Case Information

*0 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 11/12/2015 7:21:04 AM JEFFREY D. KYLE Clerk IN THE COURT OF APPEALS FOR THE THIRD COURT OF APPEALS 11/12/2015 7:21:04 AM JEFFREY D. KYLE AUSTIN, TEXAS 03-15-00252-CV *1 ACCEPTED ^[7789969] CLERK THIRD JUDICIAL DISTRICT OF TEXAS DR. BEHZAD NAZARI, D.D.S. D/B/A

ANTOINE DENTAL CENTER ET. AL.,

Defendants-Appellants ,

v.

STATE OF TEXAS, Cause No. 03-15-00252-CV

Plaintiff-Appellee ,

v.

XEROX CORPORATION AND XEROX

STATE HEALTHCARE, LLC, F/K/A ACS

STATE HEALTHCARE, LLC,

Third-Party Defendants-Appellees . IN RE XEROX CORPORATION AND

XEROX STATE HEALTHCARE, LLC Cause No. 03-15-00401-CV

F/K/A ACS STATE HEALTHCARE, LLC,

Relators . Joint Motion to Modify Order Regarding Oral Argument

This joint motion requests modification of the Court’s October 28, 2015 order to clarify time for oral argument. The parties have agreed on an alloca-

tion that embraces both causes.

The Nazari appeal

Cause No. 03-15-00252-CV (the Nazari appeal) is an appeal in a civil case. In the underlying action (district court case no. D-1-GN-14-005380),

plaintiff the State of Texas sues defendants Dr. Behzad Nazari et al. (“the

dentist defendants”) alleging certain violations of the Texas Medicaid Fraud

Prevention Act. The dentist defendants filed (1) counterclaims against the

State and (2) third-party claims against Xerox (a former state contractor).

The district court granted the State’s plea to the jurisdiction asserting sov- ereign immunity to the counterclaims against the State. The district court also

granted the State’s motion to dismiss the dentist defendants’ third-party

claims against Xerox, wherein the State asserted that the Texas Medicaid

Fraud Prevention Act does not authorize a defendant to bring third party

claims and that, in any event, the claims against Xerox are barred by sovereign

immunity. ^[1]

On May 1, 2015, the dentist defendants appealed. The State of Texas and Xerox are appellees. On appeal, the dentist defendants raise two arguments:

(1) that the trial court erred in dismissing their counterclaims against the State

because the State has waived sovereign immunity by bringing an affirmative

claim for relief, the counterclaims are compulsory, and counterclaims are per-

missible in this type of suit; and (2) that the district court erred in dismissing

their third-party claims against Xerox because third-party claim are likewise

permissible.

Xerox’s appellate brief argues that (1) the Texas Rules of Civil Procedure and Chapter 33 of the Texas Civil Practice & Remedies Code apply to the

State’s claim, and (2) that any holding that the State has waived sovereign

*3 immunity by bringing an affirmative claim for relief should be limited to the

State, because Xerox has not brought any claims in this suit.

The State (1) argues that sovereign immunity bars the counterclaims, and (2) argues that this Court lacks jurisdiction over the interlocutory appeal from

the order dismissing the dentist defendants’ third-party claims against Xerox

and, in any event, those claims were properly stricken.

The In re Xerox Corporation mandamus petition Cause No. 03-15-00401-CV ( In re Xerox Corporation ) is a mandamus proceeding. The petition seeks mandamus review of two orders issued by the

district court in a separate civil case (district court case no. D-1-GV-14-

000581). In that underlying action, plaintiff the State of Texas sues its former

contractor Xerox alleging certain violations of the Texas Medicaid Fraud Pre-

vention Act. Xerox filed third-party claims against the dentists and dental

practices who are defendants in the State v. Nazari action. Xerox also moved

for leave to designate responsible third parties under chapter 33 of the Civil

Practice and Remedies Code. The district court struck the third-party claims

and denied the chapter 33 motion.

On July 1, 2015, Xerox filed an original mandamus proceeding in this Court seeking review of those orders. In that proceeding, Xerox is the relator

and the State is the real party in interest. Xerox argues that the district court

erred because Chapter 33 applies to the State’s claim under the Texas Medi-

caid Fraud Prevention Act and that it lacks an adequate remedy by appeal. The

State disagrees.

