liability companies formed by investors and former Wall Street
investment bankers” by obtaining qui tam bounties. U.S. Mot. to
Dismiss at 1-2, Eli Lilly, No. 5:17-cv-123. As the Court has previously
observed, “private delegations clearly raise [] troubling constitutional
issues” precisely because “the private delegate may have a personal or
9 See also J. Randy Beck, The False Claims Act And The English Eradication of Qui
Tam Legislation, 78 N.C. L. Rev. 539, 616 (2000) (qui tam relators have “no incentive to consider the public impact of the litigation, the culpability of the defendants, the fairness of a particular litigation strategy, or similar matters that might influence a public prosecutor”).
36 APP208 pecuniary interest which is inconsistent with or repugnant to the public
interest to be served.” Tex. Boll Weevil, 952 S.W.2d at 469. Avoiding
that result is precisely why the Constitution prohibits turning over
If the Legislature can assign the power to prosecute violations of
the TMFPA to private parties—even from outside Texas or the United
States—then nothing would prevent the Legislature from granting
private parties the ability to prosecute every violation of state law and
thereby subject the “executive power to death by a thousand cuts.”
Saikrishna Prakash, The Chief Prosecutor, 73 Geo. Wash. L. Rev. 521,
582 (2005). And if the Legislature can validly assign that power to self-
appointed relators, what prevents the Legislature from delegating that
power to a specific individual or association of individuals of its
choosing? A decision upholding the TMFPA’s qui tam provisions would
mean that the Legislature not only has the power to enact laws but also
the power to enforce the laws it enacts by delegating prosecutorial
power to any agent of its choosing. A more apparent violation of the
37 APP209 2. There is no possible saving construction.
Unlike the statutes construed in Maud, Agey, and Staples, the
TMFPA’s constitutional infirmities cannot be cured through statutory
construction. The statutes in those cases left ambiguous whether a
private individual could litigate on behalf of the State, and the Court
resolved each of those cases by construing the statutes to prevent such
action. The TMFPA, by contrast, is crystal-clear on this point: the qui
tam provisions of the statute authorize a private person to bring and
maintain a suit “for” and “in the name . . . of the state.” Tex. Hum. Res.
Code § 36.101(a). That is plainly unconstitutional because the duty and
authority of the State’s attorneys to bring and maintain suit for the
TMFPA cannot be read to avoid the separation-of-powers issue. A
provision of the statute, Tex. Hum. Res. Code § 36.105, states that
“[t]he attorney general may contract with a private attorney to
represent the state in an action under this subchapter with which the
state elects to proceed.” That provision illustrates that the Legislature
has tools to address healthcare fraud that operate within the bounds of
38 APP210 the law. But it also confirms that the qui tam provisions that kick in
when the State declines to proceed with the action are not such tools.
Those provisions may be severed from the portions of the TMFPA
that lawfully allow the State to press litigation on its own behalf. See
Quick v. City of Austin, 7 S.W.3d 109, 115 (Tex. 1998) (“[I]f any
provision of the statute is held to be invalid, the invalidity does not
affect other provisions that can properly be given effect in the absence
of the invalid provisions.”). This relief would not disrupt the State’s
ability to deter genuine healthcare fraud: on the contrary, all that it
would do is restore the statutory scheme to the way it operated before
2007. Until that time, the TMFPA provided that an action that the
State did not elect to pursue must be dismissed. See Tex. Hum. Res.
Code § 36.104(b) (2005); supra at 6. Restoring State control over State
litigation, therefore, will not eviscerate the TMFPA; it would simply
recreate the regime that existed when the statute was enacted, and that
3. HSG and the State’s contrary arguments lack merit.
At the petition stage, HSG and the State advanced two arguments
responsive to the separation-of-powers problems with the TMFPA. The
39 APP211 first is rooted in a misreading of Brown v. De La Cruz, 156 S.W.3d 560
(Tex. 2004). The second rests on a misunderstanding of the statutory
provisions that govern qui tam actions where the State has declined to
intervene.
a. Brown has nothing to do with this case, contra HSG Resp. 10-
11, and if anything undermines HSG’s position. The question in that
litigation was purely statutory: whether a prior provision of the Texas
Property Code allowed a purchaser of residential property a private
cause of action to recover a $500-per-day penalty for a seller’s failure to
record and transfer a property deed within thirty days of payment. 156
S.W.3d at 561-62. The Court held that the statute did not create a
private cause of action because the statute was silent about who may
collect the statutory penalty and, “[g]enerally a statutory penalty or fine
is not payable to a private litigant” but rather may only be collected “by
the Attorney General or some other governmental entity or
representative.” Id. at 564. That is because, as explained above, civil
penalties ordinarily are meant to punish and thus vindicate a sovereign
interest, see supra at 21, and sovereign interests must be pressed by a
40 APP212 State attorney, not a private party. Thus, to the extent Brown is
relevant here, it supports Novartis, not HSG.
HSG’s contrary argument rests on the Court’s statement that the
Legislature must “clearly” assign “private standing to bring such
actions.” 156 S.W.3d at 566. HSG thinks that the Court’s statement
must be read by implication to have blessed as constitutional private
actions that authorize private suits on behalf of the State. But HSG’s
reading is unreasonable because the Court did not consider the question
presented in this case: whether a statute that grants a private party the
power to prosecute a suit on behalf of the State is constitutional.
Rather, the Court held in Brown that the statute at issue did not grant
private parties the right to sue at all, let alone the right to sue to
enforce an interest that belongs solely to the State.
Nothing in Brown reveals anything about whether a statute that
vests a member of the public with State litigation authority comports
with the Constitution. That case merely stands for the unremarkable
proposition that the Legislature may create a private cause of action for
an individual harmed by a defendant’s violation to bring suit on his own
behalf to recover a statutory penalty. It says nothing about the
41 APP213 constitutionality of a statute that purports to authorize a private
party—much less an unharmed private party—to maintain a suit for
and in the name of the State. The Court’s decisions in Maud, Allen,
Staples, and Sheppard are controlling on those questions, and it is
simply not plausible that Brown overturned all those cases without any
discussion.
b. HSG and the State are no more successful when they argue
that the State maintains control over litigation that it “declines” to
bring. Tex. Hum. Res. Code § 36.104(a)(2); see HSG Resp. 13-14; State
Resp. 21. The statutory language is clear: the private qui tam plaintiff
“may proceed without the state’s participation.” Tex. Hum. Res. Code
§ 36.104(b). The State cannot control litigation in which it is not
The arguments to the contrary misunderstand both the TMFPA
and the requirement that the State control public litigation.
To start, HSG cites Texas Human Resources Code § 36.107(b) for
the proposition that “[i]rrespective of . . . OAG’s initial intervention/
nonintervention decision,” the Attorney General can “dismiss the
relator’s case even over the objections of the relator.” HSG Resp. 14.
42 APP214 That is incorrect. The section that HSG cites sets out the “Rights of
Parties if State Continues Action.” By its plain terms, it does not speak
to the State’s authority after the State attorney declines to take over
the suit. And even if it did, the Constitution requires that the State
attorney “join[]” in the suit—not that he merely forebear from
dismissing it. Agey, 172 S.W.2d at 974.
The State’s statutory arguments fare no better. The State
stresses that it “is entitled to ongoing information about declined cases.”
State Resp. 21; see Tex. Hum. Res. Code § 36.104(b-1). That is true, but
irrelevant: receiving information about an action is not the same as
“exercis[ing] . . . judgment and discretion regarding the filing of a suit.”
Agey, 172 S.W.2d at 974.
The State also emphasizes that it “can choose to intervene later.”
State Resp. 21. But again, the Constitution requires that the State
attorney control the litigation—not merely that he have the possibility
to later participate in it. And regardless, that statement is misleading:
the TMFPA provides that the State can intervene in a suit that it
declined to join only “on a showing of good cause,” and only “without
limiting the status and right of that person.” Tex. Hum. Res. Code
43 APP215 § 36.104(b-1). So if the State intervenes later, it cannot assume full
responsibility for the suit. That is not State control of State litigation.
(Neither is the State’s cited ability to “submit Statements of Interest
and appear at hearings to advocate for its rights.” State Resp. 21.)
Finally, the State notes that it “can pursue its claims through an
alternate remedy in a separate proceeding; can stay the relator’s ability
to conduct discovery that would interfere with the State’s investigations
or prosecutions; and retains the ultimate authority to consent to—or
veto—a proposed settlement.” State Resp. 21 (footnotes omitted). But
again, the core constitutional concern is that a private litigant may
pursue litigation for and in the name of the State in an action that the
State’s attorneys have expressly declined to take over. See supra at 27-
32. The State’s powers to file separate actions, seek to delay discovery,
and review settlements do nothing to address that fundamental
problem.
At the federal level, defenders of the False Claims Act’s qui tam
provisions have emphasized the historical pedigree of the False Claims
Act. See, e.g., Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749, 753 (5th
44 APP216 Cir. 2001). At the same time, growing consensus—even in the federal
context—is that “the early history of federal qui tam statutes” cannot
“justify contemporary violations of constitutional guarantees.” United
States ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419, 450
(2023) (Thomas, J., dissenting) (quoting Marsh v. Chambers, 463 U.S.
783, 790 (1983)); see id. at 442 (Kavanaugh, J., joined by Barrett, J.,
concurring); Riley, 252 F.3d at 772-75 (Smith, J., dissenting);
Constitutionality of the Qui Tam Provisions of the False Claims Act, 13
The Court need not wade into this dispute because the federal
history does not control the constitutionality of this Texas statute. And
there is no history of qui tam litigation in Texas. The provisions of the
TMFPA that allow a qui tam plaintiff to pursue a suit when the State
declines to take over the case were not even enacted until 2007. See
supra at 6. Before then, no law enacted under the current Texas
Constitution purported to allow a private plaintiff to bring and
maintain suits for the State.10 To the contrary, this Court regularly
10 There were a handful of qui tam statutes enacted under prior constitutional
regimes. See, e.g., Bush v. Republic of Texas, 1 Tex. 455 (1846). But the constitutions then in effect “did not contain the invoked provisions [of Article IV and Article V], and “therefore the question here presented was not there in issue.” Am.
45 APP217 construed statutes to prevent that possibility, and explained that any
statute that could be read to authorize a contrary result must be struck
down. See supra at 27-32.
Nor is it plausible that the early American history of qui tam
litigation informs the meaning of the Texas Constitution. See Southern
Pac Co. v. Porter, 331 S.W.2d 42, 45 (Tex. 1960) (“Texas was never a
British colony nor an American territory.”). The framers of the 1876
Constitution, which contains the relevant separation-of-powers
guarantees, aimed to “define[] the duties of the attorney general or of
district or county attorneys” more “specifically” than prior constitutions.
State v. Moore, 57 Tex. 307, 316 (1882). Indeed, the 1876 Constitution
assigns public litigation duties in much more detail than its federal
counterpart, which says nothing specific about who may litigate on
behalf of the United States. There is simply no reason to believe that
the same framers who carefully assigned litigation responsibility to
Liberty Pipe Line Co., 167 S.W.2d at 581-82. And the decisions by this Court “during the reconstruction period” that blessed qui tam litigation were quickly disregarded once this Constitution was enacted. See Gibbs v. State, 46 S.W. 645, 646 (Tex. Crim. App. 1898) (“We are of opinion that while proceedings in qui tam actions may have been by the informer, by the commonwealth, or by the state in other jurisdictions, under the provisions of our constitution, it being an offense, the prosecution must run in the name of the state.”).
46 APP218 State officials meant to allow for an unwritten qui tam carveout to the
The bottom line is that “tradition . . . cannot provide authority
that the law does not.” Saldano v. State, 70 S.W.3d 873, 883 (Tex.
constitutional meaning, NLRB v. Noel Canning, 573 U.S. 513, 570
(2014) (Scalia, J., concurring in the judgment), and so a law may be
invalid even “when the practice in question ‘covers our entire national
existence and indeed predates it.’” Polansky, 599 U.S. at 450 (Thomas,
J., dissenting) (quoting Walz v. Tax Comm’n of City of N.Y., 397 U.S.
664, 678 (1970)). Here, where qui tam statutes have never been used
under Texas’ current constitution, the tradition is of no relevance at all.
The TMFPA is unconstitutional, and a smattering of eighteenth-century
III. THE COURT SHOULD GRANT MANDAMUS RELIEF.
error of law for which there is no “adequate remedy by appeal.” In re
Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004). Because
the trial court allowed this constitutionally infirm suit to go forward, it
47 APP219 committed an error of law. See supra Parts I-II. And there is no
adequate remedy by appeal for the constitutional infirmities with this
suit: Requiring the parties to undergo cost-intensive discovery just for
Novartis to later obtain reversal on a threshold legal question would
constitute a “gross and unnecessary waste of economic and judicial
resources.” In re J.B. Hunt Transport, Inc., 492 S.W.3d 287, 298-99
(Tex. 2016). For this reason, this Court regularly holds that
“[m]andamus relief is appropriate” when the trial court improperly
denies a “motion to dismiss.” See, e.g., In re Farmers Tex. Cnty. Mut.
Ins. Co., 621 S.W.3d 261, 266 (Tex. 2021); In re Essex Ins. Co., 450
S.W.3d 524, 528 (Tex. 2014); cf. In re Shire PLC, 633 S.W.3d 1, 27 (Tex.
App. 2021) (“[A]n incorrect denial of a Rule 91a motion to dismiss would
expose the defendant to the time and resources necessary to defend a
claim that can only end in a defense verdict.”). That is true even when
the “issue of law” presented is “one of first impression.” In re
constitutional questions presented in this petition. The issues are
purely legal; they do not turn on any facts specific to this qui tam suit.
48 APP220 So nothing will be gained from further proceedings that—if Novartis is
correct in its legal arguments—cannot constitutionally proceed.
Immediate resolution of the issues presented here is also important to
preserving separation of powers and the orderly processes of
government—specifically, the jurisdiction of the Executive department
and the Attorney General’s core constitutional duties to initiate (or not
initiate) suit for the State and exclusively control litigation intended to
vindicate the public interest.
CONCLUSION AND PRAYER
mandamus directing the district court to dismiss HSG’s claims.
49 APP221 Dated: September 30, 2024 Respectfully submitted,
/s/ Danny S. Ashby Danny S. Ashby Texas Bar No. 01370960 dashby@omm.com 2801 North Harwood Street, Suite 1600 Dallas, Texas 75201 Telephone: +1 972 360 1900 Facsimile: +1 972 360 1901
Anton Metlitsky ametlitsky@omm.com Ross Galin rgalin@omm.com 1301 Avenue of the Americas, 17th Floor New York, NY 10019 Telephone: +1 212 326 2000 (Admitted pro hac vice)
Deron R. Dacus Texas Bar No. 00790553 ddacus@dacusfirm.com 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903 705 1117
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APP226 FILED 24-0239 10/29/2024 3:33 PM tex-93703585 SUPREME COURT OF TEXAS BLAKE A. HAWTHORNE, CLERK
Cause No. 24-0239
_______________________________________ SIXTH DISTRICT COURT OF APPEALS CASE NO. 06-24-00005-CV, FROM THE 71ST DISTRICT COURT IN HARRISON COUNTY, TEXAS CAUSE NO. 23-0276 • THE HONORABLE BRAD MORIN PRESIDING
BRIEF OF AMICUS CURIAE U.S. CHAMBER OF COMMERCE IN SUPPORT OF PETITIONER
LINDSEY B. COHAN STEVEN A. ENGEL (Texas Bar No. 24083903) (Admitted Pro Hac Vice) DECHERT LLP MICHAEL H. MCGINLEY 515 Congress Avenue, Suite 1400 (Admitted Pro Hac Vice) Austin, Texas 78701 M. SCOTT PROCTOR Telephone: +1 512.394.3001 (Admitted Pro Hac Vice) lindsey.cohan@dechert.com JUSTIN W. AIMONETTI (Admitted Pro Hac Vice) DECHERT LLP 1900 K Street, NW Washington, D.C. 20006 Counsel for Amicus Curiae, Telephone: +1 202.261.3300 U.S. Chamber of Commerce steven.engel@dechert.com f @ COUNSEL PRESS · (213) 680-2300 PRINTED ON RECYCLED PAPER
APP227 IDENTITY OF PARTIES, AMICUS CURIAE, AND COUNSEL
The parties and their counsel are correctly identified in the parties’
briefs on the merits. This brief is written on behalf of Amicus Curiae the
Chamber of Commerce of the United States of America.
Amicus Curiae is represented by the following counsel:
Lindsey Cohan DECHERT LLP 515 Congress Ave., Suite 1400 Austin, TX, 78701
Steven A. Engel (Admitted Pro Hac Vice) Michael H. McGinley (Admitted Pro Hac Vice) M. Scott Proctor (Admitted Pro Hac Vice) Justin W. Aimonetti (Admitted Pro Hac Vice) DECHERT LLP 1900 K ST NW Washington DC, 20006 steven.engel@dechert.com
APP228 TABLE OF CONTENTS
TABLE OF AUTHORITIES ...................................................................... iv INTEREST OF AMICUS CURIAE ............................................................ 1 INTRODUCTION ....................................................................................... 3 ARGUMENT ............................................................................................... 6 I. The Separation of Powers Is Fundamental To Both The Texas And United States Constitutions ................................... 6 A. The Texas Constitution Makes Clear That The Separation Of Powers Safeguards Liberty ............................. 6 B. The Separation Of Powers Under The Texas Constitution Derives From The U.S. Constitution ................. 8 C. Courts Have Long Recognized That The U.S. Constitution’s Separation of Powers Vests All Executive Power In A Politically Accountable Executive ................................................................................ 11 II. The Texas Constitution Vests The Attorney General And County Attorneys With The Authority Of The State .................... 13 III. The TMFPA’s Qui Tam Provisions Violate The Texas Constitution ..................................................................................... 17 A. The TMFPA Violates The Separation-Of-Powers Principles Enshrined In Article II, Section 1; Article IV, Section 22; And Article V, Section 21.............................. 17 B. Federal Caselaw Reinforces The Conclusion That The TMFPA Is Unconstitutional ........................................... 19 C. History Cannot Salvage The Texas Qui Tam Provisions’ Affront To The Separation Of Powers ................ 22 PRAYER .................................................................................................... 28 CERTIFICATE OF COMPLIANCE ........................................................ 29 CERTIFICATE OF SERVICE.................................................................. 30
APP229 TABLE OF AUTHORITIES
CASES Page(s) Albertson’s, Inc. v. Sinclair, 984 S.W.2d 958 (Tex. 1999)............................................................. 16 Allen v. Fisher, 9 S.W.2d 731 (Tex. 1928)................................................................. 15 Armadillo Bail Bonds v. State, 802 S.W.2d 237 (Tex. Crim. App. 1990) (en banc) ........................... 7 Chisholm v. Bewley Mills, 287 S.W.2d 943 (Tex. 1956)............................................................. 16 Cochise Consultancy, Inc. v. United States ex rel. Hunt, 587 U.S. 262 (2019) ......................................................................... 21 Dao v. Trinh, 2024 WL 2069933 (Tex. App. May 9, 2024) ................................... 18 Dep’t of Transp. v. Ass’n of Am. R.R., 575 U.S. 43 (2015) ..................................................................... 12, 13 El Paso Electric Co. v. Texas Department of Insurance, 937 S.W.2d 432 (Tex. 1996)....................................................... 17, 18 Ex parte Davis, 957 S.W.2d 9 (Tex. Crim. App. 1997) ............................................. 20 Fin. Comm’n of Texas v. Norwood, 418 S.W.3d 566 (Tex. 2013)............................................................... 3 Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477 (2010) ................................................................... 11, 12 Garcia v. City of Willis, 593 S.W.3d 201 (Tex. 2019)............................................................... 7 Image API, LLC v. Young, 691 S.W.3d 831 (Tex. 2024)............................................................. 16 In re Abbott, 628 S.W.3d 288 (Tex. 2021)............................................................. 19 In re Allcat Claims Serv., L.P., 356 S.W.3d 455 (Tex. 2011)....................................................... 14, 16 iv
APP230 In re Dallas Cnty., 697 S.W.3d 142 (Tex. 2024)............................................................. 27 Johnson ex rel. MAII Holdings, Inc. v. Jackson Walker, L.L.P., 247 S.W.3d 765 (Tex. App. 2008) ...................................................... 6 Jones v. State, 803 S.W.2d 712 (Tex. Crim. App. 1992) ........................................... 7 Kinney v. Barnes, 443 S.W.3d 87 (Tex. 2014)........................................................... 5, 20 Kirk v. State, 454 S.W.3d 511 (Tex. Crim. App. 2015) ......................................... 13 Lucia v. Securities and Exchange Commission, 585 U.S. 237 (2018) ......................................................................... 21 Marsh v. Chambers, 463 U.S. 783 (1983) ......................................................................... 26 Martin v. Hunter’s Lessee, 14 U.S. (1 Wheat.) 304 (1816) ......................................................... 13 Michaelis v. Rollins, 1999 WL 33748054 (Tex. App. May 6, 1999) ................................. 15 Mosley v. Texas Health & Hum. Servs. Comm’n, 593 S.W.3d 250 (Tex. 2019)............................................................. 19 Murphy v. Smith, 583 U.S. 220 (2018) ......................................................................... 16 New York State Rifle & Pistol Ass’n, Inc. v. Bruen, 597 U.S. 1 (2022) ............................................................................. 26 Pidgeon v. Turner, 538 S.W.3d 73 (Tex. 2017)........................................................... 5, 20 Robertson v. United States ex rel. Watson, 560 U.S. 272 (2010) ......................................................................... 12 Satterfield v. Crown Cork & Seal Co., 268 S.W.3d 190 (Tex. App. 2008) .................................................... 20 Seila Law LLC v. Consumer Financial Protection Bureau, 591 U.S. 197 (2020) ................................................................... 11, 21
APP231 State ex rel. Downs v. Harney, 164 S.W.2d 55 (Tex. Civ. App. 1942) .............................................. 16 State ex rel. Durden v. Shahan, 658 S.W.3d 300 (Tex. 2022)............................................................. 15 State ex rel. Hill v. Pirtle, 887 S.W.2d 921 (Tex. Crim. App. 1994) ......................................... 15 State v. Rhine, 297 S.W.3d 301 (Tex. Crim. App. 2009) ......................................... 13 State v. Stephens, 663 S.W.3d 45 (Tex. Crim. App. 2021) ........................................... 13 Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993)......................................................... 7, 18 Texas Boll Weevil Eradication Foundation, Inc. v. Lewellen, 952 S.W.2d 454 (Tex. 1997)........................................................... 7, 8 Texas Dep’t of Transp. v. T. Brown Constructors, Inc., 947 S.W.2d 655 (Tex. App. 1997) ...................................................... 6 United States ex rel. Atkins v. McInteer, 470 F.3d 1350 (11th Cir. 2006) ....................................................... 23 United States ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419 (2023) ......................................................... 4, 13, 21, 22 United States ex rel. Stevens, 529 U.S. 765 (2000) ......................................................................... 24 United States ex rel. Zafirov v. Florida Medical Associates, LLC, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024). ..................... 4, 22, 26 United States v. Rahimi, 144 S. Ct. 1889 (2024) ..................................................................... 26 Waffle House, Inc. v. Williams, 313 S.W.3d 796 (Tex. 2010)............................................................. 19 Walz v. Tax Comm’n of City of New York, 397 U.S. 664 (1970) ......................................................................... 26
vi
APP232 CONSTITUTIONS Tex. Const. art. II, § 1 ............................................................. 3, 6, 7, 13, 18 Tex. Const. art. IV, § 22 ................................................... 14, 15, 16, 17, 18 Tex. Const. art. V, § 21 ..................................................... 14, 15, 16, 17, 18 Tex. Const. art. XVII ................................................................................ 18 U.S. Const. art. II, § 1, cl. 1 .............................................. 11, 12, 13, 17, 22 U.S. Const. art. II, § 2, cl. 2 ...................................................................... 22
STATUTES Tex. Hum. Res. Code § 36.101.................................................................. 17 Tex. Hum. Res. Code § 36.104............................................................ 17, 18 Tex. Hum. Res. Code § 36.110.................................................................. 17
RULES Tex. App. R. 11(c) ........................................................................................ 5
OTHER AUTHORITIES 1 Annals of Cong. 480 (1789) (statement of James Madison) ................ 12 4 William Blackstone, Commentaries on the Laws of England (1768) ...................................................................... 9, 10, 11 5 Matthew Bacon, A New Abridgement of the Law 798 (7th ed. 1832) ................................................................................... 11 2007 Tex. Sess. Law Serv. Ch. 29, § 4 (S.B. 362) ................................... 17 A. Scalia & B. Garner, Reading Law: The Interpretation of Legal Texts 114 (2012)..................................................................... 16 Act of Aug. 4, 1790, ch. 35, §§ 55, 69, 1 Stat. 145, 173, 177 ................... 24 Act of Feb. 25, 1791, ch. 10, §§ 8, 9, 1 Stat. 191, 195–96 ........................ 24 Act of July 20, 1790, ch. 29, § 1, 1 Stat. 131, 131 .................................... 24 Act of July 31, 1789, ch. 5, §§ 8, 29, 38, 1 Stat. 29, 38, 45, 48 ................ 23 Act of May 31, 1790, ch. 15, § 2, 1 Stat. 124, 124–25 .............................. 24 Act of Sept. 1, 1789, ch. 11, § 21, 1 Stat. 55, 60 ...................................... 24
APP233 Act of Sept. 2, 1789, ch. 12, § 8, 1 Stat. 65, 67 ........................................ 24 Ann Woolhandler & Caleb Nelson, Does History Defeat Standing Doctrine?, 102 Mich. L. Rev. 689 (2004) .......................................................... 25 Constitutionality of the Qui Tam Provisions of the False Claims Act, 13 Op. O.L.C. 207 (1989) (William Barr, Ass’t Att’y Gen.)...... 25, 26 J. Randy Beck, The False Claims Act and the English Eradication of Qui Tam Legislation, 78 N.C. L. Rev. 539 (2000) ........................................................ 25, 26 John Locke, Two Treatises on Civil Government 197 (George Routledge & Sons ed., 1884) ......................................... 9, 10 Leonard D. White, The Federalists 417 (1956)........................................ 25 Montesquieu, The Spirit of the Laws 157 (A. Cohler, B. Miller, & H. Stone eds. 1989) .................................... 9 Pamela Bucy et. al., States, Statutes, and Fraud: A Study of Emerging State Efforts to Combat White Collar Crime, 31 Cardozo L. Rev. 1523 (2010) ...................................................... 23
viii
APP234 INTEREST OF AMICUS CURIAE
The Chamber of Commerce of the United States of America
(“Chamber”) is the world’s largest business federation. It represents
approximately 300,000 direct members and indirectly represents the
interests of more than 3 million companies and professional
organizations of every size, in every industry sector, and from every
region of the country. An important function of the Chamber is to
represent the interests of its members in matters before Congress, the
Executive Branch, and the state and federal courts. To that end, the
Chamber regularly files amicus curiae briefs in cases, like this one, that
raise issues of concern to the business community.
The federal False Claims Act (“FCA”) and parallel state laws, such
as the Texas Medicaid Fraud Prevention Act (“TMFPA”) at issue here,
together affect nearly every sector of the economy, from healthcare,
defense, and construction, to technology, education, and banking. These
acts no doubt promote the worthy goal of protecting the federal and state
treasuries from fraud. But the Chamber believes that the qui tam
mechanisms in such statutes have been grossly abused, particularly over
the past few decades, where relators have sought to exploit the
APP235 extraordinary powers granted by such mechanisms to seek private profit
in cases that do not involve genuine fraud against the federal and state
governments.
The unusual qui tam device deputizes individual relators to
exercise government power and pursue litigation on behalf of the
sovereign, even when the government refuses to intervene. And that
transfer of core government power to private hands has exacted a
substantial economic toll. Companies frequently spend millions of
dollars, or more, conducting investigations, fielding discovery demands,
and engaging in motions practice—all to defend against baseless
allegations that the government has deemed unworthy of prosecution.
Those litigation costs quickly add up. As a result, even meritless cases
can be used to extract enormous settlements.
Because qui tam provisions impose costs that affect businesses
across the Nation, the Chamber files this amicus brief to assist the
Court.1
1 The Chamber agrees with Novartis that the relator lacks constitutional standing, but files this brief to address the separation of powers problems underlying the TMFPA. 2
APP236 INTRODUCTION
In 2007, Texas amended the TMFPA to include qui tam provisions.
Those added provisions violate the separation of powers under the Texas
Constitution. That foundational document guarantees that “[t]he powers
of the Government of the State of Texas shall be divided into three
distinct departments”—Legislative, Executive, and Judicial—and that
“no person, or collection of persons, being one of these departments, shall
exercise any power properly attached to either of the others, except in the
instances herein expressly permitted.” Tex. Const. art. II, § 1.
The Texans who ratified the State’s Constitution understood that
“[t]he principle of separation of powers is foundational for federal and
state governments in this country and firmly embedded in our nation’s
history.” Fin. Comm’n of Texas v. Norwood, 418 S.W.3d 566, 570 (Tex.
2013). That is so because a government of separated powers ensures that
no single institution attains overweening political dominance over the
State, and that politically accountable government officials bear
responsibility for the enforcement of the State’s law—including the
provisions of the TMFPA. Thus, maintaining the separation of powers is
critically important to protecting the liberties of the People from
governmental overreach.
The qui tam provisions of the TMFPA violate these core
constitutional requirements. Through those provisions, the State
APP237 legislature has wrested the enforcement power from the hands of the
government attorneys to whom it is assigned by the Texas Constitution
and has placed that power in the hands of unaccountable private
plaintiffs who are free to pursue claims that state officials have declined
to chase. Such a transfer of power is unconstitutional.
The separation of powers principles of the Texas Constitution
reflect the separation of powers principles of the federal Constitution.
Just last year, three Justices of the U.S. Supreme Court observed that
“[t]here are substantial arguments that the qui tam device is inconsistent
with Article II” of the U.S. Constitution. United States ex rel. Polansky
v. Exec. Health Res., Inc., 599 U.S. 449 (2023) (Thomas, J., dissenting);
see id. at 442 (Kavanaugh, J., joined by Barrett, J., concurring). And just
last month, a federal district judge thoroughly considered those concerns
and held that the qui tam provisions of the FCA, which the TMFPA
mirrors, violate the federal Constitution. See United States ex rel. Zafirov
v. Florida Medical Associates, LLC, 2024 WL 4349242, at *18 (M.D. Fla.
Sept. 30, 2024).
The TMFPA’s qui tam provisions are likewise invalid under the
Texas Constitution, which even more explicitly safeguards the separation
APP238 of powers that protects the liberties of the People and ensures official
accountability. See, e.g., Kinney v. Barnes, 443 S.W.3d 87, 92 (Tex. 2014);
Pidgeon v. Turner, 538 S.W.3d 73, 83 (Tex. 2017). Much as the FCA’s qui
tam provisions contravene the separation of powers principles
underpinning the federal Constitution, the TMFPA’s qui tam provisions
run roughshod over the separation of powers principles expressly
protected by the Texas Constitution. The qui tam provisions empower
self-appointed private citizens with substantial governmental power to
enforce public rights that only Texas government attorneys are
authorized to enforce. This Court should therefore deem the TMFPA’s
qui tam provisions repugnant to the Texas Constitution and issue a writ
of mandamus directing the district court to dismiss Health Selection
Group’s (“HSG’s”) claims.
Amicus curiae states that no counsel for any party authored this
brief in whole or in part and no entity or person, aside from amicus
curiae, its members, or its counsel, made any monetary contribution
intended to fund the preparation or submission of this brief. Tex. App.
R. 11(c).
APP239 ARGUMENT
I. The Separation of Powers Is Fundamental To Both The Texas And United States Constitutions.
A. The Texas Constitution Makes Clear That The Separation Of Powers Safeguards Liberty.
Like the federal Constitution, the Texas Constitution “expressly
preserves three distinct departments of government.” Texas Dep’t of
Transp. v. T. Brown Constructors, Inc., 947 S.W.2d 655, 659 (Tex. App.
1997). But the Texas Constitution’s ratifiers went even further and
adopted Article II, § 1 to explicitly ensconce the inviolability of the
separation of powers into the State’s foundational document. The Article
first mandates that “the Government of the State of Texas shall be
divided into three distinct departments”—the “Legislative,” “Executive,”
and “Judicial.” Tex. Const. art. II, § 1; see, e.g., Johnson ex rel. MAII
Holdings, Inc. v. Jackson Walker, L.L.P., 247 S.W.3d 765, 777 (Tex. App.
2008). The Article then makes plain what is implied in the federal
Constitution—“no person, or collection of persons, being of one of these
departments, shall exercise any power properly attached to either of the
others, except in the instances herein expressly permitted.” Tex. Const.
art. II, § 1. This separation of powers “reflects a belief on the part of those
who drafted and adopted [Texas’s] [C]onstitution that one of the greatest
APP240 threats to liberty is the accumulation of excessive power in a single
branch of government.” Armadillo Bail Bonds v. State, 802 S.W.2d 237,
239 (Tex. Crim. App. 1990) (en banc). As this Court has explained, due
regard for this separation of powers mandates that “governmental
authority vested in one department of government cannot be exercised
by another department unless expressly permitted by the [Texas
C]onstitution.” Garcia v. City of Willis, 593 S.W.3d 201, 206 (Tex. 2019)
(quoting Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444
(Tex. 1993)).
One branch can violate the separation of powers principles
embodied in Article II, § 1 without directly arrogating to itself the powers
of another branch. See Armadillo Bail Bonds, 802 S.W.2d at 239. It can
do so by “unduly interfer[ing] with another branch so that the other
branch cannot effectively exercise its constitutionally assigned powers.”
Id.; see Jones v. State, 803 S.W.2d 712, 715 (Tex. Crim. App. 1992).
Relevant here, the Texas legislature might unduly interfere with another
branch’s authority by delegating that branch’s powers to a private entity
via statute. See Texas Boll Weevil Eradication Foundation, Inc. v.
Lewellen, 952 S.W.2d 454, 465–75 (Tex. 1997) (holding that “improperly
delegating government authority to” a private foundation violated the
APP241 separation of powers in part because it did not delegate executive
functions to an “administrative” agency). Such a move would not merely
offend the separation of powers. “More fundamentally, the basic concept
of democratic rule under a republican form of government is
compromised when public powers are abandoned to those who are neither
elected by the People, appointed by a public official or entity, nor
employed by the government” to exercise a power assigned to one of the
branches. Id. at 469.
B. The Separation Of Powers Under The Texas Constitution Derives From The U.S. Constitution.
The State of Texas derived its understanding of separated powers
from the U.S. Constitution, including its conception of the executive
power. Just as the authors of the Texas Constitution drew on, and
elaborated upon, the concept of executive power embodied in the U.S.
Constitution, the Texas Founders drew on, and elaborated upon, the U.S.
Founders’ understanding of separated powers, which vested the
executive power in accountable government officers. Thus, to understand
APP242 the nature of the Texas executive power, it is necessary to understand its
origin in the Anglo-American legal tradition.
The conception of centralized executive authority under the U.S.
Constitution finds roots in the influential political theory of the English
political philosopher John Locke. As Locke explained, “in the state of
Nature[,] every one has the executive power of the law of Nature.” John
Locke, Two Treatises on Civil Government 197 (George Routledge & Sons
ed., 1884); see Montesquieu, The Spirit of the Laws 157 (A. Cohler, B.
Miller, & H. Stone eds. 1989). But “when they enter into society,”
individuals “give up the . . . executive power they had in the state of
Nature into the hands of the society.” Locke, supra, at 258. That is, the
people delegate their executive authority to public officials, whose power
is “to be directed to no other end but the peace, safety, and public good of
the people.” Id. at 259.
William Blackstone’s Commentaries reflect a similar
understanding. “In a state of society,” he reasoned, the right “to put [the
law] in execution” is “transferred from individuals to the sovereign
power,” who “alone . . . bears the sword of justice by the consent of the
whole community.” 4 William Blackstone, Commentaries on the Laws of
APP243 England *7–8 (1768). And because the public “delegate[s] all its power
and rights, with regard to the execution of the laws, to one visible
magistrate,” that officer is “the proper person to prosecute for all public
offences.” 1 Blackstone, Commentaries at *258–59. Importantly, this
understanding of the executive power was not strictly limited to the
prosecution of “criminal” offenses. Rather, it extended to the pursuit of
relief for all “infraction[s] of the public rights belonging to th[e]
community.” 4 Blackstone, Commentaries at *2. Vindicating those
public rights is the prerogative of the sovereign actor whom the people
have empowered to administer the laws. See id.
The common law recognized that, if a person has personally
“suffered the damage” from a public infraction, then he might have a
concomitant right to demand redress “in his own name.” Locke, supra,
at 196. But that private wrong would not permit him to pursue relief on
behalf of the public writ large. “[N]o person” other than the official
entrusted with the executive authority “can have an action for a public
nuisance, or punish it,” unless that “private person suffers some
extraordinary damage.” 3 Blackstone, Commentaries at *219–20.
Because individual persons give up the right to exercise executive
APP244 authority when they enter society, “the law gives no private remedy for
any thing but a private wrong.” Id. at *219; see also 5 Matthew Bacon, A
New Abridgement of the Law 798 (7th ed. 1832) (explaining that “common
nuisances against the public are only punishable by a public
prosecution”). Only the public office or entity vested with the executive
power may vindicate such public rights.
C. Courts Have Long Recognized That The U.S. Constitution’s Separation of Powers Vests All Executive Power In A Politically Accountable Executive.
The Framers of the U.S. Constitution enshrined this understanding
in Article II’s text, which vests “[t]he executive Power” in a single
“President of the United States.” U.S. Const. art. II, § 1, cl. 1. The
Framers adopted that unitary structure to promote accountability and
ensure that “a President chosen by the entire Nation” would “oversee the
execution of the laws.” Free Enter. Fund v. Pub. Co. Acct. Oversight Bd.,
561 U.S. 477, 499 (2010). By entrusting “the President alone” with “all
of” the Nation’s executive Power, the Framers sought to ensure that he
would remain accountable for all those who would act on his behalf. Seila
Law LLC v. CFPB, 591 U.S. 197, 203, 213 (2020). The Framers
understood that “[a] basic step in organizing a civilized society” was to
APP245 take the “sword” of law-enforcement actions “out of private hands and
turn it over to an organized government, acting on behalf of all the
people.” Robertson v. United States ex rel. Watson, 560 U.S. 272, 282–83
(2010) (Roberts, C.J., dissenting from the dismissal of a writ of certiorari
as improvidently granted).
Consistent with this need for accountability, the Framers did not
vest “[p]rivate entities . . . with the ‘executive Power.’” Dep’t of Transp.
v. Ass’n of Am. R.R., 575 U.S. 43, 62 (2015) (Alito, J., concurring) (quoting
U.S. Const. art. II, § 1, cl. 1). “[T]he intention of the Constitution” was
instead “that the first Magistrate should be responsible for the executive
department” in its entirety. 1 Annals of Cong. 480 (1789) (statement of
James Madison). To that end, the federal Constitution established a
unitary and accountable Executive who alone was charged with the
responsibility for enforcing federal law. See Free Enter. Fund, 561 U.S.
at 496–97; Ass’n of Am. R.R., 575 U.S. at 67–68 (Thomas, J., concurring
in the judgment).
More to the point, the Framers understood that the branch
entrusted with the legislative power—Congress—could not strip the
President of the executive power that the Constitution vested in that
APP246 office. That is so because the Constitution created “a separate Executive
Branch coequal to the Legislature,” United States ex rel. Polansky v.
Executive Health Resources, Inc., 599 U.S. 419, 450 (2023) (Thomas, J.,
dissenting) (emphasis added), in which only the President “shall be
vested” with the executive power, U.S. Const. art. II cl. 1. Given that
design, it is “utterly inadmissible” for Congress to attempt to vest
executive authority “in any other person” besides the President. Martin
v. Hunter’s Lessee, 14 U.S. (1 Wheat.) 304, 330 (1816) (Story, J.); see also
Ass’n of Am. R.R., 575 U.S. at 62 (Alito, J., concurring) (questioning the
propriety of “citizen suits” that might delegate “the ‘Executive power’”).
II. The Texas Constitution Vests The Attorney General And County Attorneys With The Authority Of The State.
By dividing its government into three parts, the Texas Constitution
adopts the model set by the U.S. Constitution. If anything, that model is
“more aggressively enforce[d]” in Texas because, unlike the federal
Constitution, the Texas Constitution contains an “express separation of
powers provision” in Article II, Section 1. State v. Stephens, 663 S.W.3d
45, 49–50 (Tex. Crim. App. 2021); State v. Rhine, 297 S.W.3d 301, 315
(Tex. Crim. App. 2009) (Keller, P.J., concurring); see also Kirk v. State,
454 S.W.3d 511, 514 (Tex. Crim. App. 2015) (characterizing Texas
APP247 Supreme Court holdings as persuasive authority). That “explicit
Separation of Powers provision—something the U.S. Constitution
lacks—prohibits not just the exercise of one branch’s powers by another
branch, but also any interference with another branch’s exercise of its own
authority.” In re Allcat Claims Serv., L.P., 356 S.W.3d 455, 485–86 (Tex.
2011) (Willet, J., concurring) (footnote omitted).
Although the Texas Constitution does not have a unitary executive
like the federal government, it expressly specifies the politically
accountable officials who may exercise the executive power of the State.
Article IV, Section 22 provides that the Attorney General “shall represent
the State in all suits and pleas in the Supreme Court of the State . . . and
perform such other duties as may be required by law.” Article V, Section
21 provides that county attorneys “shall represent the State in all cases
in the District and inferior courts in their respective counties.” Read
together, these provisions confirm that the “Texas Constitution
authorizes the attorney general, county attorneys, and district attorneys
APP248 to represent the state in various cases.” State ex rel. Durden v. Shahan,
658 S.W.3d 300, 303 (Tex. 2022) (per curiam).
Given the clarity of the Constitution’s text, this Court has held that
Article IV, Section 22 and Article V, Section 21 “mark the limits of
legislative authority to prescribe who shall represent the state and
control its interests in a lawsuit in the district court.” Allen v. Fisher, 9
S.W.2d 731, 732 (Tex. 1928). That is so even though Texas categorizes
the Attorney General as an executive officer and the county attorneys as
judicial officers. See State v. Stephens, 663 S.W.3d 45, 54 (Tex. Crim.
