# Wooley v. Lucksinger

> Louisiana Court of Appeal · February 13, 2009 · 14 So. 3d 311

URL: https://www.frixlaw.com/law-library/cases/1589402

## Case

- **Full name:** J. Robert WOOLEY, as Commissioner of Insurance for the State of Louisiana v. Thomas S. LUCKSINGER, Michael D. Nadler, Stephen J. Nazarenus, Scott Westbrook, Michael K. Jhin, William F. Galtney, John P. Mudd, Executive Risk Indemnity, Inc., Executive Risk Management Associates, Executive Risk Specialty Insurance Co., Executive Liability Underwriters and Greenwich Insurance Co., AmCareco, Inc., AmCare Management, Inc.; J. Robert Wooley, Commissioner of Insurance for the State of Louisiana, in His Capacity as Liquidator of AmCare Health Plans of Louisiana v. Foundation Health Corporation, Foundation Health Systems, Inc., and Health Net, Inc.; J. Robert Wooley, Commissioner of Insurance for the State of Louisiana, as Liquidator for AmCare Health Plans of Louisiana, Inc., in Receivership v. PriceWaterhouseCoopers, LLP
- **Court:** Louisiana Court of Appeal
- **Decided:** February 13, 2009
- **Citations:** 14 So. 3d 311
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Ciaccio, Lanier, Claiborne
- **Cited by:** 38 later opinions in the Frix Law Library

## Citator (automated)

- **Red flag:** Reversed in part, on other grounds by Wooley v. Lucksinger, 2011 La. LEXIS 706 (2011).
- Negative treatments: 1
- Distinguished by: 0
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/1589402

## Opinion text

14 So.3d 311 (2008)
J. Robert WOOLEY, As Commissioner of Insurance for the State of Louisiana
v.
Thomas S. LUCKSINGER, Michael D. Nadler, Stephen J. Nazarenus, Scott Westbrook, Michael K. Jhin, William F. Galtney, John P. Mudd, Executive Risk Indemnity, Inc., Executive Risk Management Associates, Executive Risk Specialty Insurance Co., Executive Liability Underwriters and Greenwich Insurance Co., AmCareco, Inc., AmCare Management, Inc.
J. Robert Wooley, Commissioner of Insurance for the State of Louisiana, In his Capacity as Liquidator of AmCare Health Plans of Louisiana
v.
Foundation Health Corporation, Foundation Health Systems, Inc., and Health Net, Inc.
J. Robert Wooley, Commissioner of Insurance for the State of Louisiana, As Liquidator for AmCare Health Plans of Louisiana, Inc., In Receivership
v.
PriceWaterhouseCoopers, LLP.
Nos. 2006 CA 1140 to 2006 CA 1145, 2006 CA 1158 to 2006 CA 1163.
Court of Appeal of Louisiana, First Circuit.
December 30, 2008.
Opinion on Rehearing February 13, 2009.
*334 Joseph E. Cullens, Jr., Baton Rouge, LA, Guy M. Hohmann, Austin, TX, Kimberly S. Morgan, Edward J. Walters, Jr., Baton Rouge, Sue Buser, Gonzales, LA, Jonathan C. Augustine, Baton Rouge, LA, for Plaintiff-Appellee, J. Robert Wooley, as Acting Commissioner of Insurance and Liquidator of AmCare Health Plans of Louisiana, Inc.
James C. Percy, David M. Kerth, Baton Rouge, LA, Robert B. Bieck, Jr., New Orleans, LA, for Defendant-Appellant, Health Net, Inc.
Joseph J. McKernan, Baton Rouge, LA, for Plaintiff-Appellee, Jean Johnson as Texas Special Deputy Receiver.
David M. Latham, Keary L. Everitt, New Orleans, LA, for Plaintiff-Appellee, Louisiana Department of Insurance.
Gary P. Koederitz, Baton Rouge, LA, for Defendant-Appellee, BestCare, Inc.
Wendell Clark, Baton Rouge, LA, for Defendant-Appellee, Thomas S. Lucksinger, Michael D. Nadler and Stephen J. Nazarenus.
Claude F. Reynaud, Jr., Baton Rouge, LA, for Defendant-Appellee, Proskauer Rose, L.L.P. and Stuart L. Rosow.
Harry J. Philips, Jr., Baton Rouge, LA, for Defendant-Appellee, William Galtney, Jr. and Michael K. Jhin.
Mary Olive Pierson, V. Thomas Clark, Jr., Baton Rouge, LA, for Defendant-Appellee, PriceWaterhouseCoopers, L.L.C.
Robert J. Burns, Jr., Baton Rouge, LA, David H. Topol, Washington, D.C., for Defendant-Appellee, Greenwich Insurance Company.
George B. Hall, Jr., New Orleans, LA, Merril Hirsh, Washington, D.C., Kelsey Kornick Funes, Baton Rouge, LA, for Defendant-Appellee, Executive Risk Management *335 and Executive Risk Specialty Ins. Co.
David L. Guerry, Baton Rouge, LA, for Defendant-Appellee, Scott Westbrook.
William C. Kaufman, III, Baton Rouge, LA, for Defendant-Appellee, M. Lee Pearce.
Dominique J. Sam, Michael Charles Guy, Baton Rouge, LA, for Amicus Curiae, Charles C. Foti, Jr., Atty. Gen., On Behalf of the Commissioner of Insurance-Liquidator of AmCare Health Plans of Louisiana, Inc.
Before CIACCIO, LANIER and CLAIBORNE, JJ. [1]
Table of Contents
I. GENERAL FACTS ............................................................................... 338
II. PROCEDURAL HISTORY .......................................................................... 346
III. INTERPRETATION OF LAWS ...................................................................... 350
IV. STANDARDS FOR APPELLATE REVIEW OF FACTS AND LAW ............................................. 351
V. CONFLICT OF LAWS ............................................................................ 353
A. Conflict of Laws Facts ................................................................... 354
B. The Ruling of the Trial Court on the Issue of Choice-of-Law .............................. 354
C. Applicable Conflict of Laws Rules ........................................................ 356
1. Law Applicable to the Texas Case ...................................................... 362
2. Law Applicable in the Louisiana Case .................................................. 363
3. Law Applicable in the Oklahoma Case ................................................... 369
D. Conclusion ............................................................................... 372
VI. STANDARD OF REVIEW OF FACTS IN THE TEXAS CASE
A. The Trial Court's Duty to Instruct a Jury ................................................ 373
B. The Trial Court's Duties to Rule on Requests for Jury Instructions and to Inform
the Parties of Proposed Jury Instructions Prior to Arguments to the Jury ............... 374
1. Right to Submit Jury Instructions ..................................................... 375
2. Trial Court Duty to Inform Parties of Proposed Jury Instructions and
Interrogatories ..................................................................... 378
3. Right of a Party to Object to Proposed Jury Instructions .............................. 379
C. Patent Jury Instruction Error ............................................................ 383
D. Jury Instruction and Interrogatory Errors ................................................ 384
1. Failure to Give Instruction ........................................................... 384
2. Erroneous Instructions ................................................................ 401
E. Inconsistencies Between the Texas Jury Verdicts and JNOV and the Judgments
and Reasons for Judgment in the Louisiana and Oklahoma Cases ........................... 428
1. Negligent Misrepresentation ........................................................... 428
2. Proximate Cause ....................................................................... 429
3. Fraud ................................................................................. 429
4. Allocation of Fault ................................................................... 430
5. Existence of Pledged Capital for an HMO by Health Net ................................. 434
6. Conclusion ............................................................................ 434
F. Recapitulation of Errors Affecting the Texas Jury Verdict ................................ 434
G. Conclusion ............................................................................... 435
VII. STANDARD OF REVIEW OF FACTS IN THE LOUISIANA AND OKLAHOMA
JUDGE TRIAL CASES ......................................................................... 435
A. Proximate Cause in the Louisiana Case .................................................... 435
B. The Tort of Conspiracy in the Louisiana Case ............................................. 435
C. Unfair or Deceptive Acts or Practices in Violation of the Texas Insurance Code ........... 436
D. Allocation of Fault ...................................................................... 436
*336
E. Refusal to Provide Adequate Written Findings of Fact and Reasons for Judgment ............ 438
1. Facts ................................................................................. 438
2. Supplemental Assignments of Error ..................................................... 442
3. Applicable Law ........................................................................ 442
4. The Trial Court's Reasons for the Nineteen (19) Month Delay ........................... 446
5. The Trial Court's Failures to Comply with the Order to Provide Written
Findings of Fact and Reasons for Judgment ........................................... 447
6. Conclusion ............................................................................ 448
F. Application of Erroneous Texas Law in the Louisiana and Oklahoma Cases ................... 448
G. Conclusion ............................................................................... 449
VIII. PRESCRIPTION/PEREMPTION: STATUTES OF LIMITATIONS AND REPOSE ................................. 449
A. The Proper Procedure to Assert Prescription/Peremption ................................... 450
1. Affirmative Defense ................................................................... 451
2. Objection of No Cause of Action ....................................................... 452
3. Summary Judgment ...................................................................... 453
4. Prescription/Peremption ............................................................... 454
B. Choice-of-Law ............................................................................ 457
1. Liberative Prescription or Peremption in the Louisiana Case ........................... 458
2. The Texas and Oklahoma Exceptions ..................................................... 467
C. Conclusion ............................................................................... 468
IX. SHAM SALE ................................................................................... 468
X. PIERCING THE CORPORATE VEIL—SINGLE BUSINESS ENTERPRISE .................................. 482
A. The Trial Court's Reasons ................................................................ 482
B. The Law .................................................................................. 483
1. Texas Law ............................................................................. 483
2. Louisiana Law ......................................................................... 484
3. Oklahoma Law .......................................................................... 487
C. Burden of Proof and Persuasion ........................................................... 488
D. Common SBE Circumstances Pre- and Post-Sale .............................................. 489
1. Pre-Sale Health Net/AmCareco SBE Issue ................................................ 489
2. Post-Sale Health Net/AmCareco SBE Issue ............................................... 490
XI. LIABILITY FOR FRAUD ......................................................................... 492
A. Fraud in Obtaining Regulator Approval of the Sale ........................................ 494
1. The Stock Purchase Agreement and Side Letter Contract ................................. 495
2. The Financial Spreadsheet For The Sale ................................................ 497
3. Failure to file Side Letter ........................................................... 539
4. Failure to file Letter of Intent ...................................................... 540
5. Failure to file Closing Agreement ..................................................... 542
B. Fraud in Financial Reporting to Regulators After the Sale ................................ 544
1. Facts ................................................................................. 545
2. The Law of Fraud ...................................................................... 554
3. Conclusion ............................................................................ 557
C. Conclusion ............................................................................... 557
XII. LIABILITY FOR BREACH OF FIDUCIARY DUTY ...................................................... 557
A. The Texas Case ........................................................................... 557
B. The Louisiana Case ....................................................................... 560
C. The Oklahoma Case ........................................................................ 563
D. Conclusion ............................................................................... 564
XIII. LIABILITY FOR VIOLATION OF THE TEXAS INSURANCE CODE ......................................... 564
A. The Texas Case ........................................................................... 564
B. The Louisiana and Oklahoma Cases ......................................................... 566
C. Conclusion ............................................................................... 567
XIV. LIABILITY FOR CONSPIRACY .................................................................... 567
A. The Texas Case ........................................................................... 567
B. The Louisiana Case ....................................................................... 568
C. The Oklahoma Case ........................................................................ 570
D. Conclusion ............................................................................... 570
*337
XV. COSTS ....................................................................................... 511
A. Facts .................................................................................... 511
B. Conflict of Laws on Costs ................................................................ 511
C. Louisisana Law on Costs .................................................................. 572
D. Allocation of Costs ...................................................................... 574
LANIER, J.
