CASE NO . 0 3
- 1 4
- 00 59 4
- CV

IN THE COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS

AUSTIN, TEXAS
KEN PAXTON 1 , ATTORNEY GENERAL OF TEXAS,

Appellant ,

v. TEXAS DEPARTMENT OF STATE HEALTH SERVICES, Appellee
. On Appeal from the 353rd District Court of Travis County, Texas

The Honorable Lora Livingston, Presiding
REPLY BRIEF OF APPELL ANT KEN PAXTON , ATTORNEY GENERAL OF TEXAS
KEN PAXTON Attorney General of Texas
CHARLES E. ROY First Assistant Attorney General
BRANTLEY STARR Deputy Attorney General for Legal Counsel DAVID A. TALBOT, JR. Chief, Administrative Law Division
KIMBERLY L. FUCHS Chief, Open Records Litigation MATTHEW R. ENTSMINGER State Bar No. 240 59723 Assistant Attorney General Open Records Litigation Administrative Law Division Office of the Attorney General of Texas P.O. Box 12548, Capitol Station Austin, Texas 78711

- 2548 Telephone: (512) 475

- 41 51 Facsimile: (512) 320

- 016 7
A TT ORNEYS FOR A PPELL ANT K EN P AXTON , A TTORNEY G ENERAL OF T EXAS February 27, 2 015

1 Pursuant to Texas Rule of Appellate Procedure 7.2, the Attorney General substitutes Attorney General Ken Paxton for former Attorney General Greg Abbott. ACCEPTED 03-14-00594-CV 4312768 THIRD COURT OF APPEALS

AUSTIN, TEXAS 2/27/2015 11:55:30 AM JEFFREY D. KYLE

CLERKii TABLE OF CONTENTS
TABLE OF CONTENTS

................................ ................................ .......................... i i
INDEX OF AUTHORITIES

................................ ................................ .................... i ii
REPLY

................................ ................................ ................................ ....................... 1
I. DSHS has failed to show any statutory investigative authority outside of subchapter C that was reasonably contemplated by the legislature when creating section 531.1021(g).

................................ ................................ ..... 1
II. Section 531.102 does not mandate the creation of a publicly

- available “final report” on audits or investigations unrelated to fraud, waste, and abuse in the provision and delivery of all health and human services in the state.

................................ ................................ ................................ ...... 4
III. The legislatu re has not taken any action to amend section 531.1021( g ) to address the Attorney General’s interpretation.

................................ ....... 5 CONCLUSION AND PRAYER

................................ ................................ ............... 7
CERTIFICATE OF COMPLIANCE

................................ ................................ ......... 8
CERTIFICATE OF SERVICE

................................ ................................ .................. 9iii INDEX OF AUTHORITIES

CASE Tex. Dep’t of Aging and Disability Servs. v. Greg Abbott, Attorney Gen. of Tex. , No. D

- 1

- GN

- 11

- 002989 (353rd Dist. Ct., Travis County, Tex. Jul. 18, 2013)

......... 6 STATUTES Tex. Gov't Code § 531.102(a)

................................ ................................ ................................ ........... 2, 4 § 531.102(j)

................................ ................................ ................................ ................ 4 § 531.102(k)

................................ ................................ ................................ ............... 4 § 531.008(c)(2)

................................ ................................ ................................ ........... 3 § 531.103

................................ ................................ ................................ .................... 2 § 531.1031

................................ ................................ ................................ .................. 2 § 531.104

................................ ................................ ................................ .................... 2 § 531.1021(g)

................................ ................................ ................................ ......... 1, 5
RULE 1 Tex. Admin. Code § 371.11(a)

................................ ................................ ............... 3 ATTORNEY GENERAL LETTER RULINGS 2 OR2004

- 08876

................................ ................................ ................................ ........... 5
OR2012

- 10072

................................ ................................ ................................ ........... 6

2 Open records decisions and letter rulings of the Attorney General are available on the internet at: https://www.oag.state.tx.us/open/ogindex.shtml and Westlaw©.iv