App. 2021). What matters is that the authors of the Texas Constitution
entrusted specific state officers with the fundamentally executive power
to enforce the State’s laws. But the authors nowhere authorized the
legislature to transfer that power to private citizens via a private right of
action to vindicate public rights. See State ex rel. Hill v. Pirtle, 887
S.W.2d 921, 928 (Tex. Crim. App. 1994); Michaelis v. Rollins, 1999 WL
33748054, at *1 (Tex. App. May 6, 1999).
The text is unmistakably clear: the Texas Constitution uses the
word “shall.” This Court “presume[s] the language of the Constitution
was carefully selected, interpret words as they are generally understood,
APP249 and rely heavily on the literal text.” In re Allcat Claims Serv., L.P., 356
S.W.3d 455, 466 (Tex. 2011). Here, “the word ‘shall’ is generally
construed to be mandatory.” Chisholm v. Bewley Mills, 287 S.W.2d 943,
945 (Tex. 1956); Image API, LLC v. Young, 691 S.W.3d 831, 841 (Tex.
2024) (“[U]sing words like shall or must, is mandatory.”); Albertson’s, Inc.
v. Sinclair, 984 S.W.2d 958, 961 (Tex. 1999) (“We generally construe the
word ‘shall’ as mandatory, unless legislative intent suggests otherwise.”);
A. Scalia & B. Garner, Reading Law: The Interpretation of Legal Texts
114 (2012) (“[W]hen the word shall can reasonably be read as mandatory,
it ought to be so read”); see also Murphy v. Smith, 583 U.S. 220, 223 (2018)
(“[T]he word ‘shall’ usually creates a mandate, not a liberty.”).
As a result, the “shall” language of Article IV, Section 22 and Article
V, Section 21 create a duty and “vests in the county attorney and” the
attorney general the authority to enforce Texas law. State ex rel. Downs
v. Harney, 164 S.W.2d 55, 58 (Tex. Civ. App. 1942). That clear language
means that the Texas legislature cannot “divest these officials of their
collective constitutional authority by shifting representation to some
APP250 other attorney.” El Paso Electric Co. v. Texas Department of Insurance,
937 S.W.2d 432, 439 (Tex. 1996).
III. The TMFPA’s Qui Tam Provisions Violate The Texas Constitution.
A. The TMFPA Violates The Separation-Of-Powers Principles Enshrined In Article II, Section 1; Article IV, Section 22; And Article V, Section 21.
The TMFPA provides that a “person may bring a civil action for a
violation” of the Act “for the person and for the state,” which “shall be
brought in the name of the person and of the state.” Tex. Hum. Res. Code
§ 36.101(a). For the first decade after its enactment, the TMFPA
provided that the court “shall dismiss the action” if the State declined to
bring it. Id. § 36.104(b) (2005). But the Texas Legislature amended the
statute in 2007 to allow private individuals to continue litigation without
the State’s consent. 2007 Tex. Sess. Law Serv. Ch. 29, § 4 (S.B. 362).
Now, if the State declines to take over the action, “the person bringing
the action may proceed without the state’s participation.” Tex. Hum. Res.
Code § 36.104(b). And if a private person succeeds in her qui tam action,
the defendant must pay the same civil penalties as if the State had
brought the action itself. Id. § 36.101(b). The private person receives a
significant bounty from that penalty award. Id. § 36.110(a-1). In other
APP251 words, the TMFPA authorizes (indeed, incentivizes) private individuals
to sue on behalf of the State in circumstances where the State attorneys
specifically empowered by Section 21 and Section 22 affirmatively decline
to press the litigation.
By authorizing a private person to “proceed without the state’s
participation,” Tex. Hum. Res. Code § 36.104(b), the Texas legislature
unconstitutionally devolved the State’s power to individuals who lack the
constitutional authority to exercise it. That is so because the Texas
Constitution exclusively empowers the Texas Attorney General and the
county attorneys with the vested duty to enforce the law and seek redress
for violations of public rights. See Dao v. Trinh, 2024 WL 2069933, at *3
(Tex. App. May 9, 2024); Texas Ass’n of Bus. v. Texas Air Control Bd., 852
S.W.2d 440, 464 (Tex. 1993) (Doggett, J., concurring in part). The Texas
legislature may not “divest” those attorneys of the executive power that
the Texas Constitution assigns to them. El Paso Electric Co, 937 S.W.2d
at 439. Only Texans, through constitutional amendment, may do so. See
Tex. Const. art. 17 (amendment process). This Court should therefore
hold that the TMFPA qui tam provisions violate Article II, Section 1,
Article IV, Section 22, and Article V, Section 21 because the Texas
APP252 Legislature’s effort to give a private party the power to pursue public
litigation violates the separation-of-powers principles enshrined in the
state’s Constitution.
B. Federal Caselaw Reinforces The Conclusion That The TMFPA Is Unconstitutional.
If this Court were to find that the TMFPA qui tam provisions
violate the Texas Constitution, it would be following a path already trod
in proceedings involving the qui tam provisions of the comparable federal
False Claims Act (“FCA”). These recent federal proceedings reinforce
the conclusion that the TMFPA violates the Texas separation of powers.
The Texas Constitution reflects the same separation of powers
principles as the federal Constitution. See supra. That fact has led this
Court to look to federal precedent where persuasive and helpful to
interpret the Texas Constitution’s separation of powers. See In re Abbott,
628 S.W.3d 288, 296 (Tex. 2021) (“We frequently look to federal
constitutional decisions when interpreting analogous state constitutional
provisions, particularly when the constitutional text is functionally
identical.”); Mosley v. Texas Health & Hum. Servs. Comm’n, 593 S.W.3d
250, 264 (Tex. 2019) (similar); Waffle House, Inc. v. Williams, 313 S.W.3d
796, 804 (Tex. 2010) (“Texas courts look to analogous federal law in
APP253 applying the state Act.”); Kinney v. Barnes, 443 S.W.3d 87, 92 (Tex. 2014)
(“[I]n interpreting our own constitution, we ‘should borrow from well-
reasoned and persuasive federal procedural and substantive precedent
when this is deemed helpful, but should never feel compelled to parrot
the federal judiciary.’” (citation omitted)); Pidgeon v. Turner, 538 S.W.3d
73, 83 (Tex. 2017) (“[Federal] decisions, particularly those regarding
federal constitutional questions, can certainly be helpful and may be
persuasive for Texas trial courts.”). But Texas does not follow federal
court interpretations in lockstep. Rather, Texas courts must give due
effect where, as here, the Texas Constitution provides for more explicit
protections than the federal counterpart. See Ex parte Davis, 957 S.W.2d
9, 12 (Tex. Crim. App. 1997) (“We note initially that this Court, as well
as the Texas Supreme Court, has held that the Texas Constitution gives
greater protection in some instances to Texas citizens than does its
federal counterpart.”); Satterfield v. Crown Cork & Seal Co., 268 S.W.3d
190, 202 (Tex. App. 2008) (“[S]tate constitutions can, and often do,
provide additional rights for their citizens.”).
A few lower federal courts have upheld the constitutionality of the
federal FCA. But those decisions predate a line of U.S. Supreme Court
APP254 precedents over the past 20 years that have enforced the structural limits
of the federal Constitution with renewed vigor. For example, in Seila
Law LLC v. Consumer Financial Protection Bureau, 591 U.S. 197 (2020),
the Supreme Court held that Congress violated Article II’s vesting clause
by creating an independent agency led by a single director insulated from
presidential removal. And in Lucia v. Securities and Exchange
Commission, 585 U.S. 237 (2018), the Court held that administrative law
judges were “officers of the United States,” who must be appointed in a
presidentially accountable manner consistent with the Appointments
Clause of the U.S. Constitution; see also Cochise Consultancy, Inc. v.
United States ex rel. Hunt, 587 U.S. 262, 272 (2019) (holding that a
relator is not “appointed as an officer of the United States”). In those
cases and others, the Court has pushed back on Congress’s attempts to
diminish the President’s control over the Executive Branch.
Last year, three Justices of the Supreme Court observed that, in
light of these precedents, “[t]here are substantial arguments that the qui
tam device is inconsistent with Article II” because it too strips the
President of his ability to exercise a part of the executive power of the
United States. United States ex rel. Polansky v. Exec. Health Res., Inc.,
APP255 599 U.S. 419, 449 (2023) (Thomas, J., dissenting); see id. at 442
(Kavanaugh, J., joined by Barrett, J., concurring). And just last month,
a federal court determined that the FCA’s qui tam provisions violated the
Appointments Clause of the federal Constitution. See Zafirov, 2024 WL
4349242, at *18. As that court correctly concluded, qui tam laws violate
Article II by stripping executive power from the executive branch and
assigning it to private actors despite the Framers’ decision to vest the
entire “executive Power” in the President and properly appointed officers
accountable before him. U.S. Const. art. II, § 1, cl. 1; id. art. II, § 2, cl. 2.
The qui tam provisions of the TMPFA likewise violate the Texas
constitution by shifting power to pursue redress for public wrongs from
the Attorney General and county attorneys and delegates it to private
actors who are unaccountable to the Texas electorate.
C. History Cannot Salvage The Texas Qui Tam Provisions’ Affront To The Separation Of Powers.
In federal court, a “primary counterargument” for upholding the
federal FCA’s qui tam provisions emphasizes the “historical pedigree of
qui tam suits.” Polansky, 599 U.S. at 450 (Thomas, J., dissenting).
Whatever the purchase such arguments might have in informing the
interpretation of Article II of the U.S. Constitution, they cannot save the
APP256 qui tam provisions of the TMFPA. The TMFPA was amended to add its
qui tam provisions very recently—in 2007. The State thus cannot rely
upon historical provenance to counter the Texas Constitution’s plain text.
See Pamela Bucy et. al., States, Statutes, and Fraud: A Study of Emerging
State Efforts to Combat White Collar Crime, 31 Cardozo L. Rev. 1523,
1542–43 (2010) (noting that Texas is one of many States “relatively new
to the world of qui tam litigation”).
In all events, the historical roots of the federal qui tam are limited
at best, and they do not support the federal constitutionality of the FCA’s
qui tam provisions, much less the constitutionality of the TMFPA under
the Texas Constitution.
Many of the early federal qui tam enactments operated differently
than the current FCA, which allows unharmed plaintiffs to “stand[] in
the government’s shoes” and litigate on the people’s behalf. United States
ex rel. Atkins v. McInteer, 470 F.3d 1350, 1360 (11th Cir. 2006). Most of
the early statutes offered only a reward to informers for bringing a matter
to the government’s attention, without providing a cause of action to sue
on behalf of the sovereign. See, e.g., Act of July 31, 1789, ch. 5, §§ 8, 29,
38, 1 Stat. 29, 38, 45, 48 (penalties against collectors, naval officers, and
APP257 surveyors who failed to take an oath or display rate tables, with a bounty
to the informer); Act of Sept. 1, 1789, ch. 11, § 21, 1 Stat. 55, 60 (similar
for a maritime law); Act of Aug. 4, 1790, ch. 35, §§ 55, 69, 1 Stat. 145, 173,
177 (similar for a customs law); Act of Sept. 2, 1789, ch. 12, § 8, 1 Stat.
65, 67 (penalties for Treasury Department officials who violated conflict-
of-interest and bribery prohibitions, with a bounty to the informer); Act
of Feb. 25, 1791, ch. 10, §§ 8, 9, 1 Stat. 191, 195–96 (penalties for agents
of the United States Bank that engaged in improper trading practices,
with a bounty to the informer).
Others merely sought to redress private injuries, with only
incidental recoveries flowing to the government. See, e.g., Act of May 31,
1790, ch. 15, § 2, 1 Stat. 124, 124–25 (giving half of statutory penalty to
authors who sued for copyright infringement of their works, with other
half to the government); Act of July 20, 1790, ch. 29, § 1, 1 Stat. 131, 131
(giving, on top of damages, half of statutory penalty to seamen or
mariners deprived of pre-departure shipping contracts, with other half to
the government).
As to the few enactments that allowed informers to pursue the
sovereign’s claims, see Stevens, 529 U.S. at 777 n.6, these provisions
APP258 “were essentially stop-gap measures, confined to narrow circumstances”
to assist the fledlging Executive, Constitutionality of the Qui Tam
Provisions of the False Claims Act, 13 Op. O.L.C. 207, 213 (1989) (William
Barr, Ass’t Att’y Gen.) (“OLC Memo”). And the “transitory and
aberrational” qui tam device “never gained a secure foothold within our
constitutional structure.” Id. It produced “little actual litigation,” Ann
Woolhandler & Caleb Nelson, Does History Defeat Standing Doctrine?,
102 Mich. L. Rev. 689, 728 (2004), and “[w]ithin a decade, ‘the tide had
turned against’ qui tam, and Congress started curtailing its use,” OLC
Memo, supra, at 235–36 (alterations adopted) (quoting Leonard D. White,
The Federalists 417 (1956)).
These early statutes were rarely used and “rapidly fell into
disfavor.” OLC Memo, supra, at 235. Decades later, Congress revived
qui tam litigation by adopting the original version of the FCA during the
Civil War. But those qui tam provisions too “fell into relative desuetude”
once the crisis of the Civil War retreated. Id. at 209. Eventually, “both
Houses of Congress voted to repeal the FCA[’s] qui tam provisions” in the
early 1940s, albeit in different sessions. J. Randy Beck, The False Claims
Act and the English Eradication of Qui Tam Legislation, 78 N.C. L. Rev.
APP259 539, 558 (2000). These scattered historical episodes thus cannot excuse
the manifest conflict between the FCA’s qui tam provisions and the text,
structure, and history of Article II of the Constitution—much less justify
the qui tam provisions of the TMFPA.
The few historical antecedents cannot wash away qui tam’s
constitutional shortcomings in any event. After all, “[t]he Constitution,
not history, is the supreme law.” OLC Memo, supra, at 233; see New York
State Rifle & Pistol Ass'n, Inc. v. Bruen, 597 U.S. 1, 36 (2022) (stressing
that “the text controls” when “later history contradicts what the text
says”). The “basic principle” of constitutional interpretation is that the
document controls over “contrary historical practices,” United States v.
Rahimi, 144 S. Ct. 1889, 1912 n.2 (2024) (Kavanaugh, J., concurring),
meaning that, “[s]tanding alone, historical patterns cannot justify
contemporary violations of constitutional guarantees,” Marsh v.
Chambers, 463 U.S. 783, 790 (1983); see Zafirov, 2024 WL 4349242, at
*15. That holds true even for historical practices that “cover[] our entire
national existence and indeed predate[] it.” Walz v. Tax Comm’n of City
of New York, 397 U.S. 664, 678 (1970). Nor can it cure infirmities under
the Texas Constitution. The “guiding principle when interpreting” that
APP260 document “is to give effect to the intent of the voters who adopted” it. In
re Dallas Cnty., 697 S.W.3d 142, 158 (Tex. 2024). As described above, the
Texas voters who ratified the Texas Constitution’s separation-of-powers
provisions intended to give the Texas Attorney General and the county
attorneys the exclusive power to seek remedies for public wrongs. No
amount of history can alter that fact.
APP261 PRAYER
This Court should issue a writ of mandamus directing the district
court to dismiss HSG’s claims brought under the qui tam provisions of
the TMFPA.
Dated: October 29, 2024 Respectfully submitted,
/s/ Lindsey Cohan LINDSEY COHAN DECHERT LLP 515 Congress Ave., Suite 1400 Austin, TX, 78701
Steven A. Engel (Admitted Pro Hac Vice) Michael H. McGinley (Admitted Pro Hac Vice) M. Scott Proctor (Admitted Pro Hac Vice) Justin W. Aimonetti (Admitted Pro Hac Vice) DECHERT LLP 1900 K ST NW Washington DC, 20006
APP262 CERTIFICATE OF COMPLIANCE
I further certify that this brief complies with the type-volume
limitation in Texas Rule of Appellate Procedure 9.4(i) because, according
to Microsoft Word, it contains 5,386, excluding exempted parts.
/s/ Lindsey Cohan Lindsey Cohan
Steven A. Engel (Admitted Pro Hac Vice) Michael H. McGinley (Admitted Pro Hac Vice) M. Scott Proctor (Admitted Pro Hac Vice) Justin W. Aimonetti (Admitted Pro Hac Vice)
APP263 CERTIFICATE OF SERVICE
I certify that on October 29, 2024, a true and correct copy of the
foregoing brief has been served on counsel of record for all parties
Steven A. Engel (Admitted Pro Hac Vice) Michael H. McGinley (Admitted Pro Hac Vice) M. Scott Proctor (Admitted Pro Hac Vice) Justin W. Aimonetti (Admitted Pro Hac Vice)
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APP266 FILED 24-0239 11/20/2024 2:31 PM tex-94522528 SUPREME COURT OF TEXAS BLAKE A. HAWTHORNE, CLERK
Original Mandamus Proceeding From the 71st District Court in Harrison County Cause 23-0276, The Honorable Brad Morin, Presiding
HEALTH SECTION GROUP, LLC’S BRIEF ON THE MERITS
Samuel F. Baxter Mark Lanier Jennifer L. Truelove Harvey Brown McKool Smith, P.C. Benjamin Major 104 East Houston, Suite 300 Zeke DeRose Marshall, Texas 75670 Jonathan Wilkerson (903) 923-9000 The Lanier Law Firm Fax: (903) 923-9099 10940 W. Sam Houston Pkwy. N., Suite 100 Houston, TX 77064 (800) 723-3216 Fax: (713) 659-2204
Attorneys for Plaintiff and Real-Party-in-Interest Health Selection Group, LLC
APP267 TABLE OF CONTENTS Table of Authorities ................................................................................................... v Table of Abbreviations............................................................................................ xii Statement of the Case............................................................................................. xiii Mandamus Record ..................................................................................................xiv Issues Presented ......................................................................................................xiv Introduction ................................................................................................................ 1 I. Texas Qui Tam Statutes Protect Texas Medicaid from Fraud and, to Maximize Federal Funding for Texas Medicaid, Mirror Their Federal Counterparts................................................................................................ 2 II. Novartis’s Requested Relief Would Reduce State Attorneys’ Legal Resources and Federal Medicaid Funding ................................................. 3 Summary of the Argument......................................................................................... 4 The TMFPA Qui Tam Statutes .................................................................................. 6 Argument: The District Court Did Not Abuse Its Discretion .................................... 8 I. Article III, § 51-a of the Texas Constitution Grants the Legislature Broad Authority over Medicaid and Empowers the Legislature to Maximize Federal Matching Money for Medicaid through the TMFPA’s Qui Tam Provisions................................................................... 8 A. The Legislature Maximizes Federal Matching Money by Passing Qui Tam Statutes that Are as Effective as Federal Qui Tam Statutes at Rewarding and Facilitating Qui Tam Actions ................... 10 B. Section 51-a Grants the Legislature Broad Constitutional Authority over Texas Medicaid and Defeats Novartis’s Arguments ........................................................................................... 11 II. Health Selection Has Standing or, Alternatively, Need Not Establish Standing Given Its Authority to Prosecute These Claims in its Capacity as Relator ................................................................................... 13
ii APP268 A. Health Selection Has Individual Standing Because the TMFPA Partially Assigns the State’s Claims against Novartis to Health Selection .............................................................................................. 14 1. Applying the U.S. Supreme Court’s analysis in Stevens, Health Selection has standing by assignment ............................................ 14 2. Texas law on assignee standing supports application of Stevens ............................................................................................ 17 3. Texas standing law parallels federal standing law despite textual differences between the relevant Texas constitutional provisions and the U.S. Constitution’s “cases” and “controversies” clause .................................................................... 19 4. Novartis’s “damages” versus “penalty” distinction is wrong factually and, even if true, would not defeat Health Selection’s Standing .......................................................................................... 21 B. Alternatively, Health Selection’s Statutory Authority and Capacity to Represent the State Preclude Dismissal Regardless of Health Selection’s Standing ................................................................ 27 1. The TMFPA provides qui tam relators with capacity and authority ......................................................................................... 28 2. In its capacity as relator, Health Selection need not allege an individual injury because the State has standing ........................... 29 C. Alternatively, Because the TMFPA Provides Relators Like Health Selection Standing to Sue, Constitutional Standing Requirements Do Not Apply ...................................................................................... 32 III. Health Selection’s Limited Authority under the TMFPA to Prosecute Claims Benefitting the State Does Not Violate the Texas Constitution .............................................................................................. 33 A. Novartis’s Constitutional Challenges Fail Because Relators’ Authority under the TMFPA Does Not Unequivocally Supplant State Attorneys’ Authority to Represent the State in Medicaid Fraud Litigation ................................................................................... 34 B. The Presumption of Constitutional Validity Requires Novartis to Show the TMFPA Is Unconstitutional Beyond Any Reasonable Doubt ................................................................................................... 35
iii APP269 C. The Court Has Already Resolved Any Conceivable “Doubt” in Favor of Upholding the TMFPA’s Qui Tam Provisions..................... 36 D. In Maud and Camp, the Court Has Approved Legislative Authorization of Non-State Attorneys to Prosecute Claims Benefitting the State so Long as their Authority Does Not Supplant the Authority of State Attorneys .......................................... 38 1. Maud v. Terrell............................................................................... 39 2. Camp v. Gulf Production Co.......................................................... 41 E. Novartis’s Challenge Relies on Inapposite Case Law that Nevertheless Upholds the Deferential Maud Standard ....................... 43 F. The TMFPA Stays Within the Parameters Set by Maud, Camp, Sheppard, and Other Governing Case Law......................................... 48 1. The TMFPA does not unequivocally supplant State attorneys’ authority to represent the State....................................................... 48 2. Under the TMFPA, State attorneys do not cede constitutional authority if they elect not to intervene within the 180-day seal period .............................................................................................. 51 3. Novartis’s reliance on the nondelegation doctrine fails................. 55 4. Novartis’s mistaken speculation regarding State attorneys’ intentions does not control ............................................................. 56 Argument: The Appellate Process Should Prevail .................................................. 57 Conclusion ............................................................................................................... 58 Signature Block ........................................................................................................ 59 Certificates ............................................................................................................... 60
iv APP270 TABLE OF AUTHORITIES
Cases Abbott v. Mexican Am. Legislative Caucus, Tex. House of Representatives, 647 S.W.3d 681 (Tex. 2022) ............................................................................... 20
Agey v. Am. Liberty Pipe Line Co., 141 Tex. 379, 172 S.W.2d 972 (1943)................................................................ 47
Allen v. Fisher, 118 Tex. 38, 9 S.W.2d 731 (Comm’n App. 1928) ....................................... 46-47
Armes v. Thompson, 222 S.W.3d 79 (Tex. App.—Eastland 2006, no pet.) ...................................18, 19
Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845 (Tex. 2005) ...................................................................18, 19, 29
Bell v. Low Income Women of Tex., 95 S.W.3d 253 (Tex. 2002) ........................................................................... 10, 11
Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547 (Tex. 2000) ................................................................................. 32
Brady v. Brooks, 99 Tex. 366, 89 S.W. 1052 (Tex. 1905) ............................................................. 34
Brooks v. Northglen Ass’n, 141 S.W.3d 158 (Tex. 2004) ............................................................................... 20
Brown v. De La Cruz, 156 S.W.3d 560 (Tex. 2004) ............................................................................... 23
Busbee v. Cty. of Medina, 681 S.W.3d 391 (Tex. 2023) ............................................................................... 33
Camp v. Gulf Prod. Co., 122 Tex. 383, 61 S.W.2d 773 (Tex. 1933) .......................... 35, 38, 41, 42, 48, 49
v APP271 Children of the Kingdom v. Cent. Appraisal Dist. of Taylor Cty., 674 S.W.3d 407 (Tex. App.—Eastland 2023, pet. denied) ................................ 32
Comm’n for Lawyer Discipline v. Benton, 980 S.W.2d 425 (Tex. 1998) ............................................................................... 54
Cortes v. Wendl, No. 06-17-00121-CV, 2018 WL 3040322 (Tex. App.—Texarkana June 20, 2018, no pet) ................................................................................................. 30
Cotten v. Republic Nat’l Bank of Dallas, 395 S.W.2d 930 (Tex. App.—Dallas 1965, writ ref’d n.r.e.) .............................. 29
Data Foundry, Inc. v. City of Austin, 620 S.W.3d 692 (Tex. 2021) ............................................................................... 20
El Paso Elec. Co. v. Tex. Dep’t of Ins., 937 S.W.2d 432 (Tex. 1996) .............................................................34, 38, 41, 49
EXLP Leasing, LLC v. Galveston Cent. Appraisal Dist., 554 S.W.3d 572 (Tex. 2018) ............................................................................... 35
Everett v. TK-Taito, L.L.C., 178 S.W.3d 844 (Tex. App.—Fort Worth 2005, no pet.) ................................... 32
Ferreira v. Butler, 575 S.W.3d 331 (Tex. 2019) ............................................................................... 31
Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118 (Tex. 2010) ................................................................................. 8
Greene v. Farmers Ins. Exch., 446 S.W.3d 761 (Tex. 2014) ............................................................................... 17
Heckman v. Williamson Cty., 369 S.W.3d 137 (Tex. 2012) ............................................................................... 20
Hill County v. Sheppard, 178 S.W.2d 261 (Tex. 1944) ............................................................. 43-44, 47, 48
vi APP272 Hunt v. Bass, 664 S.W.2d 323 (Tex. 1984) .........................................................................32, 33
In re Bridgestone Americas Tire Operations, LLC, 459 S.W.3d 565 (Tex. 2015) (orig. proceeding)................................................. 31
In re Essex Ins. Co., 450 S.W.3d 524 (Tex. 2014) (orig. proceeding)................................................. 57
In re Farmers Tex. Cty. Mut. Ins. Co., 621 S.W.3d 261 (Tex. 2021) (orig. proceeding)..............................................8, 57
In re G.X.H., 627 S.W.3d 288 (Tex. 2021) ................................................................................. 8
In re Mem’l Hermann Hosp. Sys., 464 S.W.3d 686 (Tex. 2015) (orig. proceeding)................................................. 14
In re Novartis Pharm. Corp., No. 06-24-00005-CV, 2024 WL 874686 (Tex. App.—Texarkana Mar. 1, 2024, orig. proceeding) ........................... xiii-xiv
In re Xerox Corp., 555 S.W.3d 518 (Tex. 2018) (orig. proceeding)..........................................passim
Koy v. Schneider, 110 Tex. 369, 218 S.W. 479 (1920)........................................................36, 37, 54
Koy v. Schneider, 110 Tex. 369, 221 S.W. 880 (1920)............................................ 36-37, 38, 49, 54
Marauder Corp. v. Beall, 301 S.W.3d 817 (Tex. App.—Dallas 2009, no pet.) .......................................... 32
Maud v. Terrell, 109 Tex. 97, 200 S.W. 375 (Tex. 1918) ......................................................passim
Memon v. Nguyen, No. 01-21-00706-CV, 2023 WL 3513135 (Tex. App.—Houston [1st Dist.] May 18, 2023, no pet.) ........................................................................................ 30
vii APP273 Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763 (Tex. 2020) ...................................................................20, 29, 33
PNC Mortgage v. Howard, 668 S.W.3d 644 (Tex. 2023) ............................................................................... 18
Rockwell Int’l Corp. v. United States, 549 U.S. 457 (2007) ............................................................................................ 16
Rodarte v. Investeco Grp., L.L.C., 299 S.W.3d 400 (Tex. App.—Houston [14th Dist.] 2009, no pet.).................... 31
Rose v. Doctors Hosp., 801 S.W.2d 841 (Tex. 1990) ............................................................................... 54
Sprint Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269 (2008) ......................................................................................16, 22
Staples v. State, 112 Tex. 61, 245 S.W. 639 (1922).................................................... 42, 44-45, 47
Stroud v. Stroud, 733 S.W.2d 619 (Tex. App.—Dallas 1987, no writ) .......................................... 18
Sw. Bell Tel. Co. v. Mktg. on Hold Inc., 308 S.W.3d 909 (Tex. 2010) ............................................................................... 17
Terrell v. Sparks, 104 Tex. 191, 135 S.W. 519 (Tex. 1911) ........................................................... 38
Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993) ............................................................................... 20
Tex. Boll Weevil Eradication Found., Inc. v. Lewellen, 952 S.W.2d 454 (Tex. 1997) ............................................................................... 55
Tex. Med. Res., LLP v. Molina Healthcare of Tex., Inc., 659 S.W.3d 424 (Tex. 2023) ............................................................................... 33
viii APP274 Tex. Propane Gas Ass’n v. City of Houston, 622 S.W.3d 791 (Tex. 2021) ............................................................................... 20
Timbertech Inc. v. Wallboards, Inc., No. 14-98-00422-CV, 1999 WL 649116 (Tex. App.—Houston [14th Dist.] Aug. 26, 1999, pet. denied) ....................................................................... 31
TransUnion LLC v. Ramirez, 594 U.S. 413 (2021) ............................................................................................ 26
United States ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., Inc., 4 F.4th 255 (5th Cir. 2021) ................................................................................. 50
United States ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., No. 5:17-cv-123 (E.D. Tex. Jan. 22, 2019) .......................................................... 1
United States ex rel. Jackson v. Ventavia Research Grp., LLC, No. 1:21-CV-00008, 2024 WL 3812294 (E.D. Tex. Aug. 9, 2024) ............. 52-53
United States ex rel. Laird v. Lockheed Martin Eng’g & Sci. Servs. Co., 336 F.3d 346 (5th Cir. 2003) ........................................................................16, 28
United States ex rel. Polansky v. Exec. Health Res. Inc, 17 F.4th 376 (3d Cir. 2021) ................................................................................ 52
United States, ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419 (2023) ................................................................................ 16, 52-53
United States ex rel. Stevens v. State of Vt. Agency of Nat. Res., 162 F.3d 195 (2d Cir. 1998)................................................................................ 15
Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000) .....................................................................................passim
Whole Woman’s Health v. Jackson, 642 S.W.3d 569 (Tex. 2022) ............................................................................... 46
Williams v. Lara, 52 S.W.3d 171 (Tex. 2001) ........................................................................... 20, 32
ix APP275 Texas Constitution Tex. Const. art. I, § 13.............................................................................................. 19
Tex. Const. art. II, § 1 ....................................................................................9, 13, 19
Tex. Const. art. III, § 51 ........................................................................................... 11
Tex. Const. art. III, § 51-a .................................................................................passim
Tex. Const. art. IV, § 22........................................................................................... 36
Tex. Const. art. V, § 1 .............................................................................................. 19
Tex. Const. art. V, § 21 ............................................................................................ 36
Statutes and Rules 31 U.S.C. § 3729 ...................................................................................................... 22
31 U.S.C. § 3730 ..........................................................................................12, 15, 17
42 U.S.C. § 1396h ..................................................................................4, 5, 9, 10, 12
Tex. Civ. Prac. & Rem. Code § 64.001 ................................................................... 30
Tex. Civ. Prac. & Rem. Code § 64.033 ................................................................... 30
Tex. Civ. Prac. & Rem. Code § 66.002 ................................................................... 45
Tex. Civ. Prac. & Rem. Code § 66.003 ................................................................... 45
Tex. Civ. Prac. & Rem. Code § 71.021 ................................................................... 18
Tex. Estates Code § 22.012...................................................................................... 18
Tex. Estates Code § 752.051.................................................................................... 30
Tex. Gov’t Code § 82.0651...................................................................................... 46
Tex. Gov’t Code § 311.005...................................................................................... 33
Tex. Gov’t Code § 311.021................................................................................36, 53
x APP276 Tex. Gov’t Code § 311.032...................................................................................... 54
Tex. Health & Safety Code § 171.208 ..................................................................... 46
Tex. Hum. Res. Code § 32.024 ................................................................................ 10
Tex. Hum. Res. Code § 36.051 ................................................................................ 34
Tex. Hum. Res. Code § 36.052 ..............................................................22, 34, 48, 49
Tex. Hum. Res. Code § 36.053 ................................................................................ 34
Texas Hum. Res. Code § 36.101.......................................................................passim
Tex. Hum. Res. Code § 36.102 ..........................................................7, 48, 49, 52, 53
Tex. Hum. Res. Code § 36.104 ....................................................7, 49, 50, 51, 52, 53
Tex. Hum. Res. Code § 36.105 ................................................................................ 51
Tex. Hum. Res. Code § 36.107 ..........................................................7, 48, 49, 50, 53
Tex. Hum. Res. Code § 36.108 ................................................................................ 50
Tex. Hum. Res. Code § 36.109 ................................................................................ 51
Tex. Hum. Res. Code § 36.110 ................................................................7, 15, 17, 28
Tex. Hum. Res. Code § 36.113 ................................................................................ 51
Tex. Labor Code § 417.001 ..................................................................................... 18
Miscellaneous
Brief of Amicus Curiae, Bell v. Low Income Women of Texas, 95 S.W.3d 253 (2001) (No. 01-0061), 2001 WL 34377696 .............................. 11
xi APP277 TABLE OF ABBREVIATIONS
“91a Motion” refers to Defendant Novartis Pharmaceutical Corporation’s motion to dismiss, which was denied by the district court. Novartis challenges that order by this mandamus proceeding.
“Brief” refers to Novartis’s Brief on the Merits, filed in this Court on September 30, 2024.
“Novartis” refers to Novartis Pharmaceutical Corporation, which is the defendant in the proceedings below and the mandamus relator in this proceeding.
“FCA” refers to the federal False Claims Act, 31 U.S.C. §§ 3729 et seq.
“Health Selection” refers to Health Selection Group, LLC, the real party in interest for purposes of this mandamus proceeding and the qui tam relator-plaintiff in the trial proceedings.
“MR” refers to the mandamus record.
“Section 51-a” refers to article III, § 51-a of the Texas Constitution.
“State” refers to the State of Texas.
“OAG” refers to the State Office of Attorney General.
“SMR” refers to the supplemental mandamus record filed by Health Selection.
“The district court” refers to the 71st District Court in Harrison County, Texas, the honorable Brad Morin, presiding.
“TMFPA” refers to the Texas Medicaid Fraud Prevention Act, the previous title of Texas Human Resources Code chapter 36.
xii APP278 STATEMENT OF THE CASE
Nature of the case: This is a qui tam case filed by Health Selection Group,
LLC (Health Selection) on behalf of the State of Texas (State) under the Texas
Medicaid Fraud Prevention Act (TMFPA), now called the Texas Health Care
Program Fraud Prevention Act.1 Health Selection alleges Defendant Novartis
Pharmaceuticals Corporation (Novartis) employed illegal marketing programs to
boost prescriptions for several of its products. Health Selection alleges that
Novartis’s misconduct caused the State Medicaid program to pay millions in what
the TMFPA defines as illegal charges. Health Selection seeks to help the State
recover its losses and to enforce its rights as assignee and relator under the TMFPA.
In December 2023, the district court denied Novartis’s plea to the jurisdiction
and motion to dismiss pursuant to Texas Rule of Civil Procedure Rule 91a (91a
Motion). The district court rejected Novartis’s arguments that (i) Health Selection
lacks standing; and (ii) the TMFPA is unconstitutional. The district court refused to
certify an interlocutory appeal pursuant to Texas Rule of Civil Procedure 168.
Novartis then filed a mandamus petition and motion to stay with the
Texarkana Court of Appeals. The Texarkana court denied mandamus after briefing.
In re Novartis Pharm. Corp., No. 06-24-00005-CV, 2024 WL 874686 (Tex. App.—
1 In previous briefing, the parties referred to the Medicaid fraud legislation using its previous acronym—the TMFPA. For consistency, Health Selection does the same here.
xiii APP279 Texarkana Mar. 1, 2024, orig. proceeding). Novartis’s Petition and Motion for
Temporary Stay in this Court followed. After this Court requested briefing on the
merits, Novartis filed its Brief on the Merits. This is Health Selection’s response.
Respondent: The Honorable Brad Morin, Presiding Judge of the 71st Judicial
District Court, Harrison County, Case No. 23-0276.
Rulings at issue: The district court’s order dated December 15, 2023, denying
Novartis’s 91a Motion.
Relief sought: An order denying Novartis’s Petition for Mandamus.
MANDAMUS RECORD
Health Selection agrees that, with the exception of two documents, the record
presented with the Petition (cited using the prefix MR) includes all of the pertinent
materials. Health Selection provides Novartis’s Special Exceptions and the State’s
Opposition to Dismissal of Relator’s Claims on the Basis of the Public Disclosure
Bar in a supplemental mandamus record, which this brief cites as SMR.
1. Does article III, section 51-a of the Texas Constitution—which tasks the
Legislature with managing Medicaid and maximizing its federal funding—empower
the Legislature to pass the TMFPA qui tam provisions given they combat Medicaid
fraud and entitle the State to a ten percent bonus from the federal government on
State Medicaid fraud recoveries?
xiv APP280 2. Does the TMFPA’s partial assignment of the State’s Medicaid fraud claims to
relators establish standing for Texas relators as the False Claims Act’s assignment
does for federal relators, Vermont Agency of Natural Resources v. United States ex
rel. Stevens, 529 U.S. 765 (2000)?2
3. Alternatively, may Health Selection proceed in its capacity as relator given
the State undisputedly has standing and the TMFPA authorizes Health Selection to
represent State interests in that capacity?
4. Does Human Resources Code § 36.101’s limited authorization to relators to
represent the State violate the Texas Constitution’s separation-of-powers clause
even though that statutory authorization does not unequivocally supplant State
attorneys’ authority to represent the State in Medicaid fraud litigation?
5. Is mandamus relief appropriate when (i) the district court properly denied
Novartis’s 91a Motion and (ii) State attorneys—who have already shown support of
this case by opposing Novartis’s dismissal bid—could intervene and thereby moot
Novartis’s constitutionality challenge and prevent dismissal of this case based on
Novartis’s standing challenge?
2 Unless otherwise specified, the terms “relator” and “real party in interest” refer to the qui tam context and not the mandamus context.
xv APP281 INTRODUCTION
This proceeding concerns purely legal matters. Attempting to relegate the law,
Novartis injects irrelevant barbs by mischaracterizing Health Selection as a
“professional relator” that supposedly files meritless lawsuits. It is tempting to
address the question raised by those gibes: Who wears the black hat in this case? Is
it Health Selection, who seeks to protect government coffers by exposing corporate
fraud?3 Or is it Novartis, who in recent years has spent over a billion dollars settling
government fraud claims?4 Health Selection will resist the temptation to fully answer
this question because it is irrelevant.
3 Health Selection affiliates have restored nearly $300 million to defrauded government healthcare programs. See, e.g., Decl. of John R. Mininno at 11-13, United States ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., No. 5:17-cv-123 (E.D. Tex. Jan. 22, 2019), ECF 208-02; Office of the Attorney General’s Civil Medicaid Fraud Division Recovers $42.7 Million in Taxpayer Funds, TEX. ATT’Y GEN. (Aug. 8, 2023), https://www.texasattorneygeneral.gov/news/releases/office-attorney-generals-civil-medicaid- fraud-division-recovers-427-million-taxpayer-funds (noting that “the settlement resolves allegations that the drug manufacturers violated the TMFPA by providing, directly or indirectly, nursing and reimbursement services to Texas Medicaid providers for certain pharmaceutical drugs, as well as by paying clinical nurse educators to refer or recommend the drug Vyvanse to providers”). 4 See, e.g., Novartis Pays Over $642 Million to Settle Allegations of Improper Payments to Patients and Physicians, U.S. DEP’T OF JUSTICE (July 1, 2020), https://www.justice.gov/opa/pr/novartis- pays-over-642-million-settle-allegations-improper-payments-patients-and- physicians#:~:text=Pharmaceutical%20company%20Novartis%20Pharmaceuticals%20Corporati on,False%20Claims%20Act%20(FCA); State Joints Global Settlement with Novartis Pharmaceuticals to Resolve Kickback Allegations, U.S. DEP’T OF HEALTH & HUM. SERVS. (Dec. 17, 2015), https://oig.hhs.gov/fraud/enforcement/state-joins-global-settlement-with-novartis- pharmaceuticals-to-resolve-kickback-allegations/ (referencing $390 million settlement).
1 APP282 I. TEXAS QUI TAM STATUTES PROTECT TEXAS MEDICAID FROM FRAUD AND, TO MAXIMIZE FEDERAL FUNDING FOR TEXAS MEDICAID, MIRROR THEIR FEDERAL COUNTERPARTS.
Since the federal False Claims Act’s (FCA) enactment over 150 years ago,
more than two dozen states have adopted analogous statutes. Many states’
enactments—including the TMFPA—contain qui tam provisions, which encourage
citizen suits that help governments recoup losses from those who defraud the
government.5 The TMFPA’s qui tam provisions also function to maximize federal
Medicaid funding because federal law entitles the State to a ten percent bonus from
the federal government on Medicaid fraud recoveries if the TMFPA properly
incentivizes and facilitates qui tam actions.
While there are differences between the FCA and TMFPA, their relevant
provisions mirror each other. Both acts incentivize private citizens to help hold
fraudulent actors to account in the courts. And under both acts, qui tam relators’
standing derives from the victims of the fraud—the defrauded governments. Because
private relators enforcing the FCA and TMFPA stand in the shoes of the government,
injuries sustained by the government support relators’ constitutional standing to sue
in the courts.
5 The TMFPA has had qui tam provisions since 1997. S.B. 30, 75th Leg. Sess., Reg. Sess. (Tex. 1997) (available at https://capitol.texas.gov/BillLookup/Text.aspx?LegSess=75R&Bill=SB30#).
