Shamrock Psychiatric Clinic, P.A. v. Texas Health and Human Services Commission Charles Smith, Executive Commissioner of the Texas Health and Human Services Commission And Stuart W. Bowen Jr., Inspector General for the Texas Health and Human Services Commission Office of Inspector General ( 2015 )

ACCEPTED
03-15-00349-CV
6850247
THIRD COURT OF APPEALS
AUSTIN, TEXAS
9/9/2015 3:10:32 PM
JEFFREY D. KYLE
CLERK
NO. 03-15-00349-CV
In the FILED IN
3rd COURT OF APPEALS
Third Court of Appeals AUSTIN, TEXAS
Of Texas 9/9/2015 3:10:32 PM
JEFFREY D. KYLE
Clerk
SHAMROCK PSYCHIATRIC, P.A.
Appellant,
V.
TEXAS DEPARTMENT OF HEALTH AND HUMAN SERVICES,
KYLE JANEK, MD, EXECUTIVE COMM’R
AND DOUGLAS WILSON, INSPECTOR GENERAL
Appellees,
On appeal from the 126th District Court, Travis County, Texas
Cause NO. D-1-GV-14-001833
APPELLANT’S BRIEF
Jason Ray
Texas Bar No. 24000511
RIGGS & RAY, P.C.
506 West 14th Street, Suite A
Austin, Texas 78701
512 457-9806
512 457-9066 – Facsimile
jray@r-alaw.com
ATTORNEY FOR APPELLANT
ORAL ARGUMENT REQUESTED
IDENTITY OF PARTIES AND COUNSEL
The following is a complete list of all parties, as well as the names and
addresses of all counsel.
Appellant: Shamrock Psychiatric, P.A.
Lead Counsel: Jason Ray
State Bar No. 24000511
RIGGS & RAY, P.C.
506 West 14th Street, Suite A
Austin, Texas 78701
Telephone: 512 457-9806
Facsimile: 512 457-9066
jray@r-alaw.com
Appellees: Texas Department Of Health And Human
Services (“HHSC”), Kyle Janek, Md,
Executive Comm’r and Douglas Wilson,
Inspector General
Lead Counsel Appellees : Eugene A. Clayborn
Assistant Attorney General
Deputy Chief, Administrative Law Division
Office of the Attorney General of Texas
P.O. Box 12548, Capitol Station
Austin, Texas 78711-2548
Eugene.clayborn@texasattorneygeneral.gov
Appellant’s Brief
Page | i
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL .............................................................i
TABLE OF CONTENTS .......................................................................................... ii
INDEX OF AUTHORITIES.................................................................................... iii
STATEMENT OF THE CASE .................................................................................iv
STATEMENT REGARDING ORAL ARGUMENT ..............................................vi
ISSUE PRESENTED ................................................................................................vi
STATEMENT OF FACTS ........................................................................................ 1
I. The OIG asks Shamrock to consolidate two administrative
cases; Shamrock agrees multiple times; the court makes the
parties’ agreement part of the record. .............................................................. 1
II. The OIG breaks its promise. ....................................................................... 4
SUMMARY OF THE ARGUMENT ........................................................................ 8
ARGUMENT ............................................................................................................. 9
Issue: Does mandamus lie to require the OIG to provide Shamrock
with an administrative hearing on the issue of Shamrock’s
alleged overpayment? ..................................................................................... 9
I. Mandamus is appropriate because Shamrock complied
with the statutory requirement when it requested a hearing
three times within 15 days of being notified that the OIG
would seek to recover an alleged overpayment. ................................... 9
II. Mandamus is appropriate since Shamrock preemptively
requested a hearing prior to the OIG’s “Final Notice,”
so TRCP 306c and/or TRAP 27.2 apply. ............................................ 11
III. Mandamus is appropriate because the OIG’s statements
and pleadings constitute a binding TRCP Rule 11/ SOAH Rule
155.415 agreement that require the OIG to set the overpayment
case for a hearing. ................................................................................ 15
Appellant’s Brief
Page | ii
IV. Mandamus is appropriate because the OIG’s “withdrawal”
of its payment hold claim cannot be used to deprive Shamrock
of its right to an overpayment hearing.
CONCLUSION ........................................................................................................ 23
PRAYER ............................................................................................................. 23
CERTIFICATE OF COMPLIANCE ....................................................................... 24
CERTIFICATE OF SERVICE ............................................................................... 25
Appellant’s Brief
Page | iii
INDEX OF AUTHORITIES
CASES
Brighton v. Koss,
415 S.W.3d 864 (Tex. 2013), reh'g denied (Oct. 18, 2013) .......................... 12
El Paso Elec. Co. v. Pub. Util. Com'n of Texas,
715 S.W.2d 734 (Tex. App.—Austin 1986, writ ref'd n.r.e.) ..................13, 14
ExxonMobil Corp. v. Valence Operating Co.,
174 S.W.3d 303 (Tex. App.—Houston [1st Dist.] 2005, pet. denied ........... 20
Fed. Lanes, Inc. v. City of Houston,
905 S.W.2d 686 (Tex. App.—Houston [1st Dist.] 1995, no writ ................. 20
Janek v. Harlingen Family Dentistry, P.C.,
451 S.W.3d 97, 99 (Tex. App.—Austin 2014, no pet.) ................................. 22
Scott-Richter v. Taffarello,
186 S.W.3d 182 (Tex. App.—Fort Worth 2006, pet. denied) ....................... 20
Texas Mut. Ins. v. Ledbetter, 251 S.W.3d 31 (Tex. 2008)....................................... 21
Trudy's Tex. Star, Inc. v. City of Austin,
307 S.W.3d 894 (Tex. App.-Austin 2010, no pet.) ....................................... 18
TEXAS ADMINISTRATIVE CODE
1 TAC 155.155 ...................................................................................................14, 16
1 TAC 155.415 ......................................................................................................... 17
1 TAC 155.503(c)(1)............................................................................................ 6, 22
STATUTES
TEX GOV’T CODE 531.1201(a) ............................................................................ 11
Appellant’s Brief
Page | iv
STATEMENT OF THE CASE
Shamrock Psychiatric, P.A. (“Shamrock”) sued the Texas Health and
Human Services Commission (“HHSC”), Kyle Janek, Executive Commissioner
and Douglas Wilson, Inspector General (collectively “OIG”) seeking a Writ of
Mandamus to compel the OIG to comply with a Rule 11 agreement that promised
Shamrock a contested case administrative hearing. (CR 3).
