In Re Sanofi-Aventis U.S. LLC v. the State of Texas

• Court: Court of Appeals of Texas
• Decided: February 27, 2025
• Docket: 15-24-00104-CV
• Status: Published

Opinion

ACCEPTED 15-24-00104-CV FIFTEENTH COURT OF APPEALS AUSTIN, TEXAS 2/27/2025 3:35 PM No. 15-24-00104-CV CHRISTOPHER A. PRINE ___________________________________________________ CLERK FILED IN IN THE COURT OF APPEALS 15th COURT OF APPEALS AUSTIN, TEXAS FIFTEENTH JUDICIAL DISTRICT OF TEXAS 2/27/2025 3:35:38 PM AT AUSTIN, TEXAS CHRISTOPHER A. PRINE ___________________________________________________ Clerk

IN RE: SANOFI-AVENTIS U.S. LLC ______________________________________________________

Original Proceeding from Cause No. 23-0698 71st District Court Harrison County, Texas ______________________________________________________

NOTICE OF SUPPLEMENTAL AUTHORITY ______________________________________________________

Oral Argument Requested

WAYNE B. MASON Charles Everingham IV State Bar No. 13158950 State Bar No. 00787447 wayne.mason@faegredrinker.com chad@millerfairhenry.com S. VANCE WITTIE Brett F. Miller vance.witte@faegredrinker.com State Bar No. 24065750 State Bar No. 21832980 brett@millerfairhenry.com DAWN MCCORD MILLER, FAIR, HENRY, PLLC dawn.mccord@faegredrinker.com 1507 Bill Owens Parkway Texas Bar No. 24002934 Longview, Texas 75604 FAEGRE DRINKER BIDDLE & (903) 757-6400 REATH LLP (903) 757-2323 (fax) 2323 Ross Ave., Suite 1700 Dallas, Texas 75201 (469) 357-2500 Fax: (469) 327-0860 CARRIE S. LOVE Pro Hac Vice carrie.love@faegredrinker.com FAEGRE DRINKER BIDDLE & REATH LLP One Logan Square, Suite 2000 Philadelphia, Pennsylvania 19103 (215) 988-2700 Fax: (215) 988-2757

ALEC P. HARRIS Pro Hac Vice alec.harris@faegredrinker.com FAEGRE DRINKER BIDDLE & REATH LLP 1144 15th St., Suite 3400 Denver, Colorado 80202 (303) 607-3500 Fax: (303) 607-3600

COUNSEL FOR SANOFI-AVENTIS U.S. LLC Defendant-Relator sanofi-aventis U.S. LLC (“Sanofi”) respectfully submits

this Notice of Supplemental Authority to call the Court’s attention to the State of

Texas’ Brief on the Merits filed on November 20, 2024 in In re Novartis

Pharmaceuticals Corp., No. 24-0239 (Tex.), attached here as Exhibit A.

Like the present case, the Novartis case is a non-intervened qui tam action

filed by a corporate relator in Harrison County under the Texas Health Care Program

Fraud Prevention Act (“THFPA”) (previously known as the Texas Medicaid Fraud

Prevention Act). Despite having elected not to intervene, the State of Texas filed a

merits brief to defend the statute from allegations that it unconstitutionally divests

the representational authority of State attorneys. In its brief, the State argues that the

THFPA “includes qui tam provisions that incentivize and deputize private

whistleblowers to pursue fraud claims on the State’s behalf,” and that this

arrangement is a “successful public-private partnership.” Brief at 1; see also id. at

11. The State further explains that the THFPA’s qui tam provisions “explicitly

preserve the Attorney General’s authority to take over and otherwise control any qui

tam suit brought on behalf of the State,” and details the many “provisions [in the

THFPA] designed to ensure that the State maintains control over these suits” from

“the moment relator files [them].” Id. at 4, 15-19, 22-23; see also Reply In Support

of Petition for Writ of Mandamus at 6-8 (discussing the same provisions). The State

1 concludes that this arrangement is “no different than if the State had opted to pursue

the civil-remedies claim itself.” Id. at 13.

The State’s brief is relevant to this Court’s jurisdiction. The brief shows that

it is the position of the State of Texas, the named plaintiff in this action, that THFPA

cases like this matter are for all intents and purposes brought by and for the State.