2 APP283 The TMFPA protects State funds. “[T]he increasing sophistication of
Medicaid scams make chicanery difficult to uncover.” In re Xerox Corp., 555
S.W.3d 518, 525 (Tex. 2018) (orig. proceeding). The TMFPA provides the State a
“powerful tool for targeting fraud against the Texas Medicaid program and securing
the program’s integrity.” Id. Through qui tam actions, the TMFPA “deputizes private
citizens” to help uncover fraud and scams, and to restore ill-gotten gains to the State.
Id. And private “qui tam” relators’ pursuit of Medicaid fraud recoveries makes a
meaningful, positive impact on the State’s finances.6
II. NOVARTIS’S REQUESTED RELIEF WOULD REDUCE STATE ATTORNEYS’ LEGAL RESOURCES AND FEDERAL MEDICAID FUNDING.
Novartis seeks to gut the TMFPA of qui tam actions. Not only are Novartis’s
arguments wrong; they seek relief that would harm the State. Qui tam actions
represent a powerful enforcement mechanism against Medicaid fraud that also (i)
permits the OAG to preserve its resources and (ii) entitles the State to a bonus from
the federal government on all State Medicaid fraud recoveries. Deputized relators
6 For example, just one qui tam action resulted in a $42.7 million settlement in 2023, and since 2000, TMFPA actions brought by State attorneys and qui tam relators have recovered approximately $2.5 billion for taxpayers under the TMFPA. Office of the Attorney General’s Civil Medicaid Fraud Division Recovers $42.7 million in Taxpayer Funds, OFFICE OF TEX. ATTY. GEN. (Aug. 8, 2023), https://texasattorneygeneral.gov/news/releases/office-attorney-generals-civil- medicaid-fraud-division-recovers-427-million-taxpayer-funds; MR102. That’s enough to fund the entire judiciary for approximately four years using the 2024-2025 budget. See H.B. No. 1, 88th Leg. Sess., Reg. Sess. (Tex. 2023) (table on page IV-47).
3 APP284 help the OAG identify Medicaid fraud that its office may prosecute directly. In cases
where State attorneys neither intervene nor dismiss the action, deputized relators
also enable State attorneys to preserve State resources by permitting relators and
their counsel to handle those cases. Novartis asks the Court to rewrite the TMFPA
to preclude a qui tam case even if State attorneys support it. Novartis’s requested
relief would eliminate State attorneys’ authority to allow competent private counsel
to litigate Medicaid fraud claims and, additionally, undermine their discretion to
allocate legal resources in the manner they deem most efficient and effective.
Novartis’s requested relief would also reduce federal matching money for
Texas Medicaid because the State would no longer have “in effect” a qui tam statute
that is as effective as the FCA at “rewarding and facilitating qui tam actions” for
Medicaid fraud. See 42 U.S.C. § 1396h(a)-(b). And the Legislature’s constitutional
authority over Medicaid would erode—against the will of Texas voters who
approved article III, section 51-a of the Texas Constitution.
The district court did not err in rejecting Novartis’s arguments that (i) Health
Selection lacks standing and (ii) the TMFPA’s qui tam provisions unconstitutionally
interfere with State attorneys’ authority to represent the State. First, a constitutional
provision specifically governing Texas Medicaid forecloses Novartis’s arguments.
Article III, section 51-a of the Texas Constitution assigns the Legislature authority
4 APP285 to form, govern, and fund Medicaid. It specifically empowers the Legislature to
maximize federal matching money for Medicaid, which the Legislature intended to
do by retaining and amending the TMFPA’s qui tam provisions. See 42 U.S.C. §§
1396h(a)-(b). Under separation-of-powers principles, Section 51-a calls for
heightened deference to the Legislature’s decision to pass qui tam provisions that
satisfy 42 U.S.C. § 1396h.
Second, Health Selection has standing or, alternatively, does not need standing
to proceed in its capacity as relator. In Justice Scalia’s opinion in Stevens, the U.S.
Supreme Court held a relator under the analogous FCA has standing as partial
assignee of the government’s claims. 529 U.S. at 773-74. The same reasoning,
buttressed by Texas law on assignee standing, supports Health Selection’s standing
here. Novartis cites no law supporting another result. Further, the TMFPA expressly
grants standing to Health Selection. The Legislature also granted relators like Health
Selection authority and “capacity” to sue on behalf of the State—which is a named
party in this case and has standing. In its capacity as relator, Health Selection may
continue to litigate the case for the State regardless of its individual standing.
Third, following a century of precedent from this Court, the TMFPA
withstands Novartis’s constitutional attack. See generally, Maud v. Terrell, 109 Tex.
97, 200 S.W. 375 (1918). Novartis’s argument relies primarily on its bare—and
mistaken—speculation that when State attorneys elect not to take over a qui tam
5 APP286 action, they “decide that [] case is not worth litigating.” Brief at 33. The OAG’s
extensive acts of support in this case demonstrate Novartis is wrong. Novartis’s
speculation is also irrelevant. Under Maud’s standard, the TMFPA must be enforced
unless its language “unequivocally supplants” State attorneys’ authority to represent
the State in litigation. This is not a close call. State attorneys wield absolute control
over qui tam lawsuits. And even if there were serious doubts about the
constitutionality of the TMFPA’s qui tam provisions, the standards defined by the
Court call for resolving those doubts in the Legislature’s favor.
Mandamus relief is therefore inappropriate because the court did not err.
Mandamus relief is also inappropriate because State attorneys retain the right to
intervene. There is no dispute that the State itself has standing, and its intervention
would moot Novartis’s constitutional challenge. Novartis’s petition should be
THE TMFPA QUI TAM STATUTES7
The TMFPA qui tam provisions, in tandem with authorities cited below,
demonstrate (i) Health Selection has standing and (ii) has authority to litigate this
qui tam action that remains subordinate to State attorneys’ constitutional authority
to represent the State in litigation. First, the TMFPA expressly confers standing and
7 Health Selection agrees with Novartis that, while the TMFPA has been amended, those amendments do not affect the provisions at issue here. Brief at 3 n.1.
6 APP287 authority upon private persons—referred to generally as “relators”—to file suit “for
the state.” Tex. Hum. Res. Code § 36.101(a). Second, it grants State attorneys
discretion to dismiss a relator suit without consulting the relator. Id. § 36.102(e).
Third, it pauses the relators’ suit for 180 days or more by requiring relators to file
under seal pending State lawyers’ review of the case, and it prohibits relators from
serving the defendant absent court order. Id. § 36.102(a)-(b). Fourth, it gives State
attorneys the right to “proceed with the action” without relator involvement and, in
the absence of intervention, authorizes the relator to proceed with the action subject
to oversight by State attorneys and potential future intervention by State attorneys.
Id. §§ 36.104(a)-(b-1), 36.107(a).8 Fifth, if State attorneys intervene after the seal
period upon the featherlight good-cause showing, they have the right to seek
dismissal of the case without relators’ permission, though the court must hear
relator’s opposing arguments, if any. Id. § 36.107(b).9 Sixth, the TMFPA assigns
relators an interest in recovery, and the value of that interest depends on whether
State attorneys intervene and on the value State attorneys and courts place on
relators’ contributions to the case. Id. § 36.110.
8 Although subsequent intervention by State attorneys requires a “good cause” showing, available authority demonstrates the “good cause” standard effectively permits State attorneys to intervene at will. Infra pp. 52-53. 9 The pro forma hearing requirement provides relators no realistic chance to prevent dismissal if State attorneys seek it. Infra pp. 52-53, 51 n.42.
7 APP288 ARGUMENT: THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION
Mandamus relief in the Rule 91a context requires an error in law. In re
Farmers Tex. Cty. Mut. Ins. Co., 621 S.W.3d 261, 266 (Tex. 2021) (orig.
proceeding). But the Court will find no error by the district court. First, the Texas
Constitution empowers the Legislature to pass the legislative provisions challenged
by Novartis. Second, Health Selection has standing and capacity to proceed with this
action. Third, TMFPA qui tam actions do not offend the Texas Constitution because
the Legislature properly refrained from “unequivocally supplanting” State attorneys’
authority to represent the State in litigation.10
I. ARTICLE III, § 51-a OF THE TEXAS CONSTITUTION GRANTS THE LEGISLATURE BROAD AUTHORITY OVER MEDICAID AND EMPOWERS THE LEGISLATURE TO MAXIMIZE FEDERAL MATCHING MONEY FOR MEDICAID THROUGH THE TMFPA’S QUI TAM PROVISIONS. As with any constitutional challenge, the inquiry begins with the
constitution’s text. But completely absent from Novartis’s Brief is any reference to
article III, section 51-a of the Texas Constitution.11 Section 51-a(a) provides:
10 See Maud, 200 S.W. at 377; infra pp. 39-41 (discussing Maud in detail). 11 While Health Selection did not cite Section 51-a below, it did not have to. Section 51-a does not raise a new issue; it is additional authority supporting Health Selection’s argument throughout this case: the Legislature had authority to pass the TMFPA’s qui tam provisions. No rule in Texas bars a party from citing new authority supporting arguments it made in lower courts. And even if Section 51-a represents a new “issue,” Health Selection owed no duty to raise it below because it supports an order in Health Selection’s favor. See Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 125 (Tex. 2010); In re G.X.H., 627 S.W.3d 288, 295 (Tex. 2021) (“Here, the Department prevailed in the trial court, and therefore did not need to raise every argument supporting the trial court’s judgment in its appellee’s brief in the court of appeals.”).
8 APP289 The Legislature shall have the power, by General Laws, to provide, subject to limitations herein contained, and such other limitations, restrictions and regulations as may by the Legislature be deemed expedient, for assistance grants to needy dependent children and the caretakers of such children, needy persons who are totally and permanently disabled because of a mental or physical handicap, needy aged persons and needy blind persons.
Tex. Const. art. III, § 51-a(a). Subsection (b) grants the Legislature broad authority
to provide for indigent health care specifically. And subsection (c) specifically
recognizes the Legislature’s authority to maximize “federal matching money,”
which necessarily includes the ten percent bonus from the federal government’s
share of Texas Medicaid fraud recoveries. See 42 U.S.C. § 1396h(a)-(b); infra pp.
10, 12.
Section 51-a thus grants the Legislature broad authority to (i) govern State
Medicaid—which provides aid to needy children and disabled persons—through
legislation, and (ii) pass laws that maximize federal matching money. The
Legislature and voters of this State approved Section 51-a. Judicial restraint is
particularly appropriate here because authority over Medicaid is expressly entrusted
to the Legislature by the constitution. See Tex. Const. art. II, § 1 (separation of
powers). Section 51-a defeats Novartis’s arguments.
9 APP290 A. The Legislature Maximizes Federal Matching Money by Passing Qui Tam Statutes that Are as Effective as Federal Qui Tam Statutes at Rewarding and Facilitating Qui Tam Actions.12
The State’s Medicaid program “provides medically necessary services for
which federal matching funds are available.” Bell v. Low Income Women of Tex., 95
S.W.3d 253, 255 (Tex. 2002); Tex. Hum. Res. Code §§ 32.024(a), (e). As noted in
Bell, the constitution empowers the Legislature to maximize federal matching funds
for Medicaid. 95 S.W.3d at 261.13
If the TMFPA’s qui tam provisions are stricken, Texas will no longer receive
a ten percent bonus from the federal government for Medicaid fraud recoveries
secured by the State. To qualify for this federally funded bonus, Texas’s Medicaid
fraud enforcement laws must “contain[] provisions that are at least as effective” in
both “rewarding” and—importantly here—“facilitating qui tam actions for false or
fraudulent claims as those described” in the FCA. See 42 U.S.C. § 1396h(a), (b)(2)
(emphasis added); Xerox, 555 S.W.3d at 538 (citing § 1396h(a) for the proposition
that “states with qui tam laws meeting specified federal standards can retain an
additional ten percent of Medicaid recoveries”). The Legislature passed qui tam
statutes that meet this standard. Xerox, 555 S.W.3d at 538-39.
12 See Xerox, 555 S.W.3d at 538-39 (detailing the Legislature’s efforts). 13 The Court held the State Medicaid’s failure to fund certain abortions—because federal law prohibited federal matching funds for those abortions—complied with the constitution. Id. at 255, 264, 265, 266.
10 APP291 B. Section 51-a Grants the Legislature Broad Constitutional Authority Over Texas Medicaid and Defeats Novartis’s Arguments.
The Texas Constitution “has long reflected,” through Section 51-a, “a strong
interest in maximizing federal matching funds for medical assistance to the needy.”
Bell, 95 S.W.3d at 261.14 The original Texas Constitution prohibited the Legislature
from authorizing the “grant of public moneys to any individual” except in times of
“public calamity.” Tex. Const. art. III, § 51. But Section 51-a passed in 1933 to
create an exception. It has been amended since and permits “assistance grants” to
the needy that include Medicaid. See Tex. Const. art. III, § 51-a(a)-(b).
Section 51-a specifically grants the Legislature broad authority to provide for
indigent health care: “The Legislature may provide by General Law for medical care
. . . for needy persons.” Tex. Const. art. III, § 51-a(b). Neither these broad grants of
authority to the Legislature—nor any other “limitations herein contained”—purport
to limit the Legislature’s power to protect these programs from fraud through
legislation. See id. §§ 51-a(a), (c). Nor does legislation or another constitutional
provision regarding Medicaid purport to decrease the Legislature’s authority over
14 “Texas has participated in Medicaid since 1967 through the Texas Medical Assistance Program (TMAP).” Bell, 95 S.W.3d at 256 (Tex. 2002); see also Brief of Amicus Curiae, Bell v. Low Income Women of Texas, 95 S.W.3d 253 (2001) (No. 01-0061), 2001 WL 34377696, at *3-5 (Governor Perry arguing in Bell that “[t]he Texas Medical Assistance Program is founded upon the[] express constitutional powers” provided in Section 51-a).
11 APP292 State Medicaid, including fraud enforcement.
Subsection (c) authorizes the Legislature to maximize federal matching
money and recognizes its general authority to do so. To the extent any purported
“limitations and restrictions herein . . . conflict with the provisions of appropriate
federal statutes” such that “federal matching money” becomes unavailable to the
State for Medicaid, Section 51-a empowers the Legislature “to . . . enact such laws
as may be necessary in order that such federal matching money will be available.”
Tex. Const. art. III, § 51-a(c). As noted above, the TMFPA’s qui tam provisions
increase federal funding for Medicaid. See 42 U.S.C. § 1396h. This Court has
observed that “after initially failing to qualify for the federal financial incentive, and
after falling out of compliance by virtue of the [FCA’s] amendment, the Legislature
has, more than once, amended the TMFPA to eliminate barriers to obtaining an
increased share of Medicaid recoveries.” Xerox, 555 S.W.3d at 538. Properly
construed, Section 51-a empowers the Legislature to maximize “federal matching
money” by allowing private persons to initiate qui tam actions in the name of the
State to the same extent permitted by the FCA. See 42 U.S.C. § 1396h(a)-(b); 31
U.S.C. § 3730(b); Tex. Hum. Res. Code § 36.101.
Section 51-a grants the Legislature authority not only to govern Medicaid
through legislation but also to protect State access to federal matching money.
Section 51-a thus supports the Legislature’s decision to provide private parties with
12 APP293 capacity and standing to represent the State in Medicaid fraud litigation. And it
supports the constitutionality of the TMFPA’s partial assignment of the State’s
interest in Medicaid fraud recoveries to private parties whose efforts lead to such
recoveries for the State.
Section 51-a defeats Novartis’s arguments and affirms the judiciary should
extend deference to the Legislature’s constitutional authority to govern Medicaid
and to maximize the program’s federal funding. See Tex. Const. art. II, § 1.
II. HEALTH SELECTION HAS STANDING OR, ALTERNATIVELY, NEED NOT ESTABLISH STANDING GIVEN ITS AUTHORITY TO PROSECUTE THESE CLAIMS IN ITS CAPACITY AS RELATOR.
The district court properly refused to dismiss the case based on Novartis’s
standing challenge. Health Selection enjoys standing as partial assignee of the
State’s Medicaid fraud claim under the TMFPA and pursuant to the U.S. Supreme
Court’s analysis of an identical challenge under the FCA. Alternatively, Health
Selection may continue to represent State interests in its capacity as relator because
the Legislature has authorized it to do so under the TMFPA. Alternatively, the
Legislature granted Health Selection standing, and the constitutional standing
requirements do not apply.
13 APP294 A. Health Selection Has Individual Standing Because the TMFPA Partially Assigns the State’s Claims against Novartis to Health Selection.
The State has standing based on Health Selection’s allegations that Novartis
defrauded the State’s Medicaid program to the tune of millions of dollars. However,
Novartis argues Health Selection, as a qui tam relator, lacks individual standing to
prosecute these claims. The U.S. Supreme Court rejected the same argument against
an FCA relator. See Stevens, 529 U.S. at 773-74. Despite Novartis’s contrary
protestations, the grounds supporting Stevens’s holding apply equally here.15
Applying Stevens, Health Selection enjoys constitutional standing as partial assignee
of the State’s Medicaid fraud claim.
1. Applying the U.S. Supreme Court’s analysis in Stevens, Health Selection has standing by assignment.
The U.S. Supreme Court in Stevens held qui tam relators have constitutional
standing by assignment under the FCA. 529 U.S. at 773-74. The relator in Stevens
alleged his former employer submitted false claims to the EPA in violation of the
FCA. 529 U.S. at 770. Like the TMFPA, the FCA provides that “a private person
(the relator) may bring a qui tam action ‘for the person and for the United States
15 Notably, as recently as 2015, this Court has distinguished “qui tam” standing under the TMFPA from standing requiring “injury-in-fact.” See In re Mem’l Hermann Hosp. Sys., 464 S.W.3d 686, 709, 709 n.109 (Tex. 2015) (orig. proceeding). While the Court did not explore the contours of that distinction, Stevens describes that difference as qui tam relators may establish standing as partial assignees who can rely on the assignor’s injuries.
14 APP295 Government . . . in the name of the Government.’” Id. at 769. And like the TMFPA,
the FCA assigns relators an interest in fraud recoveries. Compare 31 U.S.C. §
3730(d) with Tex. Hum. Res. Code § 36.110. As State attorneys have done here, the
U.S. attorneys declined to intervene in Stevens. Id. at 770.16
The Court addressed challenges to the qui tam relator’s standing. 529 U.S. at
771. While the qui tam relator argued he sought “to remedy an injury in fact suffered
by the United States,” the Court emphasized that “judicial power exists only to
redress or otherwise to protect against injury to the complaining party.” Id. (original
emphasis, quote omitted). This statement reflects the argument Novartis makes.
Next, the Court considered relator’s argument that the FCA grants standing
by designating relators as “agent[s] of the United States” to sue on the government’s
behalf. Id. 529 U.S. at 772. The Court summarily rejected this argument because, in
the Court’s view, a relator’s interest in fraud recoveries under the FCA represents
“an interest in the lawsuit, and not merely the right to retain a fee.” Id. (original
emphasis). The Court concluded, for that interest, “some explanation of standing
other than agency for the Government must be identified.” Id.
Still, the Court held the relator had standing. It reasoned “that adequate basis
for the relator’s suit for his bounty is to be found in the doctrine that the assignee of
16 The government intervened on appeal but not under the FCA. United States ex rel. Stevens v. State of Vt. Agency of Nat. Res., 162 F.3d 195, 199 (2d Cir. 1998).
15 APP296 a claim has standing to assert the injury in fact suffered by the assignor.” Stevens,
529 U.S. at 773.17 It added, the “FCA can reasonably be regarded as effecting a
partial assignment of the Government’s damages claim.” Id.;18 see also Sprint
Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 286 (2008) (citing Stevens
as holding “that an assignee can sue based on his assignor’s injuries”); United States,
ex rel. Polansky v. Exec, Health Res., Inc., 599 U.S. 419, 425 (2023) (“The FCA . . .
effects a partial assignment of the Government’s own damages claim.” (cleaned
up)).19
Stevens next addressed the federal limitation of jurisdiction under the
Constitution to “Cases” or “Controversies” historically amenable to the judicial
process. 529 U.S. at 774. The Court concluded that the history of qui tam actions
“well nigh conclusive[ly]” shows an FCA relator’s action satisfies the “Cases” and
“Controversies” limitation in the U.S. Constitution. Id. at 774-78.20
17 While two justices dissented, they did not challenge the majority’s holding on standing. Id. at 789-802. 18 Responding to criticism on another issue by the dissent, the Court emphasized, “More precisely, we are asserting that a qui tam relator is, in effect, suing as a partial assignee of the United States.” Id. at 773 n.4 (original emphasis). 19 Cf. United States ex rel. Laird v. Lockheed Martin Eng’g & Sci. Servs. Co., 336 F.3d 346, 358 (5th Cir. 2003), abrogated on other grounds by Rockwell Int’l Corp. v. United States, 549 U.S. 457 (2007) (citing Stevens for proposition that qui tam relator was a real party in interest because of partial assignment of government’s claim). 20 The Supreme Court relies on “history and tradition [to] offer a meaningful guide to the types of cases that Article III empowers federal courts to consider.” Sprint, 554 U.S. at 274-75 (concluding,
16 APP297 The TMFPA assigned Health Selection an interest in the State’s Medicaid
fraud claim just like the FCA did for the relator in Stevens with respect to the federal
government’s fraud claims. Compare 31 U.S.C. § 3730(d) with Tex. Hum Res. Code
§ 36.110; see also Stevens, 529 U.S. at 772 (emphasizing facets of FCA shared with
TMFPA that provided relator an “interest in the lawsuit” (emphasis omitted)). That
assignment comes with the right to rely on the State’s injuries to establish standing.
And because the State’s injury undisputedly supports standing, the district court did
not err.
2. Texas law on assignee standing supports application of Stevens.
Texas has long recognized that a valid assignment supports standing. For
example, when a plaintiff holds “contractually valid assignments, [it] steps into the
shoes of the claim-holders and is considered under the law to have suffered the same
injury as the assignors and have the same ability to pursue the claims.” Sw. Bell Tel.
Co. v. Mktg. on Hold Inc., 308 S.W.3d 909, 916 (Tex. 2010) (citing Stevens).
While “assignments may be invalidated on public policy grounds,” id., the
Legislature defines public policy. See Greene v. Farmers Ins. Exch., 446 S.W.3d
761, 770 (Tex. 2014) (“The Legislature establishes public policy through its
enactments.”); see also Tex. Const. art. III, § 51-a. The assignment under the
“history and precedent are clear on the question before us: Assignees of a claim . . . have long been permitted to bring suit”).
17 APP298 TMFPA is therefore consistent with public policy.
The Legislature has assigned claims by statute in other contexts. See, e.g.,
Stroud v. Stroud, 733 S.W.2d 619, 620, 621 (Tex. App.—Dallas 1987, no writ)
(when mother sought public aid, statute “assigned” to the State “the right to collect
child support payments”); Tex. Labor Code § 417.001(b) (Texas workers’
compensation subrogation law assigns insurers the right to “enforce the liability of
the third party in the name of the injured employee or the legal beneficiary”); PNC
Mortgage v. Howard, 668 S.W.3d 644, 648 (Tex. 2023) (under workers’
compensation laws, the employee’s claim “is transferred to the carrier,” and
subrogation grants an insurer “standing to assert a damages claim that initially
belonged to a tort victim” (emphasis omitted));21 Tex. Civ. Prac. & Rem. Code §
71.021 (“A personal injury action survives to and in favor of the heirs, legal
representatives, and estate of the injured person.”);22 Austin Nursing Ctr., Inc. v.
Lovato, 171 S.W.3d 845, 850 (Tex. 2005) (estate has justiciable interest in survival
claim because it transfers to estate upon decedent’s death).23
21 The Supreme Court in Stevens also equated subrogees with assignees. 529 U.S. at 773-74. 22 This is a statutory transfer of rights from a person—the decedent—to a distinct entity, the estate. See Armes v. Thompson, 222 S.W.3d 79, 83 (Tex. App.—Eastland 2006, no pet.) (“The estate is distinct from the individual.”); Tex. Estates Code § 22.012. (“Estate” refers to “decedent’s property”). 23 Thus, the survival statute and Estates Code implicate both capacity and standing. The transfer of the right from a decedent to other entities or people represents a statutory assignment of a right that supports standing. On the other hand, for the estate to prosecute the claim, it must appear
18 APP299 Like any other assignment, contractual or statutory, the TMFPA’s partial
assignment of the State’s Medicaid fraud claims provides relators standing to sue.
Because Health Selection, as assignee, steps into the State’s shoes for purposes of
Medicaid fraud claims, Health Selection enjoys standing based on the State’s
injuries. This well-settled state law supports application of Stevens.
3. Texas standing law parallels federal standing law despite textual differences between the relevant Texas constitutional provisions and the U.S. Constitution’s “cases” and “controversies” clause.
Novartis has argued the historical bases supporting Stevens’s holding do not
apply because the “Texas Constitution does not contain the ‘Cases’ and
‘Controversies’ language” found in Article III, section 2 of the federal constitution.
Petition at 20.24 For good reason, Novartis no longer makes, and appears to have
abandoned, that argument. Under the Texas Constitution, “[t]he judicial power of
this State” is vested in the courts. Tex. Const. art. V, § 1. Other constitutional
provisions govern standing. See Tex. Const. art. I, § 13 (“All courts shall be open,
and every person for an injury done him, in his lands, goods, person or reputation,
shall have remedy by due course of law.”); Tex. Const. art. II, § 1.
through someone with capacity like an executor or administrator. See Armes, 222 S.W.3d at 84, 84 n.3; Lovato, 171 S.W.3d at 850-51. 24 Novartis concludes its Brief with an irrelevant commentary about tradition’s inability to save unconstitutional statutes. Brief at 44-47. Contrary to Novartis’s casual dismissal, the historical underpinnings for qui tam litigation provide important context and underscore how extraordinary Novartis’s position actually is. More importantly, for the reasons explained, the TMFPA qui tam provisions are constitutional. Accordingly, Novartis’s argument is just a strawman.
19 APP300 Despite the textual differences between the U.S. Constitution and the Texas
Constitution, the Texas standing analysis tracks the federal analysis. “Because
Texas’s test for constitutional standing parallels the federal test for Article III
standing, [Texas courts] look to federal standing jurisprudence for guidance. . . .”
Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763, 776 (Tex. 2020).25 These parallels
extend to specific types of standing and other specialized issues bearing on standing.
See, e.g., Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 447 (Tex.
1993) (adopting the U.S. Supreme Court’s test for associational standing); Heckman
v. Williamson Cty., 369 S.W.3d 137, 165 (Tex. 2012) (“We adopt the federal
exception to mootness for ‘inherently transitory’ claims.”).26
Thus, it is no surprise Texas courts have equated standing “implicit in the
[Texas] open courts provision” with standing in “cases” and “controversies” over
which the federal judiciary may exercise jurisdiction. See Tex. Ass’n of Bus., 852
S.W.2d at 444; Brooks v. Northglen Ass’n, 141 S.W.3d 158, 164 (Tex. 2004) (“A
judicial decision reached without a case or controversy is an advisory opinion, which
is barred by the separation of powers provision of the Texas Constitution.”
25 Tex. Propane Gas Ass’n v. City of Houston, 622 S.W.3d 791, 799 (Tex. 2021) (“The Texas standing requirements parallel the federal test for Article III standing.”); Data Foundry, Inc. v. City of Austin, 620 S.W.3d 692, 696 (Tex. 2021); Abbott v. Mexican Am. Legislative Caucus, Tex. House of Representatives, 647 S.W.3d 681, 690 (Tex. 2022). 26 Mootness bears on standing because “[i]f a case becomes moot, the parties lose standing to maintain their claims.” Williams v. Lara, 52 S.W.3d 171, 184 (Tex. 2001).
20 APP301 (emphasis added)).
Novartis asks the Court to veer from its parallel track with the U.S. Supreme
Court’s standing jurisprudence. But Novartis can cite no reason or authority
supporting its extraordinary request. Because Stevens is consistent with Texas law
on standing by assignment, the Court should apply Stevens.
4. Novartis’s “damages” versus “penalty” distinction is wrong factually and, even if true, would not defeat Health Selection’s standing.
Stevens relied on the “doctrine that the assignee of a claim has standing to
assert the injury in fact suffered by the assignor” without regard to the remedy. 529
U.S. at 773 (emphasis added). Novartis nevertheless argues the Court should simply
disregard Stevens because the FCA provides for “damages” while the TMFPA
provides for “civil penalties.” Brief at 19 et seq. (relying primarily on this Court’s
holding in Xerox).27 In fact, the FCA and TMFPA remedies are strikingly similar.
Novartis’s reliance on Xerox to distinguish Stevens is misplaced.
Xerox considered a different issue than Stevens, namely “whether a party
found liable for violating the TMFPA may shift the financial burden of Section
27 Novartis argues the Xerox Court “held that comparisons to the [FCA] are ‘not probative’ because, while the statutes ‘may be similar in aim and tactic,’ they ‘employ materially different language, and the language of [Texas] statutes controls the outcome here.” Brief at 20. Novartis conveniently omits the sentences that immediately follow where the Court drew a connection between federal courts’ application of the FCA and the Court’s holding in Xerox, and found that the TMFPA and FCA (as well as other states’ analogues) align. 555 S.W.3d at 535 (just as under the TMFPA, “federal courts have held wrongdoers may not ameliorate their punishment under federal law.” (collecting cases for this proposition including FCA cases)).
21 APP302 36.052’s civil remedies to other wrongdoers under the proportionate-responsibility
statute.” 555 S.W.3d at 526. Xerox does not conflict with Stevens. While the Court
held that the TMFPA “remedy does not constitute ‘damages’ subject to
apportionment under Chapter 33” of the Texas Civil Practice and Remedies Code,
id. at 520, the decision was not dependent on that finding. As the Court further held,
even if the TMFPA were an action to recover damages, “Chapter 33 would not apply
to a TMFPA action because the two statutes are in irreconcilable tension with one
another.” Id. at 535-36 (holding Chapter 33’s fault-allocation scheme conflicts with
the TMFPA fraud detection and prevention tools, including incentivizing
whistleblowers to come forward). Xerox’s reasoning regarding the conflict with
comparative fault regimes applies equally to the FCA. Moreover, “damage” versus
“penalty” labels aside, the FCA and TMFPA remedies both provide for treble the
amount provided as a result of the unlawful conduct plus civil penalties.28
As a practical matter, Novartis’s “distinction” makes no difference. The focus
of standing is the injury and not the relief. See e.g., Sprint, 554 U.S. at 287 (in
redressability context, rejecting argument that plaintiff’s assignment of potential
28 Compare 31 U.S.C. § 3729 (FCA wrongdoer “is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000 . . . plus 3 times the amount of damages which the Government sustains because of the act of that person”) with Tex. Hum. Res. Code § 36.052, amended by S.B.745, 88th Leg. Sess., Reg. Sess. (Tex. 2023) (version of TMFPA remedy statute at time of Xerox actually cites federal FCA and provides for recovery of penalties for violations as well as recovery of three times the amount of Medicaid payments made as a result of misconduct).
22 APP303 recovery to nonparty defeated standing because “an assignee for collection may
properly bring suit to redress the injury originally suffered by his assignor”
(emphasis added)). Thus, whether the relief is primarily compensatory or primarily
punitive in nature does not alter standing because standing focuses on the assignor’s
injury—not the character of relief. See id.; cf. Brown v. De La Cruz, 156 S.W.3d
560, 566 (Tex. 2004) (“[T]his is a penal statute that would in many instances impose
a fine far beyond the damages that a purchaser is likely to suffer. . . . [T]he
Legislature may grant private standing to bring such actions, but it must do so
clearly.”).
Perhaps more importantly, the premise of Novartis’s argument is wrong. The
FCA and TMFPA both provide the same type of relief for the same type injury. Both
include punitive and compensatory components. In Xerox, this Court cited Stevens
as “describing the civil-penalty and treble-damages remedy in the [FCA] as
‘essentially punitive in nature.’” 555 S.W.3d at 527 n.52; see also id. at 530 n.70,
532 n.81; Stevens, 529 U.S. at 784-85. Indeed, Stevens acknowledged that it
previously “suggested that damages under an earlier version of the FCA were
remedial rather than punitive.” Id. at 785. But the FCA’s remedies became “punitive
in nature” after amendment because it “generally imposes treble damages and a civil
penalty of up to $10,000 per claim.” Id. Stevens concluded that imposing the FCA’s
remedies against a state would violate “the presumption against imposition of
23 APP304 punitive damages on governmental entities.” Id. at 784-85 (emphasis added). The
FCA remedies are punitive.
Stevens therefore held that Congress had partially assigned the government’s
claim to relators while contemporaneously noting the remedies for that claim were
“punitive in nature.” That Stevens referred to assignment of “the Government’s
damages claim,” Brief at 19, rather than “claim for penalties” makes no difference
given the Supreme Court’s express, contemporaneous acknowledgement that the
FCA provides for punitive relief and given the parallels between the TMFPA and
FCA remedies provisions. Moreover, Stevens never suggests it was parsing or
limiting what could be assigned based on the different types of relief available under
the FCA. And Stevens’s finding of standing did not turn at all on a holding that the
FCA is an action to recover “damages” as opposed to penalties or any other form of
relief.
Novartis also overlooks language from Xerox, which emphasized the
“compensatory traits” of civil remedies like those imposed by the TMFPA:
Monetary liability that exists even when no loss has occurred can only be a fine or a penalty, not damages. But that does not mean penalties do not and cannot have “compensatory traits.” Indeed, the Legislature may choose a penalty regime precisely because harm ensuing from a wrong may be inestimable and, therefore, must be deterred and prevented. Moreover, penalties necessarily compensate in the sense that the hallmark of a penalty is that it goes beyond compensating for a loss.
555 S.W.3d at 530 (original emphasis, footnotes omitted); see also Cook Cty. v.
24 APP305 United States ex rel Chandler, 538 U.S. 119, 130 (2003) (explaining, when
analyzing FCA relief, that “treble damages have a compensatory side, serving
remedial purposes in addition to punitive objectives”).
Thus, the TMFPA, like the FCA, partially assigns a claim that tends to
compensate the State for losses caused by Medicaid fraud and punishes fraudsters.
Xerox held the TMFPA does not provide for “damages” for purposes of
apportionment and contribution under Chapter 33. Xerox analyzed a narrow issue
that does not touch on standing at all. And its acknowledgement of TMFPA
remedies’ “compensatory traits” supports application of Stevens.
Novartis also devotes much space to set up the differences between damages
and civil penalties, but it never delivers the punchline. Brief at 21-22. Novartis cites
no authority for the proposition that Texas prohibits legislative assignment of civil
claims that provide for relief with “compensatory traits” and a punitive component,
when the State has been injured by the misconduct at issue and retains the right to
the lion’s share of any recovery.
Instead of delivering persuasive legal authority that undercuts Stevens’s
application here, Novartis hyperbolically equates TMFPA qui tam actions with
“criminal lawsuit[s]” that seek only to vindicate a purely “public interest.” Brief at
25 APP306 22.29 Novartis’s citation to TransUnion, while acknowledging the parallel nature of
the federal and Texas standing analyses, does not carry the point for Novartis. Id.
(citing TransUnion LLC v. Ramirez, 594 U.S. 413 (2021)). TransUnion says nothing
about qui tam actions. TransUnion says nothing about the Texas Legislature’s
authority to partially assign the State’s Medicaid fraud claim to relators who
contribute to the State’s recovery from Medicaid fraudsters. TransUnion does not
hold that a party with a concrete harm cannot assign its claim to another. Indeed,
there is no purported assignment in TransUnion. And despite analyzing claims that
allowed for statutory penalties, TransUnion nevertheless emphasized the injury—
not the character of relief—drives the standing analysis. Compare 594 U.S. at 419,
423, 427-28 with Brief at 21.
TransUnion merely reaffirms the general proposition of federal law that a
statute generally cannot circumvent the concrete-injury standing requirement by
granting uninjured private citizens the bare right to enforce a law. See 594 U.S. at
427-430.30 But the State has suffered an injury here. The Legislature has partially
29 Novartis would seemingly liken Health Selection’s efforts to a private person suing another for exceeding the speed limit when no one was injured—with the bare intent to enforce the law. Not true. The State has suffered an injury beyond mere violation of a law, and the TMFPA partially assigned the State’s right to recover to Health Selection. Health Selection’s efforts represent something more than litigating a “criminal lawsuit” aiming to right a purely “public” wrong. The State has suffered pecuniary losses, and Health Selection possesses unique information that entitles it to compensation under the TMFPA. 30 The TransUnion court held that several plaintiffs established a concrete injury where the defendant disseminated credit reports to third parties that falsely suggested plaintiffs were possibly criminals and terrorists. Id. at 432. But with respect to other plaintiffs who suffered no injury
26 APP307 assigned the State’s Medicaid fraud claim to Health Selection. Health Selection may
therefore rely on the State’s injury to establish standing under both Stevens and
Texas law.
Given the parallels between the TMFPA’s and FCA’s relevant qui tam
provisions, Stevens’s reasoning demonstrates Health Selection has standing as
partial assignee of the State’s Medicaid fraud claim. Novartis cites no authority in
support of this Court’s departure from its tradition of tracking federal standing rules.
Novartis cannot articulate any reason for this Court to disagree with Stevens. And
Novartis’s attempts to distinguish Stevens wilt under weight of the law. This Court
should therefore apply Stevens and hold the district court properly denied Novartis’s
91a Motion.
B. Alternatively, Health Selection’s Statutory Authority and Capacity to Represent the State Preclude Dismissal Regardless of Health Selection’s Standing.31
A plaintiff must have capacity and standing to sue. But capacity and standing
need not reside in the same person. Regardless of whether Stevens applies, the
TMFPA provides qui tam relators authority or “capacity” to sue on behalf of the
State. And while the relator’s award comes from the “proceeds of the action,” it also
because the defendant had only maintained the misleading files internally, the court held they lacked constitutional standing. Id. at 433-35. 31 Novartis agrees that the TMFPA grants Health Selection authority to represent the State in Medicaid fraud actions; it just challenges the constitutionality of that authorization, a challenge that Health Selection addresses, infra p. 33 et seq. See Brief at 25 et seq.
27 APP308 depends on the value of the relator’s contribution to the litigation. Tex. Hum. Res.
Code §§ 36.110(a), (a-1), (b). The relator’s award can reasonably be characterized
as payment for its services, akin to payment that receivers, conservators, ad litems,
and executors receive for representing an entity or person with constitutional
1. The TMFPA provides qui tam relators with capacity and authority.
The TMFPA authorizes Health Selection to represent the State in this
Medicaid fraud action. Tex. Hum. Res. § 36.101(a). Regardless of whether State
attorneys intervene, the government is a real party in interest, demonstrating a
representative relationship between the government and Health Selection as relator.
See Laird, 336 F.3d at 357 (government is real party in interest under FCA even if
federal attorneys do not intervene); Tex. Hum. Res. Code §§ 36.101(a) (qui tam
action is “for the state” and “in the name of the . . . state”), 36.110(a)(a-1) (State
receives at least 70% of the recovery even if it does not intervene).
This Court has also observed that the “[TMFPA]—via qui tam provisions—
deputizes private citizens to pursue a TMFPA action on the government’s behalf.”
Xerox, 555 S.W.3d at 525. “Deputizes” denotes authority to represent the State in a
defined, limited role.
Because the TMFPA provides Health Selection with authority and capacity to
sue on the State’s behalf, Health Selection need only establish the State’s standing,
28 APP309 which is undisputed. Even if the Court holds the TMFPA does not partially assign
State rights to Health Selection, the TMFPA allows Health Selection to represent the
State in its capacity as relator.
2. In its capacity as relator, Health Selection need not allege an individual injury because the State has standing. While Novartis previously cited Pike v. Texas EMC Management, LLC for the
proposition that standing under a statute does not satisfy the constitutional standing
requirements, Pike’s real import is its emphasis on the difference between “capacity”
and “standing.” See generally, 610 S.W.3d at 775. “Both capacity and standing are
necessary to bring a lawsuit.” Id. And a “party has capacity when it has the legal
authority to act, regardless of whether it has a justiciable interest in the
controversy.” Id. (some emphasis added). Thus, “capacity” and “standing” need not
reside in a single entity for the aggrieved party—the party with standing—to
prosecute its claims. For example, minors, “incompetents,” and estates may suffer a
harm that supports standing, but “the law . . . grants another party the capacity to sue
on their behalf.” Lovato, 171 S.W.3d at 849. Thus, standing often resides in one
person while capacity resides in another.
Contrary to Novartis’s averments, it is not necessary that the real party in
interest be “incompetent” for another person to represent the party’s interests in
litigation. See Brief at 23-24. For example, receivers sue in a representative
“capacity” on behalf of various aggrieved parties. See, e.g., Cotten v. Republic Nat’l
29 APP310 Bank of Dallas, 395 S.W.2d 930, 941 (Tex. App.—Dallas 1965, writ ref’d n.r.e.)
(receiver for insolvent insurance company may “sue as the representative of the
corporation and its creditors, stockholders and policyholders, for they have an
interest in the corporation’s assets”); Tex. Civ. Prac. & Rem. Code §§ 64.001(a),
64.033 (“A receiver may bring suits in his official capacity . . . .”); Memon v. Nguyen,
No. 01-21-00706-CV, 2023 WL 3513135, at *4 (Tex. App.—Houston [1st Dist.]
May 18, 2023, no pet.) (“The [turnover] order grants the Receiver the power to take
control of all of appellants’ causes of action, to initiate litigation, and to settle any
litigation.”).
