27,992 and 29,016

Testo completo

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: 	________________
Filing Date: 	December 15, 2011
NO. 27,992 consolidated with NO. 29,016
STARKO, INC., d/b/a MEDICINE CHEST #1,
and JERRY JACOBS, d/b/a PILL BOX
PHARMACY #4, for and on behalf of
themselves and all others similarly situated,
Plaintiffs-Appellants/Cross-Appellees,
v.
PRESBYTERIAN HEALTH PLAN, INC.,
a New Mexico corporation, d/b/a
PRESBYTERIAN SALUD,
Defendant-Appellee,
and
CIMARRON HEALTH PLAN, INC.,
a New Mexico corporation, d/b/a
CIMARRON HEALTH MAINTENANCE
ORGANIZATION, a/k/a CIMARRON HMO,
Defendant-Appellee/Cross-Appellant,

consolidated with
STARKO, INC., d/b/a MEDICINE CHEST #1,
and JERRY JACOBS, d/b/a PILL BOX
PHARMACY #4, for and on behalf of
themselves and all others similarly situated,
Plaintiffs-Appellants,
v.
NEW MEXICO HUMAN SERVICES
DEPARTMENT,
Defendant-Appellee.
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Linda M. Vanzi, District Judge
Peifer, Hanson & Mullins, P.A.
Charles R. Peifer
Robert E. Hanson
Lauren Keefe
Elizabeth Radosevich
Albuquerque, NM
Cavin & Ingram, P.A.
Sealy H. Cavin, Jr.
Stephen D. Ingram
Albuquerque, NM
for Appellants/Cross-Appellees
Long, Pound & Komer, P.A.
John B. Pound
Santa Fe, NM

Rodey, Dickason, Sloan, Akin & Robb, PA
Edward Ricco
Albuquerque, NM
for Appellee Presbyterian Health Plan, Inc.
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
Lisa Mann
Jennifer A. Noya
Albuquerque, NM
for Appellee/Cross-Appellant Cimarron Health Plan, Inc.
Gary K. King, Attorney General
Jerome Marshak, Special Assistant Attorney General
Eric R. Miller, Assistant Attorney General
Santa Fe, NM
for Appellee New Mexico Human Services Department

1This appeal is the third and fourth we have decided in this case since 2005. See
Starko, Inc. v. Cimarron Health Plan, Inc. (Starko I), 2005-NMCA-040, 137 N.M.
310, 110 P.3d 526 (holding that Rule 1-023(F) NMRA was inapplicable to the issue
of class certification); Starko, Inc. v. Gallegos (Starko II), 2006-NMCA-085, 140
N.M. 136, 140 P.3d 1085 (granting qualified immunity under 42 U.S.C § 1983 (1996)
to individual defendants who were state executives during the transition from a fee-
for-service model to a managed care model).
OPINION
KENNEDY, Judge.
{1} 	Today, we update a continuing saga of Medicaid-related litigation spanning
more than eleven years.1 Starko, Inc. and Jerry Jacobs are representatives of a
certified class of pharmacists (collectively, Plaintiffs), who contend they were not
properly reimbursed for their services under Medicaid. 	They argue that the New
Mexico Human Services Department (HSD) and managed care organizations, namely,
Presbyterian Health Plan, Inc. and Cimarron Health Maintenance Corporation
(collectively, the MCOs), which administered Medicaid for the State of New Mexico,
were required to pay Plaintiffs in accordance with NMSA 1978, Section 27-2-16(B)
(1984), but refused to do so. 	In two consolidated appeals, Plaintiffs appeal four
district court orders dismissing their claims against the MCOs and HSD for violation
of Section 27-2-16(B), breach of contract, breach of contract on a third-party
beneficiary theory, unjust enrichment, declaratory relief, and injunctive relief.
{2} 	We 	hold 	that 	Section 	27-2-16(B) 	confers 	upon 	participating 	Medicaid
pharmacists an implied cause of action to enforce the statute directly against the

2
MCOs. 	Furthermore, (1) the district court properly dismissed Plaintiffs’ claim
concerning HSD’s reduction of reimbursement without federal approval for a six-
month period; (2) Plaintiffs’ breach of contract claim, third-party beneficiary contract,
and unjust enrichment claims may proceed; (3) the district court properly concluded
that Section 27-2-16(B) conferred non-waivable rights; (4) the district court did not
abuse its discretion in denying Plaintiffs’ demands for injunctive and declaratory
relief; and (5) the district court properly certified Plaintiffs’ class in these cases.
{3} 	Consequently, we affirm in part, reverse in part, and remand to the district court
for proceedings consistent with this Opinion.
I. 	BACKGROUND
{4} 	Congress created the Medicaid program in 1965 to supplement the Social
Security Act. Atkins v. Rivera, 477 U.S. 154, 156 (1986); see 42 U.S.C. § 1396w-2
(2009). 	The program provides “medical assistance to persons whose income and
resources are insufficient to meet the costs of necessary care” and compels
participating states to share the costs of administering the program with the federal
government. Atkins, 477 U.S. at 156-57. New Mexico is a participant state. Initially,
New Mexico’s Medicaid program operated on a fee-for-service model, in which
Medicaid services were provided directly to recipients by HSD. More recently, in the
interest of cutting costs, the state has significantly curtailed the fee-for-service model.

2Under managed care, Presbyterian has chosen to contract with pharmacists
directly, while Cimarron uses PBMs as intermediaries. 	In Cimarron’s case, it
contracts with PBMs and requires PBMs to subcontract with pharmacists, who then
provide services to Medicaid recipients on behalf of Cimarron. Though pharmacists
do not contract directly with Cimarron, it is somewhat unclear from the record
whether Cimarron, the PBMs, or both, truly exercise control over pharmacists. For
instance, the contracts between Cimarron and PBMs impose a variety of conditions
on pharmacists, while the contracts between PBMs and pharmacists provide that
pharmacists will be paid by PBMs.
3
Now, like most states, the greatest number of New Mexico’s Medicaid recipients
receive their treatment via a managed care program, in which the state contracts with
the MCOs to provide services. 	Starko II, 2006-NMCA-085, ¶ 3. The MCOs then
contract with pharmacists, either directly or through intermediaries called “Pharmacy
Benefits 	Managers” 	(PBMs), 	and 	pharmacists, 	in 	turn, 	provide 	prescription
medication to Medicaid recipients.2 Id.
{5} 	Section 27-2-16(B) governs how New Mexico’s Medicaid program pays
participating pharmacists. It was modified to its current form in 1984 and remains
unchanged to the present day. 	Section 27-2-16(B) thus bridges New Mexico’s
transition from the original fee-for-service model to today’s managed care and
provides as follows:
If drug product selection is permitted by [NMSA 1978, Section
26-3-3 (2005)], reimbursement by the [M]edicaid program shall be
limited to the wholesale cost of the lesser expensive[,] therapeutic

3Since the advent of managed care, Section 27-2-16(B) has been challenged
twice in both the House and the Senate without success, once in 2002 and again in
2004. Both bills sought to restrict payments to pharmacists. See H.B. 400, 45th Leg.,
2d Sess. (N.M. 2002) (not passed) (seeking to revise Section 27-2-16(B) by replacing
the phrase “wholesale cost” with “lowest price available” and deleting the phrase “of
at least three dollars sixty[-]five cents ($3.65)” (emphasis omitted)); see also S.B. 183,
46th Leg., 2d Sess. (N.M. 2004) (not passed) (seeking to declare “an emergency[,]”
rewriting Section 27-2-16(B) to allow pharmaceutical payments to be set “by
negotiation,” and by “regulations adopted by the [HSD]” (emphasis omitted)).
4
equivalent drug generally available in New Mexico plus a reasonable
dispensing fee of at least three dollars [and] sixty-five cents ($3.65). 3
Section 26-3-3, referenced in Section 27-2-16(B), allows Medicaid pharmacists in
their professional discretion to substitute any “therapeutically equivalent” drug for the
drug actually prescribed as long as the substitution conforms with federal guidelines.
Section 26-3-3. Under fee-for-service Medicaid, HSD followed this requirement and
paid pharmacists the wholesale cost of the lesser expensive drug plus an additional
$3.65 for each transaction.
{6} 	That began to change in 1994. At that time, the Legislature authorized HSD to
transition from a fee-for-service to a managed care program and, in 1997, HSD
implemented 	SALUD!, 	a 	managed 	care 	program, 	in 	which 	it 	entered 	into
competitively bid contracts with the MCOs to provide care to Medicaid recipients.
The contracts, known as Medicaid Managed Care Service (MMCS) Agreements
required the MCOs to provide medical care and pharmacy services to all qualified
Medicaid recipients. These contracts explicitly incorporated “[a]ll applicable statutes,

5
regulations and rules implemented by the [f]ederal [g]overnment, the State of New
Mexico . . . , and [HSD], concerning Medicaid services[.]” Shortly after the adoption
of SALUD!, HSD notified pharmacists that, in order to continue to provide services
under Medicaid, pharmacists would be required to contract with the MCOs instead of
HSD. Under the new MCO-pharmacist contracts, pharmacists would be reimbursed
by the MCOs at the “current and applicable Medicaid reimbursement rates” which,
Plaintiffs allege, had the potential to be significantly lower than the statutory
reimbursement rates guaranteed by Section 27-2-16(B). Yet, pharmacists wishing to
participate in the program had no choice. 	Anyone who refused the new contracts
would be “terminated from the active provider list” by HSD.
{7} 	Under SALUD!, pharmaceutical costs were negotiated directly between HSD
and the MCOs, and Plaintiffs allege that, under the new regime, the MCOs were
sufficiently paid by HSD to comply with Section 27-2-16(B). Fearing that their rights
under Section 27-2-16(B) would be waived by agreeing to contracts with the MCOs,
Plaintiffs filed suit against HSD and obtained a temporary restraining order from the
district court. In essence, the district court gave HSD an ultimatum: either withdraw
the requirement that pharmacists contract with the MCOs, or agree that the new
contracts would not waive pharmacists’ right to sue pursuant to Section 27-2-16(B).
HSD chose the latter and, with other aspects of the litigation still pending against

4The present appeal does not deal with any claims by Plaintiffs against the
MCOs on breach of the contracts between Plaintiffs and the MCOs.
6
HSD, pharmacists entered into new contracts, either with the MCOs themselves or
with the MCOs’ intermediary, the PBMs. 	Plaintiffs claim that the reimbursable
amounts ultimately paid under these contracts were often substantially lower than the
amounts required by Section 27-2-16(B).4 Likewise, they claim that HSD, by
instituting this new regime, circumvented its obligations under the statute by using the
MCOs as intermediaries.
{8} 	Over HSD’s protests, Plaintiffs were certified as a class in October 1999. At
that time, the MCOs had not yet been added as Defendants. In 2000, Plaintiffs moved
for summary judgment, and the district court ruled that HSD was affirmatively
required to comply with Section 27-2-16(B). It found that HSD could not “delegate
or contract away” its responsibilities under the statute. Then, after winning on their
summary judgment motion against HSD, Plaintiffs argued that the MCOs were
indispensable parties. In October 2000, the district court allowed them to be added
and held that, like HSD, the MCOs were required to comply with Section 27-2-16(B).
{9} 	The MCOs attacked the class certification. They filed briefs asking the court
to decertify the class and included a number of supporting exhibits. As a result, the
district court allowed discovery into “whether the class should be decertified.” The
MCOs never requested an evidentiary hearing on their motions, but oral arguments

7
were heard in September 2002. 	After this second consideration of the class
certification issue, the district court denied the MCOs’ motions to decertify the class
and found that the requirements of Rule 1-023 NMRA continued to be met. 	The
MCOs appealed to this Court pursuant to Rule 1-023(F). We refused to consider the
merits of their claim and held that an appeal under Rule 1-023(F) was unavailable.
See Starko I, 2005-NMCA-040, ¶¶ 2, 18 (discussing the applicability of Rule 1-
023(F)).
{10} 	It appears that such wrangling through the years has directly influenced the
language of contracts between the parties. Most notably, contracts between HSD and
the MCOs have taken several forms. The first contracts in 1997 simply required the
MCOs to pay pharmacists in a manner consistent with “current and applicable . . .
reimbursement rates.” Then, in 2001, following the district court’s order that HSD
and the MCOs comply with Section 27-2-16(B), the contracts were changed to include
what the parties now refer to as “the Starko [C]lause.” That language provides that
“[t]he subcontract for pharmacy providers shall include a payment provision
consistent with [Section 27-2-16(B)] unless the subcontractor provides a voluntary
waiver to any rights under” the statute. 	The contracts were again revised in 2005
when they took their current form. Those contracts alter the Starko Clause to require
that “subcontracts for pharmacy providers shall include a payment provision

8
consistent with [Section 27-2-16(B)] unless there is a change in law or regulation.”
(Emphasis added.) 	We emphasize that Section 27-2-16(B) has not changed since
1984.
{11} 	As these cases have progressed since the last appeal, three separate district court
judges have issued a variety of orders. We review four.
{12} 	First, in 2006, Presbyterian filed a motion for judgment on the pleadings.
Following the hearing, the district court affirmed its earlier ruling that HSD’s
affirmative duty to Plaintiffs under Section 27-2-16(B) was non-delegable. As such,
any right of action under the statute would be most properly pursued against HSD, not
the MCOs. Thus, the court held that any private right of action against the MCOs
under the statute must fail. Likewise, the court held in favor of the MCOs on the issue
of unjust enrichment. It found that Plaintiffs’ contracts with the MCOs provided an
“adequate remedy at law” against the MCOs, which precluded a cause of action in
equity.
{13} 	Second, in 2007, Presbyterian filed a second motion for judgment on the
pleadings, which Cimarron joined. Together, the MCOs sought rulings on Plaintiffs’
claim for breach of the contracts between the MCOs and HSD. Following argument,
the district court held that the claims were unfounded because Plaintiffs were not
intended third-party beneficiaries of the contracts between the MCOs and HSD.

