IN THE OFFICE OF ADMINISTRATIVE HEARINGS ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

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1 1 1 Andrew S. Gordon (000 Roopali H. Desai (0 COPPERSMITH SCHERMER & BROCKELMAN PLC 00 North Central Avenue, Suite Phoenix, Arizona 00 Telephone: (0 1-0 Facsimile: (0-0 agordon@csblaw.com rdesai@csblaw.com Brett W. Johnson (0 Michael T. Liburdi (0 SNELL & WILMER, LLP 00 East Van Buren Street, Suite 00 Phoenix, Arizona 00- Telephone: (0-000 Facsimile: (0-00 bwjohnson@swlaw.com mliburdi@swlaw.com Attorneys for Intervenor Mercy Maricopa Integrated Care Paul F. Eckstein (00 D. Andrew Gaona (0 PERKINS COIE LLP 01 North Central Avenue, Suite 00 Phoenix, Arizona 01- Telephone: ( Facsimile: (0-000 peckstein@perkinscoie.com agaona@perkinscoie.com IN THE OFFICE OF ADMINISTRATIVE HEARINGS MAGELLAN HEALTH SERVICES OF ARIZONA, INC. and MAGELLAN COMPLETE CARE OF ARIZONA, INC., v. Appellants, ARIZONA DEPARTMENT OF HEALTH SERVICES, Respondent. MERCY MARICOPA INTEGRATED CARE, and ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM, Intervenors. Docket No. 1F-00-ADM No. Solicitation: ADHS MERCY MARICOPA INTEGRATED CARE S RESPONSE IN OPPOSITION TO MAGELLAN S MOTION TO CONTINUE HEARING (Assigned to Hon. Diane Mihalsky {0001. }

2 Mercy Maricopa Integrated Care ( MMIC respectfully requests that Magellan s Motion to Continue Hearing ( Motion to Continue be denied. 1 Magellan s entire strategy is to extend 1 1 this administrative proceeding as long as possible to try to delay the time the new integrated care system can begin providing services. This allows Magellan to continue to reap $. million per month in profits under the old contract. This only benefits Magellan. (See Will Humble letter attached to MMIC s Response Opposing Magellan s Mis-styled Request for Continuance (styled Magellan s response to MMIC proposed scheduling order filed July. Magellan now wants to make the OAH part of its goal of extending the stay by having the OAH order a continuance for at least two months (until October but no sooner than when it has completed the discovery it wants. (Motion to Continue at 1. The OAH should decline to become a part of Magellan s scheme. Magellan s unsubstantiated claims of denial of due process and vague unmet discovery needs do not demonstrate good cause for a continuance under A.A.C. R-- 1. A.R.S. 1-.0(A(1 requires that this hearing shall be held by the current hearing date. That date may only be extended by agreement of the parties, which has not happened, or for good cause. A.R.S. 1-(C. However, Magellan has not met any of the good cause requirements under A.A.C. R--1. Magellan s entire Motion to Continue is based on three incorrect premises: (1 it is entitled to substantial document discovery prior to the hearing; ( if it is not able to obtain all the documents it seeks, regardless of whether or not such documentation actually exists, it is being denied its due process rights; and ( it has not received or will not timely receive documents it is entitled to obtain. It is wrong on all three points. We address these issues in that order. 1 We do not wish to repeat what we or others have already said on this subject. This Response focuses on issues not previously raised before the OAH. However, we adopt and incorporate AHCCCS s Response Opposing this Motion to Continue as well as MMIC s Response Opposing Magellan s Mis-styled Request for Continuance (styled Magellan s response to MMIC s proposed scheduling order filed July, 1. {0001. } 1

