THE STATE OF LOUISIANA, EX REL. JAMES D. "BUDDY" CALDWELL, ATTORNEY GENERAL
MOLINA HEALTHCARE, INC.; MOLINA INFORMATION SYSTEMS, L.L.C. D/B/A MOLINA MEDICAID SOLUTIONS; PARAMAX SYSTEMS CORPORATION; AND UNISYS CORPORATION
WRIT OF CERTIORARI TO THE COURT OF APPEAL, FIRST CIRCUIT,
PARISH OF EAST BATON ROUGE
writ application was granted in this matter to review the
correctness of the appellate court's ruling, sustaining
an exception of no right of action for the Attorney
General's lawsuit against the defendants, which are
corporate entities allegedly serving as the state's
fiscal intermediary for the Medicaid program. By statute, the
Louisiana Department of Health has the capacity to sue and be
sued for programs that it administers, such as Medicaid.
However, because the Louisiana Department of Health has
delegated-and the defendants allegedly contractually
accepted-some of the administrative functions of the
state's Medicaid program, we find that the Attorney
General has the capacity, and hence a right of action, to
prosecute this lawsuit.
state, represented by its Attorney General, filed this
lawsuit on June 26, 2014, against defendants, Molina
Healthcare, Inc., Molina Information Systems, L.L.C. d/b/a
Molina Medicaid Solutions, and Unisys Corporation. As
described in the state's petition, "[o]ver the last
thirty ("30") years, the Defendants have been the
fiscal agent responsible for processing Louisiana's
Medical pharmacy provider reimbursement claims."
Pursuant to a contract to which the state itself is allegedly
a party, "the Defendants assumed operational
liability" of a "customizable" computerized
system known as the Louisiana Medicare Management Information
System ("LMMIS"). As part of defendants'
duties, they are "responsible for the operation and
maintenance of LMMIS, as well as creating and implementing
design changes to the LMMIS that comply with State and
further described in the state's petition, since January
1984, Unisys has engaged in the business of operating,
maintaining, implementing, and managing LMMIS. In May 2010,
the Molina defendants acquired Unisys' Health Information
Management Division, and the Unisys defendant became a
subcontractor of the Molina defendants. Unisys continues to
work with the Molina defendants to operate LMMIS. For
simplicity's sake, given the defendants' alleged
corporate affiliation and noting the state's
representation in brief that "Molina has been dismissed
from the suit," this opinion will refer to the
defendants collectively as "Unisys."
crux of the state's allegations in this lawsuit is that
Unisys caused the Louisiana Department of Health
("LDH") to overpay Medicaid pharmacy providers
through Unisys' improper operation and management of
LMMIS. Under theories of fraud, breach of contract,
negligence, and negligent misrepresentation, the state
contends that it is entitled to recover from Unisys the
amounts LDH overpaid to the pharmacy providers as far back as
1989. The state's petition also proposes
statutory theories of recovery under Louisiana's Unfair
Trade Practices Act ("LUTPA," La. R.S. 51:1401,
et seq.) and Louisiana's Medical Assistance
Programs Integrity Law ("MAPIL," La. R.S. 46:437.1,
et seq.); however, these statutory theories of
recovery were earlier dismissed on Unisys' exceptions of
no cause of action. See State ex rel. Caldwell
v. Molina Healthcare, Inc., 15-0492 (La.App. 1 Cir.
1/22/16) (unpublished writ action; 2016 WL 10771114).
state further describes its remaining contract-based claims,
Unisys has served as "the fiscal agent responsible for
processing Louisiana Medicaid's pharmacy provider
reimbursement claims." LMMIS has been "the core
tool" used by Unisys while serving as the state's
Medicaid "fiscal agent." Louisiana's Medicaid
program maintains a drug formulary as part of the "State
Plan," and LMMIS should select reimbursement prices from
the lowest price point in the state's formulary. These
reimbursement prices are then paid by the state to medical
providers, including pharmacies. However, according to the
state, Unisys "fail[ed] to process the State's
reimbursements according to the reimbursement formula set
forth in the State Plan. Instead, the Defendants adjudicated
claims based on a formula that failed to adhere to both State
and federal policies concerning reimbursement." As a
result, the state has overpaid "excessive amounts"
on reimbursement for drugs dispensed by pharmacies.
to the state, the state was unaware until recently of the
excessive reimbursements. In contrast, the state alleges
"nearly two-hundred thirty … highly trained
professionals, including programmer analysts and
engineers" are employed by Unisys, which is
"responsible for implementing" a system that
conforms with the Louisiana Medicaid program.
same pleading whereby Unisys obtained dismissal of the
state's statutory claims brought under LUTPA and MAPIL,
Unisys also sought dismissal of the state's
contract-based claims. Nevertheless, the state's
contract-based claims were untouched, and remained viable,
under the appellate court's ruling dismissing the
statutory claims. See Molina Healthcare, Inc.,
revisited its exception of no right of action, however, after
the appellate court found the state had no right of action
regarding Medicaid drug payments in State v. Abbott
Laboratories., Inc., 15-1626 (La.App. 1 Cir. 10/21/16),
208 So.3d 384, 390, writs denied, 17-0149, 17-0125
(La. 3/13/17), 216 So.3d 802, 808, overruled in part on
other grounds by State, by and through Caldwell v.