Shamrock maintains that the parties’ written communications constitute a
proper request for a hearing under TRCP 306a and 306c; in the alternative
Shamrock maintains the OIG’s affirmations made in the administrative record at
prehearing conferences establish a binding Rule 11 agreement to set and hear
Shamrock’s Medicaid overpayment hearing. (CR 33). The OIG maintains that
despite its statements to Shamrock and to the administrative law judge agreeing to
set and hear the case, Shamrock’s failure to subsequently memorialize its request
for the hearing constituted a default which deprived it and the State Office of
Administrative Hearings of jurisdiction to hear the contested case. (CR 70).
The trial court denied Shamrock’s petition seeking mandamus and dismissed
the suit for lack of jurisdiction. (CR 205)
Shamrock appeals that judgment and seeks an order requiring the OIG to set
Shamrock’s overpayment hearing.
Appellant’s Brief
Page | v
STATEMENT REGARDING ORAL ARGUMENT
Appellant Shamrock requests oral argument.
ISSUE PRESENTED
Issue: Does mandamus lie to require the OIG to provide Shamrock with an
administrative hearing on the issue of Shamrock’s alleged
overpayment?
Appellant’s Brief
Page | vi
STATEMENT OF FACTS1
I. The OIG asks Shamrock to consolidate two administrative cases; Shamrock
agrees multiple times; the court makes the parties’ agreement part of the
record.
Appellant Shamrock is a Medicaid provider of psychiatric services. In
January 2013, the HHSC instituted a “payment hold” against Shamrock. (App. Ex.
2; CR 93, App. Ex. 7). A payment hold is a pre-hearing confiscation of all future
Medicaid payments due to a provider, despite the provider’s ongoing participation
in the Medicaid program. The payment hold against Shamrock was issued pursuant
to what the Office of the Inspector General (a division of the HHSC, hereinafter
“OIG”) called a “credible allegation of fraud” regarding Shamrock’s past Medicaid
billings. The HHSC placed a 100% payment hold on Shamrock’s reimbursement.
(CR 93). On February 4, 2013, Shamrock requested an expedited administrative
hearing concerning the payment hold, and the OIG docketed the case at the State
Office of Administrative Hearings (SOAH). (App. Ex. 2). The only issue to be
determined at the payment hold hearing was whether the OIG could demonstrate a
credible allegation of fraud to maintain a payment hold against Shamrock. (CR
110).
1
SOAH Order No. 11, at App. Ex 2., sets out the undisputed factual and procedural history of this case. Shamrock
believes the SOAH Order contains all of the facts necessary to dispose of this appeal, including a recitation of the
parties’ written agreements. SOAH Order No. 11 is the law of this case.
Appellant’s Brief
Page 1
In September 2013, while the payment hold case was pending at the SOAH,
the OIG completed its investigation of Shamrock and gave Shamrock preliminary
notice that the OIG intended to seek recovery of Medicaid payments that had
allegedly been overpaid to Shamrock as a result of Shamrock’s alleged fraudulent
billing. (App. Ex. 2; CR 102). The OIG’s overpayment allegation created a right to
a separate contested case hearing at the SOAH for Shamrock; the issue at an
overpayment hearing is whether Shamrock was actually overpaid for work
(whether through fraud or for some more benign reason or confusion regarding
program requirement, such as an accidental billing mistake), and if so, what
amount Shamrock should repay the State. (App. Ex. 6; CR 128).
Since Shamrock’s overpayment hearing would be, as a practical matter, a
broader review of Shamrock’s actions regarding the exact same Medicaid patients
and billing questions that were already at issue in the payment hold hearing, the
OIG’s counsel, on September 17, 2013, proposed to Shamrock that the two
hearings—the payment hold hearing and the final overpayment hearing—be
combined. (App. Ex. 3). It is noteworthy that the OIG approached Shamrock about
combining the hearings; the OIG’s request was a considerable benefit to the OIG
because Shamrock’s payment hold hearing was already set to be tried on
November 5-7, 2013. (CR 113). Agreeing to combine the two hearings would
mean that the November 2013 payment hold setting would have to be continued
Appellant’s Brief
Page 2
into mid-2014, and Shamrock would remain under a 100% payment hold until that
time.
In the spirit of cooperation and to promote judicial economy, Shamrock’s
counsel agreed to the OIG’s request on October 4, 2013. (App. Ex. 2; App. Ex. 3).
In response to a second OIG email on October 7, 2013 that reiterated the OIG’s
intent to set the overpayment hearing for a merits hearing “in about 90 days”,
Shamrock agreed for a second time to combine the two hearings and stated “we
may need more than 90 days for the [overpayment] hearing.” (App. Ex. 2; App.
Ex. 3).
On October 9, 2013, the OIG filed a status report with the SOAH; that
pleading put the SOAH judge on notice of the parties agreement:
Counsels for [OIG and Shamrock] have agreed to consolidate both the
payment hold and the overpayment into one proceeding in the interest of
judicial economy. Starting September 1, 2013, Petitioners have the option to
have their overpayment hearing adjudicated in either Health and Human
Services Commission Appeals or the State Office of Administrative
Hearings. Shamrock has opted to proceed to the overpayment hearing there
at SOAH. At this point, without the court’s objection, HHSC-OIG would
like to simply file an amended pleading reflecting the consolidated issues. . .
(App. Ex. 4). On October 21, 2013, the SOAH Judge accepted the agreement,
setting a pre-hearing conference on the consolidated matters and noting:
[T]he parties have agreed to consolidate the payment hold and overpayment
issues into one proceeding.
Appellant’s Brief
Page 3
(App. Ex. 5, SOAH Order No. 5; App. Ex. 2, SOAH Order No. 11). On October
28, 2013, both parties again represented to the SOAH judge on the record that they
had agreed to consolidate the overpayment and payment hold cases. (App. Ex. 2).
