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Andrew S. Gordon (003660) Roopali H. Desai (024295) COPPERSMITH SCHERMER & BROCKELMAN PLC 2800 North Central Avenue, Suite 1200 Phoenix, Arizona 85004 Telephone: (602) 381-5460 Facsimile: (602) 772-3760 [email protected] [email protected]
Brett W. Johnson (021527) Michael T. Liburdi (021894) SNELL & WILMER, LLP 400 East Van Buren Street, Suite 1900 Phoenix, Arizona 85004-2202 Telephone: (602) 382-6000 Facsimile: (602) 382-6070 [email protected] [email protected]
Paul F. Eckstein (001822) D. Andrew Gaona (028414) PERKINS COIE LLP 2901 North Central Avenue, Suite 2000 Phoenix, Arizona 85012-2788 Telephone: (602) 351-8000 Facsimile: (602) 648-7000 [email protected] [email protected]
Attorneys for Intervenor Mercy Maricopa Integrated Care
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
In the Matter of: MAGELLAN HEALTH SERVICES OF ARIZONA, INC.,
Appellant, v. ARIZONA DEPARTMENT OF HEALTH SERVICES,
Respondent,
and MERCY MARICOPA INTEGRATED CARE,
Intervenor.
))))))))))))))))))))
Docket No. 13F-006-ADM
No. Solicitation: ADHS13-00002257 MERCY MARICOPA INTEGRATED CARE’S RESPONSE OPPOSING MAGELLAN’S MIS-STYLED REQUEST FOR CONTINUANCE (STYLED “MAGELLAN’S RESPONSE TO MMIC PROPOSED SCHEDULING ORDER”) (Assigned to Hon. Diane Mihalsky)
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I. Magellan’s Response Is Really a Motion to Continue
During the July 11, 2013, pre-hearing conference, counsel for Magellan asked permission
to file a counter-schedule on “some items” in MMIC’s proposed scheduling order. Despite the
fact that MMIC filed its proposed scheduling order on July 8 and Magellan filed its written
response on July 10 without proposing alternative dates, OAH allowed Magellan to file if it did it
quickly. (Audio of July 11, 2013 hearing at 1:41).1 Significantly, Magellan did this against a
backdrop of its counsel stating that Magellan “wants to have a hearing as soon as possible” (id. at
56:05) and “we are here to expedite a hearing.” (Id. at 1:00:34). What Magellan’s counsel did
not do, which would have been the candid, straight forward and honest thing to do, is say that
Magellan was going to file a request to continue the hearing date.
On July 12, 2013, Magellan filed a pleading styled “Magellan’s Response to MMIC’s
Proposed Scheduling Order.” In fact, it is a motion to continue the hearing for more than two
months. Specifically, it proposes that the hearing be continued from August 12, 2013 to no
sooner than October 14, 2013 (Magellan’s proposed Order at ¶ 21.) It also asks that the hearing
be extended from three days to ten days (id.) Magellan’s pleading should be treated as what it is
– a motion to continue. United States v. Young, 936 F.2d 1050, 1052 (9th Cir. 1991) (court will
determine true nature of motion; nomenclature assigned by movant is not controlling).
Magellan’s mis-styling of its pleading is no oversight. It is part of what we warned OAH
that Magellan’s overall strategy is – to delay the hearing on the merits for as long as possible.
According to Magellan’s audited financial statements on file with ADHS, Magellan has, over the
1 Like MMIC, OAH probably assumed that Magellan would propose a different schedule for discovery, dispositive motions, and other matters before the scheduled hearing date of August 12, 2013. Indeed, that is what a proposed scheduling order does – it proposes a schedule and deadlines for the interim time period before the start of a trial, which in this case is the scheduled hearing date that was ordered by OAH on June 18, 2013. [See Doc. 7, Notice of Hearing.] A proposed scheduling order does not, however, propose to change the already ordered trial date.
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last three years, netted pretax approximately $5.25 million dollars a month on its existing RBHA
contract. A two month delay could net Magellan $10.5 million dollars.2
What makes Magellan’s play for continuance particularly cynical is that while it
continues to receive revenue under the old contract, there is a stay in place preventing ADHS,
AHCCCS and MMIC from implementing the new integrated care contract from proceeding, thus
denying the SMI population to be served, as well as the State, the benefits of that new contract.