The Court’s Order Regarding Oral Argument Xerox filed in the Nazari appeal an unopposed motion to consolidate the above-described causes for purposes of oral argument only. The motion stated

the State’s position “that the In re Xerox Corporation petition should be de-

nied without oral argument,” while also expressing Xerox’s and the Nazari

parties’ position that “hearing argument on both matters would make sense,

given the overlap on the underlying legal issues.” Oct. 13, 2015 Mot. ¶ 2. The

motion requested that, if oral argument is held in the mandamus proceeding,

the Court “set both causes for submission for oral argument on the same day.”

Id. ¶ 4.

On October 28, 2015, this Court granted Xerox’s motion. Referencing both appellate causes described above, the order states:

Appellees Xerox Corporation and Xerox State Healthcare, LLC’s Unopposed Motion to Consolidated Causes for Submission on Oral Argument was granted by this Court on the date noted above. Accord- ingly, you are hereby notified that the above causes have been consol- idated for purposes of oral argument and have this day been set for submission and oral argument on December 16, 2015 at 1:30 PM, be- fore Justices Puryear, Goodwin, and Bourland. Argument is limited to 20 minutes for appellants and for appellees.

Oct. 28, 2015 Order at 2 (underlining and bolding removed).

Request for Modification and Proposed Allocation of Time

Xerox and the Nazari parties agree that this order grants oral argument in

both causes. The Court’s order states that “the above causes have been con-

solidated for purposes of oral argument and have this day been set for submis-

sion and oral argument.” The State agrees that the Court’s docket reflects that

ruling, although the State perceives ambiguity and would welcome clarifica-

tion given that the Court’s order purports only to grant an unopposed motion

that did not express the State’s agreement to setting the mandamus petition

for oral argument and given that the order does not mention a “relator” or “real

party in interest” in assigning argument time.

Assuming the Court has set both causes for oral argument, the parties con-

cur in requesting clarification of the Court’s intended allocation of time. The

parties have conferred about an order of argument and time allocation for this

scenario and jointly propose the following ordering and time allocation:

No. 03-15-00401-CV, In re Xerox Corporation:

Xerox: 15 minutes

State of Texas: 20 minutes

Xerox rebuttal: 5 minutes

No. 03-15-00252-CV, State v. Nazari :

Nazari: 12 minutes

Xerox: 6 minutes

State of Texas: 17 minutes

Nazari rebuttal: 5 minutes

This allocation of time ensures that the Court will have full argument time for

both proceedings, assuming both are set for argument.

Xerox and Nazari parties’ statement of justification If the Court’s order allocated only 40 minutes for both proceedings, the Court should grant the standard amount of oral argument time for each cause.

This request is justified by the following reasons.

First , Xerox’s original proceeding involves an issue common to both cases and thus will assist the Court with understanding the entire landscape of

this complex litigation. Specifically, the proceeding raises the issue of

whether the State’s claim (its sole claim in both proceedings) is a tort claim

subject to Chapter 33.

In the State’s suit against Xerox, this claim has stakes of more than $1 billion. In the State’s suit against the Nazari Appellants, this claim has stakes

of more than $400 million. Given the significance of this issue for both cases,

and given the unusually high stakes in each lawsuit, Xerox and the Nazari

parties respectfully submit that the standard amount of oral argument time is

necessary to fully explore the issue. Further, it makes sense to hear this argu-

ment first, as it will lay the groundwork common to both proceedings.

Second , the Nazari interlocutory appeal involves multiple complex is- sues. The threshold issue for the Court is whether the State has waived sov-

ereign immunity by bringing a claim for affirmative relief against the Nazari

parties. That issue alone is worthy of the full amount of argument time. The

appeal also involves questions of whether third-party claims can be brought

in a suit where the State has asserted a claim under the Texas Medicaid Fraud

Prevention Act.

Third , these two cases demonstrate the tripartite relationship of the par- ties. Holding both arguments within the time constraints for one oral argu-

ment would very likely deprive the Court of full answers from each of the

three perspectives. Xerox and the Nazari parties agree that it would best assist

the Court in understanding the issues if the oral arguments are held consecu-

tively and each given the standard amount of time.

State of Texas’s statement of justification The State of Texas does not agree with all aspects of Xerox and the Nazari parties’ argument and characterizations in their statement of justifica-

tion above, and the State does not join in that statement. See supra pp. 5-6.

The State also finds it unclear, for the reasons noted above, whether the

Court’s order actually reflects a decision to set both causes for argument.

Nonetheless, if the Court has or does now determine that oral argument would

be appropriate on the mandamus petition, the State agrees that the above-de-

scribed allocation of time best allows the parties to present their arguments

and will eliminate confusion arising from the October 28 order, regarding

questions such as the amount of time assigned to Xerox as an appellee in one

cause and as the relator in the other cause.

