Ken Paxton, Attorney General of the State of Texas v. Texas Department of State Health Services

Opinion

ACCEPTED 03-14-00594-CV 4312768 THIRD COURT OF APPEALS AUSTIN, TEXAS 2/27/2015 11:55:30 AM JEFFREY D. KYLE CLERK CASE NO. 03-14-00594-CV

FILED IN IN THE COURT OF APPEALS 3rd COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS AUSTIN, TEXAS 2/27/2015 11:55:30 AM AUSTIN, TEXAS JEFFREY D. KYLE Clerk KEN PAXTON1, ATTORNEY GENERAL OF TEXAS, Appellant,

v.

TEXAS DEPARTMENT OF STATE HEALTH SERVICES, Appellee.

On Appeal from the 353rd District Court of Travis County, Texas The Honorable Lora Livingston, Presiding

REPLY BRIEF OF APPELLANT KEN PAXTON, ATTORNEY GENERAL OF TEXAS

KEN PAXTON MATTHEW R. ENTSMINGER Attorney General of Texas State Bar No. 24059723 Assistant Attorney General CHARLES E. ROY Open Records Litigation First Assistant Attorney General Administrative Law Division Office of the Attorney General of Texas BRANTLEY STARR P.O. Box 12548, Capitol Station Deputy Attorney General for Legal Austin, Texas 78711-2548 Counsel Telephone: (512) 475-4151 Facsimile: (512) 320-0167 DAVID A. TALBOT, JR. Chief, Administrative Law Division ATTORNEYS FOR APPELLANT KEN PAXTON, ATTORNEY GENERAL OF TEXAS KIMBERLY L. FUCHS Chief, Open Records Litigation February 27, 2015

1 Pursuant to Texas Rule of Appellate Procedure 7.2, the Attorney General substitutes Attorney General Ken Paxton for former Attorney General Greg Abbott. TABLE OF CONTENTS

TABLE OF CONTENTS .......................................................................................... ii

INDEX OF AUTHORITIES.................................................................................... iii

REPLY .......................................................................................................................1

I. DSHS has failed to show any statutory investigative authority outside of subchapter C that was reasonably contemplated by the legislature when creating section 531.1021(g). .....................................................................1

II. Section 531.102 does not mandate the creation of a publicly-available “final report” on audits or investigations unrelated to fraud, waste, and abuse in the provision and delivery of all health and human services in the state. ......................................................................................................4

III. The legislature has not taken any action to amend section 531.1021(g) to address the Attorney General’s interpretation........................................5 CONCLUSION AND PRAYER ...............................................................................7

CERTIFICATE OF COMPLIANCE .........................................................................8

CERTIFICATE OF SERVICE ..................................................................................9

ii INDEX OF AUTHORITIES

CASE Tex. Dep’t of Aging and Disability Servs. v. Greg Abbott, Attorney Gen. of Tex., No. D-1-GN-11-002989 (353rd Dist. Ct., Travis County, Tex. Jul. 18, 2013) .........6 STATUTES Tex. Gov't Code § 531.102(a) ...........................................................................................................2, 4

§ 531.102(j) ................................................................................................................4

§ 531.102(k) ...............................................................................................................4

§ 531.008(c)(2)...........................................................................................................3

§ 531.103 ....................................................................................................................2

§ 531.1031 ..................................................................................................................2

§ 531.104 ....................................................................................................................2

§ 531.1021(g) .........................................................................................................1, 5

RULE 1 Tex. Admin. Code § 371.11(a) ...............................................................................3 ATTORNEY GENERAL LETTER RULINGS2 OR2004-08876 ...........................................................................................................5

OR2012-10072 ...........................................................................................................6

2 Open records decisions and letter rulings of the Attorney General are available on the internet at: https://www.oag.state.tx.us/open/ogindex.shtml and Westlaw©.

iii ATTORNEY GENERAL LETTER RULINGS (continued)

OR2012-19674 ...........................................................................................................6

OR2013-02357 ...........................................................................................................6

OR2013-02732 ...........................................................................................................6

OR2013-04545 ...........................................................................................................6

OR2013-05224 ...........................................................................................................6

OR2013-06264 ...........................................................................................................6

OR2013-08066 ...........................................................................................................6

OR2013-11552 ...........................................................................................................6

OR2013-12119 ...........................................................................................................6

OR2013-14973 ...........................................................................................................6

OR2014-06063 ...........................................................................................................6

OR2014-07711 ...........................................................................................................6

OR2014-13108 ...........................................................................................................6

OR2014-15004 ...........................................................................................................6

iv TO THE HONORABLE JUSTICES OF THE THIRD COURT OF APPEALS:

The Attorney General files this brief in reply to the brief submitted by the

Department of State Health Services (DSHS).

REPLY

I. DSHS HAS FAILED TO SHOW ANY STATUTORY INVESTIGATIVE AUTHORITY OUTSIDE OF SUBCHAPTER C THAT WAS REASONABLY CONTEMPLATED BY THE LEGISLATURE WHEN CREATING SECTION 531.1021(g).