This was the third time Shamrock had evidenced its request to have a hearing on
both matters, and the fourth time the OIG had admitted that Shamrock had
requested a hearing on both matters. (App. Ex. 2). On October 29, 2013, the
SOAH judge acknowledged the agreement, continued the payment hold hearing
and reset the matter so that the OIG could consolidate its payment hold pleadings
and its overpayment pleadings. (App. Ex. 2).
II. The OIG breaks its promise.
On November 25, 2013, the OIG sent Shamrock a Final Notice of
Overpayment, which was the OIG’s final statement regarding what it would seek
in the overpayment hearing. (App. Ex. 6). Because: 1) Shamrock had preemptively
requested the overpayment hearing, and 2) the parties had agreed to consolidate the
cases at the SOAH, and 3) the OIG had repeatedly indicated in its pleadings and on
the record that the overpayment hearing was going to be heard along with the
payment hold hearing, Shamrock did not respond to the OIG’s Final Notice with a
fourth request for the overpayment hearing. (App. Ex. 2, SOAH Judge finding that
“Shamrock relied on OIG’s representations to its detriment…”).
Appellant’s Brief
Page 4
Despite its agreement to do so, the OIG did not amend its SOAH pleadings
to include the overpayment allegations.2 It remained silent until January 3, 2014;
the OIG then filed a Motion to Dismiss the Payment Hold case, claiming any
dispute regarding Shamrock’s alleged overpayment was moot because Shamrock
had not requested an overpayment hearing within 15 days after the OIG’s Final
Notice. (App. Ex. 8). The OIG’s Motion to Dismiss further claimed that
Shamrock’s alleged $1,611,709 debt3 to the State was a “final debt,” meaning the
debt was indisputable and not subject to challenge in any court or proceeding.
(App. Ex. 8).
Caught off-guard by the OIG’s reversal, Shamrock quickly responded to the
OIG’s Motion to Dismiss. (App. Ex. 8). At first, the SOAH judge denied the OIG’s
Motion to Dismiss, citing the parties’ previous agreements and explaining “for
Petitioner [Shamrock] to have requested a hearing when one was already set would
have accomplished nothing because the parties had already agreed to consolidate
the two cases for hearing”; the SOAH judge consolidated the payment hold and
overpayment cases and set them for a March hearing. (App. Ex. 9, SOAH Order 8).
The OIG responded by lifting/dismissing the payment hold case and sweeping
2
It may be of interest to this Court that the OIG’s about-face coincided with a change in its lead counsel. Mr.
Enrique Varela represented the OIG and made all agreementsand OIG statements through October 9, 2013. Mr.
Steven Johnson represented the OIG from mid-October 2013 through November. Mr. Kevin Heyburn was lead
counsel in January 2014 when the OIG claimed Shamrock had failed to request a hearing on the OIG’s overpayment
allegations.
3
That debt was calculated to be $1,611,709 in the Final Notice.
Appellant’s Brief
Page 5
Shamrock’s held funds toward the satisfaction of the $1.6 million debt, which it
claimed was final and unappealable. (App. Ex. 2). Ultimately, the SOAH judge
reconsidered her earlier denial, and found she did not have the power to make the
OIG abide by its earlier promises:
[E]ven though Shamrock relied on OIG’s representations to its detriment,
the ALJ cannot proceed to a hearing. OIG has withdrawn the payment hold
issue, and it has neither separately referred an overpayment claim to SOAH
regarding Shamrock nor amended its pleadings to assert an overpayment
claim. The ALJ does not have authority to require OIG to amend its
pleadings to assert an overpayment claim in this case. As a result, there is no
pending case for which the ALJ could receive evidence and issue a Proposal
for Decision. Therefore, the ALJ dismisses this case from SOAH’s docket
pursuant to 1 TAC 155.503(c)(1).
(App. Ex. 2).
Although the OIG “withdrew” its claims for the temporary payment hold, it
did not release the funds to Shamrock. Instead, the OIG kept the funds and applied
them toward Shamrock’s alleged debt, which the OIG and the State now consider
final. Shamrock filed a motion to reconsider the dismissal at the SOAH. (CR 165)
The OIG opposed the motion; the SOAH judge denied the motion to reconsider.
(CR 196, RR Def. Ex. 20).
On June 12, 2014, Shamrock filed an Original Petition in the 126 th District
Court of Travis County with a subsequent Brief in Support of Writ of Mandamus
and Enforcement of Rule 11 Agreement. That Court issued an Order Granting
Defendants’ Motion to Dismiss for Lack of Jurisdiction on May 6, 2015. (CR 205).
Appellant’s Brief
Page 6
Neither the OIG, nor the HHSC, nor any other State agency has issued a
final order finding that Shamrock has a $1.6 million debt to the State; however, the
OIG has placed a warrant hold on Shamrock through the State Comptroller.
Appellant’s Brief
Page 7
SUMMARY OF THE ARGUMENT
The OIG is committing fraud on Shamrock and its own trier of fact, the
SOAH. The OIG approached Shamrock and asked Shamrock to combine its two
pending contested cases. When Shamrock agreed to the OIG’s request, the OIG
memorialized the agreement in emails with Shamrock, in its own pleadings, and in
its statements in open court. The OIG then laid behind the log, ignoring the parties’
agreement and its on-the-record avowals. Having assured both Shamrock and the
SOAH multiple times that it would consolidate the administrative cases, it then
pulled the rug out from under both, asserting an absurd argument that Shamrock
had failed to properly request the very hearing that the OIG itself had solicited.
This Court should not reward this sort of legal chicanery. Whether this Court
looks to 1) the OIG’s unilateral request to combine the cases, or 2) to Shamrock’s
multiple agreements to have its overpayment hearing pooled with its pending
payment hold hearing, or 3) to case law, the Rules of Civil Procedure and the Rules
of Appellate Procedure that permit Shamrock to prematurely file its appeal, or 4) to
TRCP Rule 11 and the SOAH Rule 155.415, which both require that a party be
held to their agreements, the result in this case is clear: Shamrock is entitled to its
overpayment hearing. The OIG asked Shamrock to agree (it did), then it asked the
SOAH to approve the consolidation (the SOAH agreed and continued the pending
hearing). Those actions prevent the OIG from now claiming that Shamrock failed
Appellant’s Brief
Page 8
in any way to request a hearing. From the moment the OIG first approached
Shamrock and the parties agreed to merge the cases, there was never any doubt as
to Shamrock’s intent and written requests to challenge the OIG’s claims that
Shamrock had been overpaid. No degree of deception or dishonesty by the OIG
should be allowed to rob Shamrock of its right to a hearing.
