Opinion
03-22-00236-CV
11-15-2023
The State of Texas, Appellant v. Christine Ellis, D.D.S.; Alexandra Alvarez; and Joshua LaFountain, Appellees
From the 459th District Court of Travis County No. D-1-GN-19-004849, the Honorable Maya Guerra Gamble, Judge Presiding
Before Chief Justice Byrne, Justices Baker and Theofanis
OPINION
ROSA LOPEZ THEOFANIS, JUSTICE
The question before us in this interlocutory appeal is the trial court's subject matter jurisdiction under the Texas Medicaid Fraud Prevention Act (TMFPA) to adjudicate the merits of the joint motion of Christine Ellis, D.D.S. and Joshua LaFountain that they filed in the State of Texas's suit against Xerox Corporation and its affiliated corporate entities (collectively, Xerox). Based on their previously filed qui tam actions against Xerox, Ellis and LaFountain jointly moved for the trial court to determine their share of the proceeds from the State's settlement with Xerox. See Tex. Hum. Res. Code § 36.110 (entitling private party, who files petition for government under TMFPA, to receive varying percentage of proceeds from prosecution of action).
Appellees' joint motion also sought expenses, attorney's fees, and costs. See Tex. Hum. Res. Code § 36.110 (entitling private party, who files petition on behalf of government under TMFPA, to receive expenses, attorney's fees, and costs from defendant). But the parties address only appellees' request for the trial court to determine their share of the settlement proceeds. Consistent with the parties, we limit our discussion to the trial court's jurisdiction to determine appellees' share of the settlement proceeds.
Appealing from the trial court's order denying its plea to the jurisdiction, see Tex. Civ. Prac. & Rem. Code § 51.014(a)(8), the State contends that it enjoys sovereign immunity and that the TMFPA's first-to-file provision deprived the trial court of jurisdiction over appellees' joint motion, see Tex. Hum. Res. Code § 36.106. Because we conclude that the trial court has subject matter jurisdiction to adjudicate the merits of appellees' joint motion, we affirm the trial court's order denying the State's plea to the jurisdiction.
Alexandra Alvarez filed the joint motion with Ellis and LaFountain, but the State challenges the trial court's denial of the plea to the jurisdiction only as to Ellis and LaFountain.
BACKGROUND
Texas Medicaid Fraud Prevention Act
We begin with a brief overview of the TMFPA and its relevant provisions. The TMFPA targets fraud against the Texas Medicaid program, which in conjunction with the federal government "provides medical coverage to eligible Texans in need." In re Xerox Corp., 555 S.W.3d 518, 524-25 (Tex. 2018); see Tex. Hum. Res. Code § 32.001 (implementing Texas Medicaid Program "to provide medical assistance on behalf of needy individuals and to enable the state to obtain all benefits for those persons authorized" by federal law); Bell v. Low Income Women of Tex., 95 S.W.3d 253, 255 (Tex. 2002) (stating that "[s]ince 1965, the federal government's Medicaid program has offered matching funds to states that provide health services to the indigent"); see generally 42 U.S.C. §§ 1396 to 1396w-5 (addressing grants to states for medical assistance programs and providing for each state to administer its own Medicaid program).
The TMFPA authorizes the attorney general to investigate and enforce its provisions "and-via qui tam provisions-deputizes private citizens to pursue a TMFPA action on the government's behalf." In re Xerox, 555 S.W.3d at 525 (citing Tex. Hum. Res. Code §§ 36.051-.055, .101); see Tex. Hum. Res. Code §§ 36.101-.117 (authorizing and addressing actions by private persons). Private persons, known as relators, must file their petition under seal and serve a copy of it and additional information on the attorney general. See Tex. Hum. Res. Code § 36.102. The State then either elects to intervene in the case and take over the action or declines to do so. Id. §§ 36.102(c), .104; see also id. § 36.107 (addressing qui tam relator's rights and State's options when State proceeds with action). Although the percentage varies, a relator generally is entitled to a percentage "of the proceeds of the action," which "includes proceeds of a settlement of the action." Id. § 36.110. A payment to a person under this provision "shall be made from the proceeds of the action" and the person who receives a payment "is also entitled to receive from the defendant an amount for reasonable expenses, reasonable attorney's fees, and costs." Id. § 36.110(c). The court determines the amount of expenses, fees, and costs to be awarded "only after the defendant has been found liable in the action or the claim is settled." Id. Further, "the state may elect to pursue the state's claim through any alternate remedy available to the state," and when the state does so, "the person bringing the action has the same rights in the other proceeding as the person would have had if the action had continued under [the qui tam provisions]." Id. § 36.109(a).
