NO. 03-15-00252-CV

In the 

Third Court of Appeals 

Of Texas 

DR. BEHZAD NAZARI, D.D.S., ET AL

Appellants, 

V. 

THE STATE OF TEXAS

 Appellees,

V. 

ACS STATE HEALTHCARE, LLC

Appellees. 

On appeal from the 53rd District Court, Travis County, Texas 

Cause No. NO. D-1-GV-14-005380 

APPELLANTS’ REPLY BRIEF 

Jason Ray

State Bar No. 24000511

RIGGS & RAY, P.C.

506 West 14th St., Suite A

Austin, Texas 78701

Telephone: (512) 457-9806

Telecopier: (512) 457-9066

jray@r-alaw.com

E. Hart Green 

Texas Bar No. 08349290 

WELLER, GREEN, TOUPS & TERRELL, L.L.P.

Post Office Box 350 

Beaumont, Texas 77704-0350

Telephone: (409) 838-0101

Telecopier: (409) 832-8577

hartgr@wgttlaw.com

Attorneys for Appellants Dr. Behzad Nazari, D.D.S., et al

Oral Argument Requested 

ACCEPTED

03-15-00252-CV

7019858

THIRD COURT OF APPEALS

AUSTIN, TEXAS

9/21/2015 3:29:38 PM

JEFFREY D. KYLE

CLERK

 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 9/21/2015 3:29:38 PM JEFFREY D. KYLE Clerk
Appellants’ Reply Brief

Page ii

TABLE OF CONTENTS

TABLE OF CONTENTS ......................................................................................... ii

TABLE OF AUTHORITIES ........................................................................................... iii

SUMMARY OF THE REPLY............................................................................................1

REPLY ARGUMENT......................................................................................................2

I. Reply to the State’s argument that it did not waive sovereign

immunity when it brought affirmative claims against the 

Dental Group. . ................................................................................................2

II. Response to State’s argument that the Dental Group’s 

Third Party claims against Xerox cannot be considered in

this appeal. .....................................................................................................6

A. Judicial economy and consistency would be met if this

Court opines on the propriety of third party claims,

because this is the same issue presented in the similarly

postured Xerox proceeding, 03-15-00401-CV. ............................................6

B. Xerox is correct; Chapter 33 applies to permit

contribution claims................................................................................8

CONCLUSION...............................................................................................................9

PRAYER ...............................................................................................................9

CERTIFICATE OF COMPLIANCE .................................................................................12

CERTIFICATE OF SERVICE..........................................................................................13
Appellants’ Reply Brief

Page iii

TABLE OF AUTHORITIES

CASES

Bates v. Republic of Texas,

2 Tex. 616 (1847) ............................................................................................4

Gabelli v. SEC, 

133 S. Ct. 1216 (2013).....................................................................................4

Guillory v. Port of Houston Auth.,

845 S.W.2d 812 (Tex. 1993) ...........................................................................3

Reata Const. Corp. v. City of Dallas,

197 S.W.3d 371 (Tex. 2006) ...........................................................................4

SEC v. City of Miami, 

581 F. App’x 757 (11th Cir. 2014)...............................................................4,5

State v. Emeritus Corp.,

No. 13-13-00529-CV, 2015 WL 1456436, 

(Tex. App.—Corpus Christi Mar. 26, 2015, pet. filed)................................4,5

State v. Precision Solar Controls, Inc., 

188 S.W.3d 364 (Tex. App.—Austin 2006)....................................................4

State ex rel. Texas Dept. of Transp. v. Precision Solar Controls, Inc.,

220 S.W.3d 494 (Tex. 2007) ........................................................................2,4

STATUTES

Texas Civil Practice and Remedies Code Chapter 33 ...............................................8
Appellants’ Reply Brief

Page 1

SUMMARY OF THE REPLY

It is disturbing to imagine a government that has the power to seek damages

for civil wrongdoing, while also avoiding any investigation into its own part in that 

same alleged wrongdoing. The idea that the State is immune from: 1) compulsory 

counterclaims, 2) counterclaims that would directly or inferentially rebut the facts 

upon which its claims are predicated, and/or 3) counterclaims that share common 

or related core underlying facts is a breathtaking stance. Yet the State’s response 

brief fails to provide any legal support for that position. This Court should not be 

misled by the State’s attempt to fabricate a self-serving “carve-out” that would 

effectively create a TMFPA superstatute to override the Rules of Civil Procedure, 

logic, precedent, and due process. This court need only follow Reata and the 

federal analysis for False Claims Act counterclaims to resolve this case.