Similarly, a power of attorney can grant the attorney-in-fact capacity to sue
for the principal regardless of the principal’s capacity. See, e.g., Cortes v. Wendl,
No. 06-17-00121-CV, 2018 WL 3040322, at *5, *5 n.8 (Tex. App.—Texarkana June
20, 2018, no pet.) (relying on the language of a durable power of attorney which did
not depend on incapacity and holding, “The record supports the trial court’s implied
finding that Wendl, in her capacity as agent and attorney-in-fact for Hardy, had the
capacity to bring the lawsuit on Hardy’s behalf”);32 Tex. Estates Code § 752.051
(durable power of attorney may grant attorney-in-fact authority to sue even if
principal is not incapacitated). While the principal could represent herself, she may
32 Note the principal also testified in the case. Id. at *2.
30 APP311 provide someone else with the authority and capacity to represent her. The
proposition that a relator may represent the State—even though the State also has
capacity—therefore does not rest on novel principles. See Rodarte v. Investeco Grp.,
L.L.C., 299 S.W.3d 400, 407 (Tex. App.—Houston [14th Dist.] 2009, no pet.) (“A
plaintiff with no legally cognizable interest in the outcome of the case lacks standing
to sue on its own behalf, but may be authorized to sue on behalf of another.”).
Further examples of representative capacity: Corporations appear through
persons granted authority in bylaws or board resolutions. See, e.g., Timbertech Inc.
v. Wallboards, Inc., No. 14-98-00422-CV, 1999 WL 649116, at *3 (Tex. App.—
Houston [14th Dist.] Aug. 26, 1999, pet. denied). Parents (and other adults) sue on
behalf of children in their capacity as next friend, and executors sue on behalf of
estates in a representative capacity. See generally In re Bridgestone Americas Tire
Operations, LLC, 459 S.W.3d 565, 572–73 (Tex. 2015) (orig. proceeding)
(distinguishing capacity of next friend and status of minor as real party in interest);
Ferreira v. Butler, 575 S.W.3d 331, 334-35 (Tex. 2019) (generally distinguishing
representative capacity of executor from individual capacity of devisee).
The TMFPA provides that “persons”—who possess evidence of Medicaid
fraud—may represent the State in their capacity as relators. While capacity and
standing are both necessary to litigate this claim, Health Selection may proceed on
behalf of the State because the TMFPA grants Health Selection capacity and
31 APP312 authority to do so and because the State has standing.
C. Alternatively, Because the TMFPA Provides Relators Like Health Selection Standing to Sue, Constitutional Standing Requirements Do Not Apply.
There is a long line of cases, which do not appear to be expressly abrogated,
that provide the burden to establish standing under the constitution applies “absent
a statutory exception to the contrary.” Hunt v. Bass, 664 S.W.2d 323, 324 (Tex.
1984) (emphasis added); see also Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547,
555–56 (Tex. 2000) (“Unless standing is conferred by statute, taxpayers must show
as a rule that they have suffered a particularized injury distinct from that suffered by
the general public in order to have standing to challenge a government action or
assert a public right.” (footnote omitted));33 Lara, 52 S.W.3d at 178 (“As a general
rule of Texas law, to have standing, unless it is conferred by statute, a plaintiff must
demonstrate that he or she possesses an interest in a conflict distinct from that of the
general public, such that the defendant’s actions have caused the plaintiff some
particular injury.” (emphasis added)).34
33 Bland also noted a “long-established exception” to the injury requirement for standing where a taxpayer sues to enjoin illegal public spending. 34 S.W.3d at 556. 34 Texas intermediate courts of appeals continue to cite variants of this rule. See, e.g., Marauder Corp. v. Beall, 301 S.W.3d 817, 820 (Tex. App.—Dallas 2009, no pet.) (“The Constitution requires standing to maintain suit. Standing, however, may be conferred by statute. . . . The standing analysis begins and ends with the statute itself.”) (citations omitted)); Children of the Kingdom v. Cent. Appraisal Dist. of Taylor Cty., 674 S.W.3d 407, 414, 415 (Tex. App.—Eastland 2023, pet. denied); Everett v. TK-Taito, L.L.C., 178 S.W.3d 844, 850-51 (Tex. App.—Fort Worth 2005, no pet.).
32 APP313 Under the TMFPA’s language, a “person”—which includes a corporation,
organization, or “any other legal entity”—may bring a civil action for violations of
the TMFPA on his own behalf and on the State’s behalf.35 Tex. Hum. Res. Code §
36.101(a). Under the rule cited by Hunt, Blue, and Lara—with support from Section
51-a—the TMFPA provides standing to Health Selection without reference to
common law principles.
Health Selection is aware of recent opinions suggesting that statutory
provisions defining “the class of persons authorized to sue” go to “the merits of the
plaintiff’s claim, not the plaintiff’s standing to sue in the jurisdictional sense.” See
Busbee v. Cty. of Medina, 681 S.W.3d 391, 395 (Tex. 2023); see also Pike, 610
S.W.3d at 774; Tex. Med. Res., LLP v. Molina Healthcare of Tex., Inc., 659 S.W.3d
424, 440, 441 (Tex. 2023). These opinions, however, do not address the
Legislature’s authority under Section 51-a to protect against Medicaid fraud and
maximize federal funding through qui tam actions. Supra pp. 8-13.
III. HEALTH SELECTION’S LIMITED AUTHORITY UNDER THE TMFPA TO PROSECUTE CLAIMS BENEFITTING THE STATE DOES NOT VIOLATE THE TEXAS CONSTITUTION.
The arguments above demonstrate Health Selection may proceed as a partial
assignee of the State’s claim, a “deputized” representative of the State, or with
standing prescribed by statute. For its second challenge, Novartis correctly accepts
35 See Tex. Gov’t Code § 311.005(2); Tex. Hum. Res. Code § 36.001 (not defining “person”).
33 APP314 the TMFPA delegates to Health Selection authority and capacity to recover money
for the State in Medicaid fraud litigation. But Novartis incorrectly argues that
delegation is unconstitutional.
In granting relators limited, contingent authority to prosecute Medicaid fraud
claims that benefit the State, the Legislature finds ample constitutional support in
Section 51-a analyzed above. Supra pp. 8-13. Additionally, applying the Court’s
century-old guidance, this legislative delegation of authority does not offend the
Texas Constitution’s separation-of-powers provision. Specifically, it does not
unconstitutionally encroach on State attorneys’ authority to represent the State. The
district court properly rejected Novartis’s separation-of-powers challenge.
A. Novartis’s Constitutional Challenges Fail Because Relators’ Authority under the TMFPA Does Not Unequivocally Supplant State Attorneys’ Authority to Represent the State in Medicaid Fraud Litigation.
Novartis does not quarrel with the Legislature’s decision to permit the OAG
to represent the State in all TMFPA fraud actions. Brief at 26; see also El Paso Elec.
Co. v. Tex. Dep’t of Ins., 937 S.W.2d 432, 438 (Tex. 1996); Brady v. Brooks, 99 Tex.
366, 379-380, 89 S.W. 1052, 1056-57 (Tex. 1905). The Legislature has appointed
attorneys general to represent the State and supervise qui tam actions pursuant to its
undisputed authority. See Tex. Hum. Res. Code §§ 36.051-053, 36.101 et seq.; see
also Maud, 200 S.W. at 376 (referencing legislative authority to create new causes
of action in favor of the State and entrust OAG to prosecute those claims in trial and
34 APP315 appellate courts).
Novartis frames its complaint as presenting a separation-of-powers issue.
Brief at 25. That complaint boils down to one question: Do the qui tam provisions
unequivocally supplant State attorneys’ authority to represent the State in Medicaid
fraud litigation? See infra pp. 39-43 (discussing Court’s analysis and holdings in
Maud and Camp v. Gulf Production Co.). The answer is no because qui tam relators’
authority to prosecute claims on behalf of the State remains subordinate to State
attorneys’ authority. Id. Thus, even putting aside the Legislature’s authority under
Section 51-a, Novartis’s argument fails.
B. The Presumption of Constitutional Validity Requires Novartis to Show the TMFPA Is Unconstitutional Beyond Any Reasonable Doubt.
“There is always a presumption of constitutional validity with regard to
legislation . . . .” EXLP Leasing, LLC v. Galveston Cent. Appraisal Dist., 554 S.W.3d
572, 575 (Tex. 2018); see also Maud, 200 S.W. at 376 (“An act of the Legislature is
not to be declared unconstitutional unless plainly so. The presumption is that the
Legislature acted in the light of the Constitution, with the intention to observe it
rather than violate it.”). “The party challenging the statute’s constitutionality bears
the burden of demonstrating that the enactment fails to meet constitutional
requirements.” EXLP Leasing, 554 S.W.3d at 576. If legislation is reasonably
susceptible to two meanings—one that will offend the constitution and a second that
complies with it—“that construction will be adopted which sustains the [legislative]
35 APP316 act rather than destroys it.” Maud, 200 S.W. at 376; see also Tex. Gov’t Code §
311.021(1).
When deciding the constitutionality of the qui tam statutes, the Court should
uphold those statutes “unless [their] unconstitutionality be made to appear beyond
any reasonable doubt.” See Koy v. Schneider, 110 Tex. 369, 407, 221 S.W. 880, 888
(1920) (Koy II) (denying rehearing); see also id. at 882 (“[A]ny doubt as to the
validity of . . . legislation is to be resolved in [the Legislature’s] favor” (quotation
omitted)); Koy v. Schneider, 110 Tex. 369, 383, 218 S.W. 479, 483 (1920) (Koy I)
(courts must uphold statute against constitutional challenge unless Legislature was
“wrong beyond a reasonable doubt” in its belief that the statute complies with the
constitution). In other words, a statute should not be stricken unless “its
unconstitutionality is clear and unquestionable.” Koy II, 221 S.W. at 882.
C. The Court Has Already Resolved Any Conceivable “Doubt” in Favor of Upholding the TMFPA’s Qui Tam Provisions.
Novartis’s challenge turns on the meaning of “represent” in constitutional
provisions granting State attorneys the right to “represent the State” in litigation. See
Tex. Const. art. IV, § 22; Tex. Const. art. V, § 21. But Novartis’s interpretation
contradicts this Court’s prior decisions. Where there is any ambiguity, the
presumption of constitutional validity controls.
The Court’s decision in Koy is instructive. In Koy, the Legislature passed a
law that permitted women to vote in “primary elections.” Koy II, 220 S.W. at 881.
36 APP317 The issue was whether the statute violated a constitutional provision that
“restrict[ed] to ‘males’ the privilege of voting in ‘any election.’” Id. The Court
answered the question in the negative. Id. at 919.36 Koy turned on whether a “primary
election” governed by the statute fell within the scope of “any election” in the
constitutional suffrage language. Id. at 883. Displaying deference, the Court
narrowly defined the constitutional phrase “any election” as not including “primary
elections” and upheld the legislation. See, e.g., id. at 884, 889-899.
Just as “any election” was found to be ambiguous in Koy, so too is the word
“represent.” Does the term mean “prosecute or defend every lawsuit involving the
State”? Does it mean State attorneys cannot accept assistance from others? Does it
require absolute exclusivity and bar others from representing the State in litigation
even when State attorneys approve and monitor the case? The Court need not answer
these questions because Maud already has.
“Represent” merely means the authority to control litigation in which the State
is a party, whether it is continuously and actively exercised or not. See, e.g., Maud,
200 S.W. at 376 (State attorneys permitted to allow others to assist in representing
State). As explained in Maud, the right is “exclusive” in the sense that the Legislature
cannot “unequivocally supplant” State attorneys. See id. at 377. But the “exclusive”
36 See also Koy I, 218 S.W. at 483.
37 APP318 nature of this authority to “represent” the State does not prohibit delegation of that
authority to others. See id.; El Paso Elec., 937 S.W.2d at 439; Terrell v. Sparks, 104
Tex. 191, 195, 198, 135 S.W. 519, 520, 521-22 (Tex. 1911). And it certainly does
not prohibit State attorneys from allowing others to assist the State as is the case
here.
Because the qui tam statutes respect the Court’s definition of “represent,” the
Court should uphold those statutes even if “serious doubt[s]” exist as to their
constitutionality. See Koy II, 221 S.W. at 888 (quoting previous supreme court
opinion for proposition that “[i]f, by reasonably fair construction it appears that the
Legislature was empowered to enact the law, . . . a serious doubt of that power must
be resolved in favor of the validity of the law”).
D. In Maud and Camp, the Court Has Approved Legislative Authorization of Non-State Attorneys to Prosecute Claims Benefitting the State So Long as Their Authority Does Not Supplant the Authority of State Attorneys.
For over one hundred years, the Court’s analysis and holding in Maud has
foreclosed the very argument that Novartis makes here. See 200 S.W. at 377. And
the Court, in later opinions, continued to affirm Maud and permits the Legislature to
empower private citizens to represent State interests in court so long as their
authority remains subordinate to State attorneys’ authority.
38 APP319 1. Maud v. Terrell
Maud explained what the Texas Constitution means when it grants State
attorneys the right to “represent” the State in civil litigation. Maud arose from the
state comptroller’s refusal to pay for tax collection services provided by a tax
collector. 200 S.W. at 375-76. The comptroller—pursuant to the challenged
statute—appointed the tax collector to represent the State in efforts to collect
inheritance taxes. Id. The case turned on the constitutional validity of the statute that
empowered the comptroller to employ tax collectors to sue on behalf of and represent
the State in recovering inheritance taxes for the State. Id.
The statute at issue authorized the comptroller to appoint “suitable” persons
to “sue for and collect [inheritance] taxes.” Maud, 200 S.W. at 377 (emphasis
added). The statute added, “[t]he person appointed by the said Comptroller may
represent the State in any proceeding necessary” to enforce tax collections. Id.
(emphasis added)). The statute preserved the district or county attorneys’ right to sue
on “behalf of the State” and did not preclude them from “appear[ing] for the State
in all suits necessary to enforce the law.” Id.
The State’s challenge of the statute in Maud reflects Novartis’s challenge
here:
The validity of the Act is challenged upon the ground that its necessary effect is to substitute the person or persons whom the Comptroller may thus employ for the county attorneys of the State in the prosecution of suits by the State for such taxes in the district and inferior courts; and
39 APP320 for the Attorney-General in their prosecution in the Supreme Court, supplanting them in the discharge of their constitutional duties and denying their right to perform them.
Maud, 200 S.W. at 376. Despite recognizing the “powers thus conferred by the
Constitution upon [State attorneys] are exclusive,” the Court upheld this statutory
delegation of authority to represent the State. See id. at 376-77.
First, the Court distilled the test as “simply whether by plain and unambiguous
language [the statute] deprives the county attorneys and the Attorney-General of
their authority to prosecute in the courts suits by the State for the recovery of
inheritance taxes.” Maud, 200 S.W. at 376 (emphasis added). Stated differently, the
test is whether statutory provisions “unequivocally supplant the county attorneys and
the Attorney-General in their authority to prosecute the suits of the State for the
recovery of the taxes.” Id. at 377 (emphasis added). Applying that test, the Court
held the statute was constitutional because “the provision that the person appointed
by the Comptroller may represent the State . . . to enforce the collection of the taxes
does not deny to county attorneys or the Attorney-General the right to conduct suits
for the taxes.” Id. at 377 (emphasis added). Indeed, “[t]o say that such person may
so represent the State is not equivalent to a declaration that it shall be to [State
attorneys’] exclusion.” Id. at 377-78. The Court held the statute did not unlawfully
purport to deny State attorneys the discretion to either reject the assistance of others
in carrying out these constitutional duties or to avail themselves of those services “to
40 APP321 be rendered in subordination of their authority.” See id. at 376.37
Thus, the foundational takeaways from Maud are (i) the Legislature cannot
outright prohibit State attorneys from representing the State in litigation; (ii) courts
should not read statutes permitting individuals other than State attorneys to represent
the State as prohibiting State attorneys from representing the State; and (iii) statutes
permitting others to litigate claims for the State are unconstitutional only if they
“unequivocally supplant [State attorneys] in their authority to prosecute the suits of
the State.” Maud, 200 S.W. at 376, 377 (emphasis added); see also El Paso Elec.,
937 S.W.2d at 439 (citing Maud for proposition that “a statute authorizing an agency
to hire outside counsel should, if possible, be construed as complying with this
constitutional requirement, even if the statute does not expressly recognize the
authority of the Attorney General” (emphasis added)).
2. Camp v. Gulf Production Co.
Despite admitting Maud is “foundational” authority on this issue, Brief at 27,
Novartis effectively asks the Court to reject Maud. But Maud’s holding and rationale
were affirmed in Camp v. Gulf Production Co., when the Court revisited the
37 After holding the statute did not violate the constitution, the Court opined the Legislature likely did not intend for the comptroller’s designee to actually file lawsuits to collect taxes. Id. at 377. But that contemplation did not drive the Court’s holding: “The first provision . . . may be said, literally, to empower such person to institute suits, but it does not exclude the idea that this shall be in subordination to the authority of the county attorney.” Id. Moreover, in Camp, discussed next, the Court upheld the relevant statute even though it permitted a private party to file suit that would adjudicate the State’s ownership of land.
41 APP322 propriety of legislation that permitted private persons to represent State interests in
litigation. 122 Tex. 383, 391, 61 S.W.2d 773, 775-76 (Tex. 1933). Camp involved a
statute that authorized private persons, interested in purchasing “vacant unsurveyed
school land,” to sue in order to determine whether the State owned the land and,
thus, could sell the land to that person. Id. at 775, 776 (“If the suit results in the land
being adjudged to be vacant . . . the land belongs to the state,” and private parties
prosecuting the action obtain the right to purchase that land). Like the State and
relator in a qui tam action, both the State (by virtue of becoming the adjudicated
owner of the land) and private parties (by virtue of obtaining the right to purchase
land declared to be state-owned) stood to gain from the private-party lawsuit. See id.
The statute’s challenger argued it improperly “adjudicate[ed] the state’s title
to its public land” through a private party while “exclud[ing] the Attorney General
and county and district attorneys from the right to represent the State.” Id. at 777.
Thus, the Court analyzed whether the statute unconstitutionally “denie[d] [State
attorneys] the right and duty of representing the state, as committed to them under
section 22, art. 4, and section 21, art. 5, of the Texas Constitution.” Id. at 775-76.
Applying Maud and Staples (discussed supra pp. 39-41, infra 45-46), the Court
affirmed the statute even though it made private parties “the agent of the state to
42 APP323 institute the suit on his own behalf, and on behalf of the state.” Id. at 776-77, 778.38
Similar to the Section 51-a reasoning above, the Court observed the statute was
consistent with the Legislature’s specific constitutional authority “to supervise and
control the sale of the public school lands.” Id. at 776. And the Court upheld the
statute against these constitutional challenges in part because State attorneys—
regardless of these private lawsuits—retained “the rights and powers given them by
the Constitution . . . to appear in any suit instituted by authority of this statute, and
represent the state.” Id. at 776-78.
The relevant rule remained clear: if the statute does not “unequivocally
supplant” State attorneys, it does not unconstitutionally encroach on their authority.
The TMFPA’s qui tam provisions stay well within the confines of this rule. Infra pp.
47-54.
E. Novartis’s Challenge Relies on Inapposite Case Law that Nevertheless Upholds the Deferential Maud Standard. Novartis relies heavily on a case following Maud where the Legislature went
too far by completely replacing certain county attorneys. See generally, Hill Cty. v.
Sheppard, 142 Tex. 358, 178 S.W.2d 261 (1944).39 In Sheppard, the challenged
38 While the court noted the statute was “susceptible of but two constructions with reference to its purpose and intent,” the court did “not consider it necessary . . . to determine” whether the private- person-agent construction identified in this sentence or the alternative construction should govern. Id. at 776-77. It follows that neither construction would render the statute unconstitutional. 39 Sheppard also did not involve a specific constitutional grant of legislative authority like Section 51-a.
43 APP324 statute provided that in certain counties with only a county attorney, (i) “the office
of Criminal District Attorney is hereby created” and (ii) such “Criminal District
Attorney . . . shall have and exercise, all such powers, duties and privileges . . . as
are by Law now conferred or which may hereafter be conferred upon District and
County Attorneys.” Id. at 261-62 (emphasis added). But article V, section 21 of the
Texas Constitution provides, in counties with no district attorney, the county
attorney “shall represent the state in all cases” in lower courts. Id. at 262. After
holding the statute did not create a constitutional office, the question became “what
was the effect of the statute if it undertook to create a statutory office to take over
the duties of the county attorney.” Id. at 264 (emphasis added). Consistent with and
citing to Maud, the Court found the statute constitutionally defective because it
“create[d] a statutory office with power to take over . . . functions” which “the
Constitution imposed . . . upon the county attorney.” Id. (emphasis added). In other
words, the Legislature cannot wholly supplant, supersede, and replace State
attorneys with respect to their constitutional authority to represent the State.
Sheppard merely applied Maud’s standard to a statute that quite literally sought to
replace county attorneys.
Staples v. State likewise does not undermine the TMFPA’s constitutionality.
See generally, 112 Tex. 61, 245 S.W. 639 (1922). Staples involved a statute that
capped expenditures in primary elections. Id. at 639. If a candidate knowingly
44 APP325 violated those limits, their candidacy could be challenged through “proceedings quo
warranto” which the statute provided “may be instituted at the suit of any citizen.”
Id. at 640 (emphasis added). Citizens with no pecuniary interest sought to prosecute
a quo warranto suit under that statute without State Attorney “participation” or
“consent.” Id. at 639, 640. The first issue certified to the Court was whether the
statute purported to authorize private persons to “institute and maintain” quo
warranto proceedings. Id. at 639. The court answered this question “no” primarily
because the legislative language did not plainly conflict with the “established and
well-known meaning” of “quo warranto proceedings”—state actions to protect
purely public interests brought only by State attorneys though, in some
circumstances, after prodding by interested individuals. Id. at 640-41.40 This holding
turned on statutory interpretation.
The Staples Court also opined on the constitutionality of the statute in light of
State attorneys’ constitutional authority to represent the State. Id. at 639, 643.
Because the statutory language and legislative intent did not plainly depart from the
settled parameters of quo warranto proceedings, the Court held the statute did not
offend those constitutional provisions. Id. at 643. Staples does not impugn the
TMFPA’s constitutionality. Instead, it merely supports the proposition that so long
40 The current statute more clearly states that a State attorney may file the petition “at the request of an individual relator.” Tex. Civ. Prac. & Rem. Code §§ 66.002(c), 66.003(2).
45 APP326 as State attorneys retain the right to decline the assistance of private parties—or the
private parties’ representation of the State remains “in subordination to” State
attorneys’ authority—no offense befalls the constitution. Id. at 642 (quoting Maud).
Novartis cites Allen v. Fisher for the proposition “that a private plaintiff
cannot be authorized to maintain a suit that solely seeks to vindicate a matter of
public concern.” Brief at 24-25 (emphasis added) (citing 118 Tex. 38, 9 S.W.2d 731
(Comm’n App. 1928)).41 But Allen involved a plaintiff—who was ineligible to serve
as the democratic nominee for a public office—suing to challenge another’s
nomination for that office. See 9 S.W.2d at 732. Because the plaintiff could not gain
anything beyond what any other citizen might gain, the Court held the “plaintiff . . .
has no authority to maintain this suit, as a voter, independently of a public official
who is properly clothed with that authority.” Id. But Health Selection, who possesses
evidence of Medicaid fraud that triggers its right to payment under the TMFPA,
41 The TMFPA qui tam provisions are not unique in the authority they grant private citizens to prosecute claims with a public-harm component. For example, the Legislature has empowered “[a]ny person” to enforce Texas abortion laws by suing “any person who . . . performs or induces an abortion in violation of [the subchapter titled Detection of Fetal Heartbeat].” Tex. Health & Safety Code § 171.208(a). That legislation expressly prohibits State attorneys from intervening in such actions. Id. § 171.208(h). In answering certified questions by the Fifth Circuit, this Court emphasized that the “Texas Heartbeat Act,” through the exclusive method described under section 171.208 “may be enforced by a private civil action, that no state official may bring or participate as a party in any such action, that such an action is the exclusive means to enforce the requirements, and that these restrictions apply notwithstanding any other law.” Whole Woman’s Health v. Jackson, 642 S.W.3d 569, 583 (Tex. 2022) (emphasis added). This statute goes well beyond the TMFPA’s authorization of relator suits given the Texas Heartbeat Act expressly prohibits action by State attorneys and other officers. This is just one example. See Tex. Gov’t Code § 82.0651(c) (barratry).
46 APP327 stands apart from ordinary citizens. And unlike Allen, State attorneys continue to
monitor, oversee, and support the case. MR116 (OAG response to 91a Motion
stating, “The State retains an interest in this matter, even though it has declined to
intervene” and “Texas’s declination in this matter is not a comment on the merits of
the case”); see also MR390-444 (OAG’s response in Texarkana Court of Appeals).
The statute in Allen did not assign the State’s claim to the plaintiff. It did not
specifically delegate authority to private persons with specialized knowledge of a
violation. Unlike here, there was no constitutional provision specifically supporting
the plaintiff’s right to prosecute the action. Novartis’s reliance on Allen is misplaced.
Nor does Agey v. American Liberty Pipe Line Co. aid Novartis’s cause. 141
Tex. 379, 172 S.W.2d 972 (1943). The statute at issue did not empower a private
person to represent the State, so the Court did not address the constitutional issue.
See id. at 974-75. Agey did not restrict or abrogate the Maud standard in any way.
In sum, Novartis incorrectly argues Maud, Allen, Staples, and Sheppard
undercut the constitutionality of TMFPA qui tam statutes. Novartis cites no authority
that supports striking down a statute that respects State attorneys’ constitutional
authority and finds constitutional support in a targeted provision like Section 51-a.
It is Novartis’s burden to do so. But it is a burden Novartis cannot budge.
47 APP328 F. The TMFPA Stays Within the Parameters Set by Maud, Camp, Sheppard, and Other Governing Case Law.
Under the TMFPA, State attorneys expressly retain absolute control over qui
tam litigation from the beginning to the end. The TMFPA remains inbounds under
Maud, Camp, Sheppard, and other guidance discussed above. Under those
authorities—and applying the TMFPA’s text and the presumption of
constitutionality—the TMFPA qui tam provisions are constitutional.
1. The TMFPA does not unequivocally supplant State attorneys’ authority to represent the State.
The TMFPA authorizes private citizens to litigate Medicaid fraud claims
subject to the authority of State attorneys to control, dismiss, and settle the litigation.
Akin to the inheritance tax statute in Maud, the TMFPA “authoriz[es]” relators to
“bring a civil action for a violation of Section 36.002 [defining Medicaid fraud] . . .
for the state.” Tex. Hum. Res. Code § 36.101(a). And like the authorization to collect
taxes in Maud, the TMFPA does not purport to “deny” State attorneys the “right to
conduct suits” for Medicaid fraud—far from it. See, e.g. Tex. Hum. Res. Code §§
36.052(e) (granting OAG right to sue), 36.102 (State attorneys have authority to
intervene and dismiss qui tam action); 36.107(a).
State attorneys retain authority to reject assistance by the relators and to take
over the case. A relator must serve the petition and “substantially all material
evidence and information the person possesses on the attorney general” before the
48 APP329 case may proceed. Tex. Hum. Res. Code § 36.102(a). A relator may not litigate the
case for half a year pending State attorneys’ decision to intervene. See id. §
36.102(b), (c). And State attorneys may dismiss the action without consulting
relators. Id. § 36.102(e). Thus, State attorneys retain the right to wield total control,
and this statutory framework is by careful design. See Maud, 200 S.W. at 377, 378;
Camp, 61 S.W.2d at 776-78; Koy II, 221 S.W. at 886 (stating courts assume “the
Legislature was familiar with previous decisions of the Supreme Court affecting the
subject-matter”). State attorneys’ power to displace relators or to dismiss the case
altogether evinces “ultimate control” over the case. See El Paso Elec., 937 S.W.2d
at 436; Maud, 200 S.W. at 376 (framed as State attorneys’ right to refuse outside
assistance).
As in Maud, the TMFPA’s authorization of private persons to sue is
permissive and qualified; it does not bind or “unequivocally supplant” State
attorneys. See, e.g., Tex. Hum. Res. Code § 36.052(e) (granting OAG authority to
sue). In qui tam actions, State attorneys may dismiss the case against a relator’s
wishes or intervene and effectively displace the relator. Id. §§ 36.102(e), 36.104(a),
36.107(b). In cases where the State chooses not to unilaterally dismiss a qui tam
action or take over the direct, day-to-day management of the litigation, State
attorneys elect merely “to avail themselves of the services” of relators as the law
allows. See Maud, 200 S.W. at 377.
49 APP330 “If the state proceeds with the action, the state has the primary responsibility
for prosecuting the action and is not bound by an act of the person bringing the
action.” Tex. Hum. Res. Code § 36.107(a) (emphasis added). And State attorneys
may dismiss the action later on “notwithstanding the objections” of relators so long
as the court provides relators an opportunity for a hearing on the State’s motion to
dismiss. Id. § 36.107(b).42 Regardless of when State attorneys intervene, they may
settle an action “notwithstanding the objections of the person bringing the action.”
Id. § 36.107(c). State attorneys may significantly limit the role of the relator at any
time. Id. § 36.107(d).
Even if State attorneys elect not to intervene and permit relators to proceed,
they retain the right to control the litigation by receiving copies of all pleadings filed
in the action and by intervening beyond the 180-day deadline. Id. § 36.104(b-1).
Regardless of State attorneys’ decision to intervene, they may stay discovery
pending their investigation into the same matter, which effectively halts the qui tam
action. Id. § 36.108(a), (c). State attorneys may pursue the State’s claim through
42 While no Texas court has analyzed the issue in the TMFPA context, the most onerous burden imposed on the government to dismiss FCA claims merely requires the government to proffer “plausible” or “arguable” reasons for dismissal at which point the qui tam relators carry the heavy burden to demonstrate dismissal is “fraudulent, arbitrary and capricious, or illegal.” United States ex rel. Health Choice Alliance, L.L.C. v. Eli Lilly & Co., Inc., 4 F.4th 255, 267 (5th Cir. 2021). Thus, while a relator may be entitled to a “hearing,” the likelihood of superseding the government’s unilateral decision to dismiss is effectively null.
50 APP331 alternative means, including administrative proceedings. Id. § 36.109. The TMFPA
also bars participation altogether by relators if their allegations of Medicaid fraud
“are the subject of a civil suit or an administrative penalty proceeding in which the
state is already a party.” Tex. Hum. Res. Code § 36.113(a).
The qui tam provisions allow State attorneys to dismiss the case, to take over
the case, or to authorize the private person to litigate the case on the State’s behalf
while State attorneys retain authority to oversee and intervene. This arrangement
differs very little from the OAG’s statutory right to employ a private attorney to
prosecute claims on behalf of the State. See Tex. Hum. Res. Code § 36.105; Sparks,
135 S.W. at 520, 521-22. Under Maud’s test, the TMFPA’s qui tam provisions are
constitutional.
2. Under the TMFPA, State attorneys do not cede constitutional authority if they elect not to intervene within the 180-day seal period.
Novartis’s primary criticism targets § 36.104. Brief at 33 et seq. That section
provides that, after State attorneys decline to intervene or dismiss, the relator “may
proceed without the state’s participation.” Tex. Hum. Res. § 36.104(a)(2), (b).
However, the State attorneys retain the right to participate even without formal
intervention as they have done here. See Maud, 200 S.W. at 377; MR116 et seq.;
MR390 et seq.; SMR. Moreover, the statute expressly protects the State attorneys’
right to monitor the relator’s actions and to intervene later. Id. § 36.104(b-1).
51 APP332 Novartis gives State attorneys’ authority under § 36.102 short shrift and
largely ignores their untrammeled right to intervene, take over, and dismiss a case
during the 180-day seal period. See Brief at 5 (containing lone citations to § 36.102).
Even ignoring State attorneys’ absolute control during the seal period, the qui tam
statutes would remain constitutional. If State attorneys become displeased with the
relator’s management of the litigation, the State may intervene at any time “on a
showing of good cause.” Tex. Hum. Res. § 36.104(b-1). The “good cause” provision
here requires nothing more than a pro forma showing.43
No Texas case law defines “good cause” in the qui tam context. But case law
analyzing the FCA demonstrates “good cause” presents a nominal hurdle for the
government, and upon intervening, the government takes the wheel. United States
ex rel. Polansky v. Exec. Health Res. Inc, 17 F.4th 376, 387, 387 n.12 (3d Cir. 2021)
(discussing the light burden imposed by “good cause” language and opining history
of qui tam actions indicates good-cause requirement presents no separation-of-
powers problem); see also Polansky, 599 U.S. at 433-38 (approving government
dismissal through “good cause” intervention because, even if government does not
intervene initially, its “views are entitled to substantial deference”); United States ex
rel. Jackson v. Ventavia Research Grp., LLC, No. 1:21-CV-00008, 2024 WL
43 This is especially true here because Health Selection does not oppose intervention.
52 APP333 3812294, at *6 (E.D. Tex. Aug. 9, 2024) (collecting cases and stating, “Courts,
particularly in the wake of Polansky, have consistently permitted the Government to
intervene after the seal period when the Government wants to dismiss a case because
it disputes the case’s merits, wants to avoid discovery and litigation costs, or finds
that the case conflicts with its policies”).
Thus, regardless of whether or when the State intervenes the action always
remains subject to State attorneys’ constitutional authority to oversee, reassess, and
take over the case. And the “good cause” standard does not unconstitutionally
interfere with the State’s right to intervene at a later point in time.
Thus, the TMFPA does not “unequivocally supplant” State attorneys’
“authority to prosecute the suits of the State.” See Maud 200 S.W. at 377. Novartis’s
quarrel misunderstands the ease with which State attorneys may intervene and
exercise total control of the litigation at any time. And it ignores other provisions
that maintain State attorneys’ ultimate control of the litigation. See Tex. Gov’t Code
§ 311.021(2); Tex. Hum. Res. Code §§ 36.102(c), 36.107.
Alternatively, if the Court concludes “good cause” is a heavier burden in
Texas courts than in federal courts or otherwise unduly restricts State attorneys’
constitutional authority to represent the State, the Court should sever “on a showing
of good cause” from Texas Human Resources § 36.104(b-1) because that language’s
absence would not affect other provisions of the TMFPA, including its qui tam
53 APP334 provisions.44 See Rose v. Doctors Hosp., 801 S.W.2d 841, 842, 844-45 (Tex. 1990)
(where court previously held “statutory damages limitations [were] unconstitutional
when applied to damages in common law medical malpractice actions,” holding
court could simply sever the reference to “common law claims” because the statute
“remains complete in itself, and capable of being executed in accordance with the
legislative intent, wholly independent of that which was rejected” (emphasis
added)); Comm’n for Lawyer Discipline v. Benton, 980 S.W.2d 425, 441-42 (Tex.
1998) (holding attorney disciplinary rule against mistreatment of discharged jurors
would remain in effect even without the unconstitutionally vague “or embarrass”
language).
The TMFPA remains faithful to State attorneys’ “right . . . to decline” qui tam
actions and to the rule that qui tam relators’ representation of State interests must be
“in subordination to” State attorneys’ authority. See Maud, 200 S.W. at 376. The
TMFPA qui tam provisions are constitutional, and the Court should resolve any
doubt—even “serious doubt[s]”—against Novartis. Koy II, 221 S.W. at 882, 888;
Koy I, 218 S.W. at 483.
44 Although the TMFPA does not contain a severability clause, it is not necessary to support severance. See Tex. Gov’t Code § 311.032(c) (directing courts to apply general severance standard when legislation is silent on severability).
54 APP335 3. Novartis’s reliance on the nondelegation doctrine fails.
Novartis’s invocation of the nondelegation doctrine—generally referring to
the delegation of legislative duties to others—does not apply here. See Brief at 35-
37 (relying primarily on Tex. Boll Weevil Eradication Found., Inc. v. Lewellen, 952
S.W.2d 454, 469 (Tex. 1997)). Lewellen involved the Legislature’s delegation of
extensive legislative and enforcement authority to a private entity. 952 S.W.2d at
471. Novartis does not connect the nondelegation doctrine to this case. And even
assuming the doctrine applies, the Court’s test in Lewellen supports the TMFPA’s
qui tam statutes because (i) qui tam relators’ actions are “subject to meaningful
review” by State attorneys; (ii) the State, as the primarily affected party, is
“adequately represented” by State attorneys who wield absolute control over the
litigation; (iii) the relators’ pecuniary interest is completely aligned with the State’s
interests; (iv) the relators’ authority extends only to a single lawsuit and terminates
when that litigation terminates; (v) proper relators possess important, nonpublic
information necessary to prove Medicaid fraud and are represented by skilled legal
counsel; and (vi) the TMFPA provides sufficient standards to guide qui tam relators
by expressly providing that State attorneys retain ultimate control over Medicaid
fraud litigation. See id. at 472 (listing factors). Thus, even if the nondelegation
doctrine did apply, the TMFPA’s qui tam provisions do not offend it.
55 APP336 4. Novartis’s mistaken speculation regarding State attorneys’ intentions does not control.
Novartis argues that State attorneys “affirmatively decline to press the
litigation”; “decline[] to pursue the case”; or “decide that a case is not worth
litigating” when they do not intervene. Brief at 32, 33, 35. This rank speculation is
undermined by the OAG’s July 17, 2024 brief in this proceeding and its extensive
response in the Texarkana Court of Appeals. MR390 et seq. It is further undermined
by the OAG’s activities in the courts below and its anticipated arguments before this
Court. MR116, MR116 n.2; SMR. It is more reasonable to believe State attorneys
intend to monitor and control the case—as they have done throughout this
litigation—according to the TMFPA’s provisions and their constitutional authority.
It is more reasonable to believe they have not intervened because they trust Health
Selection and its lawyers to manage the day-to-day demands of this litigation. It is
more reasonable to believe State attorneys have declined to intervene based on their
desire to preserve State legal resources when private lawyers are properly managing
the case. The Court has recognized State attorneys’ right to “avail themselves” of
assistance by others. Maud, 200 S.W. at 377. Even if Novartis’s purported concern
that cases will be brought against the State’s will were legitimate, the TMFPA is
expressly designed to prevent that outcome by maintaining the State’s control
throughout the life of qui tam proceedings. Thus, not only are Novartis’s
assumptions incorrect, more importantly they are completely irrelevant to the
56 APP337 constitutional analysis.
ARGUMENT: THE APPELLATE PROCESS SHOULD PREVAIL
“Mandamus relief is appropriate when the trial court abuses its discretion in
denying a Rule 91a motion to dismiss.” Farmers, 621 S.W.3d at 266, 276-77
(mandamus appropriate where trial court misapplied the law by allowing Stowers
claim to proceed where there was no settlement or judgment that exceeded policy
limits). As demonstrated above, the district court did not err in any respect.
Further, “the adequacy of an appellate remedy must be determined by
balancing the benefits of mandamus review against the detriments.” In re Essex Ins.
Co., 450 S.W.3d 524, 528 (Tex. 2014) (orig. proceeding) (quote omitted). In most
Rule 91a cases, there is no chance the issues will resolve themselves during the
pendency of the litigation. For example, there was no chance in Farmers that the
Stowers doctrine would apply in the absence of an excess judgment or settlement.
See 621 S.W.3d at 264, 267-68. But here, given State attorneys’ demonstrated
interest in this case—and given their continuing right to intervene—State attorneys
may intervene as this case develops. State attorney intervention would moot
Novartis’s constitutional challenge. And it would prevent dismissal based on
Novartis’s standing challenge. Unlike other Rule 91a denials that the Court has held
warrant mandamus relief, mandamus would not work here to prevent the “utter[]
waste[]” of time and money because any error may resolve itself. See Essex, 450
57 APP338 S.W.3d at 528. Mandamus relief would also interfere with State attorneys’ ongoing
discretion to intervene in this case. To any extent the district court erred, mandamus
relief remains inappropriate.
CONCLUSION
The Legislature intended for the TMFPA’s qui tam provisions to maximize
federal matching money for Texas Medicaid. That effort falls squarely within the
specific constitutional provision assigning authority over Medicaid to the
Legislature. Should Novartis prevail, the Texas Medicaid program will not only lose
money; the ruling would unduly erode the Legislature’s constitutional authority to
govern Texas Medicaid in a manner that maximizes federal matching money.
Moreover, Health Selection has individual standing to sue on its own account,
and the capacity and authority to sue on the State’s behalf. Nothing about the
TMFPA’s qui tam statutes offends constitutional provisions that preserve the
separation of powers and grant State attorneys authority to represent the State in
litigation.
For these reasons, Health Selection respectfully requests that the Court deny
Novartis’s petition for mandamus.
58 APP339 Dated: November 20, 2024 Respectfully submitted,
/s/ Sam Baxter /s/ Mark Lanier Samuel F. Baxter (co-lead counsel) Mark Lanier (co-lead counsel) sbaxter@mckoolsmith.com Harvey Brown Jennifer L. Truelove Benjamin Major jtruelove@mckoolsmith.com Zeke DeRose MCKOOL SMITH P.C. Jonathan Wilkerson 104 East Houston, Suite 300 THE LANIER FIRM Marshall, Texas 75670 10940 W. Sam Houston Pkwy N (903) 923-9000 Houston, TX 77064 Fax: (903) 923-9099 (800) 723-3216 Fax: (713) 659-2204
Attorneys for Plaintiff and Real-Party-in-Interest Health Selection Group, LLC ATTORNEYS FOR
59 APP340 CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the above and foregoing document has been served on November 20, 2024 to counsel of record.
Using the “Word Count” function on Microsoft Word, Health Selection Group’s Brief on the Merits contains 14,648 words, excluding the portions of the brief exempt from the word count under Texas Rule of Appellate Procedure 9.4(i)(1).
I certify that I have reviewed the forgoing pleading and concluded that every factual statement is supported by competent evidence included in the record.
60 APP341 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below:
Envelope ID: 94522528 Filing Code Description: Brief on the Merits (all briefs) Filing Description: HEALTH SECTION GROUP, LLC'S BRIEF ON THE MERITS Status as of 11/20/2024 2:50 PM CST
Jonathan Wilkerson 24050162 jonathan.wilkerson@lanierlawfirm.com 11/20/2024 2:31:50 PM SENT
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APP342 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below:
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APP343 FILED 24-0239 11/20/2024 3:27 PM tex-94528158 SUPREME COURT OF TEXAS BLAKE A. HAWTHORNE, CLERK
In re Novartis Pharmaceuticals Corporation, Realtor.