The TMFPA's first-to-file and public-disclosure provisions place restrictions on private parties' qui tam actions. The first-to-file provision provides that "[a] person other than the state may not intervene or bring a related action based on the facts underlying a pending action brought under [the qui tam provisions]." Id. § 36.106; In re Gilead Scis., Inc., No. 06-21-00030-CV, 2021 Tex.App. LEXIS 8003, at *3-4 (Tex. App-Texarkana Sept. 30, 2021, orig. proceeding) (mem. op.) (describing TMFPA's "first-to-file bar"). "If the newly filed complaint 'alleges the same material or essential elements of fraud described in a pending qui tam action,' the first-to-file bar applies." In re Gilead Scis., Inc., 2021 Tex.App. LEXIS 8003, at *4 (quoting United States ex rel. Branch Consultants v. Allstate Ins., 560 F.3d 371, 378 (5th Cir. 2009)); see also United States ex rel. McGuire v. Millenium Labs., Inc., 923 F.3d 240, 252-53 (1st Cir. 2019) (discussing first-to-file provision in federal false claims act (FCA) and "'essential facts' standard" for determining when it applies and explaining that courts proceed claim by claim in making determination); Branch Consultants, 560 F.3d at 377-78 (discussing FCA's first-to-file rule and explaining that courts determine whether first-to-file provision applies based on "'essential facts' or 'material elements' standard").
Because the TMFPA's qui tam provisions at issue, including its first-to-file provision, use substantially similar language to the FCA's qui tam provisions, see 31 U.S.C. § 3729-33, federal jurisprudence interpreting the FCA's comparable provisions is informative. Cf. In re Xerox Corp., 555 S.W.3d 518, 535 (Tex. 2018) (orig. proceeding) (comparing federal and state fraud-prevention acts, including FCA, but concluding comparisons were not probative for issue before court because statutes employed "materially different language").
The TMFPA's public-disclosure provision generally requires a court, unless opposed by the attorney general, to dismiss a relator's qui tam action or claim if substantially the same allegations in the action or claim were already publicly disclosed and the relator is not the "original source of the information." See Tex. Hum. Res. Code § 36.113(b). Federal courts appear to agree that the FCA's analogous public-disclosure provision is not jurisdictional. See 31 U.S.C. § 3730(e)(4) (requiring court generally to dismiss relator's action or claim, unless opposed by the government, if substantially same allegations in relator's action or claim were already publicly disclosed unless relator was "original source of the information"); see, e.g., Abbott v. BP Exploration &Prod. Inc., 851 F.3d 384, 387 n.2 (5th Cir. 2017) (in context of FCA, agreeing with "sister circuits that the public disclosure bar is no longer jurisdictional").
In contrast to the federal courts' apparent agreement that the FCA's publicdisclosure provision is no longer jurisdictional, a split exists among the federal courts as to whether the FCA's counterpart provision to the TMFPA's first-to-file provision is jurisdictional. See 31 U.S.C. § 3730(b)(5) ("When a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action."); see, e.g., United States ex rel. JKJ P'ship 2011 LP v. Sanofi-Aventis U.S. L.L.C. (In re Plavix Mktg.), 974 F.3d 228, 232 (3d Cir. 2020) (recognizing split in federal sister circuits on question of whether FCA's first-to-file bar is jurisdictional and collecting federal cases treating it as jurisdictional and not jurisdictional).
Appellees' Qui Tam Suits against Xerox
In 2012, appellees filed qui tam petitions under seal against Xerox and dental and orthodontist service providers (Providers), alleging that Xerox and the Providers had violated the TMFPA concerning Medicaid payments to the Providers for certain types of services. See Tex. Hum. Res. Code § 36.102(b) (requiring petition to be filed under seal); Nazari v. State, 561 S.W.3d 495, 497-98 (Tex. 2018) (describing Providers' services and State's allegations against Providers and Xerox as to those services and explaining that "Xerox administered the prior-authorization program under a contract with the state" for those services); Nazari v. State, 497 S.W.3d 169, 171-72 (Tex. App.-Austin 2016), aff'd, 561 S.W.3d 495 (Tex. 2018) (providing overview of relevant statutes and regulations pertaining to the orthodontic services at issue). Alvarez filed her petition in February 2012, LaFountain in March 2012, and Ellis in April 2012. The State elected to intervene in their respective cases. See Tex. Hum. Res. Code § 36.102(b).
In addition to naming Xerox as a defendant, appellees named different Providers in their respective petitions.
The State's TMFPA suit against Xerox
In May 2014, the State filed its own suit against Xerox seeking civil remedies under the TMFPA, alleging that:
Xerox fraudulently operated the review process while serving as the Medicaid program administrator. Among other complaints, the State alleges Xerox misrepresented, concealed, or failed to disclose that it was not processing orthodontic prior-authorization requests in accordance with Medicaid policy, was not substantively reviewing the evaluative documentation, and was approving vast numbers of prior-authorization requests for ineligible services. The State claims that rather than conducting a rigorous review, Xerox actively concealed the fact that unqualified and inadequately supervised clerical employees routinely "rubber stamped" orthodontic prior-authorization requests. According to the State, Xerox's actions were unlawful, compromised the Medicaid program's integrity, and directly or indirectly caused the State to pay millions of dollars for unauthorized orthodontic services to Medicaid patients.In re Xerox, 555 S.W.3d at 521; see Nazari, 561 S.W.3d at 498 (summarizing State's allegations against Xerox in suit seeking civil remedies against service providers). Around the time that it filed its suit against Xerox, the State sought and received the agreement from appellees to dismiss or abate their respective qui tam actions.