These matters come before this Court on appeal from judgments rendered by the trial court in the consolidated matters of J. Robert Wooley v. Thomas S. Lucksinger, Nineteenth Judicial District Court Docket Number 499,737, J. Robert Wooley v. Foundation Health Corp, et al, Nineteenth Judicial District Court Docket Number 509,297, and J. Robert Wooley v. PriceWaterhouseCoopers, LLC, Nineteenth Judicial District Court Docket Number 512,366. These three separate trial court actions (La.C.C.P. art. 421) were consolidated (La.C.C.P. art. 1561) for trial.
The first and third numbered actions (District Court Docket Number 499,737 and District Court Docket Number 512,366) assert tort causes of action by J. Robert Wooley, Commissioner of Insurance for the State of Louisiana, in His Capacity as Liquidator for AmCare Health Plans of Louisiana, Inc. ("the Louisiana Receiver"). In the second numbered action (District Court Docket Number 509,297), the trial court permitted the cumulation of the Louisiana Receiver's tort causes of action with a pre-existing action that asserted a contract cause of action by the Louisiana Receiver. The Louisiana contract cause of action was not asserted in either the first or third numbered actions.
Carroll Fisher, Commissioner of Insurance for the State of Oklahoma, in his capacity as Receiver, ("the Oklahoma Receiver") and Jean Johnson, Texas Special Deputy Receiver ("the Texas Receiver"), intervened in all three actions asserting identical tort causes of action as those asserted by Wooley in the first and third numbered actions. The tort causes of action of the Texas Receiver were tried and factually decided by a jury under the docket numbers of all three trial court actions. [2] The Louisiana and Oklahoma tort causes of action each were tried and decided by the trial court under the docket numbers of all three trial court actions. The Louisiana contract cause of action was tried and decided by the trial court under the docket numbers of all three trial court actions. For clarity of adjudication, we will adjudicate all issues pertaining to the tort causes of action in a lead opinion, all issues pertaining to the Louisiana contract cause of action in a second opinion, and will dispose of the Texas Receiver's appeal in a third opinion. The title sheets of our opinions will show the District Court Docket Number for the particular trial court action and the Court of Appeal Docket Numbers that have been assigned to the judgment being adjudicated by this Court in each action. [3]
*338 For the following reasons, we reverse the trial court judgments in favor of the Louisiana, Oklahoma, and Texas Receivers on the tort causes of action in District Court Docket Numbers 499,737, 509,297, and 512,366 and render judgment and dismiss those claims with prejudice.
I. GENERAL FACTS
Foundation Health Corporation (Foundation), a Delaware corporation with its principal place of business in California, owned all of the stock of health maintenance organizations (HMOs) that were incorporated and operated in Louisiana, Oklahoma, and Texas. Foundation Health, a Louisiana Health Plan, Inc., was the Louisiana HMO; Foundation Health, an Oklahoma Health Plan, Inc., was the Oklahoma HMO; and Foundation Health, a Texas Health Plan, Inc., was the Texas HMO. In 1997, Foundation merged with Health Systems International and became Foundation Health Systems, Inc. This corporation is now known as Health Net, Inc. (Health Net) [4]
Beginning in 1994, Dr. Malik M. Hasan served as Chairman of the Board of Directors and Chief Executive Officer (CEO) of Health Net. Health Net acquired the three HMOs in the 1997 merger and, shortly thereafter, Hasan "came to the conclusion that we were better off disposing of those plans, which may include closing them down or selling them." At this time Curtis Westen served as Senior Vice President and General Counsel for Health Net. Although Hasan had concerns about the viability and/or profitability of the HMOs, he told Westen he could "negotiate" with a buyer "but you will not slow down the winding-down process." [5] Hasan directed that there could be a sale if three conditions are met: (1) the buyer knows "what challenge he has;" (2) the buyer "has the requisite capital;" and (3) "the regulators approve." [6] Hasan retired as President and CEO of Health Net in August of 1998 and Jay Michael Gellert became CEO.
Shattuck Hammond Partners, a partnership providing investment banking services, was retained by Health Net and identified a group of investors headed by Thomas S. Lucksinger, who is domiciled in Texas, as a potential buyer for the HMOs. Lucksinger is a Texas lawyer who was also a certified public accountant, had been a partner in the Vinson & Elkins Texas law firm, had been the CEO of a successful Texas HMO named NYLCARE that had approximately 500,000 members, taught a course on health care policy at the University of Texas, and served on the Solvency Oversight Committee of the Texas Department *339 of Insurance. The Lucksinger group formed AmCareco, Inc. (AmCareco), a corporation chartered in Delaware with its principal place of business in Texas. Lucksinger served as President of AmCareco. Other individuals who were associated with and/or served as officers and/or directors of AmCareco and its subsidiaries included Michael D. Nadler, Chief Operation Officer (COO), Stephen J. Nazarenus, Chief Financial Officer (CFO), [7] Scott Westbrook, Michael K. Jhin, [8] William F. Galtney, Jr., John P. Mudd, and Dr. M. Lee Pearce. These persons are domiciled in Texas and Florida. Correspondence concerning the possible sale and purchase of the stock of the HMOs was exchanged between Shattuck Hammond, individuals at Health Net, and individuals in the Lucksinger group. The correspondence discussed possible scenarios whereby Health Net would: (1) recoup loans it had made to the HMOs; (2) acquire preferred shares of AmCareco stock; [9] and (3) "cash sweep" funds out of the HMOs back to Health Net.
On April 17, 1998, Health Net and AmCareco signed a "Letter of Intent" that outlined an agreement to negotiate the sale and purchase of the stock of the HMOs. According to the terms of the Letter of Intent, both parties would negotiate in good faith and a target date for a definitive agreement was set as May 18, 1998. [10]
The Letter of Intent included a "Term Sheet" as an attachment. The Term Sheet set forth "the principal terms for the acquisition by [AmCareco] ... of the stock of the [HMOs] from [Health Net]." The Term Sheet included specific terms, including: "Purchase Price/Cash Sweep," "Reserve/Receivable True-Up," "Put Rights," and "Right of First Refusal." The term "Purchase Price/Cash Sweep" included a calculation for "the `book value' of the [HMOs] as of closing (after the Restructuring Reserve (as defined below) reversal referenced below) less ... the ... Cash Sweep (as defined below)," and "[Health Net] would reverse prior to closing all non-cash restructuring and merger related liabilities and reserves (the "Restructuring Reserves")" and "settle prior to closing all inter-company accounts...." Exhibit A attached to the Term Sheet set forth "an estimated calculation of such [Health Net] Cash Sweep ... as of February 28, 1998, assuming the Restructuring Reserve reversal referenced above has been effected." The attachment contained a line item "Cash Sweep [$8.5]" and the following notations: "[a]ssumes the reversal of $6.3 million in Restructuring Reserves prior to the closing" and "[b]racketed numbers will change in the event the Louisiana Local Deposit may be used to meet the Statutory Requirements." A review of the Letter of Intent shows that it specially states that "[t]his letter of intent and the term sheet are for the purpose of setting forth the substance of the discussions between Acquiring Co. [AmCareco] and [Health Net] and to serve as the basis for continuing discussions and preparations of definitive agreements for the Proposed Acquisitions" and that "[t]his letter of intent and term sheet do not constitute an agreement to consummate the Proposed Acquisitions or create any binding obligation in connection therewith, and no *340 such binding obligation shall arise unless and until such definitive agreements are executed by [AmCareco] and [Health Net]. " (Emphasis added.)
Pursuant to a "Stock Purchase Agreement" dated November 4, 1998, Health Net agreed to sell and AmCareco agreed to buy all of the stock of the HMOs. Assisting AmCareco in the drafting of the Letter of Intent and the Stock Purchase Agreement was Proskauer Rose, a law firm with its principal place of business in New York, represented by one of its partners, Stuart Rosow, a resident of New York. The Stock Purchase Agreement included the terms of the sale, an outside date of closing of January 31, 1999, [11] representations and warranties by both the buyer and seller, and other additional provisions. In particular, the Stock Purchase Agreement provided for the issuance of preferred stock in AmCareco to Health Net and a Cash Payment from the HMOs to Health Net. The Cash Payment was to be an amount determined pursuant to a formula contained in the Stock Purchase Agreement and was based on financial figures contained in an Estimated Balance Sheet.
Additional provisions of the Stock Purchase Agreement provided that "all non-cash restructuring and merger related liabilities and reserves (the "Restructuring Reserves") shall be reversed" and "all inter-company accounts between [the HMOs] and [Health Net] shall be settled." The Stock Purchase Agreement also included stock redemption provisions pertaining to "put" and "call" rights. [12] Health Net's right to compel AmCareco to redeem Heath Net's AmCareco stock was secured by a $2 million letter of credit in favor of Health Net. A mechanism for a "true-up" [13] one year after the closing would be used to determine the necessity of any adjustments to the Cash Payment or the number of shares of preferred stock issued and would be based on figures contained in a Final Balance Sheet.
In addition, AmCareco and Health Net entered into a letter agreement (the "Side Letter") on November 4, 1998. The Side Letter provided that AmCareco would attempt to acquire between $5-$15 million in additional private financing. The Side Letter also provided that if the closing was delayed beyond January 15, 1999, and Health Net was required to supply additional premium deficiency reserve funds (PDR) [14] to the HMOs, the parties would negotiate a method for Health Net to be repaid any cash loaned [15] to the HMOs that was contributed to the PDRs.
*341 When the closing was delayed beyond January 15, 1999, Health Net loaned $6.3 million to the HMOs. Specifically, Health Net loaned $700,000 to the Texas HMO in December 1998, $3.3 million to the Texas HMO in March 1999, and $2.3 million to the Louisiana HMO in March 1999. [16] AmCareco raised only $8.5 million in additional private financing.
In anticipation of the purchase of the stock of the HMOs, AmCareco engaged the Texas law firm of Vinson & Elkins to prepare the required "Form-A" applications for regulatory approval of the acquisitions. Virtually identical Form-A applications [17] were submitted to the Departments of Insurance of Louisiana, Oklahoma, and Texas. The Louisiana Form-A application for acquisition of the Louisiana HMO contained a list of investors as of March 1, 1999. The investors and their respective investment amounts were identified on the Louisiana Form-A as: Foundation $12,000,000 ("in the form of contributed HMO assets to be exchanged for AmCareco Class A Preferred Shares"); Luxor Holdings II, LLC or Assignee (Pearce) $5,000,000; St Luke's Healthcare System (Jhin) $500,000; Lucksinger $500,000; Jeff D. Nesmith $250,000; Brian Parsley, M.D. $250,000; James Considine, M.D. $250,000; Jon D. Epstein/J. Evans Atwell $250,000. [18] The Form-A applications contained copies of the Stock Purchase Agreement, the Side Letter, and financial statements and spreadsheets relating to the HMOs and AmCareco, including a "Cash Sweep and Preferred A Share Calculation." This document, prepared by Shattuck Hammond, was an estimated balance sheet of the three HMOs and AmCareco after the acquisition.