On Petition for Writ of Mandamus to the 71st Judicial District Court, Harrison County
BRIEF ON THE MERITS FOR REAL PARTY IN INTEREST THE STATE OF TEXAS
Ken Paxton Aaron L. Nielson Attorney General of Texas Solicitor General
Brent Webster Evan S. Greene First Assistant Attorney General Assistant Solicitor General State Bar No. 24068742 Evan.Greene@oag.texas.gov
Office of the Attorney General Counsel for Real Party in Interest P.O. Box 12548 (MC 059) the State of Texas Austin, Texas 78711-2548 Tel.: (512) 936-1700 Fax: (512) 474-2697
APP344 Identity of Parties and Counsel Relator: Novartis Pharmaceuticals Corporation Counsel for Relator: Danny S. Ashby (lead counsel) Anton Metlitsky O’Melveny & Myers LLP Ross B. Galin 2801 N. Harwood Street, Suite 1600 O’Melveny & Myers LLP Dallas, Texas 75201 7 Times Square (972) 360-1900 New York, New York 10036 dashby@omm.com (212) 326-2000 Deron R. Dacus Meredith Garagiola The Dacus Firm, P.C. O’Melveny & Myers LLP 821 ESE Loop 323, Suite 430 1625 Eye Street Tyler, Texas 75701 Washington, D.C. 20006 (903) 705-1117 (202) 383-5115 Megan R. Whisler (formerly with O’Melveny & Myers LLP) Real Parties in Interest: State of Texas Health Selection Group, L.L.C. Counsel for Real Party in Interest the State of Texas: Ken Paxton Brent Webster Aaron L. Nielson James Lloyd Amy S. Hilton Evan S. Greene (lead counsel) Jonathan D. Bonilla Jordan Underhill Lynne Kurtz-Citrin Office of the Attorney General P.O. Box 12548 (MC 059) Austin, Texas 78711-2548 (512) 936-1845 evan.greene@oag.texas.gov
ii APP345 Counsel for Real Party in Interest Health Selection Group, L.L.C.: Samuel F. Baxter (co-lead counsel) Mark Lanier (co-lead counsel) Jennifer L. Truelove Harvey Brown McKool Smith, P.C. Benjamin Major 104 East Houston, Suite 300 Zeke DeRose Marshall, Texas 75670 Jonathan Wilkerson (903) 923-9000 The Lanier Firm sbaxter@mckoolsmith.com 10940 W. Sam Houston Pkwy N, Suite 100 Eric B. Halper Houston, Texas 77064 Radu A. Lelutiu (800) 723-3216 McKool Smith, P.C. WML@LanierLawFirm.com 1301 Avenue of the Americas New York, New York 10019 (212) 402-9400
iii APP346 Table of Contents Page Identity of Parties and Counsel ................................................................................ ii Index of Authorities ................................................................................................. v Statement of the Case ............................................................................................. ix Statement of Jurisdiction ......................................................................................... x Issues Presented ....................................................................................................... x Introduction ............................................................................................................. 1 Statement of Facts ................................................................................................... 2 I. Legal Background ....................................................................................... 2 II. HSG’s lawsuit ............................................................................................ 5 Summary of the Argument ....................................................................................... 6 Argument ................................................................................................................. 8 I. HSG Has Standing to Maintain the Underlying Lawsuit. .......................... 8 A. The assignee of a legal claim has standing to assert and obtain redress for the assignor’s injury. .......................................................... 8 B. Qui tam relators are assignees that have standing to assert and obtain redress for Texas’s injuries under the TMFPA. ...................... 11 II. The TMFPA’s Qui Tam Provisions Do Not Violate the Texas Constitution.............................................................................................. 14 A. The TMFPA ensures that the Attorney General maintains ultimate authority over any qui tam lawsuit........................................ 14 B. Novartis’s remaining arguments are unavailing. ................................ 18 III. This Case Does Not Warrant Mandamus Relief. ..................................... 24 Prayer ..................................................................................................................... 26 Certificate of Compliance ...................................................................................... 27
iv APP347 Index of Authorities
Page(s) Cases: Agey v. American Liberty Pipe Line Co., 172 S.W.2d 972 (Tex. 1943) ....................................................................... 20, 23 Bell v. Low Income Women of Tex., 95 S.W.3d 253 (Tex. 2002) ................................................................................ 2 Camp v. Gulf Prod. Co., 61 S.W.2d 773 (Tex. 1933) ............................................................................... 19 City of Houston v. Hous. Prof’l Firefighters Ass’n, 664 S.W.3d 790 (Tex. 2023) ............................................................................ 24 Dallas Cnty. Mental Health & Mental Retardation v. Bossley, 968 S.W.2d 339 (Tex. 1998) ............................................................................. 14 Data Foundry, Inc. v. City of Austin, 620 S.W.3d 692 (Tex. 2021) .............................................................................. 8 EBS Sols., Inc. v. Hegar, 601 S.W.3d 744 (Tex. 2020) .............................................................................15 El Paso Elec. Co. v. Tex. Dep’t of Ins., 937 S.W.2d 432 (Tex. 1996) .................................................................. 15, 17, 23 In re Essex Ins. Co., 450 S.W.3d 524 (Tex. 2014) ............................................................................ 26 In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d 261 (Tex. 2021) ............................................................................. 25 Heckman v. Williamson County, 369 S.W.3d 137 (Tex. 2012) ........................................................................... 8, 9 Hill County v. Sheppard, 178 S.W.2d 261 (Tex. 1944) ............................................................................. 20 Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (Tex. 2001) ...............................................................................13 Hooks v. Fourth Ct. of Appeals, 808 S.W.2d 56 (Tex. 1991)............................................................................... 25 In re Kappmeyer, 668 S.W.3d 651 (Tex. 2023)....................................................................... 24, 25 Lujan v. Defs. of Wildlife, 504 U.S. 555 (1992) ............................................................................................ 8
v APP348 Malouf v. State ex rels. Ellis, 694 S.W.3d 712 (Tex. 2024) ............................................................................ 26 Maud v. Terrell, 200 S.W. 375 (Tex. 1918) ................................................................. 15, 18, 19, 23 McLane Champions, LLC v. Hous. Baseball Partners LLC, 671 S.W.3d 907 (Tex. 2023) ......................................................................... 9, 14 In re Novartis Pharm. Corp., No. 06-24-00005-CV, 2024 WL 874686 (Tex. App.— Texarkana 2024, orig. proceeding) ................................................................... ix Paxton v. Longoria, 646 S.W.3d 532 (Tex. 2022) ....................................................................... 16, 17 Polansky v. Exec. Health Res. Inc., 17 F.4th 376 (3d Cir. 2021) ................................................................................17 In re Rogers, 690 S.W.3d 296 (Tex. 2024) ............................................................................ 24 In re Shire PLC, 633 S.W.3d 1 (Tex. App.—Texarkana 2021, orig. proceeding)........................ 26 S.W. Bell Tel. Co. v. Mktg. on Hold, Inc., 308 S.W.3d 909 (Tex. 2010) .............................................................. 9, 11, 12, 13 Sprint Commc’ns Co. v. APCC Servs., Inc., 554 U.S. 269 (2008) ........................................................................... 9, 10, 11, 12 Staples v. State, 245 S.W. 639 (Tex. 1922)............................................................................ 19, 23 State ex rel. Durden v. Shahan, 658 S.W.3d 300 (Tex. 2022) ............................................................................ 14 State v. Hollins, 620 S.W.3d 400 (Tex. 2020) ........................................................................... 12 State v. Lloyd, 994 S.W.2d 362 (Tex. App.—Waco 1999, no pet.) ................................ 15, 17, 18 Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993) .............................................................................. 8 Texas Boll Weevil Eradication Foundation, Inc. v. Lewellen, 952 S.W.2d 454 (Tex. 1997) ............................................................................. 21 U.S. ex rel. Taxpayers Against Fraud v. Gen. Elec. Co., 41 F.3d 1032 (6th Cir. 1994) ....................................................................... 21, 22
vi APP349 United State ex. rel. Adams v. Chattanooga Hamilton Cnty. Hosp. Auth., No. 1:21-cv-84, 2024 WL 4784372 (E.D. Tenn. Nov. 7, 2024)........................ 22 United States ex rel. Zafirov v. Fla. Med. Assoc., LLC, No. 8:19-cv-01236-KKM-SPF, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024) ............................................................................... 22 Univ. of Tex. at Arlington v. Bishop, 997 S.W.2d 350 (Tex. App.—Fort Worth 1999, pet. denied) .......................... 18 UTHSCSA v. Mata & Bordini, Inc., 2 S.W.3d 312 (Tex. App.—San Antonio 1999, pet. denied) ............................. 18 Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000) ............................................ 6, 7, 9, 10, 11, 12, 13, 21, 22, 24 In re Xerox Corp., 555 S.W.3d 518 (Tex. 2018) ............................................. 1, 2, 3, 4, 11, 14, 20, 22 Constitutional Provisions, Statutes, and Rules: 42 U.S.C.: §§ 1396-1396b .................................................................................................... 2 § 1396a ............................................................................................................... 2 § 1396h(a) .......................................................................................................... 3 § 1396h(b)(2) ..................................................................................................... 3 Tex. Const.: art. II, § 1.......................................................................................................... 21 art. III, § 51-a...................................................................................................... 2 art. III, § 51-a(a) ................................................................................................. 2 art. III, § 51-a(b) ................................................................................................. 2 art. III, § 51-a(c) ................................................................................................. 2 art. IV, § 22 ................................................................... x, 7, 14, 15, 17, 18, 19, 22 art. V, § 21 ............................................................................... x, 7, 14, 18, 19, 22 Tex. Gov’t Code § 22.002(a) .................................................................................. x Tex. Hum. Res. Code: § 32.001 ............................................................................................................. 2 §§ 36.001-.132 ................................................................................................... ix § 36.002 ..................................................................................................... 3, 4, 6 § 36.002(1) ......................................................................................................... 3 § 36.002(2)-(13) ................................................................................................. 3 § 36.007 ............................................................................................................. 3
vii APP350 § 36.051 .............................................................................................................. 3 § 36.052 ........................................................................................................ 3, 13 § 36.052(a) ........................................................................................................13 § 36.052(a)(1)................................................................................................... 12 § 36.101 ....................................................................................................... 11, 17 §§ 36.101-.117..................................................................................................... 3 § 36.101(a)................................................................................ x, 4, 11, 13, 15, 20 § 36.102................................................................................................. 17, 21, 23 § 36.102(a) ....................................................................................................... 16 § 36.102(a)-(b) ................................................................................................... 4 § 36.102(b) .................................................................................................... 5, 16 § 36.102(b)-(c) ............................................................................................. 4, 16 § 36.102(d) ......................................................................................................... 4 § 36.102(e) .................................................................................................. 17, 18 § 36.104.......................................................................................................... 4, 5 § 36.104(b) .................................................................................................. 16, 23 § 36.104(b-1) ........................................................................................... 5, 16, 18 § 36.107 ................................................................................................. 17, 21, 23 § 36.107(a) .............................................................................................. 5, 16, 23 § 36.107(b) ....................................................................................................... 21 § 36.107(b)-(c) .............................................................................................. 5, 16 § 36.108......................................................................................................... 5, 18 § 36.108(a) ........................................................................................................17 § 36.109 .............................................................................................................. 5 § 36.109(a) ........................................................................................................17 § 36.109(b) ........................................................................................................17 § 36.110 ......................................................................................................... 4, 11 § 36.112 ............................................................................................................ 21 Other Authorities: Office of Inspector General, U.S. Dep’t of Health and Hum. Servs., State False Claims Act Reviews, https://oig.hhs.gov/fraud/state-false-claims- act-reviews/ ....................................................................................................... 4
viii APP351 Statement of the Case Nature and Course Health Selection Group L.L.C. (“HSG”) sued Novartis of Underlying Pharmaceuticals Corporation under the qui tam provisions of Proceeding: the Texas Medicaid Fraud Prevention Act (“TMFPA”). MR.1-59. 1 Novartis filed a combined plea to the jurisdiction and Rule 91a motion to dismiss, contending that HSG lacks standing and that the qui tam provisions otherwise are uncon- stitutional. MR.61-95.
Respondent: 71st Judicial District Court, Harrison County The Honorable Brad Morin
Respondent’s The trial court denied the motion. MR.167. Challenged Action:
Court of Appeals: Sixth Court of Appeals
Proceedings in the Novartis filed a petition for writ of mandamus on February Court of Appeals: 2, 2024. The court of appeals denied the petition. MR.496- 501; In re Novartis Pharm. Corp., No. 06-24-00005-CV, 2024 WL 874686 (Tex. App.—Texarkana 2024, orig. proceeding) (per Stevens, C.J., joined by van Cleef and Rambin, JJ.).
1 Although the relevant chapter of the Human Resources Code has been renamed the “Texas Health Care Program Fraud Prevention Act,” see Tex. Hum. Res. Code §§ 36.001-.132, the State continues to refer to the TMFPA to remain consistent with the parties’ earlier briefing below and in this Court.
ix APP352 Statement of Jurisdiction The Court has jurisdiction under Texas Government Code section 22.002(a).
Issues Presented The qui tam provisions of the TMFPA authorize a private person to bring a civil
action for a violation of the Act “in the name of the person and of the state.” Tex.
Hum. Res. Code § 36.101(a). HSG filed a lawsuit under those provisions, contending
that Novartis secured improper payments from the Texas Medicaid program in con-
nection with the unlawful marketing of Novartis’s drugs. Novartis moved to dismiss
the lawsuit, arguing that HSG lacks standing and that the qui tam provisions other- wise are unconstitutional because they authorize a private person to represent the
State in court proceedings. The trial court denied the motion. Novartis then sought
a writ of mandamus seeking the same relief in the Sixth Court of Appeals. That pe- tition was denied, too. The issues presented are:
1. Whether the trial court abused its discretion in concluding that HSG has
standing to maintain its TMFPA claims. 2. Whether the trial court abused its discretion in concluding that the qui tam
provisions satisfy article IV, section 22, and article V, section 21 of the Texas
3. Whether mandamus relief is appropriate when Novartis can appeal the de-
nial of its motion to dismiss after final judgment is entered in this suit.
x APP353 Introduction “[T]he limited time and financial resources of governmental regulators . . . and
the increasing sophistication of Medicaid scams make chicanery difficult to un-
cover.” In re Xerox Corp., 555 S.W.3d 518, 525 (Tex. 2018) (orig. proceeding). Be-
cause Medicaid funds are limited, too, every dollar that’s paid out to such fraudsters is a dollar that could have been spent to provide healthcare for the neediest Texans.
To help combat these schemes and preserve State funds, the TMFPA includes
qui tam provisions that incentivize and deputize private whistleblowers to pursue fraud claims on the State’s behalf. In the nearly thirty years that those provisions
have been in effect, private citizens have assisted the State in deterring and remedi-
ating Medicaid fraud—to the tune of roughly $2 billion. But here, Novartis seeks to undo the Act’s highly successful public-private partnership, contending that qui tam
plaintiffs (like HSG) lack standing and that the challenged laws otherwise are uncon-
stitutional for authorizing private persons to represent the State in court. Novartis is
wrong on both counts.
First, HSG has standing to maintain its lawsuit as an assignee of Texas’s right to
redress under the TMFPA. The U.S. Supreme Court so held in an indistinguishable case recognizing a private citizen’s ability to maintain federal False Claims Act
claims vindicating the United States’s injuries. Second, the qui tam provisions are
constitutional because they explicitly preserve the Attorney General’s authority to
take over and otherwise control any qui tam suit brought on behalf of the State. No-
vartis’s concern about private actors supplanting State interests via these lawsuits is
unfounded. The Court should deny the petition.
APP354 Statement of Facts The court of appeals correctly stated the nature of the case. See supra p. ix.
I. Legal Background A. Article III, section 51-a of the Texas Constitution authorizes the Legislature
to provide “assistance grants” for “needy” persons, including “needy dependent
children” and persons who are “disabled because of a mental or physical handicap.”
Tex. Const. art. III, § 51-a(a). Such “assistance” specifically includes funding for
“medical care, rehabilitation and other similar services.” Id. § 51-a(b).
Pursuant to that authority, in 1967, the Texas Legislature enacted the State’s “Medical Assistance Program,” which “enable[s] the state to provide medical as-
sistance on behalf of needy individuals.” Tex. Hum. Res. Code § 32.001. The pro-
gram additionally permits Texas to participate in the federal Medicaid program, which offers matching federal funds to States that implement indigent-health-service
programs meeting certain standards. Bell v. Low Income Women of Tex., 95 S.W.3d
253, 255-56 (Tex. 2002) (citing 42 U.S.C. §§ 1396-1396b); see also Tex. Const. art. III, § 51-a(c) (“[T]he Legislature is specifically authorized and empowered to . . .
enact such laws as may be necessary in order that such federal matching money will
be available for assistance and/or medical care for or on behalf of needy persons.”).
Because Medicaid resources are limited, however, “fraud, abuse, and waste
[necessarily] divert funds that could otherwise be used to provide essential health-
care services” for needy persons. Xerox, 555 S.W.3d at 524; see also 42 U.S.C. § 1396a (requiring participating States to implement measures to curb “fraud, waste,
and abuse” in the Medicaid program).
2 APP355 To combat those diversions, in 1995, the Legislature enacted the TMFPA,
which created a “state enforcement action” authorizing relief against any person
who defrauds the Texas Medicaid program through defined “unlawful act[s].”
Xerox, 555 S.W.3d at 522; Tex. Hum. Res. Code §§ 36.002, 36.051. The Act prohib- its “knowingly mak[ing] or caus[ing] to be made a false statement or misrepresenta-
tion of a material fact . . . to receive a benefit or payment under a health care program
that is not authorized or that is greater than the benefit or payment that is author- ized,” Tex. Hum. Res. Code § 36.002(1), along with twelve other similar fraudulent
acts, id. § 36.002(2)-(13). The TMFPA authorizes the State to recover a slew of
“civil remedies” from violators—including disgorgement of improper overpay- ments, interest, and other penalties. Id. §§ 36.007, 36.052. All told, the Court has
recognized that the Act serves as “a powerful tool for targeting fraud against the
Texas Medicaid program and securing the program’s integrity.” Xerox, 555 S.W.3d at 525.
B. To provide additional protection against Medicaid fraud, the Texas Legis-
lature added qui tam whistleblower provisions to the TMFPA in 1997. Tex. Hum. Res. Code §§ 36.101-.117. Besides providing the State with assistance in rooting out
fraud, those provisions allow Texas to qualify for a 10% bonus from the federal gov-
ernment for any Medicaid award the State secures. See 42 U.S.C. § 1396h(a), (b)(2) (requiring States to implement whistleblower laws that are “at least as effective in
rewarding and facilitating qui tam actions for false or fraudulent [Medicaid] claims
as those described in [the federal False Claims Act]”); see also Xerox, 555 S.W.3d at
3 APP356 538 (“[S]tates with qui tam laws meeting specified federal standards can retain an
additional ten percent of Medicaid recoveries.”). 2
Under Texas’s qui tam provisions, a private plaintiff (the qui tam relator) may
bring a civil action for a violation of section 36.002 “in the name of the person and
of the state.” Tex. Hum. Res. Code § 36.101(a); see also Xerox, 555 S.W.3d at 525
(noting that the qui tam provisions “deputize[] private citizens to pursue a TMFPA
action on the government’s behalf.”). The private plaintiff ultimately may recover a percentage of any proceeds awarded to the State via the lawsuit. Tex. Hum. Res.
Code § 36.110.
But the Act includes several provisions designed to ensure that the State main- tains control over these suits. First, before serving the defendant, the suit must be
filed in camera and served on the Attorney General along with “a written disclosure
of substantially all material evidence and information the person possesses” support- ing the claims. Id. § 36.102(a)-(b). The Attorney General then has 180 days to review
those materials. Id. §§ 36.102(b)-(c), 36.104. At that point, the Attorney General has
two options: He may intervene in the action or decline to take over principal respon-
sibility for the suit. Id. 3 During the review period, the suit remains under seal, and
2 The TMFPA’s qui tam provisions currently qualify for the federal bonus. See Office of Inspector General, U.S. Dep’t of Health and Hum. Servs., State False Claims Act Reviews, https://oig.hhs.gov/fraud/state-false-claims-act-reviews/ (describing re- quirements and listing States that are approved for the federal bonus). 3 The Attorney General also may move to extend the 180-day deadline for “good cause shown.” Id. § 36.102(d).
4 APP357 the petition cannot be served on the defendant until the court orders service. Id.
§ 36.102(b).
If the Attorney General decides to intervene, he bears “the primary responsibil-
ity for prosecuting the action,” leaving the qui tam relator with limited rights to con- tinue as a party. Id. § 36.107(a). The Attorney General then may prosecute, dismiss,
or settle the action “notwithstanding the objections” of the qui tam relator. Id.
§ 36.107(b)-(c). If the Attorney General “declines to take over the action,” on the other hand,
he still enjoys the right to oversee and ultimately take over the lawsuit if necessary.
Id. § 36.104. On request, the Attorney General must be served with all pleadings filed in the action and provided with copies of all deposition transcripts. Id. § 36.104(b-1).
Based on receipt of that information or otherwise, the Attorney General then may
intervene after the original 180-day deadline “on a showing of good cause.” Id. In addition to this right to intervene later, the Attorney General may move to stay dis-
covery in the qui tam action if discovery would interfere with the State’s own inves-
tigation or prosecution of a related matter. Id. § 36.108. The Attorney General may also pursue an alternative remedy in a separate proceeding that can become conclu-
sive on all parties in the qui tam action. Id. § 36.109.
II. HSG’s lawsuit HSG filed the underlying lawsuit contending that Novartis had “fraudulently
engaged in unlawful marketing schemes and illegally reaped hundreds of millions of
dollars from Texas Medicaid” relating to its promotion of certain drugs. MR.2. HSG
asserted that Novartis committed multiple “unlawful acts,” as defined under section
5 APP358 36.002 of the TMFPA, including “knowingly induc[ing] doctors to prescribe . . . its
products” so that Novartis could receive improper payments under the Texas Med-
icaid program. MR.56-57. HSG sought recovery of the improper payments, statutory
penalties, interest, and other fees “on behalf of Texas,” along with its “Relator’s share as provided by the TMFPA.” MR.57-58.
In turn, Novartis filed a joint plea to the jurisdiction and motion to dismiss con-
tending that HSG lacks standing to maintain its suit and that the TMFPA’s qui tam provisions otherwise are unconstitutional in authorizing private parties to represent
the State in court. MR.61-95. HSG responded, MR.98-115, and the State, which had
declined to intervene in the underlying suit, also submitted a statement of interest supporting HSG’s suit, MR.116-38. Upon consideration of the parties’ briefing and
oral argument, the trial court issued an order denying Novartis’s motion. MR.167.
Novartis then filed a petition for a writ of mandamus raising the same arguments and seeking dismissal of HSG’s lawsuit in the Sixth Court of Appeals. MR.170-247.
The court of appeals issued an order and judgment denying Novartis’s petition.
MR.496-501.
Summary of the Argument I. HSG has standing to maintain its qui tam suit as an assignee of Texas’s rights
under the TMFPA. Although the standing requirements ordinarily require the com-
plainant to assert her own injury, federal and Texas law have long recognized that an injured person lawfully may assign her right to recovery to another person. Once a
valid assignment has occurred, the assignee steps into the shoes of the assignor and
has standing to litigate any claim that the assignor could have maintained. In Vermont
6 APP359 Agency of Natural Resources v. United States ex rel. Stevens, the U.S. Supreme Court
applied this principle in a directly analogous federal False Claims Act case, holding
that a private qui tam plaintiff had assignee-standing to maintain fraud claims vindi-
cating the United States’s injuries even though the plaintiff suffered no injury him- self. 529 U.S. 765, 771-74 (2000).
Because the TMFPA similarly assigns Texas’s rights under the Act to private
persons, a qui tam plaintiff like HSG has assignee-standing to maintain TMFPA claims. That HSG suffered no injury itself is irrelevant: It is suing to rectify Texas’s
injuries, which indisputably would confer standing on the State to maintain this law-
suit. Texas’s injuries serve as an adequate basis for HSG’s standing. II. The TMFPA’s qui tam provisions also comport with article IV, section 22,
and article V, section 21 of the Texas Constitution. Those provisions generally re-
quire state attorneys to represent the State in court. But this Court has held that the Legislature may authorize a state agency to obtain private counsel so long as the
counsel’s authority is subordinate to the relevant state attorney.
The TMFPA easily satisfies that standard. At the outset, the Act provides the Attorney General with the opportunity to assume principal command over any qui
tam suit that is filed on behalf of the State. If the Attorney General takes over the
lawsuit, he may prosecute, dismiss, or settle the case over the objection of the qui tam relator. If the Attorney General declines to take over the action, he still enjoys
the right to updates regarding the case along with the ability to intervene if necessary.
Far from supplanting the Attorney General’s authority to represent the State, the
TMFPA preserves it at every juncture.
7 APP360 III. Mandamus relief is wholly unwarranted in this case. The trial court cor-
rectly denied Novartis’s motion to dismiss. No case even remotely supports invali-
dating the nearly thirty-year-old qui tam provisions at issue here. But even if the trial
court was wrong, Novartis has an adequate remedy by appeal. Novartis failed to point to any extraordinary circumstances supporting a right to bypass the ordinary
appellate process.
I. HSG Has Standing to Maintain the Underlying Lawsuit.
A. The assignee of a legal claim has standing to assert and obtain redress for the assignor’s injury. 1. Standing is a constitutional prerequisite to maintaining a lawsuit under both federal and Texas law. Heckman v. Williamson County, 369 S.W.3d 137, 150-51 & n.60
(Tex. 2012). To assess standing, this Court has “adopted the federal require-
ments…as set forth by the United States Supreme Court.” Data Foundry, Inc. v. City
of Austin, 620 S.W.3d 692, 696 (Tex. 2021) (citing Lujan v. Defs. of Wildlife, 504 U.S.
555 (1992) (plurality op.)). Thereunder, a plaintiff must show: “(1) an injury in fact
that is both concrete and particularized and actual or imminent, not conjectural or hypothetical; (2) that the injury is fairly traceable to the defendant’s challenged ac-
tion; and (3) that it is likely, as opposed to merely speculative, that the injury will be
redressed by a favorable decision.” Id. Having adopted the federal standard, this
Court “look[s] to the more extensive jurisprudential experience of the federal courts
on [standing] for any guidance it may yield.” Heckman, 369 S.W.3d at 151 n.60 (citing
Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993)).
8 APP361 To that end, the U.S. Supreme Court has explained that the standing require-
ments ordinarily ensure that the judicial power “exists only to redress or otherwise
to protect against injury to the complaining party.” Stevens, 529 U.S. at 771; accord
Heckman, 369 S.W.3d at 155 (“[O]ur Constitution opens the courthouse doors only to those who have or are suffering an injury.”).
2. Nonetheless, an injured person lawfully may assign her right to recovery to
another person. See, e.g., McLane Champions, LLC v. Hous. Baseball Partners LLC, 671 S.W.3d 907, 911-13 (Tex. 2023). And courts have “long found ways to allow as-
signees [of legal rights] to bring suit” to rectify injuries suffered by their assignors.
Sprint Commc’ns Co. v. APCC Servs., Inc., 554 U.S. 269, 285 (2008). As this Court has explained, an assignee “is considered under the law to have suffered the same
injury as the assignor[] and ha[s] the same ability to pursue the claims.” S.W. Bell
Tel. Co. v. Mktg. on Hold, Inc., 308 S.W.3d 909, 916 (Tex. 2010). Consequently, an assignee has standing to maintain legal claims whenever the assignor would satisfy
the standing test. Id.
Assignee standing applies even when the government is the injured party that assigns its claims to a private party. To wit, in Stevens, the U.S. Supreme Court con-
sidered “whether a private individual [could] bring suit . . . on behalf of the United
States . . . under the [qui tam provisions of the] False Claims Act” when it was un- disputed that the individual suffered no harm and was asserting only “an injury to
the United States.” 529 U.S. at 768, 771. Those injuries included the “injury to [the
United States’s] sovereignty arising from violation of its laws” along with the United
States’s “proprietary injury resulting from the alleged fraud.” Id. at 771. To satisfy
9 APP362 standing requirements, Stevens explained, the qui tam relator’s interest in the lawsuit
“must consist of obtaining compensation for[] or preventing” the government’s in-
juries, as contrasted with someone who had simply “placed a wager upon the out-
come” of the lawsuit. Id. at 772. Employing that reasoning, the Court found an “adequate basis for the relator’s
suit . . . in the doctrine that the assignee of a claim has standing to assert the injury
in fact suffered by the assignor.” Id. at 772-73. The Court observed that it had “rou- tinely entertained” such assignee suits—implicitly, through the guise of “represen-
tational standing.” Id. at 773. And because the private relator held a valid assignment
of the United States’s rights under the qui tam provisions of the False Claims Act, “the United States’s injury in fact suffice[d] to confer standing on [him].” Id. at 774.
Eight years later, the Court reaffirmed Stevens and reiterated that “where as-
signment is at issue, courts . . . have always permitted the party with legal title alone to bring suit.” Sprint Commc’ns, 554 U.S. at 285 (emphasis added). It held that as-
signees of payphone operators’ rights under the federal Communications Act had
standing to bring claims arising from the operators’ injuries even though the assign- ees “did not originally suffer any injury” themselves and otherwise intended to remit
the proceeds of the litigation to the assignors. Id. at 271, 286. The Court explained
that the assignee-standing inquiry does not turn on the specific legal claim assigned to the plaintiff or “what the plaintiff ultimately intends to do with the money he re-
covers.” Id. at 287. Simply put, an assignee “may properly bring suit to redress the
injury originally suffered by his assignor.” Id.
10 APP363 Guided by federal precedent, this Court recognizes assignee standing under the
same reasoning set forth in Stevens and Sprint Communications. In Southwestern Bell
Telephone, the Court held that a phone-bill auditor had standing to bring claims as-
signed to the auditor by Southwestern Bell’s customers—notwithstanding that the auditor did not suffer its own injury. 308 S.W.3d at 916. As the Court explained,
“[b]ecause STA holds . . . valid assignments, STA steps into the shoes of the claim-
holders.” Id.
B. Qui tam relators are assignees that have standing to assert and obtain redress for Texas’s injuries under the TMFPA. 1. Section 36.101 of the TMFPA authorizes a private person to bring an action
for civil remedies against any person who defrauds defined Texas health-care pro-
grams. Tex. Hum. Res. Code § 36.101(a). The action is brought “for the person and for the state” and “shall be brought in the name of the person and of the state.” Id.
The private plaintiff ultimately is entitled to recover a percentage of any proceeds
due to the State, which percentage differs depending on whether the State intervenes and how the action otherwise proceeds. Id. § 36.110.
This Court has recognized that the TMFPA’s qui tam provisions effectively
“deputize[] private citizens to pursue a TMFPA action on the government’s behalf.”
Xerox, 555 S.W.3d at 525 (emphasis added). In other words, like private relators un-
der the federal False Claims Act, a TMFPA qui tam relator is “suing as a partial
assignee” of the government’s claims to rectify the government’s injuries. Stevens,
529 U.S. at 773 n.4.
11 APP364 Consequently, a qui tam relator, like HSG here, has assignee-standing to main-
tain TMFPA claims to redress injuries suffered by the State of Texas. As in Stevens,
those injuries include the proprietary injury resulting from the fraud, see Tex. Hum.
Res. Code § 36.052(a)(1) (authorizing recovery of “the amount of any payment . . . provided under a health care program . . . as a result of the unlawful act”), as well as
the injury to Texas’s sovereignty resulting from the violation of its laws, cf. Stevens,
529 U.S. at 771; cf. also State v. Hollins, 620 S.W.3d 400, 410 (Tex. 2020) (per cu- riam) (explaining that “ultra vires conduct automatically results in harm to the sov-
ereign as a matter of law”). That HSG “d[id] not allege that it personally suffered
any injury from the conduct alleged in the petition,” Novartis Br. 16, is of no moment because the TMFPA assigns Texas’s rights (and corresponding injuries) to private
plaintiffs like HSG. Per Stevens and Southwestern Bell Telephone, that assignment sat-
isfies constitutional limits on standing, supra pp. 9-11, not just the statutory prerequi- sites to bringing an action under the TMFPA, cf. Novartis Br. 17-18.
2. Against this backdrop, Novartis attempts to distinguish Stevens, contending
that its “logic . . . does not apply” because the TMFPA provides for civil penalties as opposed to damages. Id. at 19. But there’s no daylight between Stevens and this
case. Stevens did not turn on the specific type of claim assigned by the government
to the private plaintiff or the related remedy. The assignee-standing inquiry instead is based on the assignor’s injury. As Stevens explained, when the government assigns
a claim designed to “compensat[e] for” or “prevent[]” the violation of its rights,
the assignee naturally “has standing to assert the injury in fact suffered by the as-
signor.” 529 U.S. at 772-73 (emphasis added); see also Sprint Commc’ns, 554 U.S. at
12 APP365 286 (“[A]n assignee can sue based on his assignor’s injuries.” (emphasis added));
S.W. Bell, 308 S.W.3d at 916 (“[An assignee] is considered under the law to have
suffered the same injury as the assignors.” (emphasis added)). Put simply, if the as-
signor has standing to rectify an injury, then the assignee has standing, too. Here, the Texas Legislature determined that an action for civil remedies would
compensate for and prevent fraudulent acts committed against the State’s health
care programs. Tex. Hum. Res. Code § 36.052(a). Therefore, an assignee of such a claim, like HSG under section 36.101(a), has standing to assert and obtain redress for
the State’s injuries. It’s no different than if the State had opted to pursue the civil-
remedies claim itself. See Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 572 (Tex. 2001) (“[A]n assignee stands in the shoes of his assignor.”). Because the
State indisputably would have standing to maintain the claims asserted in the under-
lying lawsuit, HSG has standing, too. Implicitly recognizing that Stevens controls, Novartis last contends that a “sov-
ereign remedy” like civil penalties “cannot be ‘assigned’ to private litigants.” No-
vartis Br. 21. Novartis cites nothing to support that proposition. And it cannot be squared with Stevens itself, which confirmed that a private plaintiff could sue to rec-
tify “the injury to [the United States’s] sovereignty arising from violation of its
laws.” 529 U.S. at 771. In all events, the civil remedies authorized under section 36.052—including the amount of any payment provided due to the fraud, interest,
and various cash penalties, Tex. Hum. Res. Code § 36.052(a)—also rectify the “pro-
prietary injury” inflicted on the State, Stevens, 529 U.S. at 771; cf. Novartis Br. 22
(acknowledging that “[t]he government may partially assign a claim vindicating its
13 APP366 proprietary interest just like anyone else can”). Even if the statutorily authorized
civil remedies are not “damages” per se, Xerox, 555 S.W.3d at 527, they nonetheless
alleviate Texas’s pocketbook injury—and therefore can be assigned under Novar-
tis’s own argument. At bottom, the “real substance” of Novartis’s standing argument, cf. Dallas
Cnty. Mental Health & Mental Retardation v. Bossley, 968 S.W.2d 339, 343 (Tex.
1998), is that the TMFPA’s assignment provisions are void for violating the “sepa- ration of powers,” Novartis Br. 22. That argument is wrong for the reasons set forth
below. Infra pp. 14-24. And it has no bearing on the standing analysis. See McLane
Champions, 671 S.W.3d at 913 (“[A] plaintiff does not lack standing simply because some other legal principle may prevent it from prevailing on the merits.”).
Because the Texas Legislature partially assigned Texas’s rights under the
TMFPA to qui tam relators, HSG has standing to assert and rectify Texas’s injuries.
II. The TMFPA’s Qui Tam Provisions Do Not Violate the Texas Constitution.
A. The TMFPA ensures that the Attorney General maintains ultimate authority over any qui tam lawsuit. 1. Article IV, section 22, and article V, section 21 of the Texas Constitution
allocate representational authority for the State in the state courts among the Attor-
ney General, district attorneys, and county attorneys. State ex rel. Durden v. Shahan,
658 S.W.3d 300, 303 (Tex. 2022) (per curiam). Based on these provisions, the Court
has explained that the Legislature cannot “divest these officials of their collective
constitutional authority” by shifting representational power to some other attorney.
14 APP367 El Paso Elec. Co. v. Tex. Dep’t of Ins., 937 S.W.2d 432, 439 (Tex. 1996) (emphasis
added).
At the same time, El Paso Electric made clear that “the Legislature may author-
ize an agency to retain private counsel to prosecute [an] action[], as long as such counsel’s authority is subordinate” to that of the relevant state attorney. Id. (citing
Maud v. Terrell, 200 S.W. 375, 376 (Tex. 1918)). The Court also confirmed that the
ordinary presumption of constitutionality applies to any statute that delegates repre- sentational authority for the State to outside counsel. Id. As such, “a statute author-
izing an agency to hire outside counsel should, if possible, be construed as complying
with [article IV, section 22 of the Texas Constitution], even if the statute does not expressly recognize the authority of the Attorney General.” Id.; see also EBS Sols.,
Inc. v. Hegar, 601 S.W.3d 744, 754 (Tex. 2020) (“[I]f a statute is susceptible to two
interpretations . . . then the constitutional [one] will prevail.”). Under these standards, a statute authorizing private counsel to represent the
State does not violate the Texas Constitution “unless it ‘unequivocally supplant[s]’
the . . . Attorney[]General in [his] authority to prosecute the suits of the State.” State v. Lloyd, 994 S.W.2d 362, 364 (Tex. App.—Waco 1999, no pet.) (alterations in orig-
inal) (quoting El Paso Elec., 937 S.W.2d at 439).
2. The qui tam provisions of the TMFPA easily satisfy this forgiving constitu- tional standard because they explicitly preserve the Attorney General’s authority
over the prosecution of any TMFPA lawsuit filed on behalf of the State.
As discussed above, section 36.101(a) of the Act authorizes a private person to
bring a civil action to rectify fraudulent acts committed against Texas health-care
15 APP368 programs “in the name of the person and of the state.” Supra p. 11. Any person
bringing such an action must initially serve a copy of the petition along with “a writ-
ten disclosure of substantially all material evidence and information the person pos-
sesses” on the Attorney General. Tex. Hum. Res. Code § 36.102(a). The Attorney General then has 180 days to elect to intervene and “proceed with the action” him-
self. Id. § 36.102(b)-(c). In the meantime, the petition is filed in camera and remains
under seal for the 180-day period or until the Attorney General decides to intervene, whichever is earlier. Id. § 36.102(b). The petition cannot be served on the defendant
until the court orders service. Id.
If the Attorney General opts to proceed with the action, he takes over “primary responsibility” for handling it. Id. § 36.107(a). He then may prosecute, dismiss, or
settle the action “notwithstanding the objections” of the qui tam relator. Id.
§ 36.107(b)-(c). But even if the Attorney General “declines to take over the action” within the
180-day period, id. § 36.104(b), he still retains control over the lawsuit. To begin, the
Attorney General is “entitled” to copies of all pleadings filed, along with copies of deposition transcripts. Id. § 36.104(b-1). Based on receipt of that information or oth-
erwise, the Attorney General may choose to intervene in the action after the initial
180-day period has expired. See id. (requiring “a showing of good cause” for subse- quent intervention). 4 The Attorney General may also stay the private relator’s ability
4 To the extent the “good cause” requirement imposes any meaningful barrier to subsequent intervention, it can and therefore should be interpreted liberally to sup- port the constitutionality of the qui tam provisions. See Paxton v. Longoria, 646
16 APP369 to conduct discovery upon showing that the lawsuit is interfering with “the state’s
investigation or prosecution of a criminal or civil matter arising out of the same
facts.” Id. § 36.108(a). The action also cannot be dismissed without the consent of
the Attorney General, id. § 36.102(e)—so he retains veto authority over any pro- posed settlement.
Moreover, “[n]otwithstanding [s]ection 36.101” (which authorizes a qui tam ac-
tion), the State may elect to pursue its claim through “any alternate remedy available to the state.” Id. § 36.109(a). And the State’s alternate proceeding can become
“conclusive” for all parties to any qui tam action proceeding under section 36.101.
Id. § 36.109(b). 3. As these provisions demonstrate, the TMFPA ensures that the Attorney
General may exercise his constitutional authority to represent the State in court.
From the very outset, the Attorney General may choose to take over a qui tam action himself. Id. §§ 36.102, 36.107. When a statutory scheme expressly provides the State
with that option, it necessarily comports with article IV, section 22. El Paso Elec. Co.,
937 S.W.2d at 439; see also Lloyd, 994 S.W.2d at 366 (“Under the Workers’ Com- pensation Act, the State may pursue a subrogation claim in its own name or the
S.W.3d 532, 539 (Tex. 2022) (“Under the canon of constitutional avoidance, we should, if possible, interpret a statute in a manner that avoids constitutional infir- mity.” (quotation marks omitted)). Adopting a liberal construction would also be consistent with federal caselaw interpreting the federal False Claim Act’s “good cause” requirement for governmental intervention. See Polansky v. Exec. Health Res. Inc., 17 F.4th 376, 387 (3d Cir. 2021) (“[S]howing ‘good cause’ is neither a burden- some nor unfamiliar obligation.”).
17 APP370 employee’s name. Thus, the Act does not unequivocally supplant the Attorney Gen-
eral in his authority to prosecute the suits of the State.” (cleaned up)); accord
UTHSCSA v. Mata & Bordini, Inc., 2 S.W.3d 312, 318 (Tex. App.—San Antonio
1999, pet. denied) (holding that “a third-party action, in which the Attorney General apparently elected not to participate” did not violate the separation of powers (empha-
sis added)); Univ. of Tex. at Arlington v. Bishop, 997 S.W.2d 350, 354-55 (Tex. App.—
Fort Worth 1999, pet. denied) (same). But even when the Attorney General opts to remain on the sidelines, he still may
stay the relator’s ability to conduct discovery that would interfere with the State’s
own investigation, Tex. Hum. Res. Code § 36.108, demand ongoing information about the action and intervene after the initial 180-day period expires, id. § 36.104(b-
1), and control any proposed settlement, id. § 36.102(e). Simply put, the qui tam re-
lator serves at the State’s discretion and may proceed with a TMFPA action only as the Attorney General sees fit.
