ADMINISTRATIVE HEARINGS

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1 1 David G. Derickson, State Bar No. 000 John P. Kaites, State Bar No. 01 Michael S. Love, State Bar No. 0 RIDENOUR, HIENTON & LEWIS, P.L.L.C. Chase Tower 1 North Central Avenue, Suite 00 Phoenix, Arizona 00- (0) -00; Fax (0) -0 Firm designatedcontact@rhlfirm.com Attorney dderickson@rhlfirm.com mlove@rhlfirm.com Attorneys for Interested Party/Protestant/Appellants MAGELLAN HEALTH SERVICES OF ARIZONA, INC. AND MAGELLAN COMPLETE CARE OF ARIZONA, INC., v. IN THE OFFICE OF ADMINISTRATIVE HEARINGS Appellants, ARIZONA DEPARTMENT OF HEALTH SERVICES, Respondent. Docket No. F-00-ADM MAGELLAN S REQUEST FOR PREHEARING CONFERENCE Magellan Health Services of Arizona, Inc. ( MHSAZ ) and Magellan Complete Care of Arizona, Inc. ( MCCA ) (collectively, Magellan ) respectfully requests that a Prehearing Conference be set in this matter which is presently scheduled for August 1 through August,. This request is made pursuant to A.R.S. 1-.0(F), A.A.C.R-- (A) () and A.A.C. R-- and is necessary to promote judicial efficiency and an orderly hearing. INTRODUCTION Separate from this Request, Respondent the Arizona Department of Health Services ( ADHS ) filed a Request for Expedited Prehearing Conference Pursuant to Arizona Administrative Code R-- and R-- on Friday, June,

2 1 outlining eleven issues it expects the Court to address during a proposed two hour conference (the ADHS Request ). Magellan also expects an expedited conference is required for the reasons stated herein. FACTUAL AND PROCEDURAL SUMMARY Magellan is the current Regional Behavioral Health Authority ( RBHA ) for GSA under a contract with ADHS, and has been functioning in that role since September 1, 0. As the GSA RBHA, Magellan is responsible for the delivery of behavioral health services to approximately,000 eligible individuals, including approximately,000 individuals with serious mental illness ( SMI ) currently in treatment. Magellan also provides integrated physical and behavior health services to approximately,000 individuals with SMI. ADHS solicited bid proposals for the award of the Regional Behavioral Health Authority Contract for Maricopa County and part of Pinal County (the GSA RBHA Contract ) through ADHS (the Solicitation ). Bids were due on January,. On March,, ADHS issued an award of the GSA RBHA Contract to Mercy Maricopa Integrated Care ( MMIC ), an entity created specifically to bid on the Solicitation. Magellan timely filed its protest alleging serious deficiencies in the award and requested a stay of the award and implementation of the Solicitation on April,. On April,, ADHS procurement officer, Christine Ruth, denied the protest and request for stay. Pursuant to A.A.C. R--A0, Magellan timely filed a written Request for Immediate Stay with the Director of the Department of Administration (the ADOA ) on May,. Concurrently with that filing, Magellan filed its Appeal of ADHS award to MMIC and ADHS denial of its timely bid protest. - -

3 1 On May,, the ADOA, through its Deputy Director Jeff Grant, issued a Stay of the contract award,...and related performance and transition activities,... pending the Appeal. (Exh. MHS-1) On June,, the ADOA issued clarification of its Stay Order, stating Specifically, the May, Stay is to prevent MMIC from going forward with any performance or transition activities that have the potential to generate costs or losses to MMIC, or liability to the State of Arizona. (Exh. MHS-.) Finally, on June, 0, the ADOA issued its Order referring the Appeal to the Office of Administrative Hearings, citing the unique circumstances of the Solicitation. An Order setting hearing for August 1 through August, followed. THE NEED FOR A PREHEARING CONFERENCE Pursuant to A.R.S. 1-.0, prehearing conferences may be set in administrative hearings to: 1. Clarify or limit procedural, legal or factual issues;. Consider amendments to any pleadings;. Identify and exchange lists of witnesses and exhibits intended to be introduced at the hearing;. Obtain stipulations or rulings regarding testimony, exhibits, facts or law; and. Schedule deadlines, hearing dates and locations if not previously set. The reasons for holding a prehearing conference in this case are multifaceted and compelling. 1. The issues that will be presented are complex issues of law, fact, statute, rule, and procedure. A prehearing conference is necessary to clarify the procedural, legal, and factual issues. Magellan s appeal raises six separate substantive legal grounds to overturn the award of the GSA RBHA Contract to MMIC that will require the Court to - -