9
Further, the court found that a third-party beneficiary claim would not lie against the
MCOs even if Plaintiffs had been intended beneficiaries. The district court reasoned
that “[t]o allow an action against the MCOs on a third-party beneficiary theory would
be inconsistent with th[is c]ourt’s previous ruling that Plaintiffs have no private right
of action.”
{14} 	Third, in 2008, Plaintiffs filed a motion for summary judgment on the issue of
when Section 27-2-16(B) applies. 	The court entered partial summary judgment,
stating that the statute only applies when a pharmacist actually substitutes a lower
cost, therapeutic equivalent drug for the prescribed drug.
{15} 	Fourth, in 2008, Plaintiffs submitted a motion for partial summary judgment on
several issues with regard to their case against HSD. HSD responded with its own
motion for summary judgment on the issues. The district court issued a memorandum
opinion and order on the cross-motions for summary judgment. In it, the court held
that (1) HSD had no obligation to pay Plaintiffs for the alleged shortfall, (2) HSD
could not be held liable for past non-compliance with Section 27-2-16(B), (3)
Plaintiffs did not have a breach of contract claim concerning HSD’s reduction of
reimbursement without federal approval for a six-month period, and (4) the $3.65
dispensing fee was reasonable.

10
{16} 	On appeal from these orders, Plaintiffs argue several points of error. First, they
assert that Section 27-2-16(B) creates a private right of action enforceable against the
MCOs and HSD. Furthermore, they argue the district court erroneously dismissed
their claims for breach of contract, third-party beneficiary breach of contract theory,
unjust enrichment, declaratory relief, and injunctive relief.
{17} 	Against any extent to which we reverse any portion of the district court’s
rulings in this matter, Cimarron asks us to consider its conditional cross-appeal. In
it, Cimarron argues, first, that the district court’s class certification in this case was
both constitutionally and statutorily defective and, second, presuming Section 27-2-
16(B) confers any rights at all, those rights have been waived.
II. 	STANDARD OF REVIEW
{18} 	When reviewing judgments on the pleadings, we “accept as true all facts well
pleaded and question only whether the plaintiffs might prevail under any state of facts
provable under the claim.” Garcia v. Rodey, Dickason, Sloan, Akin & Robb, P.A., 106
N.M. 757, 760, 750 P.2d 118, 121 (1988). 	All interpretations of law made by the
district court are reviewed de novo. Klinksiek v. Klinksiek, 2005-NMCA-008, ¶ 4, 136
N.M. 693, 104 P.3d 559.
{19} 	We review orders granting or denying summary judgment de novo. Romero v.
Philip Morris Inc., 2010-NMSC-035, ¶ 7, 148 N.M. 713, 242 P.3d 280. “Summary

11
judgment is proper when the material facts are undisputed and the only remaining
issues are questions of law.” Farmers Ins. Co. of Ariz. v. Sandoval, 2011-NMCA-051,
¶ 6, 149 N.M. 654, 253 P.3d 944 (internal quotation marks and citation omitted).
{20} 	We 	likewise 	apply 	a 	de 	novo 	standard 	when 	engaging 	in 	statutory
interpretation. State v. Smith, 2009-NMCA-028, ¶ 8, 145 N.M. 757, 204 P.3d 1267;
see Sedillo v. N.M. Dep’t of Pub. Safety, 2007-NMCA-002, ¶ 7, 140 N.M. 858, 149
P.3d 955 (“The question of whether statutes create or imply a private right of action
is a question of law . . . reviewed de novo.”). In doing so, we strive to effectuate the
intent and policies of the Legislature, looking “first to the words chosen . . . and the
plain meaning of the . . . language.” Smith, 2009-NMCA-028, ¶ 8 (internal quotation
marks and citation omitted). When a statute’s language “is clear and unambiguous,
we give effect to that language and refrain from further statutory interpretation.” Id.
(internal quotation marks and citation omitted). 	Where ambiguity arises, we go
outside the plain language and engage in further statutory interpretation. N.M. Bd. of
Veterinary Med. v. Riegger, 2007-NMSC-044, ¶ 11, 142 N.M. 248, 164 P.3d 947. We
“construe the entire statute . . . so that all . . . provisions [are] considered in relation
to one another.” Id. (internal quotation marks and citation omitted). “In ascertaining
legislative intent, we look not only to the language used in the statute, but also to the
object sought to be accomplished and the wrong to be remedied.” Patterson v. Globe

12
Am. Cas. Co., 101 N.M. 541, 543, 685 P.2d 396, 398 (Ct. App. 1984), superseded by
statute on other grounds as stated in Journal Publ’g Co. v. Am. Home Assurance Co.,
771 F. Supp. 632, 635 (S.D.N.Y. 1991).
III. 	DISCUSSION
A. 	Plaintiffs Have Not Waived Claims Regarding Section 27-2-16(B)
{21} 	As a threshold issue, Defendants assert that Plaintiffs waived any claim they
had regarding Section 27-2-16(B). 	Specifically, the MCOs argue that because
Plaintiffs have entered into contracts for an amount less than the requirement in
Section 27-2-16(B), Plaintiffs have waived any cause of action based upon Section
27-2-16(B). The MCOs contend that the district court, when it concluded that no
waiver occurred, violated the principle of freedom of contract. 	Citing United
Wholesale Liquor Co. v. Brown-Forman Distillers Corp., 108 N.M. 467, 471, 775
P.2d 233, 237 (1989), Presbyterian supports its waiver argument with the principle
that “[t]he voluntary relinquishment of a statutory protection is consistent with our
policy favoring the right to contract.” 	For reasons explained in this Opinion, we
conclude that any semblance of a relinquishment was not voluntary in this case.
{22} 	In addition, HSD argues that, in the provider agreements it made with Plaintiffs,
Plaintiffs agreed “[t]o accept as payment in full the amount paid in accordance with
the reimbursement structure in effect for the period during which such services were

13
provided as per 42 [C.F.R. §] 447.15.” The Medicaid Payment for Services Rule, 42
C.F.R. § 447.15, provides that participation in the Medicaid program is limited to
providers that “accept, as payment in full, the amounts paid by the agency plus any
deductible, coinsurance or copayment required by the plan to be paid by the
individual.” Thus, HSD contends that Plaintiffs cannot seek additional payments from
HSD under the fee-for-service program because, “by agreeing to become Medicaid
providers[, Plaintiffs] have agreed not to seek reimbursement from HSD beyond what
is paid to them by HSD pursuant to its drug reimbursement regulations as then in
effect.” HSD further argues that as to SALUD!, “HSD included a provision in the
MMCS Agreements[, stating that Plaintiffs] must accept payment from the MCO[s]
as payment for any services included in the benefit package, and cannot request
payment from HSD or from Medicaid members . . . for services performed under the
subcontract.” (Internal quotation marks omitted.)
{23} 	We disagree with the contentions of both the MCOs and HSD that Plaintiffs’
claims have been waived. 	In 1997, as stated above, Plaintiffs sought a temporary
restraining order from the court to determine the effect of entering into new contracts
with the MCOs. 	The court issued the order and required HSD to either allow
Plaintiffs to refuse the new contracts, or agree that such contracts would not waive any

14
rights under Section 27-2-16(B). HSD chose the latter, and Plaintiffs signed with the
MCOs.
{24} 	This Court has explained in the past,
a 	valid 	waiver 	requires 	a 	known 	legal 	right, 	relinquished 	for
consideration, where such legal right is intended for the waivor’s sole
benefit and does not infringe on the rights of others. . . . In no case will
a waiver be presumed or implied, contrary to the intention of the party
whose rights would be injuriously affected thereby, unless, by his
conduct, the opposite party has been misled, to his prejudice, into the
honest belief that such waiver was intended or consented to. Absent
proof of an express agreement, in order to establish waiver[,] there must
be a showing of unequivocal acts or conduct on the part of the person
against whom waiver is asserted showing an intent to waive.
McCurry v. McCurry, 117 N.M. 564, 567, 874 P.2d 25, 28 (Ct. App. 1994) (internal
quotation marks and citations omitted). 	When we consider the actions taken by
Plaintiffs to preserve their statutory rights through a court order and the change in
position chosen at the time by HSD, we do not see these contracts they entered into
with Defendants as unequivocal acts showing an intent to waive statutory rights.
{25} 	HSD’s argument that Plaintiffs contractually waived their right to seek further
compensation from HSD is inconsistent with HSD’s agreement that Plaintiffs would
not 	waive 	their 	statutory 	rights 	by 	engaging 	in 	contracts 	with 	the 	MCOs.
Furthermore, entering into contracts with the MCOs can hardly be said to constitute
an unequivocal intent to waive rights under Section 27-2-16(B), especially given
Plaintiffs’ refusal to enter the contracts without HSD’s agreement and a court order

15
that their rights would be preserved. Moreover, the contracts, which we discuss in
further detail below, continue to require compliance with the Section 27-2-16(B)
absent waiver or change of law.
{26} In addition, we will not imply waiver unless Defendants were misled by
Plaintiffs’ conduct to their prejudice, while honestly believing that Plaintiffs actually
intended to waive their rights. Brown v. Jimerson, 95 N.M. 191, 192-93, 619 P.2d
1235, 1236-37 (1980); see Ed Black’s Chevrolet Ctr., Inc. v. Melichar, 81 N.M. 602,
604, 471 P.2d 172, 174 (1970) (“In no case will a waiver be presumed or implied,
contrary to the intention of the party whose rights would be injuriously affected
thereby, unless, by his conduct, the opposite party has been misled, to his prejudice,
into the honest belief that such waiver was intended or consented to.”); see also Brown
v. Taylor, 120 N.M. 302, 305, 901 P.2d 720, 723 (1995) (holding that a theory of
implied waiver must be supported by evidence that the aggrieved party acted in
reliance on the waiver to his detriment). Here, the MCOs have presented no evidence
that they were misled by Plaintiffs or that they entered into these contracts in reliance
on Plaintiffs’ alleged waiver. Neither has HSD demonstrated such reliance, and
Plaintiffs have certainly demonstrated no such intent.
{27} Thus, we hold that the district court was correct when it concluded that
Plaintiffs did not waive their rights under Section 27-2-16(B). We also note that the

16
case before us involves a unique set of facts and, as the district court stated, “[n]one
of the cases cited by [the MCOs] . . . deals with this unique situation in which a [s]tate
program and [s]tate actors, who themselves must comply with the statute, can, by their
own contracts with third parties, allow the statute to be ignored or violated.” Having
determined that Plaintiffs did not waive their right to sue under the statute itself or
under contracts that incorporated the statute, we now discuss Section 27-2-16(B)’s
role in the Medicaid program.
B. 	Section 27-2-16(B)
{28} 	New Mexico’s Medicaid program falls under the Public Assistance Act. See
NMSA 1978, §§ 27-2-1 to -34 (1972, as amended through 2007). Under the Act, the
HSD is charged with administering Medicaid and maintaining a “statewide, managed
care system to provide cost-efficient, preventive, primary and acute care for
[M]edicaid recipients.” 	Section 27-2-12.6(A). 	In administering the Medicaid
program, HSD must ensure that recipients are provided prescription medication.
Section 27-2-12.11. Section 27-2-16(B) provides that “[i]f drug product selection is
permitted by Section 26-3-3 . . . , reimbursement by the [M]edicaid program shall be
limited to the wholesale cost of the lesser expensive[,] therapeutic equivalent drug
generally available in New Mexico plus a reasonable dispensing fee of at least three
dollars sixty-five cents ($3.65).” Titled “Compliance with federal law[,]” Section 27-