ATTORNEY GENERAL LETTER RULINGS (continued)
OR2012

- 19674

................................ ................................ ................................ ........... 6
OR2013

- 02357

................................ ................................ ................................ ........... 6
OR2013

- 02732

................................ ................................ ................................ ........... 6
OR2013

- 04545

................................ ................................ ................................ ........... 6
OR2013

- 05224

................................ ................................ ................................ ........... 6
OR2013

- 06264

................................ ................................ ................................ ........... 6
OR2013

- 08066

................................ ................................ ................................ ........... 6
OR2013

- 11552

................................ ................................ ................................ ........... 6
OR2013

- 12119

................................ ................................ ................................ ........... 6
OR2013

- 14973

................................ ................................ ................................ ........... 6
OR2014

- 06063

................................ ................................ ................................ ........... 6
OR2014

- 07711

................................ ................................ ................................ ........... 6
OR2014

- 13108

................................ ................................ ................................ ........... 6
OR2014

- 15004

................................ ................................ ................................ ........... 6TO THE HONORABLE JUSTICES OF THE THIRD COURT OF APPEALS:

The Attorney General files this brief in reply to the brief submitted by the Department of State Health Services (DSHS).

REPLY
I. DSHS HAS FAILED TO S HOW ANY STATUTORY INVESTIGATIVE AUTHORITY OUTSIDE OF SUBCHAPTER C THAT WA S REASONABLY CO NTEMPLATED BY THE LE GISLATURE WHEN CREATING SECTION 531 .1021( g ). DSHS emphasizes that section 531.1021(g) of the Government Code restricts confidentiality of information and materials su bpoenaed or compiled by the Office of the Attorney General to such information gathered “in connection with a Medicaid fraud investigation,” while containing no similar restrictive phrasing in relation to OIG investigations. Appellee’s Br. at 8

– 9; see Tex . Gov’t Code § 531.1021(g) . But this phrasing only further supports the Attorney General’s position that the legislature clearly contemplated only those investigations conducted under
subcha pter C (“Medicaid and Other Health and Human Services Fraud and Overcharges”) when crafting the limited confidentiality provision contained in section 531.1021(g).
While the Texas Constitution mandates the Office of the Attorney General is responsible fo r representing the State in all cases in which the State may be a part y, subchapter C concerns only those investigations conducted by the Attorney2

General’s Medicaid fraud enforcement divisions. See Tex. Gov’t Code §§ 531.103 (authorizing interagency coordination in cases of suspected fraud, waste, or abuse under state Medicaid program or other program administered by the commission or
a heal th and human services agency); 531.1031 (defining “participating agency” in relevant part as “the Medicaid fraud enforcement divisions of the offi ce of the attorney general”); 531.104 (mandating Health and Human Services Commission provide inve stigative support to Attorney General “in connection with cases under Subchapter B, Chapter 36, Human Resources Code,” relating to Medicaid Fraud Prevention). Given the Attorney General’s mandated involvement in any number of cases or investigations beyon d those contemplated by subchapter C of chapter 531, it is apparent why the legislature explicitly limited the reach of section 531.1021(g) to only those materials subpoenaed or compiled by the Office of the Attorney General “in connection with a Medicaid fraud investigation.” To the extent the OIG might conduct investigations not contemplated by subchapter C, however, it can claim no similar, obvious investigative authority beyond that established by subchapter C and which the legislature might have take n into account in drafting the confidentiality provision in question. Rather, as explained in the Attorney General’s brief, the legislature has explicitly set out the duties of the OIG within subchapter C itself , and nowhere else

. See Tex. Gov’t Code § 5 31.102(a) (OIG responsible for “investigation of fraud, waste, and abuse in the3

provision and delivery of all health and human services in the state”). DSHS c ites to a statute delineating the divisions of the Health and Human Services Commission (HHSC) in support of its claim that the OIG “has been charged with investigating more than just Medicaid fraud”: “ The executive commissioner shall establish within
the commission

