283 So.3d 472
La.2019Background
- The State (Attorney General) sued Molina/Unisys alleging the defendants, as the Medicaid fiscal intermediary operating LMMIS, misprocessed pharmacy reimbursement claims causing overpayments to providers.
- Defendants previously obtained dismissal of the State’s statutory claims (LUTPA, MAPIL); remaining claims are contract-based (fraud, breach, negligence, negligent misrepresentation) tied to operation/maintenance of LMMIS.
- Defendants renewed a peremptory exception of no right of action, arguing LDH (Louisiana Department of Health) — statutorily authorized to sue and be sued — is the proper party, citing Abbott Laboratories precedent.
- The district court denied the exception; the appellate court sustained it, holding the State/AG lacked a right to sue where LDH had statutory capacity; the Supreme Court granted certiorari.
- The Supreme Court vacated the appellate decision, holding the Attorney General has a right of action under "highly exceptional circumstances" where a private contractor performs governmental functions subject to ongoing legislative and federal oversight.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the AG/State has a right to sue for alleged breaches tied to LDH-administered Medicaid program | AG: Constitutional authority (La. Const. art. IV §8) and duty to protect state interests allows suit; State retains interest in contracts and funds | Unisys: LDH has statutory capacity to sue and be sued (La. R.S. 36:251), so State/AG lacks right of action; Abbott supports exclusivity | AG has a right to sue only in "highly exceptional circumstances"; pleadings here allege such circumstances and AG's right exists; vacate appellate decision |
| Standard for resolving a no-right-of-action exception when petition includes evidence | AG: Constitutional grant plus allegations of contractor performing governmental functions justify de novo review and plaintiff-favoring resolution | Unisys: Where LDH can sue, AG should be barred as a matter of law absent clear statutory authorization | Court: Mixed review—legal question de novo; factual findings on evidence subject to manifest-error; resolve doubts for plaintiff |
| Whether prior precedent (Tensas/Allen/Doucet) prohibits duplicative suits by AG when an agency may sue | AG: Those precedents allow exceptions; AG may sue when necessary to protect state interests, especially where ongoing oversight/funding links state to claim | Unisys: Precedent bars duplicative state suits; only agency with capacity should sue | Court: Precedent remains good law; general bar exists but exception for "highly exceptional circumstances" applies; these facts meet that standard |
| Applicability of Abbott Laboratories decision | AG: Abbott is distinguishable (there claims targeted manufacturers, not fiscal intermediary performing governmental functions) | Unisys: Abbott supports dismissal of AG claims lacking statutory basis | Court: Abbott distinguishable; different factual posture—here contractor allegedly performed governmental functions integral to Medicaid administration |
Key Cases Cited
- State v. Tensas Delta Land Co., 52 So. 216 (La. 1910) (establishes general rule that state/AG cannot sue on causes belonging to political subdivision that may sue; recognizes narrow exception)
- Saint v. Allen, 134 So. 246 (La. 1931) (rejects AG assumption of agency litigation role absent statute; distinguishes state and corporate agencies)
- State ex rel. Jones v. Doucet, 14 So.2d 622 (La. 1943) (reaffirms rule and limited "highly exceptional circumstances" exception for AG suits)
- State, Dep’t of Highways v. City of Pineville, 403 So.2d 49 (La. 1981) (confirms agencies with capacity to sue remain distinct legal entities; state not substitute party)
- Abbott Laboratories, Inc. v. State, 208 So.3d 384 (La. App. 1 Cir. 2016) (appellate decision denying AG standing for certain nonstatutory claims; distinguished by Supreme Court here)
- Fruge v. Bd. of Trustees of La. State Emps.’ Ret. Sys., 6 So.3d 124 (La. 2008) (presumption that legislature enacted statutes with awareness of existing judicial interpretations)