On April 29, 1999, Susan Conway, the attorney with Vinson & Elkins who represented AmCareco in the application process, forwarded to each state's Department of Insurance an updated version of the Cash Sweep and Preferred A Share Calculation. This calculation was based on balance sheets for the quarter ending March 31, 1999. [19] It reflected "accounting adjustments and fund transfers to be made in connection with the closing." According to the Cash Sweep line item on the calculation sheet forwarded to the Louisiana Department of Insurance (LaDOI), $243,531 was to be swept from the Louisiana HMO; on the sheet forwarded to the Oklahoma Department of Insurance (OkDOI), $2,903,761 was to be swept from the Oklahoma HMO; and in the cover letter of the *342 calculation sheet forwarded to the Texas Department of Insurance (TxDOI), $2,920,123 was to be swept from the Texas HMO. The total of these proposed sweeps was $6,067,415. On April 30, 1999, the regulators in each state approved the acquisition of the stock of the HMOs by AmCareco. Upon the purchase of the stock of the HMOs by AmCareco, the HMOs became known as AmCare Health Plans of Texas, Inc., (AmCare-TX), AmCare Health Plans of Louisiana, Inc., (AmCare-LA) and AmCare Health Plans of Oklahoma, Inc. (AmCare-OK)
A Closing Agreement between AmCareco and Health Net was executed between April 30 and May 6, 1999. In the Closing Agreement, the parties finalized the transaction, waived certain conditions set forth in the Stock Purchase Agreement, and agreed to additional terms and conditions. The financial provisions of the spreadsheet remained the same. It appears the Closing Agreement was not given to the regulators before or after approval of the acquisition. [20]
The terms of the Closing Agreement included:
3. Post-Closing Covenants.
. . .
(q) The Parties hereby acknowledge and agree that the premium deficiency reserves of the acquired corporations [HMOs] should be considered a "Restructuring Reserve" and therefore reversed pursuant to Section 2.1 of the Stock Purchase Agreement in order to calculate the Cash Payment, which reversal has been reflected in the FHS Cash Sweep and Preferred A Share Calculation prepared for Closing and attached as Exhibit E to this Agreement.
The Cash Sweep and Preferred A Share Calculation attached as an exhibit to the Closing Agreement reflected a cash sweep from Louisiana of $2,543,530, from Oklahoma of $2,903,761, and from Texas of $2,920,123, for a total of $8,367,414. The $2,543,530 represented the repayment of the $2,300,000 PDR loan and a Cash Payment of $243,531. The issuance of preferred stock resulted in Health Net acquiring a forty-seven percent (47%) ownership interest in AmCareco.
Following approval of the sale of the stock by the regulators, each HMO was a wholly-owned subsidiary of AmCareco. The HMOs subsequently were managed by AmCare Management of Texas, Inc., (AmCare-MGT) a wholly-owned subsidiary of AmCareco that was incorporated by AmCareco. After the acquisition, Lucksinger continued to serve as President and the CEO of AmCareco and the HMOs, Nazarenus served as the CFO, and Nadler served as the COO.
During the period immediately following the sale of the stock, Health Net and AmCareco entered into a Transition Services Agreement. This agreement provided that Health Net would provide certain administrative and operational services to the HMOs, such as E-mail and computer system assistance, until AmCareco could assume those activities. By the express terms of the agreement, AmCareco retained "ultimate authority and responsibility," with Health Net merely providing the contracted services to the HMOs.
The Cash Payment was implemented on or about May 3, 1999. At that time, the account authorizations at financial institutions where the HMOs' accounts were located did not authorize AmCareco to transfer funds within the accounts. *343 Therefore, Health Net, with the concurrence of AmCareco, initiated wire transfers of the funds for the Cash Payment from the HMOs' accounts to Health Net. The sum of $2,543,530 was transferred from the Louisiana HMO, $2,903,761 was transferred from the Oklahoma HMO and $2,920,123 was transferred from the Texas HMO, for a total Cash Payment to Health Net of the $8,367,414.
The Stock Purchase Agreement also required AmCareco to purchase a $2 million letter of credit to secure Health Net's redemption right. This letter of credit was established at Chase Bank on May 3, 1999.
According to state regulators approving the sale of stock, AmCare-LA was required to maintain a minimum of $4 million in capital, [21] AmCare-OK was required to maintain a minimum net worth of $750,000, [22] and AmCare-TX had a surplus statutory requirement of $700,000, [23] for a total of $5,450,000.
The first quarterly statements reported by the HMOs were for the period ending June 30, 1999. Amended documents prepared by AmCare-LA and filed with La-DOI [24] reflect AmCare-LA's net worth at $3,785,007; documents prepared by AmCare-OK and filed with OkDOI stated AmCare-OK's net worth at $2,129,991; amended documents prepared by AmCare-TX and filed with TxDOI [25] reflect AmCare-TX's net worth at $936,947, for a combined new worth of the three HMOs of $6,851,945.
Based on the reported Louisiana financial statement, LaDOI contacted AmCare-LA in November of 1999, requesting that additional contributions be made to bring AmCare-LA's net worth up to the required $4 million. Correspondence between AmCare-LA and LaDOI over the next several months indicates LaDOI's continued concern regarding this deficiency. Because AmCare-LA continued to be below the net worth requirement, in April 2000, AmCare-LA requested and LaDOI approved a monthly, rather than quarterly, financial reporting schedule in lieu of an immediate cash infusion from AmCareco.
Texas Department of Insurance officials were concerned about the financial condition and operations of AmCare-TX, and a meeting to discuss their concerns was held in November 1999. At the meeting, items to be discussed included "[t]he HMO's current statutory deposit" and "the HMO's [PDR] and the methods used to calculate the reserve." Notes from the meeting show that Nazarenus "indicated the paperwork is being processed on the [statutory deposit and is almost completed." As to the issue of the PDR, Nazarenus "indicated *344 that the PDR reserve set up initially by Foundation [Health Net] included a wind down reserve, as of 12/31/98. AmCare [AmCare-TX] didn't think this reserve was necessary so they amortized the full amount in the second quarter of 1999." Specific follow-up actions discussed were that Nazarenus "will follow up later with questions concerning the PDR calculation" and "[t]he HMO will submit to [TxDOI] a request to release part of the Statutory Deposit by 1/15/2000 ...".
PriceWaterhouseCoopers (PWC) audited AmCareco and its subsidiaries for the eight-month period from April 30, 1999, through December 31, 1999. PWC reported AmCareco sustained a net loss of $9,192,165 and noted "one of the Company's subsidiaries has not met the prescribed minimum net worth requirements for the state of Louisiana." Following the date of the sale of stock, the number of enrollees in the HMOs increased from 33,550 in 1999 to 82,468 in 2000 and to approximately 105,000-110,000 in 2001.
After the sale in 1999, all AmCareco personnel were employed by AmCare-MGT, and it provided services to the HMOs pursuant to management agreements.
During the first two quarters of 2000, the HMOs continued to experience financial difficulties. Upon initial compilation of the required second quarter 2000 financial filings, Lucksinger informed Nazarenus and Nadler by E-mail on May 11, 2000 of the need to discuss "the Oklahoma filing if it is going to show us out of statutory compliance. If we are[,] then I believe we should think about making some sort of intercompany receivable/capital contribution in order to not submit showing noncompliance.... If we show compliance, regardless of how we get there, they should not push us on this issue at this time.... We will also need to immediately fund the amount that we show as the intercompany payable." Nazarenus responded back, "We can reflect an I/C [intercompany] receivable and a capital contribution to get us into compliance at 3/31/00; the funding of this contribution is a problem."
After finalizing the second quarter 2000 filings, Nazarenus informed Lucksinger and Nadler:
Louisiana — requires a $200K capital contribution to maintain the $4M net worth requirement
— [LaDOI] will be expecting an immediate cash transfer to satisfy the capital contribution based upon the agreement I reached with them earlier this year....
Oklahoma — the cash position was $0; actually it was an overdraft of $780K[.]
— net worth was $770K, but we now have a capital contribution due to the plan of $2.25M to achieve this minimum net worth....
— ODI/ODH [the Oklahoma Department of Insurance] have been very hands off but I suspect that the lack of cash and the minimum N/W [net worth] may change their position....
Texas — the cash position was $0; actually it was an overdraft of $200K[.]
AmCareco received over $3.8 million in additional funding in September 2000. In exchange for this amount of cash, AmCareco issued promissory notes to the investors who included Health Net, Pearce, and Galtney. In particular, AmCareco issued to Health Net one promissory note in the amount of $1,750,000.00.
In September and December 2000, AmCareco acquired two additional health plans, AmeriHealth and Sierra Texas Health Services, Inc., and it purchased and began using a new claims adjudication computer system. According to Mark Tharp, an insurance industry claims *345 auditor, during the implementation and use of the new claims computer system, approximately $11 million was paid out in ineligible payments, overpayments, and/or duplicative payments. Following the acquisition of AmeriHealth, AmCareco reported to TxDOI an $8 million receivable in conjunction with the acquisition, which resulted from "balance sheet differences and medical loss ratio guarantees." TxDOI approved this recording treatment but noted, "Should the collectability of this receivable become questionable or a dispute between the parties arise[,] then AmCare should report the receivable as a non-admitted asset." In addition, during 2000 and 2001, AmCareco continued to record intercompany receivables from AmCareco to the HMOs to maintain statutory requirements. However, according to an April 30, 2001 investor update by Lucksinger, "AmCareco does not have the resources to pay off these intercompany payables at this time."
On August 17, 2001, Lucksinger sent a memo to some individual investors and to some officers at Health Net summarizing the difficult financial condition of AmCareco and the HMOs and stating, "We are now basically living from hand to mouth on our cash flow." The memo confirms AmCareco was "judiciously utilizing the various accounting treatments available to AmCareco, intercompany payables and cash on hand to stretch $2-3 million in total consolidated capital around to cover approximately $16 million in regulatory capital and cash reserve requirements" and admits that AmCareco has "run out of smoke and mirrors." The memo concludes with a request for approximately $8 million in additional funding.
The accounting treatments that Lucksinger mentioned included moving cash among the HMOs, AmCareco, and AmCare-MGT, sometimes on a daily or hourly basis. For example, documents reveal that during the business day of July 17, 2001, AmCare-MGT engaged in the following transactions (which are sometimes referred to as the "cash swirl"): (1) $1,941,875.65 was transferred from AmCare-LA to AmCareco; (2) $2,829,360.13 was transferred from AmCareco to AmCare-OK; (3) $1,021,075.75 was transferred from AmCare-OK to AmCare-LA; (4) $89,450.76 was transferred from AmCare-TX to AmCare-OK; (5) $462,535 was transferred from AmCare-TX to AmCare-LA; (6) $200,000.00 was transferred from AmCare-LA to AmCare-MGT; and (7) $900,000.00 was transferred from AmCare-MGT to AmCareco.
Although Lucksinger identified and approached potential investors requesting additional capital, they and officers at Health Net declined to provide any additional funding for AmCareco.
In 2001, AmCareco had offices in the following locations: (1) Houston, Dallas, and San Antonio, Texas; (2) Baton Rouge, Shreveport, and New Orleans, Louisiana; and (3) Tulsa and Oklahoma City, Oklahoma. AmCareco had 258 fulltime employees, including 43 managerial and executive personnel and 56 temporary employees, and operation centers in Houston and Tulsa. At this time, 7,575 shares of Class B Preferred Stock had been issued to 14 shareholders; 7,830 shares of Common Stock had been issued to 15 shareholders; and 7,050 employee stock options had been issued to 42 persons.
On May 1, 2002, LaDOI informed AmCare-LA that it had been placed under administrative supervision. [26]
At the June 17, 2002 meeting of the Board of Directors of AmCareco, Nazarenus' *346 finance report stated AmCareco's net worth was negative $16.7 million, the intercompany receivables were $29.6 million, processed but unpaid claims totaled approximately $15.8 million, and unprocessed claims totaled $23 million.
On July 26, 2002 pursuant to the terms of the Stock Purchase Agreement, Health Net exercised its redemption right and collected the $2 million provided for by the letter of credit.
II. PROCEDURAL HISTORY
J. Robert Wooley, the Louisiana Commissioner of Insurance (the Commissioner), had AmCare-LA placed in Rehabilitation on September 23, 2002, [27] based on a determination by the Commissioner that AmCare-LA was financially troubled. The order of Rehabilitation vested in the Commissioner title to all property and other assets of AmCare-LA, empowered the Commissioner to commence and defend any and all legal actions concerning AmCare-LA, and provided for continuing the business affairs of AmCare-LA. On October 7, 2002, the Commissioner filed a petition for the liquidation of AmCare-LA and an order of injunction and an order of liquidation were entered the same day.