17
2-16(B) most clearly effectuates the federal requirement that state medical assistance
plans
provide such methods and procedures . . . as may be necessary to . . .
assure that payments are consistent with efficiency, economy, and
quality of care and are sufficient to enlist enough providers so that care
and services are available under the plan at least to the extent that such
care and services are available to the general population in the
geographic area[.]
42 U.S.C. § 1396a(a)(30)(A) (1999, as amended through 2010) (emphasis added).
Indeed, as Presbyterian recognizes in its answer brief, the statute is a response to
Section 1396(a)(30)(A) and seeks “a balance between paying providers enough to
assure patient accessibility and keeping Medicaid expenditures as low as possible.”
1. 	Section 27-2-16(B) Survived the Transition to Managed Care
{29} 	The MCOs argue that Section 27-2-16(B) did not survive New Mexico’s
transition to managed care. Even if it did, they claim the statute does not provide a
remedy and is therefore unenforceable. As to whether Section 27-2-16(B) survived
the transition to managed care, the most apparent manifestation of our Legislature’s
intent to pay Plaintiffs for their stock and labor is the inescapable fact that the statute,
setting the requirements for doing so, remains on the statute books despite the 2002
and 2004 attempts to change it. The requirement was first enacted in 1974 and has
existed in its current form since 1984, predating the advent of managed care in New
Mexico by more than a decade and surviving more than a decade past. See § 27-2-

18
16(B); § 27-2-12.6(A). Yet, the MCOs argue that the requirement is inconsistent with
managed care as implemented in 1997 because it sets an absolute amount for payment;
whereas, managed care is premised upon periodic renegotiations between the MCOs
and their subcontractors.
{30} 	The MCOs fail to demonstrate that the Legislature intended for Section 27-2-
16(B) to be superseded by managed care. The Legislature twice rejected amendments
that 	specifically 	would 	have 	either 	lowered 	payments 	or 	required 	periodic
renegotiation. See H.B. 400, 45th Leg., 2d Sess. (N.M. 2002) (not passed); S.B. 183,
46th Leg., 2d Sess. (N.M. 2004) (not passed). It seems that the evidence is clearly
contrary to the MCOs’ argument.
{31} 	Nor are we persuaded by Cimarron’s argument that the statute’s very language
demonstrates its inapplicability to managed care. Essentially, Cimarron claims that
because Section 27-2-16(B) requires “reimbursement by the [M]edicaid program[,]”
it cannot apply to them because they are not the Medicaid program. Cimarron’s brief
assumes that the Medicaid program is another way of saying “New Mexico Human
Services Department.” In conjunction with this argument, Presbyterian contends that
nowhere do Plaintiffs cite case law standing for the proposition that when a statute
imposes a non-delegable duty on a government agency, any implied right of action by

19
the aggrieved party against that agency includes a right to sue other entities with
which the agency has a contractual or regulatory relationship.
{32} 	These arguments are misplaced. We agree with the district court’s holding that
the MCOs “are not [health plans], and they are not third[-]party insurers. Rather, they
are part of the Medicaid program.” The Medicaid program begins at the government
level, upstream of the MCOs, and continues through the provision of care and services
to recipients downstream of the MCOs. Had our Legislature intended reimbursements
to come directly and only from HSD, it could have easily used the term “department”
in Section 27-2-16(B). 	See § 27-2-2(A) (defining “department” as the “[H]uman
[S]ervices [D]epartment”). Rather, the Legislature chose a broader term, “Medicaid
program,” which we interpret to encompass the entire Medicaid apparatus by which
patients are served by Medicaid funds through HSD’s agents. 	In other words, the
statute tells pharmacists that, under a certain set of circumstances by legislative
enactment, the money appropriated by the state and federal government and passed
through several layers of bureaucracy, agents, and contractors will be paid to them in
a predetermined manner on which they may rely. This is true regardless of whether
the program operates under fee-for-service, managed care, or some other method.
Under managed care, the MCOs were contracted by HSD to be the conduits for
Medicaid funds, succeeding HSD itself. We hold that the statute applies to the MCOs

5We distinguish the present appeal from a previous appeal in this same case
regarding Plaintiffs’ attempt to bring a § 1983 suit for HSD’s supposed violation of
Section 27-2-16(B). 	In Starko II, we held that Plaintiffs could not bring a § 1983
claim for a procedural due process violation with regard to Section 27-2-16(B).
Starko II, 2006-NMCA-085, ¶ 29. This previous appeal determined “only the discrete
question of whether Plaintiffs may proceed against Defendants under § 1983[] and not
whether Plaintiffs can proceed against HSD under other state law remedies.” Starko
II, 2006-NMCA-085, ¶ 29.
20
and the managed care program regardless of additional layers of bureaucracy and
administrative control.
2. 	Section 27-2-16(B) Creates a Private Right of Enforcement
{33} 	Plaintiffs contend that the district court erred in finding that there was no
implied private cause of action under Section 27-2-16(B).5 When a party seeks to
enforce a statute that provides no express mechanism for its enforcement, we examine
whether a cause of action may be implied through the common law based on an
interpretation of legislative intent or public policy. Nat’l Trust for Historic Pres. v.
City of Albuquerque, 117 N.M. 590, 594, 874 P.2d 798, 802 (Ct. App. 1994); see
Hovet v. Allstate Ins. Co., 2004-NMSC-010, ¶¶ 9-10, 135 N.M. 397, 89 P.3d 69
(holding that legislative intent and public policy supported the conclusion that third
parties may bring a cause of action against insurers for unfair practices where the
statute at issue provided a cause of action generally). 	“[A] state court, because it
possesses common-law authority, has significantly greater power than a federal court
to recognize a cause of action not explicitly expressed in a statute.” Nat’l Trust, 117

21
N.M. at 593, 874 P.2d at 801. In determining whether to recognize whether there is
a cause of action, we examine three non-exclusive factors: 	“(1) Was the statute
enacted for the special benefit of a class of which the plaintiff is a member?[;] (2) Is
there any indication of legislative intent, explicit or implicit, to create or deny a
private remedy?[;] and (3) Would a private remedy either frustrate or assist the
underlying purpose of the legislative scheme?” 	Nat’l Trust, 117 N.M. at 593, 874
P.2d at 801. In addition, “[a] state’s public policy, independent of [these] factors, may
be determinative in deciding whether to recognize a cause of action.” Id. at 594, 874
P.2d at 802.
a. 	Implied Cause of Action Based Upon Legislative Intent
{34} 	First, we address the three factors that may contribute to the recognition of a
private cause of action based upon legislative intent. We first analyze whether the
statute was enacted for the special benefit of a class of which Plaintiffs are members.
Section 27-2-16(B) states that, “[i]f drug product selection is permitted . . . ,
reimbursement by the [M]edicaid program shall be limited to the wholesale cost of the
lesser expensive[,] therapeutic equivalent drug generally available in New Mexico
plus a reasonable dispensing fee of at least three dollars sixty-five cents ($3.65).”
Section 27-2-16(B) benefits individuals or entities that dispense drugs to Medicaid
participants, ensuring that each receives a reasonable dispensing fee and payment for

22
the drug dispensed. Plaintiffs, being pharmacists, clearly fall within a class sought to
be benefitted by the statute.
{35} 	Next, we examine whether there is any indication in the statute of legislative
intent, explicit or implicit, to create or deny a private remedy. “The guiding principle
of statutory construction is that a statute should be interpreted in a manner consistent
with legislative intent. . . . [W]e look not only to the language used in the statute, but
also to the purpose to be achieved and the wrong to be remedied.” 	Hovet, 2004-
NMSC-010, ¶ 10. Here, we utilize factors developed by the United States Supreme
Court in evaluating legislative intent, including (1) whether the statute contains
“rights-creating language”; (2) whether it has an “aggregate, not individual, focus”;
and (3) the purpose of the statute. 	Gonzaga Univ. v. Doe, 536 U.S. 273, 284, 290
(2002); see Blessing v. Freestone, 520 U.S. 329, 340-41 (1997); Nat’l Trust, 117 N.M.
at 593, 874 P.2d at 801. 	The Supreme Court typically applies these questions
regarding legislative intent within the context of a § 1983 action. 	However, this
particular legislative intent inquiry is the same in our context because, in both
situations, a court has the task of analyzing whether the Legislature intended to create
or deny a private remedy.
{36} 	In Gonzaga University, the Supreme Court held that the Family Educational
Rights and Privacy Act’s (FERPA) non-disclosure provisions failed to confer

23
enforceable rights as the provisions “entirely lack the sort of ‘rights-creating’
language critical to showing the requisite congressional intent to create new rights.”
536 U.S. at 287. There, a student sought to sue the university by bringing a § 1983
action for violating non-disclosure provisions of FERPA that prohibited federal
funding of educational institutions that had a policy or practice of releasing education
records to unauthorized persons. Gonzaga Univ., 536 U.S. at 276-77. The Supreme
Court concluded that the provisions were only addressed to the Secretary of Education
to direct the expenditure of funds and that the statute did not address “the interests of
individual students and parents.” Id at 287. The Supreme Court also determined that
“FERPA’s non[-]disclosure provisions further speak only in terms of institutional
policy and practice, not individual instances of disclosure. Therefore, . . . they have
an ‘aggregate’ focus, they are not concerned with whether the needs of any particular
person have been satisfied, and they cannot give rise to individual rights[.]” Id. at 288
(internal quotation marks and citations omitted). Thus, the Gonzaga University Court
held that the student did not have a private cause of action under FERPA. Id. at 290.
{37} 	In contrast, the United States Supreme Court held that there was legislative
intent to create a private cause of action under the Boren Amendment. Wilder v. Va.
Hosp. Ass’n, 496 U.S. 498, 512 (1990). There, an association of hospitals brought a

24
§ 1983 action, challenging the administration of the state’s Medicaid program on the
ground that it violated the Boren Amendment. 	Wilder, 496 U.S. at 501-02. 	The
Boren Amendment required states to reimburse Medicaid providers in an amount that
was “reasonable and adequate” to meet the costs “incurred by efficiently and
economically operated facilities[.]” 	Id. (internal quotation marks and citation
omitted). 	The Supreme Court concluded that the Boren Amendment created a
substantive right for health care providers in reasonable and adequate reimbursement
rates. Id. at 509-10. The Supreme Court explained:
There can be little doubt that health care providers are the intended
beneficiaries of the Boren Amendment. The provision establishes a
system 	for 	reimbursement 	of 	providers 	and 	is 	phrased 	in 	terms
benefit[t]ing health care providers: It requires a state plan to provide for
payment . . . of the hospital services, nursing facility services, and
services in an intermediate care facility for the mentally retarded
provided under the plan.
Id. at 510 (internal quotation marks and citation omitted). 	The Supreme Court
concluded that this right was enforceable because the Boren Amendment was cast in
mandatory, rather than precatory, terms since it required the state to “provide for
payment . . . of hospital[s] according to rates the [s]tate finds are reasonable and
adequate.” Id. at 512 (first alteration in original). The Court described this language
as a “congressional command, . . . wholly uncharacteristic of a mere suggestion or

25
nudge” and held that the hospital association had a right to bring the action. 	Id.
(internal quotation marks and citation omitted).
{38} 	The case at bar more resembles Wilder rather than Gonzaga University, and the
facts here, as in Wilder, weigh in favor of finding legislative intent to create a private
cause of action under Section 27-2-16(B). 	The present case and Wilder deal with
mandatory reasonable reimbursement of Medicaid providers. 	Like the statute in
Wilder, Section 27-2-16(B)’s language is mandatory, stating that “[i]f drug product
selection is permitted by Section 26-3-3 . . . , reimbursement by the [M]edicaid
program shall be limited to the wholesale cost of the lesser expensive[,] therapeutic
equivalent drug generally available in New Mexico plus a reasonable dispensing fee
of at least three dollars sixty-five cents ($3.65).” We have stated in the past that “[t]he
word ‘shall’ as used in a statute is generally construed to be mandatory.” 	State v.
Guerra, 2001-NMCA-031, ¶ 14, 130 N.M. 302, 24 P.3d 334. Thus, in the present
case, reimbursement for filling prescriptions as intended by the Legislature in
accordance with the statute is a mandatory legislative “command” very similar to that
in Wilder. 	Plainly, the Legislature intended pharmacists to fill prescriptions in a
certain way under Section 26-3-3 and be paid in a certain way for doing so under
Section 27-2-16(B). This certainty reinforces our conclusion.

