In re Xerox Corp.

555 S.W.3d 518

IN RE XEROX CORPORATION and Xerox State HealthCare, LLC f/k/a ACS State HealthCare, Relators

No. 16-0671

Supreme Court of Texas.

Argued December 6, 2017

Opinion delivered: June 22, 2018

William R. Peterson, Morgan, Lewis & Bockius LLP, Houston, for Amicus Curiae The Pharmaceutical Research and Manufacturers of America.

E. Hart Green, Weller Green Toups & Terrell, L.L.P., Beaumont, Jason D. Ray, Riggs & Ray, P.C., Austin, for Intervenor Antoine Dental Center, et al.

Raymond C. Winter, Jeffrey C. Mateer, John Campbell Barker, Philip A. Lionberger, Reynolds Brissenden IV, Scott A. Keller, Austin, for Real Party in Interest State of Texas.

Constance H. Pfeiffer, David M. Gunn, Beck Redden LLP, Houston, Christopher R. Cowan, Eric J.R. Nichols, Beck Redden LLP, Austin, C. Andrew Weber, Kelly Hart & Hallman LLP, Austin, Robert C. Walters, Gibson, Dunn & Crutcher LLP, Dallas, for Relator Xerox Corporation, Xerox State Healthcare, LLC f/k/a ACS State Healthcare, LLC.

Justice Guzman delivered the opinion of the Court.

In this mandamus proceeding, we consider whether the proportionate-responsibility scheme in Chapter 33 of the Texas Civil Practice and Remedies Code¹ applies to a civil-remedy action under the Texas Medicaid Fraud Prevention Act (TMFPA).² The trial court held Chapter 33 inapplicable, struck the relators' third-party petition seeking contribution under Chapter 33, and denied the relators' motion to designate responsible third parties.³ The court of appeals denied mandamus relief,⁴ as do we. Chapter 33 does not apply to a TMFPA action because (1) the statutory remedy does not constitute "damages" subject to apportionment under Chapter 33 and (2) an irreconcilable conflict exists between the proportionate-responsibility statute and the TMFPA’s mitigation and fault-allocation scheme.

I. Background

For nearly a decade, Xerox Corporation and Xerox State HealthCare, LLC, f/k/a ACS State HealthCare, LLC (collectively, Xerox) administered the Texas Medicaid program under contracts with the Texas Health and Human Services Commission and its predecessors. As claims processor, Xerox’s duties included (1) reviewing documents and patient information submitted with prior-authorization requests for orthodontic services and (2) approving or denying the requests in accordance with Medicaid policy.⁵

The State of Texas asserts Xerox fraudulently operated the review process while serving as the Medicaid program administrator. Among other complaints, the State alleges Xerox misrepresented, concealed, or failed to disclose that it was not processing orthodontic prior-authorization requests in accordance with Medicaid policy, was not substantively reviewing the evaluative documentation, and was approving vast numbers of prior-authorization requests for ineligible services. The State claims that rather than conducting a rigorous review, Xerox actively concealed the fact that unqualified and inadequately supervised clerical employees routinely "rubber stamped" orthodontic prior-authorization requests. According to the State, Xerox’s actions were unlawful, compromised the Medicaid program’s integrity, and directly or indirectly caused the State to pay millions of dollars for unauthorized orthodontic services to Medicaid patients.

Medicaid fraud may be redressed in criminal, administrative, or civil proceedings.⁶ The State sued Xerox for a civil remedy under the Texas Medicaid Fraud Prevention Act (TMFPA or the Act).⁷ As authorized by the Act, the State seeks treble the amount of any Medicaid payment made as a result of an unlawful act; civil penalties of not less than $5,500 per unlawful act; interest on the amount of unlawfully procured payments; and expenses, costs, and attorney’s fees.⁸ The State also filed administrative actions against various orthodontic service providers, but later dismissed those proceedings in favor of pursuing TMFPA remedies against those providers in separate civil actions.

Xerox filed a general denial and, through various procedural devices, sought to unite the separate TMFPA proceedings for purposes of shifting liability, if any, to the service providers who had directly received disputed Medicaid payments. The State vigorously opposed all efforts to bring the Medicaid service providers into the Xerox litigation, and the trial court ruled in the State’s favor across the board. The court (1) granted the State’s motion to strike Xerox’s third-party petition, which sought contribution from twenty-seven Medicaid service providers under the comparative-fault regime in Chapter 33;⁹ (2) denied Xerox’s motion to designate nearly seventy Medicaid service providers as responsible third parties under Chapter 33;¹⁰ (3) twice refused Xerox’s request to consolidate this proceeding with the State’s TMFPA actions against the service providers (except as to depositions); and (4) struck petitions in intervention filed by a group of service providers.