The Dental Group’s third-party claims against Xerox include a claim for 

contribution, but under a pure Federal False Claims Act analysis those claims 

would not be permitted. The Dental Group’s original brief did not address that 

category of relief. However, Xerox’s response brief accurately speaks to the 

applicability of Civil Practice and Remedies Code Chapter 33. The Dental Group 

agrees with Xerox and adopts its briefing on the matter.
Appellants’ Reply Brief

Page 2

REPLY ARGUMENT 

Reply to the State’s argument that it did not waive sovereign immunity when 

it brought affirmative claims against the Dental Group.

The State’s response brief is rooted in two assertions. First, the State claims 

that it can invoke sovereign immunity as a defensive maneuver to the Dental 

Groups’ counterclaims, while simultaneously asserting affirmative claims for relief

on the exact same facts, despite Reata and 75 years of case law to the contrary. 

Second, because its affirmative claims were brought only under the TMFPA, the 

State claims it retains its immunity “shield” while at the same time wielding the 

TMFPA “sword” against the Dental Group. Both of these arguments are contrary 

to precedent.

The State begins its response brief by arguing that Reata is not a case that 

involves a waiver of sovereign immunity; the State claims that Reata instead 

relates to the judicial abrogation of sovereign immunity that occurs as a result of 

the State bringing its own claims for relief. That position is a distinction without a 

difference. Whether this Court categorizes the State’s claims as creating “waiver of 

immunity by conduct,”1 or producing judicial revocation of the common law 

doctrine, or forming a bubble of facts upon which immunity cannot exist, the result 

 

1 State ex rel. Texas Dept. of Transp. v. Precision Solar Controls, Inc., 220 S.W.3d 494 (Tex. 

2007) (“[In Reata,] [w]e held that a governmental entity that brings an action waives immunity 

from suit for claims that are germane to, connected with, and properly defensive to its action, to 

the extent of an offset.”)
Appellants’ Reply Brief

Page 3

is the same: sovereign immunity is unavailable to the State as a jurisdictional bar 

on the Dental Groups’ claims that are germane to, connected with, and properly 

defensive to the state’s claims. 

The State stretches case law to find any statement that, taken in a vacuum, 

might appear to support its position. None of the cases cited by the State support its 

argument. The State cites Guillory v. Port of Houston Auth., 845 S.W.2d 812, 814 

(Tex. 1993) for its proposition that the Texas Supreme Court has refused to 

judicially abrogate a government entity’s immunity in a proprietary activity vs. 

non-proprietary activity setting. (State’s Br. at 19-20). But the State ignores the 

overriding fact that Guillory was about a conflict between relief available under the 

Texas Tort Claims Act and federal Maritime law. Guillory did not involve the 

interaction of affirmative claims asserted by the government and related 

counterclaims asserted by Guillory; Guillory was about the scope of a statutory 

waiver of immunity. Guillory was a straight tort action brought against a 

governmental entity by Guillory. In addition, the Texas Supreme Court’s decision 

in Guillory only reformed and limited Guillory’s monetary recovery; it did not 

completely deprive Guillory of his claims and recovery. Guillory’s facts are so 

different than the facts here, its usefulness on any relevant legal question is 

negligible. 
Appellants’ Reply Brief

Page 4

Next, the State reaches back 150 years to cite Bates v. Republic of Texas, 2 

Tex. 616 (1847) for the idea that a right to set-off damages through a crossclaim is 

barred by immunity. (State’s Br. at 20-21, 24). However, in 2006 this Court 

expressly acknowledged that Bates had been abrogated for over 100 years, and that 

Anderson and Reata were the controlling cases with regard to counterclaims raised 

against the State. See State v. Precision Solar Controls, Inc., 188 S.W.3d 364, 367 

(Tex. App.—Austin 2006), order withdrawn (Apr. 5, 2007), review granted, 

judgment vacated sub nom. on other grounds State ex rel. Texas Dept. of Transp. v. 

Precision Solar Controls, Inc., 220 S.W.3d 494 (Tex. 2007) (Supreme Court 

remanded the case to the trial court for further consideration consistent with 

Reata); see also Reata Const. Corp. v. City of Dallas, 197 S.W.3d 371, 376 fn 2 

(Tex. 2006) (stating that Bates was not in conflict with Anderson or Reata because 

Bates “involved claims by the defendants for set-offs unrelated to the 

governmental entities' claims.”). The claims at issue here are far from “unrelated.”