ARGUMENT
Issue: Does mandamus lie to require the OIG to provide Shamrock with
an administrative hearing on the issue of Shamrock’s alleged
overpayment?
I. Mandamus is appropriate because Shamrock complied with the
statutory requirement when it requested a hearing three times within 15 days
of being notified that the OIG would seek to recover an alleged overpayment.
Shamrock timely requested an appeal of the OIG’s indication it would seek
to permanently withhold the funds subject to the temporary payment hold. Section
531.1201(a) of the Government Code requires that a provider “request an appeal
under this section not later than the 15th day after the provider is notified that the
commission or the commission’s office of inspector general will seek to recover an
overpayment or debt from the provider.” TEX GOV’T CODE§ 531.1201(a)(emphasis
added). Shamrock complied with this requirement. Shamrock requested an appeal
on 10/4/13, 10/7/13, and 10/9/13, all of which were within 15 days of the OIG’s
10/2/13 e-mailed notice of an intent to seek recovery of an overpayment. (App. Ex.
Appellant’s Brief
Page 9
2 (SOAH Order 11); App. Ex. 3 (emails)). As early as September 17, 2013, the
OIG attorney on the case knew that Shamrock wanted an overpayment hearing,
because the OIG began its set-up with an e-mailed offer to consolidate the cases,
never questioning Shamrock’s intent or written requests to appeal the OIG’s
overpayment action. The relevant chronology is as follows:
10/2/13- By e-mail, the OIG gives notice of its intent to pursue an
overpayment hearing. This e-mail was “notifi[cation] that the commission or
the commission’s office of inspector general will seek to recover an
overpayment or debt from the provider.”
10/4/13- 1st Notice of Intent to Appeal (2 days after 10/2/13 notice).
Shamrock responds by e-mail, expressly requesting that the OIG set the
overpayment case at SOAH, consolidate the payment hold and overpayment,
and closing with a specific request to the OIG to “Let me know when you
receive this email and if I need to do anything.”
10/7/13- 2nd Notice (5 days after 10/2/13 notice). Shamrock responds to the
OIG’s statement that the OIG “could be ready for a hearing on the
overpayment issue in about 90 days” by clarifying “we may need more than
90 days for the hearing,” and again offering “Let me know if there is
anything I can do to assist you in docketing/consolidating the cases.”
10/9/13- 3rd Notice (7 days after the 10/2/13 notice). The OIG files a status
report correctly stating that “Shamrock has opted to proceed to the
overpayment hearing there at SOAH.”
(App. Ex. 2 (SOAH Order 11); App. Ex. 3 (emails)).
When the OIG gave notice of its intent to seek recovery of an alleged
overpayment, Shamrock timely responded. Therefore, the OIG’s refusal to provide
Shamrock with an administrative hearing is a violation of its ministerial duty. This
Appellant’s Brief
Page 10
court should reverse the district court and order the OIG to set Shamrock’s
overpayment case for a hearing.
II. Mandamus is appropriate since Shamrock preemptively requested a
hearing prior to the OIG’s “Final Notice,” so TRCP 306c and/or TRAP 27.2
apply.
The OIG claims that the only Notice of Overpayment that matters in this
case is the OIG’s “Final Notice of Overpayment ” letter sent November 25, 2013.
(App. Ex. 6). That is not what Texas Government Code section 531.1201 states.
The OIG claims that Shamrock’s earlier requests for a hearing on the overpayment
allegations were ineffective, and that Shamrock was required to respond after the
November 25, 2013 letter with yet another request for the already-agreed-to
overpayment hearing. Shamrock disagrees with the notion that the OIG can create
a moving target by simply sending one notice after another, each acting like a reset
button, and each requiring that Shamrock repeat its appeal request or suffer a
complete default. But assuming the November 25, 2013 “Final Notice of
Overpayment” letter was the only OIG notice that triggers the Texas Gov’t Code §
531.1201 right to a hearing in this case, Shamrock’s October appeal requests do
not release the OIG from its ministerial duty to docket the case at the SOAH.
Appellant’s Brief
Page 11
The Final Notice of Overpayment contains language that makes the OIG’s
overpayment determination appear to be self-effectuating unless a hearing is
requested:
(App. Ex. 6). While the Final Notice is not a “final order,” the language in it
appears to have the same effect as a final order; that is, the OIG’s overpayment
allegation will become final unless challenged through an appeal. Thus, the case
law and procedural rules for such final orders are instructive.
Under Texas Rule of Civil Procedure 306a, a premature notice of appeal is
deemed to be filed on the day of, but subsequent to, a challenged judgment.
Brighton v. Koss, 415 S.W.3d 864, 866 (Tex. 2013), reh'g denied (Oct. 18, 2013)
(“When a party prematurely files a notice of appeal, our procedural rules treat the
premature notice as filed subsequent to the order or judgment to which it applies.
Tex.R.App. P. 27.2; see also Tex.R. Civ. P. 306c (treating prematurely filed
motions for new trial as filed subsequent to the signing of the judgment)”). This
Court has applied Rule 306c to administrative cases, such as when a regulated
entity provided intent to appeal a final order before the final order was actually
Appellant’s Brief
Page 12
entered. El Paso Elec. Co. v. Pub. Util. Com'n of Texas, 715 S.W.2d 734, 738
(Tex. App.—Austin 1986, writ ref'd n.r.e.).