In the appeal from the separate Medicaid-fraud case against the Providers, the Texas Supreme Court explained that the State "maintains that the Providers and Xerox committed independent frauds in violation of the [TMFPA]" and described the State's allegations against Xerox as follows: "Xerox failed to properly review the Providers' prior-authorization requests and instead simply rubber-stamped them." Nazari v. State, 561 S.W.3d 495, 498 (Tex. 2018). As to the Providers, the State alleged that:
the Providers routinely submitted prior-authorization and post-treatment-payment requests that misrepresented the severity or nature of the patients' conditions, sought payments for services that were never provided, falsely claimed that licensed employees had provided the services, and in some cases, accepted kickbacks.See id.
After the State and Xerox reached a settlement, appellees filed their joint motion in the State's suit for determination of their share of the settlement proceeds pursuant to Section 36.110 of the TMFPA. Appellees contended that the State's allegations were based on allegations that they had raised in their respective qui tam petitions. Appellees represented that they had "resolved any potential issues (e.g., 'first to file,' etc.) among themselves" as to "what percentage of recovery each" of them was "entitled out of the statutory share" and argued that the State's suit against Xerox was an alternative remedy proceeding to their qui tam actions against Xerox and that, therefore, they were entitled to a share of the settlement proceeds. See Tex. Hum. Res. Code § 36.109(a). Several months later, appellees also filed a joint motion to intervene pursuant to Texas Rule of Civil Procedure 60. See Tex.R.Civ.P. 60 (allowing party to intervene by filing pleading). Appellees believed they were "already proper parties because of their standing as qui tam relators in previously-filed, intervened lawsuits against the Xerox defendants in this case" but filed the motion to intervene "out of an abundance of caution so the Court has a clear understanding of [their] standing to participate in this case."
Appellees also attached exhibits to their motions, including the settlement agreement, which provided in relevant part:
• The State initiated its investigation "[o]n or about June 8, 2012."
• The State "intervened in a number of other actions brought in its name by qui tam relators (collectively, and together with any other such qui tam actions filed in state or federal court alleging claims arising out of Covered Conduct, the 'Related Actions')."
• The parties had "reached a full and final settlement of any and all of the claims, or potential claims," including those asserted in the "Related Actions."
• The parties defined "Covered Conduct" to include "conduct, acts, inaction, representations, omissions, statements, misstatements, or breach alleged" in the "Related Actions."
• The parties allocated some of the settlement amount "towards payment of attorneys' fees, costs, and legal expenses incurred by the State in connection with . . . the Related Actions."
• The State agreed to "promptly seek dismissal of all Related Actions filed in Texas state court."
• The parties agreed that: "With respect to the Related Actions, . . . the State shall be solely responsible to reimburse any relator or relator's counsel for any amounts in any manner arising from the Covered Conduct to be awarded to such relator or relator's counsel pursuant to provisions of state or federal law, or that are otherwise agreed by the State to be paid to such relator or relator's counsel, and none of Defendants shall have any responsibility to pay any such amounts in any manner arising from the Covered Conduct awarded or agreed to be paid to such relators or their counsel. The State agrees and commits to resolving any such amounts in any manner arising from the Covered Conduct awarded or agreed to be paid to such relator or relator's counsel using the proceeds paid under this Agreement."
• The parties agreed that: "Nothing in this Agreement is a waiver of the State's sovereign immunity, except as to a proceeding to enforce this Agreement."
• The parties agreed that: "This Agreement constitutes the complete agreement between the Parties with regard to the settlement of the State Action, the Related Actions, . . . and the other matters set forth in this Agreement.
The exhibits attached to appellees' motions also included copies of: (i) the State's notices of intervention in pending qui tam actions, (ii) a February 2014 letter from the attorney general representing that Alvarez's status was the "first to file" against Xerox, (iii) a letter confirming that the State had intervened in Ellis's suit in June 2012, (iv) a 2014 agreed order to partially unseal and abate Ellis's qui tam suit against Xerox, (v) a 2013 letter from the attorney general urging the trial court to deny the defendant's motion for summary judgment against Ellis in her qui tam suit, representing that the attorney general opposed dismissing Ellis from the suit and that it considered her a "bona fide relator" who brought to the case "knowledge and information" that "materially advances the litigation" and is "independent of and materially" in addition "to the allegations (if any) that were publicly disclosed," and (vi) a May 2014 statement on the attorney general's website that the State had filed a civil lawsuit against Xerox "to recover fraudulent Medicaid payments for orthodontic and dental services that were improperly approved by Xerox."