On December 16, 2002, AmCare-TX was placed into receivership and a Texas Receiver was appointed. On January 21, 2003, AmCare-TX was placed in permanent receivership.
On April 30, 2002, AmCare-OK's license to conduct business in Oklahoma expired. At that time, AmCare-OK filed an application for renewal of its license. On September 18, 2002, AmCare-OK's operations were limited to "conclusion of business" and AmCare-OK's application to renew its business license was denied effective October 1, 2002. On July 8, 2003, AmCare-OK was placed in receivership and an Oklahoma Receiver was appointed. (The three state-appointed Receivers are hereinafter sometimes referred to collectively as "the Receivers.")
On June 30, 2003, the Louisiana Commissioner filed three actions in the 19th Judicial District Court in and for East Baton Rouge Parish, Louisiana. The first action, Docket Number 499,737, was filed against the directors and officers of AmCare-LA, AmCareco and AmCare-MGT (hereinafter referred to as the "D & O action"). [28] This action is a tort action alleging the directors and officers failed to properly manage AmCare-LA. Health Net was not named as a party defendant in this action at this time. A second action, Docket Number 509,297, was filed against FHC, Foundation Health Systems, Inc., and its successor, Health Net, Inc., seeking enforcement of a parental guarantee (suretyship contract) executed by FHC for the Louisiana HMO in 1996 (the "Louisiana parental guarantee action"). The third action, Docket Number 512,366, was filed against PriceWaterhouseCoopers, LLC, a Delaware corporation doing business in Louisiana (the "PWC action"). The third action asserted claims in tort for accounting negligence and breach of contract *347 by PWC, AmCare-LA's auditor. [29]
On September 30, 2003, the Texas receiver filed an action in the 250th Judicial District Court in Travis County, Texas, entitled Johnson v. PWC, Cause Number GN303897 (the " Johnson action"). The Johnson action, which the Oklahoma Receiver joined, essentially named the same defendants as the Louisiana actions and asserted the same substantive tort claims as the Louisiana actions.
On September 1, 2004, the Oklahoma Receiver filed a petition for intervention in the D & O and the PWC actions in Louisiana asserting tort causes of action. [30] On September 13, 2004, the Louisiana, Oklahoma, and Texas Receivers filed a motion in the D & O action seeking approval for the "joint litigation" and prosecution of their claims. The district court granted the order for joint litigation on September 21, 2004.
On September 27, 2004, the Texas Receiver filed petitions for intervention in the D & O and PWC actions asserting tort causes of action and naming as defendants PWC, Lucksinger, Nadler, Nazarenus, Mudd, Jhin, and Galtney. Health Net was not named as a party defendant in these interventions.
On October 15, 2004, the Texas Receiver filed a petition for intervention in the Louisiana parental guarantee action. This petition cumulated Texas tort claims with the Louisiana contract action. For the first time the Texas Receiver named Health Net as a party defendant in these proceedings. On October 15, 2004, the three Receivers filed a joint motion to consolidate the three pending actions. The minute entry for November 8, 2004 states, "Next urged was a motion for intervention and motion to consolidate filed on behalf of Oklahoma and Louisiana Receivers.... [T]he motions were granted." [31]
Further, on October 15, 2004, the Commissioner and the Oklahoma Receiver filed an amended and restated petition in the consolidated actions which cumulated the tort claims with the Louisiana contract claim. Named as defendants were Lucksinger, Nadler, Nazarenus, Jhin, Galtney, Mudd, Westbrook, Pearce, Executive Risk Indemnity, Inc., Executive Risk Specialty Insurance Company, Executive Risk Management Association, Greenwich Insurance Company, XL Specialty, Foundation Health Corporation, Foundation Health Systems, Inc., Health Net, Inc., PWC, Proskauer Rose, Stewart Rosow, and AmCareco, Inc. This petition raised claims of fraud, conspiracy, gross negligence, negligence, unjust enrichment, breach of fiduciary duties and breach of contract. The Commissioner and the Oklahoma Receiver sought compensatory and exemplary (punitive) damages and attorney fees.
Finally, on October 15, 2004, the Texas Receiver filed a first supplemental and amending petition in the three consolidated actions naming as defendants PWC, Lucksinger, Nadler, Nazarenus, Mudd, Jhin, Galtney, Pearce, Foundation Health Corporation, Foundation Health Systems, Inc., Proskauer Rose, Rosow, and Health *348 Net. The Texas Receiver's amended petition asserted claims of negligent misrepresentation, violation of the Texas Insurance Code, fraud, conspiracy, and breach of fiduciary duty and sought compensatory and exemplary (punitive) damages and attorney fees.
Several of the defendants and Health Net filed exceptions raising objections of lis pendens, lack of personal jurisdiction, lack of subject matter jurisdiction, prematurity, vagueness, improper cumulation, prescription, peremption, res judicata, improper joinder, no cause of action, and no right of action. These exceptions were overruled. Health Net filed a declinatory exception raising the objection of improper venue. The exception was overruled and Health Net appealed.
While Health Net's appeal of the venue issue was pending, the trial court proceeded with the three "joint litigation" and consolidated actions. On February 4, 2005, Health Net filed its answer to the "Consolidated, Amended and Restated Petition of the Louisiana and Oklahoma Receivers." On February 14, 2005, Health Net filed an amended answer and a reconventional demand against several named defendants and a third party demand against the LaDOI, raising claims of indemnity, contribution, detrimental reliance and regulator fault. [32] Upon motion by the Louisiana Receiver, on May 9, 2005, the trial court judge ruled as a matter of conflict of laws (law) that Louisiana law applied to all procedural issues and Texas law applied to all substantive issues raised by these actions. Health Net filed its answer to the Texas Receiver's petitions on June 13, 2005. Before the trial began on June 16, 2005, all defendants except Health Net settled. [33] In a common trial, the trial court judge decided the claims of the Louisiana and the Oklahoma Receivers, and a jury decided the facts for the claims of the Texas Receiver.
On June 30, 2005, in the Texas case, the jury returned a verdict finding Health Net eighty-five percent (85%) at fault and "Any other Company" fifteen percent (15%) at fault and awarded $52,400,000.00 in compensatory damages which was reduced to $44,540,000.00 in the subsequent trial court judgment that memorialized the jury verdict. The jury awarded Texas $65,000,000.00 in punitive damages. The jury also awarded Health Net a dollar-for-dollar *349 settlement credit reduction. Health Net sought a Judgment Notwithstanding the Verdict (JNOV) or alternatively a new trial. On November 3, 2005, the trial court granted Health Net's JNOV as to fault allocation, apportioning fifteen percent (15%) fault to "other persons", and reduced the jury award of punitive damages by thirty percent (30%). Health Net's motion for a new trial was denied. Both the judgment memorializing the jury verdict and the judgment rendering the JNOV were issued under all three trial court docket numbers.
On November 4, 2005, the trial court rendered separate judgments in favor of the Louisiana and Oklahoma plaintiffs, and each judgment reflected that it was rendered in all three of the trial court actions. The trial court found Health Net to be seventy percent (70%) at fault, "Any other Company" fifteen percent (15%) at fault and "Any other Person(s)" fifteen percent (15%) at fault, and found Health Net liable for attorney fees and punitive damages, with quantum for the attorney fees and punitive damages to be determined at a subsequent bifurcated trial. The Louisiana plaintiff was awarded $9,511,624.19 in compensatory damages, reduced to $6,658,136.93. Health Net also was held liable under the Louisiana parental guarantee for the full amount of $9,511,624.19. [34] The Oklahoma plaintiff was awarded $24,426,005.00 in compensatory damages, reduced to $17,098,203.50.
Health Net took suspensive appeals from the judgments in the three docketed trial court actions. The Texas Receiver took a devolutive appeal from the trial court judgment and the judgment granting the JNOV in the three trial court actions. The Louisiana Receiver and the Oklahoma Receiver each filed answers to Health Net's appeals of the judgments in their favor. [35]
On December 6, 2005, [36] after the bifurcated trial on the issues of quantum for the Louisiana and Oklahoma plaintiffs' punitive damages and attorney fees claims, the trial court judge found the Louisiana plaintiff failed to meet his burden of proof for these claims and dismissed the claims. On December 12, 2005, [37] the trial court judge found the Oklahoma plaintiff failed to meet her burden of proof for these claims and dismissed the claims. The Louisiana and Oklahoma plaintiffs then filed a motion seeking an award of treble damages. Health Net responded with a motion to strike the election, which was granted. In addition, the trial court granted Health Net's request for a preliminary injunction enjoining the Texas and Oklahoma plaintiffs from pursuing their claims against Health Net in the Johnson action pending in Travis County, Texas. The trial court also sustained the Louisiana plaintiffs exception raising the objection of no cause of action as to Health Net's third party demand against LaDOI asserting regulator fault.
*350 This Court, in Wooley v. AmCare, 2005-2025 (La.App. 1 Cir. 10/25/06) , 944 So.2d 668 , affirmed the trial court's ruling holding venue for the Texas and Oklahoma interventions was proper in East Baton Rouge Parish. In Wooley v. AmCare , XXXX-XXXX-XXXX (La.App. 1 Cir. 1/17/07), 952 So.2d 720 , this Court held that the judgments dismissing the Louisiana and Oklahoma exemplary damage and attorney fees claims were absolute nullities, reinstated the original judgments, and dismissed those appeals. In Wooley v. Lucksinger, XXXX-XXXX-XXXX (La.App. 1 Cir. 5/4/07), 961 So.2d 1225 , this Court held the preliminary injunction granted to Health Net was moot. In Wooley v. Lucksinger, XXXX-XXXX-XXXX (La.App. 1 Cir. 5/4/07), 961 So.2d 1228 , this Court affirmed the trial court's dismissal of Health Net's detrimental reliance claims and third party demands against LaDOI and referred the regulator fault claim to the merits. These judgments are final and definitive. La. C.C.P. art. 2166.
III. INTERPRETATION OF LAWS
Louisiana Revised Statutes 24:177 is entitled "Legislative intent, text, history and other indices of intent" and provides, in pertinent part, as follows:
A. When the meaning of a law cannot be ascertained by the application of the provisions of Chapter 2 of the Preliminary Title of the Louisiana Civil Code and Chapter 1 of Title 1 of the Louisiana Revised Statutes of 1950, the court shall consider the intent of the legislature.
B. (1) The text of a law is the best evidence of legislative intent.
Chapter 2 of the Preliminary Title of the Louisiana Civil Code is entitled "Interpretation of Laws" and is comprised of La. C.C. arts 9 through 13. Chapter 1 of Title 1 of the Louisiana Revised Statutes is entitled "Interpretation of Revised Statutes" and is comprised of La. R.S. 1:1 through 17. When construing a law or a constitutional provision, the word "shall" universally is considered to mean mandatory. La. R.S. 1:3; La. C.C.P. art. 5053; La.C.Cr.P. art. 5; La. Ch.C. art. 107; Champagne v. Ward, XXXX-XXXX, p. 21 (La.1/19/05), 893 So.2d 773, 786 .
Accordingly, the interpretation (construction) of a law or a constitutional provision must start by applying the rules found in the designated provisions of the Civil Code and the Revised Statutes to the language of the law or the constitutional provision at issue. P. Lamonica & J. Jones, 20 La. Civ. Law Treatise, Legislative Law and Procedure, § 7.4, pp. 136-38 (2004), and the authorities cited therein; see Wooley, XXXX-XXXX at p. 12, 961 So.2d at 1237.