26
{39} 	Furthermore, Section 27-2-16(B) contains rights-creating language that gives
Plaintiffs a protected property right in the reasonable dispensing fee and average
wholesale price (AWP) of the lesser-expensive, therapeutic equivalent drug when
Plaintiffs can dispense a drug within this category to a Medicaid patient. “Property
interests . . . are created and their dimensions are defined by existing rules or
understandings that stem from an independent source such as state law-rules or
understandings that secure certain benefits and that support claims of entitlement to
those benefits.” Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 577 (1972);
see Logan v. Zimmerman Brush Co., 455 U.S. 422, 430 (1982) (“The hallmark of
property, the [Supreme] Court has emphasized, is an individual entitlement grounded
in state law, which cannot be removed except for cause.” (internal quotation marks
and citation omitted)). 	“The definition of property centers on the concept of
entitlement; therefore, interests in government benefits will be recognized as
constitutional property if the person can be deemed entitled to them.” Bd. of Educ. of
Carlsbad Mun. Sch. v. Harrell, 118 N.M. 470, 477, 882 P.2d 511, 518 (1994) (internal
quotation marks and citation omitted). 	Section 27-2-16(B) entitles Plaintiffs to a
specific monetary payment for drugs already dispensed. We suggested in response
to a previous appeal from this case that “Section 27-2-16(B) confers upon pharmacists
a protected property interest in a dispensing fee of $3.65, particularly where they have

27
already filled prescriptions and are awaiting reimbursement.” Starko II, 2006-NMCA-
085, ¶ 19. We now abandon previous assumptions and suggestions to decide that this
is true. Unlike the statute in Gonzaga University, Section 27-2-16(B) specifies the
particular right attributable to Plaintiffs, an amount of money that is clearly defined
within the statute and a direction from the Legislature that it be paid. This legislative
command is not just an institutional policy and practice.
{40} 	Like Wilder, the payment provision of Section 27-2-16(B) speaks directly to the
“Medicaid program,” ordering it to pay the plaintiffs a specific fee for dispensing
drugs to Medicaid recipients. Section 27-2-16(B) is pointedly concerned with whether
the needs of this particular group have been satisfied, giving each pharmacist
dispensing drugs to Medicaid patients an individual right to a particular amount of
reimbursement. 	Thus, the purpose of Section 27-2-16(B) is directed to the
reimbursement of individual providers, and the wrong to be remedied by the statute
is the insufficient reimbursement of individual Medicaid providers. The provisions
speak not only to the expenditure of funds but, more specifically, guarantee a property
right in the dispensing fee and cost of the drug to dispensing pharmacists. Therefore,
there is implicit legislative intent to create an enforceable right for Medicaid
providers, like Plaintiffs, through Section 27-2-16(B).

6The Legislature exempted the managed care system from the equal pay
provision affecting physicians, dentists, optometrists, podiatrists, and psychologists.
§ 27-2-12.3.
28
{41} 	Last, we determine whether a private remedy would either frustrate or assist the
underlying purpose of the legislative scheme. The purpose of Section 27-2-16(B) is
to set a reasonable rate of reimbursement for Medicaid providers as part of a larger
legislative scheme dealing with the administration of Medicaid in New Mexico. This
statute requires the appropriate reimbursement of Medicaid providers and also confers
a protected property right. 	Unlike other statutes 6 within this legislative scheme
dealing with payments to providers, the Legislature never repealed or exempted the
MCOs from Section 27-2-16(B) following the Medicaid program’s transition into
managed care. Thus, we conclude that providing a private remedy would assist and
further the underlying purpose of the legislative scheme.
{42} 	For the reasons we have discussed, we hold that the Legislature intended to
provide an implied cause of action under the statute.
b. 	Application of the Private Cause of Action to the Parties
{43} 	As explained above, Section 27-2-16(B) creates an implied private cause of
action. Plaintiffs may seek their remedy directly from the MCOs because the MCOs
are part and parcel with the Medicaid program and a conduit for all of the state’s
Medicaid managed care funding.

29
{44} 	In addition, Plaintiffs argue on appeal that “the district court erred in concluding
that [Section] 27-2-16(B) [did] not create a private right of action against [HSD].”
Yet, the district court never made a ruling in its memorandum opinion on the issue of
whether HSD can be subject to the private cause of action derived from Section 27-2-
16(B). After reviewing Plaintiffs’ motion for summary judgment on the pleadings as
to HSD, we are unable to locate any argument regarding an implied cause of action
against HSD. 	Moreover, Plaintiffs fail to provide citation to an argument in the
motions regarding the implied cause of action. Instead, they argue that the issue was
preserved because “the district court explicitly relied on its prior rulings [that Section
27-2-16(B) did not create a private cause of action] in granting [HSD]’s motions for
summary judgment.” 	We are unpersuaded by this argument, especially because
Plaintiffs even failed to assert an implied cause of action against HSD in their fourth
amended complaint. Within Count Two of the fourth amended complaint, Plaintiffs
raise state law violations, specifically the violation of Section 27-2-16(B). 	There,
Plaintiffs state that “[t]he MCOs have violated [Section] 27-2-16(B). . . . The actions
of the MCOs in failing to comply with state law were done intentionally and in a
reckless and willful disregard of the rights of Plaintiffs for which they are entitled to
punitive damages.” Not once is HSD mentioned in Count Two as a party violating the

30
statute, nor is an implied cause of action against HSD discussed elsewhere in the
complaint.
{45} 	For the above reasons, we hold that the issue of an implied cause of action
against HSD has not been preserved. Woolwine v. Furr’s, Inc., 106 N.M. 492, 496,
745 P.2d 717, 721 (Ct. App. 1987) (“To preserve an issue for review on appeal, it
must appear that appellant fairly invoked a ruling of the trial court on the same
grounds argued in the appellate court.”); see State v. Wyman, 2008-NMCA-113, ¶ 10,
144 N.M. 701, 191 P.3d 559. We will not address issues that were not preserved and
are now raised for the first time on appeal. 	State v. Ware, 118 N.M. 703, 705, 884
P.2d 1182, 1184 (Ct. App. 1994). Thus, upon remand, the implied cause of action
under Section 27-2-16(B) may be tried against the MCOs because such arguments
were preserved, but not against HSD.
3. 	Section 27-2-16(B) Applies Whenever a Substitution is Possible, Even if the
Substitution Was Not Made
{46} 	Plaintiffs also appeal the district court’s holding that the statute “applies
whenever a pharmacist dispenses a multiple source drug to a Medicaid recipient at a
lower cost than the drug listed in the prescription; and . . . whenever a pharmacist
dispenses a therapeutically equivalent drug to a Medicaid recipient which is lower in
cost than the drug listed in the prescription.” This issue was briefed and preserved by
Plaintiffs in the second of the two appeals at issue in this Opinion to which HSD was

31
a party. Though the MCOs have not briefed the matter, it was properly raised, and we
consider our resolution of this legal issue applicable to all of the parties.
{47} 	Plaintiffs contend that based upon its plain language, Section 27-2-16(B) should
apply “anytime a pharmacist is permitted to select among multiple source drug[s] or
therapeutically equivalent drugs in providing a prescription to a Medicaid recipient.”
We agree with Plaintiffs that the plain language requires that the dispensing fee apply
whenever a substitution of a lesser expensive, therapeutic equivalent drug can be
made, not only when it is actually made. In analyzing how to apply Section 27-2-
16(B), we give effect to the statute’s clear and unambiguous language. 	Smith,
2009-NMCA-028, ¶ 8. We will not read into a statute “language which is not there,
especially when it makes sense as it is written.” 	Reule Sun Corp. v. Valles, 2010-
NMSC-004, ¶ 15, 147 N.M. 512, 226 P.3d 611 (internal quotation marks and citation
omitted). In addition, “the practical implications, as well as the statute’s object and
purpose are considered.” Id.
{48} 	Before we begin our analysis, we reiterate that Section 27-2-16(B) states that
“[i]f drug product selection is permitted by Section 26-3-3 . . . , reimbursement by the
[M]edicaid program shall be limited to the wholesale cost of the lesser expensive[,]
therapeutic equivalent drug generally available in New Mexico plus a reasonable
dispensing fee of at least three dollars sixty-five cents ($3.65).” Section 27-2-16(B).

32
As explained previously, reimbursement according to this statute is mandatory
because of the Legislature’s use of “shall.” We now address when and how Section
27-2-16(B) would be applicable.
{49} 	The crucial phrase of the statute is “[i]f drug product selection is permitted by
Section 26-3-3.” 	Section 27-2-16(B) (emphasis added). 	Here, the plain language
conditions the applicability of the statute on whether drug product selection is
allowed. This precondition must be fulfilled before the Medicaid program is required
to pay the reasonable dispensing fee and AWP of the lesser expensive drug. 	The
statute specifies that it applies when the substitution is “permitted” and does not
require the substitution to actually occur. If the Legislature wanted to condition the
applicability of this payment scheme on the dispensing of the lesser expensive,
therapeutic equivalent drug, it would have included those terms within the statute.
{50} 	Furthermore, this reading of the statute is consistent with the practical
implications, objective, and purpose of Section 27-2-16(B). As HSD asserts, “[t]he
Legislature intended this section to save money to the purchaser of prescription drugs
regardless of whether the purchaser is an individual or the Medicaid program.” This
statute seems to proceed from the federal mandate that New Mexico’s Medicaid
system should spend its money as wisely as possible. Thus, when a lesser expensive,
therapeutic equivalent drug is available, the government should not pay for a more

33
expensive one. The program seeks to save money by limiting reimbursement to the
wholesale cost of the lesser expensive drug, while paying pharmacists a predetermined
“reasonable dispensing fee.” Section 27-2-16(B). This reading promotes consistency
and predictability. 	It also gives an incentive to pharmacists to save the Medicaid
program money by refusing to dispense name brand drugs when lesser expensive,
therapeutic equivalent drugs are available. Our reading also comports best with the
statute’s title, “Compliance with federal law[,]” by ensuring that payments to
Medicaid pharmacists are “consistent with efficiency, economy, and quality of care
and are sufficient to enlist enough providers so that care and services are available.”
42 U.S.C. § 1396a(a)(30)(A).
{51} 	In contrast, the district court’s interpretation of Section 27-2-16(B) limits the
statute’s application to those instances when there is actual proof that the drug
dispensed differed from the original prescription. HSD supports the district court’s
conclusion with an argument based upon Section 26-3-3, which provides the
circumstances under which a prescription can be filled with a lesser expensive,
therapeutic equivalent drug. 	HSD argues that the district court’s interpretation is
correct because “[t]hat is precisely what [Section] 26-3-3 requires[.]” HSD goes on
to discuss the requirements of Section 26-3-3, not just the types of permissible
substitution, but also what a pharmacist must do when dispensing the lesser expensive,

34
therapeutic equivalent drug under Subsection (D) of Section 26-3-3. HSD contends
that because “[t]he Legislature required that the proof of product selection appear on
the label of the drug dispensed [under Subsection D],” there must be proof that the
substitution occurred for Section 27-2-16(B) to apply.
{52} 	HSD places too much emphasis on the role of Section 26-3-3 in interpreting
Section 27-2-16(B), essentially contending that every aspect of Section 26-3-3 must
be fulfilled and a lesser expensive, therapeutic equivalent drug issued in accordance
with it for Section 27-2-16(B) to apply. This is not the case. Section 27-2-16(B) only
requires that “drug product selection [be] permitted by Section 26-3-3” for the statute
to apply. Section 26-3-3(A) and (B) set forth the two instances where a pharmacist
may dispense a lesser expensive, therapeutic equivalent drug: 	(1) when “the
drug[] . . . satisfies the final determinations so recognized and listed by the [F]ederal
[D]epartment of [H]ealth and [H]uman [S]ervices” and (2) when the “drug . . . appears
on the [F]ederal [F]ood and [D]rug [A]dministration’s approved prescription drug
products with therapeutic equivalence evaluation list as supplemented[.]” Section 26-
3-3(C) explicitly states that “[d]rug product selection shall be permitted only under
circumstances and conditions set forth in Subsections A and B of this section[.]”
Therefore, if the prescribed drug falls under one of the two categories stated in Section
26-3-3(A) and (B), then the drug product selection is permissible and the pharmacists