See Tex. Govt. Code § 22.220(d)(1).

2 Dated: February 27, 2025 Respectfully Submitted,

/s/ S. Vance Wittie WAYNE B. MASON State Bar No. 13158950 wayne.mason@faegredrinker.com S. VANCE WITTIE State Bar No. 21832980 vance.wittie@faegredrinker.com DAWN S. MCCORD State Bar No. 24002934 dawn.mccord@faegredrinker.com FAEGRE DRINKER BIDDLE & REATH LLP 1717 Main Street, Suite 5400 Dallas, Texas 75201 (469) 357-2500 (469) 327-0860 (fax)

CARRIE S. LOVE Pro Hac Vice Carrie.Love@Faegredrinker.Com FAEGRE DRINKER BIDDLE & REATH LLP One Logan Square, Suite 2000 Philadelphia, Pennsylvania 19103 (215) 988-2700 Fax: (215) 988-2757

ALEC P. HARRIS Pro Hac Vice alec.harris@faegredrinker.com FAEGRE DRINKER BIDDLE & REATH LLP 1144 15th St., Suite 3400 Denver, Colorado 80202 (303) 607-3500 Fax: (303) 607-3600

ATTORNEYS FOR DEFENDANT

3 CERTIFICATE OF SERVICE

This is to certify that on February 27, 2025, true, correct, and complete copy

of this Reply has been served on all counsel of record via a court-approved electronic

filing system or by certified mail, return receipt requested.

/s/ S. Vance Wittie S. VANCE WITTIE

4 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.

Danette Dykema on behalf of Sherman Wittie Bar No. 21832980 Danette.dykema@faegredrinker.com Envelope ID: 97888089 Filing Code Description: Other Document Filing Description: Notice of Supplemental Authority Status as of 2/27/2025 3:44 PM CST

Case Contacts

Name BarNumber Email TimestampSubmitted Status

Sherman Vance ("Vance")Wittie vance.wittie@faegredrinker.com 2/27/2025 3:35:38 PM SENT

Wayne B.Mason wayne.mason@faegredrinker.com 2/27/2025 3:35:38 PM SENT

Danette Dykema Danette.dykema@faegredrinker.com 2/27/2025 3:35:38 PM SENT

Dawn S. McCord dawn.mccord@faegredrinker.com 2/27/2025 3:35:38 PM SENT

Michael Catapano mcatapano@mckoolsmith.com 2/27/2025 3:35:38 PM SENT

Rick Halper rhalper@mckoolsmith.com 2/27/2025 3:35:38 PM SENT

Radu Lelutiu rlelutiu@mckoolsmith.com 2/27/2025 3:35:38 PM SENT

Jennifer Truelove jtruelove@mckoolsmith.com 2/27/2025 3:35:38 PM SENT

Sam Baxter sbaxter@mckoolsmith.com 2/27/2025 3:35:38 PM SENT

Denise Lopez dlopez@mckoolsmith.com 2/27/2025 3:35:38 PM SENT

Hannah Mirzoeff hmirzoeff@mckoolsmith.com 2/27/2025 3:35:38 PM SENT

Angel Devine adevine@mckoolsmith.com 2/27/2025 3:35:38 PM SENT

melone DeRose Melonie.DeRose@LanierLawFirm.com 2/27/2025 3:35:38 PM SENT

Zeke DeRose Zeke.Rose@LanierLawFirm.com 2/27/2025 3:35:38 PM SENT

Carrie SLove carrie.love@faegredrinker.com 2/27/2025 3:35:38 PM SENT

Alec P. Harris alec.harris@faegredrinker.com 2/27/2025 3:35:38 PM SENT Exhibit A FILED 24-0239 11/20/2024 3:27 PM tex-94528158 SUPREME COURT OF TEXAS BLAKE A. HAWTHORNE, CLERK

No. 24-0239

In the Supreme Court of Texas

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 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 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 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 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 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 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 § 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 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 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

Constitution.

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 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. 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 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

3 538 (“[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 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 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 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 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.

Argument

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 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 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 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 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

12 286 (“[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 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 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 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 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 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 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 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 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 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 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 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 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 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 Certificate of Compliance Microsoft Word reports that this document contains 7,561 words, excluding ex-

empted text.

/s/ Evan Greene Evan Greene

27 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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