In Holly & Smith Architects, Inc. v. St. Helena Congregate Facility, Inc., XXXX-XXXX, pp. 9-10 (La.11/29/06), 943 So.2d 1037, 1045 , appears the following:
When we are called upon to review legislative provisions, this Court follows certain guidelines, as we did in Louisiana Municipal Association v. State, 04-0227 (La.1/19/05); 893 So.2d 809 . In Louisiana Municipal Association [XXXX-XXXX at pp. 35-36, 893 So.2d at 836-37], this Court recognized:
Questions of law, such as the proper interpretation of a statute, are reviewed by this court under the de novo standard of review. After our review, we "render judgment on the record, without deference to the legal conclusions of the tribunals below. This court is the ultimate arbiter of the meaning of the laws of this state."
"Legislation is the solemn expression of legislative will, and therefore, the interpretation of a law involves primarily the search for the legislature's intent." The interpretation of a statute starts *351 with the language of the statute itself. When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written, and no further interpretation may be made in search of the intent of the legislature.
The laws of statutory construction require that laws on the same subject matter must be interpreted in reference to each other. The legislature is presumed to have acted with deliberation and to have enacted a statute in light of the preceding statutes involving the same subject matter. "Under our long-standing rules of statutory construction, where it is possible, courts have a duty in the interpretation of a statute to adopt a construction which harmonizes and reconciles it with other provisions dealing with the same subject matter."
A statute must be "applied and interpreted in a manner that is logical and consistent with the presumed fair purpose and intention the Legislature had in enacting it." In addition, "courts are bound to give effect to all parts of a statute and cannot give a statute an interpretation that makes any part superfluous or meaningless, if that result can be avoided." (Emphasis added; footnote omitted.) [38]
See also M.J. Farms, Ltd. v. Exxon Mobil Corp., 2008 WL 2811534, 2007-2371, pp. 12-14 (La.7/1/08), 998 So.2d 16, 26-27 .
IV. STANDARDS FOR APPELLATE REVIEW OF FACTS AND LAW
These consolidated actions assert causes of action that accrued in the states of Louisiana, Oklahoma, and Texas. When an action is filed in a state asserting that a cause of action arose or accrued in another state, initially the applicable state law is determined by whether the issue involved is a matter of substance (right) or a matter of procedure (remedy). Matters of procedure are determined by the law of the forum, i.e., the place where the action is filed. Wooley, 2005-2025 at p. 17, 944 *352 So.2d at 678, and the authorities cited therein.
In Louisiana, the standards for appellate review are considered procedural in nature and the constitution, law, and jurisprudence of this state control. Milstead v. Diamond M Offshore, Inc., 95-2446, p. 11 (La.7/2/96), 676 So.2d 89, 95-96 . Accordingly, we will review these consolidated actions pursuant to the Louisiana standards for the appellate review of facts and law.
Pursuant to LA. CONST, art. V, § 10(A) and (B), Courts of Appeal have appellate jurisdiction to review "all civil matters" and have the power and authority to review "law and facts." This language is clear and unambiguous. This constitutional jurisdiction to review the law and facts is plenary and unlimited. See also LA. CONST, art. V, § 5(C). Such a review is referred to as a de novo review. A de novo review or an appeal de novo is "[a]n appeal in which the appellate court uses the trial court's record but reviews the evidence and law without deference to the trial court's rulings. " (Emphasis added.) BLACK'S LAW DICTIONARY 94 (7th ed.1999).
The constitution is implemented by La. C.C.P. art. 2164, which provides, in pertinent part, as follows:
The appellate court shall render any judgment which is just, legal, and proper upon the record on appeal.
Official Revision Comment (a) for Article 2164 provides as follows:
(a) The purpose of this article is to give the appellate court complete freedom to do justice on the record irrespective of whether a particular legal point or theory was made, argued, or passed on by the court below. This article insures that the "theory of a case" doctrine, which has served to introduce the worst features of the common law writ system into Louisiana is not applicable to appeals under this Code. See Hubert, The Theory of a Case in Louisiana, 24 Tul.L.Rev. 66 (1949). (Emphasis added.)
See also La. C.C.P. arts. 1635 and 2129. [39] In F. Maraist & H. Lemmon, 1 La. Civ. Law Treatise, Civil Procedure, § 14.9, p. 382 (1999), appears the following:
An appellate court, vested with the authority to render any judgment that is just, legal and proper upon the record, may consider an issue raised for the first time on appeal or may even consider an issue not raised by the parties if its resolution is necessary for a proper judgment on the record. (Emphasis added; footnote omitted.)
Although the constitutional power and authority of appellate courts to review facts in civil cases is plenary and unlimited, jurisprudence has evolved that requires that trial court findings of fact must be reviewed on appeal pursuant to the manifest error (clearly wrong) standard of review. Hebert v. Rapids Parish Police Jury, XXXX-XXXX, p. 24 (La.4/11/07), 974 So.2d 635, 653-54 ( on rehearing ); Arceneaux v. Domingue, 365 So.2d 1330, 1333 (La.1978); Maraist & Lemmon, 1 La. Civ. Law Treatise, Civil Procedure, § 14.14, p. 391-98. This standard of appellate review is a two-part test: 1) the appellate court must find from the record whether there is a reasonable factual basis for the finding of the factfinder; and 2) the appellate court must further determine whether the record establishes the finding is not manifestly erroneous (clearly wrong). Mart v. Hill, 505 So.2d 1120, 1127 (La.1987). Factual findings should not be reversed on appeal absent manifest *353 error. Rosell v. ESCO, 549 So.2d 840, 844 (La.1989). If the trial court's or jury's factual findings are reasonable in light of the record reviewed in its entirety, the court of appeal may not reverse. Sistler v. Liberty Mutual Ins. Co., 558 So.2d 1106, 1112 (La.1990). Consequently, when there are two permissible views of the evidence, the factfinder's choice between them cannot be manifestly erroneous. Stobart v. State, Through Department of Transportation & Development, 617 So.2d 880, 883 (La.1993); Sistler, 558 So.2d at 1112 .
Finally, in Maraist & Lemmon, 1 La. Civ. Law Treatise, Civil Procedure, § 14.14, at 395-96, appears the following:
The manifest error rule assumes that the trier of fact applied the correct law in reaching its conclusion. If the trier of fact applied the incorrect law because of erroneous and prejudicial jury instructions or because of erroneous and prejudicial procedural or evidentiary rulings, and if the appellate court determines the error could have affected the outcome below, the manifest error rule does not apply, and the appellate court makes an independent determination of the facts from the record on appeal. The appellate court then decides the case on the record facts without according any deference to the factual findings of the trial court, whether judge or jury. However, if the error in instructions or in evidentiary rulings affects only one of several parts of a verdict or judgment, the appellate court may disregard those factual findings affected by the error while according the usual deference to the unaffected findings. (Emphasis added; footnotes omitted.)
Questions of law are reviewed by appellate courts in Louisiana under the de novo standard. Holly & Smith Architects, Inc., XXXX-XXXX at p. 9, 943 So.2d at 1045 ; Louisiana Municipal Association v. State , XXXX-XXXX, p. 35 (La.1/19/05), 893 So.2d 809, 836 ; Hall v. Folger Coffee Co., XXXX-XXXX, p. 10 (La.4/14/04), 874 So.2d 90, 99 . Cf. Branch-Hines v. Hebert, 939 F.2d 1311 , 1317 and 1320 (5th Cir. [La.] 1991). Accordingly, we will review the law applicable herein without deference to the trial court's rulings of law.
V. CONFLICT OF LAWS
Louisiana's choice-of-law rules are found in La. C.C. art 3515 et seq. and apply in Louisiana actions that involve contacts with other states. La. C.C. arts. 14 and 3517. La. C.C. art. 14 provides as follows:
Unless otherwise expressly provided by the law of this state, cases having contacts with other states are governed by the law selected in accordance with the provision of Book IV of this Code.
In Champagne , XXXX-XXXX at p. 11, 893 So.2d at 780, appears the following:
Choice of Law Provisions
Unless otherwise expressly provided by the law of this state, cases having contacts with other states are governed by the law selected in accordance with the provisions of Book IV of the Civil Code. La. C.C. art. 14. The residual nature of the provisions of Book IV is established by the introductory phrase of La. C.C. art. 14 that reads "unless otherwise expressly provided by the law of this state." La. C.C. art. 14 Revision Comment (b). This phrase means that the provisions of Book IV are not intended to supercede more specific choice-of-law rules contained in other Louisiana statutes, such as the Insurance Code (See, La. R.S. 22:611 et seq.). Id. When applicable, those rules, being more specific, will prevail over the provisions *354 of Book IV of the Civil Code.[ [40] ] (Emphasis added.)
A. Conflict of Laws Facts
The nominal plaintiffs in these consolidated and "Joint/Source Proceedings" are the Insurance Commissioners and Receivers for Liquidation for the states of Louisiana, Oklahoma, and Texas. These plaintiffs are acting on behalf of, and in the interest of, the policyholders, enrollees, members, subscribers, providers, and creditors of the Louisiana, Oklahoma, and Texas HMOs that are in liquidation and the three HMOs. All of the Commissioners and Receivers are domiciled in their respective states. The three HMOs were incorporated in and had their principal places of business in their respective states.
The domiciles of the defendants are in numerous states. Lucksinger, Nadler, Nazarenus, Jhin, and Galtney are domiciled in Texas. Mudd and Pearce are domiciled in Florida. Rosow is domiciled in New York. Health Net was incorporated in Delaware and its principal place of business is in California. AmCareco was incorporated in Delaware and its principal place of business is in Texas. PWC is a partnership chartered in Delaware with partners residing in Louisiana and it does business in Louisiana. Proskauer Rose is a foreign law firm operating as a limited liability partnership under New York law, has its principal place of business in New York, and is qualified to do business in Louisiana. Several foreign insurers doing business in Louisiana also were named as defendants. La. C.C. arts. 3518 and 3548.
The conduct of which the plaintiffs complain allegedly occurred in the states of Louisiana, Oklahoma, Texas, California, and New York. A substantial majority of the conduct occurred in Texas. The following conduct occurred in Louisiana and Oklahoma: (1) selling memberships or policies; (2) collecting premiums; (3) processing of claims; (4) day-to-day operations; (5) commercial advertising; and (6) failing to pay claims, benefits or other contractual obligations of policyholders, enrollees, members, subscribers, providers, employees, and other creditors. The three HMOs did business only in their respective states.
The extent of the alleged injury caused by the conduct can be estimated by the compensatory damage awards given in the trial court. Those awards were: (1) $52,400,000.00 (61%) for Texas; (2) $9,511,624.19 (11%) for Louisiana; and (3) $24,426,005.00 (28%) for Oklahoma.
B. The Ruling of the Trial Court on the Issue of Choice-of-Law
On October 15, 2004, the Louisiana and Oklahoma Receivers filed a joint motion *355 in limine to "determine ... the law applicable to various substantive issues in this matter." (Emphasis added.) On May 9, 2005, a contradictory hearing was held on this motion in the trial court. The following is the pertinent portion of the hearing transcript:
THE COURT: Court overruled the final exception. Now, we need to get back to the choice of law.
It appears, Mr. Cullens [Counsel for the Louisiana and Oklahoma Receivers], to this court, and I know Mr. Percy [Counsel for Health Net] will correct me, but it appears that what you allege and contend in your petition, that there was a design and an enterprise which resulted in fraud, negligence, unfair trade practice, that it had its genesis in the state of Texas, that it had its tentacles that reached into five other of the fifty states, that the damage was treble [sic] because it had a ripple effect, so that the damage occurred in Texas as well as in the five other states on the front line and in the secondary to the forty-five other states.
That is what I have gleaned from reading the several petitions filed in this matter and the innumerable memoranda and all of the argument. That's what it appears that you are trying to get to trial on. Is that correct or incorrect?