Far from “unequivocally supplant[ing]” the Attorney General’s authority,
Lloyd, 994 S.W.2d at 364, the TMFPA preserves it at every turn. As such, the chal- lenged provisions comport with article IV, section 22, and article V, section 21 of the
Texas Constitution.
B. Novartis’s remaining arguments are unavailing. 1. The key separation-of-powers cases that Novartis cites (at 27-32) support
the constitutionality of the challenged TMFPA provisions. To begin, the “founda-
tional case” of Maud v. Terrell, Novartis Br. 27, upheld a law authorizing the Comp-
troller to “sue for and collect” taxes because the statute did not “by plain and
18 APP371 unambiguous language . . . deprive[] the county attorneys and the Attorney General
of their authority to prosecute in the court suits by the State for the recovery of in-
heritance taxes,” 200 S.W. at 376. As the Court explained, because the statute did
“not exclude the idea” that the Comptroller’s ability to “sue for” taxes “shall be in subordination to the authority of the county attorney,” id. at 377 (emphasis added),
it was constitutional. To hold otherwise, according to the Court, a statute would have
to explicitly “deny to county attorneys or the Attorney-General the right to conduct suits.” Id. (emphasis added); see also Camp v. Gulf Prod. Co., 61 S.W.2d 773, 777
(Tex. 1933) (“There is nothing in the instant act to indicate any purpose or intention
to curtail or abridge any . . . duty . . . imposed by the Constitution . . . upon . . . the Attorney General to represent the interest of the state.”). As shown above, however,
the TMFPA expressly ensures that the Attorney General maintains the authority to
conduct and control any qui tam action. Nothing in the Act even remotely denies the Attorney General such power.
Staples v. State, 245 S.W. 639 (Tex. 1922), also supports the constitutionality of
the TMFPA. Like the TMFPA, Staples’s challenged law authorized private persons to initiate quo warranto suits “in the name of the state of Texas” and “in their own
names” to prevent the placement of a candidate’s name on a ballot. Id. Citing Maud,
the Court held that the statute satisfied article IV, section 22, and article V, section 21, because it could be construed to preserve the state attorneys’ authority by requir-
ing the private citizen to present and receive approval for the suit from the relevant
officers before it was filed. Id. at 642-43. As discussed above, the TMFPA explicitly
19 APP372 ensures that the Attorney General can exercise his prosecutorial discretion before
the case is served on the defendant and while it proceeds. Supra pp. 17-18.
Novartis also points to Agey v. American Liberty Pipe Line Co., but there, the
Court held that the challenged statute did not authorize an individual to file suit on behalf of the State, 172 S.W.2d 972, 974 (Tex. 1943), which the TMFPA plainly
does, Tex. Hum. Res. Code § 36.101(a). Consequently, the Court did not reach the
constitutional question presented in this case. Agey, 172 S.W.2d at 974-75. Finally, Hill County v. Sheppard, 178 S.W.2d 261 (Tex. 1944) (orig. proceeding),
is inapposite. The Court held that the Legislature could not establish a statutory of-
fice for a criminal district attorney that would supplant the extant county attorney’s duties. Id. at 264 (“We think that it is well settled that since the Constitution im-
posed certain duties upon the county attorney, the Legislature, in the absence of
other constitutional authority therefor, could not create a statutory office with power to take over and exercise such functions.”). The TMFPA creates no statutory office.
Neither does it supplant the Attorney General’s authority in any way. As this Court
recognized, the Act instead “imbues the attorney general with broad investigative and enforcement authority and . . . deputizes private citizens to [litigate] on the gov-
ernment’s behalf.” Xerox, 555 S.W.3d at 525.
At bottom, the Court’s precedents do not “teach” that private individuals must be “employed” by the State to pursue a lawsuit on behalf of the State. Cf. Novartis
Br. 32; see also id. at 33-34 (contending that “[w]here the Attorney General . . . de-
cide[s] that a case is not worth litigating on behalf of the State of Texas, that [must
be] the end of the matter”). For over a century, this Court instead has held that a
20 APP373 statute delegating the power to represent the State to a private person is constitu-
tional unless it patently negates the Attorney General’s superior authority to repre-
sent the State in court. Supra pp. 14-15. The TMFPA does no such thing.
2. Novartis additionally points to Texas Boll Weevil Eradication Foundation, Inc. v. Lewellen, but plaintiffs there challenged a delegation of legislative power to a private
entity under article II, section 1 of the Texas Constitution, 952 S.W.2d 454, 465-66
(Tex. 1997). No similar claim is at issue here, and Novartis made no effort to address the Court’s eight-factor private-delegation test. Cf. id. at 472.
Novartis’s related concern about “self-interested private actors” taking actions
“repugnant to the public interest” via the TMFPA, Novartis Br. 36-37, is overblown because the Act ensures that the Attorney General may review, take over, and oth-
erwise control the lawsuit from its inception, Tex. Hum. Res. Code §§ 36.102,
36.107. Indeed, the Attorney General can dismiss a meritless action over the objec- tion of the qui tam relator, id. § 36.107(b), and the Act even provides defendants with
the ability to obtain an award if a frivolous action is filed against them, id. § 36.112.
As discussed above, Stevens blessed the federal False Claims Act notwithstanding similar concerns to those Novartis raises here. 529 U.S. at 772 (authorizing the qui
tam relator to pursue a “bounty” on behalf of the United States); id. at 801 (Stevens,
J., dissenting) (observing that the federal qui tam provisions would have satisfied any Article II challenge requiring the President to enforce the laws); 5 see also U.S. ex rel.
5 All nine justices on the U.S. Supreme Court agreed that the private qui tam plaintiff had standing in Stevens. The two dissenting justices would also have held that States
21 APP374 Taxpayers Against Fraud v. Gen. Elec. Co., 41 F.3d 1032, 1041 (6th Cir. 1994) (“The
qui tam provisions adopted by Congress do not contradict the constitutional princi-
ple of separation of powers. Rather, they have been crafted with particular care to
maintain the primacy of the Executive Branch in prosecuting false-claims actions, even when the relator has initiated the process.”). 6 Novartis’s “liberty” hardly is
jeopardized, cf. Novartis Br. 35, by a statute designed to enable private persons to
assist the State with rooting out fraud and other “chicanery,” Xerox, 555 S.W.3d at
525.
3. Novartis further suggests that a “saving construction” cannot salvage the
TMFPA, Novartis Br. 38-39, but constitutional avoidance is unnecessary here. Alt- hough the Court is required to construe the TMFPA to preserve its constitutionality,
supra p. 15, there is no need to resort to tools of statutory construction because the
Act plainly ensures that the Attorney General may control the lawsuit from the
could be sued under the federal False Claims Act. See Stevens, 529 U.S. at 789-802 (Stevens, J., dissenting). 6 One recent outlier federal district court decision held that the federal False Claims Act’s qui tam provisions violate the U.S. Constitution’s Appointments Clause by improperly appointing private relators as officers of the United States. United States ex rel. Zafirov v. Fla. Med. Assoc., LLC, No. 8:19-cv-01236-KKM-SPF, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024). There is no analogous “appointments” claim in this lawsuit, which instead is based on article IV, section 22, and article V, section 21 of the Texas Constitution. Moreover, Zafirov already has been criticized by an- other federal district court. See United State ex. rel. Adams v. Chattanooga Hamilton Cnty. Hosp. Auth., No. 1:21-cv-84, 2024 WL 4784372, at *3 (E.D. Tenn. Nov. 7, 2024) (“A single, outlier trial-court decision that whistles past precedent . . . pro- vides no basis to ignore that precedent here.”).
22 APP375 moment the relator files it, Tex. Hum. Res. Code §§ 36.102, 36.107. This Court up-
held the challenged statutes in Maud and Staples even though the laws did not explic-
itly preserve the Attorney General’s representational authority, supra pp. 18-20, as
the TMFPA does here. Novartis’s repeated contention that private actors cannot maintain a suit on behalf of the State, Novartis Br. 38-39, cannot be squared with El
Paso Electric and the Court’s antecedent caselaw. So long as the Attorney General is
not unequivocally supplanted—and he is not—the statute is constitutional. 4. Finally, Novartis belittles the statutory protections that apply (at 42-44)
when the Attorney General “declines to take over the action” within the initial 180-
day period. Tex. Hum. Res. Code § 36.104(b). Of course, those provisions apply only when the Attorney General opts not to assume “primary responsibility for prosecut-
ing the action” from the outset. Id. § 36.107(a). That initial opportunity to assume
command ensures that the Attorney General is not unconstitutionally subordinated to a private party. Even Novartis seems to recognize that preserving the Attorney
General’s prosecutorial discretion is what’s key. See Novartis Br. 43 (“[R]eceiving
information about an action is not the same as ‘exercis[ing] . . . judgment and discre- tion regarding the filing of a suit.’” (citing Agey, 172 S.W.2d at 974)).
Moreover, the additional protections that attach when the Attorney General de-
cides not to lead the lawsuit—e.g., the right to ongoing information, subsequent
23 APP376 intervention, a stay of discovery, and veto power over any settlement—preserve the
Attorney General’s ability to control the case as he sees fit. 7
III. This Case Does Not Warrant Mandamus Relief. Novartis’s novel request to invalidate a nearly thirty-year-old statutory scheme
is particularly unsuited for mandamus relief. See In re Rogers, 690 S.W.3d 296, 302 (Tex. 2024) (orig. proceeding) (per curiam) (“Mandamus relief is an extraordinary
remedy.”). To obtain such relief, the relator must show that: (1) the trial court
clearly abused its discretion; and (2) there is no adequate remedy by appeal. In re
Kappmeyer, 668 S.W.3d 651, 654 (Tex. 2023) (orig. proceeding). Novartis fails on
both counts.
First, for the reasons set forth above, the trial court rightly denied Novartis’s motion to dismiss, thereby upholding the challenged provisions of the TMFPA and
allowing HSG to maintain its claims. Cf. City of Houston v. Hous. Prof’l Firefighters
Ass’n, 664 S.W.3d 790, 798 (Tex. 2023) (“A party challenging a statute as unconsti- tutional bears a heavy burden to overcome th[e] presumption [of constitutionality].”
(emphasis added)). Far from carrying its heavy burden, Novartis failed to point to a
single case even questioning the constitutionality of the Act. Indeed, the U.S. Su- preme Court rejected many of the arguments Novartis advances here when it held
that a qui tam relator had standing to vindicate the United States’s injuries via the
federal False Claims Act. Stevens, 529 U.S. at 774. It’s quite a stretch to contend that
7 Novartis’s discussion of the TMFPA’s “history” (or, rather, the lack thereof), No- vartis Br. 44-47, is irrelevant given this Court’s caselaw upholding statutes that au- thorize private persons to litigate on behalf of the State.
24 APP377 the trial court abused its discretion when it denied Novartis what would have
amounted to unprecedented relief. Cf. Kappmeyer, 668 S.W.3d at 655 (“A trial court
abuses its discretion when it acts with disregard of guiding rules or principles or in
an arbitrary or unreasonable manner.”). Second, even assuming that the trial court erred, Novartis has an adequate rem-
edy by appeal. As this Court has explained, “[a]bsent extraordinary circum-
stances…a denial of a motion to dismiss…is a ruling incident to the ordinary trial process which will not be corrected by mandamus.” Hooks v. Fourth Ct. of Appeals,
808 S.W.2d 56, 59 (Tex. 1991) (orig. proceeding).
Beyond avoiding “cost-intensive discovery” incident to civil litigation, Novartis Br. 48, Novartis fails to explain why it should be entitled to bypass the ordinary ap-
pellate process in the underlying case. The “cost or delay of having to go through
trial and the appellate process,” however, “does not make the remedy at law inade- quate.” Hooks, 808 S.W.2d at 60. Otherwise, every denial of every motion to dismiss
or plea to the jurisdiction would afford the defendant the right to mandamus. That
would take the “extraordinary” out of the “extraordinary circumstances” warrant- ing relief.
The cases Novartis cites (at 48) affording defendants mandamus relief when trial
courts had failed to grant Rule 91a motions involved clearly settled caselaw that plainly foreclosed the plaintiffs’ claims. See In re Farmers Tex. Cnty. Mut. Ins. Co.,
621 S.W.3d 261, 267-68 (Tex. 2021) (orig. proceeding) (“[O]ur precedent has con-
sistently recognized a Stowers cause of action only when the insured’s liability ex-
ceeds policy limits. Longoria’s claim for Farmers’ negligent failure to settle within
25 APP378 policy limits has no basis in law.”); In re Essex Ins. Co., 450 S.W.3d 524, 527 (Tex.
2014) (orig. proceeding) (per curiam) (“Texas law does not permit Zuniga to sue
Essex directly for a declaration of Essex’s duty to indemnify SDT before SDT’s lia-
bility to Zuniga has been determined.”); cf. In re Shire PLC, 633 S.W.3d 1, 27 (Tex. App.—Texarkana 2021, orig. proceeding) (“Shire is not entitled to mandamus relief
in this case because the law it relies upon [for dismissal of relator’s qui tam action] is
clearly not settled by any standard.”). In contrast here, this Court has entertained qui tam TMFPA actions much like HSG’s without ever questioning the constitu-
tionality of the Act. See, e.g., Malouf v. State ex rels. Ellis, 694 S.W.3d 712, 716 (Tex.
2024). No caselaw forecloses (or even undermines) HSG’s TMFPA claims.
Prayer The Court should deny Novartis’s petition for a writ of mandamus.
Respectfully submitted.
Ken Paxton Aaron L. Nielson Attorney General of Texas Solicitor General
Brent Webster /s/ Evan S. Greene First Assistant Attorney General Evan S. Greene Assistant Solicitor General State Bar No. 24068742 Evan.Greene@oag.texas.gov
Office of the Attorney General Counsel for Real Party in Interest P.O. Box 12548 (MC 059) the State of Texas Austin, Texas 78711-2548 Tel.: (512) 936-1700 Fax: (512) 474-2697
26 APP379 Certificate of Compliance Microsoft Word reports that this document contains 7,561 words, excluding ex-
empted text.
/s/ Evan Greene Evan Greene
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APP382 FILED 24-0239 12/19/2024 3:18 PM tex-95519035
No. 24-0239 SUPREME COURT OF TEXAS BLAKE A. HAWTHORNE, CLERK
In the Supreme Court of Texas ___________________
___________________ On Petition for Writ of Mandamus to the 71st Judicial District Court, Harrison County
BRIEF OF AMICUS CURIAE PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF AMERICA IN SUPPORT OF RELATOR NOVARTIS PHARMACEUTICAL CORPORATION
PHILLIP M. AURENTZ KWAKU A. AKOWUAH* CHELSEA A. PRIEST JOSHUA J. FOUGERE* SIDLEY AUSTIN LLP CODY M. AKINS 2021 McKinney Ave. SIDLEY AUSTIN LLP Suite 2000 1501 K Street, NW Dallas, Texas 75201 Washington, D.C. 20005 Tel: (214) 981-3300 Tel.: (202) 736-8000 Fax: (214) 981-3400 Fax: (202) 736-8711 kakowuah@sidley.com SCOTT D. STEIN* SIDLEY AUSTIN LLP Counsel for Amicus Curiae One South Dearborn Chicago, Illinois 60603 December 19, 2024 Tel: (312) 853-7000 Fax: (312) 853-7036 sstein@sidley.com
* Pro hac vice
APP383 IDENTITY OF PARTIES, AMICUS CURIAE, AND COUNSEL
The parties and their counsel are correctly identified in the parties’
briefs on the merits. This brief is written on behalf of amicus curiae Pharma-
ceutical Research and Manufacturers of America (PhRMA). No counsel for a
party in this case authored this brief in whole or in part. No person or en-
tity—other than PhRMA, its members, or its counsel—made monetary con-
tributions specifically for the preparation or submission of this brief.
PhRMA is represented by the following counsel:
Phillip M. Aurentz Kwaku A. Akowuah Chelsea A. Priest Joshua J. Fougere Sidley Austin LLP Cody M. Akins 2021 McKinney Ave. Sidley Austin LLP Suite 2000 1501 K Street, NW Dallas, Texas 75201 Washington, D.C. 20005
Scott D. Stein Sidley Austin LLP One South Dearborn Chicago, Illinois 60603
i APP384 TABLE OF CONTENTS
IDENTITY OF PARTIES, AMICUS CURIAE, AND COUNSEL .................. I
INDEX OF AUTHORITIES ............................................................................. iii
INTEREST OF AMICUS CURIAE .................................................................. 1
ARGUMENT ....................................................................................................... 2
I. The constitutional difficulties inherent in qui tam litigation are fatal for uninjured, professional relators like HSG. ................................................................................................. 2
A. Uninjured, professional relators do not serve the purposes of qui tam statutes. ............................................... 2
B. Uninjured, professional relators like HSG do not have standing. ....................................................................... 7
C. Separation of powers concerns are sharpened for uninjured professional relators like HSG......................... 13
II. Abusive qui tam litigation brought by professional relators deters beneficial regulatory practices and harms patient care. ................................................................................................ 15
PRAYER ............................................................................................................ 19
ii APP385 INDEX OF AUTHORITIES
Agey v. Am. Liberty Pipe Line Co., 172 S.W.2d 972 (Tex. 1943) ................................................................. 13
Andrade v. NAACP of Austin, 345 S.W.3d 1 (Tex. 2011) ....................................................................... 7
Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313 (1971) .............................................................................. 16
United States ex rel. Branch Consultants v. Allstate Ins. Co., 560 F.3d 371 (5th Cir. 2009) .................................................................. 4
Brown v. Todd, 53 S.W.3d 297 (Tex. 2001) ..................................................................... 7
DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299 (Tex. 2008) ............................................................... 7, 8
Dep’t of Transp. v. Ass’n of Am. R.R., 575 U.S. 43 (2015) .......................................................................... 13, 14
El Paso Elec. Co. v. Texas Dep’t of Ins., 937 S.W.2d 432 (Tex. 1996) ................................................................. 13
Farmers Tex. Cnty. Mut. Ins. Co. v. Beasley, 598 S.W.3d 237 (Tex. 2020) ............................................................... 7, 8
Fin. Comm’n of Tex. v. Norwood, 418 S.W.3d 566 (Tex. 2013) ................................................................. 12
Heckman v. Williamson County, 369 S.W.3d 137 (Tex. 2012) ..................................................... 7, 8, 9, 12
Hill County v. Sheppard, 178 S.W.2d 261 (Tex. 1944) ................................................................. 13
iii APP386 United States ex rel. Holmes v. Northrop Grumman Corp., 642 F. App’x 373 (5th Cir. 2016) ........................................................... 6
Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939 (1997) .............................................................................. 14
Leysock v. Forest Labs., Inc., 2017 WL 1591833 (D. Mass. Apr. 28, 2017) ......................................... 5
Lujan v. Defs. of Wildlife, 504 U.S. 555 (1992) ................................................................................ 7
M.D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d 704 (Tex. 2001) ..................................................................... 8
Maud v. Terrell, 200 S.W. 375 (Tex. 1918) ..................................................................... 13
McCleskey v. Kemp, 481 U.S. 279 (1987) .............................................................................. 14
Oklahoma v. United States, 62 F.4th 221 (6th Cir. 2023) ................................................................ 14
PPG Indus., Inc. v. JMB/Hous. Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79 (Tex. 2004) ............................................................... 9, 10
In re Tex. House of Reps., – S.W.3d – (Tex. Nov. 15, 2024). ......................................................... 13
Tex. Med. Res., LLP v. Molina Healthcare of Tex., Inc., 659 S.W.3d 424 (Tex. 2023) ................................................................... 9
TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021) ............................................................................ 8
United States v. Eli Lilly & Co., 4 F.4th 255 (5th Cir. 2021) ............................................................ 15, 16
United States v. Quest Diagnostics Inc., 734 F.3d 154 (2d Cir. 2013) ................................................................... 6
iv APP387 United States v. Smith, 55 F.3d 157 (4th Cir. 1995) .................................................................. 13
United States v. Students Challenging Regul. Agency Procs., 412 U.S. 669 (1973) ................................................................................ 8
United States v. UCB, Inc., 970 F.3d 835 (7th Cir. 2020) ...................................................... 4, 15, 17
Vt. Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000) .................................................................... 9, 10, 11
Walburn v. Lockheed Martin Corp., 431 F.3d 966 (6th Cir. 2005) .................................................................. 6
Wang v. FMC Corp., 975 F.2d 1412 (9th Cir. 1982) ................................................................ 2
In re Xerox Corp., 555 S.W.3d 518 (Tex. 2018) ............................................... 3, 4, 9, 10, 17
Statutes and Constitution
Tex. Const. art. I, § 8 ................................................................................ 12
Tex. Const. art. V, § 3(a)........................................................................... 12
Tex. Bus. & Com. Code § 17.46(b)............................................................ 10
Tex. Hum. Res. Code § 36.002.................................................................. 10
Tex. Hum. Res. Code § 36.052(c)................................................................ 6
Tex. Hum. Res. Code § 36.101(a) ............................................................. 11
Tex. Hum. Res. Code § 36.113(b) ............................................................... 3
Tex. Hum. Res. Code § 36.115................................................................ 3, 6
v APP388 Scholarly Authorities
Dayna Bowen Matthew, The Moral Hazard Problem with Privatization of Public Enforcement: The Case of Pharmaceutical Fraud, 40 U. Mich. J.L. Reform 281 (2007) .................................................... 17
M. Gilles, Representational Standing: U.S. ex rel. Stevens and the Future of Public Law Litigation, 89 Cal. L. Rev. 315 (2001) .................................................................... 11
Tammy W. Cowart et al., Carrots and Sticks of Whistleblow- ing: What Classification Trees Say about False Claims Act Lawsuits, 17 ALSB J. Emp. & Lab. L. 1 (2019) ................................................... 17
J.C. Herz, Medicare Scammers Steal $60 Billion a Year. This Man Is Hunting Them, Wired (Mar. 7, 2016), tinyurl.com/ycxr2mh5 ............................................................................ 5
vi APP389 INTEREST OF AMICUS CURIAE
The Pharmaceutical Research and Manufacturers of America
(PhRMA) is a voluntary, nonprofit association representing the country’s
leading research-based pharmaceutical and biotechnology companies.
PhRMA’s mission is to advocate public policies encouraging innovation in
life-saving and life-enhancing new medicines. PhRMA’s members strive to
develop cutting-edge medicines, treatments, and vaccines that save, extend,
and improve the lives of countless Americans. Since 2000, PhRMA’s mem-
bers have invested more than $1 trillion in the search for new treatments
and cures.
PhRMA members proudly provide these medicines to low-income indi-
viduals by participating in various state and federal healthcare programs,
including the Texas Medicaid program. Unfortunately, that participation
also means that PhRMA’s members are far too frequently the target of qui
tam suits brought by uninjured and self-interested private plaintiffs. In some
instances, relators rightly identify fraud and abuse in the healthcare sector.
But increasingly, uninjured, professional relators seek only to squeeze a pay-
day out of conduct that everyone else, including government regulators,
thinks is not only lawful but beneficial to the healthcare system.
1 APP390 Those abuses should no longer be tolerated. While qui tam litigation
has long tested constitutional boundaries, it surpasses those boundaries
when left in the hands of uninjured, professional relators.
I. The constitutional difficulties inherent in qui tam litigation are fatal for uninjured, professional relators like HSG.
Qui tam statutes already live on the constitutional edge. They purport
to confer the government’s extraordinary power to enforce the laws on une-
lected and unaccountable private parties. When qui tam statutes work as
intended—encouraging true insiders to come forward—their unique fea-
tures can at least serve a legitimate public goal. But in the hands of unin-
jured, professional relators whose only aim is to skim a return from compa-
nies’ earnings, qui tam suits not only become a nuisance to legitimate and
beneficial activity, but the constitutional difficulties of qui tam litigation be-
come fatal.
A. Uninjured, professional relators do not serve the purposes of qui tam statutes.
1. Qui tam statutes are designed to incentivize insider whistleblowers
and victims of unlawful schemes to come forward with information the gov-
ernment could not likely discover on its own. As one court put it, the “para-
digm qui tam plaintiff” is “the ‘whistleblowing insider.’” Wang v. FMC Corp.,
2 APP391 975 F.2d 1412, 1419 (9th Cir. 1982). The same is true under the Texas Med-
icaid Fraud Prevention Act (TMFPA): “To ferret out information about fraud-
ulent activities, the TMFPA … coaxes wrongdoers to divulge potentially in-
criminating information.” In re Xerox Corp., 555 S.W.3d 518, 536 (Tex. 2018).
Many of the TMFPA’s provisions are uniquely geared to encouraging
insiders and victims to make “prompt, voluntary disclosure” of wrongdoing.
Id. at 526. The law provides whistleblowers with protection against retalia-
tion. Tex. Hum. Res. Code § 36.115. And whereas fraudsters who fail to come
forward are subject to “substantial monetary consequences” and “onerous
administrative sanctions,” Xerox, 555 S.W.3d at 525, an insider who reports
fraud cannot be liable for more than “two times the amount of the unlawfully
procured payment, meaning monetary exposure … could be zero.” Id. at 526
(citing Tex. Hum. Res. Code § 36.052(c)).
By the same token, the TMFPA seeks to incentivize reporting of other-
wise undetectable misconduct. The statute generally bars qui tam suits
based on information that has been “publicly disclosed.” Tex. Hum. Res. Code
§ 36.113(b). But there is an exception: if the person bringing the action pre-
viously disclosed the information to the State or “has knowledge that is in-
dependent of and materially adds to the publicly disclosed” information, he
3 APP392 may sue. Id. This public-disclosure bar and its exception, like the correspond-
ing provisions in the federal False Claims Act, reflects “the notion that a qui
tam suit does not benefit the Government if the information about the fraud
is already publicly known, unless the plaintiff is an original source.” United
States ex rel. Branch Consultants v. Allstate Ins. Co., 560 F.3d 371, 381 (5th
Cir. 2009). Through and through, the TMFPA reflects a “strong public policy
of encouraging insiders and whistleblowers to come forward.” Xerox, 555
S.W.3d at 538.
2. Professional relators are neither. Take the plaintiff here, Health
Selection Group, LLC (HSG). It certainly is not a whistleblower; it is not, for
example, a former employee of Novartis or one of its contractors or custom-
ers. Rather, HSG is a “stand-alone LLC[ ]” formed solely for the purpose of
filing this qui tam action. See Ex. A to Decl. of Brian J. McCabe in Support
of the United States’ Mot. to Dismiss, U.S. ex rel. Health Choice All., LLC v.
Eli Lilly & Co., No. 5:17-cv-123, ECF No. 192-1 (E.D. Tex.); see also United
States v. UCB, Inc., 970 F.3d 835, 839 (7th Cir. 2020) (describing a set of
entities “formed … for the single purpose of prosecuting a separate qui tam
action”).
4 APP393 Nor are HSG’s allegations based on knowledge it gained as an insider
or victim of the alleged scheme. HSG’s parent company, National Healthcare
Analysis Group (NHCAG), was founded when one of its principals and his
“Wall Street” “angel investor” saw “a massive business opportunity” in comb-
ing publicly available Medicare and Medicaid data for potential qui tam
cases. J.C. Herz, Medicare Scammers Steal $60 Billion a Year. This Man Is
Hunting Them, Wired (Mar. 7, 2016), tinyurl.com/ycxr2mh5. The only “in-
side” information NHCAG has is what it extracts under “false pretenses”
from “potential informants” it identifies in its “database of 70,000 health care
workers and their employment histories, scraped and extracted from pub-
licly available sources.” Id.; United States’ Mot. to Dismiss at 5–6, U.S. ex
rel. Health Choice Alliance, LLC v. Eli Lilly & Co., No. 5:17-cv-123, ECF No.
192 (E.D. Tex.).
HSG is not alone in resorting to such tactics to try to make up for a
lack of personal knowledge. A federal court in Massachusetts concluded that
a relator’s team of lawyers “devised and implemented an elaborate scheme
of misrepresentation and deceit under the guise of a legitimate medical re-
search study … solely for the purpose of ensuring that the complaint sur-
vived a motion to dismiss.” Leysock v. Forest Labs., Inc., 2017 WL 1591833,
5 APP394 at *12–13 (D. Mass. Apr. 28, 2017). The U.S. Court of Appeals for the Second
Circuit held that a company’s former general counsel violated the ethical rule
against “side-switching” when he used confidential information to bring a
qui tam action against his former employer. United States v. Quest Diagnos-
tics Inc., 734 F.3d 154, 157–58, 161 (2d Cir. 2013). And, closer to home, the
Fifth Circuit dismissed a qui tam claim brought by an attorney looking to
cash in on confidential information he had obtained in separate litigation.
United States ex rel. Holmes v. Northrop Grumman Corp., 642 F. App’x 373,
375–76 (5th Cir. 2016).
3. The point of all this is not simply that uninjured, professional rela-
tors like HSG upset the legislative balance between incentivizing whistle-
blowers and “discourag[ing] opportunistic plaintiffs from bringing parasitic
lawsuits.” Walburn v. Lockheed Martin Corp., 431 F.3d 966, 970 (6th Cir.
2005). They undoubtedly do.
But uninjured, professional relators like HSG also sharpen the consti-
tutional difficulties long associated with qui tam litigation. Professional re-
lators are not bringing qui tam suits in an effort to recover for their own
losses, cf. Tex. Hum. Res. Code § 36.115, or to limit their own liability, see id.
§ 36.052(c). Their overwhelming aim is a pay day—potentially a hefty one.
6 APP395 That goal leads professional relators to press sweeping legal theories and
flimsy factual allegations without regard for collateral consequences and in
a way fundamentally inconsistent with core constitutional limits.
B. Uninjured, professional relators like HSG do not have standing.
1. “Standing is a constitutional prerequisite to suit.” Heckman v. Wil-
liamson County, 369 S.W.3d 137, 150 (Tex. 2012). To establish standing in
Texas, the plaintiff’s injury must be “persona[l],” “concrete and particular-
ized,” and “actual or imminent, not hypothetical.” DaimlerChrysler Corp. v.
Inman, 252 S.W.3d 299, 304–05 (Tex. 2008).
Two characteristics of that test are particularly pertinent here. First,
a plaintiff’s generalized grievance with a bare legal violation is neither “con-
crete” nor “particularized.” See Andrade v. NAACP of Austin, 345 S.W.3d 1,
8 (Tex. 2011); accord Lujan v. Defs. of Wildlife, 504 U.S. 555, 573–75 (1992).
That is true whether the violator is a governmental entity, e.g., Brown v.
Todd, 53 S.W.3d 297, 302 (Tex. 2001) (mayor), or a private one, e.g., Farmers
Tex. Cnty. Mut. Ins. Co. v. Beasley, 598 S.W.3d 237, 238 (Tex. 2020) (insurer).
Second, the plaintiff must be “personally injured.” Heckman, 369
S.W.3d at 155. A plaintiff cannot open the courthouse door by pointing to
someone else’s harm. That is why, for example, a class action must be
7 APP396 dismissed for lack of standing when the named plaintiff is not injured, even
if other class members indisputably are. M.D. Anderson Cancer Ctr. v. No-
vak, 52 S.W.3d 704, 710 (Tex. 2001).
Demanding that plaintiffs demonstrate a personal and particularized
injury “prevents the judicial process from becoming no more than a vehicle
for the vindication of the value interests of concerned bystanders.” United
States v. Students Challenging Regul. Agency Procs., 412 U.S. 669, 687
(1973). And in that way, it ultimately reflects “the Texas Constitution’s sep-
aration of powers among the departments of government, which denies the
judiciary authority to decide issues in the abstract.” DaimlerChrysler, 252
S.W.3d at 304.
2. HSG fails the standing test at the first question. It does not allege
that it is “personally injured.” Heckman, 369 S.W.3d at 155. Nor could it:
HSG had nothing to do with the alleged wrongful conduct and did not even
exist when that conduct occurred. HSG, to be sure, alleges that “Novartis
defrauded the State’s Medicaid program.” HSG Br. 14. But that is just an
allegation that Novartis broke the law; it cannot confer standing any more
than the bare allegation that the defendant breached a contract, see Farm-
ers, 598 S.W.3d at 241–43; see also TransUnion LLC v. Ramirez, 141 S. Ct.
8 APP397 2190, 2205 (2021) (“[A]n injury in law is not an injury in fact.”). HSG asserts,
too, that the State of Texas was injured (financially) by Novartis’s alleged
conduct. See HSG Br. 14. But HSG cannot “borrow” an injury from Texas
any more than a class representative can “‘borrow’ standing from the class.”
Heckman, 369 S.W.3d at 153–54. Applying settled tenets of Texas standing
doctrine, the straightforward conclusion is that HSG has no injury, so HSG
has no standing.
3. Vermont Agency of Natural Resources v. United States ex rel. Ste-
vens, 529 U.S. 765 (2000), does not change that conclusion. Stevens held that
a relator under the federal False Claims Act “has standing to assert the in-
jury in fact suffered by the assignor” because the relator is effectively “the
assignee” of “the Government’s damages claim.” Id. at 773. The problem for
HSG is that “a TMFPA civil-remedy action is not an action for recovery of
damages.” Xerox, 555 S.W.3d at 526 (cleaned up).
That distinction matters. This Court has long recognized that not “all”
legal claims are assignable. PPG Indus., Inc. v. JMB/Hous. Ctrs. Partners
Ltd. P’ship, 146 S.W.3d 79, 87 (Tex. 2004). In particular, claims that “are
personal and punitive rather than property-based and remedial” may not be
assigned. Tex. Med. Res., LLP v. Molina Healthcare of Tex., Inc., 659 S.W.3d
9 APP398 424, 439 (Tex. 2023). A claim under the Deceptive Trade Practices Act, for
example, cannot be assigned because there is a “‘personal’ aspect in being
‘duped’” and a “punitive rather than remedial” goal in allowing treble dam-
ages. PPG Indus., 146 S.W.3d at 89. The same is true of a TMFPA claim.
Each of the statute’s “unlawful act[s]” describes an instance of the State per-
sonally being “duped,” just as in the DTPA. Compare Tex. Hum. Res. Code
§ 36.002, with Tex. Bus. & Com. Code § 17.46(b). And the TMFPA’s reme-
dies, whether viewed as a whole or individually, are “undeniably punitive.”
Xerox, 555 S.W.3d at 527.
It does not matter that the Legislature has purported to assign to a
relator this unassignable claim. The “personal” and “punitive” nature of a
TMFPA claim vested in the State reveals that the only injury the State seeks
to redress is the one to its “sovereignty arising from violation of its laws.”
Stevens, 529 U.S. at 771. Texas need not even suffer a proprietary “pocket-
book injury” to prove a violation of the TMFPA claim. See Xerox, 555 S.W.3d
at 530, 533–34; contra State Br. 14. The TMFPA’s goal is therefore not to
remedy a loss but to punish a violation of the law. Xerox, 555 S.W.3d at 533.
And legislative assignment or not, vindicating that kind of innately sover-
eign interest cannot be delegated to a private party. See M. Gilles,
10 APP399 Representational Standing: U.S. ex rel. Stevens and the Future of Public Law
Litigation, 89 Cal. L. Rev. 315, 341–45 (2001).
4. HSG also offers a grab bag of assorted additional theories in an ef-
fort to try to manufacture standing where there is none. This backfires. The
sheer number of throw-everything-at-the-wall theories spotlights the simple
fact that as an uninjured party, HSG lacks standing.
Take HSG’s claim that it can sue as the State’s representative, like a
“next friend” of a minor child or an executor of a deceased’s estate. HSG Br.
29–32. This theory boils down to the assertion that HSG is simply the State’s
agent, and that (as HSG admits) a “relator’s award” is simply “payment for
its services” as an agent. HSG Br. 28. Stevens quickly disposed of that very
same argument, and rightly so: Unlike a party’s attorney or guardian, a qui
tam relator “himself” has an “an interest in the lawsuit, and not merely the
right to retain a fee out of the recovery.” 529 U.S. at 772; see Tex. Hum. Res.
Code § 36.101(a) (“A person may bring a civil action for a violation of Section
36.002 for the person and for the state.” (emphasis added)).
HSG’s other theories can be dismissed just as quickly. It asserts that
it need not have an injury because the TMFPA grants relators a cause of
action. HSG Br. 32–33. But standing is a constitutional limit on Texas courts’
11 APP400 jurisdiction, Heckman, 369 S.W.3d at 150; it may not be abrogated by statute
any more than the Legislature could decree this Court to have the final word
in criminal cases, see Tex. Const. art. V, § 3(a) (this Court’s “determinations
shall be final except in criminal law matters”).
HSG relatedly contends that the normal constitutional standing rules
do not apply here because Article III, section 51-a grants the Legislature au-
thority to “enact such laws as may be necessary” to obtain federal Medicaid
matching funds. HSG Br. 11–13. But section 51-a can hardly be read as a
blank check for the Legislature to ignore the Texas Constitution. Just as it
does not, for example, authorize the Legislature to pursue federal matching
funds by muzzling critics of Medicaid laws, Tex. Const. art. I, § 8, or by bless-
ing warrantless searches of Medicaid recipients, id. art. I., § 9, it does not
empower the Legislature to exceed constitutional limits on Texas courts’ ju-
risdiction. See Fin. Comm’n of Tex. v. Norwood, 418 S.W.3d 566, 582 n.83
(Tex. 2013) (“[C]ourts’ constitutional jurisdiction cannot be enlarged by stat-
ute.”).
* * *
12 APP401 The upshot is that HSG suffered no injury, and neither Stevens nor
HSG’s assortment of other theories can save it from that fact. It therefore
lacks standing.
C. Separation of powers concerns are sharpened in cases brought by uninjured professional relators like HSG.
1. The Texas Constitution “carefully apportions the duties of repre-
senting the State in district and inferior courts” among various “constitu-
tional officers.” Hill County v. Sheppard, 178 S.W.2d 261, 264 (Tex. 1944).
The Legislature may not reallocate that authority to other government offic-
ers, El Paso Elec. Co. v. Texas Dep’t of Ins., 937 S.W.2d 432, 439 (Tex. 1996),
or to private parties, Agey v. Am. Liberty Pipe Line Co., 172 S.W.2d 972, 974
(Tex. 1943). See also Maud v. Terrell, 200 S.W. 375, 376 (Tex. 1918).
The Constitution’s exclusive allocation of prosecutorial authority in
State attorneys is not some empty technicality. Like all separation-of-powers
principles, this assignment is an essential safeguard of individual liberty.
See, e.g., In re Tex. House of Reps., – S.W.3d –, slip op. at 22 (Tex. Nov. 15,
2024); see also Dep’t of Transp. v. Ass’n of Am. R.R., 575 U.S. 43, 61 (2015)
(Alito, J., concurring) (“The principle that Congress cannot delegate away its
vested powers exists to protect liberty.”). The Constitution thus vests the
State’s awesome power to prosecute—including the decision not to
13 APP402 prosecute—in the hands of State officials who serve both the people and the
ends of justice. Cf. United States v. Smith, 55 F.3d 157, 160 (4th Cir. 1995)
(“[I]t is the duty of the United States Attorney not simply to prosecute but to
do justice.”).
2. Delegating prosecutorial authority to private relators “dash[es] the
whole scheme.” Dep’t of Transp., 575 U.S. at 61. Professional relators like
HSG (who have no ties to the State of Texas or its residents) are “motivated”
not by “the public good” but “by prospects of monetary reward.” Hughes Air-
craft Co. v. United States ex rel. Schumer, 520 U.S. 939, 949 (1997). Lacking
any responsibility for pursuing the public good, profiteering relators cannot
seriously be expected to conscientiously exercise the kind of public-minded
“prosecutorial discretion” American law has long considered part of provid-
ing “individualized justice.” McCleskey v. Kemp, 481 U.S. 279, 311–12 (1987).
Nor can they be held accountable to the people: Transferring governmental
power “to a private entity that is not elected, nominated, removable, or im-
peachable undercuts representative government at every turn.” Oklahoma
v. United States, 62 F.4th 221, 228 (6th Cir. 2023), cert. denied, 144 S. Ct.
2679 (2024).
14 APP403 II. Abusive qui tam litigation brought by professional relators deters beneficial regulatory practices and harms patient care.
This case demonstrates the dangers of vesting the State’s prosecutorial
power in an uninjured, professional relator whose only skin in the game is a
return on investment. Left unchecked, suits like this one will allow self-in-
terested private entities to countermand the policy judgments of the State’s
and country’s elected officials, all to the detriment of the healthcare system.
1. This case is part of a string of nearly identical cases brought by
NHCAG affiliates against dozens of pharmaceutical companies across the
country. See United States v. Eli Lilly & Co., 4 F.4th 255, 259 & n.1 (5th Cir.
2021) (collecting cases). In each case, a for-profit NHCAG affiliate alleged
that the company violated federal law by providing free patient education
programs about the company’s drugs. That profit-motivated litigation theory
was itself completely incompatible with federal law: “[A]cross nine cited
agency guidances, advisory opinions, and final rulemakings,” federal officials
had “consistently held” that patient support services like these are “[n]ot only
lawful, but beneficial to patients and the public.” UCB, Inc., 970 F.3d at 852;
see also Eli Lilly, 4 F.4th at 268 (similar).
15 APP404 NHCAG did not heed the government’s considered decision that these
lawsuits actually “undermine practices that benefit federal healthcare pro-
grams.” Eli Lilly, 4 F.4th at 267. When the government sought to dismiss
NHCAG’s cases to protect the public interest, NHCAG fought dismissal
tooth-and-nail. It even called the government’s dismissal request a “policy of
Executive Branch nullification of binding statutory authority,” Br. of Appel-
lants, United States v. Eli Lilly & Co., 4 F.4th 255 (5th Cir. 2021) (No. 19-
40906), 2020 WL 231331 at 52—a startling assertion given the conclusion
from the Branch vested with enforcing the laws that the defendants’ conduct
was perfectly lawful. Perhaps NHCAG’s resistance should have come as no
surprise—it was frank that it had a significant “property interest” (money)
on the line. Eli Lilly, 4 F.4th at 267. But, appropriately, the federal courts
respected the views of a coordinate branch of government more than
NHCAG and dismissed its suits across the board. See id. at 259 & n.1.