The facts of El Paso are analogous to the facts in this case. In El Paso, the
Public Utility Commission issued a final order, and El Paso Electric filed a motion
for rehearing, which is a mandatory prerequisite to appealing the case from the
agency to District Court. Id. at 735. The Commission granted in part El Paso
Electric’s First Motion for Rehearing and modified the final order. El Paso
Electric filed a second motion for rehearing on that amended final order; the
Commission again granted in part the second motion for rehearing and again
amended the final order. Id. El Paso Electric did not file a third motion for
rehearing after the issuance of the Commission’s last amended final order. Id.
When El Paso Electric filed its appeal in Travis County District Court,
the Commission successfully argued that by failing to file a third
motion for rehearing, El Paso Electric failed to satisfy the APTRA
jurisdictional requirements for judicial review. The pertinent provision
in APTRA requires a party to file a motion for rehearing within 15
days after the date of rendition of a final decision or order “in writing
or stated in the record.” APTRA, § 16(a), (e) (emphasis added).
According to the Commission, this provision is mandatory and
jurisdictional. Under this argument, El Paso Electric's second motion
for rehearing filed on December 4 was not timely since it was
filed before the December 7 order, and the district court therefore
properly concluded that it was without jurisdiction to review the
Commission's order.
Appellant’s Brief
Page 13
Id. (emphasis in original). The Commission’s position in El Paso is exactly what
the OIG argued to the SOAH in this case. This court rejected such stale
justification, holding,
it is appropriate and reasonable to turn to the rules and case law of
civil practice to consider the effect of a prematurely filed motion for
rehearing. Rule 306c of the Tex.R.Civ.P.Ann. (1985) provides that
“[n]o motion for new trial ... shall be held ineffective because
prematurely filed; but every such motion shall be deemed to have
been filed on the date of but subsequent to the date of signing of the
judgment the motion assails....” The effect of the rule is plain: When a
motion for new trial is filed before the judgment is signed, the motion
is regarded as filed on the date the judgment was signed. Magnolia
Petroleum Co. v. Klingeman, 242 S.W.2d 950 (Tex.Civ.App.1951,
writ ref'd).
Id. at 738. The analogy with Rule 306a and the early filing of an appeal is even
more compelling here since this case involves the beginning of the administrative
process as opposed to the courts’ review of agency action after an agency hearing.
Stated differently, the fact that Shamrock had repeatedly requested (and the OIG
had repeatedly acknowledged and accepted its receipt of Shamrock’s request for)
an overpayment hearing satisfies the statutory language and falls squarely within
the scenarios contemplated by Tex.R. Civ. P. 306c and Tex.R.App. P. 27.2.
Like El Paso, at issue are the agency’s duty to give notice of its claims in the
first place and the provider’s right to seek a hearing/appeal on that notice.
Shamrock’s early appeal does not harm the agency in any way. Like El Paso, the
OIG did not change what it sought from Shamrock between the October 2, 2013
Appellant’s Brief
Page 14
emailed notice and the November 25, 2013 “Final Notice.” Nor, for that matter, did
the OIG “Final Notice” change the basic nature of its claims from what it sought in
the temporary payment hold filed in February 2013. Shamrock’s three
appeal/hearing requests made in October 2013 appeal effectively put the OIG on
notice of Shamrock’s request for a hearing, and under TRCP 306c and TRAP 27.2,
were effective. As a result, this court should reverse the district court and order the
OIG to set Shamrock’s overpayment case for a hearing.
III. Mandamus is appropriate because the OIG’s statements and pleadings
constitute a binding TRCP Rule 11/ SOAH Rule 155.415 agreement that
require the OIG to set the overpayment case for a hearing.
In reversing herself and dismissing the case, the SOAH ALJ concluded that
“[t]he ALJ does not have authority to require OIG to amend its pleadings to assert
an overpayment claim in this case.” (App. Ex. 2). Shamrock respectfully disagrees.
Although the SOAH ALJs do not have the authority to tell the OIG to initiate cases
or claims, the SOAH ALJs certainly have the authority to rule on matters already
before them. Here, both the payment hold and the final overpayment issue were
before the SOAH (1) because the OIG status report was arguably sufficient to raise
the “final notice” claims and constitute a pleading and (2) because the parties’
agreement was enforceable as a Rule 11 agreement.
Appellant’s Brief
Page 15
The SOAH was already exercising its jurisdiction over the temporary
payment hold case. The only purpose of the “final notice” was to attempt to make
permanent the OIG’s ability to withhold the money at issue. The payments that the
OIG sought to recover are the same. The OIG basis for alleging the money paid
was an “overpayment” remained the same. The only distinction was that the pre-
hearing payment hold required proof to a credible allegation of fraud. The claims
otherwise remained the same. That is why the OIG indicated it would simply
amend its pleadings to shift from a pre-hearing “payment hold” to a full hearing on
the merits regarding what, if anything, Shamrock was required to repay the State.
The OIG’s status report put the matters at issue. The report reads like a
pleading: the OIG “is seeking recoupment of payments.” (App. Ex. 4). Although
the OIG indicated it would amend, the OIG status report did not say it “would
seek” recoupment. Pleadings in the SOAH cases need not take any particular form.
The SOAH Rule 155.5(19) defines a pleading as “[a] filed document that requests
procedural or substantive relief, makes claims, alleges facts, makes legal argument,
or otherwise addresses matters involved in the case.” The only purpose of the
OIG’s pleading amendment was to attempt to make permanent the OIG’s ability to
withhold the money that was already being withheld under the payment hold; the
SOAH already had jurisdiction over that payment hold matter. Thus, the
documents on file were sufficient to place the matter before the SOAH ALJ.
Appellant’s Brief
Page 16
For that reason, the SOAH ALJ already had jurisdiction over both matters.
As noted in Order No. 5:
[T]he parties have agreed to consolidate the payment hold and overpayment
issues into one proceeding.
(App. Ex. 2, SOAH Order No. 11, quoting SOAH Order No. 5). Because the only
issue was the consolidation of the overpayment hearing, the SOAH ALJ had the
power to enter Order No. 5 and to proceed with both cases. See 1 TAC 155.155
(allowing the SOAH judge to consolidate cases with common questions of fact).
The SOAH Rule 155.415 is the SOAH rule that is analogous or parallel to
Texas Rules of Civil Procedure Rule 11. Rule 155.415 provides:
No agreement will be enforced unless it is in writing, signed, and filed with
SOAH or entered on the record at the hearing or prehearing conference.