35
must be reimbursed with the AWP of the equivalent drug plus a reasonable dispensing
fee. Whether the drug label includes the fact that a substitution has occurred is not
relevant to the criteria for determining whether a substitution is permissible.
{53} 	Furthermore, Plaintiffs assert that “the district court’s decision does not
adequately take into account that drug product selection occurs not only in the case
of brand[]name/generic substitution, but also in the case of choosing among non-
pioneer versions of multiple source drugs.” 	Plaintiffs contend that there are three
reasons for which this distinction must be accounted, all of which are related to the
FDA distinguishing between multiple source drugs as separate and unique drugs with
or without the same active ingredients. We do not see that the district court ruled that
Section 27-2-16(B) only applied when generic drugs were substituted for brand name
drugs. As stated above, the district court held that the statute “applies whenever a
pharmacist dispenses a multiple source drug to a Medicaid recipient at a lower cost
than the drug listed in the prescription; and . . . whenever a pharmacist dispenses a
[therapeutic] equivalent drug to a Medicaid recipient which is lower in cost than the
drug listed in the prescription.”
{54} 	The district court appears to draw no distinction between substitutions where
the prescribed drug is a brand name drug and substitutions where the prescribed drug
is a multiple source generic version. Based upon the plain language of the statute, we

36
hold that the statute requires no distinction between prescribed drugs that are generic
and those that are brand name, as long as the pharmacist is authorized to use his or her
discretion to dispense a lesser expensive drug than the prescribed drug, and the
substitution meets the requirements set out in Section 26-3-3(A) and (B).
{55} Thus, we reverse the district court’s determination that Section 27-2-16(B)
applies only when a substitution actually occurs. Moreover, Section 27-2-16(B)
applies to both brand name and generic prescribed drugs, so long as a substitution of
a lesser expensive, therapeutic equivalent drug would be permissible. We therefore
hold that Section 27-2-16(B) applies whenever a pharmacist may use his or her
discretion to issue a lesser expensive drug that is the therapeutic equivalent to the
prescribed drug even if that substitution does not occur.
4. Amount of Payment Required by Section 27-2-16(B)—The District Court
Failed to Determine Whether $3.65 Was a Reasonable Dispensing Fee
{56} Plaintiffs appeal the district court’s finding that a base dispensing fee of $3.65
is reasonable, arguing that there are contested issues of material fact with regard to the
reasonableness of the dispensing fee. Reasonableness is a question of fact when the
court is required to weigh evidence. Rio Grande Kennel Club v. City of Albuquerque,
2008-NMCA-093, ¶ 18, 144 N.M. 636, 190 P.3d 1131 (“The issue regarding the
reasonableness of [a statute’s license and permit] fees presented a question of fact
requiring the district court to weigh evidence. . . . Facts may exist to prove that the

37
fee provisions in [the statute] are excessive or unreasonable with respect to the cost
of regulation.”).
{57} 	In granting HSD’s motion for summary judgment, the district court based its
holding that $3.65 was a reasonable dispensing fee on two grounds. 	First, it gave
deference to HSD’s interpretation of Section 27-2-16(B). Second, the court stated that
Plaintiffs did not provide the court with “any information that would cast doubt on
[HSD’s] assertion . . . that the amount New Mexico pays its providers is higher than
that paid by private insurers in the private sector [to pharmacists] in New Mexico.”
{58} 	Plaintiffs contend that they presented evidence below that created a dispute
regarding the reasonableness of the $3.65 dispensing fee, a material fact. 	First,
Plaintiffs argue that the numerous studies they presented about dispensing costs
demonstrated that those costs exceeded $3.65. 	Second, Plaintiffs assert that the
reasonableness of the $3.65 fee is questionable because there is evidence that HSD
paid Medicaid pharmacists a dispensing fee of $4.00 between 1991 and 2002. Third,
Plaintiffs contend that the reasonableness of the dispensing fee is put into question by
the former Director of the Medical Assistance Division’s admission that the $3.65
dispensing fee was well below the average pharmacy’s dispensing cost. We agree
with Plaintiffs and conclude that this information bears on the reasonableness of the
fee as it would inform and influence the fact finder’s decision.

38
{59} 	Further, HSD directs this Court to other information that raises additional
factual questions regarding the reasonableness of a $3.65 dispensing fee. HSD asserts
that “the actual cost to dispense prescription drugs varies dramatically with the
volume of the dispensing pharmacy. . . . [Some smaller pharmacies] count[] out pills
by hand[,] while large pharmacies have machines that can do it faster [and] have non-
pharmacist technicians to fill prescriptions who get paid less than a licensed
pharmacist.” 	Thus, a base fee of $3.65 may be reasonable for larger pharmacies,
where it may not be reasonable for smaller pharmacies.
{60} 	Moreover, HSD’s contention that the $3.65 dispensing fee is greater than that
paid in the private health insurance sector is not determinative of reasonableness itself
and raises further factual questions. 	We do not know how the private sector
reimburses pharmacists for the ingredient cost of the drug, or whether they reimburse
for more or less than the AWP, minus fourteen percent, as the Medicaid program does.
HSD even admits in its reply brief regarding this motion for summary judgment that
dispensing fees can vary greatly, depending upon how much the pharmacists are
reimbursed for the drug ingredient costs. 	In that brief, HSD argued that “New
Mexico’s dispensing fee is reasonable when compared with the fees paid under
Medicaid by other [s]tates. . . . Other [s]tates pay a dispensing fee ranging from $2.00
to more than $10.” HSD then explained that “some [s]tates with a higher dispensing

39
fee pay a lower ingredient cost.” 	Thus, the standard insurance companies use to
reimburse for the ingredient cost plays a significant role in how much the companies
will then reimburse for the dispensing fee. 	We are not provided with information
regarding how the private sector reimburses pharmacists for the ingredient cost.
Without such information, we will not assume that the private sector’s ingredient cost
reimbursement schemes are similar to Medicaid’s.
{61} 	Because the district court was required to weigh the evidence regarding this
issue, we hold that reasonableness of the dispensing fee was a question of fact in this
case. Facts exist in the record that may prove that the $3.65 fee was unreasonable.
Thus, 	summary 	judgment 	on 	the 	reasonableness 	of 	the 	dispensing 	fee 	was
inappropriate. 	We remand for a factual determination about what a reasonable
dispensing fee is for each pharmacy.
C. 	The District Court Properly Dismissed Plaintiffs’ Claim Regarding HSD’s
Reduction of Reimbursement Without Federal Approval During a Six-
Month Gap Period
{62} 	Plaintiffs argue that the district court erred in denying their motion for summary
judgment on HSD’s violation of Section 27-2-16(B) for failure to reimburse Plaintiffs
in accordance with Medicaid legislation for the drug ingredient costs. From January
1, 1991 through June 30, 1997, HSD reimbursed fee-for-service Medicaid pharmacy
providers for drug ingredient costs at the rate of the AWP, minus ten and one-half

40
percent. HSD’s regulations were amended, effective and implemented on June 30,
1997, reducing the ingredient cost to the AWP, minus twelve and one-half percent.
Federal approval of the reduction was given by the Federal Health Care Financing
Agency in April 1998, retroactive to January 1, 1998. 	Plaintiffs contend they are
owed $960,000 by HSD due to the reduction during the six-month gap between when
the reduction was implemented by HSD (July 1, 1997) and when federal approval was
given (January 1, 1998).
{63} 	Although all parties agree that approval is necessary, they disagree about
whether approval can be retroactive. Plaintiffs contend that “they are entitled to this
amount because Defendants did not have approval for the rate change when they
began to reimburse at the new amount.” 	HSD argues that retroactive approval is
sufficient. 	The district court held that HSD was not liable for implementing an
amendment to the state Medicaid program prior to approval by the federal
government. We affirm the district court’s ruling and hold that retroactive approval
is sufficient.
{64} 	Two federal statutes of the Social Security Act provide guidance in this matter.
Under Title XIX of the Social Security Act, 42 U.S.C.A. § 1396-1 (1984), “[t]he sums
made available under [Medicaid legislation] shall be used for making payments to
[s]tates which have submitted, and had approved by the Secretary [of the Federal

41
Department of Health and Human Services], [s]tate plans for medical assistance.”
Furthermore, under 42 U.S.C.A. § 1396c (1965),
[i]f the Secretary, after reasonable notice and opportunity for hearing to
the [s]tate agency administering or supervising the administration of the
[s]tate plan approved under this subchapter, finds--
(1) that the plan has been so changed that it no longer complies
with the provisions of section 1396a of this title; or
(2) that in the administration of the plan there is a failure to
comply substantially with any such provision;
the Secretary shall notify such [s]tate agency that further payments will
not be made to the [s]tate (or, in his discretion, that payments will be
limited to categories under or parts of the [s]tate plan not affected by
such failure), until the Secretary is satisfied that there will no longer be
any such failure to comply. Until he is so satisfied he shall make no
further payments to such [s]tate (or shall limit payments to categories
under or parts of the [s]tate plan not affected by such failure).
{65} 	The statutes quoted above are the current versions of the Act. Prior to 1981, the
Act contained different language that required preapproval of state plans before they
were implemented. Specifically, 42 U.S.C. § 1396a(a)(13)(D) (1980) required that
the state Medicaid program provide “for payment of the reasonable cost of inpatient
hospital services provided under the plan, as determined in accordance with methods
and standards . . . which shall be developed by the state and reviewed and approved
by the Secretary, and (after notice of approval by the Secretary) included in the
plan[.]” Magee-Womens Hosp. v. Heckler, 562 F. Supp. 483, 485 (W.D. Pa. 1983)

42
(citing 42 U.S.C. § 1396a(a)(13)(D) (internal quotation marks omitted)). 	This
previous version of the Act required that the state obtain notice of approval from the
Secretary before the changes were included in the state’s Medicaid program. 	The
amended statutes in place today do not facially require prior approval. The absence
of such language in the amended version of Title XIX is compelling evidence that
Congress intended to abandon the requirement of prior approval.
{66} 	Furthermore, as the district court highlighted in its memorandum opinion,
persuasive case law supports this position. 	In Charleston Memorial Hospital v.
Conrad, 693 F.2d 324, 325-26 (4th Cir. 1982), the plaintiff argued that the state
illegally implemented reductions in Medicaid coverage because implementation took
place before the federal government approved the changes. After analyzing 42 U.S.C.
§ 1396 (1974), the court held for the defendants, stating that the Act does not require
prior approval. The court reasoned that “[t]he Act does not expressly provide that a
plan may not be modified without prior approval by the Secretary. Congress easily
could have given the Secretary such approval authority. 	Instead, the Secretary is
authorized only to impose sanctions when modifications do not comport with the
Act.” 	Charleston Mem. Hosp., 693 F.2d at 332-33. 	Similarly, in Jennings v.
Alexander, 518 F. Supp. 877 (M.D. Tenn. 1981), Medicaid recipients sued to enjoin
the state’s reduction of funding for inpatient hospital care. 	In addressing the

43
plaintiffs’ argument that the reduction was invalid without prior approval of the
Secretary, the court held that prior approval was unnecessary. Id. at 888. “Such a
requirement [of prior approval] would effectively hamstring the ability of state
administrators to respond to changing demands on the Medicaid program or to
respond to fiscal crises such as the one currently facing the [s]tate.” Id. The Jennings
court also reasoned that the prior approval requirement would be inconsistent with 42
U.S.C. § 1396c, which, as explained above, requires the Secretary to review state
Medicaid programs and changes to such plans and to cut off federal payments to the
state when its plan fails to comply with federal law. Jennings, 518 F. Supp. at 888;
see Ill. Council on Long Term Care v. Miller, 579 F. Supp. 1140, 1147 (N.D. Ill.
1983) (“This court holds . . . that implementation of the state’s amendment to its
reimbursement plan before acceptance by the Secretary was not in violation of federal
law.”). We agree with the above holdings. Statutory construction of the Act reveals
that preapproval is not required, and such a requirement would weaken New Mexico’s
ability to react to fiscal exigencies.
{67} Plaintiffs cite two cases in support of their appeal of this issue: AMISUB (PSL),
Inc. v. Colorado Department of Social Services, 879 F.2d 789 (10th Cir. 1989) and
Oregon Association of Homes for Aging, Inc. v. Oregon, 5 F.3d 1239 (9th Cir. 1993).
In AMISUB, the court held that when the state amended its Medicaid inpatient