Undeterred, HSG brought this case in a transparent attempt to obtain
the same pay day it couldn’t get in federal court. Its allegations concern the
very same conduct that the federal government has concluded is “not only
beneficial but also lawful.” Id. at 268. Texas apparently does not disagree. It
16 APP405 declined to intervene in HSG’s suit, and it has studiously avoided taking a
position on the merits of HSG’s claims in this Court.
As the United States Supreme Court once remarked, repeat filer con-
duct like HSG’s reflects “the aura of the gaming table,” rather than a serious
effort to pursue a justified claim. See Blonder-Tongue Labs., Inc. v. Univ. of
Ill. Found., 402 U.S. 313, 329 (1971). This Court should not permit HSG—
an “investment vehicl[e] for financial speculators” to “indiscriminately ad-
vance claims on behalf of the government against an entire industry that
would undermine practices the federal government has determined are ap-
propriate and beneficial to federal healthcare programs and their beneficiar-
ies.” UCB, Inc., 970 F.3d at 852 (cleaned up).
2. Even when it does not expressly contradict public policy, frivolous
qui tam litigation distracts the biopharmaceutical industry from developing
lifesaving treatments. As regular participants in government healthcare pro-
grams, pharmaceutical companies are a frequent target for profiteering re-
lators. At the federal level, a statistical analysis of unsealed False Claims
Act settlements between 2004 and 2014 revealed that pharmaceutical com-
panies are the most likely of any industry to have qui tam settlements ex-
ceeding $10 million. Tammy W. Cowart et al., Carrots and Sticks of
17 APP406 Whistleblowing: What Classification Trees Say about False Claims Act Law-
suits, 17 ALSB J. Emp. & Lab. L. 1, 13, 15 (2019). As in the federal context,
the prospect of “substantial monetary consequences” and “death-penalty ad-
ministrative sanctions” in Texas, Xerox, 555 S.W.3d at 525–26, creates mas-
sive pressure to settle even unmeritorious claims, see Dayna Bowen Mat-
thew, The Moral Hazard Problem with Privatization of Public Enforcement:
The Case of Pharmaceutical Fraud, 40 U. Mich. J.L. Reform 281, 314 (2007)
(observing this trend in federal False Claims Act litigation).
Biopharmaceutical companies offer lifesaving treatment and care.
These treatments often are available to the public through State and federal
healthcare programs, and the government has a clear interest in ensuring
that such treatments remain available. Unmeritorious and burdensome
FCA litigation interferes with that mission by discouraging programs that
facilitate individual access to biopharmaceutical innovations and diverting
time and resources away from the development of live-saving and life-im-
proving drugs.
18 APP407 PRAYER
This Court should issue a writ of mandamus directing the district court
to dismiss HSG’s claims brought under the qui tam provisions of the
TMFPA.
December 19, 2024 Respectfully submitted,
/s/ Phillip M. Aurentz
PHILLIP M. AURENTZ KWAKU A. AKOWUAH CHELSEA A. PRIEST JOSHUA J. FOUGERE SIDLEY AUSTIN LLP CODY M. AKINS 2021 McKinney Ave. SIDLEY AUSTIN LLP Suite 2000 1501 K Street, NW Dallas, Texas 75201 Washington, D.C. 20005 Tel: (214) 981-3300 Tel.: (202) 736-8000 Fax: (214) 981-3400 Fax: (202) 736-8711 kakowuah@sidley.com SCOTT D. STEIN SIDLEY AUSTIN LLP Counsel for Amicus Curiae One South Dearborn Chicago, Illinois 60603 Tel: (312) 853-7000 Fax: (312) 853-7036 sstein@sidley.com
19 APP408 CERTIFICATE OF COMPLIANCE
I certify that this brief contains 3,750 words as reported by Microsoft
Word.
/s/ Phillip M. Aurentz Phillip M. Aurentz
December 19, 2024
APP409 CERTIFICATE OF SERVICE
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to be served on counsel of record for all parties through electronic service via
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APP412 FILED 24-0239 12/20/2024 3:46 PM tex-95567794 SUPREME COURT OF TEXAS BLAKE A. HAWTHORNE, CLERK
_______________________________________ SIXTH DISTRICT COURT OF APPEALS CASE NO. 06-24-00005-CV, FROM THE 71ST DISTRICT COURT IN HARRISON COUNTY, TEXAS CAUSE NO. 23-0276 • THE HONORABLE BRAD MORIN PRESIDING
RELATOR NOVARTIS PHARMACEUTICALS CORPORATION’S REPLY BRIEF ON THE MERITS
DANNY S. ASHBY ANTON METLITSKY (Texas Bar No. 01370960) ROSS GALIN O’MELVENY & MYERS LLP O’MELVENY & MYERS LLP 2801 N. Harwood Street, Suite 1600 1301 Avenue of the Americas, Dallas, Texas 75201 17th Floor Telephone: +1 972.360.1900 New York, NY 10019 Telephone: +1 212.326.2000 DERON R. DACUS (Admitted Pro Hac Vice) (Texas Bar No. 00790553) THE DACUS FIRM, P.C. 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903.705.1117 Counsel for Relator Novartis Pharmaceuticals Corporation f @ COUNSEL PRESS ∙ (213) 680-2300 PRINTED ON RECYCLED PAPER
APP413 TABLE OF CONTENTS
TABLE OF CONTENTS ............................................................................ i TABLE OF AUTHORITIES ...................................................................... ii INTRODUCTION ...................................................................................... 1 ARGUMENT .............................................................................................. 4 I. HSG LACKS STANDING. ..................................................................... 4 A. HSG and Texas’s standing-by-assignment theory fails. ....... 4 B. Statutory standing does not satisfy or displace constitutional standing principles. ....................................... 10 C. Representative-capacity standing has no application here. ....................................................................................... 12 II. THE TMFPA VIOLATES THE SEPARATION OF POWERS. ................... 14 A. Under this Court’s case law, State attorneys must control State litigation. ......................................................... 15 B. The TMFPA permits private attorneys to control State litigation. ............................................................................... 20 III. HSG’S NOVEL SECTION 51-A AND MEDICAID ACT ARGUMENTS ARE UNAVAILING. ............................................................................ 28 IV. MANDAMUS RELIEF IS WARRANTED. ................................................ 30 CONCLUSION AND PRAYER ............................................................... 32 CERTIFICATE OF COMPLIANCE ....................................................... 34 CERTIFICATE OF SERVICE................................................................. 35
i APP414 TABLE OF AUTHORITIES
Agey v. American Liberty Pipe Line Co., 172 S.W.2d 972 (Tex. 1943) ................................................. 16, 18, 20, 22
Am. Liberty Pipe Line Co. v. Agey, 167 S.W.2d 580 (Tex. App.—Austin 1942, judgment affirmed) .......... 18
Brown v. De La Cruz, 156 S.W.3d 560 (Tex. 2004) ................................................................... 26
Busbee v. Cnty. of Medina, 681 S.W.3d 391 (Tex. 2023) ................................................................... 11
Camp v. Gulf Production Co., 61 S.W.2d 773 (Tex. 1933)............................................................. passim
El Paso Electric Co. v. Texas Department of Insurance, 937 S.W.2d 432 (Tex. 1996) ................................................................... 19
Farmers Tex. Cnty. Mut. Ins. Co. v. Beasley, 598 S.W.3d 237 (Tex. 2020) ................................................................... 11
Flores v. Millennium Interests, Ltd., 185 S.W.3d 427 (Tex. 2005) ................................................................... 10
Heckman v. Williamson Cnty., 369 S.W.3d 137 (Tex. 2012) ................................................................... 12
Hill Country v. Sheppard, 178 S.W.2d 261 (Tex. 1944) ............................................................. 20, 25
In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d 261 (Tex. 2021) ................................................................... 31
In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004) ................................................................... 31
In re Xerox Corp., 555 S.W.3d 518 (Tex. 2018) ....................................................... 5, 8, 9, 10
ii APP415 Jurgens v. Martin, 631 S.W.3d 385 (Tex. App.—Eastland 2021, mandamus denied) ....... 13
Maud v. Terrell, 200 S.W. 375 (Tex. 1918) ............................................................... passim
Moyer v. Moyer, 183 S.W.3d 48 (Tex. App.—Austin 2005, no pet.) ................................ 13
Perez v. Turner, 653 S.W.3d 191 (Tex. 2022) ................................................................... 12
Sneed v. Webre, 465 S.W.3d 169 (Tex. 2015) ................................................................... 13
Sprint Communications Co., L.P. v. APCC Services, Inc., 554 U.S. 269 (2008) ................................................................................. 6
Staples v. State, 245 S.W. 639 (Tex. 1922) ..................................................... 16, 17, 20, 22
State v. Lloyd, 994 S.W.2d 362 (Tex. App.—Waco 1999, no pet.) ................................ 19
Tenet Hosps. Ltd. v. Rivera, 445 S.W.3d 698 (Tex. 2014) ................................................................... 13
Texas Boll Weevil Eradication Found., Inc. v. Lewellen, 952 S.W.2d 454 (Tex. 1997) ................................................................... 27
Texas v. Yellen, 105 F.4th 755 (5th Cir. 2024) ................................................................ 30
TransUnion LLC v. Ramirez, 594 U.S. 413 (2021) ............................................................................. 7, 8
United States ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419 (2023) ......................................................................... 27, 30
United States ex rel. Zafirov v. Fla. Med. Assoc., LLC, __ F. Supp. 3d __, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024) .. 27, 30
iii APP416 Univ. of Tex. Health Sci. Ctr. at San Antonio v. Mata & Bordini, Inc., 2 S.W.3d 312 (Tex. App.—San Antonio 1999, pet. denied) ........... 19, 20
University of Texas at Arlington v. Bishop, 997 S.W.2d 350 (Tex. App.—Fort Worth 1999, pet. denied) ............... 19
Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000) ......................................................................... 5, 6, 7
Willie v. State, 2017 WL 3526760 (Tex. App.—Houston Aug. 17, 2017, no writ) ........ 23
Constitutional Provisions
Tex. Const. art. I, § 6 ................................................................................ 29
Tex. Const. art. II, § 1 ............................................................................... 29
Tex. Const. art. III, § 10 ........................................................................... 29
Tex. Const. art. III, § 51-a(a).................................................................... 29
Tex. Const. art. IV, § 22 ........................................................................... 17
Tex. Const. art. V, § 21 ............................................................................. 17
31 U.S.C. § 3729(a)(1)(G)...................................................................... 9, 10
42 U.S.C. § 1396h ..................................................................................... 29
Tex. Civ. Prac. & Rem. Code § 64.001(a) ................................................. 13
Tex. Estates Code § 351.101 .................................................................... 13
Tex. Hum. Res. Code § 36.052(a) ............................................................... 9
Tex. Hum. Res. Code § 36.102.................................................................. 21
Tex. Hum. Res. Code § 36.102(e) ............................................................. 23
Tex. Hum. Res. Code § 36.104(b) ..................................................... passim
iv APP417 Tex. Hum. Res. Code § 36.104(b-1) .......................................................... 23
Tex. Hum. Res. Code § 36.105.................................................................. 24
Tex. Hum. Res. Code § 36.108.................................................................. 23
Tex. Hum. Res. Code § 36.109(a) ............................................................. 24
v APP418 INTRODUCTION
The Texas Medicaid Fraud Prevention Act (TMFPA), unique
among Texas statutes, allows qui tam relators to sue on behalf of the
State in circumstances where the State declines to litigate itself. As
Novartis’s opening brief explained, that unique legal regime is doubly
unconstitutional: The relators have no constitutional standing to sue as
to conduct that has not injured them, and they have no constitutional
authority to litigate on behalf of the State.
Health Services Group (HSG) and the State of Texas seek to resist
these conclusions but fail at every turn. As to the standing issue, they
assert a standing-by-assignment theory grounded in a decision
concerning the federal False Claims Act. But the federal precedent was
predicated on a theory that the government was partially assigning a
damages action to the relator, whereas this Court has already held that
the TMFPA creates only civil penalties, not a damages action. That
distinction makes a dispositive difference—the government (like anyone
else) can assign a right to seek damages predicated on an invasion of its
own proprietary interest, but it cannot assign to a private party the
right to vindicate the government’s sovereign interest. The right to seek
1 APP419 civil penalties is uniquely sovereign and thus non-delegable, so the
standing-by-assignment theory fails. So do HSG’s more eccentric
standing arguments, which the State does not join: HSG cannot sue
without constitutional standing, and its analogies to guardians ad lidem
and the like are inapposite—parties have traditionally been allowed to
sue on behalf of another when the beneficiary could not sue himself, but
the State of Texas can (and, indeed, must) bring suit to vindicate its
own interests.
As to the separation of powers, HSG and the State ignore the
decisive language in this Court’s precedents. Time and again, this
Court has made clear that a State attorney must direct all State
litigation in the same manner as if the State attorney brought the suit
himself. The TMFPA, which allows a private person to press suits on
behalf of the State “without the state’s participation,” Tex. Hum. Res.
Code § 36.104(b), cannot be reconciled with that requirement. The
State does not control qui tam suits like it does ordinary litigation—
instead, the relator may press ahead without the State’s approval, and
may even litigate motions against the State itself. Neither HSG nor the
2 APP420 State can explain how that unprecedented structure comports with the
Constitution’s requirements.
Perhaps recognizing that settled constitutional law is against it,
HSG chooses to open its brief with an argument never before raised in
this years-long controversy. It contends that—even if HSG lacks
standing, and even if the TMFPA transgresses the separation of
powers—the Court should rule in HSG’s favor because the Legislature
has authority to issue assistance grants to vulnerable populations.
That argument is as wrong as it sounds. The Legislature’s authority
under that provision does not authorize it to erase the separation of
powers or to allow suit by uninjured parties—which is surely why the
State does not join this eleventh-hour theory. Nor does the State join
HSG’s catastrophizing predictions that a ruling in Novartis’s favor will
lead to Texas being deprived of Medicaid Act matching funds—a claim
that is neither relevant to this constitutional question nor persuasive as
a prognostication.
It is past time to end the qui tam attack on the Texas
Constitution. This suit cannot proceed because the State declined to
bring it. HSG, as an uninjured bounty-hunter, has neither standing nor
3 APP421 constitutional authority to press the litigation on the State’s behalf.
Contrary to HSG’s and the State’s position, there is no impediment to
this Court’s grant of mandamus relief here. The Court should thus
grant mandamus and order this suit dismissed.
I. HSG LACKS STANDING.
As Novartis’s opening brief explained, the Texas Constitution
allows only individuals who have suffered harm to bring suit in Texas
courts. HSG and Texas nevertheless insist that doctrinal exceptions
excuse HSG’s lack of any personal stake in this controversy—they claim
that HSG has standing as Texas’s assignee; and, should that route fail,
HSG (but not Texas) argues that it has statutory standing, or
alternatively, that it can sue in a representative capacity. Each of these
arguments fail to cure the threshold jurisdictional defect in this action:
HSG has not been injured by Novartis’s behavior and so cannot
challenge that behavior in court.
A. HSG and Texas’s standing-by-assignment theory fails.
1. HSG and Texas double down on the claim that HSG has
standing as the State’s assignee under the Supreme Court of the United
4 APP422 States’ reasoning in Vermont Agency of Natural Resources v. United
States ex rel. Stevens, 529 U.S. 765 (2000). HSG Br. 14-17; Tex. Br. 11-
12. But as Novartis explained, Stevens’s logic does not apply to the
TMFPA. See Novartis Br. 19-22. Stevens held that a qui tam relator
satisfied the federal Article III standing requirements because the False
Claims Act “can reasonably be regarded as effecting a partial
assignment of the Government’s damages claim.” 529 U.S. at 773. But
this Court has already held that the TMFPA does not create an
assignable claim for damages. See Novartis Br. 19 (citing In re Xerox
Corp., 555 S.W.3d 518, 526 (Tex. 2018)). And while that distinction
alone should end the inquiry, HSG and the State likewise fail to rebut
Novartis’s explanation that Stevens does not apply for the independent
reason that it relied on the “long tradition of qui tam actions in England
and the American Colonies,” 529 U.S. at 773, yet here there is no
history of qui tam actions that could inform the Texas Constitution’s
meaning. Novartis Br. 23 n.6, 44-47. For both reasons, HSG and
Texas’s reliance on Stevens fails.
HSG and Texas nevertheless insist that Stevens’s reasoning
applies to the TMFPA because standing-by-assignment focuses on the
5 APP423 assignor’s injury rather than its claim for relief. HSG Br. 23; Tex. Br.
12-13. That is incorrect. As Novartis explained, Br. 21, an assignor
does not assign an injury; it assigns a claim for relief. That is why
Stevens says that the False Claims Act can be read to effect a partial
assignment of the Government’s “damages claim.” 529 U.S. at 773; see
id. (“[T]he assignee of a claim has standing to assert the injury in fact
suffered by the assignor.”). HSG also invokes Sprint Communications
Co., L.P. v. APCC Services, Inc., 554 U.S. 269 (2008), for the proposition
that the “focus” of standing-by-assignment is injury. But consistent
with Stevens, the very assignment at issue in Sprint transferred the
assignor’s “claims, demands or causes of action.” 554 U.S. at 272.
HSG and the State ignore this clear doctrine, while offering no
meaningful response to Novartis’s explanation that Stevens refers to
“damages” for a specific reason: only damages, not civil penalties, are
assignable. The State claims that Stevens allows private plaintiffs to
sue to rectify “the injury to [the United States’s] sovereignty arising
from violation of its laws.” Tex. Br. 13. But its argument misreads
Stevens, which explained that while FCA violations cause the United
States two injuries—“the injury to its sovereignty arising from violation
6 APP424 of its laws (which suffices to support a criminal lawsuit by the
Government) and the proprietary injury resulting from the alleged
fraud”—a False Claims Act qui tam relator’s standing is as “a partial
assign[ee] of the Government’s damages claim,” underscoring that
Stevens did not construe the FCA as assigning to private litigants a
claim to vindicate the United States’s sovereign interests, such as
“criminal lawsuits.” 529 U.S. at 771-73 (emphasis added).
HSG, for its part, accuses Novartis of citing no authority holding
that the State cannot assign standing to remedy a sovereign interest,
HSG Br. 25, but ignores both Stevens and TransUnion LLC v. Ramirez,
594 U.S. 413 (2021): “[T]he public interest that private entities comply
with the law cannot be converted into an individual right by a statute
that denominates it as such, and that permits all citizens (or, for that
matter, a subclass of citizens who suffer no distinctive concrete harm) to
sue.” Id. at 428-29 (internal quotation marks omitted); see Novartis Br.
22; see also PhRMA Amicus Br. 9-10 (collecting additional cases
rejecting assignment of such claims). While HSG observes that
TransUnion did not involve a qui tam action or an assignment, HSG Br.
26, that objection misses the point. TransUnion underscores that
7 APP425 because the TMFPA creates a civil penalties scheme, not a civil action
to recover damages, In re Xerox Corp., 555 S.W.3d at 526, it cannot
grant HSG standing as Texas’s assignee. The State’s interest in
ensuring “that private entities comply with the law”—i.e., it’s sovereign,
as opposed to proprietary, interest—“cannot be converted into an
individual right” just because a statute “denominates it as such.”
TransUnion, 594 U.S. at 428-29.
Lastly, HSG claims that Novartis, by arguing that HSG has no
standing by assignment, asks the Court to “veer from its parallel track”
with federal principles of Article III standing. HSG Br. 21. But the
whole point here is that, as a result of key differences between the
federal False Claims Act and the TMFPA, the tracks are not parallel—
the federal False Claims Act provides for a damages cause of action,
whereas the TMFPA does not. Novartis’s argument is simply that this
fundamental distinction between the federal and Texas statutes leads
to a different result with respect constitutional standing in Texas. See
Novartis Br. 18-23.
2. HSG also makes several arguments that the State does not.
Each is wrong.
8 APP426 HSG first argues that this Court should ignore its prior decision
construing the TMFPA. HSG insists that Xerox—which held that the
TMFPA does not authorize damages actions—is irrelevant because it
did not “touch on standing.” HSG Br. 21-25. But Xerox concluded that
the TMFPA employs a “penalty scheme” rather than a civil remedy for
damages. 555 S.W.3d at 534. As explained above, other precedent
makes clear that causes of action for penalties cannot be assigned.
Thus, Xerox all but resolves the standing question before this Court.
HSG next suggests that the distinction between civil penalties
and damages is irrelevant because the False Claims Act and the
TMFPA both provide for treble the amount provided as a result of the
unlawful conduct. HSG Br. 22. That is just an attempt to relitigate
Xerox, and in any event misunderstands the statutes at issue. While
the TMFPA permits recovery of “two times the amount of the payment
or the value of the benefit” provided, Tex. Hum. Res. Code § 36.052(a),
the False Claims Act allows recovery of “3 times the amount of damages
which the Government sustains,” 31 U.S.C. § 3729(a)(1)(G) (emphasis
added). Tying recovery to the payment or benefit in question is
obviously different than tying it to the Government’s damages. The
9 APP427 former is penal, the latter is not. See, e.g., Flores v. Millennium
Interests, Ltd., 185 S.W.3d 427, 432-33 (Tex. 2005) (flat fine that bears
no relationship to actual harm was penal in nature). And HSG’s related
argument (HSG Br. 23-24) that Stevens’s logic extends to the TMFPA
because the FCA has punitive components fails for the same reason: the
FCA expressly ties recovery to “damages” the Government sustains, 31
U.S.C. § 3729(a)(1)(G), standing in stark contrast to the recovery
permitted by the TMFPA, which—as this Court has explained—“is fixed
without regard to any loss to the Medicaid program” and thus
constitutes “a penalty.” Xerox, 555 S.W.3d at 533. Xerox was therefore
correct to hold that the TMFPA was meaningfully different than the
False Claims Act, and such differences lead to a different result as to
the standing question relevant here.
B. Statutory standing does not satisfy or displace constitutional standing principles.
Recognizing the flaws in its standing-by-assignment theory, HSG
suggests that even if Stevens does not support its standing, the TMFPA
grants HSG authority to represent Texas “in its capacity as relator.”
HSG Br. 28-29. Texas does not press this argument, and for good
10 APP428 reason: it is just another way of saying that the TMFPA allows HSG to
ignore the rules of constitutional standing.
To its credit, HSG admits that it is “aware of recent opinions”
rejecting that argument. HSG Br. 33. While some Texas courts have
suggested that parties have “standing” because a statute says they do,
that is because “Texas courts often apply the label ‘standing’ to
statutory or prudential considerations that do not implicate subject-
matter jurisdiction but rather determine whether a plaintiff falls within
the class of persons authorized to sue.” Busbee v. Cnty. of Medina, 681
S.W.3d 391, 395 (Tex. 2023). By contrast, constitutional standing—
which is at issue in this case—“is a component of subject matter
jurisdiction,” and is thus “a threshold requirement to maintaining a
lawsuit” regardless of statutory-standing considerations. See Novartis
Br. 15 (quoting Farmers Tex. Cnty. Mut. Ins. Co. v. Beasley, 598 S.W.3d
237, 240 (Tex. 2020)). Because HSG has not been “personally injured,”
it cannot satisfy this threshold jurisdictional requirement regardless of
11 APP429 whether it has a statutory cause of action to bring its qui tam suit.
Heckman v. Williamson Cnty., 369 S.W.3d 137, 155-56 (Tex. 2012).1
C. Representative-capacity standing has no application here.
HSG next suggests that it might have standing in a
“representative capacity” even if it has not suffered an injury of its own.
It notes that parents sue on behalf of children; receivers sue on behalf of
aggrieved parties; executors sue on behalf of devisees; agents holding
power of attorney sue on behalf of principals; and executives sometimes
sue on behalf of corporations. HSG Br. 29-32. HSG suggests that it is
similarly situated to those sorts of plaintiffs.
The State again does not join this argument, and there is again a
good reason for that: The sovereign State of Texas is not similarly
situated to a party without capacity, and HSG is not similarly situated
to the sorts of next friends who have power to sue. See Novartis Br. 23-
24. Parents and executors have fiduciary-type legal obligations to those
they represent, who cannot sue in their own names because they are
1 While HSG also observes that an exception to the injury-in-fact requirement exists
for taxpayers suing to enjoin illegal public spending, HSG Br. 32 n.33, it fails to explain why this idiosyncratic doctrine—applicable only to “drastic” suits—has any relevance here. Perez v. Turner, 653 S.W.3d 191, 199 (Tex. 2022) (internal quotation marks omitted).
12 APP430 incompetent to do so. See, e.g., Tex. Estates Code § 351.101 (duty on
executors); Tenet Hosps. Ltd. v. Rivera, 445 S.W.3d 698, 705 (Tex. 2014)
(duty on legal guardians). Persons holding power of attorney likewise
“owe[] a fiduciary duty to [their] principal,” as well as “a duty to account
to the principal’s estate for actions taken under the power of attorney.”
Jurgens v. Martin, 631 S.W.3d 385, 409 (Tex. App.—Eastland 2021,
mandamus denied). Officers and directors similarly owe fiduciary
duties to the corporation for which they have capacity to litigate. See,
e.g., Sneed v. Webre, 465 S.W.3d 169, 173 (Tex. 2015) (fiduciary duties of
officers and directors). And receivers—the example HSG cites
repeatedly, HSG Br. 28, 29, 30—are “indifferent person[s], between the
parties to a cause, appointed by the court to receive and preserve the
property or fund in litigation pendente lite.” Moyer v. Moyer, 183
S.W.3d 48, 56 (Tex. App.—Austin 2005, no pet.); see Tex. Civ. Prac. &
Rem. Code § 64.001(a) (prescribing various scenarios in which a receiver
may be appointed to preserve property).
This qui tam suit has none of those features. Unlike parents,
executors, persons with power of attorney, and persons granted
authority to litigate for corporations, HSG has no fiduciary duty to act
13 APP431 in the State’s interest. Unlike minors and the deceased, the State is
perfectly able to sue on its own behalf. And unlike receivers, HSG was
not appointed by the court, is certainly not a neutral party, and is not
seeking to preserve property pending the outcome of litigation. The
State is perfectly able to represent itself, so there is no need for HSG to
act as the State’s representative. Indeed, as described directly below,
the State not only can litigate on its own behalf, but must do so under
basic separation-of-powers principles, which is an independent reason
to invalidate the TMFPA’s qui tam provision.
II. THE TMFPA VIOLATES THE SEPARATION OF POWERS.
As Novartis’s opening brief explained, the Constitution requires
that only State attorneys (or their employees) can litigate on behalf of
the State. See Novartis Br. 32. That is the consistent lesson of a
century of this Court’s cases. See id. at 27-32. Those cases doom the
TMFPA’s qui tam provision, which allows private litigants to press
suits that State attorneys have affirmatively declined to bring. See id.
at 32-44.
HSG and the State fail to meaningfully grapple with this
constitutional defect. Their argument rests on two basic claims. First,
14 APP432 they misread this Court’s cases, ignoring the critical language that
requires that a State attorney directly control every State suit. Second,
they argue that the TMFPA passes constitutional muster because State
attorneys have particular opportunities to become involved in the suits
that private individuals press “without the state’s participation.” Tex.
Hum. Res. Code § 36.104(b). They are wrong on both counts.
A. Under this Court’s case law, State attorneys must control State litigation.
This Court has consistently held that all public litigation must be
brought by a State attorney or by his agent. The response briefs
misread the relevant precedents, ignoring the language in this Court’s
holdings that sets out the applicable legal standards.
The critical cases from this Court require that State attorneys—
not private individuals—litigate on behalf of the State. See Novartis
Br. 27-32. That is the holding of Maud v. Terrell, 200 S.W. 375 (Tex.
1918), which held that the public litigation authority cannot be
“devolve[d] . . . upon others.” Id. at 376. The Court therefore construed
a statute to deny private individuals the right to sue themselves,
holding that they could only “cause the suit to be filed by the official
15 APP433 charged by law with that specific duty”—i.e., the State attorney, to
whom the private person acts as an “assistant.” Id. at 377-78.
The Court reiterated that holding repeatedly, requiring that a
State attorney “institute[]” every State suit. Agey v. American Liberty
Pipe Line Co., 172 S.W.2d 972, 975 (Tex. 1943); Staples v. State, 245
S.W. 639, 643 (Tex. 1922). Each of the Court’s cases prohibited private
individuals from bringing suit, requiring that they instead ask State
attorneys to litigate on their behalf. If the State attorney declined to do
so, the suits could not proceed.
HSG’s brief makes a hash of these precedents.2 HSG tries to
argue that Maud stands primarily for the rule that “courts should not
read statutes permitting individuals other than State attorneys to
represent the State as prohibiting State attorneys from representing
the State.” HSG Br. 41. If that were the only holding of Maud, it would
not have needed to construe the statute to “subordinat[e]” the private
individuals’ authority to the State attorneys’. 200 S.W. at 377. And it
would not have expressly held that only State officials could “cause the
2 The State, for its part, correctly recognizes that Maud holds that private
individuals can bring State litigation only “in subordination to the authority” of the State attorney. Tex. Br. 19 (quoting Maud, 200 S.W. at 377).
16 APP434 suit to be filed,” id. —language that HSG ignores completely. See HSG
Br. 40-41.
The same problem ails HSG’s discussion of Agey and Staples.
HSG again fails to acknowledge the language in those cases requiring
that the State attorney institute the suit. Instead, it insists that what
is important is that neither case held the statutes at issue in those
cases to be unconstitutional. HSG Br. 45, 47. But that is because the
Court construed those statutes to prohibit private control of State
litigation, precisely to avoid a constitutional question. Had such
constructions been impossible, the laws would have been struck down,
because a “statute cannot confer a right upon private individuals to act
for all where it is shown they have no interest different from all others.”
245 S.W. at 641 (citing Tex. Const. art. IV, § 22; id. art. V, § 21).
HSG equally misreads precedent when it claims that Camp v.
Gulf Production Co., 61 S.W.2d 773 (Tex. 1933), “permit[s] private
persons to represent State interests in litigation.” HSG Br. 42.
Contrary to the State’s argument, Camp provides no support for HSG’s
prosecution of this civil enforcement action. The statute in Camp
allowed a prospective purchaser of “unsurveyed” “public school land” to
17 APP435 “file suit against the county surveyor . . . to compel him to make the
survey.” 61 S.W.2d at 775. So the question was whether “the state is a
necessary party to this action” not whether the applicant could institute
or maintain a suit for the State without the Attorney General’s full
participation. Id. at 780; see Am. Liberty Pipe Line Co. v. Agey, 167
S.W.2d 580, 584 (Tex. App.—Austin 1942, judgment affirmed) (noting
“[s]uits with similar objective have in later decisions been treated as
suits against the State”). In Agey, therefore, this Court agreed that
Camp involved issues far different from whether a private person could
“institute and prosecute such a suit in the name of the State without
the joinder of the Attorney General or some district or county attorney.”
Agey, 172 S.W.2d at 974-75. The answer to that question is no, as
Maud, Agey, and Staples held. See supra at 15-17.
prosecute an action on behalf of the State, this Court made clear that
they could do so only subject to complete State control. The Court
required that the relevant statute be construed to give State attorneys
“the right to control the litigation for the state just the same as in any
ordinary suit to which the state is a party.” Camp, 61 S.W.2d at 778.
18 APP436 In other words, it required that the private person be in a traditional
principal-“agent” relationship with the State attorney, who had the
“duty[] to appear in the case and represent the state.” Id. at 777-78.
Only in those limited circumstances could the statute be construed not
to “curtail or abridge” the State attorneys’ prerogatives. Id. Once more,
that crucial language is absent from HSG’s brief. See HSG Br. 42-43.
Finally, the State (but not HSG) claims that Novartis’s arguments
“cannot be squared with” El Paso Electric Co. v. Texas Department of
Insurance, 937 S.W.2d 432 (Tex. 1996). Tex. Br. 23. That reliance is
puzzling, because the Court in that case “express[ed] no opinion” on any
question of “constitutional authority.” 937 S.W.2d at 439. All that the
Court did was repeat the rule of Maud that any private individual must
be “subordinate” to a State attorney, id. (citing Maud, 200 S.W. at 377-
78), which supports Novartis’s argument, not the State’s.3
3 The State also cites three lower court cases. Tex. Br. 18. Each of them “addresse[d] the right of a private attorney to be compensated for efforts expended on behalf of a private client in an action against the responsible third party when an ‘insurance carrier’ . . . benefits from the recovery obtained by the attorney.” University of Texas at Arlington v. Bishop, 997 S.W.2d 350, 354 (Tex. App.—Fort Worth 1999, pet. denied); see Univ. of Tex. Health Sci. Ctr. at San Antonio v. Mata & Bordini, Inc., 2 S.W.3d 312, 318 (Tex. App.—San Antonio 1999, pet. denied) (“UTHSCSA”) (similar); State v. Lloyd, 994 S.W.2d 362, 366 (Tex. App.—Waco 1999, no pet.) (similar). They accordingly “d[id] not involve . . . a private attorney’s attempt to usurp the Attorney General’s right to control the representation of the
19 APP437 B. The TMFPA permits private attorneys to control State litigation.
The holdings of Maud, Staples, Agey, and Camp guide the inquiry
in this case. If the TMFPA requires that a State attorney “cause the
suit to be filed” or “institute[]” the suit, it falls within the bounds set in
this Court’s cases. Agey, 172 S.W.2d at 975; Staples, 245 S.W. at 643;
Maud, 200 S.W. at 377. If it allows other actors to litigate but gives
State attorneys “the right to control the litigation for the state just the
same as in any ordinary suit to which the state is a party,” it is also
analogous to prior laws the Court has upheld. Camp, 61 S.W.2d at 778.
But if it allows a private party to institute the suit and allows that
party to proceed without requiring the State to participate “just the
same as in any ordinary suit to which the state is a party,” then it
violates the Texas Constitution. See Hill Country v. Sheppard, 178
S.W.2d 261 (Tex. 1944).
The TMFPA resoundingly fails under these principles. It does not
require State attorneys to initiate litigation, but rather allows private
parties to litigate a State suit “without the state’s participation.” Tex.
State’s interest in the third-party action in the first instance,” and so have no relevance to this case. UTHSCSA, 2 S.W.3d at 318.
20 APP438 Hum. Res. Code § 36.104(b). And when they do so, the Attorney
General has significantly less authority than he would “in any ordinary
suit.” The law is consequently void.
The parties agree that the TMFPA permits private parties to
litigate without State approval. See HSG Br. 49; Tex. Br. 16. That fact
alone distinguishes this case from the cases discussed above, which
require that the State attorney institute or bring the suit, or at least
that the State attorney have the same control as if he did so. See supra
at 15-18.
HSG and the State make much of the fact that the State has the
opportunity, early in a qui tam suit, to take over the litigation. Tex.
Br. 15-16; HSG Br. 50; see Tex. Hum. Res. Code § 36.102. That is true
but irrelevant to this case. Novartis’s petition does not challenge the
State’s authority to take over a suit. See Novartis Br. 39. The
constitutional question presented is whether a private individual can
sue for the State where (as here) the Attorney General decides that the
case is not worth bringing on the State’s behalf. No case of this Court
permits that maneuver. On the contrary, they hold that unless the
Attorney General affirmatively “cause[s] the suit to be filed,” Maud, 200
21 APP439 S.W. at 377, “institute[s]” suit himself, Agey, 172 S.W.2d at 975;
Staples, 245 S.W. at 643, or has “the right to control the litigation for
the state just the same as in any ordinary suit to which the state is a
party,” Camp, 61 S.W.2d at 778, the private action cannot proceed.
At times, the State seems to argue that its initial ability to
assume responsibility for the case means that it need not have control
over declined qui tam actions. See Tex. Br. 23 (“That initial
opportunity to assume command ensures that the Attorney General is
not subordinated to a private party.”). That suggestion is incorrect.
The Constitution requires that the State attorney actually exercise
“authority” over all State litigation—not that he merely be comfortable
with a private person wielding that power. Maud, 200 S.W. at 377; see
supra at 15-18. A private prosecution of a criminal defendant would not
become permissible simply because the State attorney had the
opportunity to veto the action. Here, too, the initial veto power alone
cannot validate the TMFPA.
Nor does the Attorney General have the same authority in a
declined qui tam suit as he does in “any ordinary suit to which the state
is a party.” Camp, 61 S.W.2d at 778. When the Attorney General
22 APP440 declines to intervene, a qui tam relator may litigate the case “without
the state’s participation.” Tex. Hum. Res. Code § 36.104(b). The relator
is not required to run its arguments by the State. It can advance
theories with which the State disagrees. It can even oppose motions
made by the State in the action. See, e.g., Willie v. State, 2017 WL
3526760 (Tex. App.—Houston Aug. 17, 2017, no writ). It is impossible
to reconcile those facts with the notion that the State has control over
the litigation.
The State and HSG’s focus on ways to resolve disagreements
between the State and the qui tam claimant only underscores this
constitutional problem. True, the State can move to stay discovery that
it believes is harmful (although the relator can object). Tex. Hum. Res.
Code § 36.108; see Tex. Br. 18; HSG Br. 50. True, the State can veto
potential settlements. Tex. Hum. Res. Code § 36.102(e); see Tex. Br.
18. True, the State can demand to receive filings in the case and can
seek to intervene if it thinks the case has gone off the rails (although,
again, the realtor can object). Tex. Hum. Res. Code § 36.104(b-1); see
23 APP441 Tex. Br. 18.4 And true, the State may pursue “alternate remed[ies]” in
other forums and through other statutes. Tex. Hum. Res. Code
§ 36.109(a); see Tex. Br. 17. But those powers do not indicate that the
State has absolute control over the suit. To the contrary, the bespoke
steps set out in the TMFPA confirm that the State’s authority is very
different than “any ordinary suit to which the State is a party.” Camp,
61 S.W.2d at 778.
Another provision of the TMFPA confirms as much. As Novartis
previously explained—but as HSG and the State entirely ignore—the
statute permits the Attorney General to “contract with a private
attorney to represent the state in an action under this subchapter with
which the state elects to proceed.” Tex. Hum. Res. Code § 36.105; see
Novartis Br. 38-39. That conventional agency relationship stands in
marked contrast to the TMFPA’s qui tam provisions. In the typical
agency relationship, the State has total control over its contractor, and
need not jump through TMFPA-specific hoops to control the suit. The
4 Both HSG and the State argue that the State should usually win contested
motions to intervene. HSG Br. 52-53; Tex. Br. 16 n.4. But whatever the standard, it is different than that of an ordinary civil suit, in which the Attorney General would have complete control from the beginning. Accordingly, HSG’s suggestion that the Court could solve the constitutional problem by easing that standard, see HSG Br. 53-54, misses the mark.
24 APP442 difference between that ordinary process and the TMFPA’s
extraordinary one is precisely why the TMFPA fails the “any ordinary
suit” test recognized in Camp.
Because the TMFPA gives private attorneys unprecedented
control over public litigation, it is unconstitutional. See Sheppard, 178
S.W.2d at 263. The proper remedy is accordingly to strike down the
provisions of the TMFPA allowing a private party to litigate without the
State’s consent. See Novartis Br. 38-39. Doing so would return the
TMFPA to its pre-2007 state.5 It would not prohibit the Attorney
General from taking over qui tam litigation or from hiring contractors—
whether on a contingency fee or on some other basis—to press that
litigation on his behalf.
Notably, neither HSG nor the State meaningfully contests this
issue. The State acknowledges that there is no “saving construction”
that would allow the Court to reinterpret the declined qui tam
provisions to preserve State attorney control. Tex. Br. 23-24. HSG
5 HSG claims that “[t]he TMFPA has had qui tam provisions since 1997.” HSG Br. 2 n.5. That is incorrect. The bill that it cites includes only a provision allowing the State of Texas to join federal qui tam litigation as a relator to the United States. The statutory provisions allowing private individuals to sue in Texas court were added in 2007. See Novartis Br. 6.
25 APP443 likewise does not propose any way to construe the TMFPA that would
give State attorneys the same control as they have in ordinary State
suits. Accordingly, HSG and the State have no argument that the
Court can avoid the constitutional issue posed here. So where, as here,
“the language of the particular enactment is unambiguous and the
conflict with the Constitution is hence apparent, there is no alternative
but to declare the enactment void.” Maud, 200 S.W. at 376.
Finally, it is worth noting what HSG and the State do not argue.
Both parties implicitly acknowledge that qui tam litigation is State
litigation that must be controlled by State attorneys. Neither party
suggests that any Texas history of qui tam litigation bolsters the
TMFPA’s constitutionality. Tex. Br. 24 n.7; HSG Br. 19 n.24; see
Novartis Br. 44-47. Even though HSG claimed in prior briefing that
Brown v. De La Cruz, 156 S.W.3d 560 (Tex. 2004), “eviscerates”
Novartis’s arguments, see HSG Resp. 18, HSG no longer claims that
Brown has any bearing on this matter. See Novartis Br. 40-42
(explaining why, if anything, Brown helps Novartis). Nor does HSG or
the State contest that the TMFPA is a “penal” statute, accentuating the
impropriety of allowing a private party to “impose penal sanctions.”
26 APP444 Novartis Br. 34-35 (quoting Texas Boll Weevil Eradication Found., Inc.
v. Lewellen, 952 S.W.2d 454, 474 (Tex. 1997)).
Finally, neither HSG nor the State advances a meaningful
response to Novartis’s observation that “placing the power to litigate on
behalf of the State in the hands of profit-seeking private entities” raises
significant liberty and fairness concerns. Novartis Br. 35; see Texas
Boll Weevil, 952 S.W.2d at 474.6 Texas notes only that federal courts
have previously approved such bounties under the federal False Claims
Act. Tex. Br. 21. But the federal statute has different historical and
textual underpinnings—and even so, there is a growing consensus that
the False Claims Act is unconstitutional. See United States ex rel.