4 1 navigate complex factual and legal issues involving multiple parties. As it presently stands, there is at least one section of the Arizona Constitution, five sections of Arizona s Revised Statutes, and a half dozen procurement rules at issue in this case. Over the course of the past two months, the parties have submitted numerous briefs in various venues outlining, explaining and discussing the factual issues and the impact of these laws and regulations. Development of the facts will require pre-hearing disclosures by the parties and production of records from third-parties as discussed in more detail below. Magellan believes a briefing schedule, particularly on matters that may be dispositive, must be set and that the briefing be done only after production of relevant and necessary documents, but sufficiently in advance of the hearing for the parties to adjust their presentations based on this Court s rulings.. Standard and burden of proof. Magellan believes a prehearing conference is necessary to provide the parties with the Court s guidance concerning the standard of proof and burden of proof applicable to these proceedings. The parties appear to agree that a preponderance of the evidence standard applies. Magellan believes it is required only to demonstrate, by a preponderance of the evidence and in accordance with the evaluation criteria established under the Solicitation and applicable law, MMIC was not a responsible offeror or that an award of the Contract to MMIC is not in the best interest of the State. Magellan contends that a finding that an award of the contract to MMIC violates applicable statutes or rules or was tainted by improper conduct or bias would satisfy its burden. ADHS, apparently, disagrees. In order to resolve this dispute, Magellan recommends a briefing schedule on this point be developed at the requested prehearing conference.. Intervention of interested parties ; management of parties. One of the most important procedural issues that must be addressed is the proposed intervention of MMIC and various other entities that may also seek to - -

5 1 intervene. In the interests of judicial economy, the Court should exercise its discretion to preclude or limit the roles of proposed intervenors in filing motions, participating in discovery or examination where the interests and arguments are aligned with a party already authorized to participate in the hearing, i.e. ADHS.. Disqualification of MMIC s lead counsel for conflict of interest. Another critical procedural issue is the ethical issue raised by the Entry of Appearance of MMIC s lead counsel. In 0, Magellan engaged the law firm of COPPERSMITH SCHERMER & BROCKELMAN ( CSB ) to defend Magellan s award of the 0 GSA RBHA contract against bid protests and related civil actions. On Wednesday, June,, CSB filed a notice of appearance on behalf of MMIC in this matter. Magellan contends that CSB s involvement constitutes a violation of Rule, Arizona Rules of Supreme Court, E.R. 1. (the Rule ), and that CSB should be disqualified. Magellan has filed a Motion to Disqualify CSB from its participation in a related matter in the Maricopa County Superior Court. That motion has been fully briefed, a hearing has been set for July 1,, and the parties are awaiting a ruling from the Superior Court.. Management of the production of documents. Magellan will require the assistance of this Court in expediting disclosure of relevant records, particularly within the short timeframe provided as a result of the hearing date presently set. Magellan has undertaken immediate and diligent efforts to gain production and disclosure of relevant documents and correspondence through public records requests. A significant source of the documents and evidence in this case is maintained by the Maricopa County Special Health Care District d/b/a Maricopa Integrated Health System ( MIHS ) and MMIC. A schedule requiring prompt disclosure of relevant records by MMIC, as intervenor, and third-party MIHS, is critical to allow Magellan to prepare for the currently scheduled hearing date. MIHS is a public body - -

6 1 subject to the Arizona Public Records Act. Its involvement with MMIC as a so-called sponsor, member, owner and investor is a critical issue in this case. Magellan served a public records request on MIHS seeking production of documents relevant to the issues in the appeal on March,. After MIHS stonewalled Magellan s efforts to obtain relevant public records, Magellan was forced to file a Special Action Petition in Superior Court pursuant to Article, Section of the Arizona Constitution, A.R.S. 1-01, 1-1, 1-1, and Rule, ARIZ. R. CIV. P. In response to Magellan s public records lawsuit, MIHS has advised that it is promptly searching and reviewing its files to unearth the evidence. Apparently, this is a lengthy process and MIHS has estimated it will take,000,000 person hours for a complete response. According to MIHS, There are,0 s that have already been identified [as responsive]. MIHS counsel further explained in open court on May 0,, I can tell you on the easy stuff we re going to spend not less than 00 hours on the search followed by manual search. And I candidly don t know, Your Honor, whether [the subsequent manual search] will be 00 hours or 1,000 hours but its somewhere in that realm A significant reason for the delay in production is the assertion of no fewer than eight privileges MIHS is asserting. One of those privileges relates to the redaction of socalled proprietary information supplied by MMIC. Magellan will seek this Court s guidance and assistance in resolving these claims of privilege or other attempts at withholding relevant records from production. A prompt and thorough disclosure of all relevant documents is absolutely essential for the parties to move forward with the scheduled hearing date. Magellan is sensitive to concerns for a prompt resolution of this case, but is also understandably concerned about the fairness of the proceedings if MIHS and MMIC continue to claim privilege and delay disclosure while simultaneously arguing that time is critical. - -