3 1 1 I. There Is No General Right to Discovery in Administrative Proceedings. The type of discovery generally available in a civil proceeding under the Arizona Rules of Civil Procedure is not available in administrative proceedings and for good reason. Administrative procedures are intended to balance a litigant s need for information and the public s need to have administrative proceedings resolved in a timely manner. Indeed, if every disappointed bidder were entitled to the type of information Magellan seeks, bid protests would turn into full-blown litigation. For these reasons, courts do not order discovery beyond that required by the applicable rules. See Replacement Rent-A-Car, Inc. v. Smith, A.d, 1 (Md. App. (discovery rules do not apply to administrative proceedings; any general right to discovery in administrative proceedings must come from statutes or rules governing those proceedings; Chafian v. Ala. Bd. of Med. Exam rs, So.d, (Ala. App. (prehearing discovery is within the discretion of the administrative agency; Office of Consumer Counsel v. Dep t of Pub. Util. Control, A.d, (Conn. Sup. Ct. (pretrial discovery may be expressly authorized by statute but, absent express provision, extent to which party to an administrative proceeding is entitled to discovery is determined by rules of particular administrative agency; Beaver Cnty. v. Utah State Tax Comm n, P.d, (Utah (administrative proceedings are not subject to state rules of civil procedure unless governing statute or regulations so provide; discovery in administrative proceedings is available only if governing statues or agency rules so provide. The only discovery Magellan is entitled to under Arizona administrative law and procedure is a limited right to subpoena relevant documents. Even then, [s]ubpoenas for the production of documents may be ordered by the administrative law judge if the party seeking the discovery demonstrates that the party has reasonable need of the materials being sought. Bid protests at the federal level follow a similar process. For example, the Government Accountability Office ( GAO does not allow fishing expeditions as to document that might exist. Rather, if an interested party is aware of a specific document and that party can articulate the relevance of that specific document, then it can be produced and supplement the agency s record. See C.F.R... {0001. }

4 A.R.S. 1-.0(F( (emphasis added; see also A.A.C. R--(B. As we explain below, Magellan has not made such a showing. The current hearing date has not jeopardized Magellan s limited subpoena rights. II. Magellan s Due Process Rights Are Limited and Not At Risk. Limiting Magellan s discovery rights to subpoenas conforming to A.R.S. 1-.0(F 1 1 and A.A.C. R--(B does not jeopardize Magellan s due process rights because it has no due process right to discovery in an administrative proceeding. Courts have held repeatedly that there is no constitutional due process right to discovery in an administrative proceeding. Kelly v. EPA, F.d, (th Cir. 00 ( There is no constitutional right to pretrial discovery in administrative proceedings. ; Silverman v. Commodity Future Trading Comm n, F.d, (th Cir. ( There is no basic constitutional right to pretrial discovery in administrative proceedings. Finding due process satisfied where, in advance of hearing, petitioner provided with copies of exhibits, list of witnesses, identities of relevant government agents and copies of statements given by petitioner; Coles v. Delaware River and Bay Auth., WL 1 (D. Del. (reasoning it is well-settled law that parties to administrative proceedings are not entitled to pre-trial discovery as a matter of constitutional right. Despite Magellan s wailing about some threat to its due process rights, it has not cited any authority whatsoever supporting its argument that it has a due process right to discovery. Nor has it made a showing that it does not have the necessary documents or evidence to proceed with the currently scheduled hearing date. Indeed, Magellan has collected thousands of pages of documents from countless public records requests to the Arizona Department of Health Services, the Arizona Department of Insurance, and MIHS. Most importantly, it has had access to the entire procurement file since MMIC was awarded the bid on March, 1. Moreover, none of the cases cited by Magellan support Magellan s statement that If the hearing continues on the scheduled date, Magellan will be denied due process because it will not have had an opportunity to conduct discovery. (Motion at. It is worth looking at the situations in the cases Magellan cites. In Huck v. Harlambie, 1 Ariz. (, the court found that only giving a party a one-day notice for hearing did not satisfy due process because it {0001. }

