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

Opinion

ACCEPTED 03-15-00401-CV 7791561 THIRD COURT OF APPEALS AUSTIN, TEXAS 11/12/2015 9:15:54 AM JEFFREY D. KYLE IN THE COURT OF APPEALS FOR THE CLERK

THIRD JUDICIAL DISTRICT OF TEXAS FILED IN 3rd COURT OF APPEALS DR. BEHZAD NAZARI, D.D.S. D/B/A AUSTIN, TEXAS ANTOINE DENTAL CENTER ET. AL., 11/12/2015 9:15:54 AM JEFFREY D. KYLE Defendants-Appellants, Clerk

v. STATE OF TEXAS, Plaintiff-Appellee, Cause No. 03-15-00252-CV

v. XEROX CORPORATION AND XEROX STATE HEALTHCARE, LLC, F/K/A ACS STATE HEALTHCARE, LLC, Third-Party Defendants-Appellees.

IN RE XEROX CORPORATION AND XEROX STATE HEALTHCARE, LLC Cause No. 03-15-00401-CV F/K/A ACS STATE HEALTHCARE, LLC, Relators.

Joint Motion to Modify Order Regarding Oral Argument This joint motion requests modification of the Court’s October 28, 2015 order to clarify time for oral argument. The parties have agreed on an allocation that embraces both causes.

The Nazari appeal Cause No. 03-15-00252-CV (the Nazari appeal) is an appeal in a civil case. In the underlying action (district court case no. D-1-GN-14-005380),

plaintiff the State of Texas sues defendants Dr. Behzad Nazari et al. (“the

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dentist defendants”) alleging certain violations of the Texas Medicaid Fraud Prevention Act. The dentist defendants filed (1) counterclaims against the

State and (2) third-party claims against Xerox (a former state contractor).

The district court granted the State’s plea to the jurisdiction asserting sovereign immunity to the counterclaims against the State. The district court also

granted the State’s motion to dismiss the dentist defendants’ third-party claims against Xerox, wherein the State asserted that the Texas Medicaid Fraud Prevention Act does not authorize a defendant to bring third party

claims and that, in any event, the claims against Xerox are barred by sovereign immunity. 1 On May 1, 2015, the dentist defendants appealed. The State of Texas and Xerox are appellees. On appeal, the dentist defendants raise two arguments: (1) that the trial court erred in dismissing their counterclaims against the State because the State has waived sovereign immunity by bringing an affirmative claim for relief, the counterclaims are compulsory, and counterclaims are permissible in this type of suit; and (2) that the district court erred in dismissing their third-party claims against Xerox because third-party claim are likewise

permissible.

Xerox’s appellate brief argues that (1) the Texas Rules of Civil Procedure and Chapter 33 of the Texas Civil Practice & Remedies Code apply to the State’s claim, and (2) that any holding that the State has waived sovereign

1 The State adopted by reference the arguments it raised in briefing to the trial court in its separate suit against Xerox, which resulted in an order that is the subject of Xerox’s mandamus proceeding.

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immunity by bringing an affirmative claim for relief should be limited to the State, because Xerox has not brought any claims in this suit.

The State (1) argues that sovereign immunity bars the counterclaims, and (2) argues that this Court lacks jurisdiction over the interlocutory appeal from the order dismissing the dentist defendants’ third-party claims against Xerox

and, in any event, those claims were properly stricken.

The In re Xerox Corporation mandamus petition Cause No. 03-15-00401-CV (In re Xerox Corporation) is a mandamus

proceeding. The petition seeks mandamus review of two orders issued by the district court in a separate civil case (district court case no. D-1-GV-14- 000581). In that underlying action, plaintiff the State of Texas sues its former contractor Xerox alleging certain violations of the Texas Medicaid Fraud Prevention Act. Xerox filed third-party claims against the dentists and dental practices who are defendants in the State v. Nazari action. Xerox also moved for leave to designate responsible third parties under chapter 33 of the Civil Practice and Remedies Code. The district court struck the third-party claims and denied the chapter 33 motion.

On July 1, 2015, Xerox filed an original mandamus proceeding in this Court seeking review of those orders. In that proceeding, Xerox is the relator and the State is the real party in interest. Xerox argues that the district court erred because Chapter 33 applies to the State’s claim under the Texas Medicaid Fraud Prevention Act and that it lacks an adequate remedy by appeal. The State disagrees.