7 1 Finally, the parties and the Court will benefit from having reasonable and consistent calendaring of significant pre-hearing and hearing markers, because it will enhance the efficient use of court time to present the evidence and arguments necessary for the Court to make its decisions. RESPECTFULLY SUBMITTED this th day of June,. ORIGINAL of the foregoing e-filed this th day of June, to: Clerk of Court OFFICE OF ADMINISTRATIVE HEARINGS Suite 1 00 West Washington Phoenix, Arizona 00 COPIES ed and/or electronically served via OAH Electronic Filing System this date to: Diane Mihalsky Administrative Law Judge OFFICE OF ADMINISTRATIVE HEARINGS Suite 1 00 West Washington Phoenix, Arizona 00 Bret H. Parke ADOA General Counsel Chair, GRRC ARIZONA DEPARTMENT OF ADMINISTRATION 0 N. th Ave, th fl. Phoenix, AZ 00 Bret.parke@azdoa.gov - - RIDENOUR, HIENTON & LEWIS, P.L.L.C. By /s/ Michael S. Love, Esq., SBA #0 David G. Derickson John P. Kaites Michael S. Love 1 North Central Avenue, Suite 00 Phoenix, Arizona 00- Attorneys for Appellants

8 1 Jeff Grant, Deputy Director ARIZONA DEPARTMENT OF ADMINISTRATION Suite 1 0 North th Avenue Phoenix, Arizona 00 jeff.grant@azdoa.gov; brian.mcneil@azdoa.gov; Maria.Vega@azdoa.gov Will Humble, Director ARIZONA DEPARTMENT OF HEALTH SERVICES Suite 00 0 North th Avenue Phoenix, Arizona 00 Will.humble@azdhs.gov Christine Ruth Chief Procurement Officer ARIZONA DEPARTMENT OF HEALTH SERVICES Office of Procurement 0 West Adams Street, Suite 0 Phoenix, Arizona 00 Christine.Ruth@azdhs.gov Kevin D. Ray Gregory D. Honig Laura T. Flores OFFICE OF THE ATTORNEY GENERAL Education and Health Section 1 West Washington Street Phoenix, Arizona 00- Kevin.Ray@azag.gov educationhealth@azag.gov Mark Fisher, CEO MERCY MARICOPA INTEGRATED CARE Building D 0 East Cotton Center Boulevard Phoenix, Arizona 00 Mark.fisher@aetna.com - -

9 1 Andrew S. Gordon, Esq. Kimberly A. Fatica, Esq. Roopali H. Desai, Esq. COPPERSMITH SCHERMER & BROCKELMAN PLC Suite 00 North Central Avenue Phoenix, Arizona 00-0 Attorneys for Mercy Maricopa Integrated Care Paul F. Eckstein, Esq. D. Andrew Gaona, Esq. PERKINS COIE, LLP th Floor 01 North Central Avenue Phoenix, Arizona 01 Attorneys for Mercy Maricopa Integrated Care Paul J. Giancola, Esq. Michael T. Liburdi, Esq. Brett W. Johnson, Esq. SNELL & WILMER, LLP 00 East Van Buren Phoenix, Arizona 00- Attorneys for Mercy Maricopa Integrated Care - -

10 1 Gary L. Birnbaum, Esq. Barry R. Sanders, Esq. Andrew L. Pringle, Esq. DICKINSON WRIGHT MARISCAL WEEKS Suite 0 01 North Central Avenue Attorneys for Maricopa County Special Health Care District dba Maricopa Integrated Health System gbirnbaum@dickinsonwright.com bsanders@dickinsonwright.com lpringle@dickinsonwright.com Logan T. Johnston JOHNSTON LAW OFFICES, P.L.C. 0 E. Mescal Street Phoenix, Arizona 0 Attorneys for AHCCCS ltjohnston@johnstonlawoffices.net Jean Clark State Procurement Administrator ARIZONA DEPARTMENT OF ADMINISTRATION Suite 1 0 North th Avenue Phoenix, Arizona 00 Jean.clark@azdoa.gov /s/ DC Hatheway OAH F-00-ADM - -

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

IN THE OFFICE OF ADMINISTRATIVE HEARINGS 0 0 David G. Derickson, State Bar No. 000 John P. Kaites, State Bar No. 0 Michael S. Love, State Bar No. 0 RIDENOUR, HIENTON & LEWIS, P.L.L.C. Chase Tower 0 North Central Avenue, Suite 00 Phoenix, Arizona