1 TAC 155.415; see also Tex. R. Civ. P. 11 (“Rule 11”). Under Rule 155.415, The
SOAH ALJs have the power and authority to “enforce” the parties’ agreements.
The October emails between the OIG and Shamrock constitute a binding
agreement because they were entered on the record at a prehearing conference
(App. Ex. 2). Likewise, the OIG’s agreement in its pleadings (App. Ex. 4) and as
entered in the record by the SOAH judge (App. Ex. 2) constitute a binding
agreement.
As a result, contrary to the SOAH ALJ’s concern that she lacked the power
to order the OIG to amend its pleadings, she most certainly did have the authority
Appellant’s Brief
Page 17
to do so since the OIG had entered its agreement to do so on the record. In addition
to the e-mail exchanges and judicial admissions in motions, the OIG had filed its
status report, which was in writing, which the OIG counsel had signed, and which
incorporated the OIG’s agreement to amend the existing contested case in response
to Shamrock’s request for a hearing on the overpayment. The parties had also
announced the agreement in open hearings. The parties’ agreement was also made
part of the record through the SOAH Order No. 5 and through the representations
made at the prehearing conference set in Order No. 5. (App. Ex. 5)
Because Rule 155.415 has the same effect as TRCP Rule 11, cases applying
Rule 11 are instructive. Litigants’ Rule 11 agreements are contracts relating to
litigation. Trudy's Tex. Star, Inc. v. City of Austin, 307 S.W.3d 894, 914 (Tex.
App.-Austin 2010, no pet.) The terms of this Rule 11/Rule 155.415 agreement are
readily apparent from the OIG’s e-mails, status report, judicial admissions in
motions, and statements to the ALJ in open court. The backbone of the agreement
was that Shamrock would receive a SOAH overpayment hearing.
The parties agreed to consolidate the cases, without qualification or
prerequisite. The terms are straightforward, as stated by the OIG counsel’s 10/7/13
e-mail. (App. Ex. 3). That correspondence from the OIG confirmed Shamrock’s
understanding of the agreement, and clarified it by explaining, “I [the OIG]
will…docket a separate case then consolidate or just file the overpayment case in
Appellant’s Brief
Page 18
the same case number as the payment hold (my preference).” (App. Ex. 2; Order
No. 11, describing the e-mails). With the OIG’s utter and unreserved agreement
repeated so often in and on the administrative record, it seems ridiculously
unnecessary to point out that the OIG never stated—to anyone, but especially to
the SOAH judge—that Shamrock needed to take action to preserve its right to the
combination “payment hold-overpayment hearing” that the OIG has begun
soliciting since October 2013. The OIG’s 10/9/13 subsequent status report is even
more clear-cut:
“Counsels for [OIG and Shamrock] have agreed to consolidate both
the payment hold and the overpayment into one proceeding in the
interest of judicial economy…HHSC-OIG would like to simply file an
amended pleading reflecting the consolidated issues. However, the
parties have not had time to do specific discovery regarding
overpayment issues. The parties would like input from the court on
how to proceed.”
(App. Ex. 4). What does it mean when the OIG states, “The parties would like
input from the court on how to proceed.”? Shamrock asks this court: How to
proceed with what? Was the OIG asking SOAH how to proceed with the payment
hold case? Obviously not; that case was already set for hearing in the next 30 days.
So the only reasonable answer is that the OIG was asking for direction regarding
how to proceed in the overpayment case.
The fact that the OIG was asking the SOAH judge how to amend its own
pleadings, and how to proceed with discovery in the overpayment case, necessarily
Appellant’s Brief
Page 19
indicates that the OIG was not waiting for any separate or affirmative action by
Shamrock. The OIG, at least the legal counsel at that time, projected to both SOAH
and Shamrock that the impetus was on the OIG, not Shamrock, to move forward
with the case by amending the pleadings and beginning discovery. Simply put, the
OIG knew Shamrock wanted an overpayment hearing, the OIG agreed to provide
that hearing, and the OIG was already considering how to proceed with discovery
in that hearing when it asked the court for direction on how to proceed.
Given the OIG’s on-the-record statements and actions, the only conclusion
that reasonable minds could have reached was that the OIG was set to move
forward with amending its pleadings and combining its claims. That is the very
essence of a Rule 11 agreement.
A trial court has a ministerial duty to enforce a valid Rule 11 agreement.
Scott-Richter v. Taffarello, 186 S.W.3d 182, 189 (Tex. App.—Fort Worth 2006,
pet. denied) citing ExxonMobil Corp. v. Valence Operating Co., 174 S.W.3d 303,
309 (Tex. App.—Houston [1st Dist.] 2005, pet. denied); Fed. Lanes, Inc. v. City of
Houston, 905 S.W.2d 686, 690 (Tex. App.—Houston [1st Dist.] 1995, no writ)
(holding that when Rule 11 prerequisites were met, trial court had ministerial duty
to grant relief in strict accordance with parties' agreement). Because there was a
valid and unambiguous “Rule 11” agreement, the ALJ was duty-bound to enforce
its provisions, as was the OIG. The OIG has the same the ministerial duty because
Appellant’s Brief
Page 20
administrative hearings are, technically, always in front of the agency; the SOAH
simply acts as the neutral fact-finder. So the ministerial duty ultimately falls to the
agency, since the SOAH judges operate only at the request of the agency that
invokes them. The ALJ was incorrect in her conclusion that she did not have the
authority to require the OIG to amend its pleading to assert an overpayment claim
in this case or to simply proceed on matters already before her. In fact, the ALJ is
required to do so, pursuant to the parties’ agreement. Likewise, the OIG has a
ministerial duty to abide by the promises made to Shamrock and the SOAH judge.
As a result, this court should reverse the district court dismissing the case for want
of jurisdiction and instruct the district court to order the OIG to set Shamrock’s
overpayment case for a hearing at the SOAH.
IV. Mandamus is appropriate because the OIG’s “withdrawal” of its
payment hold claim cannot be used to deprive Shamrock of its right to an
overpayment hearing.