The State’s invocation of Gabelli v. SEC, 133 S. Ct. 1216, 1223 (2013), SEC 

v. City of Miami, 581 F. App’x 757, 760 (11th Cir. 2014) and State v. Emeritus 

Corp., No. 13-13-00529-CV, 2015 WL 1456436, at *10–11 (Tex. App.—Corpus 

Christi Mar. 26, 2015, pet. filed), also fail to support the State’s position in any 

way. Gabelli stands only for the proposition that the government is bound by the 

statute of limitations when it seeks civil penalties; it does not even imply that there 
Appellants’ Reply Brief

Page 5

is a different standard for applying immunity for different sorts of governmental 

actions. The court in SEC v. City of Miami expressly denied official immunity to 

Miami’s budget director when the SEC sought penalties for federal securities 

fraud; it is difficult to see how a case denying official immunity from Federal 

claims acts as a bar here, where the State is attempting to assert sovereign 

immunity to counterclaims. Finally, State v. Emeritus Corp. is a decision that 

turned entirely on the applicability of the Texas Medical Liability Act to a State 

action under the Deceptive Trade Practices and Assisted Living Facilities Act. The 

dispute in Emeritus Corp. did not in any way involve sovereign immunity or a 

defendant’s counterclaims. 

Simply put, the State wishes to ignore Reata. The State presents no 

authority, express or implied, direct or indirect, for its position that the TMFPA is a 

unilateral weapon. Thus, the State asks that this Court manufacture a completely 

new standard for determining whether the State can assert sovereign immunity in 

response to offsetting counterclaims from a defendant. Allowing the State to 

pursue a civil action without fear of having to address compulsory or related 

counterclaims from defendants that might provide an offset to the State’s claims is 

a breathtaking departure from precedent and the rules of civil procedure.
Appellants’ Reply Brief

Page 6

Response to State’s argument that the Dental Group’s Third Party claims 

against Xerox cannot be considered in this appeal.

A. Judicial economy and consistency would be met if this Court 

opines on the propriety of third party claims, because this is the 

same issue presented in the similarly postured Xerox proceeding, 

03-15-00401-CV.

The Dental Group agrees with Xerox that this Court should decide Xerox’s 

original proceeding in Cause 03-15-00401-CV in conjunction with this appeal. The 

Dental Group’s second issue is generally the same as Xerox’s issue in its original 

proceeding: namely, does the TMFPA prevent a defendant (either the Dental 

Group in this case, or Xerox in that case) from bringing third party claims? In its 

response brief, the State avoids any argument on the merits of this issue. Instead, it 

argues only that this Court lacks jurisdiction to consider whether the dismissal of 

the Dental Groups’ third party claims was proper.

In considering both this appeal and Xerox’s original action, this Court 

should note the strange procedural posture that the State’s actions have created. 

The State is working to prevent all of the parties from adjudicating these 

overlapping, intertwined claims in a single proceeding. All three “sides” are 

claiming the others committed wrongdoing on the same facts:
Appellants’ Reply Brief

Page 7

STATE

DENTISTS XEROX

Under the facts pleaded by the State in both of its fraud suits, the defendants’ 

justiciable interests are evident. Whether the defendant is the Dental Group in this 

case or Xerox in the similarly situated original proceeding 03-15-00401-CV, the 

defendants seek to reveal all of the interrelated facts and relationships in each of 

their respective cases so that the culpable party(s) can be held accountable. The 

defendants also seek to prevent the State from taking inconsistent positions against 

the defendants.

The State is pursuing recovery of the same “tens of millions of dollars” from 

both the Dental Group and the defendant Xerox, even as the State demands that the 

cases be tried separately. The Dental Group’s justiciable interests are obvious. The 

TMFPA civil fraud 

claim (D-1-GV-14-

00581) and the related 

appeal (03-15-00401-

CV)

TMFPA fraud claims in 

administrative court 

(SOAH, HHSC); 

subsequently dismissed and 

replaced by this civil 

TMFPA case (D-1-GV-14-

005380; appeal 03-15-

00252-CV)

Counterclaims in this civil 

TMFPA case: Conspiracy, 

joint enterprise, breach of 

contract, conversion, fraud, 

breach of contract, 

negligence, gross negligence

Third party claims in 

this case; the same 

claims are made in 

D-1-GV-15-002055; 

D-1-GN-14-000319, 

320, 321, and 322. 