Astra Zeneca AB, 16-1073 (La.App. 1 Cir. 4/11/18), 249
So.3d 38. The district court denied Unisys' exception of
no right of action, explaining:
After carefully reviewing and considering the memoranda
together with the law in this case, and specifically
State v. Abbott Laboratories, Inc., 2015-1626
(La.App. 1 Cir. 10/21/16), 208 So.3d 384, writ
denied, 2017-0125, 2017-49 (La. 3/13/17), 2017 WL
1075533, 2017 WL 1076464, the Court finds that the State of
Louisiana is a party to the contract and indeed the enforcing
body which gives the State a real and actual interest in this
litigation. In other words, the State of Louisiana has
sought supervisory review from the same appellate court that
decided Abbott Laboratories, Inc. Largely in reliance on
Abbott Laboratories, Inc., and because LDH had a statutory
right to sue and be sued, the appellate court agreed with
Unisys that the state had no right of action:
WRIT GRANTED. Under our de novo review, we find that
the [district] court erred in denying the exception raising
the objection of no right of action as to the State of
Louisiana's claims of breach of contract, fraud,
negligence, and negligent misrepresentation. State v.
Abbott Laboratories, Inc., 2015-1626 (La.App. 1st Cir.
10/21/16), 208 So.3d 384, reh'g denied, (Dec.
22, 2016), writs denied, 2017-0149 (La. 3/13/17),
216 So.3d 802 & 2017-0125 (La. 3/13/17), 216 So.3d 808.
The State of Louisiana, itself, is not a party to any of the
contracts at issue and has no claim for the breach thereof.
Dennis v. Copelin, 94-2002 (La.App. 4th Cir.
2/1/96), 669 So.2d 556, 561, writ denied, 96-1012
(La. 6/21/96), 675 So.2d 1079. The right belongs to the party
to the contracts at issue, [LDH], which is a body corporate
with the power to sue and be sued. La. R.S. 36:251(A);
also see Abbott Laboratories, Inc., 208 So.3d 384.
The State of Louisiana has no interest in judicially
enforcing the rights asserted in the petition. Jenkins v.
City of Baton Rouge, 2014-1235 (La.App. 1st Cir.
3/9/15), 166 So.3d 1032, 1035. Accordingly, the [district]
court's judgment denying the defendant's exception of
no right of action is reversed, the exception of no right of
action is sustained, and the matter is dismissed, with
State ex rel. Caldwell v. Molina Healthcare, Inc.,
17-0778 (La.App. 1 Cir. 8/14/18), (unpublished writ action;
2018 WL 3913330).
state filed a writ of certiorari with this court, which was
granted. State ex rel. Caldwell v. Molina Healthcare,
Inc., 18-1768 (La. 1/18/19), ___ So.3d ___.
a legal action can be brought only by a person having a real
and actual interest in doing so. See La. C.C.P. art.
681. "When the facts alleged in the petition provide a
remedy under the law to someone, but the plaintiff who seeks
the relief is not the person in whose favor the law extends
the remedy, the proper objection is no right of action, or
want of interest in the plaintiff to institute the
suit." Howard v. Administrators of Tulane Educ.
Fund, 07-2224, p. 16 (La. 7/1/08), 986 So.2d 47, 59
(citing 1 Frank L. Maraist & Harry T. Lemmon, Louisiana
Civil Law Treatise: Civil Procedure § 6.7, 121 (1999)).
Such an objection is presented as a peremptory exception of
no right of action raised by the defendant or noticed by the
court on its own motion, in either the trial or appellate
court. See La. C.C.P. arts. 927 and 2163. "The
function of the peremptory exception is to have the
plaintiff's action declared legally nonexistent, or
barred by effect of law, and hence this exception tends to
dismiss or defeat the action." La. C.C.P. art. 923.
burden of showing that the plaintiff has stated no cause of
action is upon the exceptor." City of New Orleans v.
Bd. of Directors of Louisiana State Museum, 98-1170, p.
9 (La. 3/2/99), 739 So.2d 748, 755. "On the trial of the
peremptory exception [of no right of action] pleaded at or
prior to the trial of the case, evidence may be introduced to
support or controvert any of the objections pleaded, when the
grounds thereof do not appear from the petition." La.