Polansky v. Exec. Health Res., Inc., 599 U.S. 419, 449-52 (2023)
(Thomas, J., dissenting); id. at 442 (Kavanaugh, J., joined by Barrett,
J., concurring); United States ex rel. Zafirov v. Fla. Med. Assoc., LLC, __
F. Supp. 3d __, 2024 WL 4349242, at *20 (M.D. Fla. Sept. 30, 2024).
Under the Texas Constitution—which protects the separation of powers
6 Both HSG and the State note that Texas Boll Weevil concerned “a delegation of
legislative power,” not of litigation authority. Tex. Br. 21; see HSG Br. 55 (similar). But the Court’s observation that “[t]he basic concept of democratic rule under a republican form of government is compromised when public powers are abandoned to” private entities, 952 S.W.2d at 469, applies equally in both contexts.
27 APP445 even more stringently than its federal counterpart, see Novartis Br. 46-
47—bounty-hunting qui tam claimants like HSG cannot wield State
attorneys’ sovereign power.7
III. HSG’S NOVEL SECTION 51-A AND MEDICAID ACT ARGUMENTS ARE UNAVAILING.
Not content to brief the questions presented, HSG leads its brief
with an argument that it admits it is raising for the first time. See HSG
Br. 8 n.11. In its view, Article III, Section 51-a of the Texas
Constitution, which empowers the Legislature to provide “for assistance
grants” to vulnerable populations, means that the TMFPA can violate
the State’s separation of powers and permit suits brought by plaintiffs
without constitutional standing. HSG Br. 8-13. The State does not join
this absurd argument.
The fact that the Legislature is constitutionally empowered to
provide funds for a certain purpose does not mean that it can violate
other provisions of the Constitution when it does so. The constitutional
provision that HSG invokes explicitly states that the Legislature’s
7 Notably, HSG never addresses Novartis’s point that its entire business model is
based on qui tam suits, and that the United States has previously determined that its litigation arguments would harm, not help, the healthcare system. Novartis Br. 8-10, 36.
28 APP446 power in this area is “subject to limitations herein contained”—
language that only confirms the commonsense point that the
Legislature, when acting pursuant to an enumerated power, cannot run
roughshod over other constitutional guarantees. Tex. Const. art. III,
§ 51-a(a). So the Legislature, in providing assistance grants, is not
empowered to discriminate on the basis of religion, see id. art. I, § 6, to
pass bills without a quorum, see id. art. III, § 10, or—as relevant here—
to violate the State’s separation of powers, see id. art. II, § 1. HSG does
not provide any authority or analysis to the contrary.
Nor is it relevant to the constitutional questions in this case
whether, under the federal Medicaid Act, “[i]f the TMFPA’s qui tam
provisions are stricken, Texas will no longer receive a ten percent bonus
from the federal government for Medicaid fraud recoveries secured by
the State.” HSG Br. 10; see 42 U.S.C. § 1396h. There is no interpretive
canon suggesting that this State’s Constitution should be construed to
maximize federal matching funds. If standing doctrine or the
separation of powers precludes qui tam litigation, that result will not
change because a federal law encourages states to authorize qui tam
29 APP447 Regardless, HSG’s sky-is-falling argument is likely wrong. For
starters, a federal court recently invalidated the False Claims Act’s qui
tam provisions; if that ruling is affirmed on appeal (as Justice Thomas
indicates that it should be), then every state will have a qui tam regime
that is “at least as effective” as the federal statute. Zafirov, 2024 WL
4349242, at *20; see Polansky, 599 U.S. at 449-52 (Thomas, J.,
dissenting). And even if the federal qui tam provisions remain,
Congress lacks power under the Federal Constitution to force this State
to choose between following its separation of powers and receiving
federal matching funds. See, e.g., Texas v. Yellen, 105 F.4th 755, 767
(5th Cir. 2024) (“Congress may not use its spending power to
functionally commandeer the states.”). The State Attorney General is
adept at litigating such suits, see id., which may explain why the State
does not raise the same objections as does HSG.
IV. MANDAMUS RELIEF IS WARRANTED.
If the Court agrees with Novartis that HSG lacks standing or
constitutional authority to press this suit, it should grant mandamus
relief. As this Court has repeatedly held, “[m]andamus relief is
appropriate” when a trial court improperly denies a motion to dismiss.
30 APP448 In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d 261, 266 (Tex. 2021);
see Novartis Br. 48 (collecting additional cases). That is because there
is no utility to forcing the parties and the courts to proceed with time-
intensive litigation that suffers from threshold, purely legal defects.
HSG and the State’s contrary arguments are unavailing.
The State halfheartedly urges that mandamus relief is
appropriate only when a case should be dismissed based on “clearly
settled caselaw.” Tex. Br. 25. Not so. As Novartis’s opening brief
observed, this Court also grants mandamus relief when addressing
issues “of first impression.” In re Prudential Ins. Co. of Am., 148 S.W.3d
124, 138 (Tex. 2004); see Novartis Br. 48. The State does not reconcile
its argument with that holding.
For its part, HSG urges that mandamus relief is inappropriate
because it would “interfere with State attorneys’ ongoing discretion to
intervene in this case.” HSG Br. 58. But the State has not intervened
in the four-and-a-half years this suit has been pending. And the State’s
brief in this Court gives no indication that it plans to intervene now,
regardless of how the Court rules on this petition. HSG has long been
prosecuting this case “without the state’s participation,” Tex. Hum. Res.
31 APP449 Code § 36.104(b), so if such actions are unlawful, the only proper
remedy is to dismiss the suit.
For the foregoing reasons, as well as those set forth in Novartis’s
opening brief, the Court should issue a writ of mandamus directing the
district court to dismiss HSG’s claims.
32 APP450 Dated: December 20, 2024 Respectfully submitted,
/s/ Danny S. Ashby Danny S. Ashby Texas Bar No. 01370960 dashby@omm.com 2801 North Harwood Street, Suite 1600 Dallas, Texas 75201 Telephone: +1 972 360 1900 Facsimile: +1 972 360 1901
Anton Metlitsky ametlitsky@omm.com Ross Galin rgalin@omm.com 1301 Avenue of the Americas, 17th Floor New York, NY 10019 Telephone: +1 212 326 2000 (Admitted pro hac vice)
Deron R. Dacus Texas Bar No. 00790553 ddacus@dacusfirm.com 821 ESE Loop 323, Suite 430 Tyler, Texas 75701 Telephone: +1 903 705 1117
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APP455 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
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APP456 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
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APP457 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
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RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
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RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
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RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
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RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
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APP462 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
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APP463 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
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APP464 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
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APP465 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
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APP466 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
RYAN ELLIS LANIER LAW FIRM 10940 W. SAM HOUSTON PKWY N, SUITE 100 HOUSTON, TX 77064 * DELIVERED VIA E-MAIL *
APP467 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
MS. DEBBIE AUTREY CLERK, SIXTH COURT OF APPEALS 100 N. STATE LINE AVE., SUITE 20 TEXARKANA, TX 75501 * DELIVERED VIA E-MAIL *
APP468 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
MR. DERON R. DACUS THE DACUS FIRM, P.C. 821 E SE LOOP 323, STE 430 TYLER, TX 75701-0518 * DELIVERED VIA E-MAIL *
APP469 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
ALEX J. BROWN LANIER LAW FIRM 10940 W SAM HOUSTON PKWY N STE 100 HOUSTON, TX 77064-5768 * DELIVERED VIA E-MAIL *
APP470 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
JONATHAN D. BONILLA OFFICE OF THE TEXAS ATTORNEY GENERAL P O BOX 12548 AUSTIN, TX 78711 * DELIVERED VIA E-MAIL *
APP471 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
MS. LYNNE KURTZ-CITRIN OFFICE OF THE TEXAS ATTORNEY GENERAL PO BOX 12548 AUSTIN, TX 78711-2548 * DELIVERED VIA E-MAIL *
APP472 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
JUSTIN W. AIMONETTI DECHERT LLP 1900 K STREET NW WASHINGTON, DC 20006 * DELIVERED VIA E-MAIL *
APP473 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
MR. ZEKE DEROSE III LANIER LAW FIRM 10940 WEST SAM HOUSTON PKWY N, SUITE 100 HOUSTON, TX 77064 * DELIVERED VIA E-MAIL *
APP474 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
MR. SAMUEL F. BAXTER MCKOOL SMITH, PC 104 E HOUSTON ST STE 300 MARSHALL, TX 75670-4144 * DELIVERED VIA E-MAIL *
APP475 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
MR. DANNY S. ASHBY O’MELVENY & MYERS LLP 2801 N HARWOOD ST STE 1600 DALLAS, TX 75201-2692 * DELIVERED VIA E-MAIL *
APP476 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
ANTON METLITSKY O'MELVENY & MYERS LLP 1301 AVE. OF THE AMERICAS, SUITE 1700 NEW YORK, NY 10019 * DELIVERED VIA E-MAIL *
APP477 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
MR. W. MARK LANIER THE LANIER LAW FIRM, P.C. 10940 W. SAM HOUSTON PKWY N SUITE 100 HOUSTON, TX 77064-5768 * DELIVERED VIA E-MAIL *
APP478 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
ROSS B. GALIN O'MELVENY & MYERS LLP 1301 AVE. OF THE AMERICAS, SUITE 1700 NEW YORK, NY 10019 * DELIVERED VIA E-MAIL *
APP479 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
MS. JENNIFER L. TRUELOVE MCKOOL SMITH, PC 104 E HOUSTON ST, STE 300 MARSHALL, TX 75670-4144 * DELIVERED VIA E-MAIL *
APP480 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
DISTRICT CLERK HARRISON COUNTY HARRISON COUNTY COURTHOUSE 200 WEST HOUSTON SUITE 234 MARSHALL, TX 75671 * DELIVERED VIA E-MAIL *
APP481 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
STEVEN A. ENGEL DECHERT LLP 1900 K STREET NW WASHINGTON, DC 20006 * DELIVERED VIA E-MAIL *
APP482 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
KWAKU A. AKOWUAH SIDLEY AUSTIN LLP 1501 K STREET, NW WASHINGON, DC 20005 * DELIVERED VIA E-MAIL *
APP483 FILE COPY
RE: Case No. 24-0239 DATE: 10/24/2025 COA #: 06-24-00005-CV TC#: 23-0276 STYLE: IN RE NOVARTIS PHARM. CORP.
Today the Supreme Court of Texas denied the petition for writ of mandamus in the above-referenced case. The stay order issued August 30, 2024 is lifted. Statement of Justice Young and Justice Sullivan respecting the denial of the petition for writ of mandamus.
MR. KENNETH W. STARR LANIER LAW FIRM 10940 W. SAM. HOUSTON PKWY N, SUITE 100 HOUSTON, TX 77064 * DELIVERED VIA E-MAIL *
APP484 Supreme Court of Texas ══════════ No. 24-0239 ══════════
═══════════════════════════════════════ On Petition for Writ of Mandamus ═══════════════════════════════════════
Statement of JUSTICE YOUNG and JUSTICE SULLIVAN respecting the denial of the petition for writ of mandamus.
This case presents weighty issues worthy of our full attention, and perhaps the Court should have set it for oral argument. But the decision to deny the petition is understandable given that there is a new statewide appellate court that has already held that it has jurisdiction over disputes like this one. Awaiting that court’s view of the issues presented may assist this Court in its eventual and inevitable consideration of the constitutional concerns surrounding qui tam litigation under what is now called the Texas Health Care Program Fraud Prevention Act. I “[T]he Texas Medicaid Fraud Prevention Act,” as this statute was once known, “is a powerful tool for targeting fraud against the Texas Medicaid program and securing the program’s integrity.” In re Xerox Corp., 555 S.W.3d 518, 525 (Tex. 2018) (citing Tex. Hum. Res. Code
APP485 §§ 36.001–.132); see also Act of May 16, 2023, 88th Leg., R.S., ch. 273, 2023 Tex. Gen. Laws 584 (expanding the statute’s coverage to include two additional healthcare programs). “The statute imbues the attorney general with broad investigative and enforcement authority and—via qui tam provisions—deputizes private citizens to pursue a[n] action on the government’s behalf.” Xerox, 555 S.W.3d at 525. Thus, a private “person may bring a civil action for a violation of [the Act] for the person and for the state,” seeking payment of civil penalties “in the name of the person and of the state.” Tex. Hum. Res. Code § 36.101(a); see also id. § 36.052(a) (prescribing civil remedies for which a defendant can be held liable). This so-called qui tam relator “shall serve a copy of the petition and a written disclosure of substantially all material evidence and information the person possesses on the attorney general,” id. § 36.102(a), who must then decide within 180 days whether to take over the action, id. § 36.104(a); id. § 36.102(c). “If the state declines to take over the action, the person bringing the action may proceed without the state’s participation.” Id. § 36.104(b). Under certain circumstances, the State can intervene in the action after the 180-day deadline has passed. Id. § 36.104(b-1). In this case, Health Selection Group, LLC (HSG) sued Novartis under the Act, alleging that Novartis bilked Texas Medicaid out of hundreds of millions of dollars through fraudulent marketing schemes. The State declined to take over the action. Novartis filed a plea to the jurisdiction and motion to dismiss in which it argued, among other things, that HSG lacked standing. The State asserted a continuing interest in the case and opposed Novartis’s motion, which the trial court denied.
APP486 The Sixth Court of Appeals denied Novartis’s ensuing mandamus petition without analysis. In re Novartis Pharms. Corp., No. 06-24-00005-CV, 2024 WL 874686, at *1 (Tex. App.—Texarkana Mar. 1, 2024). This Court does the same today, declining to take up a pair of arguments against this qui tam action. First, Novartis contends that because its alleged violations of the Act did not injure HSG, HSG lacks standing and the courts lack subject-matter jurisdiction. Second, it argues that the Act’s qui tam provisions violate the separation of powers established by Article II, § 1 of the Texas Constitution, insofar as the Act allows a private litigant, rather than the attorney general, to represent the State in court. Able counsel for HSG and Novartis have joined issue on these important constitutional questions, as have the solicitor general and several sophisticated amici curiae, but for now they will remain unanswered. II When it denied mandamus relief, the Sixth Court provided no meaningful analysis of Novartis’s arguments about standing and separation of powers. See 2024 WL 874686, at *1 (recounting the mandamus standard and then announcing the conclusion that mandamus relief is denied). Our Court would surely benefit from thoughtful consideration of these difficult questions by the lower courts. Analysis of HSG’s standing is likely to begin, but probably should not end, with Justice Scalia’s opinion for the Court in Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000). The Stevens Court held that a qui tam relator under the federal False Claims Act can have Article III standing as a partial assignee of
APP487 the government’s damages claim, because “the assignee of a claim has standing to assert the injury in fact suffered by the assignor.” Id. at 773 (emphasis added); accord id. at 771–74 (reiterating that this holding was conditioned on an “injury in fact,” not merely on some violation of law). HSG may find some support in Stevens, to whatever extent Texas’s standing doctrine “parallels the federal test for Article III standing.” Heckman v. Williamson County, 369 S.W.3d 137, 154 (Tex. 2012); cf. Tex. Dep’t of Fam. & Protective Servs. v. Grassroots Leadership, Inc., 717 S.W.3d 854, 866–73 (Tex. 2025). But the False Claims Act, “while similar in aim and tactic, employ[s] materially different language, and the language of [Texas’s] statutes controls the outcome.” Xerox, 555 S.W.3d at 535. The Act under which HSG sued Novartis “employs a penalty scheme and is not an action for the recovery of damages,” with money being “exacted as punishment for either a wrong to the state or a civil wrong (as distinguished from compensation for an injured party’s loss).” Id. at 530, 534 (internal quotation marks and citation omitted). How can it be said, given these statutory differences, that the State has some injury in fact (as opposed to an injury in law) that it could assign to a qui tam relator like HSG? Consider a hypothetical law that encouraged people to report traffic violations that caused no injury: An ordinary citizen can sit at an intersection, record videos of vehicles running red lights, bring punitive civil suits, and recover monetary awards. In that scenario, the people caught on video violated Texas law, but the relator suffered no injury. The State suffered an injury in law—the violation of statutes that govern traffic. That is why we can be ticketed for speeding or other legal violations
APP488 even when there is no concrete harm that results. In this hypothetical, did the State suffer any injury in fact? Even if so, is it the kind that it could assign to a relator? To quote David Byrne: “I’ll tell you later.” Stop Making Sense (Arnold Stiefel Co. 1984). As for Novartis’s separation-of-powers argument, HSG will find less comfort in the United States Reports. Justice Thomas has outlined “substantial arguments that the qui tam device is inconsistent with Article II [of the U.S. Constitution] and that private relators may not represent the interests of the United States in litigation.” United States ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419, 449 (2023) (Thomas, J., dissenting); accord id. at 442 (Kavanaugh, J., joined by Barrett, J., concurring); Wis. Bell, Inc. v. United States ex rel. Heath, 145 S. Ct. 498, 515 (2025) (Kavanaugh, J., joined by Thomas, J., concurring). Of course, Article II of the Texas Constitution—a “strong separation-of- powers provision,” see Abbott v. Harris County, 672 S.W.3d 1, 3 (Tex. 2023) (citing Tex. Const. art. II, § 1)—uses very different language, but that may just generate different constitutional doubts about qui tam litigation. See Tex. Boll Weevil Eradication Found., Inc. v. Lewellen, 952 S.W.2d 454, 469 (Tex. 1997) (“[W]e believe it axiomatic that courts should subject private delegations to a more searching scrutiny than their public counterparts.”). Then, too, our Constitution assigns the authority to represent the State in court to the attorney general and to county attorneys and district attorneys. See Tex. Const. art. IV, § 22; id. art. V, § 21. Does this limitation pose a problem for a private qui tam relator like HSG? See, e.g., Agey v. Am. Liberty Pipe Line Co., 172 S.W.2d 972, 974 (Tex. 1943). Stay tuned!
APP489 If Texas’s qui tam statute suffers from either of the constitutional flaws Novartis purports to identify, our legislature needs to know it soon and to hear it from a statewide court. If for no other reason, there are federal financial incentives hanging in the balance. See Xerox, 555 S.W.3d at 538–39 & nn.115–22 (explaining that a State “with qui tam laws meeting specified federal standards can retain an additional ten percent of Medicaid recoveries” (citing 42 U.S.C. § 1396h)). Whether in this case or in another one like it, the lower courts—and, eventually, this Court—ought to take up this important subject. III Fortunately, the legislature recently created the Fifteenth Court of Appeals, which has “statewide jurisdiction for a range of cases that implicate the State’s interests.” In re Dallas County, 697 S.W.3d 142, 146 (Tex. 2024). The Fifteenth Court came into existence about five months after Novartis filed its mandamus petition in this Court. And the Fifteenth Court has held that it has jurisdiction over mandamus petitions like this one. See In re Sanofi-Aventis U.S. LLC, 711 S.W.3d 732, 737–38 (Tex. App.—15th Dist. 2025, orig. proceeding). In that case, APBQR, LLC sued Sanofi-Aventis U.S. LLC on behalf of the State of Texas under the Act. Id. at 735. Sanofi moved to transfer the case to another county under the statute’s default-venue provision. Id. The trial court denied the motion, and Sanofi filed a mandamus petition in the Fifteenth Court. Id. APBQR argued that the court of appeals lacked jurisdiction. Id. at 736. It pointed out that the Fifteenth Court’s original mandamus jurisdiction “is limited to writs arising out of matters over which the
APP490 court has exclusive intermediate appellate jurisdiction.” Id. (quoting Tex. Gov’t Code § 22.221(c-1)). That exclusive appellate jurisdiction includes “matters brought by or against the state.” Id. (quoting Tex. Gov’t Code § 22.220(d)(1)). According to APBQR, because “the State did not intervene in the suit,” it was not a matter brought by the State and the court lacked mandamus jurisdiction. Id. The Fifteenth Court rejected that argument. It noted that the suit was “brought in the name of the person and of the state.” Id. at 737 (quoting Tex. Hum. Res. Code § 36.101(a)). On its reading of the statute, “[e]ven if the State declines to intervene, the State may step back into the litigation fray at any time and settle the action with the defendant.” Id. (citing Tex. Hum. Res. Code § 36.107(c)). And the State receives most of any proceeds from the suit. Id. (citing Tex. Hum. Res. Code § 36.110(a-1)). In the court’s view, therefore, “a private person bringing suit under the [Act], even when the State declines to intervene, steps into the State’s shoes.” Id. “Essentially, the person and the State are the same for purposes of the claim.” Id. Moreover, if APBQR were correct that the Fifteenth Court’s jurisdiction turned on whether the State intervened, then the State could “effectively divest [the court] of jurisdiction” by withdrawing its intervention after a party sought mandamus—an “absurd result” the court could not abide. Id. Having determined that its jurisdiction was secure, the court conditionally granted mandamus relief. Id. at 741. We express no view here on whether the Fifteenth Court properly exercised mandamus jurisdiction in Sanofi. For present purposes, the important thing is that the court’s analysis would seemingly allow it to exercise jurisdiction over a mandamus petition like Novartis’s. Both
APP491 cases involve qui tam suits (brought under the same Act) in which the State declined to intervene. Under Sanofi’s logic, the suit against Novartis is also a “matter[] brought by or against the state.” Tex. Gov’t Code § 22.220(d)(1). This means that a statewide court has now declared itself the proper forum to hear the grave challenges to the Act that Novartis raises here. Indeed, the Fifteenth Court indicated in Sanofi that other suits involving the Act were already pending before it. See Sanofi, 711 S.W.3d at 737 n.4. If the Act really does suffer from the constitutional deficiencies alleged by Novartis, we expect that future litigants will provide the Fifteenth Court with the opportunity to carefully consider them. The Fifteenth Court would greatly assist this Court by presenting its analysis in a written opinion. After the Fifteenth Court has weighed in, this Court will be better positioned to provide an accurate and definitive determination of the Act’s constitutionality. Indeed, at least as a formal matter, we see no reason that Novartis could not file a mandamus petition in the Fifteenth Court raising its challenges to the Act. After all, “this Court’s failure to grant a petition for writ of mandamus is not an adjudication of, nor even a comment on, the merits of a case in any respect, including whether mandamus relief was available.” In re AIU Ins. Co., 148 S.W.3d 109, 119 (Tex. 2004). “The writ of mandamus is a discretionary writ,” Chambers v. O’Quinn, 242 S.W.3d 30, 32 (Tex. 2007), and there are many reasons why a justice may vote to deny a mandamus petition. That is why a party could challenge the trial court’s decision to compel arbitration even though two separate courts of appeals and this Court had previously denied his
APP492 mandamus petitions raising the same issue. See id. at 31–32. Lower courts are familiar with this principle. See, e.g., In re Mason-Gibson, Inc., No. 06-21-00120-CV, 2022 WL 452279, at *3 (Tex. App.—Texarkana Feb. 15, 2022, orig. proceeding) (entertaining a mandamus petition even though the relator had previously “filed the same mandamus petition requesting the same relief in the Texas Supreme Court” and this Court had denied relief ); In re Arpin Am. Moving Sys., LLC, 416 S.W.3d 927, 929–30 (Tex. App.—Dallas 2013, orig. proceeding) (entertaining a mandamus petition even though the court of appeals had “denied an earlier petition for writ of mandamus filed by relator for lack of proper certification under Rule 52.3(j)”). To be sure, parties should not abuse the judicial system by flooding the courts with an endless stream of identical petitions. As a general matter, an identical petition should meet the same fate, if only for the sake of judicial economy. But this case’s unusual circumstances likely place it in a class of one, or at most of a very few, meaning that allowing Novartis to petition the Fifteenth Court for mandamus would not risk re-urged mandamus in other cases. The legislature decided that a statewide court was needed to hear certain disputes involving state interests. When Novartis filed its petitions in the Sixth Court and in this Court, that new court did not yet exist, but it has now become operational. From now on, if Sanofi is correct, all such petitions will go to the Fifteenth Court and any eventual appeal from Novartis’s underlying proceeding will end up in that court, too. Given that the Sixth Court did not explain why Novartis’s petition lacked merit and this Court did not opine on the merits at all, it might make sense to give the court hearing any eventual
APP493 appeal an opportunity to assess the Act’s constitutionality sooner rather than later, assuming that the other prerequisites of mandamus review are met to that court’s satisfaction. In sum, another challenge to the Act’s constitutionality is likely to arise, whether from Novartis or from a future litigant. When it does, we hope that the court of appeals will take the issues seriously enough to dispose of them in a written opinion. And, in an appropriate case, we anticipate this Court settling those issues once and for all.
Evan A. Young Justice
James P. Sullivan Justice
OPINION FILED: October 24, 2025
APP494 § 13. Excessive bail or fines; cruel or unusual punishment;..., TX CONST Art. 1, § 13
Vernon's Texas Statutes and Codes Annotated Constitution of the State of Texas 1876 (Refs & Annos) Article I. Bill of Rights (Refs & Annos)
§ 13. Excessive bail or fines; cruel or unusual punishment; open courts; remedy by due course of law
Excessive bail shall not be required, nor excessive fines imposed, nor cruel or unusual punishment inflicted. All courts shall be open, and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy by due course of law.
Vernon's Ann. Texas Const. Art. 1, § 13, TX CONST Art. 1, § 13 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
WEST AW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP495 1 § 1. Separation of powers of government among three departments, TX CONST Art. 2, § 1
Vernon's Texas Statutes and Codes Annotated Constitution of the State of Texas 1876 (Refs & Annos) Article II. The Powers of Government
§ 1. Separation of powers of government among three departments
The powers of the Government of the State of Texas shall be divided into three distinct departments, each of which shall be confided to a separate body of magistracy, to wit: those which are Legislative to one, those which are Executive to another, and those which are Judicial to another; and no person, or collection of persons, being of one of these departments, shall exercise any power properly attached to either of the others, except in the instances herein expressly permitted.
Vernon's Ann. Texas Const. Art. 2, § 1, TX CONST Art. 2, § 1 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
WEST AW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP496 1 § 22. Attorney General, TX CONST Art. 4, § 22
Vernon's Texas Statutes and Codes Annotated Constitution of the State of Texas 1876 (Refs & Annos) Article IV. Executive Department
The Attorney General shall represent the State in all suits and pleas in the Supreme Court of the State in which the State may be a party, and shall especially inquire into the charter rights of all private corporations, and from time to time, in the name of the State, take such action in the courts as may be proper and necessary to prevent any private corporation from exercising any power or demanding or collecting any species of taxes, tolls, freight or wharfage not authorized by law. He shall, whenever sufficient cause exists, seek a judicial forfeiture of such charters, unless otherwise expressly directed by law, and give legal advice in writing to the Governor and other executive officers, when requested by them, and perform such other duties as may be required by law.
Credits Adopted Feb. 15, 1876. Amended Nov. 3, 1936; Nov. 2, 1954; Nov. 7, 1972; Nov. 2, 1999.
Vernon's Ann. Texas Const. Art. 4, § 22, TX CONST Art. 4, § 22 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
WEST AW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP497 1 § 21. County attorneys; district attorneys, TX CONST Art. 5, § 21
Vernon's Texas Statutes and Codes Annotated Constitution of the State of Texas 1876 (Refs & Annos) Article V. Judicial Department
A County Attorney, for counties in which there is not a resident Criminal District Attorney, shall be elected by the qualified voters of each county, who shall be commissioned by the Governor, and hold his office for the term of four years. In case of vacancy the Commissioners Court of the county shall have the power to appoint a County Attorney until the next general election. The County Attorneys shall represent the State in all cases in the District and inferior courts in their respective counties; but if any county shall be included in a district in which there shall be a District Attorney, the respective duties of District Attorneys and County Attorneys shall in such counties be regulated by the Legislature. The Legislature may provide for the election of District Attorneys in such districts, as may be deemed necessary, and make provision for the compensation of District Attorneys and County Attorneys. District Attorneys shall hold office for a term of four years, and until their successors have qualified.
Vernon's Ann. Texas Const. Art. 5, § 21, TX CONST Art. 5, § 21 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
WEST AW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP498 1 § 36.101. Action by Private Person Authorized, TX HUM RES § 36.101
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
(a) A person may bring a civil action for a violation of Section 36.002 for the person and for the state. The action shall be brought in the name of the person and of the state.
(b) In an action brought under this subchapter, a person who violates Section 36.002 is liable as provided by Section 36.052.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997.
V. T. C. A., Human Resources Code § 36.101, TX HUM RES § 36.101 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
WEST AW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP499 1 § 36.102. Initiation of Action; Consent Required for Dismissal, TX HUM RES § 36.102
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
§ 36.102. Initiation of Action; Consent Required for Dismissal
(a) A person bringing an action under this subchapter shall serve a copy of the petition and a written disclosure of substantially all material evidence and information the person possesses on the attorney general in compliance with the Texas Rules of Civil Procedure.
(b) The petition shall be filed in camera and, except as provided by Subsection (c-1) or (d), shall remain under seal until at least the 180th day after the date the petition is filed or the date on which the state elects to intervene, whichever is earlier. The petition may not be served on the defendant until the court orders service on the defendant.
(c) The state may elect to intervene and proceed with the action not later than the 180th day after the date the attorney general receives the petition and the material evidence and information.
(c-1) At the time the state intervenes, the attorney general may file a motion with the court requesting that the petition remain under seal for an extended period.
(d) The state may, for good cause shown, move the court to extend the 180-day deadline under Subsection (b) or (c). A motion under this subsection may be supported by affidavits or other submissions in camera.
(e) An action under this subchapter may be dismissed only if the court and the attorney general consent in writing to the dismissal and state their reasons for consenting.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997. Amended by Acts 2005, 79th Leg., ch. 806, § 10, eff. Sept. 1, 2005; Acts 2019, 86th Leg., ch. 97 (H.B. 2004), §§ 1, 2, eff. Sept. 1, 2019.
V. T. C. A., Human Resources Code § 36.102, TX HUM RES § 36.102 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
WEST AW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP500 1 § 36.102. Initiation of Action; Consent Required for Dismissal, TX HUM RES § 36.102
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WESTLAW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP501 2 § 36.104. State Decision; Continuation of Action, TX HUM RES § 36.104
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
(a) Not later than the last day of the period prescribed by Section 36.102(c) or an extension of that period as provided by Section 36.102(d), the state shall:
(2) notify the court that the state declines to take over the action.
(b) If the state declines to take over the action, the person bringing the action may proceed without the state's participation. A person proceeding under this subsection may recover for an unlawful act for a period of up to six years before the date the lawsuit was filed, or for a period beginning when the unlawful act occurred until up to three years from the date the state knows or reasonably should have known facts material to the unlawful act, whichever of these two periods is longer, regardless of whether the unlawful act occurred more than six years before the date the lawsuit was filed. Notwithstanding the preceding sentence, in no event shall a person proceeding under this subsection recover for an unlawful act that occurred more than 10 years before the date the lawsuit was filed.
(b-1) On request by the state, the state is entitled to be served with copies of all pleadings filed in the action and be provided at the state's expense with copies of all deposition transcripts. If the person bringing the action proceeds without the state's participation, the court, without limiting the status and right of that person, may permit the state to intervene at a later date on a showing of good cause.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997. Amended by Acts 2005, 79th Leg., ch. 806, § 12, eff. Sept. 1, 2005; Acts 2007, 80th Leg., ch. 29, §§ 3, 4, eff. May 4, 2007; Acts 2013, 83rd Leg., ch. 572 (S.B. 746), § 2, eff. Sept. 1, 2013.
V. T. C. A., Human Resources Code § 36.104, TX HUM RES § 36.104 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
WEST AW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP502 1 § 36.107. Rights of Parties if State Continues Action, TX HUM RES § 36.107
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
(a) If the state proceeds with the action, the state has the primary responsibility for prosecuting the action and is not bound by an act of the person bringing the action. The person bringing the action has the right to continue as a party to the action, subject to the limitations set forth by this section.
(b) The state may dismiss the action notwithstanding the objections of the person bringing the action if:
(1) the attorney general notifies the person that the state has filed a motion to dismiss; and
(2) the court provides the person with an opportunity for a hearing on the motion.
(c) The state may settle the action with the defendant notwithstanding the objections of the person bringing the action if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all the circumstances. On a showing of good cause, the hearing may be held in camera.
(d) On a showing by the state that unrestricted participation during the course of the litigation by the person bringing the action would interfere with or unduly delay the state's prosecution of the case, or would be repetitious, irrelevant, or for purposes of harassment, the court may impose limitations on the person's participation, including:
(2) limiting the length of the testimony of witnesses called by the person;
(4) otherwise limiting the participation by the person in the litigation.
WEST AW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP503 1 § 36.107. Rights of Parties if State Continues Action, TX HUM RES § 36.107
(e) On a showing by the defendant that unrestricted participation during the course of the litigation by the person bringing the action would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense, the court may limit the participation by the person in the litigation.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997.
V. T. C. A., Human Resources Code § 36.107, TX HUM RES § 36.107 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
WESTLAW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP504 2 § 36.113. Certain Actions Barred, TX HUM RES § 36.113
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
(a) A person may not bring an action under this subchapter that is based on allegations or transactions that are the subject of a civil suit or an administrative penalty proceeding in which the state is already a party.
(b) The court shall dismiss an action or claim under this subchapter, unless opposed by the attorney general, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed in a Texas or federal criminal or civil hearing in which the state or an agent of the state is a party, in a Texas legislative or administrative report, or other Texas hearing, audit, or investigation, or from the news media, unless the person bringing the action is an original source of the information. In this subsection, “original source” means an individual who:
(1) prior to a public disclosure under this subsection, has voluntarily disclosed to the state the information on which allegations or transactions in a claim are based; or
(2) has knowledge that is independent of and materially adds to the publicly disclosed allegation or transactions and who has voluntarily provided the information to the state before filing an action under this subchapter.
(c) Repealed by Acts 2013, 83rd Leg., ch. 572 (S.B. 746), § 6.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997. Amended by Acts 2011, 82nd Leg., ch. 398 (S.B. 544), § 5, eff. Sept. 1, 2011; Acts 2013, 83rd Leg., ch. 572 (S.B. 746), §§ 4, 6, eff. Sept. 1, 2013.
V. T. C. A., Human Resources Code § 36.113, TX HUM RES § 36.113 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
WEST AW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP505 1 § 36.052. Civil Remedies, TX HUM RES § 36.052
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter B. Action by Attorney General (Refs & Annos)
This section has been updated. Click here for the updated version.
(a) Except as provided by Subsection (c), a person who commits an unlawful act is liable to the state for:
(1) 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;
(2) interest on the amount of the payment or the value of the benefit described by Subdivision (1) at the prejudgment interest rate in effect on the day the payment or benefit was received or paid, for the period from the date the benefit was received or paid to the date that the state recovers the amount of the payment or value of the benefit;
(A) not less than $5,500 or the minimum amount imposed as provided by 31 U.S.C. Section 3729(a), if that amount exceeds $5,500, and not more than $15,000 or the maximum amount imposed as provided by 31 U.S.C. Section 3729(a), if that amount exceeds $15,000, for each unlawful act committed by the person that results in injury to an elderly person, as defined by Section 48.002(a)(1), a person with a disability, as defined by Section 48.002(a)(8)(A), or a person younger than 18 years of age; or
(B) not less than $5,500 or the minimum amount imposed as provided by 31 U.S.C. Section 3729(a), if that amount exceeds $5,500, and not more than $11,000 or the maximum amount imposed as provided by 31 U.S.C. Section 3729(a), if that amount exceeds $11,000, for each unlawful act committed by the person that does not result in injury to a person described by Paragraph (A); and
(4) two times the amount of the payment or the value of the benefit described by Subdivision (1).
(b) In determining the amount of the civil penalty described by Subsection (a)(3), the trier of fact shall consider:
(1) whether the person has previously violated the provisions of this chapter;
WEST AW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP506 1 § 36.052. Civil Remedies, TX HUM RES § 36.052
(2) the seriousness of the unlawful act committed by the person, including the nature, circumstances, extent, and gravity of the unlawful act;
(3) whether the health and safety of the public or an individual was threatened by the unlawful act;
(4) whether the person acted in bad faith when the person engaged in the conduct that formed the basis of the unlawful act; and
(c) The trier of fact may assess a total of not more than two times the amount of a payment or the value of a benefit described by Subsection (a)(1) if the trier of fact finds that:
(1) the person furnished the attorney general with all information known to the person about the unlawful act not later than the 30th day after the date on which the person first obtained the information; and
(2) at the time the person furnished all the information to the attorney general, the attorney general had not yet begun an investigation under this chapter.
(d) An action under this section shall be brought in Travis County or in a county in which any part of the unlawful act occurred.
(1) bring an action for civil remedies under this section together with a suit for injunctive relief under Section 36.051; or
(2) institute an action for civil remedies independently of an action for injunctive relief.
Credits Added by Acts 1995, 74th Leg., ch. 824, § 1, eff. Sept. 1, 1995. Redesignated from V.T.C.A., Human Resources Code § 36.004 by Acts 1997, 75th Leg., ch. 1153, § 4.01(b), eff. Sept. 1, 1997. Amended by Acts 1997, 75th Leg., ch. 1153, § 4.04, eff. Sept. 1, 1997; Acts 2005, 79th Leg., ch. 806, § 7, eff. Sept. 1, 2005; Acts 2007, 80th Leg., ch. 29, § 1, eff. May 4, 2007; Acts 2011, 82nd Leg., ch. 398 (S.B. 544), § 3, eff. Sept. 1, 2011; Acts 2015, 84th Leg., ch. 1 (S.B. 219), § 4.183, eff. April 2, 2015.
V. T. C. A., Human Resources Code § 36.052, TX HUM RES § 36.052 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
WESTLAW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP507 2 § 36.104. Continuation or Dismissal of Action Based on..., TX HUM RES § 36.104
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Medicaid Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
This section has been updated. Click here for the updated version.
§ 36.104. Continuation or Dismissal of Action Based on State Decision
(a) Not later than the last day of the period prescribed by Section 36.102(c), the state shall:
(2) notify the court that the state declines to take over the action.
(b) If the state declines to take over the action, the court shall dismiss the action.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997.
V. T. C. A., Human Resources Code § 36.104, TX HUM RES § 36.104 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
End of Document © 2024 Thomson Reuters. No claim to original U.S. Government Works.
WEST AW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP508 1 § 36.104. State Decision; Continuation of Action, TX HUM RES § 36.104
Vernon's Texas Statutes and Codes Annotated Human Resources Code (Refs & Annos) Title 2. Human Services and Protective Services in General Subtitle C. Assistance Programs Chapter 36. Health Care Program Fraud Prevention (Refs & Annos) Subchapter C. Action by Private Persons
This section has been updated. Click here for the updated version.
(a) Not later than the last day of the period prescribed by Section 36.102(c) or an extension of that period as provided by Section 36.102(d), the state shall:
(2) notify the court that the state declines to take over the action.
(b) If the state declines to take over the action, the person bringing the action may proceed without the state's participation. On request by the state, the state is entitled to be served with copies of all pleadings filed in the action and be provided at the state's expense with copies of all deposition transcripts. If the person bringing the action proceeds without the state's participation, the court, without limiting the status and right of that person, may permit the state to intervene at a later date on a showing of good cause.
Credits Added by Acts 1997, 75th Leg., ch. 1153, § 4.08, eff. Sept. 1, 1997. Amended by Acts 2005, 79th Leg., ch. 806, § 12, eff. Sept. 1, 2005; Acts 2007, 80th Leg., ch. 29, §§ 3, 4, eff. May 4, 2007.
V. T. C. A., Human Resources Code § 36.104, TX HUM RES § 36.104 Current through the end of the 2023 Regular, Second, Third and Fourth Called Sessions of the 88th Legislature, and the Nov. 7, 2023 general election.
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WEST AW © 2024 Thomson Reuters. No claim to original U.S. Government Works. APP509 1 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.
Court Services on behalf of Danny Ashby Bar No. 1370960 ommsvc2@omm.com Envelope ID: 108084361 Filing Code Description: Original Proceeding Petition Filing Description: Petition for Writ of Mandamus Status as of 11/14/2025 4:50 PM CST
Danny S.Ashby dashby@omm.com 11/14/2025 4:30:06 PM SENT
Litigation Calendar litigationcalendar@omm.com 11/14/2025 4:30:06 PM SENT
Lynne Kurtz-Citrin 24081425 lynne.kurtz-citrin@oag.texas.gov 11/14/2025 4:30:06 PM SENT
Jonathan Wilkerson 24050162 jonathan.wilkerson@lanierlawfirm.com 11/14/2025 4:30:06 PM SENT
Zeke DeRose 24057421 zeke.derose@lanierlawfirm.com 11/14/2025 4:30:06 PM SENT
Alex Brown 24026964 alex.brown@lanierlawfirm.com 11/14/2025 4:30:06 PM SENT
W. Mark Lanier WML@LanierLawFirm.com 11/14/2025 4:30:06 PM SENT
Radu A. Lelutiu rlelutiu@mckoolsmith.com 11/14/2025 4:30:06 PM SENT
Eric B.Halper ehalper@mckoolsmith.com 11/14/2025 4:30:06 PM SENT
Jonathan D. Bonilla Jonathan.Bonilla@oag.texas.gov 11/14/2025 4:30:06 PM ERROR
Jordan Underhill Jordan.Underhill@oag.texas.gov 11/14/2025 4:30:06 PM ERROR
Jennifer Truelove 24012906 jtruelove@mckoolsmith.com 11/14/2025 4:30:06 PM SENT
Samuel Baxter 1938000 sbaxter@mckoolsmith.com 11/14/2025 4:30:06 PM SENT
Deron Dacus 790553 ddacus@dacusfirm.com 11/14/2025 4:30:06 PM SENT
Meredith Garagiola mgaragiola@omm.com 11/14/2025 4:30:06 PM SENT
Ross Galin rgalin@omm.com 11/14/2025 4:30:06 PM SENT
Anton Metlitsky ametlitsky@omm.com 11/14/2025 4:30:06 PM SENT
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