44
reimbursement rates, such an amendment was void because it violated procedural and
substantive requirements of the Federal Medicaid Act. 879 F.2d at 801. However, the
violations at issue had nothing to do with implementing reimbursement rates without
prior authorization. Id. Likewise, Oregon Association does not deal with an amended
plan submitted for HCFA approval. 5 F.3d at 1241. There, nursing homes challenged
the state’s reclassification of nursing services into rate categories, causing the nursing
homes to receive less reimbursement from the Medicaid program. Id. at 1240. The
court found that “[a] law that effects a change in payment methods or standards
without HCFA approval is invalid.” Id. at 1241. Nonetheless, the state in that case
never submitted an amendment to HCFA for approval even after the reclassification
of nursing services was implemented. Because neither of these cases deals with the
issue of implementing changes in reimbursement prior to HCFA approval, we do not
find them persuasive.
{68} 	We agree with the district court that “[t]he cases cited by Defendants [in their
motion], the fact that prior approval would hamstring [s]tate officials trying to
anticipate . . . and react to changing demands on the Medicaid program, as well as the
history of the statute[,] make a strong case against prior approval.” Thus, we affirm
the district court’s holding that Plaintiffs do not have a cause of action against HSD

45
for reimbursement during the period the amendment to the Medicaid payment
structure was not yet approved.
D. 	Plaintiffs May Bring a Breach of Contract Claim Against HSD Under the
Provider Agreements
{69} 	Before the Medicaid program in New Mexico transitioned to managed care,
Plaintiffs 	signed 	provider 	agreements 	with 	HSD 	“in 	order 	to 	qualify 	for
reimbursement from the Medicaid program.” Through the agreements, HSD required
providers to agree to terms regarding record keeping, payment, compliance with state
and federal law, reimbursement by third parties, and other issues. Plaintiffs argue that
the district court improperly held that no obligation could arise from Plaintiffs’
provider contracts that incorporate the guarantees of Section 27-2-16(B). Plaintiffs
contend that the provider “agreements expressly and impliedly require [HSD] to pay
any shortfall in pharmacist reimbursement and create an actionable claim against
[HSD] for the shortfall between what the MCOs paid and what [Section] 27-2-16(B)
requires.” 	Plaintiffs make two specific arguments regarding a third-party liability
clause in the contract and the incorporation of Section 27-2-16(B) into the contracts.
{70} 	First, Plaintiffs argue that the third-party liability provisions of the provider
agreements require HSD to make up any shortfall arising out of the MCOs’ failure to
abide by Section 27-2-16(B). The 1990 provider agreements contain a section called
“Third[-]Party Liability” that requires Plaintiffs to seek payment from third-party

46
insurers prior to seeking payment from the Medicaid program. The section further
states that “[t]he provider understands that in those instances where the provider
receives payment from a liable third party for a Medicaid covered service, the
Medicaid agency can pay only to the extent that the Medicaid allowed amount exceeds
the amount paid by the third party.” Plaintiffs contend that the MCOs are third-party
insurers or health plans, and since the MCOs have failed to pay the proper dispensing
fee, “[HSD] is responsible for the difference.”
{71} 	We reiterate here, applying the same reasoning as we did above, that the MCOs
are part of the Medicaid program. They are not third-party insurers or health plans
when they pay providers for the services and drugs provided to Medicaid participants.
In this context, they are conduits for Medicaid funds. Thus, we hold that Plaintiffs’
contention that HSD is responsible for the difference under the “Third[-]Party
Liability” section of the provider agreements lacks merit. 	Thus, the district court
properly dismissed the contract claim on this ground.
{72} 	Second, Plaintiffs argue that the provider agreements incorporate Section 27-2-
16(B) because all relevant statutes are incorporated into contracts. Plaintiffs argue
that, under this agreement, HSD should have ensured that Plaintiffs were paid in
accordance with Section 27-2-16(B) and, by failing to do so, they breached the
provider contracts.

47
{73} 	“A contract incorporates the relevant law, whether or not it is referred to in the
agreement.” 	State ex rel. Udall v. Colonial Penn Ins. Co., 112 N.M. 123, 130, 812
P.2d 777, 784 (1991); Durham v. Sw. Developers Joint Venture, 2000-NMCA-010,
¶ 18, 128 N.M. 648, 996 P.2d 911 (“The provisions of applicable statutes are part of
every contractual commitment.”). We agree that the provider agreements incorporated
Section 27-2-16(B) as the statute is relevant and applicable to the contractual
commitments involved in the provider agreements, namely, Plaintiffs’ commitment
to provide services and HSD’s commitment to reimburse Plaintiffs. Moreover, the
provider agreements specifically reference New Mexico’s Medicaid payment structure
in the section titled “Payment in Full,” stating that the providers agree to “accept as
payment in full the amounts paid in accordance with the reimbursement structure in
effect for the period during which such services were provided as per 42 C.F.R.
447.15.” There is no doubt that Section 27-2-16(B), as an integral part of the state’s
Medicaid payment structure for pharmacists, was incorporated into the contracts.
Thus, Section 27-2-16(B)’s requirement that pharmacists be reimbursed with the
AWP, plus a reasonable dispensing fee when the pharmacist dispenses a lesser
expensive, therapeutic equivalent drug, is a term of the provider agreements with
which HSD must abide.

48
{74} 	HSD argues that Plaintiffs do not have a right to sue for further reimbursement
under this contract because of the above quoted section in the agreements titled,
“Payment in Full.” HSD contends that this term of the contract waives any right to
sue for further reimbursement because Plaintiffs promised to “accept as payment in
full the amounts paid in accordance with the reimbursement structure in effect for the
period during which such services were provided as per 42 C.F.R. 447.15.” 	HSD
argues that, under 42 C.F.R. 447.15, the Medicaid program must be “limited to
providers who agree to accept as payment in full the amounts paid by the agency.”
HSD construes this to mean that providers may not seek further reimbursement or
additional payments from the state even when HSD fails to pay providers for their
services with the amount required by state statute.
{75} 	This is not the meaning of this clause of the contract. If it were, HSD could pay
providers nominal fees for their services, and the providers would have no recourse.
Plaintiffs entered into the provider agreements, agreeing to accept as payment in full
“amounts paid in accordance with the reimbursement structure in effect.” They did
not agree to accept amounts less than that provided by statute as payment in full. If
Plaintiffs were paid in accordance with the reimbursement structure in effect—Section
27-2-16(B)—we would agree that they could not sue under this contract. As Plaintiffs
contend that they were paid less than the minimum $3.65 dispensing fee for Section

49
27-2-16(B)’s applicable prescriptions, we conclude that Plaintiffs have a right to sue
for the deficiency.
{76} 	HSD further argues the MMCS agreements between HSD and the MCOs
included a provision that exempts the state from liability for shortfalls in payments
made by the MCOs to Plaintiffs. This provision states that “[t]he subcontractor must
accept payment from the MCO as payment for any services included in the benefit
package, and cannot request payment from HSD or from Medicaid members . . . for
services performed under the subcontract.” HSD argues that “[t]his provision was to
be incorporated in all contracts between the MCOs and their subcontractors. . . . Thus,
[Plaintiffs] have independently contracted away any claim they might have for
additional reimbursement by HSD.” 	We disagree with HSD’s waiver argument.
Pursuant to the district court’s order requiring HSD to agree that Plaintiffs did not
waive their rights by agreeing to participate in managed care, Plaintiffs have not
waived their rights under provider agreements by contracting to participate and
participating in managed care.
{77} 	Last, HSD opposes Plaintiffs’ argument on the ground that Plaintiffs admitted
in their fourth amended complaint that the provider agreements only apply to fee-for-
service transactions and not to managed care. 	The paragraph HSD references in
Plaintiffs’ fourth amended complaint states that “HSD has entered into contracts with

50
. . . Plaintiffs and the Class for the provision of Medicaid pharmaceutical services on
behalf of . . . HSD in the fee-for-service portion of the Medicaid [p]rogram that HSD
administers.” We do not see how this historical explanation of the provider
agreements’ purpose amounts to an admission that the contracts only apply to fee-for-
service Medicaid reimbursements. The provider agreements were signed during the
period in which HSD only reimbursed providers in accordance with the fee-for-service
reimbursement plan, prior to the implementation of managed care. Such information
was relevant to their complaint. Furthermore, the provider agreements explicitly state
that assent by providers is a precondition to any reimbursement by the Medicaid
program whatsoever. The final clause of the contract states the provider agreements
must be signed as “a precondition to participation in the New Mexico Medical
Assistance Program . . . that the provision of services, the billing of services, [and] the
receiving of payment for services under the program cannot be accomplished without
the proper completion and Department approval of [the provider agreement].” Thus,
we conclude that these agreements govern Plaintiffs’ relationship with HSD with
regard to any Medicaid reimbursement. We therefore reject HSD’s argument with
regard to the admission.
{78} In sum, Plaintiffs may bring a breach of contract cause of action against HSD
for the Medicaid program’s failure to reimburse Plaintiffs in accordance with Section

51
27-2-16(B). We remand to the district court to determine whether HSD, in its
performance under the provider agreements, has “fail[ed] to perform a contractual
obligation when that performance is called for.” UJI 13-822 NMRA.
E. Plaintiffs’ Contract Claim as Third-Party Beneficiaries
{79} Plaintiffs seek to enforce contracts between HSD and the MCOs on a third-
party beneficiary theory. As we stated earlier, these contracts specifically incorporate
Section 27-2-16(B). The contractual provisions are written in clear language, and
there can be no doubt that the MCOs and HSD intended compliance with the statute
to form part of their agreement. In their most current form, the contracts provide that
subcontracts “for pharmacy providers shall include a payment provision consistent
with [Section 27-2-16(B)] unless there is a change in law or regulation.” There have
been no such changes.
{80} Plaintiffs argue that the district court erred when it held that “an action against
[the] MCOs on a third-party beneficiary theory would be inconsistent with the
[conclusion] that Plaintiffs have no private right of action.” HSD argues that Plaintiffs
were not intended third-party beneficiaries as they are not referenced in the MMCS
agreements and neither HSD nor any MCO intended or believed that the agreements
had the purpose of benefitting Plaintiffs. In addition, the MCOs put forward a two-
fold parry to HSD’s argument that Plaintiffs are not intended third-party beneficiaries.

52
First, they echo the order of the district court, arguing that because no private right of
action is available under the statute, any attempt to enforce it through the contract
must fail. Second, they argue that any analysis of such a claim must conclude that
Plaintiffs were not intended third-party beneficiaries to the contracts between the
MCOs and HSD and, therefore, the district court was correct. We consider each
argument in turn.
{81} We are unpersuaded by HSD’s contention that Plaintiffs were not intended
third-party beneficiaries because they were not referenced by name in the contract,
and the contention that Defendants did not believe that the purpose of the contract was
to benefit Plaintiffs. “A third-party is a beneficiary if the actual parties to the contract
intended to benefit the third-party. The intent to benefit the third-party must appear
either from the contract itself or from some evidence that the person claiming to be a
third party beneficiary is an intended beneficiary.” Callahan v. N.M. Fed’n of
Teachers-TVI, 2006-NMSC-010, ¶ 20, 139 N.M. 201, 131 P.3d 51 (internal quotation
marks and citations omitted). Whether the parties had the requisite intent is a question
of fact, appropriate for the trier-of-fact to decide. Moriarity v. Meyer, 21 N.M. 521,
529-30, 157 P. 652, 655 (1916). The fact that Plaintiffs were not referenced by name
in the contract does not prove by itself that the contract was not intended to benefit
them. Section 27-2-16(B), which is incorporated into the contract, specifically

53
references Medicaid providers who dispense drugs to Medicaid participants. Plaintiffs
fall within this class of Medicaid providers and, thus, could be found by a trier-of-fact
to be intended third-party beneficiaries on that basis. Moreover, Defendants’
assertions that they did not intend to benefit Plaintiffs, as well as the fact they were
not named in the contract, are evidence for the trier-of-fact to consider in determining
whether Plaintiffs are intended third-party beneficiaries.
{82} Next, the MCOs’ first argument has been disposed of by our analysis above,
indicating that there is an implied cause of action under Section 27-2-16(B). Even if
there was not an implied cause of action under that statute, such a fact would not bar
their third-party beneficiary claim. The cases cited by the MCOs and relied upon by
the district court generally hold that a third-party beneficiary claim is just another way
of getting a certain remedy from a statute that does not provide that remedy.
Grochowski v. Phoenix Constr., 318 F.3d 80, 86 (2d Cir. 2003) (refusing to consider
third-party beneficiary claim where the plaintiffs had not sought relief under the
prescribed statutory remedy); Hodges v. Atchison, Topeka & Santa Fe Ry. Co., 728
F.2d 414, 415 (10th Cir. 1984) (disallowing the plaintiff’s claim under a third-party
beneficiary theory because the plaintiff refused to participate in arbitration as provided
by statute and, stating in dicta, that the claim was “but another aspect of the implied
right of action argument”); Carson v. Pierce, 546 F. Supp. 80, 87 (E.D. Mo. 1982)