Appellees' joint motion was severed into a separate cause number, and in December 2021, the State filed a plea to the jurisdiction, asserting that the trial court lacked subject matter jurisdiction to adjudicate appellees' joint motion because the State enjoyed sovereign immunity from the claims therein. The State contended that appellees had not alleged or established facts to support their contention that its suit was an alternative remedy to appellees' qui tam actions, see Tex. Hum. Res. Code § 36.109(a), and that there can only be one first-to-file relator, precluding the trial court from adjudicating the joint motion, see id. § 36.106.
The State filed a plea in bar against appellees based on the public disclosure bar. The State represented to the trial court that it intended to provide "more extensive briefing on the TMFPA's 'public disclosure' issues once the parties have had sufficient time to conduct fact discovery." See Tex. Hum. Res. Code §§ 36.110(b), .113(b).
The State also filed a brief supporting its plea to the jurisdiction with exhibits that included its original petition against Xerox and appellees' petitions filed in their respective qui tam actions. Consistent with its position on appeal, in its brief in support of its plea to the jurisdiction, the State narrowed its challenge to the trial court's jurisdiction, limiting it to Ellis and LaFountain based on its contentions that Alvarez was the first to file and that being the first to file was a TMFPA "statutory prerequisite" to suit. See Tex. Gov't Code § 311.034 (stating that "[s]tatutory prerequisites to a suit, including the provision of notice, are jurisdictional requirements in all suits against a governmental entity").
Appellees filed a response relying on the State's intervention and settlement of their qui tam actions; the attorney general's position after Ellis filed her qui tam suit that she was a "bona fide relator"; and, if the trial court reached the merits, the allegedly distinct allegations of fraud against Xerox in their separate qui tam actions. Appellees also filed exhibits, including an affidavit by Ellis, an agreement as to the claims against the Providers in which the State agreed to pay more than one relator, and attorney general letters and pleadings representing that Ellis was a "bona fide relator." In her affidavit, Ellis avers about her discovery and concerns regarding fraud and waste that were occurring in the Texas Medicaid Orthodontics Program leading up to the filing of her qui tam petition. The State filed a reply to the response with additional exhibits, including its notice of election of alternative remedy against certain defendant providers in Ellis's qui tam action and 2011 news stories addressing concerns with the payment process and the validity of certain Medicaid claims and payments for dental and orthodontist services.
The trial court held a hearing on the State's plea to the jurisdiction. At the conclusion of the hearing, referring to the TMFPA's "purpose and structure," the trial court advised the parties that it was denying the State's plea to the jurisdiction. The trial court thereafter signed an order denying the plea. This appeal followed.
When she denied the State's plea at the hearing's conclusion, the trial judge's stated reasons included:
I do not believe sovereign immunity is the proper vehicle for this kind of dispute. These kinds of disputes, who is first to file, who is barred by what, how do you parse the pleadings and one Relators' petition versus another, these are commonplace, these are expected and predicted by the TMFPA, and I do not believe that sovereign immunity or Plea to the Jurisdiction is the way to do it.
The State intervened, the State settled all the claims, the State requested the severance. The TMFPA's own purpose and structure all indicate to me that a Plea to the Jurisdiction is an improper vehicle for this kind of dispute. Whether and to what percent-whether any relator is entitled at all or what percentage of any relator share each of these relators may be entitled to is a question that the parties in this case can decide by agreement or I will decide at the appropriate time after proper argument and briefing and all of that. But the Plea to the Jurisdiction is denied.
ANALYSIS
In one issue, the State contends that the trial court erred when it denied the State's plea to the jurisdiction because: (i) it enjoys sovereign immunity from the claims of Ellis and LaFountain for a TMFPA relator share award that they sought pursuant to Sections 36.109(a) and 36.110 of the TMFPA, see Tex. Hum. Res. Code §§ 36.109(a), .110; and (ii) the qui tam actions of Ellis and LaFountain were barred by the TMFPA's first-to-file bar, see id. § 36.106.
Standard of Review
"Sovereign immunity protects the State of Texas and its agencies and subdivisions from suit and from liability." Matzen v. McLane, 659 S.W.3d 381, 387-88 (Tex. 2021) (citing PHI, Inc. v. Texas Juv. Just. Dep't, 593 S.W.3d 296, 301 (Tex. 2019)). "Because the assertion of sovereign immunity implicates the courts' jurisdiction, immunity is properly raised in a plea to the jurisdiction." Id. at 388 (citing Houston Belt &Terminal Ry. v. City of Houston, 487 S.W.3d 154, 160 (Tex. 2016)).
To defeat a plea to the jurisdiction that challenges the pleadings, the plaintiff suing a state agency or a state official must "affirmatively demonstrate" in its pleadings that sovereign immunity has been waived or that it does not apply. Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). "We construe the pleadings liberally in favor of the plaintiffs and look to the pleaders' intent." Id. "If the pleadings do not contain sufficient facts to affirmatively demonstrate the trial court's jurisdiction but do not affirmatively demonstrate incurable defects in jurisdiction, the issue is one of pleading sufficiency and the plaintiffs should be afforded the opportunity to amend." Id. at 226-27. But "[i]f the pleadings affirmatively negate the existence of jurisdiction, then a plea to the jurisdiction may be granted without allowing the plaintiffs an opportunity to amend." Id. at 227; see Westbrook v. Penley, 231 S.W.3d 389, 395 (Tex. 2007).
