Dr. Behzad Nazari, D.D.S. D/B/A Antoine Dental Center Dr. Behzad Nazari Harlingen Family Dentistry, P.C. A/K/A Practical Business Solutions, Series LLC Juan D. Villarreal D.D.S., Series PLLC D/B/A Harlingen Family Dentistry Group v. State, 03-15-00252-CV

Medicaid orthodontic services required prior authorization; Xerox served as the State’s contractor to administer prior-authorizations from 2004–2012.
The State (via HHSC/OIG) pursued administrative enforcement actions against members of the Dental Group, then nonsuited those administrative cases in Dec. 2014 after public reports and investigations into OIG/Xerox practices.
The State then filed a civil suit under the Texas Medicaid Fraud Prevention Act (TMFPA) against the Dental Group seeking monetary recovery for allegedly false prior-authorization submissions; the State also sued Xerox in a separate civil TMFPA action alleging Xerox improperly approved claims.
The Dental Group answered, asserting counterclaims against the State (fraud, breach of contract, negligence, promissory estoppel, gross negligence, conversion) and third‑party claims against Xerox based on Xerox’s role in prior-authorizations.
The trial court granted the State’s plea to the jurisdiction and motion to dismiss third‑party claims, dismissing the Dental Group’s counterclaims against the State with prejudice and dismissing third‑party claims against Xerox; the Dental Group appealed.

Issue	Plaintiff's Argument (State)	Defendant's Argument (Dental Group)	Held (trial court)
Whether the Dental Group may assert counterclaims against the State in the TMFPA suit	TMFPA does not expressly permit counterclaims; allowing them would undermine State enforcement and sovereign immunity	Sovereign immunity is waived when the State sues for monetary relief (Reata); counterclaims are compulsory or "inextricably intertwined," rebut State claims, and arise from same core facts	Granted: counterclaims against the State dismissed for lack of jurisdiction (State immune)
Whether the Dental Group may bring third‑party claims against Xerox in this TMFPA action	Third‑party claims are improper in TMFPA litigation; the State is entitled to pursue its TMFPA actions to exclusion of other parties	Third‑party claims mirror federal FCA practice: independent or offsetting claims are allowed; at minimum claims should be severed, not dismissed	Granted: third‑party claims against Xerox dismissed; court found State entitled to exclude other parties

Reata Const. Corp. v. City of Dallas, 197 S.W.3d 371 (Tex. 2006) (government waives immunity for claims germane to its affirmative suit for monetary relief)
City of Dallas v. Albert, 354 S.W.3d 368 (Tex. 2011) (counterclaims that rebut government’s claims are germane and may be asserted)
City of New Braunfels v. Carowest Land, Ltd., 432 S.W.3d 501 (Tex. App.—Austin 2014) (operative‑facts focus; tort counterclaims can be defensive to government contract claims)
Janek v. Harlingen Family Dentistry, P.C., 451 S.W.3d 97 (Tex. App.—Austin 2014) (prior related appellate decisions involving these providers and administrative payment releases)
Texas v. Caremark, Inc., 584 F.3d 655 (5th Cir. 2009) (FCA precedent recognizing limited waiver allowing counterclaims to offset government recovery)
United States v. Dalm, 494 U.S. 596 (U.S. 1990) (transactional approach permits examination of the whole transaction to render just relief)
Rothensies v. Electric Storage Battery Co., 329 U.S. 296 (U.S. 1946) (discussing recoupment and sovereign immunity limits)