While the Arizona Department of Administration Deputy Director has ruled that a temporary
stay is appropriate at this juncture, the directors of the agencies with subject matter expertise in
this area, ADHS and AHCCCS, both strenuously object to the stay. See Will Humble letter
attached as Attachment A and AHCCCS motion to intervene. ADOA ordered that this hearing
commence August 12, 2013. Especially under these circumstances, a continuance is not
appropriate.
By calling its pleading “Magellan’s Response to MMIC’s Proposed Scheduling Order,”
Magellan hopes to take advantage of OAH’s order that parties cannot file replies in support of
motions and thus deny MMIC what should, of course, be viewed as a response to a motion to
continue. A.A.C. R2-19-106(A)(2) and A.A.C. R2-19-110 require the filing of a written motion
to continue a hearing. A.A.C. R2-19-110 sets forth the grounds that justify continuing a
hearing. Magellan seeks to continue this hearing without providing MMIC, ADHS or AHCCCS
with an opportunity to respond and oppose. That should not be allowed.3
II. There Is No Basis for Continuing the Hearing
There is no basis for continuing the hearing for over two months or for making it a week
longer. A.A.C. R2-19-110 provides the factors that should be considered for continuing a
2 2008, 2009 http://www.azdhs.gov/procurement/pdf/rfps/12-00002257/exhibit8/8.8-magellan-final-audit-report-ft-year-ended-06302009.pdf; 2009, 2010 http://www.azdhs.gov/procurement/pdf/rfps/12-00002257/exhibit8/8.8-final-magellan-hc-arizona-gaap-fs10.pdf; 2011, 2012 http://www.azdhs.gov/bhs/finance/reports/pdf/annual/2012/magellan-financial-statements-fye-june-2012.pdf. 3 Alternatively, OAH can enter MMIC’s scheduling order and then if Magellan wishes to file a motion to continue, it can bring one on properly.
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hearing. They include the positions of the parties, the time remaining between filing the motion
and the hearing, the unavailability of parties or counsel, the unavailability of witnesses by
deposition or telephone, and the status of settlement negations. Not surprisingly, Magellan cites
none of those reasons.
Magellan’s sole basis for the continuance is the “potentially thousands of pages of
relevant and non-privileged documents within the custody and control of the Respondent,
Intervenors, and others that have yet to be disclosed to Magellan.” (Id. at 2). Magellan then
goes on to say, “[d]espite significant delay in the production of meaningful documents by MMIC
and others….” (Id.).
This would lead one to think that Magellan had timely subpoenaed documents under
A.A.C. R2-19-113 and A.R.S. § 41-1092.07 and that MMIC, ADHS and AHCCCS have not
provided what they are obligated to provide. But that is not the case. Despite the fact that
Magellan could have asked OAH to issue subpoenas as early as June 18, 2013 (when this matter
was first set for hearing and it was assigned to Judge Mihalsky), it did not present subpoenas to
be signed until more than three weeks later and less than a month before the hearing date.
Amazingly, Magellan did not make any attempt to serve the subpoenas until after it asked OAH
to delay the hearing for more than two months.4
In other words, Magellan is using its own delay to justify its request for continuance.
OAH’s rules on subpoenas, five days to object, five days to respond, and no replies, are more
than sufficient to handle discovery disputes in this case. A.A.C. § R2-19-113(D). Indeed, if
Magellan had served subpoenas on June 19, 2013, all objections, responses and rulings would
have already occurred. Magellan’s scheduling order gives the parties until July 16, 2013 to serve
subpoenas, less than one month before the hearing. Magellan never explains why it sat on its
subpoenas for over a month. It only makes sense if its true goal is delay.
4 Despite the fact Magellan refused at the pre-hearing conference to stipulate to electronic service, it sought to serve subpoenas electronically on Friday at 5:00 pm. Magellan threatened to use an unwillingness to accept electronic service as a basis for seeking an extension. Attachment B hereto is an email exchange regarding this issue.