It does not matter that the OIG dismissed its temporary payment hold
proceeding. It had no absolute right to do so if doing so would prejudice
Shamrock’s interests. Like a non-suit under Texas Rules of Civil Procedure Rule
162, a party can non-suit its claims, but such nonsuit will not affect pending claims
for affirmative relief. Texas Mut. Ins. v. Ledbetter, 251 S.W.3d 31, 37 (Tex. 2008).
Here, Shamrock had appealed the OIG payment hold and sought return of its
Appellant’s Brief
Page 21
money. Without an order requiring the return of the Shamrock money withheld
pursuant to the payment hold, the OIG could not simply dismiss its payment hold
claims. The OIG simply kept money withheld under the temporary payment hold,
and used it in partial satisfaction of the alleged overpayment. That kind of bait and
switch is beyond its authority.
“A judge may dismiss a matter from the SOAH's docket with or without
prejudice if a moving party withdraws its entire claim.” See 1 TAC 155.503(c)(1).
When Shamrock asked for a payment hold hearing, it requested relief from the
HHSC’s payment hold. The only relief that could have been granted to Shamrock
was that the payment hold could have been lifted; that relief carries with it the
requirement that the money that had been withheld by the OIG would be returned
to Shamrock. See Janek v. Harlingen Family Dentistry, P.C., 451 S.W.3d 97, 99
(Tex. App.—Austin 2014, no pet.). But when the OIG withdrew its payment hold
claim against Shamrock, it did not return Shamrock’s money that had been
withheld under the payment hold. Most importantly, the purpose of a temporary
payment hold is to secure the OIG’s financial position pending the overpayment
hearing, for which the OIG shoulders its burden of showing that the money in fact
constituted an “overpayment.” The two proceedings are inextricably linked. By
withdrawing its payment hold claim but keeping the money, the OIG prevented
Shamrock from getting any relief. As a result, this court should reverse the district
Appellant’s Brief
Page 22
court order dismissing the case for want of juisidiction and instruct the OIG to
either set Shamrock’s payment hold case for a hearing or return the previously
withheld funds to Shamrock.
CONCLUSION
The OIG cannot be allowed to induce a party to act through its repeated
promises—in communications with Shamrock, in its pleadings at the SOAH, and
in its on-the-record statements before the SOAH judge—that the parties have
agreed to have an overpayment hearing, and then assert that there was no
agreement. It is equally duplicitous for the OIG to proclaim to the SOAH in
October 2013 that there is no impediment to combining related administrative
cases, but then claim in January 2014 that Shamrock defaulted on a deadline that
prevents either case from going forward.
PRAYER
For these reasons, Shamrock prays that this Court reverse the trial court
order dissimissing the case for want of jurisdiction and instruct the trial court to
issue a Writ of Mandamus requiring the OIG to docket its overpayment claims at
the SOAH, as requested by Shamrock.
Appellant’s Brief
Page 23
Respectfully submitted,
____________________________________
Jason Ray
State Bar No. 24000511
RIGGS & RAY, P.C.
506 West 14th Street, Suite A
Austin, Texas 78701
512 457-9806
512 457-9066 – Facsimile
CERTIFICATE OF COMPLIANCE
I certify that this Brief complies with TRAP Rule 9.4 and contains 5,420
words in Times New Roman typeface of 14-point.
______________________________
Jason Ray
Appellant’s Brief
Page 24
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing document was
served by eservice on September 9, 2015 to the following:
Eugene A. Clayborn
Assistant Attorney General
Deputy Chief, Administrative Law Division
Office of the Attorney General of Texas
P.O. Box 12548, Capitol Station
Austin, Texas 78711-2548
Eugene.clayborn@texasattorneygeneral.gov
______________________________
Jason Ray
Appellant’s Brief
Page 25
Appendix to No. 03-15-00349-CV
SHAMROCK PSYCHIATRIC, P.A.
Appellants,
V.
TEXAS DEPARTMENT OF HEALTH AND HUMAN SERVICES,
KYLE JANEK, MD, EXECUTIVE COMM’R
AND DOUGLAS WILSON, INSPECTOR GENERAL
Appellees,
Ex. 1- Order Granting Motion to Dismiss for Lack of Jurisdiction
CR 205
Ex. 2- SOAH Order No. 11 (recounts procedural history of the case)
RR, Plaintiff’s Ex. 9, same as Defendant’s Ex. 15
Ex. 3- E-mails between OIG & Shamrock in September - October 2013
RR Plaintiff’s Ex. 3, same as Defendant’s Ex. 8
Ex. 4- OIG’s status report indicating Shamrock’s cases should be consolidated
RR Plaintiff’s Ex. 5, same as Defendant’s Ex. 9
Ex. 5- SOAH Order No. 5
RR Plaintiff’s Ex. 6, same as Defendant’s Ex. 10
Ex. 6- Final Notice of Overpayment
RR Defendant’s Ex. 11
Ex. 7- Notice of Payment Hold
RR Defendant’s Ex. 2
Ex. 8- OIG Motion to Dismiss Payment Hold
RR Defendant’s Ex. 13
Ex. 9- SOAH Order No. 8 (denying OIG’s Motion to Dismiss)
RR Defendant’s Ex. 14
Appendix to No. 03-15-00349-CV
Exhibit 1- Final District Court Order Granting Motion to
Dismiss for Lack of Jurisdiction
CR 205
DC BK15127 PG189
Filed in !he District Court
of Trav1s County, Texas
MAY 0 6 2015 _
./'Shamrock
/ 7 messages
,,,.·
/
Varela,Enrlque (HHSC) < Enrique.Vsrela@hhsc.slate.tx.us> Tue, Sep 17. 2013 at B:07
AM
To: •son Tran (sonvulrari@gmall.com)"
Hello Son,
Hope this email finds you well. We have the a ment hold case co u rett t and I wanted to
check In with you. Here !s Whal I propose · Iflfi\
~Mfilifit~lfiffilMB;}vhich won't have a hearing elate until Spring 2014, !:hen we now can -~·-·
consolidate both cases. Since the new leglsfa!lon came down, provlclera are now entitled to have the
overpayment hearing ai SOAH as opposed to HHSC appeals. The catch Is that the providers now have to
pay half {slate pays other haff) ofthe cost to have II at SOAH. I'm not sure what that cos! Is but I can't
imagine that our hearing would be longer than one full day. The len~ of lhe heating determines the cosL
Let me know your thoughts. Give me a cail, if you !Ike. Thanks.