MR. CULLENS: Yes, in the nutshell, Your Honor, and we also — not that there is any magic to the words, but fiduciary duty claims as well.
THE COURT: That being the case, it appears to this court that there is a single business enterprise very akin in the criminal law to — but I don't want to say those dirty words, Mr. Percy, and send you into cardiac arrest but you know the words I am thinking of. We have been down that aisle before.
But, in any event, it seems that the Texas substantive law should indeed apply because, in the opinion of this court, as outlined in the foregoing statements, that the genesis occurred in Texas, the enterprise, the design, the impact, quite a bit of the damage, and that it had a ripple effect.
The court views this as no more than multistate litigation which this court has certainly handled many times before, and parties are aligned in accordance with parallel interests.
Additionally, these parties are clothed with the indicia of some governmental authority allowed to exercise a delegation within the police power of the Executive Branch of the several sister states, allowing them to adjudicate claims that they are peculiarly situated to have addressed in any one or more fora.
Each of the several states having joined the compact on the uniform law, a substantial abiding interest in seeing that its consumers, policyholders, citizens, other persons, including juristic persons are protected to the full extent of the law and which claims should be justiciable quickly, efficiently, without undue delay and without undue expense.
Therefore, with respect to the choice of law, the court is going to apply Texas law on the substantive issues of law as outlined and is going to apply Louisiana law on the procedural issues. Whether an issue is substantive or procedural, there is quite a bit of jurisprudence. Of course, each circuit has its own jurisprudence on that issue, but we can get through that, Mr. McKernan [Counsel for the Texas Receiver].
Therefore, the court will sign judgment in accordance with its ruling. *356 Five days to take writs. Anything further?[ [41] ] (Emphasis added.)
C. Applicable Conflict of Laws Rules
The threshold question in determining the application of La. C.C. art. 3515 et seq. is whether there is a true conflict, a false conflict, or no conflict. Champagne , XXXX-XXXX at p. 22, 893 So.2d at 786; Arceneaux v. AmStar Corp., XXXX-XXXX, p. 3 (La.App. 4 Cir. 12/14/05), 921 So.2d 189, 191 ; Tolliver v. Naor, 115 F.Supp.2d 697, 701 (E.D.La.2000); In re Combustion, Inc., 960 F.Supp. 1056, 1067 (W.D.La. 1997). Louisiana Civil Code Article 3515 is the first article in Book IV entitled "CONFLICT OF LAWS" and states the basic and general policy that "an issue in a case having contacts with other states is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue. " (Emphasis added.) Obviously, if the laws of two states are substantially identical, then there is no conflict. Thus, La. C.C. art. 3544(1) provides, in pertinent part, "[p]ersons domiciled in states whose law on the particular issue is substantially identical shall be treated as if domiciled in the same state." Revision Comments — 1991(f) [42] for Article 3544 provides as follows:
Parties domiciled in states with identical law. The second sentence of subparagraph (1) provides that persons domiciled in states whose law on the particular issue of loss distribution is substantially identical should be treated as if domiciled in the same state. This legal fiction is justified by both policy and practical considerations. From a policy viewpoint, this rule is supported by the same factors as the common-domicile rule. See comment (e), supra. From a practical viewpoint, this rule will alleviate the court's choice-of-law burden by properly identifying and resolving as `false conflicts' all cases in which the victim and the tortfeasor were domiciled in states whose law on the issue of financial protection was substantially identical. This rule will also prove useful in cases involving multiple victims or multiple tortfeasors because it will enable the court to treat as domiciliaries of the same state those victims or tortfeasors who are domiciled in states with substantially identical law. (Emphasis added.)
See also Tolliver, 115 F.Supp.2d at 702 . A false conflict occurs when it is determined that only a single state has an interest in the application of its law to an issue and the other state involved has no interest in the application of its law to the issue. Arceneaux, XXXX-XXXX at p. 3, 921 So.2d at 191 ; In re Combustion, Inc., 960 F.Supp. at 1067 .
Once a true conflict is identified, courts are required to apply the rules of La. C.C. art. 3515 et seq. on an "issue-by-issue" or "issue specific" basis. In Favaroth v. Appleyard, XXXX-XXXX, p. 4 (La.App. 4 Cir. 5/2/01), 785 So.2d 262, 265 , appears the following:
*357 Under Louisiana's choice of law rules, a sweeping determination that the law of one state applies to the case, as opposed to an issue in a case, constitutes a derogation of the appropriate analysis. When a conflict exists with regard to more than one issue, each issue should be analyzed separately. One result of this analysis might be that the laws of different states may be applied to different issues in the same dispute, or dépeçage. Comment (d) to LSA-C.C. art. 3515. (Emphasis added.)
Revision Comments — 1991(d) for La. C.C. art. 3515 provides as follows:
Issue-by-issue analysis and dépeçage. The use of the term "issue" in the first paragraph of this Article is intended to focus the choice-of-law process on the particular issue as to which there exists an actual conflict of laws. When a conflict exists with regard to only one issue, the court should focus on the factual contacts and policies that are pertinent to that issue. When a conflict exists with regard to more than one issue, each issue should be analyzed separately, since each may implicate different states, or may bring into play different policies of these states. Seen from another angle, each state having factual contacts with a given multi-state case may not have an equally strong interest in regulating all issues in the case, but only those issues that actually implicate its policies in a significant way.
This so-called issue-by-issue analysis is an integral feature of all modern American choice-of-law methodologies and facilitates a more nuanced and individualized resolution of conflicts problems. One result of this analysis might be that the laws of different states may be applied to different issues in the same dispute. This phenomenon is known in conflicts literature by its French name of dépeçage. Although infrequently referred to by this name, this phenomenon is now a common occurrence in the United States and has received official recognition in Europe. This Article does not prohibit dépeçage. However, dépeçage should not be pursued for its own sake. The unnecessary splitting of the case should be avoided, especially when it results in distorting the policies of the involved states.
See also Murden v. Acands, Inc., XXXX-XXXX, p. 5 (La.App. 4 Cir. 12/14/05), 921 So.2d 165, 169 , writ denied, XXXX-XXXX (La.4/17/06), 926 So.2d 526 ; Rigdon v. Pittsburgh Tank & Tower Co., Inc., 95-2611, p. 5 (La.App. 1 Cir. 11/8/96), 682 So.2d 1303, 1306 ; Thomas v. Fidelity Brokerage Services, Inc., 977 F.Supp. 791, 794 (W.D.La.1997); In re Ford Motor Co. Bronco II Product Liability Litigation, 177 F.R.D. 360, 370-71 (E.D.La.1977); F. Maraist & T. Galligan, Louisiana Tort Law, § 22.05, p. 22-23 (2d ed.2007). A review of the trial judge's ruling at the hearing to determine the appropriate choice of law rules reflects that she made "a sweeping determination that the law of one state" applied (Texas), and she did not conduct an "issue-by-issue" analysis as required by La. C.C. art. 3515 et seq. This is error and it was exacerbated by the initial refusal of the trial court judge to timely file written findings of fact and reasons for judgment in the Louisiana and Oklahoma cases and her subsequent refusal to comply with the order of this Court that she state the pertinent constitutional provisions, laws, and jurisprudence upon which her various decisions were based. [43]
*358 The record does not reflect that Health Net excepted to the trial court choice-of-law ruling. However, La. C.C.P. art. 1635 provides as follows:
Formal exceptions to rulings or orders of the court are unnecessary. For all purposes it is sufficient that a party, at the time the ruling or order of the court is made or sought, makes known to the court the action which he desires the court to take or his objection to the action of the court and his grounds therefor; and, if a party has no opportunity to object to a ruling or order at the time it is made, the absence of an objection does not thereafter prejudice him. (Emphasis added.)
Health Net has not assigned error for the choice-of-law ruling in this appeal. In Georgia Gulf Corp. v. Board of Ethics for Public Employees, 96-1907, p. 4 (La.5/9/1997), 694 So.2d 173, 175-76 , appears the following:
From the outset, the Ethics Commission asserts that the due process issues were not raised in the administrative proceedings, were not assigned as error on the appellate level, and are not properly before us. We disagree.
La.Code Civ.P. art. 2129 provides that an assignment of errors is not necessary in any appeal. Code of Practice of 1870, Art. 896, one of the source provisions for La.Code Civ.P. art 2129, provided that if the trial court record was not certified by the clerk of court of the lower court as containing all of the testimony, the supreme court would only judge the case on a statement of the facts. Code of Practice of 1870, Art. 897, another source provision for La.Code Civ.P. art. 2129, provided that an appellant who did not rely wholly or in part on a statement of facts, an exception to the judge's opinion, or a special verdict, but on an error of law appearing on the face of the record, would be allowed ten-days after the lodging of the record to file a statement alleging any errors. The Official Revision Comments under La.Code Civ.P. art. 2129 records that the jurisprudence under the old Code of Practice articles construed them to mean that where there was a certified transcript containing all of the testimony and the grounds for reversal were apparent from the face of the record, no assignment of errors was required. La.Code Civ.P. art. 2129 simply codified this jurisprudence.
Moreover, La.Code Civ.P. art. 2164 provides that an appellate court "shall render any judgment which is just, legal and proper upon the record on appeal." As noted in the Official Revision Comments under Art. 2164, the appellate court has "complete freedom to do justice on the record irrespective of whether a particular legal point or theory was made, argued, or passed on by the court below." In a similar vein, Uniform Rules of Louisiana Court of Appeal, Rule 1-3 provides that even in the absence of an assignment of errors, the appellate court can review such issues if the "interest of justice clearly requires...."
Under the codal authorities cited herein above, it is clear that the appellate court had the right to consider the issue of due process even though there was no assignment of error in that regard. Accordingly we find that the due process issue is also properly before us.
See also Berg v. Zummo, XXXX-XXXX, p. 13, n. 5 (La.4/25/01), 786 So.2d 708, 716, n. 5 ; Nicholas v. Allstate Ins. Co., 99-2522, pp. 6-10 (La.8/31/00), 765 So.2d 1017, 1022-1024 . Determining the proper choice-of-law law to be applied to an issue is a question of law for which this court has the plenary and unlimited constitutional power *359 and authority to review de novo. Foshee v. Torch Operating Co., 99-1863, pp. 17-18 (La.App. 3 Cir. 5/17/00) , 763 So.2d 82, 92-93 . Cf. Duhon v. Union Pacific Resources, Co., 43 F.3d 1011, 1013 (C.A.5 (La.) 1995). Accordingly, we will conduct the required issue-by-issue de novo analysis to decide the assignments of error in this case and, if the trial court committed error, determine whether this trial court error was prejudicial for any issue so decided. [44] See the excellent discussion of the effect of a legal error in Duzon v. Stallworth, XXXX-XXXX, pp. 30-32 (La.App. 1 Cir. 12/11/02) , 866 So.2d 837, 860-861 , writ denied, XXXX-XXXX (La.5/2/03), 842 So.2d 1101 , and XXXX-XXXX (La.5/2/03), 842 So.2d 1110 .
With the exception of the Louisiana contractual claim pertaining to the Health Net parental guarantee, [45] all of the other causes of action asserted by the plaintiffs involve delictual obligations. The choice of law rules for delictual obligations (torts) are provided for in Title VII of Book IV of the Civil Code, comprised of La. C.C. arts. 3542-3548.
Louisiana Civil Code Article 3542 provides as follows:
Except as otherwise provided in this Title, an issue of delictual or quasi-delictual obligations is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue.
That state is determined by evaluating the strength and pertinence of the relevant policies of the involved states in the light of: (1) the pertinent contacts of each state to the parties and the events giving rise to the dispute, including the place of conduct and injury, the domicile, habitual residence, or place of business of the parties, and the state in which the relationship, if any, between the parties was centered; and (2) the policies referred to in Article 3515, as well as the policies of deterring wrongful conduct and of repairing the consequences of injurious acts.