5 1 1 did not give the party time to travel from Texas to Arizona. Here, Magellan has had 0-days notice, in addition to the significant amount of time between the filing of its bid protest on April, 1, and August, 1. What is more, the Huck case is not even an administrative proceeding case and has nothing to do with discovery in administrative proceedings. In Elia v. Arizona State Board of Dental Examiners, Ariz.,, 1 P.d, (1, the court found no due process violation in an administrative proceeding where the petitioner had adequate notice of charges, reasoning, [d]ue process assures an individual notice of charges prior to commencement of a hearing so the person charged has a meaningful opportunity for explanation and defense. This is Magellan s own bid protest. There is no question it knows the issues and will be given a chance to make its case. Elia has nothing to do with the scope of discovery in an administrative proceeding. Likewise, none of the other cases Magellan cites support its position in any way. See, e.g., Berenter v. Gallinger, Ariz., P.d (App. ( no due process violation because statute not unconstitutionally vague; Salas v. Ariz. Dep t of Econ. Sec., Ariz. 1,, P.d 10, 10 (App. (due process means right to notice and to be heard at an evidentiary hearing no issue of right to discovery in administrative proceeding; Rouse v. Scottsdale Unified School Dist. No., Ariz., P.d (App. (no due process violation because hearing was before an impartial decision maker. Due process entitles Magellan to notice, the right to appear and present its case, and to have an impartial decision maker. It does not entitle Magellan to any discovery. Whatever discovery it is entitled to is what the Arizona statutes or rules on administrative proceedings provide. As we explain in the next section, there is no showing that would justify continuing this hearing because of a failure to follow the administrative statutes or rules. Furthermore, Magellan s request must be viewed in the context of Magellan s initial bid protest that was referred to the OAH by the ADOA for review and recommendation. Magellan s protest arguments call mostly for a legal interpretation, upon which the factual underpinnings have already been well established in multiple filings before the ADHS, ADOA, and now the OAH. It is clear that Magellan s request to continue to conduct further discovery is simply a red {0001. }

6 herring intended to distract the OAH from the real issues referred to it by ADOA. Magellan has had multiple opportunities to present its legal arguments and its due process rights, as outlined in the applicable regulations, and has already been overly protected to the detriment of the State s and community s best interests. III. No Good Cause Exists to Continue the Hearing for Failure to Appropriately Respond to Subpoenas. A.A.C. R--1 provides the factors that should be considered for continuing a 1 1 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 negotiations. None of these factors include needing more time for discovery, and Magellan does not claim that any of the foregoing form the basis for its request for a continuance. In fact, this proceeding is following the procedure provided for in Arizona law. On April, 1, Magellan filed its initial bid protest. On April, 1, the Chief Procurement Officer ( CPO denied Magellan s bid protest and supplemental bid protest. On May, 1, pursuant to A.A.C. R--A0, Magellan appealed the denial of its bid protest to the Director of Administration, ADOA. On May, 1, pursuant to A.A.C. R--A, the CPO filed the Agency Report asking that all seven issues raised in the protest be dismissed on appeal without hearing. On June 1, 1, over two months after the initial bid protest, the Deputy Director of ADOA referred this matter to a hearing before the OAH. On June, 1, the matter was assigned to Administrative Law Judge Diane Mihalsky and the hearing was set to begin August 1, 1, which notably is the latest day under the statute to begin the hearing. Contested actions shall be held within sixty days after the agency s request for hearing. A.R.S. 1-.0(A( (emphasis added. Magellan could have submitted the subpoenas for issuance to Judge Mihalsky on the very date that it learned of the hearing, but it did not. See A.A.C. R--. If Magellan really thought it needed the items sought in the subpoenas, it should have had them ready to go after {0001. }

