In this edition of Litigation Roundup, Match Group draws a shareholder class action lawsuit in California, Medicaid fraud whistleblowers get a piece of a $212.3 million settlement, and a Harris County District Court judge sees a public reprimand against her vacated by a court of special review.
The Litigation Roundup is a weekly feature highlighting the work Texas lawyers are doing inside and outside the state. Have a development we should include next week? Please let us know at tlblitigation@texaslawbook.net.
Travis County District Court
Whistleblowers Get $37M in Xerox Medicare Fraud Case
Three whistleblowers — Alexandra Alvarez, Joshua LaFountain, and Dr. Christine Ellis — were recently awarded millions of dollars for their role in helping Texas reach a Medicaid fraud settlement with Xerox State Healthcare, formerly known as ACS State Healthcare.
On Dec. 19, Travis County District Judge Maya Guerra Gamble entered final judgment in the case awarding the whistleblowers, who initiated this litigation more than a decade ago, a 17.5 percent share of the $212.3 million settlement, which totaled $37.1 million.
Caitlyn E. Silhan of Waters Kraus Paul & Siegel in Dallas, who represented the whistleblowers, issued a statement after final judgment was entered.
“We’re disappointed the State has sought for years to avoid paying these whistleblowers their statutorily-mandated share of the settlement, but we’re pleased that our clients have prevailed. As the Court’s order acknowledges, their important fight to expose Medicaid fraud ultimately led to a massive recovery of funds for Texas taxpayers.”
The trio filed suit in 2012, alleging Xerox had violated the Texas Medicaid Fraud Prevention Act when its employees improperly approved prior authorization requests for orthodontic services without first verifying the necessity of the services, which resulted in the state paying for medically unnecessary dental and orthodontic procedures on thousands of children.
The whistleblowers are also represented by Charles S. Siegel of Waters Kraus Paul & Siegel in Dallas, James Moriarty of the Law Offices of James R. Moriarty in Houston and James “Rusty” Tucker of the Law Offices of James R. Tucker in Dallas.
Texas is represented by Brian VanderZanden, David Wright and Ethan Gaitz of the attorney general’s office.
Xerox is represented by Eric J.R. Nichols of Butler Snow.
The case number is D-1-GN-19-004849.
Central District of California
Match Group Draws Investors Class Action
Dallas-based Match Group has been sued by a group of investors who purchased stock between May 2, 2023, and Nov. 6, 2024, in a putative class action lawsuit.
The lawsuit, filed Nov. 25 by lead plaintiff Sébastien Meslage, accuses Match Group of making false or misleading statements that downplayed issues affecting the monthly active user count of Tinder.
After the company implemented new policies that took at least two million users off Tinder, the company “assured the market that it was on a path to positive [monthly active users] growth on the Tinder app when in fact it was not,” the lawsuit alleges.
Meslage alleges Match Group “understanded the difficulty of retaining existing users” or adding new ones, both in communications to shareholders and in filings with the U.S. Securities and Exchange Commission.
The lawsuit was assigned to U.S. District Judge Maame Ewusi-Mensah Frimpong. It also names as defendants Match Group’s CEO, Bernard Kim, and CFO, Gary Swidler.
The investors are represented by Laurence M. Rosen of Rosen Law Firm.
Counsel for Match Group had not filed notice of appearance as of Monday. The company has until Feb. 3 to file an answer to the lawsuit.
The case number is 2:24-cv-10153.
Court of Special Review
Harris County Judge Ursula Hall Cleared
Harris County District Judge Ursula Hall, who was publicly reprimanded by the State Commission on Judicial Conduct in April, recently had the admonishment vacated on appeal.
Judge Hall’s admonishment was based on findings that she failed to comply with and maintain professional competence in the law and that she failed to hear and decide matters assigned to her in a timely manner.
“The public reprimand further concluded that ‘Judge Hall’s failure in these respects constituted willful and persistent conduct that is clearly inconsistent with the proper performance of her duties and cast[s] public discredit upon the judiciary or the administration of justice, in violation of Article V, Section 1-a(6)A of the Texas Constitution,’” the opinion states.
But in a 12-page per curiam opinion issued Dec. 13, the Special Court of Review found the Commission had failed to meet its burden to prove the charges against Judge Hall.