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The Court’s Order Regarding Oral Argument Xerox filed in the Nazari appeal an unopposed motion to consolidate the

above-described causes for purposes of oral argument only. The motion stated the State’s position “that the In re Xerox Corporation petition should be denied without oral argument,” while also expressing Xerox’s and the Nazari

parties’ position that “hearing argument on both matters would make sense, given the overlap on the underlying legal issues.” Oct. 13, 2015 Mot. ¶ 2. The motion requested that, if oral argument is held in the mandamus proceeding,

the Court “set both causes for submission for oral argument on the same day.” Id. ¶ 4.

On October 28, 2015, this Court granted Xerox’s motion. Referencing both appellate causes described above, the order states:

Appellees Xerox Corporation and Xerox State Healthcare, LLC’s Unopposed Motion to Consolidated Causes for Submission on Oral Argument was granted by this Court on the date noted above. Accordingly , you are hereby notified that the above causes have been consolidated for purposes of oral argument and have this day been set for submission and oral argument on December 16, 2015 at 1:30 PM, before Justices Puryear, Goodwin, and Bourland. Argument is limited to 20 minutes for appellants and for appellees.

Oct. 28, 2015 Order at 2 (underlining and bolding removed).

Request for Modification and Proposed Allocation of Time

Xerox and the Nazari parties agree that this order grants oral argument in both causes. The Court’s order states that “the above causes have been consolidated for purposes of oral argument and have this day been set for submission and oral argument.” The State agrees that the Court’s docket reflects that

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ruling, although the State perceives ambiguity and would welcome clarification given that the Court’s order purports only to grant an unopposed motion

that did not express the State’s agreement to setting the mandamus petition for oral argument and given that the order does not mention a “relator” or “real party in interest” in assigning argument time.

Assuming the Court has set both causes for oral argument, the parties concur in requesting clarification of the Court’s intended allocation of time. The parties have conferred about an order of argument and time allocation for this

scenario and jointly propose the following ordering and time allocation:

No. 03-15-00401-CV, In re Xerox Corporation:

Xerox: 15 minutes State of Texas: 20 minutes Xerox rebuttal: 5 minutes

No. 03-15-00252-CV, State v. Nazari:

Nazari: 12 minutes Xerox: 6 minutes State of Texas: 17 minutes Nazari rebuttal: 5 minutes

This allocation of time ensures that the Court will have full argument time for both proceedings, assuming both are set for argument.

Xerox and Nazari parties’ statement of justification If the Court’s order allocated only 40 minutes for both proceedings, the Court should grant the standard amount of oral argument time for each cause.

This request is justified by the following reasons.

First, Xerox’s original proceeding involves an issue common to both cases and thus will assist the Court with understanding the entire landscape of

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this complex litigation. Specifically, the proceeding raises the issue of whether the State’s claim (its sole claim in both proceedings) is a tort claim

subject to Chapter 33.

In the State’s suit against Xerox, this claim has stakes of more than $1 billion. In the State’s suit against the Nazari Appellants, this claim has stakes

of more than $400 million. Given the significance of this issue for both cases, and given the unusually high stakes in each lawsuit, Xerox and the Nazari parties respectfully submit that the standard amount of oral argument time is

necessary to fully explore the issue. Further, it makes sense to hear this argument first, as it will lay the groundwork common to both proceedings.

Second, the Nazari interlocutory appeal involves multiple complex issues . The threshold issue for the Court is whether the State has waived sovereign immunity by bringing a claim for affirmative relief against the Nazari parties. That issue alone is worthy of the full amount of argument time. The appeal also involves questions of whether third-party claims can be brought in a suit where the State has asserted a claim under the Texas Medicaid Fraud Prevention Act.

Third, these two cases demonstrate the tripartite relationship of the parties . Holding both arguments within the time constraints for one oral argument would very likely deprive the Court of full answers from each of the three perspectives. Xerox and the Nazari parties agree that it would best assist the Court in understanding the issues if the oral arguments are held consecutively and each given the standard amount of time.

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State of Texas’s statement of justification The State of Texas does not agree with all aspects of Xerox and the

Nazari parties’ argument and characterizations in their statement of justification above, and the State does not join in that statement. See supra pp. 5-6. The State also finds it unclear, for the reasons noted above, whether the

Court’s order actually reflects a decision to set both causes for argument. Nonetheless, if the Court has or does now determine that oral argument would be appropriate on the mandamus petition, the State agrees that the above-de-

scribed allocation of time best allows the parties to present their arguments and will eliminate confusion arising from the October 28 order, regarding questions such as the amount of time assigned to Xerox as an appellee in one cause and as the relator in the other cause.