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Magellan alludes to its superior court special action proceeding against Maricopa
Integrated Health Services (“MIHS”) claiming that MIHS and, somehow, MMIC have
improperly thwarted Magellan’s attempts to obtain documents “undeniably relevant to this
proceeding.” (Id. at n.1). This claim is also untrue for several reasons. First, that case involves
a public records request that arises under a completely different statutory scheme, with different
rules for what is and is not obtainable. Second, Magellan has gone to Judge Rayes three times
to complain that MIHS5 has not produced public records in accordance with the public records
laws. However, what Judge Rayes has done is required Magellan to narrow its requests and
ordered Magellan to pay for a log of documents not made available because they are exempt
from production under the public records laws. Of greatest importance, Judge Rayes has neither
directly, indirectly, nor inferentially indicated that MIHS has engaged in any improper conduct
or that it has in any way delayed the document production process. Third, as referenced above, if
Magellan really believed that it had been denied documents under the public records law to
which it was entitled, it would have sought the issuance of subpoenas in this matter at the earliest
possible date – June 18. That it did not do so speaks volumes about its belief and motive.
Certainly whatever is going on in the public records matter in front of Judge Rayes
provides no basis for continuing this matter. See, e.g., London v.Broderick, “[W]e find
persuasive the Court’s reasoning that the public records law was not intended to serve as a
private discovery tool.” 206 Ariz. 490, 495, 80 P.3d 769, 774 (2003).
Finally, virtually all the time built into Magellan’s request to continue relates to a
hypothetical scenario where Magellan’s subpoenas are appropriate and that ADHS, AHCCCS,
MMIC and the other entities subpoenaed will not act appropriately and in accordance with the
rules. An anticipation that parties won’t play by the rules is not a ground for continuance. It
certainly isn’t one of the factors described in A.A.C. R2-19-110. In fact, the only discovery
5 Which, as OAH knows, is not a party to this proceeding. The OAH should enforce its own rules and abstain, as a matter of comity, from involving itself in matters that are properly before the Superior Court.
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based reason given in that rule is the total unavailability of witnesses. The intent to seek a delay
and/or continuance does, however, explain what we see as massively overbroad subpoenas
seeking many non-relevant documents.
As recognized in proceedings related to federal government contracts before the Court of
Federal Claims and the Government Accountability Office, an administrative law proceeding
such as this one should be a fairly narrow and expedited proceeding in which subpoenas should
be limited and must be specific. That is particularly so here where all of the issues but one are
pure legal issues and, as referenced in MMIC’s Motion to Dismiss, some of which are not even
properly before OAH and are being litigated in superior court. We believe Magellan’s
subpoenas are nothing more than a classic “fishing expedition.” The breadth of the subpoenas,
however, will be addressed, if necessary, in the motion to quash process.
Magellan has certainly presented no appropriate reasons to delay at all, let alone over two
months, a matter where the hearing was already set at the statutory 60-day limit, i.e., at the latest
date permitted by law. Its proposed “revised” scheduling order and thinly veiled motion for
continuance of the schedule should both be rejected.
CONCLUSION AND RELIEF REQUESTED
For these reasons, MMIC respectfully requests that the OAH deny Magellan’s Motion to
Continue reconfirming the hearing date and its length.
Respectfully submitted this 15th day of July, 2013.
COPPERSMITH SCHERMER & BROCKELMAN PLC By /s/ Andrew S. Gordon
Andrew S. Gordon Roopali H. Desai
Perkins Coie LLP Paul F. Eckstein D. Andrew Gaona 2901 North Central Avenue, Suite 2000 Phoenix, Arizona 85012-2788
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Snell & Wilmer Brett W. Johnson Michael T. Liburdi 400 East Van Buren Street, Suite 1900 Phoenix, Arizona 85004-2202
Attorneys for Intervenor Mercy Maricopa Integrated Care
Copy emailed this 15th day of July, 2013, to all parties and interested persons, By: autogenerated and posted to https://portal.azoah.com/oedf/documents/13F-006-ADM /s/ Sheri McAlister
