Court Opinion

ID: 4072944
Source: CourtListenerOpinion
Date Created: 2016-09-30 03:21:43.025738+00
Date Added: 2024-06-11T14:32:35.458594
License: Public Domain

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