A plea to the jurisdiction may also challenge the existence of jurisdictional facts. Mission Consol. Indep. Sch. Dist. v. Garcia, 372 S.W.3d 629, 635 (Tex. 2012). "In those cases, the court can consider evidence as necessary to resolve any dispute over those facts, even if that evidence 'implicates both the subject matter jurisdiction of the court and the merits of the case.'" Id. (quoting Miranda, 133 S.W.3d at 226). The trial court's review of the evidence "mirrors that of a traditional summary judgment motion." Id.; see Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 553-54 (Tex. 2000). "We review orders on pleas to the jurisdiction de novo." Matzen, 659 S.W.3d at 388 (citing University of Tex. M.D. Anderson Cancer Ctr. v. McKenzie, 578 S.W.3d 506, 512 (Tex. 2019)); see Miranda, 133 S.W.3d at 226.
The jurisdictional issue that the State raises also implicates statutory construction, which is a question of law that we review de novo. See First Am. Title Ins. v. Combs, 258 S.W.3d 627, 631 (Tex. 2008) (citing State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006)). We begin "'with the Legislature's words,' looking first to their plain and common meaning." El Paso Healthcare Sys., Ltd. v. Murphy, 518 S.W.3d 412, 418 (Tex. 2017) (quoting Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865-66 (Tex. 1999)); see also Presidio Indep. Sch. Dist. v. Scott, 309 S.W.3d 927, 930 (Tex. 2010) (explaining that courts construe statutory "text according to plain and common meaning unless a contrary intention is apparent from the context or unless such a construction leads to absurd results" (citing City of Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex. 2008))). "In conducting this analysis, 'we look at the entire act, and not a single section in isolation.'" Murphy, 518 S.W.3d at 418. This "text-based approach to statutory construction requires us to study the language of the specific provision at issue, within the context of the statute as a whole, endeavoring to give effect to every word, clause, and sentence." Id. (quoting Ritchie v. Rupe, 443 S.W.3d 856, 867 (Tex. 2014)). "When the statute's language 'is unambiguous and does not lead to absurd results, our search . . . ends there.'" Id. (quoting Texas Adjutant Gen.'s Office v. Ngakoue, 408 S.W.3d 350, 362 (Tex. 2013)).
Sovereign Immunity from Suit
As part of its issue, the State argues that Ellis and LaFountain "have failed to show that the TMFPA clearly and unambiguously waives sovereign immunity to permit their claims against the State." See Tex. Gov't Code § 311.034 (stating that "statute shall not be construed as a waiver of sovereign immunity unless the waiver is effected by clear and unambiguous language"). The State contends that appellees' joint motion seeking a relator share award that was filed in the State's suit against Xerox is a "suit" against the State and relies on this Court's statement in a related appeal that "the only provision of the [TMFPA] seeming to authorize a recovery against the State is found in [S]ection 36.112," which allows parties to recover fees and expenses against a state agency for frivolous appeals. See Nazari, 497 S.W.3d at 175; see also Tex. Hum. Res. Code §§ 36.112 (stating that Chapter 105 of Texas Civil Practice and Remedies Code applies in action under subchapter "with which the state proceeds"), .116 (stating that, "[e]xcept as provided by Section 36.112, this subchapter does not waive sovereign immunity"); Nazari, 561 S.W.3d at 497 (concluding that sovereign immunity barred service providers' counterclaims against State and affirming dismissal of those claims).
In determining whether sovereign immunity applies here to deprive the trial court of jurisdiction to adjudicate the merits of appellees' joint motion, we consider the plain language of the statutory provisions addressing a qui-tam relator's role and entitlement to a settlement share in the context of the TMFPA's statutory scheme. See Murphy, 518 S.W.3d at 418 (explaining that courts "study the language of the specific provision at issue, within the context of the statute as a whole"). Considering the provision entitling a relator to a settlement share in this context, we would have to give the Legislature's words a "forced" meaning to conclude that appellees' joint motion to receive a relator share of the Xerox settlement proceeds is a "suit" against the State such that sovereign immunity would apply to deprive the trial court of jurisdiction over the motion. See Tex. Hum. Res. Code §§ 36.101-117, .110 (generally entitling relator to percentage of settlement proceeds and providing that payment to relator "shall be made from the proceeds of the action"); In re Xerox, 555 S.W.3d at 525 (explaining that TMFPA "deputizes private citizens to pursue TMFPA action on the government's behalf"); see also Scott, 309 S.W.3d at 931 ("Courts must not give the words used by the Legislature an 'exaggerated, forced, or constrained meaning.'" (quoting City of Austin v. Southwestern Bell Tel. Co., 92 S.W.3d 434, 442 (Tex. 2002))).