“We vacate the Commission’s public reprimand and dismiss all charges against Judge Hall without sanctions,” the court held.
According to the opinion, Judge Hall received a public warning and was ordered to undergo additional education based on her failure to timely rule on pending motions before her. She drew three complaints between September 2021 and July 2023, including one from Chief Justice Tracy Christopher of the Fourteenth Court of Appeals in Houston, who noted lawyers practicing before Judge Hall had “repeatedly filed petitions for writ of mandamus” alleging the judge had failed to timely rule on outstanding motions.
The Lawbook has previously reported on some of the 30 mandamus actions involving Judge Hall.
Chief Judge Christopher testified that she had filed a complaint against Judge Hall because she “thought the overwhelming number of mandamuses meant that Judge Hall was not doing her job.”
But the court noted that based on statistics, Judge Hall has a 90-100 percent clearance rate on cases and “in some years, she exceeded 100 percent.”
Judge Hall testified she was “never consciously not ruling. And a mandamus standard for analysis is supposed to be a refusal to rule.”
“Judge Hall testified she regularly works twelve hours per day, six days per week, and she often is working at midnight. She is ‘always prepared for an oral hearing,’ and her reversal rate is low,” the opinion states. “She clears about 1,200 cases annually and for four of the eight years she has been on the bench, her clearance rate has been over 100 percent, which is in the top five percent of judges in Harris County”
The Special Court of Review found that the Commission failed to present evidence that Hall failed to timely rule on motions that have specific time frames, such as 91a dismissal motions or Texas Citizens Participation Act motions.
“While some lawyers who appear in her court have submitted complaints that Judge Hall did not rule in a timely fashion, that evidence alone does not support the conclusion that Judge Hall fails to hear and decide matters assigned to her or fails to comply with the law,” the court held.
The case number is SCR 24-0001.
U.S. Court of Appeals for the Fifth Circuit
Panel Undoes Win for NFL HOF’er LaDainian Tomlinson in Home Construction Row
A bankruptcy court judge wrongly determined a $664,590 debt incurred by a defunct homebuilding company was not dischargeable, a Fifth Circuit panel recently held, meaning NFL Hall of Fame running back LaDainian Tomlinson cannot recover the funds.
The underlying dispute stems from an adversary proceeding in the Chapter 7 bankruptcy case of Steven Andrew Clem, who formerly owned Bella Vita Custom Homes.
According to the opinion, Tomlinson signed a contract with Bella Vita in April 2015 to construct an 18,000 square foot home valued at $4.5 million, but the project “quickly ran into problems.”
Tomlinson canceled the contract about four months later, after paying Bella Vita more than $650,000, because he said the company had failed to account for how the money was being used and failed to inform him when builders punctured a water line, flooding the building pad and adjacent property.
Tomlinson sued in Tarrant County and the dispute was moved to arbitration. The arbitration panel awarded Tomlinson $744,711 in damages after finding, among other things, that Clem and Bella Vita had violated the Texas Deceptive Trade Practices Act.
Clem filed for Chapter 7 bankruptcy in December 2016, shortly after the adverse judgment was entered, and Tomlinson brought this adversary proceeding, arguing the debt wasn’t dischargeable. The bankruptcy court agreed and entered judgment in Tomlinson’s favor Jan. 3, 2018.
U.S. District Judge Sam A. Lindsay affirmed the bankruptcy court’s findings.
Clem filed notice of appeal with the Fifth Circuit in November 2022 and a panel of the court heard oral arguments Nov. 7, 2023.
The panel wrote that Tomlinson’s “claims for accounting deceptions sound in breach of contract but not fraud. As such, they are not nondischargeable under Section 523(a)(2)(A).”
“In any event, there is no evidence here that Clem undertook any extracontractual obligation and thereby submitted to any additional tort-based duty of disclosure,” the panel wrote. “The bankruptcy court’s conclusion that Clem’s breach of contract amounted to nondischargeable fraudulent nondisclosure must be reversed.”
Judges Edith H. Jones, Rhesa H. Barksdale and Chief Judge Jennifer Walker Elrod sat on the panel.
Tomlinson is represented by Jeremy Powell and Evan Shaw of the Law Offices of Van Shaw.
Clem is represented by John Bowdich of Bowdich & Associates.
The case number is 22-11072.