Contribution 

(this case)
Appellants’ Reply Brief

Page 8

relationship between the dentists, the State, and Xerox is a nearly perfect tripartite 

arrangement. In the interest of judicial economy, consistency (especially relating to 

disparate rulings on discovery and dispositive motions) and overall justice, all of 

the parties’ claims regarding medical necessity and proportionate party 

responsibility should be determined with an acknowledgement that rulings with 

regard to any one party’s claims affect all of the parties.

B. Xerox is correct; Chapter 33 applies to permit contribution 

claims.

Xerox’s response brief correctly states that the Dental Group assumed that 

because contribution claims are not permitted under the Federal False Claims Act, 

such claims were also unavailable under Texas law. Upon further research and 

review, the Dental Group agrees that Texas Civil Practice and Remedies Code 

Chapter 33 permits a right to contribution or indemnity under the facts of this case. 

Rather than copy that argument in this reply brief, the Dental Group adopts and 

incorporates Xerox’s briefing on the law under Tab F of Xerox’s response brief. 

Xerox is incorrect when it claims that none of the Dental Group’s claims 

sound in contribution. The Dental Group expressly made a claim for contribution 

in paragraph 31 of its answer (CR 40). Therefore, Xerox’s claim for contribution 

from the Dental Group in 03-15-00401-CV is mirrored by the Dental Group’s 

contribution claim in this case.
Appellants’ Reply Brief

Page 9

In sum, the Dental Group adopts Xerox’s legal analysis regarding Chapter 

33’s application to this case. The Dental Group made, inter alia, a contribution 

claim against Xerox, so that argument is relevant and applicable to this appeal. But 

whether Chapter 33 applies to permit contribution claims does not prevent, and 

will not change, an application of the federal False Claims Act framework for 

permitting third party claims. All of the Dental Group’s third party claims against 

Xerox are expressly permitted under the federal analysis (fraud, conspiracy, breach 

of contract, negligence, gross negligence) and/or Chapter 33 (contribution). 

CONCLUSION

The Dental Group and Xerox simply want judicial consistency and 

economy, and the opportunity to present all of the facts that relate to the State’s 

claims. The idea that the Dental Group can be barred from bringing compulsory 

and defensive counterclaims/third-party claims is abhorrent to the concepts of due 

process and judicial economy.

PRAYER

Appellants pray this court:

1) reverse the trial court order granting the State’s Plea to the Jurisdiction so 

that the Appellants’ claims against the State may proceed in this case, 

and
Appellants’ Reply Brief

Page 10

2) reverse the trial court order granting the State’s Motion to Dismiss so that 

the Appellants’ claims against the third party Xerox may proceed in this 

case, or 

3) in the alternative, reverse the trial court’s grant of the Motion to Dismiss 

the Appellants’ third party claims, and instruct the court to sever the 

Appellants’ third party claims against Xerox into a different cause.

___________________________________

Jason Ray

RIGGS & RAY, P.C.

504 W. 14th Street, Suite A

Austin, Texas 78701

Telephone: (512) 457-9806

Facsimile: (512) 457-9866 

jray@r-alaw.com

E. Hart Green 

Mitchell A. Toups

WELLER, GREEN, TOUPS & TERRELL, L.L.P.

Post Office Box 350 

Beaumont, Texas 77704-0350

Telephone: (409) 838-0101

Telecopier: (409) 832-8577

hartgr@wgttlaw.com

matoups@wgttlaw.com

ATTORNEYS FOR DR. BEHZAD NAZARI, 

D.D.S. D/B/A ANTOINE DENTAL CENTER, 

DR. BEHZAD NAZARI, HARLINGEN 

FAMILY DENTISTRY, P.C. A/K/A 

PRACTICAL BUSINESS SOLUTIONS, 

SERIES LLC, JUAN D. VILLARREAL D.D.S., 
Appellants’ Reply Brief

Page 11

SERIES PLLC D/B/A HARLINGEN FAMILY 

DENTISTRY GROUP, DR. JUAN

VILLARREAL, RICHARD F. HERRSCHER, 

D.D.S., M.S.D., P.C., DR. RICHARD F. 