DSHS emphasizes that section 531.1021(g) of the Government Code restricts

confidentiality of information and materials subpoenaed or compiled by the Office

of the Attorney General to such information gathered “in connection with a Medicaid

fraud investigation,” while containing no similar restrictive phrasing in relation to

OIG investigations. Appellee’s Br. at 8–9; see Tex. Gov’t Code § 531.1021(g). But

this phrasing only further supports the Attorney General’s position that the

legislature clearly contemplated only those investigations conducted under

subchapter C (“Medicaid and Other Health and Human Services Fraud and

Overcharges”) when crafting the limited confidentiality provision contained in

section 531.1021(g).

While the Texas Constitution mandates the Office of the Attorney General is

responsible for representing the State in all cases in which the State may be a party,

subchapter C concerns only those investigations conducted by the Attorney General’s Medicaid fraud enforcement divisions. See Tex. Gov’t Code §§ 531.103

(authorizing interagency coordination in cases of suspected fraud, waste, or abuse

under state Medicaid program or other program administered by the commission or

a health and human services agency); 531.1031 (defining “participating agency” in

relevant part as “the Medicaid fraud enforcement divisions of the office of the

attorney general”); 531.104 (mandating Health and Human Services Commission

provide investigative support to Attorney General “in connection with cases under

Subchapter B, Chapter 36, Human Resources Code,” relating to Medicaid Fraud

Prevention). Given the Attorney General’s mandated involvement in any number of

cases or investigations beyond those contemplated by subchapter C of chapter 531,

it is apparent why the legislature explicitly limited the reach of section 531.1021(g)

to only those materials subpoenaed or compiled by the Office of the Attorney

General “in connection with a Medicaid fraud investigation.”

To the extent the OIG might conduct investigations not contemplated by

subchapter C, however, it can claim no similar, obvious investigative authority

beyond that established by subchapter C and which the legislature might have taken

into account in drafting the confidentiality provision in question. Rather, as

explained in the Attorney General’s brief, the legislature has explicitly set out the

duties of the OIG within subchapter C itself, and nowhere else. See Tex. Gov’t Code

§ 531.102(a) (OIG responsible for “investigation of fraud, waste, and abuse in the

2 provision and delivery of all health and human services in the state”). DSHS cites

to a statute delineating the divisions of the Health and Human Services Commission

(HHSC) in support of its claim that the OIG “has been charged with investigating

more than just Medicaid fraud”: “The executive commissioner shall establish within

the commission . . . the office of inspector general to perform fraud and abuse

investigation and enforcement functions as provided by Subchapter C and other

law.” Tex. Gov’t Code § 531.008(c)(2); see Appellee’s Br. at 10. But the Attorney

General notes DSHS has not cited to any “other law”—specifically one recognizing

the OIG’s investigative authority regarding internal personnel matters not related to

fraud, waste, and abuse in the provision and delivery of all health and human services

in the state—of which the legislature might have taken into account when drafting

the statutory provision in question. Indeed, even the relevant provision of the Texas

Administrative Code states “The [OIG] is responsible for the investigation of fraud

and abuse in the provision of health and human services (HHS) in Medicaid and

other HHS programs.” 1 Tex. Admin. Code § 371.11(a) (HHSC, Medicaid and

Other Health and Human Services Fraud and Abuse Program Integrity).

Consequently, DSHS has failed to demonstrate that it should be assumed the

legislature contemplated other types of investigations OIG might undertake,

unrelated to those specifically authorized under subchapter C, when it made

confidential materials gathered during an OIG audit or investigation.

3 II. SECTION 531.102 DOES NOT MANDATE THE CREATION OF A PUBLICLY-AVAILABLE “FINAL REPORT” ON AUDITS OR INVESTIGATIONS UNRELATED TO FRAUD, WASTE, AND ABUSE IN THE PROVISION AND DELIVERY OF ALL HEALTH AND HUMAN SERVICES IN THE STATE.

DSHS asserts “[a]ny final report on an OIG audit or investigation is public,

pursuant to Section 531.102(k).” Appellee’s Br. at 14; see Tex. Gov’t Code

§ 531.102(k) (“A final report on an audit or investigation is subject to required

disclosure under Chapter 552.”). But section 531.102 mandates OIG create a final

report only in relation to an audit or investigation conducted under subchapter C:

“The [OIG] shall prepare a final report on each audit or investigation conducted

under this section.” Tex. Gov’t Code § 531.102(j) (emphasis added). As noted, the

section in question relates to investigations of fraud, waste, and abuse in the

provision and delivery of all health and human services in the state, but is silent as

to investigations of employee misconduct otherwise unrelated to such fraud, waste,

or abuse, or as to any other investigation conducted outside the subchapter’s

authority. Tex. Gov’t Code § 531.102(a); see Appellant’s Br. at 7–9. Contrary to

DSHS’s claim, this provision does not mandate the release of a final report regarding

the types of employee misconduct investigations at issue. Rather, this section offers

further support for the Attorney General’s contention that the legislature did not

4 contemplate investigations conducted outside of subchapter C in creating section

531.1021(g).3

III. THE LEGISLATURE HAS NOT TAKEN ANY ACTION TO AMEND SECTION 531.1021(g) TO ADDRESS THE ATTORNEY GENERAL’S INTERPRETATION.