Importantly, appellees' joint motion is based on their qui tam actions against Xerox. Unlike the service providers' counterclaims in Nazari, relators' qui tam actions were asserted against Xerox on behalf of-not against-the State. See Nazari, 561 S.W.3d at 497; Dolenz v. Boundy, 197 S.W.3d 416, 418 n.1 (Tex. App.-Dallas 2006, pet. denied) (explaining that "[q]ui tam is the abbreviation of the Latin phrase 'qui tam pro domino rege quam pro si ipso in hac parte sequitur,' which means 'Who sues on behalf of the King as well as for himself,'" and that qui tam action provides part of recovery to person who brought such action and remainder to state or other institution (citing Black's Law Dictionary 1251 (6th ed. 1990)); see also United States ex. rel. Shea v. Cellco P'ship, 863 F.3d 923, 926 (D.C. Cir. 2017) (stating that in qui tam suit under FCA, relator "need not allege a personal injury" but brings suit to remedy injury suffered by United States).
We also do not believe that appellees' motion-filed within the State's suit against Xerox following the settlement-falls within the meaning of a "suit" at all. See Jaster v. Comet II Constr., Inc., 438 S.W.3d 556, 563-64 (Tex. 2014) (plurality op.) (explaining that "common meaning of the term 'action' refers to an entire lawsuit or cause or proceeding, not to discrete 'claims' or 'causes of action' asserted within a suit, cause, or proceeding" and that "term 'action' is generally synonymous with 'suit,' which is a demand of one's rights in court" (quoting Thomas v. Oldham, 895 S.W.2d 352, 356 (Tex. 1995))); Black's Law Dictionary 1106 (9th ed. 2009) (defining "motion" to mean "written or oral application requesting a court to make a specified ruling or order"); see also id. 897 (defining "intervention" to mean "entry into lawsuit by a third party who, despite not being named a party in the action, has a personal stake in the outcome").
In Sections 36.109(a) and 36.110(d) of the TMFPA, the Legislature expressly contemplated and authorized a relator to receive proceeds from a settlement when the State intervenes in the relator's qui tam action and then settles the relator's allegations "through any alternate remedy available to the state." See Tex. Hum. Res. Code §§ 36.109(a), .110(d) ("In this section, 'proceeds of the action' includes proceeds of a settlement of the action."). "If an alternative remedy is pursued in another proceeding, the person bringing the action has the same rights in the other proceeding as the person would have had if the action had continued under [the qui tam provisions]." Id. § 36.109(a). Applying the plain meaning of the words in the phrase "pursued in another proceeding," the State's pursuit of claims or allegations that are raised in a relator's qui tam action through a separate suit falls squarely within the plain meaning of that phrase. See Black's Law Dictionary 1572 (9th ed. 2009) (defining "suit" to mean "any proceeding by a party or parties against another in a court of law"), 1324 (defining "proceeding" to mean "[a]ny procedural means for seeking redress from a tribunal or agency"); see also id. at 1646 (defining "tribunal" as "court or other adjudicatory body").
Here appellees pleaded and presented evidence that the State intervened in their qui tam actions; obtained their agreement to abate their proceedings, which allowed the State to pursue appellees' respective claims on the State's behalf against Xerox in "another proceeding"; filed "another proceeding"-the separate suit-against Xerox; and then entered into a settlement agreement with Xerox that included settling appellees' claims that they raised on the State's behalf against Xerox in their qui tam actions and allocating a portion of the settlement proceeds for attorney's fees incurred by the State in appellees' qui tam actions. The evidence before the trial court included the State's settlement agreement with Xerox, which defines "Covered Conduct" to include appellees' claims and allegations against Xerox in their qui tam actions, expressly references and settles appellees' qui tam actions, and states that the State initiated its investigation on or about June 8, 2012, which was after appellees had filed their respective original qui tam petitions.
Viewing appellees' pleadings and the evidence under the applicable standards of review, we conclude that the trial court did not err by concluding that sovereign immunity did not apply to deprive the trial court of jurisdiction to adjudicate the merits of appellees' joint motion seeking a relator share of the Xerox settlement proceeds. See Garcia, 372 S.W.3d at 635; Miranda, 133 S.W.3d at 226.