Conclusion For the reasons explained above, the parties jointly request modification of the Court’s October 28, 2015 order regarding oral argument.

Respectfully submitted.

Counsel for the State of Texas:

C HARLES E. R OY S COTT A. K ELLER

First Assistant Attorney General Solicitor General /s/ J. Campbell Barker

/s/ Raymond C. Winter J. C AMPBELL B ARKER R AYMOND C. W INTER Deputy Solicitor General

Chief, Civil Medicaid Fraud State Bar No. 24049125

State Bar No. 2179195

cam.barker@texasattorneygeneral.gov R EYNOLDS B. B RISSENDEN P HILIP A. L IONBERGER

Assistant Attorney General Assistant Solicitor General

State Bar No. 24056969

State Bar No. 12394380 Office of the Attorney General P.O. Box 12548 (MC 059) Austin, Texas 78711-2548 Tel.: (512) 936-1700 Fax: (512) 474-2697 Counsel for Xerox:

E RIC J.R. N ICHOLS /s/ Constance H. Pfeiffer

State Bar No. 14994900 C ONSTANCE H. P FEIFFER

enichols@beckredden.com State Bar. No. 24046627

G RETCHEN S WEEN cpfeiffer@beckredden.com

State Bar No. 20041996 B ECK R EDDEN LLP

gsween@beckredden.com 1221 McKinney St., Ste. 4500

C HRISTOPHER R. C OWAN Houston, Texas 77010

State Bar. No. 24084975 (713) 951-3700

ccowan@beckredden.com (713) 951-3720 (Fax)

B ECK R EDDEN LLP

515 Congress Ave., Ste. 1900

Austin, Texas 78701

(512) 708-1000

(512) 708-1002 (Fax)

R OBERT C. W ALTERS C. A NDREW W EBER

State Bar No. 20820300 State Bar No. 00797641

rwalters@gibsondunn.com andrew.weber@kellyhart.com

G IBSON , D UNN & C RUTCHER LLP K ELLY H ART & H ALLMAN LLP

2100 McKinney Ave., Ste. 1100 301 Congress, Ste. 2000

Dallas, Texas 75201 Austin, Texas 78701

(214) 698-3100 (512) 495-6451

(214) 571-2900 (Fax) (512) 495-6930 (Fax)

Counsel for Dr. Behzad Nazari,

D.D.S., et al:

E. H ART G REEN /s/ Jason Ray

State Bar. No. 08349290 J ASON R AY

hartgr@wgttlaw.com State Bar. No. 24000511

W ELLER , G REEN , T OUPS & jray@r-alaw.com

T ERRELL , L.L.P. R IGGS & R AY , PC

P.O. Box 350 506 W. 14th Street, Suite A

Beaumont, Texas 77704-0350 Austin, TX 78701

Tel.: (409) 838-0101 Tel.: (512) 457-9812

Fax: (409) 832-8577 Fax: (512) 457-9066

Certificate of Conference The parties jointly request modification of the October 28, 2015 order. /s/ J. Campbell Barker J. C AMPBELL B ARKER Certificate of Service I certify the service of this document on November 11, 2015 by electronic case filing or e-mail upon the following:

Counsel for Xerox:

Eric J.R. Nichols Constance H. Pfeiffer

Gretchen Sween Beck Redden LLP

Christopher R. Cowan 1221 McKinney St., Ste. 4500

Beck Redden LLP Houston, Texas 77010

515 Congress Ave., Ste. 1900

Austin, Texas 78701

Robert C. Walters C. Andrew Weber

Gibson, Dunn & Crutcher LLP Kelly Hart & Hallman LLP

2100 McKinney Ave., Ste. 1100 301 Congress, Ste. 2000

Dallas, Texas 75201 Austin, Texas 78701

Counsel for Dr. Behzad Nazari,

D.D.S., et al:

E. Hart Green Jason Ray

State Bar. No. 08349290 Riggs & Ray, PC

hartgr@wgttlaw.com 506 W. 14th Street, Suite A

Weller, Green, Toups & Terrell, Austin, TX 78701

L.L.P.

P.O. Box 350

Beaumont, Texas 77704-0350

/s/ J. Campbell Barker J. C AMPBELL B ARKER

[1] The State adopted by reference the arguments it raised in briefing to the trial court in its separate suit against Xerox, which resulted in an order that is the subject of Xerox’s man- damus proceeding.