Legal Newsline

Wednesday, April 8, 2020

Attorney general has the right to sue medical corporations on behalf of the state of Louisiana, Supreme Court rules


By Charmaine Little | May 20, 2019


NEW ORLEANS (Legal Newsline) – While a lower appellate court in Louisiana said the state's attorney general didn’t have the right to sue a group of corporations that double as Louisiana’s economic mediator for the Medicaid program, the Supreme Court of Louisiana disagreed and reversed the lower court’s ruling on May 8.

The First Circuit Court of Appeal of East Baton Rouge Parish previously sustained an exception of no right of action in former Attorney General James D. Caldwell’s lawsuit, ultimately deciding Caldwell, who served as the state’s attorney general from 2008 to 2016, didn’t have a right to sue Molina Healthcare Inc.; Molina Information Systems LLC, doing business as Molina Medicaid Solutions; Paramax Systems Corp.; and Unisys Corp.

“By statute, the Louisiana Department of Health has the capacity to sue and be sued for programs that it administers, such as Medicaid,” said the Supreme Court. “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.”

The ruling states Caldwell sued on behalf of the state on June 26, 2014, with claims that Unisys’ incorrect processing and overseeing of LMMIS (Louisiana Medicare Management Information System) resulted in the Louisiana Department of Health paying Medicaid pharmacy providers too much money. 

Caldwell filed the suit over allegations of fraud, breach of contract, negligence and negligent misrepresentation. The state requested the court award it the amount that the Louisiana Department of Health (LDH) overpaid to pharmacy workers that could date all the way back to 1989.

The Supreme Court determined the LDH can sue and even be sued in its capacity and the attorney general is also allowed to sue on behalf of the state. It added that “highly exceptional circumstances” are the only instances where it’s necessary for the attorney general to sue for programs which LDH can file a lawsuit. The Supreme Court said this is one of those “highly exceptional circumstances.”

“Specifically, the attorney general on behalf of the state has a right of action to bring a lawsuit against a private entity that has allegedly contracted to perform governmental functions essential to a program governed by both state and federal law where performance of the contract is subject to ongoing legislative oversight,” said the Supreme Court.

Considering this, the appellate court ruled incorrectly when it said the attorney general didn’t have a right to sue on behalf of the state. The high court vacated and remanded the lower court’s decision.

Justice John L. Weimer authored the opinion.

While Chief Justice Bernette J. Johnson agreed with the Supreme Court ruling, she said opinion was too limited. 

“It is the state that suffers damages if the contract is breached and funds are misspent, as the state is the source of funding and the party responsible to federal government for federal funds I find no authority to give LDH the sole right to judicially pursue the claims alleged in the petition,” said Johnson.

Justices Greg G. Guidry and James T. Genovese concurred with Johnson.

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Louisiana Attorney GeneralLouisiana Supreme Court