DSHS argues at length regarding the legislature’s inaction following the

previous determination issued by the Attorney General to HHSC in an informal open

records letter ruling issued in 2004. Appellee’s Br. at 20–26; see Tex. Att’y Gen.

OR2004-08876, C.R. 62. While the Attorney General concedes this office has

previously misapplied section 531.1021(g) to employee misconduct investigations

not conducted under subchapter C, the ruling containing the previous determination

is not such an example. Rather, as explicitly stated in that ruling, the previous

determination was based on HHSC’s claim “that the OIG was created ‘to prevent,

detect and investigate fraud, abuse and waste in state health and human service

programs.’” C.R. 62. Accordingly, the text of the previous determination itself

would not have put the public or the legislature on notice regarding the application

of section 531.1021(g) to employee misconduct investigations not arising under

subchapter C.

3 The Attorney General notes the record does not reflect that DSHS has released any “final report” relating to the employee misconduct investigation at issue in this suit.

5 However, the Attorney General did later issue a number of other informal

letter rulings applying the statute to misconduct investigations, without intervention

by the legislature. See Appellee’s Br. at 24. On the other hand, since 2012 the

Attorney General has issued numerous letter rulings holding that section

531.1021(g) does not apply to information compiled by the OIG when such

information is “not related to Medicaid or other health and human services fraud,

abuse, or overcharges.” See, e.g., Tex. Att’y Gen. OR2012-10072, OR2012-19674,

OR2013-02357, OR2013-02732, OR2013-04545, OR2013-05224, OR2013-06264,

OR2013-08066, OR2013-11552, OR2013-12119, OR2013-14973, OR2014-06063,

OR2014-07711, OR2014-13108, OR2014-15004. But despite the fact the letter

ruling at issue in the instant suit was issued in June of 2012, the 83rd Legislature

made no attempt to address the Attorney General’s interpretation of section

531.1021(g). Further, no bill has thus far been proposed in the current legislative

session that would address the Attorney General’s application of the statute, despite

previous and ongoing litigation over the matter.4

4 And beyond the instant suit, these rulings have generated other litigation. See Tex. Dep’t of Aging and Disability Servs. v. Greg Abbott, Attorney Gen. of Tex., No. D-1-GN-11-002989 (353rd Dist. Ct., Travis County, Tex. Jul. 18, 2013) (granting summary judgment in favor of the Attorney General); C.R. 123–25. The Department of Aging and Disability Services chose not to appeal that prior ruling and instead sought a different ruling by filing the instant suit.

6 CONCLUSION AND PRAYER

For the reasons set forth in this reply and in the Attorney General’s brief, the

Attorney General respectfully asks the Court to reverse the trial court’s grant of

DSHS’s summary judgment motion and render judgment in favor of the Attorney

General.

Respectfully Submitted,

KEN PAXTON Attorney General of Texas

CHARLES E. ROY First Assistant Attorney General

BRANTLEY STARR Deputy Attorney General for Legal Counsel

DAVID A. TALBOT, JR. Chief, Administrative Law Division

KIMBERLY L. FUCHS Chief, Open Records Litigation

/s/ Matthew R. Entsminger MATTHEW R. ENTSMINGER State Bar No. 24059723 Assistant Attorney General Open Records Litigation Administrative Law Division Office of the Attorney General of Texas P.O. Box 12548, Capitol Station Austin, Texas 78711-2548 Telephone: (512) 475-4151 Facsimile: (512) 320-0167 matthew.entsminger@texasattorneygeneral.gov

7 ATTORNEYS FOR APPELLANT KEN PAXTON, ATTORNEY GENERAL OF TEXAS

CERTIFICATE OF COMPLIANCE

I certify that the Reply Brief of Appellant Ken Paxton, Attorney General of

Texas, submitted complies with Rule 9 of the Texas Rules of Appellate Procedure

and the word count of this document is 1,485. The word processing software used to

prepare this filing and calculate the word count of the document is Microsoft Word

2013.

Date: February 27, 2015

/s/ Matthew R. Entsminger MATTHEW R. ENTSMINGER ATTORNEY FOR APPELLANT

8 CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing Reply Brief of

Appellant Ken Paxton, Attorney General of Texas, has been served on February 27,

2015, on the following counsel-of-record via e-service:

Ann Hartley State Bar No. 09157700 Assistant Attorney General Financial Litigation, Tax and Charitable Trusts Division Office of the Attorney General of Texas P.O. Box 12548, Capitol Station Austin, Texas 78711-2548 Telephone: (512) 936-1313 Facsimile: (512) 477-2348 ann.hartley@texasattorneygeneral.gov

ATTORNEY FOR APPELLEE

/s/ Matthew R. Entsminger MATTHEW R. ENTSMINGER ATTORNEY FOR APPELLANT