C.C.P. art. 931. In instances when "evidence [has been]
introduced at the hearing" on a peremptory exception,
"the trial court's findings of fact ... are subject
to the manifest error-clearly wrong standard of review."
London Towne Condominium Homeowner's Ass'n v.
London Towne Co., 06-401, p. 4 (La. 10/17/06), 939 So.2d
other respects, "[t]he determination of whether a
plaintiff has a legal right to bring an action raises a
question of law, which requires de novo review."
Rebel Distributors Corp., Inc. v. LUBA Workers'
Comp., 13-0749, p. 10 (La. 10/15/13), 144 So.3d 825, 833
(citing, inter alia, Holly & Smith
Architects, Inc. v. St. Helena Congregate Facility,
Inc., 06-0582, p. 9 (La. 11/29/06), 943 So.2d 1037,
1045. "An appellate court considering an exception of no
right of action should focus on whether the particular
plaintiff has a right to bring the suit and is a member of
the class of persons that has a legal interest in the subject
matter of the litigation, assuming the petition states a
valid cause of action for some person." Rebel
Distributors, 13-0749 at 10, 144 So.3d at 833. If doubt
exists about the appropriateness of an objection of no right
of action, it is to be resolved in favor of the plaintiff.
Rebel Distributors, 13-0749 at 10, 144 So.3d at 833.
instant case, as noted earlier, only non-statutory claims,
stemming from Unisys' contract to allegedly serve as the
fiscal intermediary for Louisiana's Medicaid program,
remain viable against Unisys. Unisys' exception to those
contract-based claims is primarily based on La. R.S.
36:251(A), which, in pertinent part, provides: "[LDH] is
created and shall be a body corporate with the power to sue
and be sued." According to Unisys, the power of LDH to
sue and be sued is consistent with powers ascribed to
LDH's secretary. See, e.g., La. R.S.
36:254(D)(1)(a)(i) (LDH's "secretary shall direct
and be responsible for the Medical Assistance
Program."); id. (D)(2)(ii)(d) (generally
empowering LDH's secretary to "[f]ile suit on behalf
of the Medical Assistance Program").
renewed its exception of no right of action in light of
Abbott Laboratories, Inc., in which the court cited inter
alia La. R.S. 36:251 and ruled: "In the absence of
constitutional or statutory provisions to the contrary, the
State cannot bring a cause of action that is the property of
one of its political subdivisions which has the right to sue
and be sued." Abbott Laboratories, Inc., 15-1626 at 6,
208 So.3d at 388. Based on Abbott Laboratories, Inc., Unisys
presently contends that La. R.S. 36:251(A) vests LDH with the
exclusive power to file suit and, thus, the state and its
Attorney General have no right of action.
state responds that "[t]he fact that one department may
have a right of action does not preclude others from also
having one." The state emphasizes that La. Const. art.
IV, § 8 describes the powers of the Attorney
General: "As necessary for the assertion or protection
of any right or interest of the state, the attorney general
shall have authority (1) to institute, prosecute, or
intervene in any civil action or proceeding …
." According to the state, the
legislature's conferring juridical capacity on LDH did
not sever LDH from the larger state "body politic."
Relatedly, the contract with Unisys was not for LDH alone but
rather, "the entire purpose of the contract was
to benefit the State by establishing a cost-effective
administration for the State Medicaid program."
initial observation, focusing-as our civil law methodology
requires-on the statutory text, La. R.S. 36:251(A), relied on
by Unisys, does not use the term "exclusive," or
words to that effect, when describing LDH's right to file
suit. Even so, not every governmental entity has been
statutorily authorized as having the right to sue and be
sued. A cardinal rule of statutory interpretation directs
that presumptively "every word, sentence, or provision
in a law was intended to serve some useful purpose, that some
effect is to be given to each such provision, and that no
unnecessary words or provisions were employed."
Louisiana Fed'n of Teachers v. State, 13-0120,
p. 39 (La. 5/7/13), 118 So.3d 1033, 1057-58. Also, "a
statute more specifically directed to the matter at issue
must prevail as an exception to a statute more general in
character." Esteve v. Allstate Ins. Co., 351
So.2d 117, 121 (La. 1977). If these were the only principles
at issue, the analysis would be likely be complete and Unisys
would prevail because the court would be constrained to hold
that the authorization in La. R.S. 36:251(A) for LDH to sue
and be sued is a more specific law than the authorization in
La. R.S. 13:5036 for the Attorney General to file lawsuits.