First-to-File Bar
As part of its issue, the State also contends that the TMFPA's first-to-file bar deprived the trial court of jurisdiction to adjudicate the merits of appellees' joint motion because it is a statutory prerequisite to suit. See Tex. Gov't Code § 311.034; Prairie View A&M Univ. v. Chatha, 381 S.W.3d 500, 512 (Tex. 2012) ("[A]ccording to the plain language of section 311.034, the term 'statutory prerequisite' refers to statutory provisions that are mandatory and must be accomplished prior to filing suit."). The State relies on the limitation in Section 36.109(a) that a qui tam relator only has the same rights as it would have had if its own action had continued when the State pursues an alternative remedy, see Tex. Hum. Res. Code § 36.109(a), and the requirement in Section 36.110 that a qui tam action be successfully litigated to allow a relator to share in the State's recovery, see id. § 36.110 (addressing percentage share of proceeds following successful qui tam litigation). Specifically, the State's position is that "Section 36.109(a) does not waive the State's sovereign immunity from LaFountain's and Ellis's claims because it does not confer rights on qui tam relators who are subject to statutory bars, including the first-to-file bar." According to the State, Ellis and LaFountain "affirmatively alleged facts that negate the trial court's jurisdiction" because: (i) their qui tam actions were "based on the same underlying facts" as Alvarez's earlier filed qui tam action, (ii) they did not allege "a factually-distinct fraudulent scheme," and, thus, (iii) they would not have had rights to a relator share in their own qui tam actions. See id. §§ 36.106, .109(a), .110; see also Miranda, 133 S.W.3d at 227.
The plain language of Section 311.034 of the Texas Government Code, however, provides that a statutory prerequisite to suit is a "jurisdictional" requirement only when the suit is "against" the State. See Tex. Gov't Code § 311.034; Murphy, 518 S.W.3d at 418 (explaining that when interpreting statutes, courts begin with "Legislature's words, looking first to their plain and common meaning"). As we observed above, appellees' qui tam suits are not against the State but brought for the State. Because their suits were against Xerox on behalf of the State, the plain language of the statutory prerequisite provision makes clear that it does not apply to deprive the trial court of jurisdiction over appellees' joint motion. See Tex. Gov't Code § 311.034 (confining jurisdictional requirement to when suit is "against" State). If, as the State suggests, appellees' qui tam actions were suits against the State, the State could not have intervened in those actions, settled them, or recovered attorney's fees related to those actions. It follows that the first-to-file bar is not a statutory prerequisite that deprived the trial court of jurisdiction to adjudicate the merits of appellees' joint motion.
Parties are not authorized to settle opposing parties' or non-parties' claims. Here the settlement agreement between the State and Xerox expressly settled appellees' qui tam suits and allocated a portion of the proceeds toward payment of attorney's fees, expenses, and costs that the State incurred in appellees' qui tam actions.
This conclusion is consistent with the TMFPA's overall statutory scheme. For example, the TMFPA provides the right to challenge a person's entitlement to a qui tam relator's share based on statutory bars, but it contemplates a fact-intensive inquiry by the trial court to determine whether the bars apply. See Tex. Hum. Res. Code §§ 36.106 (requiring factual determination of whether allegations were based on facts underlying pending action), .113(b) (requiring factual determination of whether allegations were already publicly disclosed); see, e.g., Millenium Labs., 923 F.3d at 253 (same) (stating that when applying "essential facts test," courts proceed "claim-by-claim"); United States ex rel. Johnson v. Planned Parenthood of Hous. & S.E. Tex., Inc., 570 Fed.Appx. 386, 389 (5th Cir. 2014) (stating that focus of inquiry in determining first-to-file is "whether an investigation into the first claim would uncover the same fraudulent activity alleged in the second claim"). The trial court also determines the amount of a relator's share at the end of an action or the alternate proceeding. See Tex. Hum. Res. Code § 36.110 (providing guidelines for percentage of proceeds that trial court should award to qui tam relator and stating that payment to person under section "shall be made from the proceeds of the action"); see, e.g., Roberts v. Accenture, LLP, 707 F.3d 1011, 1017-18 (8th Cir. 2013) (noting that in FCA cases, relator's share determination "only comes into play at the conclusion of a case, after the action has already proceeded to a judgment or a settlement").
It also appears to be common practice, at least under the FCA, for multiple relators to work together and share resulting proceeds. See, e.g., United States ex rel. Bryant v. Community Health Sys., Inc., 24 F.4th 1024, 1028-29 (6th Cir. 2022) (stating that government encouraged four relators "to work together on the cases and share any proceeds that might result" and that pursuant to relators' share agreement, relators received share of award); Jacobs v. Village Home Care, LLC, Case No: 5:21-cv-73-CEM-PRL, 2023 U.S. Dist. LEXIS 169964, at *3 (U.S. Dist. Ct. M.D. Fla. Sept. 25, 2023) (quoting explanation by government that "[c]ommonly, when multiple qui tam actions have been filed and the United States reaches one or more settlements with defendants, the relators in the multiple cases will also reach agreement regarding entitlement to the relator share" and only when such agreement cannot be reached must court apply FCA's first-to-file provision). This practice is consistent with the conclusion that the first-to-file provision is not jurisdictional because if the provision were jurisdictional, trial courts could not approve settlements awarding proceeds to more than one relator. See Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 445 (Tex. 1993) (stating that parties cannot waive subject matter jurisdiction). Appellees' evidence included an agreement in which the State agreed to pay more than one relator.