Conclusion For the reasons explained above, the parties jointly request modification of the Court’s October 28, 2015 order regarding oral argument.

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Respectfully submitted.

Counsel for the State of Texas:

CHARLES E. ROY SCOTT A. KELLER First Assistant Attorney General Solicitor General

/s/ Raymond C. Winter /s/ J. Campbell Barker RAYMOND C. WINTER J. CAMPBELL BARKER Chief, Civil Medicaid Fraud Deputy Solicitor General State Bar No. 2179195 State Bar No. 24049125 cam.barker@texasattorneygeneral.gov REYNOLDS B. BRISSENDEN Assistant Attorney General PHILIP A. LIONBERGER State Bar No. 24056969 Assistant Solicitor General State Bar No. 12394380

Office of the Attorney General P.O. Box 12548 (MC 059) Austin, Texas 78711-2548 Tel.: (512) 936-1700 Fax: (512) 474-2697

Counsel for Xerox:

ERIC J.R. NICHOLS /s/ Constance H. Pfeiffer State Bar No. 14994900 CONSTANCE H. PFEIFFER enichols@beckredden.com State Bar. No. 24046627 GRETCHEN SWEEN cpfeiffer@beckredden.com State Bar No. 20041996 BECK REDDEN LLP gsween@beckredden.com 1221 McKinney St., Ste. 4500 CHRISTOPHER R. COWAN Houston, Texas 77010 State Bar. No. 24084975 (713) 951-3700 ccowan@beckredden.com (713) 951-3720 (Fax) BECK REDDEN LLP 515 Congress Ave., Ste. 1900 Austin, Texas 78701 (512) 708-1000 (512) 708-1002 (Fax)

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ROBERT C. WALTERS C. ANDREW WEBER State Bar No. 20820300 State Bar No. 00797641 rwalters@gibsondunn.com andrew.weber@kellyhart.com GIBSON, DUNN & CRUTCHER LLP KELLY HART & HALLMAN LLP 2100 McKinney Ave., Ste. 1100 301 Congress, Ste. 2000 Dallas, Texas 75201 Austin, Texas 78701 (214) 698-3100 (512) 495-6451 (214) 571-2900 (Fax) (512) 495-6930 (Fax)

Counsel for Dr. Behzad Nazari, D.D.S., et al:

E. HART GREEN /s/ Jason Ray State Bar. No. 08349290 JASON RAY hartgr@wgttlaw.com State Bar. No. 24000511 WELLER, GREEN, TOUPS & jray@r-alaw.com TERRELL, L.L.P. RIGGS & RAY, PC P.O. Box 350 506 W. 14th Street, Suite A Beaumont, Texas 77704-0350 Austin, TX 78701 Tel.: (409) 838-0101 Tel.: (512) 457-9812 Fax: (409) 832-8577 Fax: (512) 457-9066

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Certificate of Conference The parties jointly request modification of the October 28, 2015 order.

/s/ J. Campbell Barker J. CAMPBELL BARKER

Certificate of Service I certify the service of this document on November 11, 2015 by electronic case filing or e-mail upon the following:

Counsel for Xerox:

Eric J.R. Nichols Constance H. Pfeiffer Gretchen Sween Beck Redden LLP Christopher R. Cowan 1221 McKinney St., Ste. 4500 Beck Redden LLP Houston, Texas 77010 515 Congress Ave., Ste. 1900 Austin, Texas 78701

Robert C. Walters C. Andrew Weber Gibson, Dunn & Crutcher LLP Kelly Hart & Hallman LLP 2100 McKinney Ave., Ste. 1100 301 Congress, Ste. 2000 Dallas, Texas 75201 Austin, Texas 78701

Counsel for Dr. Behzad Nazari, D.D.S., et al:

E. Hart Green Jason Ray State Bar. No. 08349290 Riggs & Ray, PC hartgr@wgttlaw.com 506 W. 14th Street, Suite A Weller, Green, Toups & Terrell, Austin, TX 78701 L.L.P. P.O. Box 350 Beaumont, Texas 77704-0350

/s/ J. Campbell Barker J. CAMPBELL BARKER