54
(reaching the merits of the contract claim, but holding that the plaintiffs were not
intended third-party beneficiaries on the basis that the statute created no implied right
of action); Wogan v. Kunze, 623 S.E.2d 107, 117, 120 (S.C. Ct. App. 2005) (holding
that the non-existence of a private remedy under the statute prohibited the third-party
beneficiary claim).
{83} 	Nonetheless, other courts have recognized such claims. 	See Brogdon ex rel.
Cline v. Nat’l Healthcare Corp., 103 F. Supp. 2d 1322, 1330 (N.D. Ga. 2000)
(allowing a third-party beneficiary claim despite a lack of Congressional intent to
create a private remedy under the Medicare and Medicaid Acts); Found. Health v.
Westside EKG Assocs., 944 So. 2d 188, 194-95 (Fla. 2006) (holding that the lack of
a private right of action in a state statute did not foreclose the plaintiff’s third-party
beneficiary claim); Dierkes v. Blue Cross & Blue Shield of Mo., 991 S.W.2d 662, 668
(Mo. 1999) (en banc) (allowing a third-party beneficiary claim to enforce the inclusion
of a statute in a contract where the statute provided no private cause of action).
{84} 	The first approach promoted by the MCOs is founded on the notion that
allowing a third-party beneficiary claim is somehow identical to recognizing an
implied right of action under the statute. For instance, in Hodges, the circuit court
disallowed the plaintiff’s third-party claim after finding that there was no implied right
of action. 728 F.2d at 416. It held that such a claim was “but another aspect of the

55
implied right of action argument.” 	Id. 	Similarly, in Wogan, the court held that
“[n]othing in the contract creates liability outside the Medicare Act. Because the Act
does not confer a private right of action to sue . . . , we refuse to allow an action . . .
on the ground [that the defendant] breached his contract” to comply with the Act. 623
S.E.2d at 119.
{85} 	The MCOs would have us adopt the reasoning of those jurisdictions as
discussed above, which disallows third-party beneficiary claims of this type. 	We
refuse to do so. The court in Dierkes reasoned:
[The] plaintiffs are not suing solely for [the defendant’s] violation of [the
statute], although compliance with that section becomes an element of
the claim to the extent it is part of [the defendant’s] promise. Instead,
[the] plaintiffs are suing for . . . breach of contract, . . . [a] claim[]
existing independent of the foregoing statute.
991 S.W.2d at 668.
{86} 	The contract specifically includes the statutory requirement for payment to
Plaintiffs pursuant to law. 	Plaintiffs seek to enforce this contract on a third-party
beneficiary theory. 	Plaintiffs are not foreclosed from asserting a third-party
beneficiary contract claim just because they may not do so directly under Section 27-
2-16(B) when operation of the statute appears to be written as a contractual
requirement for their reimbursement.

56
{87} 	In looking at Plaintiffs’ third-party beneficiary claim in this case, the district
court began by asking why HSD entered into contracts with the MCOs “in the first
place.” 	It then found, based on an interpretation of Section 27-2-16(B) and by
analogy to cases from other jurisdictions, that the statute expresses a motivation to
serve “the medical needs of the aged, blind, and disabled. This [motivation] makes
it apparent that the beneficiaries of these services are Medicaid enrollees, not
providers.” Finally, though not completely clear from the record, the conclusion that
the statute was intended to benefit Medicaid enrollees led the district court to reason
that the contract term incorporating it could not have been intended to benefit
Plaintiffs. The district court stated that “Plaintiffs are not third[-]party beneficiaries
to the contracts between HSD and the MCOs[.]” We hold that this finding requires
reversal.
{88} 	As we discussed above, when a district court considers a motion for judgment
on the pleadings, it must “accept as true all facts well pleaded and question only
whether the plaintiffs might prevail under any state of facts provable under the claim.”
Garcia, 106 N.M. at 760, 750 P.2d at 121. 	In their fourth amended complaint,
Plaintiffs argue that “HSD has entered into valid written contracts with the MCOs for
implementation of the managed care program[.]” Furthermore, Plaintiffs assert that
they “are third[-]party beneficiaries under [those contracts] as the unambiguous

57
language of such contracts governs the benefits received by Plaintiffs in dispensing
prescription medicines to Medicaid recipients.”
{89} 	By finding that the Medicaid program as a whole was intended to benefit only
Medicaid enrollees, the district court decided the merits of the third-party beneficiary
claim. Essentially, it ruled on the intent of HSD and the MCOs in bargaining for the
inclusion of the term in the contract. 	We hold that such a finding was a factual
determination inappropriate to decide in a judgment on the pleadings. We reverse the
district court on this issue and remand for additional factual development. Though we
do not reach the merits of the issue, at this point, we see no reason why the contract
term could not have been intended to benefit both Medicaid recipients and Plaintiffs.
Certainly, 	if 	Medicaid 	recipients 	are 	to 	receive 	prescription 	medication, 	the
participation of Plaintiffs is essential to the proper functioning of the system, and it
is for this reason that we are unpersuaded by Defendants’ arguments against the
recognition of a third-party claim.
F. 	Plaintiffs May Bring the Unjust Enrichment Claim
{90} 	Plaintiffs sued the MCOs for unjust enrichment, alleging that “the MCOs failed
to pay Plaintiffs the reimbursement rates to which they were entitled under
[Section] 27-2-16(B) and were [thus] unjustly enriched by the amount of Medicaid
reimbursements 	they 	wrongfully 	withheld[—]the 	difference 	between 	what

58
[Section] 27-2-16(B) required and what they paid.” 	The district court dismissed
Plaintiffs’ unjust enrichment claim on the ground that a contract existed between
Plaintiffs and the MCOs and between the MCOs and HSD, barring equitable relief.
The court subsequently dismissed Plaintiffs’ contractual claims.
{91} 	Unjust enrichment allows recovery by an aggrieved party from another who has
profited at the aggrieved party’s expense. 	Heimann v. Kinder-Morgan CO2 Co.,
2006-NMCA-127, ¶ 20, 140 N.M. 552, 144 P.3d 111. In order to state a claim for
unjust enrichment against the MCOs, Plaintiffs are required to allege, first, that the
MCOs knowingly benefitted at Plaintiffs’ expense and, second, that allowing the
MCOs to retain this benefit would be unjust. 	Id. 	That Plaintiffs had a contractual
relationship with the MCOs does not foreclose a claim for unjust enrichment. 	See
Danley v. City of Alamogordo, 91 N.M. 520, 521, 577 P.2d 418, 419 (1978) (holding
that a builder was free to pursue an unjust enrichment claim despite the fact that it was
in privity with the defendant); Platco Corp. v. Shaw, 78 N.M. 36, 37, 428 P.2d 10, 11
(1967).
{92} 	Plaintiffs argue that the district court improperly dismissed their claim for
unjust enrichment, and we agree. In its order granting Presbyterian’s 2006 motion for
judgment on the pleadings, the court dismissed Plaintiffs’ claim because it found they
possessed “a complete and adequate remedy at law. . . . 	In this case, the party’s

59
actions are regulated by a contract [between the MCOs and HSD,] and Plaintiffs are
seeking damages for breach of that contract.” (Internal quotation marks and citation
omitted.) 	Thus, the district court dismissed Plaintiffs’ unjust enrichment claim
because it considered it “legally insufficient.”
{93} 	To support its conclusion, the district court relied on Sims v. Sims, 1996-
NMSC-078, ¶ 28, 122 N.M. 618, 930 P.2d 153, but that case is not dispositive on
these facts. In Sims, our Supreme Court considered the issue of whether the existence
of a statutory cause of action foreclosed a traditionally recognized equitable claim.
Id. ¶ 17. 	Holding that equity remained available in such a situation, the Court
concluded that “[t]here is no requirement that the creation of a statutory remedy at law
for a particular type of claim will automatically supplant an equitable remedy that
addresses the same claim. [Any] major departure from the long tradition of equity
practice should not be lightly implied.” Id. ¶ 29 (internal quotation marks and citations
omitted). Likewise, as the Court held in Hydro Conduit Corp. v. Kemble, 110 N.M.
173, 178, 793 P.2d 855, 860 (1990), “unjust enrichment constitutes an independent
basis for recovery in a civil-law action, analytically and historically distinct from the
other two principal grounds for such liability, contract and tort.” See Tom Growney
Equip., Inc. v. Ansley, 119 N.M. 110, 112, 888 P.2d 992, 994 (Ct. App. 1994).

60
{94} 	Thus, dismissal of Plaintiffs’ claim for unjust enrichment on Presbyterian’s
motion for judgment on the pleadings was error. 	Plaintiffs assert that the MCOs
entered into valid contracts with HSD, ones in which the MCOs promised to pay in
accordance with Section 27-2-16(B). 	Plaintiffs allege further that HSD paid the
MCOs to comply with the statute, but that those payments were at least partially
retained by them. 	Such pleadings are enough to state a claim in equity for unjust
enrichment, and the fact that Plaintiffs had contracts with the MCOs does not work
to automatically foreclose it. Our system explicitly provides for alternative pleading
of civil claims. Rule 1-008(E)(2) NMRA. We therefore leave open their claim for
unjust enrichment.
G. 	Declaratory and Injunctive Relief Was Properly Denied
{95} 	Finally, Plaintiffs argue that their demands for declaratory and injunctive relief
were improperly dismissed by the district court. We disagree. Our Supreme Court
has held:
It is the general rule that the granting of declaratory relief is
discretionary, under both the federal and the state acts. Whether such
jurisdiction is to be entertained rests in the exercise of sound judicial
discretion by the [district] court, and its decision will not be disturbed on
appeal, in the absence of a clear showing of abuse of that discretion.
Allstate Ins. Co. v. Firemen’s Ins. Co., 76 N.M. 430, 434, 415 P.2d 553, 555 (1966)
(internal quotation marks and citation omitted). Furthermore, injunctive relief is a

61
harsh, drastic remedy that a district court “should issue only in extreme cases of
pressing necessity and only where there is a showing of irreparable injury.” Leonard
v. Payday Prof./Bio-Cal Comp., 2008-NMCA-034, ¶ 14, 143 N.M. 637, 179 P.3d
1245 (internal quotation marks and citation omitted). The district court in this case
acted within its discretion having already entered an order keeping Plaintiffs’ statutory
entitlement alive, allowing access to a measure of relief that perhaps might exceed the
reach of declaratory or injunctive judgments. Plaintiffs’ demands for injunctive and
declaratory relief essentially sought to remedy the underlying substantive claims.
Because the outcomes of those substantive issues were unclear at the time the district
court considered these equitable remedies, the district court did not abuse its discretion
in denying them.
H. 	Class Certification Was Proper
{96} 	Because we reverse in part the orders of the district court, we now consider
Cimarron’s conditional cross-appeal. Specifically, Cimarron makes two arguments
that Plaintiffs’ class was improperly certified. First, Cimarron claims that allowing
the MCOs to be added as Defendants after the original class certification results in a
violation of its constitutional due process rights. Second, Cimarron claims the district
court improperly applied the requirements for class certification under Rule 1-023
NMRA. We affirm the certification.