Enrique M. Varela
Associate Counsel
Texas Health &. Human Services Commission
Office of Inspector General
P.O. Box 85200, MC 1358
Austin, Texas 78708-5200
512-491-405.2
512-833-6484 rax
enrlque. varela@hhsc.state.tx.us
The lnformallon contained In this e-mail transmission Is confidential. It may also be subject to privileges
retatrng to attomey-c!lent communfcations, work product, or proprietary !nfurmatlon. This infurmallon is
intended for the exclusive use of the addressee(s) named above. If you are not the Intended mcipfent, you
are hereby notlflecl that any use, dlacclosure, dissemination, distribution (other than to !he addressee(s)
named above}, copying. or the laking of any action because of this lnformallon ls strictly prohlbtted. If you
have received !his information In error, pfrHise immediately notify us by relum e-mail and delete this
message.
Son Tran < sonvutran@gmall.com> Fri, Sep 20, 2013 at 2:43 PM
https:/lmai Lgoog!e.comlrnail/u/O/?ui=2&ik=a6fb Ie(}l! Ie&nmp;view=
Sorry for the la!e response. Let me tafk with the client end I Will let you know next week. Thanks.
[Ou.lll::l te•t hmdecJ
Son Tran
Ah:l~S"lmOOh'.S"Tl~AX
Attomeyi; .J.\t Law
440 Lo:.ii5lana St.. Suite 50.'.l
Houstoi, Texas 17002
Tel: (713) 236-7300
Fa>: [713) 224·6008
·--------·------------·------·---
Varela,Enrique (HHSC) < Enrfque.Vatela@hhsc.slale.t>:.us> Wed, Oct 2, 2013 at 8:57 AM
To: Son Tran
Cc: "Johnson,Steve (HHSCt
Good morning Son, I wanted to reach out and see If you W•!re able.to determine whether yourdlent
would prefer to go dfrec:tly to the overpayment hearing. I also wanted to let you know that I am leaving
DIG on the October 11, 2013. Steve Johnson, who I have cr.'d here, Is 1he lltlgatlon team lead here and
will be assigning th ls case to another attorney asap. Thank you and I enjoyed working with you on this
case.
Enrique Varela
From: Son Tran [malrtc:sonvutran@gmail.com]
Sent: Friday, September 20, 20:13 2:44 PM
To: Varela,Ennque (HHSC)
Subject: Re; Shamrock
Son Tran < sonvutran@gmall.com> Thu, Oct 3, 2013 at 4:53 PM
To: •vare!a,Enrique (HHSC)"
Cc: ''Johnson,Steve (HHscr , Wlndl Pastorin!
HI Enrique, I am still waiting on a decision by Dr. Ravichandran. It has been such a pleasure working w!th
you. Best or luck to you and Iha !w!nsl
ro11~1ee lll>l 11;eo1111J
Son Vu Tran< sonvutran@gmaB.com> Fri, Oct 4, 2013 at 3:44 PM
To: "Varela,Enrfque (HHSCt
Cc: "Johnson.Steve (HHSC)" , Windi Paatorlnl
Mr. Varela and Mr. Johnson. I havediscurmed your proposal with my client and he has a~.'~
i!li£~00.``..i2!!iifW. set It at SOAH, and consolidate both cases. Let me know when you
receive this emall and If I need to do anythlng. Thank you.
Son Tran
Attorney At Law
440 Louisiana St., Suite 800
Houston, TeKas 77002
https:/lrnail.google.com/mail/uJO/?ui=2&ik=a6fb I e().J I e&vie:w"pt&q=enriqu... 11312014
vcn I r £.. J"t VI .VUfJ OvWl!$IU01 0.. IVICl\mney, t-'V 7132246008 p.9
Gmail - Shamrock Page J of3
Tel: (713) 236-7300
Fax: (713) 224-6008
JQU'11 Mon, Oct 7, 2013 at 7:08 AM
To: Son Vu Tran , "Varela.Enrique (HHSC)"
Cc: Wlndl Pastorinl , "Peltlgrew,Karen (HHSC}" e.us>
Mr. Tran,
As Enrique rner?icned he wlll be leavlng our department this wei·I<. I am writing to introduce myself and to let yQu
know ti-at I received this email I will check with SOAH to ,ee wh !ther they want us tc darlcet a separate c3s.e then
consolida:e or just file the overpayrn1mt case In 1he same case nt.mber as the payment held Crnv preference). 1
betreve we coufd be ready ro~ a hearli:g on the overpayment issu•! in about 90 days. Oo yoti ha·•e en idea of when
you and your dlenl would want lo have that hearing? We havi! 1.everal open dat!!.5 lrt January, 2014.
thanks and I look forward to working with yo~· to reso;ve thfs ma·:ter.
Steve J.
From: Son Vu Tran [maifto:sonvutran@gmail.com]
Sent: Friday, .October 04, 2013 3:44 PM
To: Varela,Enrlque (HHSC)
Cc: lohnson,steve (HHSC); Wlndi Pastorlnl
Subject: Re: Shamrock
fQucletl 1'11<1 h1tidim)
Son Vu Tran < sonvutran@gman.com> Mon, Oct 7, 2013 at 10:58 AM
To: "Johnson,Steve (HHSC)"
Cc: "Varela,Enrique (HHscr , Wind! Pastorfnl ,
"Peltigraw,Knren (HHSC)"
Mr. Johnson, we may need more than 90 days forthe hearing. Ms. Pastorinl and r wlll call yr.tu lalerthls
week to discuss the case. We look forward to personally meeting you. Le: me know if there Is anything I
can do to assist you in docketing/cansorldatlng the c.:ises.
Son Tran
Attorney At law
440 Loulslena S!., Suite 800
Houston, Texas noo2
Tel: (713) 236-7300
Fax: (713) 224-6008
[Ouote