The first paragraph of Article 3542 repeats the basic premise of Louisiana choice-of-law that the impairment of other states' interests in Louisiana litigation should be minimized. The second paragraph lists the following factors to be considered when determining whether a state's policies may be impaired if its law was not applied to a particular issue: (1) place of conduct; (2) place of injury; (3) domicile of the parties; (4) state in which the relationship between the parties is centered; (5) policy for deterring wrongful conduct; and (6) policy for repairing the consequences of injurious acts.
What constitutes domicile is provided for in La. C.C. arts. 3518 and 3548. Article 3518 provides as follows:
For the purposes of this Book, the domicile of a person is determined in accordance with the law of this state. A juridical person may be treated as a domiciliary of either the state of its formation or the state of its principal place of business, whichever is most pertinent to the particular issue.
The Louisiana substantive law on domicile *360 is found in La. C.C. arts. 38-46. [46] Louisiana Civil Code Article 3548 provides as follows:
For the purposes of this Title, and provided it is appropriate under the principles of Article 3542, a juridical person that is domiciled outside this state, but which transacts business in this state and incurs a delictual or quasi-delictual obligation arising from activity within this state, shall be treated as a domiciliary of this state.
When determining a choice of law problem involving delictual and quasi-delictual obligations, the most important issues are those pertaining to a state's standards of conduct and safety and its policies pertaining to loss distribution and financial protection. Louisiana Civil Code Article 3543 provides as follows:
Issues pertaining to standards of conduct and safety are governed by the law of the state in which the conduct that caused the injury occurred, if the injury occurred in that state or in another state whose law did not provide for a higher standard of conduct.
In all other cases, those issues are governed by the law of the state in which the injury occurred, provided that the person whose conduct caused the injury should have foreseen its occurrence in that state.
The preceding paragraph does not apply to cases in which the conduct that caused the injury occurred in this state and was caused by a person who was domiciled in, or had another significant connection with, this state. These cases are governed by the law of this state.
Louisiana Civil Code Article 3544 provides as follows:
Issues pertaining to loss distribution and financial protection are governed, as between a person injured by an offense or quasi-offense and the person who caused the injury, by the law designated in the following order:
(1) If, at the time of the injury, the injured person and the person who caused the injury were domiciled in the same state, by the law of that state. Persons domiciled in states whose law on the particular issue is substantially identical shall be treated as if domiciled in the same state.
(2) If, at the time of the injury, the injured person and the person who caused the injury were domiciled in different states: (a) when both the injury and the conduct that caused it occurred in one of those states, by the law of that state; and (b) when the injury and the conduct that caused it occurred in different states, by the law of the state in which the injury occurred, provided that (i) the injured person was domiciled in that state, (ii) the person who caused the injury should have foreseen its occurrence in that state, and (iii) the law of that state provided for a higher standard of financial protection for the injured person than did the law of the state in which the injurious conduct occurred.
The distinction between issues of "standards of conduct and safety" and those of "loss distribution and financial protection" is set forth in Revision Comments — 1991 of La. C.C. art. 3543 as follows:
(a) Scope and terminology. This Article applies to "issues pertaining to standards of conduct and safety" as distinguished from "issues of loss distribution *361 and financial protection" which are governed by Article 3544, infra. This distinction draws from the substantive law of torts and its two fundamental objectives — deterrence and compensation. By way of illustration, so-called "rules of the road" establish or pertain to "standards of conduct and safety", whereas rules that impose a ceiling on the amount of compensatory damages or provide immunity from suit are "rules of loss-distribution and financial protection". From the choice-of-law perspective, the reason for distinguishing between conduct-regulating rules and lossdistribution rules is the fact that their operation in space abides by different principles. Thus, while conduct-regulating rules are territorially oriented, compensation or loss-distribution rules are usually not so oriented. A state's policy of deterrence embodied in its conduct-regulating rules is implicated in all substandard conduct that occurs within its territory, even if the parties involved are not domiciled in that state. Conversely, a state's loss-distribution policy may or may not extend to non-domiciliaries acting within its territory, but does extend to domiciliaries even when they act outside the state. For the origin and rationale of this distinction in American conflicts law, see Symeonides, `Choice of Law for Torts', 441-44. (Emphasis added.)
Finally, the relationship of Article 3542 with Articles 3543-3546 is described in Revision Comments — 1991 for Article 3542 as follows:
(b) Relation to other articles of this Title. The approach of this Article is further implemented by specific rules contained in Articles 3543-3546, infra, which are a priori legislative determinations of "the state whose policies would be most seriously impaired if its law were not applied". Being more specific, these Articles should, when applicable, prevail over this Article. However, as with any a priori rules. Articles 3543-3546 may in exceptional cases produce a result that is incompatible with the general objective of Article 3542, in pursuance of which they were drafted. In order to avoid such a result. Article 3547 contains an "escape clause" which, when applicable, refers these cases back to Article 3542. Moreover, Articles 3543-3546 do not cover the entire spectrum of cases or issues that might fall under the general hearings of these Articles, but only those cases that appeared to be susceptible to a clear and noncontroversial choice-of-law rule. The remaining cases or issues are governed by this Article as the residual article. Thus, Article 3542 is intended to perform a general as well as a residual role. In its residual role, this Article applies to all cases and issues that are not included within the scope of Articles 3543-3546. In its general role, this Article will help determine whether issues that do fall within the general scope of Articles 3543-3546 should be decided under the rules contained therein or under the escape clause of Article 3547 which refers them back to Article 3542. (Emphasis added.)
Louisiana Civil Code Article 3547 provides as follows:
The law applicable under Articles 3543-3546 shall not apply if, from the totality of the circumstances of an exceptional case, it is clearly evident under the principles of Article 3542, that the policies of another state would be more seriously impaired if its law were not applied to the particular issue. In such event, the law of the other state shall apply. (Emphasis added.)
*362 See generally, S. Symeonides, Louisiana's New Law of Choice of Law for Tort Conflicts: An Exegesis, 66 Tul. Law Rev. 677 (1992).
1. Law Applicable to the Texas Case
Louisiana Civil Code Article 3543 is clear and unambiguous in providing that "[i]ssues pertaining to standards of conduct and safety are governed by the law of the state in which the conduct that caused the injury occurred, if the injury occurred in that state or in another state whose law did not provide for a higher standard of conduct." The record on appeal shows that a majority of the conduct complained of occurred in Texas and, based on the quantum of the damages awarded, sixty-one percent (61%) of the total injuries in this litigation occurred in Texas. Revision Comments — 1991(d) for Article 3543 provides as follows:
Conduct and injury in the same state: Application of the law of that state. The first paragraph of this Article provides that when both the tortfeasor's conduct and the victim's injury occur in the same state, the law of that state applies, regardless of the domicile of the parties or any other factors. As long as the issue is one pertaining to regulation of conduct and safety, the state where both the conduct and the injury occur has the best, if not the exclusive, claim for applying its law. This is true regardless of the content of that law, that is, regardless of whether that law provides for a standard of conduct that is lower or higher than, for instance, the law of the state in which either party is domiciled. (Emphasis added.)
Subparagraph (2) of La. C.C. art. 3544 is clear and unambiguous in providing that for issues pertaining to loss distribution and financial protection "[i]f, at the time of the injury the injured person and the person who caused the injury were domiciled in different states: (a) when both the injury and the conduct that caused it occurred in one of those states, by the law of that state...." The Texas plaintiff is domiciled in Texas, a majority of the conduct complained of occurred in Texas, and all of the injury complained of by the Texas plaintiff occurred in Texas. AmCare-TX is incorporated in Texas and had it principal place of business there. Texas has a comprehensive HMO law. V.T.C.A. Ins.Code §§ 843.001 to 843.464. Revision Comments — 1991(g) for Article 3544 provides, in pertinent part, as follows:
Domicile of either party. Subparagraph (2) deals with cases in which, at the time of the injury, the tortfeasor and the victim were not domiciled in the same state. Clause (a) of that subparagraph provides that when both the injurious conduct and the resulting injury occurred in a state where either the tortfeasor or the victim was domiciled, the law of that state shall apply, regardless of whether it provides for a higher or lower standard of financial protection than the law of the domicile of the other party. For rationale and supporting authority, see Symeonides, `Choice of law for Torts', 453-56. When a person is injured in his home state by conduct in that state, his rights should be determined by the law of that state, even if the person who caused the injury happened to be from another state. The law of the latter state should not be interjected to the victim's detriment or benefit. (Emphasis added.)
Thus, even assuming that Health Net is domiciled in either California or Delaware, insofar as the Texas litigation is concerned, the trial court judge correctly ruled that Texas law applies to issues pertaining to standards of conduct and safety and to those pertaining to loss distribution and financial protection. The Texas plaintiff *363 initially sought in a Texas forum the same basic relief sought in this Louisiana forum. Louisiana courts have recognized the "compelling interest" Texas has in regulating issues involving Texas insurance in Texas. Murden v. Acands, Inc., XXXX-XXXX, p. 7 (La.App. 4 Cir. 12/14/05), 921 So.2d 165, 169-170 , and the case cited therein. Thus, applying Texas law in this Texas intervention does not impair Texas policies in general. Applying Texas law in a Texas insurance case in a Louisiana forum generally will not impair Louisiana policies; it does affect the amount of work involved for Louisiana court dockets. La. C.C. arts. 3515 and 3542. However, the law of another state will be applied if La. C.C. art. 3547 or another provision of Louisiana's law requires it for a particular issue.
2. Law Applicable in the Louisiana Case
As previously indicated, the domiciles of the original defendants in the Louisiana case are located in the states of Texas, Florida, New York, Delaware, California, and Louisiana; the conduct complained of occurred in varying degrees in the states of Louisiana, Oklahoma, Texas, California, and New York; and all of the injury complained of in the Louisiana case occurred in Louisiana. The Louisiana HMO was incorporated in Louisiana, had its principal place of business in Louisiana, and only did business in Louisiana. The Louisiana HMO advertised its product, sold contracts to enrollees for health care benefits, collected premiums, processed claims, entered into contracts with providers, conducted day-to-day operations, hired employees, contracted for goods and services, and failed to pay claims, benefits, and other contractual obligations of enrollees, members, subscribers, providers, employees, and other creditors that it was contractually obligated to pay in Louisiana.
For the purposes of Article 3543, the majority of the conduct that caused the injury in Louisiana occurred in Texas. However, the alleged conduct of continuing to conduct business operations when insolvent so that Louisiana conventional obligations could not be met occurred in Louisiana. Louisiana also has asserted delictual causes of action in its petition alleging that these torts caused the failure to perform resulting in multiple breaches of Louisiana contracts involving Louisiana domiciliaries. Louisiana has a very strong interest in the sanctity of its conventional obligations. La. C.C. art. 3537 et seq. All of the injury claimed by Louisiana occurred in Louisiana.
Revision Comments — 1991(h), (i), and (j) for Article 3543 provide as follows:
(h) Conduct in more than one state. Cases in which the injurious conduct occurs in more than one state should be approached under the principles of causation of the law of the forum. Ordinarily, these principles will make it possible to determine which particular conduct was, legally speaking, the principal cause of the injury. Following such a determination, the case will be governed by either the law of the state of that conduct or the law of the state of injury, depending on which paragraph of this Article is applicable, and subject always to the "escape clause" of Article 3547, infra. In the latter case, as well as in all cases in which the principles of causation would not yield a clear answer, the applicable law will be determined in accordance with Article 3542. It is also possible that the fact that the injurious conduct was not localized in any single state could, in appropriate circumstances, evoke the escape clause of Article 3547. even without resorting to the principles of causation.
