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
| Tex. App. | Sep 21, 2015Background
- The State sued a group of dentists (the Dental Group) under the Texas Medicaid Fraud Prevention Act (TMFPA) seeking tens of millions in damages; the State also sued Xerox in a related proceeding alleging involvement in the same underlying facts.
- The Dental Group asserted counterclaims and third-party claims against Xerox (including fraud, conspiracy, breach of contract, negligence, and a contribution claim), arguing those claims are compulsory or defensive to the State’s TMFPA suit.
- The trial court granted the State’s plea to the jurisdiction as to the Dental Group’s claims and granted the State’s motion to dismiss the Dental Group’s third-party claims against Xerox; the Dental Group appealed.
- Appellants contend Reata and related Texas precedent require denial of sovereign-immunity as a jurisdictional bar when the State brings affirmative claims and the defendant’s counterclaims are germane, connected with, or defensive to the State’s action.
- The Dental Group also concedes that, while contribution is not available under the federal False Claims Act, Texas Civil Practice & Remedies Code Chapter 33 permits contribution/indemnity here and adopts Xerox’s briefing on that point.
Issues
| Issue | Plaintiff's Argument (State) | Defendant's Argument (Dental Group) | Held |
|---|---|---|---|
| Whether the State waived sovereign immunity by bringing affirmative TMFPA claims so defendants may pursue compulsory/counterclaims | The State contends sovereign immunity remains available as a defense to counterclaims even while it pursues TMFPA claims | Reata and successors require that when the State sues, it cannot invoke immunity to block counterclaims germane or defensive to its suit; immunity was waived/abrogated by suit | Trial court dismissed counterclaims on jurisdictional grounds; appellants ask this Court to reverse (appeal pending) |
| Whether the TMFPA precludes defendants from bringing third‑party claims against non‑state parties (Xerox) | The State argues TMFPA grants it a unilateral enforcement weapon and defendants cannot third‑party or offset those claims | Defendants argue TMFPA does not preclude counterclaims/third‑party claims that are defensive, compulsory, or otherwise related; Reata and federal FCA analogies support allowing such claims | Trial court dismissed third‑party claims; appellants seek reversal (appeal pending) |
| Whether this Court may decide third‑party claims here or should await Xerox’s separate appeal (judicial economy) | The State argues this Court lacks jurisdiction to address the propriety of third‑party claims in this appeal | Appellants (and Xerox) urge consolidation/parallel resolution to avoid inconsistent rulings and promote judicial economy; the issues are nearly identical | Procedural posture: State sought separate proceedings; appellants request this Court decide in conjunction with Xerox’s appeal (pending) |
| Whether Texas law (Chapter 33) permits contribution claims here | State implicitly denies availability (relying on federal FCA analogy) | Defendants contend Chapter 33 permits contribution/indemnity among non‑state parties and adopt Xerox’s briefing that Chapter 33 applies | Appellants assert Chapter 33 allows contribution; trial court dismissal challenged (appeal pending) |
Key Cases Cited
- Reata Const. Corp. v. City of Dallas, 197 S.W.3d 371 (Tex. 2006) (governmental entity that brings an action may waive immunity for claims germane or defensive to its suit)
- State ex rel. Texas Dept. of Transp. v. Precision Solar Controls, Inc., 220 S.W.3d 494 (Tex. 2007) (discusses Reata’s scope and remands for consideration consistent with Reata)
- Precision Solar Controls, Inc. v. State, 188 S.W.3d 364 (Tex. App.—Austin 2006) (appellate treatment recognizing Reata’s applicability to state‑party litigation)
- Guillory v. Port of Houston Authority, 845 S.W.2d 812 (Tex. 1993) (distinguishable; involved scope of statutory waiver in tort context, not state‑initiated claims waiving immunity for related counterclaims)
- Bates v. Republic of Texas, 2 Tex. 616 (Tex. 1847) (historic set‑off authority; treated as limited by later Reata precedent)
- Gabelli v. Securities & Exchange Commission, 133 S. Ct. 1216 (U.S. 2013) (government bound by statutes of limitations when seeking penalties; does not address sovereign immunity to counterclaims)