7 1 1 the Deputy Director referred this matter to a hearing on June 1, 1. As others have pointed out in various pleadings before the OAH, the subpoenas largely duplicate public records requests that Magellan had served on MIHS months before. However, Magellan waited more than 0 days, until July, to submit the subpoenas for issuance. In addition to sitting on its hands for more than a month, Magellan then served subpoenas containing over 0 category of documents with very broad instructions and definitions. This, despite the fact that Magellan may not even be entitled to subpoena relevant documents because it did not first make a showing that the documents are needed, A.R.S. 1-.0(F, A.A.C. R--(B, and despite the fact that subpoenas should not be unreasonable or oppressive, A.A.C. R--(E(1. Because of the length and breadth of the subpoenas, Magellan should, if it was truly interested in obtaining these materials prior to hearing, have submitted a brief statement of relevancy for each of the categories of documents sought, as contemplated under A.A.C. R- 1(B. It now complains that there will not be time to resolve any disputes regarding the subpoenas prior to hearing, but that is a result of Magellan s own delay and the scope and burden of the subpoenas themselves. Magellan also is not entitled to a continuance because there is no showing that the parties served with the subpoenas are not meeting their obligations. First, the returns on the subpoenas are not due until Monday, July, 1. Second, even if there are objections, the objections may be well taken. As AHCCCS points out in its brief, while Magellan makes grand sweeping claims that everything it is asking for is relevant and critical, it has yet to identify with specificity which documents it needs and why each of the documents are relevant and critical. Let us take, for example, the MMIC corporate structure documents. Magellan claims MIHS sponsorship/membership in MMIC violates A.R.S. -(C. MMIC will be producing under an appropriate protective order, which the parties have now agreed to the {0001. }

8 1 1 MMIC articles, bylaws, corporate minutes and Letter of Intent between MIHS and Mercy Care. Those are documents sought in the subpoena. Assuming that argument is even timely, it is a legal question resolved by those documents. Much of Magellan s motion is premised on the notion that it is entitled to obtain documents it is seeking in public records requests to MIHS and ADHS before the hearing. Not surprisingly, there is no authority for this proposition and it runs counter to the law cited above. While Magellan is free to use documents obtained in public records requests as exhibits, assuming they are relevant and admissible, that does not mean that the hearing cannot take place until all its requests are met or otherwise disposed of. By that reasoning, Magellan could continue to file new public records requests and bring more parallel litigation and continuously claim that it is not ready for the hearing until those requests and lawsuits have been resolved. Beyond that, Magellan is being far from candid with the OAH when it describes the status of both the MIHS and ADHS public record requests. While Magellan has taken MIHS to court three times regarding what it views as MIHS s dilatory conduct, the court has granted Magellan no relief and has not ordered MIHS to alter its response time frames or methodology in any way. What the court has ordered is Counsel shall continue the process in place but limited to only search of s. s shall be reviewed only under specific search terms. (Minute Entry dated 0/1/1, Attachment A, quoted language highlighted. It is simply untrue to say the Court has now ordered MIHS to produce documents that are relevant to this proceeding. (Motion at. Judge Rayes has never been asked, let alone made any rulings, regarding what is relevant in this proceeding. What is clear is that he has not ordered MIHS to do anything other than what it is already doing at the pace it is doing it. Magellan s statements regarding ADHS s responses to public records requests are also not accurate. The so-called critical s and correspondence is not critical, and it has all been provided. A relatively small number of s and correspondence were provided to MIHS has already provided the articles, bylaws and a redacted version of the letter of intent. As to the other documents sought by Magellan, such as the membership agreement and note, do not exist. {0001. }

9 Magellan by ADHS on July, 1, satisfying its lingering public records request. Many are duplicates of items already in the record and none appear to be critical. 1 1 IV. Conclusion For the foregoing reasons, Magellan s Motion to Continue should be denied. Respectfully submitted this th day of July, 1. COPPERSMITH SCHERMER & BROCKELMAN PLC By /s/ Andrew S. Gordon Andrew S. Gordon Roopali H. Desai Perkins Coie LLP Paul F. Eckstein D. Andrew Gaona 01 North Central Avenue, Suite 00 Phoenix, Arizona 01- Snell & Wilmer Brett W. Johnson Michael T. Liburdi 00 East Van Buren Street, Suite 00 Phoenix, Arizona 00- Attorneys for Intervenor Mercy Maricopa Integrated Care Copy ed this th day of July, 1, to all parties and interested persons, By: autogenerated and posted to /s/ Sheri McAlister {0001. }

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