As support for its position that the trial court does not have jurisdiction over the claims of Ellis and LaFountain, the State relies on federal cases that did not allow a relator share under the FCA to persons who were not the first to file their allegations. See, e.g., United States ex rel. Ryan v. Endo Pharms., Inc., 27 F.Supp.3d 615, 626 (E.D. Pa. 2014), aff'd sub nom., United States ex rel. Dhillon v. Endo Pharms., 617 Fed.Appx. 208 (3d Cir. 2015) (determining that first-to-file relator was sole relator eligible to receive proceeds from settlement). But as we observed above, there is a split among the federal courts as to whether the FCA's analogous first-to-file provision is jurisdictional, and the more recent decisions have concluded that the provision is not jurisdictional. Compare Community Health Sys., 24 F.4th at 1036 (concluding that FCA's first-to-file provision is not jurisdictional); Sanofi-Aventis U.S. L.L.C., 974 F.3d at 232 (holding that first-to-file provision is not jurisdictional); Millenium Labs., 923 F.3d at 243 (same); United States ex. rel. Wood v. Allergan, Inc., 899 F.3d 163, 168 n.3 (2d Cir. 2018) (confirming that first-to-file provision is not jurisdictional and citing United States ex rel. Hayes v. Allstate Ins., 853 F.3d 80, 86 (2d Cir. 2017) ("[A] district court does not lack subject matter jurisdiction over an action that may be barred on the merits by the first-to-file rule.")); with Branch Consultants, 560 F.3d at 378 (stating that first-to-file bar is jurisdictional).
We find informative the analysis in opinions by the First and the District of Columbia Circuits addressing the jurisdictional question. After the First Circuit observed that it had "several times characterized the first to file rule as jurisdictional," it concluded otherwise in Millenium Laboratories. See 923 F.3d at 249. In changing course, the First Circuit relied on the U.S. Supreme Court's opinion in Kellogg Brown &Root Services, Inc. v. United States ex rel. Carter, 575 U.S. 650 (2015). The First Circuit observed that in that qui tam case, the U.S. Supreme Court "'addressed the operation of the first-to-file bar on decidedly nonjurisdictional terms, raising the issue after it decided a nonjurisdictional statute of limitations issue'" and that the "clear implication is that the Court did not consider the first-to-file rule to be jurisdictional." Id. (quoting United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112, 121 n.4 (D.C. Cir. 2015)).
In its analysis concluding that the FCA's first-to-file provision was not jurisdictional, the District of Columbia Circuit observed that the language of the provision "does not speak in jurisdictional terms or refer in any way to the jurisdiction of the district courts." AT&T, 791 F.3d at 120 (quoting Arbaugh v. Y&H Corp., 546 U.S. 500, 515 (2006)). "The text speaks only to who may bring a private action and when; it says nothing about the court's 'power' to consider claims." Id. (citing United States v. Wong, 575 U.S. 402, 410 (2015)). The Court also compared the provision to other provisions in the FCA that are expressly couched in jurisdictional terms, recognizing that Congress knew how to reference "jurisdiction expressly" if that was the purpose of the FCA provision. Id. at 120-21 (comparing first-to-file language with other FCA provision's language that explicitly states that "[n]o court shall have jurisdiction over an action brought by a former or present member of the armed forces ...."). Similarly, the TMFPA's first-to-file provision is not couched in jurisdictional terms.
As support for its position that the trial court erred in denying the plea to the jurisdiction, the State also relies on the collective relief that appellees sought in the joint motion, their "embrace" of "the characterization" of their claims as "Covered Conduct" and their qui tam actions as "Related Actions" in the settlement agreement between the State and Xerox, and the State's comparison of the allegations of fraud in appellees' respective qui tam petitions.According to the State, appellees "have openly admitted that their qui tam actions are based on the same underlying facts" and, thus, the claims of Ellis and LaFountain are not valid claims because they are barred by the first-to-file provision. But, before the trial court and with this Court, appellees contest the State's characterization of their respective allegations of fraud, join issue with the overlap and scope of the allegations of fraud in appellees' respective qui tam petitions, and identify allegations that they contend relate to distinct fraudulent schemes in their respective qui tam petitions.
The appellate record includes copies of the unredacted versions of appellees' respective qui tam petitions as well as other filings and pleadings that remain under seal.
At this stage of the case, we must construe the pleadings liberally in favor of appellees and review the evidence in the light most favorable to them. See Garcia, 372 S.W.3d at 635; Miranda, 133 S.W.3d at 226. Applying these standards, even if we were to conclude that the first-to-file bar is jurisdictional, we would conclude that the State did not conclusively establish that appellees' qui tam actions were barred by the first-to-file provision. See Garcia, 372 S.W.3d at 635 (explaining that review of evidence in plea-to-the-jurisdiction context mirrors that of motion for traditional summary judgment). It follows that even if the TMFPA's first-to-file bar is jurisdictional, the trial court did not err when it denied the State's plea to the jurisdiction.
CONCLUSION
For these reasons, we affirm the trial court's order denying the State's plea to the jurisdiction.
Affirmed.