in Re Xerox Corporation and Xerox State Healthcare, LLC F/K/A ACS State Healthcare, LLC
03-15-00401-CV
| Tex. App. | Aug 13, 2015Background
- The State of Texas (AG) sued Xerox under the Texas Medicaid Fraud Prevention Act (TMFPA), alleging Xerox, as HHSC’s prior-authorization (PA) vendor, knowingly misrepresented its PA review process and approved orthodontia requests without proper clinical review.
- TMFPA authorizes civil remedies (recover payments made directly or indirectly "as a result" of unlawful acts, statutory penalties, costs, and fees) for unlawful acts defined in Tex. Hum. Res. Code ch. 36.
- Xerox attempted to implead or designate dental providers as responsible third parties under CPRC Chapter 33 (proportionate responsibility) and sought consolidation with provider suits; the State moved to strike/oppose.
- The trial court struck Xerox’s third‑party pleading and denied leave to designate responsible third parties, rejecting application of Chapter 33 to the TMFPA and denying interlocutory appeals.
- Xerox filed a mandamus petition challenging those rulings; the State responded arguing Chapter 33 does not apply to TMFPA enforcement actions and that Xerox has an adequate appellate remedy.
Issues
| Issue | Plaintiff's Argument (State) | Defendant's Argument (Xerox) | Held |
|---|---|---|---|
| Whether CPRC Chapter 33 (responsible third‑party/apportionment) applies to a TMFPA enforcement action by the State | TMFPA is a public‑welfare statutory enforcement scheme, not a tort cause of action; Chapter 33 does not apply and would conflict with TMFPA’s remedies and legislative scheme | Chapter 33 applies because TMFPA involves fraud and statutory claims analogous to torts (and FCA analogies); Xerox should be allowed to designate third parties | Trial court correctly ruled Chapter 33 doesn’t apply to the State’s TMFPA enforcement action; mandamus not warranted on that basis |
| Whether the TMFPA creates "damages" or a single indivisible injury subject to apportionment | TMFPA liability attaches on proof of unlawful acts; remedies are statutory (payments and penalties) and do not depend on tort elements like causation, reliance, or compensable damages | TMFPA remedies measure monetary recovery tied to payments and thus permit apportionment and contribution principles under Chapter 33 | Court agreed TMFPA lacks traditional tort elements and a single indivisible injury for apportionment; Chapter 33 inapplicable |
| Whether federal False Claims Act (FCA) precedent supports applying apportionment principles to TMFPA | FCA differs materially (requirements like presentment and damage focus) and is not persuasive for TMFPA interpretation | Xerox relied on FCA analogies to justify apportioned liability and third‑party designations | State rebutted FCA analogy; court found FCA authorities not dispositive for TMFPA question |
| Whether mandamus is available because Xerox lacks an adequate appellate remedy | State: Xerox has adequate remedy by ordinary appeal; mandamus is extraordinary and inappropriate | Xerox: denial of leave to designate responsible third parties irreparably skews trial and cannot be remedied on appeal | State argues (and trial court rulings support) that appeal is adequate; mandamus should be denied |
Key Cases Cited
- Walker v. Packer, 827 S.W.2d 833 (Tex. 1992) (mandamus is extraordinary relief; requires clear abuse of discretion and lack of adequate appellate remedy)
- In re Columbia Med. Ctr., 290 S.W.3d 204 (Tex. 2009) (mandamus principles regarding adequate appellate remedy)
- In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004) (contextual, case‑by‑case adequacy of appellate remedies)
- Challenger Gaming Sols., Inc. v. Earp, 402 S.W.3d 290 (Tex. App.—Dallas 2013) (refusing to apply Chapter 33 where statutory scheme conflicted with apportionment principles)
- JCW Elecs., Inc. v. Garza, 257 S.W.3d 701 (Tex. 2008) (analysis of Chapter 33’s scope in tort/contextual apportionment cases)
- Malouf v. State ex rel. Ellis, 461 S.W.3d 641 (Tex. App.—Austin 2015) (holding certain statutory liability regimes do not import Chapter 74 apportionment rules; relevant to state‑as‑claimant analysis)