. . . the office of inspector general to perform fraud and abuse investigation and enforcement functions as provided by Subchapter C and other
law. ” Tex. Gov’t Code § 531.008(c)(2) ; see Appellee’s Br. at 10. But the Attorney General notes DSHS has not cited to any “other law”

— specifically one recognizing the OIG’s investigative authority regarding internal personnel matters not related to fraud, waste, and abuse in the provision and del ivery of all health and human services
in the state

— of which the legislature might have taken into account when drafting the statutory provision in question. Indeed, even the relevant provision of the Texas
Administrative C ode states “The [OIG] is respons ible for the investigation of fraud and abuse in the provision of health and human services (HHS) in Medicaid and other HHS programs.” 1 Tex. Admin. Code § 371.11(a) (HHSC, Medicaid and Other Health and Human Services Fraud and Abuse Program Integrity). Consequently, DSHS has failed to demonstrate that it should be assumed the legislature contemplated other types of investigations OIG might undertake, unrelated to those spe cifically authorized under subchapter C, when it made confidential materials gathered during an OIG audit or investigation.4

II. SECTION 531.102 DOES NOT MANDATE THE CREA TION OF A PUBLICLY
- AVAILABLE “FINAL REP ORT” ON AUDITS OR INVESTIGATIONS UNREL ATED TO F RAUD, WASTE, AND ABU SE IN THE PROVISION AND DELIVERY OF ALL HEAL TH AND HUMAN SERVICES IN TH E STATE. DSHS asserts “ [a] ny final report on an OIG audit or investigation is public, pursuant to Section 531.102(k).” Appellee’s Br. at 14; see Tex. Gov’t Code § 5 31.102(k) (“ A final report on an audit or investigation is subject to requir ed disclosure under Chapter 552.”). But section 531.102 mandates OIG create a final report only in relation to an audit or investigation conducted under subchapter C:

“ The [OIG] shall prepare a final report on each audit or investigation conducted
under this section .” Tex. Gov’t Code § 531.102(j) (emphasis added). As noted, the section in question relates to investigations of fraud, waste, and abuse in the provision and delivery of all health and human services in the state , but is silent as to investigations of employee misconduct otherwise unrelated to such fraud, waste, or abuse, or as to any other investigation conducted outside the subchapter’s authority. Tex. Gov’t Code § 531.102(a) ; see Appellant’s Br. at 7

– 9. Contrary to DSHS’s cl aim, this provision does not mandate the release of a final report regarding the types of employee misconduct investigations at issue. Rather, this section offers further support for the Attorney General’s contention that the legislature did not5

contempla te investigations conducted outside of subchapter C in creating section 531.1021(g). 3
III. THE LEGISLATURE HAS NOT TAKE N ANY ACTION TO AMEND SECTION 531.1021( g ) TO ADDRESS THE ATT ORNEY GENERAL’S INTERPRETATION. DSHS argues at length regarding the legislatu re’s inaction following the previous determination issued by the Attorney General to HHSC in an informal open records letter ruling issued in 2004. Appellee’s Br. at 20

– 26; see Tex. Att’y Gen.
OR2004

- 08876 , C.R. 62. While the Attorney General concedes this office has previously misapplied section 531.1021(g) to employee misconduct investigations not conducted under subchapter C, the ruling containing the previous determi nation is not such an example. Rather, as explicitly stated in that ruling, the previous determination was based on HHSC’s claim “ that the OIG was created ‘to prevent, detect and investigate fraud, abuse and waste in state health and human service programs.’” C.R. 62. Accordingly, the text of the previous determination itself would not have put the public or the legislature on notice regarding the application of section 531.1021(g) to employee misconduct investigations not arising under subchapter C.