The trial court issued letter rulings explaining that Chapter 33 is inapplicable to a TMFPA action because a state enforcement action is not a statutory tort subject to Chapter 33 and "the civil remedy in the TMFPA is not a damage provision" subject to apportionment based on comparative fault. The court said the TMFPA plainly holds each fraudster liable for a civil remedy and penalty that cannot be diminished or reduced by the civil remedy and penalty assessed against or paid by another bad actor: "There is no comparative fault, joint-and-several liability, contribution, single-satisfaction, or settlement credit in a TMFPA action." The trial court declined to consolidate the proceedings, both as an exercise of its discretion and because "[t]he State is entitled to pursue a Medicaid Fraud claim against a defendant to the exclusion of all other parties."

After the trial court denied Xerox’s request for a permissive interlocutory appeal,¹¹ Xerox sought mandamus relief from the trial court’s orders striking Xerox’s third-party petition and denying leave to designate responsible third parties under Chapter 33. The court of appeals denied mandamus relief without substantive analysis.¹² However, in an interlocutory appeal involving certain Medicaid service providers and a different legal issue, which we consider today in Nazari v. State ,¹³ the court of appeals concurred with the trial court’s substantive rulings in this case, holding the TMFPA’s civil-remedy provision is a penalty statute, not a damages provision.¹⁴

After Xerox filed its mandamus petition in this Court, we temporarily abated the case to allow a successor trial-court judge to reconsider the rulings at issue.¹⁵ The successor judge adopted the prior rulings.

II. Discussion

As in the courts below, the issue presented is whether Chapter 33’s proportionate-responsibility scheme encompasses a civil-remedy action under the TMFPA. This is a question of legislative intent, which we determine as a matter of law using well-established interpretive principles to construe the statutory language.¹⁶ We thus begin by examining the two statutes at issue. Mandamus will not issue absent a clear abuse of discretion for which an adequate appellate remedy is lacking.¹⁷

A. Chapter 33: Proportionate Responsibility

Chapter 33 provides a framework for apportioning damages among tortfeasors responsible for "causing or contributing to cause in any way the harm for which recovery of damages is sought."¹⁸ The statute applies to deceptive-trade-practice actions, "any cause of action based on tort," and "any other conduct that violates an applicable legal standard."¹⁹ We have also applied Chapter 33 to statutory torts, but have declined to do so when the enabling statute contains a separate and conflicting fault-allocation scheme.²⁰

By express carve-out, Chapter 33 is inapplicable to exemplary-damages claims, actions to collect workers' compensation benefits, and claims for damages arising from the manufacture of methamphetamine.²¹ TMFPA actions are not expressly included in or exempted from Chapter 33.

Chapter 33 embodies the fundamental tort-law principle that liability generally arises only from one’s own injury-causing conduct and, as a result, liability for damages is commensurate with fault.²² Chapter 33’s proportionate-responsibility scheme also incorporates the one-satisfaction rule–a tort concept that limits a plaintiff to only one recovery for any damages suffered because of an injury.²³ This rule provides that when a claimant seeks recovery for the same injury from multiple parties, the claimant is entitled to only one recovery on that injury.²⁴

Consistent with the one-satisfaction rule and legislative intent "to hold each person responsible for [the person’s] own conduct causing injury,"²⁵ Chapter 33 requires the trier of fact to determine the percentage of responsibility of each claimant, defendant, settling person, and any responsible third party who has been designated in compliance with the statute.²⁶ Damages are thereafter apportioned according to those comparative-fault findings.²⁷

In some circumstances, however, ratable apportionment yields to other legislative policies. Subject to a right of contribution,²⁸ comparative-fault apportionment is eliminated when a defendant is found more than fifty-percent responsible for the harm²⁹ and when certain crimes are perpetrated with "specific intent to do harm."³⁰ In addition, a claimant who is more than fifty-percent responsible is statutorily barred from recovering any damages.³¹ Chapter 33 does not include TMFPA liability among those the Legislature expressly excepted from ratable apportionment.

Xerox, supported by amici Pharmaceutical Research and Manufacturers of America, argues a TMFPA action plainly falls within Chapter 33’s scope and is not expressly or impliedly excluded. As Xerox sees it, the TMFPA is a statutory tort based on fraud for the recovery of damages—at least as to some of the civil remedies authorized in the Act—and Chapter 33 must apply to prevent the State from...