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{97} 	Decisions to certify a class are reviewed for abuse of discretion. Abuse occurs
when the district court “misapprehends the law or if [its] decision is not supported by
substantial evidence.” 	Brooks v. Norwest Corp., 2004-NMCA-134, ¶ 7, 136 N.M.
599, 103 P.3d 39. “Within the confines of Rule 1-023, the district court has broad
discretion whether or not to certify a class.” Id. The rule lists four prerequisites to
certification of a class action:
(1) 	[Numerosity:] 	the class is so numerous that joinder of all
members is impracticable;
(2) 	[Commonality:] there are questions of law or fact common to the
class;
(3) 	[Typicality:] the claims or defenses of the representative parties
are typical of the claims or defenses of the class; and
(4) 	[Adequacy of representation:] the representative parties will fairly
and adequately protect the interests of the class.
Ferrell v. Allstate Ins. Co., 2008-NMSC-042, ¶ 9, 144 N.M. 405, 188 P.3d 1156
(internal quotation marks and citation omitted). Litigants attempting to certify a class
must also meet one of three requirements under Rule 1-023(B). 	In this case, the
pertinent requirement is that “questions of law or fact common to the members of the
class predominate over any questions affecting only individual members, and that a
class action is superior to other available methods for the fair and efficient
adjudication of the controversy.” 	Rule 1-023(B)(3). 	In certifying the class, the

63
district court “must engage in a rigorous analysis of whether the Rule’s requirements
have actually been met.” Ferrell, 2008-NMSC-042, ¶ 8 (internal quotation marks and
citation omitted).
{98} 	As we stated above, the court certified the class in this case before the MCOs
were added as Defendants. Thereafter, Plaintiffs, unopposed by HSD, argued that the
MCOs were indispensable parties by virtue of the changed Medicaid administrative
and payment scheme. They persuaded the district court to allow amendment of their
complaint. The MCOs attacked the class certification. They filed briefs asking the
court to decertify the class and included a number of supporting exhibits. As a result,
the district court allowed discovery into “whether the class should be decertified.”
After hearing oral arguments on the issue, the district court concluded that the class
certification was proper. The court stated that “[a]fter a review of the various motions
to decertify the class, determine it to be void, to dismiss and to sever, I have
determined that those motions will be denied.”
{99} 	Cimarron argues that this scenario gives rise to a due process violation. We
disagree. 	As case law demonstrates, post-certification amendments to include
additional defendants typically only violate due process where the subsequently added
defendants do not receive an adequate opportunity to contest the certification and the
allegations against them. See In re Am. Med. Sys., Inc., 75 F.3d 1069, 1075, 1086 (6th

64
Cir. 1996) (holding that the additional defendants could not be added after original
class certification without having time to contest the certification); Van Vels v.
Premier Athletic Ctr. of Plainfield, Inc., 182 F.R.D. 500, 506-07 (W.D. Mich. 1998)
(allowing post-certification amendment to include the additional defendants as long
as they were given additional time for discovery and dispositive motions); see Walker
v. World Tire Corp., 563 F.2d 918, 921 (8th Cir. 1977) (concluding that courts may
not “rule on the class action question without affording the parties notice and an
opportunity to make a record on the issue” and stating that “[t]he propriety of class
action status can seldom be determined on the basis of the pleadings alone”).
{100} 	Both Plaintiffs and Cimarron cite In re American Medical Systems, 75 F.3d at
1086, and we too believe that case provides the appropriate analytical framework for
these facts. There, the plaintiffs received class certification, and the next month they
moved to amend their complaint to include an additional defendant. 	Id. at 1075.
Then, “[w]ithout any further discovery, briefing, or argument, the district judge issued
an amended order of class certification.” Id. 	The newly added defendant appealed,
and the Sixth Circuit held that “[t]he district [court] failed in its duty to conduct a
rigorous analysis . . . and clearly abused its discretion.” Id. at 1086 (internal quotation
marks omitted). Such a defendant must receive a meaningful opportunity to respond

65
to the complaint, a chance to conduct discovery, time to brief the issues, and a hearing
in which the issue may be argued. Id.
{101} 	Each of the above requirements were met in the present case. Once the district
court granted Plaintiffs’ motion to amend their complaint, the MCOs almost
immediately challenged the class certification. The district court granted discovery
to the MCOs on the issue of “whether, under the [s]econd [a]mended [c]omplaint,
Plaintiffs have abandoned the class certification against the [s]tate . . . and whether the
MCOs, as new Defendants, are subject to the previous class certification[.]” Likewise,
a hearing was held where the parties were given an opportunity to argue the issue and,
on June 5, 2003, more than two years after Plaintiffs moved to add the MCOs as
Defendants, the district court held that class certification was proper as to the MCOs.
Under such conditions, where the MCOs had adequate notice and a chance to fully
respond, we hold that no violation of their due process rights occurred.
{102} 	We are similarly unpersuaded by Cimarron’s argument that the burden of proof
as to class certification was unlawfully shifted to their shoulders. Our Supreme Court
held:
We can properly consider only those facts which appear in the
transcript on appeal, which in this case is identical with the record proper
in the district court. Upon a doubtful or deficient record[,] we indulge
every presumption in support of the correctness and regularity of the
decision of the trial court. Every reasonable intendment and presumption
are resolved in favor of the proceedings and judgment in that court.

66
State ex rel. Alfred v. Anderson, 87 N.M. 106, 107, 529 P.2d 1227, 1228 (1974)
(citations omitted).
{103} 	Given that Cimarron provides us with no citations to the record tending to prove
its allegation, we must presume that the district court applied the correct burden of
proof, requiring Plaintiffs to establish that class certification remained proper after the
MCOs were added. 	See Brooks, 2004-NMCA-134, ¶ 10 (stating that the plaintiffs
beared the burden of proof to demonstrate that the requirements of Rule 1-023 were
met).
{104} 	We also hold that the district court did not abuse its discretion in its application
of Rule 1-023. Plaintiffs clearly have standing to sue. They meet the requirements
of numerosity, commonality, typicality, and adequacy of representation. Furthermore,
it is clear to us that the Rule 1-023(B)(3) requirements of predominance and
superiority were satisfied. 	Substantial evidence supports the district court’s
conclusions on these matters.
{105} 	The requirements of standing have been met. In order to demonstrate standing,
a plaintiff must demonstrate “(1) an injury in fact, (2) a causal relationship between
the injury and the challenged conduct, and (3) a likelihood that the injury will be
redressed by a favorable decision.” Forest Guardians v. Powell, 2001-NMCA-028,
¶ 16, 130 N.M. 368, 24 P.3d 803 (internal quotation marks and citation omitted).

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Standing is a “threshold legal issue” to class certification. Andrews v. Am. Tel. & Tel.
Co., 95 F.3d 1014, 1022 (11th Cir. 1996). Cimarron alleges that because Plaintiffs
contracted with the PBMs and not directly with the MCOs themselves, they lack
standing to sue. This proposition is unsupported by precedent in Cimarron’s briefs.
Indeed, Plaintiffs alleged direct economic injuries against HSD and the MCOs
because they were paid less than the statutory requirement. Such injuries were
allegedly attributable to actions of either HSD, the MCOs, or both, and would
presumably be cured if those parties were required to pay. That some Plaintiffs were
required to contract with a PBM who, in turn, contracted with an MCO, does not
defeat standing. In such a situation, a causal connection between the injury and
challenged conduct may still exist and because the MCOs provide no law to the
contrary, we hold that standing is not defeated by the mere existence of contracts
between Plaintiffs and the PBMs. By the same token, some Plaintiffs had a direct
relationship with an MCO; all allege the same right to payment of Medicaid
reimbursement monies.
{106} We hold that substantial evidence supports the district court’s conclusions as
to numerosity, typicality, commonality, and adequacy of representation. Rule 1-
023(A). This case provides an almost textbook example of a case proper for class
certification. First, the rule requires that the number of potential plaintiffs be so high

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“that joinder of all members is impracticable[.]” 	Rule 1-023(A)(1). 	During class
certification, Plaintiffs estimated that the number of potential plaintiffs would be
between two and three hundred. 	Further, those potential plaintiffs were widely
dispersed across the entire state. In the event that certification had been denied, those
potential plaintiffs would have been greatly inconvenienced by having to individually
join in the litigation, many from remote locations. Second, the rule requires that there
be “questions of law or fact common to the class[.]” Rule 1-023(A)(2). Here, each
class member argues that Section 27-2-16(B) allows for certain rights under both the
statute and common law. The relationship of each with both HSD and the MCOs, and
the facts necessary to decide the case as to each class member, is essentially identical.
See Cottrell v. Lopeman, 119 F.R.D. 651, 657 (S.D. Ohio 1987) (stating that
commonality is met where a regulatory scheme common to all class members has been
established). Third, the rule requires that “the claims or defenses of the representative
parties [be] typical of the claims or defenses of the class[.]” Rule 1-023(A)(3). Each
member in this class seeks an interpretation of Section 27-2-16(B) that will require
either HSD or the MCOs to pay. Likewise, each seeks damages, though injured in a
different sum, to recover the money that went unpaid under the statute. Fourth, Rule
1-023(A)(4) requires that “the representative parties [must] fairly and adequately
protect the interests of the class.” No evidence was presented below establishing that

69
the interests of any individual class members were contrary to those of the entire class.
Furthermore, counsel for Plaintiffs demonstrated that they were qualified and
experienced enough to conduct the representation. When the MCOs were added as
Defendants, little changed. Plaintiffs again asserted claims based on a common statute
and involving a common set of factual circumstances. Under those conditions, we
hold that the district court did not abuse its discretion in finding that the requirements
of Rule 1-023(A) were met.
{107} 	Nor did it abuse its discretion in finding that the requirements of predominance
and superiority were met. Under Rule 1-023(B)(3), the district court is required to
find “that the questions of law or fact common to the members of the class
predominate over any questions affecting only individual members, and that a class
action is superior to other available methods for the fair and efficient adjudication of
the controversy.” Cimarron asserts that because Plaintiffs in this case dealt with many
different PBMs and because each suffered a different amount of economic injury,
individual issues predominate over the larger issues of the class as a whole. 	This
disregards the big picture of the issue at stake, and we disagree. “A single common
issue may be the overriding one in the litigation, despite the fact that the suit also
entails numerous remaining individual questions.” Armijo v. Wal-Mart Stores, Inc.,
2007-NMCA-120, ¶ 32, 142 N.M. 557, 168 P.3d 129 (internal quotation marks and

70
citation omitted). 	Such is the case here, where the claims of each class member
involve a statutory interpretation of Section 27-2-16(B), a determination of whether
that statute survived the transition to managed care, and a conclusion as to the legal
effect of that statute’s inclusion in contracts between HSD and the MCOs. Certainly,
minor differences will exist among class members in this case, but the critical issues
described above remain operative and predominate among all class members. In other
words, in order to prevail, each class member will need a holding as to the major
issues common to all. Each can then demonstrate the extent of its injury. Those are
considerations far removed from a judgment on the pleadings.
{108} 	We find nothing in the record to indicate the existence of any class member
interested in maintaining a separate action. 	Judicial resources will be saved by
certification, the number of class members is manageable, and the damages of each
class member can be calculated in a similar manner.
{109} 	In addition, Cimarron contends that the class certification resulted in “one-way
intervention.” Cimarron argues that Plaintiffs’ decision to submit their motion for
partial summary judgment for resolution after the original class certification, but
before joining the MCOs, constituted impermissible “one-way intervention.” One-
way intervention is the principle that potential members of a class may not wait until
after the resolution of the case on the merits before joining the class. Valley Utils.,

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Inc. v. O’Hare, 89 N.M. 262, 264-65, 550 P.2d 274, 276-77 (1976). To do so would
be to “invite[] non[-]participating parties to share in the spoils of a judgment obtained
by others even though those absent parties will not be bound by the judgment if they
[subsequently] decide to bring another action.” Id. at 265, 550 P.2d at 276.
{110} 	Cimarron fails to explain how one-way intervention is applicable to this
situation, citing case law that expressly applies the principle solely to intervening
plaintiffs in class actions. 	See id. at 264, 550 P.2d at 276 (holding that “only those
members of [the plaintiff] class who joined the suit prior to the verdict are either
bound by it, or allowed to benefit from it”); see also Peritz v. Liberty Loan Corp., 523
F.2d 349, 353-54 (7th Cir. 1975) (describing one-way intervention as the problem
created by potential class members waiting for a resolution of the merits before
deciding to join the lawsuit). One-way intervention is inapplicable here as non-parties
are not attempting to intervene and share in the spoils of a judgment already obtained
by others in this case.
{111} 	As part of this one-way intervention argument, Cimarron further contends that
Plaintiffs received “an impermissible preview of the merits before obtaining class
certification binding all . . . parties in the case” because Plaintiffs obtained a partial
decision on the merits that “[Section] 27-2-16(B) . . . applied to the pharmacy
contracts at issue[.]” 	Even though the court decided that the statute applied to

72
pharmacy contracts, this decision about a threshold legal matter was outside the scope
of prohibited one-way intervention. As stated above, our Supreme Court prohibits the
practice of intervention after a final judgment has been rendered, so as to prevent non-
participating prospective plaintiffs from sharing in the “spoils of a judgment.” Valley
Utils., 89 N.M. at 265, 550 P.2d at 277. 	The judgment at issue here was about a
threshold legal matter that did not result in a final judgment against HSD or the
MCOs. 	Thus, Plaintiffs’ litigation of Section 27-2-16(B)’s applicability, prior to
joining Cimarron, did not result in one-way intervention. One-way intervention is
inapplicable to both the facts of this case and the decision at issue.
IV. 	CONCLUSION
{112} 	Based on the foregoing analysis, we affirm in part, reverse in part, and remand
this case for further proceedings.

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{113} 	IT IS SO ORDERED.
______________________________
RODERICK T. KENNEDY, Judge
WE CONCUR:
_________________________________
MICHAEL D. BUSTAMANTE, Judge
_________________________________
JONATHAN B. SUTIN, Judge

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