3 The Attorney General notes th e record does not reflect that DSHS has released any “final report” relating to the employee misconduct investigation at issue in this suit.6

However, the Attorney General did later issue a number of other informal letter rulings applying the statute to misconduct investigations, without intervention by the legislature. See Appellee’s Br. at 24. On the other hand, since 2012 the Attorney Gener al has issued numerous letter rulings holding that section 531.1021(g) does not apply to information compiled by the OIG when such
information is “ not related to Medicaid or other health and human services fraud, abuse, or overcharges. ” See, e.g. , Tex. At t’y Gen. OR2012

- 10072 , OR2012

- 19674 , OR2013

- 02357 , OR2013

- 02732 , OR2013

- 04545 , OR2013

- 05224 , OR2013

- 06264 , OR2013

- 08066 , OR2013

- 11552 , OR2013

- 12119 , OR2013

- 14973 , OR2014

- 06063 , OR2014

- 07711 , OR2014

- 13108 , OR2014

- 15004

. But despite the fact the letter ruling at issue in the instant suit was issued in June of 2012, the 83 rd Legislature made no attempt to address the Attorney General’s interpretation of section 531.1021(g). Further, no bill has thus far been proposed in the current legislative session that would address the Attorney General’s applicati on of the statute, despite previous and ongoing litigation over the matter. 4

4 And beyond the instant suit, these rulings have generated other litigation. See Tex. Dep’t of Aging and Disabi lity Servs. v. Greg Abbott, Attorney Gen. of Tex. , No. D

- 1

- GN

- 11

- 002989 (353rd Dist. Ct., Travis County, Tex. Jul. 18, 2013) (granting summary judgment in favor of the Attorney Gene ral); C.R. 123

– 25. The Department of Aging and Disability Services chose not to appeal that prior ruling and instead sought a different ruling by filing the instant suit

.7 CONCLUSION AND PRAYER For the reasons set forth in this reply and in the Attorney General’s brief, t he Attorney General respectfully asks the Court to reverse the trial court’s grant of DSHS’s summary judgment motion and render judgment in favor of the Attorney
General. Respectfully Submitted,
KEN PAXTON Attorney General of Texas
CHARLES E. ROY First Assistant Attorney General
BRANTLEY STARR Deputy At torney General for Legal Counsel DAVID A. TALBOT, JR. Chief, Administrative Law Division
KIMBERLY L. FUCHS Chief, Open Records Litigation
/s/ Matthew R. Entsmin g er MATTHEW R. ENTSMINGER State Bar No. 240 59723 Assistant Attorney General Open Records Litigation Administrative Law Division Office of the Attorney General of Texas P.O. Box 12548, Capitol Station Austin, Texas 78711

- 2548 Telephone: (512) 475

- 41 51 Facsimile: (512) 320

- 016 7 matthew.entsminger@texasattorneygeneral.gov8 A TTORNEYS FOR A PPELL AN T K EN P AXTON , A TTORNEY G ENERAL OF T EXAS

CERTIFICATE OF COMPLIANCE I certify that the Reply Brief of Appell ant Ken Paxton , Attorney General of Texas, submitted complies with Rule 9 of the Texas Rules of Appellate Procedure
and the word count of this document is 1,4 8 5 . The word processing software used to prepare this filing and calculate the word count of the document is Microsoft Word
201 3

. Date: February 27, 2015
/s/ Matthew R. Entsmin g er MATTHEW R. ENTSMINGER A TTORNEY FOR A PPELL ANT9 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing Reply Brief of Appell ant Ken Paxton , Attorney General of Texas, has been served on February 27,
2015 , on the following counsel

- of

- record via e - service : A nn H artley State Bar No. 09157700 Assistant Attorney General Financial Litigation, Tax and Charitable Trusts Division Office of the Attorney General of Texas P.O. Box 12548, Capitol Station Austin, Texa s 78711

- 2548 Telephone: (512) 936

- 1313 Facsimile: (512) 477

- 2348 ann.hartley@texasattorneygeneral.gov
A TTORNEY FOR A PPELLEE

/s/ Matthew R. Entsmin g er MATTHEW R. ENTSMINGER A TTORNEY FOR A PPELLANT