However, and unlike Abbott Laboratories, Inc., the
Attorney General not only relies on the statutory authority
to file suit under La. R.S. 13:5036, but also relies on the
constitutional authority to do so under La. Const. art. IV,
restate the analysis to this point, Unisys relies on
LDH's statutory right to sue and be sued, whereas the
Attorney General relies on the constitutional right of the
Attorney General to file civil lawsuits. Unisys contends that
the fact the legislature expressly conferred a right to sue
on LDH means that LDH's right is exclusive and precludes
the Attorney General from filing lawsuits innvolving the
Medicaid program administered by LDH. The state contends that
the Attorney General's constitutional authority to file
lawsuits is broad, if not unfettered, and enables the
Attorney General to bring the instant lawsuit. However, the
legislature has seen fit to specifically authorize the
Attorney General to file lawsuits in certain causes of
action. For example, one need look no further than this case,
in which the Attorney General's petition cites statutes
conferring authority to the Attorney General to bring actions
under LUTPA and MAPIL. The legislature's express grant of
authority in certain causes of action tends to undermine the
breadth that the Attorney General would have this court now
interpret La. Const. art. IV, § 8 to confer. Therefore,
it might be said that La. R.S. 36:251(A) (conferring on LDH
the right to sue and be sued) and La. Const. art. IV, §
8 (describing the Attorney General's right to file
lawsuit) are in conflict. However, this court is tasked with
ascertaining whether a conflict between the cited provisions
is merely superficial and whether the substance of these laws
can be harmonized. "[B]ecause it is presumed that the
legislature acts within its constitutional authority in
enacting legislation, this court must construe a statute so
as to preserve its constitutionality when it is reasonable to
do so." City of New Orleans v. Louisiana
Assessors' Ret. & Relief Fund, 05-2548, pp.
12-13 (La. 10/1/07), 986 So.2d 1, 12-13.
analysis continues accordingly, with an aim to harmonize, if
possible, the legislatively-ascribed status of the LDH as
"a body corporate with the power to sue and be
sued" and the constitution's direction that
"[a]s necessary for the assertion or protection of any
right or interest of the state, the attorney general shall
have authority (1) to institute, prosecute, or intervene in
any civil action or proceeding." See La. R.S.
36:251(A); La. Const. art. IV, § 8. This is the first
time this court is called on to examine how these two
specific laws relate, but, in a broader sense, this is not a
novel issue. The jurisprudence provides significant and
longstanding guidance in other instances in which a
governmental entity has legislatively-conferred status to
"sue or be sued," and the Attorney General sought
to represent that entity.
State v. Tensas Delta Land Co., 126 La. 59, 52 So.
216 (1910), "the Attorney General in the name of the
state" brought a lawsuit to rescind allegedly fraudulent
land conveyances from Tensas Basin levee district. The
targets of the lawsuit were nine nonresident defendants who
allegedly conspired with levee district commissioners to buy
land for "nominal" prices and resell the land for
approximately four times the purchase price. Id. 52
So. at 217. The defendants lodged various exceptions,
including an exception that the state "has no right,
power, or authority to prosecute and maintain this
action" in such capacity. Id. 52 So. at 218. As
the Tensas Delta Land Co. defendants further urged,
the state had "created the corporation known as the
Board of Levee Commissioners of the Tensas Basin Levee
District, and given it full power to sue and be sued."
Id. Additionally, the state had "authorized the
said board to contract with these defendants in regard to
said lands and to sue to recover the same." Id.
Tensas Delta Land Co. court agreed that neither the Attorney
General nor the state had a right of action that survived the
legislature's conferring corporate status on a
governmental entity with the right to sue and be sued.
Id. 52 So. at 221. As a general proposition, the
Tensas Delta Land Co. court rejected an argument for
duplicative rights to sue, akin to the argument the Attorney
General has raised in the instant case, explaining:
The argument that the said board is nothing more than a mere
agency or instrumentality of the state, and that therefore
the state may sue in every case where the said board might
sue, contains a manifest non sequitur. Every city, town, and
parish of the state is a mere agency or instrumentality of
the state; but no one would venture to say that the Attorney
General could ignore the existence of these corporations and
enforce, in the name of the state, any cause of action which
any of them might have.
The legislative control over corporations of the character of
this levee board is much more complete than over municipal
corporations proper and parish-it made them, and can at any
time abolish them, so long as the obligations of their
contracts are not thereby impaired-but these corporations
have their existence and exercise their functions by and
under the Constitution and statutes of the state, and so long
as these established laws remain in force it is they which
must regulate the property and other rights of said
corporations and their modes of action, and the disposition
of their property, and their rights to sue and to be sued. If
one of these corporations have a right of action, the proper
functionary to enforce same is the governing body of the
corporation, and not the Attorney General, or the state.
Id. To the general proposition that the state and
Attorney General have no right to sue duplicative of the
statutory right to sue conferred on a governmental entity,
this court provided an exception:
[I]t is true that if the governing body of one of these
corporations fails in its duty to bring a suit which clearly
it ought to bring, the courts may (only, however, under
highly exceptional circumstances) allow any citizen or
taxpayer of the district to bring the suit; and, in such a
case, the same privilege might for the same reason ...