HERRSCHER, M & M ORTHODONTICS, 

PA, DR. SCOTT MALONE, DR. DIANA 

MALONE, MICHELLE SMITH, NATIONAL 

ORTHODONTIX, MGMT., PLLC, DR. JOHN 

VONDRAK, RGV SMILES BY ROCKY 

SALINAS, D.D.S. PA, AND DR. ROCKY 

SALINAS.
Appellants’ Reply Brief

Page 12

CERTIFICATE OF COMPLIANCE

I certify that this Brief complies with TRAP Rule 9.4 and contains 2,062

words in Times New Roman typeface of 14-point.

 Jason Ray
Appellants’ Reply Brief

Page 13

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the Response to Request for 

Disclosure was served via e-mail and e-service on the 21st day of September, 2015 

on the following:

Counsel for Plaintiff State of Texas

Raymond C. Winter 

Chief, Civil Medicaid Fraud Division 

Reynolds B. Brissenden

Assistant Attorneys General

Office of the Attorney General 

P.O. Box 12548 

Austin, Texas 78711-2548 

Telephone: (512) 936-1709 

Facsimile: (512) 936-0674 

E-mail: raymond.winter@texasattorneygeneral.gov 

E-mail: reynolds.brissenden@texasattorneygeneral.gov

Counsel for Xerox Corporation, et al.

Robert C. Walters

Gibson, Dunn, & Crutcher, LLP

2100 McKinney Avenue, Suite 1100

Dallas, Texas 75201

Telephone: (214) 698-3100 

Facsimile: (214) 571-2900 

E-mail: RWalters@gibsondunn.com

W. Curt Webb

Constance H. Pfeiffer

Beck Redden, LLP

1221 McKinney Street, Suite 4500 

Houston, Texas 77010 

Telephone: (713) 951-3700 

Facsimile: (713) 951-3720 

E-mail: cwebb@beckredden.com

E-mail: cpfeiffer@beckredden.com

Eric J. R. Nichols

Christopher R. Cowan

Beck Redden, LLP

515 Congress Avenue, Suite 1750

Austin, Texas 78701

Telephone: (512) 708-1000 

Facsimile: (512) 708-1002

E-mail: enichols@beckredden.com

E-mail: ccowan@beckredden.com
Appellants’ Reply Brief

Page 14

Counsel for Defendants/Third-Party Plaintiffs

E. Hart Green

Mitchell A. Toups

WELLER, GREEN, TOUPS & TERRELL,

L.L.P.

Post Office Box 350

Beaumont, Texas 77704-0350

Telephone: (409) 838-0101

Facsimile: (409) 832-8577

E-mail: hartgr@wgttlaw.com

E-mail: matoups@wgttlaw.com

Counsel for Defendants

Richard B. Pecore

LILES PARKER, PLLC

3400 N. McColl Rd., Suite F-35

McAllen, Texas 78501

Telephone: (202) 298-9750

Facsimile: (202) 337-5804

E-mail: rpecore@lilesparker.com

Counsel for RGV Smiles by Rocky Salinas, 

DDS PA,

and Dr. Rocky Salinas

Robert M. Anderton

Law Offices of Hanna & Anderton

900 Congress Avenue, Suite 250

Austin, Texas 78701

Telephone: (512) 477-6200

Facsimile: (512) 477-1188

E-mail: andertonr@msn.com

Counsel for Richard F. Herrscher, DDS,

MMSC, PC and Dr. Richard F. Herrscher

J.A. “Tony” Canales

CANALES & SIMONSON, P.C.

2601 Morgan Ave.

P.O. Box 5624

Corpus Christi, Texas 78465-5624

Telephone: (361) 883-0601

Facsimile: (361) 884-7023

E-mail: 

tonycanales@canalessimonson.com

Counsel for M&M Orthodontics, P.A., 

Dr. Scott Malone, Dr. Diana Malone, 

Michelle Smith, National Orthodontix 

Mgmt., PLLC and Dr. John Vondrak

Oscar X. Garcia

Law Offices of Oscar X. Garcia

302 Kings Highway, Suite 112

Brownsville, Texas 78521

Telephone: (956) 554-3000

Facsimile: (956) 554-3248

E-mail: oxgarcia@aol.com

Counsel for Dr. Vivian Teegardin

Philip H. Hilder

William B. Graham

Hilder & Associates, PC

819 Lovett Boulevard

Houston, Texas 77006

Telephone: (713) 234-1416

Facsimile: (713) 655-9112

E-mail: philip@hilderlaw.com

E-mail: will@hilderlaw.com

Counsel for Dr. Wael Kanaan

____________________________

Jason Ray