*364 (i) Injury sustained in more than one state. Cases involving multiple victims who sustained their respective injuries in different states should be handled independently for each victim. Cases where the same victim sustained injury in more than one state should be resolved by a factual determination of where the injury was primarily suffered. Following such a determination, the case will be governed by either the law of the state of injury or the law of the state of conduct, depending on which paragraph of this Article is applicable, and subject always to the escape clause of Article 3547.
(j) The third paragraph: Conduct in Louisiana. The third paragraph of this Article is intended to ensure that conduct in Louisiana by persons domiciled in, or having another similarly significant relationship with, this state will not be subjected to higher standards of another state where the injury might occur. (Emphasis added.)
Revision Comments — 1991 (b), (c), (d), (e) and (f) for Article 3544 provide, in pertinent part, as follows:
(b) Scope: persons. This Article applies to issues of loss-distribution "as between a person injured by an offense or quasi-offense and the person who caused the injury"....
When one tortfeasor causes injury to more than one person, the applicable law should be determined separately with regard to each victim. When one person is injured by more than one tort-feasor, the latter's obligations vis-a-vis the victim and the law governing these obligations should be determined separately with regard to each tortfeasor.
....
(c) Relation to Article 3542. Like Article 3543, this Article is derived from the general principles of Article 3542. When applicable, this Article, being more specific, prevails over Article 3542. However, according to Article 3547, infra, the rules provided in this Article may, in exceptional cases, be subordinated to the principles of Article 3542. See comment under Article 3547, infra. Moreover, this Article does not cover the entire spectrum of cases involving issues of loss distribution. As with Article 3543, the objective of this Article is to lighten the court's choice-of-law burden by attempting to identify those cases for which a safe choice-of-law rule could be established in advance based on accumulated experience. Because this experience does not yield safe choice-of-law rules for all cases, this article is purposefully left open-ended. For instance, this article does not cover situations in which the wrongful conduct, the resulting injury, and the domicile of each party are each located in different states. Such cases are, therefore, governed by Article 3542, the residual Article.
(d) Domicile. Based on the premise that laws of loss distribution are usually not territorially oriented, this Article pays less attention to territorial factors and focuses instead on the domicile of the parties.... For the domicile of juridical persons, see article 3518, supra, and Article 3548, infra. For the purposes of this Article, the pertinent domicile is the domicile at the time of the injury. This is stated expressly in the article or implied by the use of the past tense. However, a post-injury change of domicile may well be pertinent for the purposes of Article 3542. See Allstate Insurance v. Hague, 449 U.S. 302 , 101 S.Ct. 633 , 66 L.Ed.2d 521 (1981).
Domicile has been chosen as the primary connecting factor for the purposes of this Article because domicile connotes *365 a permanent, factual, consensual, and formal bond between a person and a given society. Because of this bond, the person participates, however indirectly, in the shaping of that society's values and may reasonably expect the protection of its laws. Correspondingly, that society has both a right and a duty to be concerned about that person's welfare. When the domiciliary bond is attenuated for whatever reason, both the person's expectations and the society's concerns may also be diminished accordingly. Thus, when a person is only nominally domiciled in one state, but habitually resides in another or has another substantial factual connection with another state that is pertinent to the particular issue, the interest of the latter state in protecting him may be stronger than that of the former state. Depending on the other factors in the case, such a case may be a good candidate for invoking the "escape clause" of Article 3547, infra.
(e) Common domicile. The first sentence of subparagraph (1) of this article deals with situations in which, at the time of the injury, both the tortfeasor and the victim were domiciled in the same state. This provision calls for the application of the law of the common domicile regardless of whether that law provides for a higher or a lower standard of financial protection for the victim than does the law of the state where the conduct and/or the injury occurred. In cases where the law of the state of the common domicile provides for a higher standard of financial protection than does the state of conduct and/or the injury, the application of the law of the common domicile has become routine in all states that have abandoned the traditional lex loci delicti rule....
(f) Parties domiciled in states with identical law. The second sentence of subparagraph (1) provides that persons domiciled in states whose law on the particular issue of loss distribution is substantially identical should be treated as if domiciled in the same state. This legal fiction is justified by both policy and practical considerations. From a policy viewpoint, this rule is supported by the same factors as the common-domicile rule. See comment (e), supra. From a practical viewpoint, this rule will alleviate the court's choice-of-law burden by properly identifying and resolving as "false conflicts" all cases in which the victim and the tortfeasor were domiciled in states whose law on the issue of financial protection was substantially identical. This rule will also prove useful in cases involving multiple victims or multiple tortfeasors because it will enable the court to treat as domiciliaries of the same state those victims or tortfeasors who are domiciled in states with substantially identical law. (Emphasis added).
Finally it must be noted that "Comment (g) to Article 3544 reflects the legislative belief that choice of law should be decided on a state's interest in the case, rather than the potential benefit or detriment to the litigants." Tolliver, 115 F.Supp.2d at 703 . See generally, S. Symeonides, supra.
The fact that Congress has allowed each of the fifty states to have its own system governing insurance strongly suggests that a state-specific system for insurance is a legitimate public purpose. Champagne , XXXX-XXXX at p. 26, 893 So.2d at 788; Dunlap v. Hartford Ins. Co. of the Midwest, XXXX-XXXX, p. 7 (La.App. 1 Cir. 3/24/05), 907 So.2d 122, 126 ; Abraham v. State Farm, 465 F.3d 609, 613-14 (C.A.5 (La.) 2006). Louisiana's system for regulating insurance is particularly state-specific.
*366 The insurance industry in Louisiana is pervasively affected by public policymaking and is heavily regulated. La. R.S. 22:2 A(1); Segura v. Frank, 93-1271, p. 19 (La.1/14/94), 630 So.2d 714, 730 . The reasons for this are discussed in W. McKenzie & H. Johnson, 15 La. Civ. Law Treatise, Insurance Law and Practice § 3, pp. 4-6 (3d ed.2006), as follows:
It is often said that the contract of insurance, and indeed the entire field of insurance law, is so substantially infused with public policy concepts that it is impossible to discuss the subject of insurance without a heavy dose of public policy considerations at every turn. The authors currently adhere to that philosophy, and indeed respectfully suggest that the reader will not have a complete understanding of the subject matter unless the marriage between insurance and public policy is made absolutely clear at the outset of this work.
It is certainly understandable that the legislature and the courts of a state, especially the former, would be very concerned about a relationship into which citizens place enormous amounts of money and in turn have equally substantial expectations about what they will receive in turn. Insurance contracts are so pervasive now that it may be safely predicted that almost every citizen either is now, has been, or may soon be a party to such a contract. We count on insurance contracts to protect our most basic financial and physical resources: our person, our property, and our potential liability for harm to others. It is difficult to imagine our society without contracts of insurance.
In light of the significant involvement of our citizens with these particular contracts, concomitant governmental involvement is easily predictable. Moreover, the nature of the contract is such that it may tend toward an adhesion relationship. The insured is often an individual with relatively little bargaining power and similarly slight expertise in the field of insurance. The insurer is very often a company of both substantial size and expertise. Together these factors invite, though do not require, a relationship of adhesion. In such a potential relationship, the usual rule found in the Civil Code that the parties may make law between themselves by contract, and are free to include virtually whatever is not prohibited in such an agreement, is not entirely appropriate. Rather one finds the parameters of the bargaining arena between the insurer and the insured sharply limited and carefully patrolled by regulatory authorities.
Given the intense interest by government in this particular type of contract, some of the principles that we encounter in this subject matter are easily explainable. For example, it is easy to see why the principles having to do with interpretation that are mentioned in the next section have developed, and why a court might be willing to reform a contract as discussed in the section following that. It is also easy to see why the legislature requires that certain provisions be included in the various insurance contracts, or provisions more favorable to the insured. Sometimes the legislature will mandate that certain types of coverage be offered in conjunction with basic coverages, and will presume that the insured opted for such coverage unless it is clear that he rejected it. The law may also require, for example, that if a certain medical expense is reimbursable when performed by a physician, it cannot be rejected when done by another health care provider with his licensed authority.
*367 Cancellations are rigorously regulated; forfeiture of built up values are protected; penalties and attorney's fees for arbitrary denial of claims are mandated. The list could go on and on, but the theme becomes very clear. This is not an area of the law in which the legislature or the courts have been willing to leave the players to their own devices. Either because of the substantial monetary investment by citizens, or of the perils to which they would be exposed without the coverage they may have thought they were purchasing, or of the disparity between the size and expertise of the contracting parties, or perhaps for all three reasons, the playing field is sharply circumscribed and closely umpired. (Emphasis added.)
The people of Louisiana have found insurance so important they have given constitutional status to the office of Commissioner of Insurance and LaDOI by providing for them in the Executive Branch of state government. LA. CONST. art. IV, §§ 1 and 11. In particular, LaDOI is one of twenty departments in the Executive Branch of state government. LA. CONST. art. IV, §§ 4(B). Finally, the legislature has provided for the organization, structure, powers, and functions of LaDOI and the powers and functions of the Commissioner in La. R.S. 36:681, et seq.
The legislature has dedicated an entire Title of the Louisiana Revised Statutes for the Louisiana Insurance Code. La. R.S. 22:1-3312. Health and Accident Insurance has been classified as a specific type of insurance and has been defined, in part, as "[ijnsurance of human beings against bodily injury, disablement, or death by accident or accidental means, or the expense thereof, or against disablement, or expense resulting from sickness or old age...." La. R.S. 22:6(2)(a). HMOs are specially provided for in La. R.S. 22:2001-2027.
For the purpose of La. R.S. 22:2001 et seq. (1) an enrollee is "an individual who is enrolled in a health maintenance organization"; (2) a provider is "any physician, hospital, or other person, organization, institution, or group of persons licensed or otherwise authorized in this state to furnish health care services"; and (3) a subscriber is a "person who is responsible for payment to a health maintenance organization or whose employment or other status, except for family dependence, is the basis for eligibility for enrollment in the health maintenance organization." La. R.S. 22:2002(4), (8) and (9). The function of an HMO is to "provide or arrange for the provision of basic health care services to enrollees." La. R.S. 22:2002(7).
A review of La. R.S. 22:2001 et seq. reflects a very strong public policy for the protection of the rights of enrollees when they contract with HMOs for health care services. The enrollee application form is provided for in extensive detail in La. R.S. 22:2026. Enrollee grievance procedures are provided for in La. R.S. 22:2022. La. R.S. 22:2018 A(1) and C require that HMO-provider contracts shall set forth that "in the event the health maintenance organization fails to pay for covered health services ..., the subscriber or enrollee shall not be liable to the provider for any sums owed by" the HMO and that "(n)o contracting provider ... may maintain any action at law against a subscriber or enrollee to collect sums owed by" the HMO. [47] La. R.S. 22:2007 A provides that any director, officer, or employee of an HMO who receives, collects, disburses, or *368 invests funds in connection with the activities of an HMO "shall be responsible for such funds in a fiduciary relationship to the" HMO. La. R.S. 22:2007 C provides that no asset of an HMO may be encumbered, pledged, or utilized to secure a loan or to confer a personal benefit on any officer, director, employee, agent, stockholder, or any beneficiary of any trust of any other person responsible to the HMO. See also La. R.S. 22:2, 20, 2010, and 2012-15. Finally, the legislature has conferred upon the Commissioner of Insurance the policymaking power to "promulgate such rules and regulations, as may be necessary or proper to carry out the provisions of this Part." La. R.S. 22:2014. Pursuant to La. R.S. 22:2013 F, "[t]he commissioner shall be authorized to issue appropriate regulations to implement an orderly procedure to wind up the affairs of any financially troubled health maintenance organization. " (Emphasis added.) See 37 ADC Pt. XIII, §§ 1305-1307.
Louisiana has a vital interest in the liquidation of insolvent insurance companies which operate in the State. Brown v. ANA Insurance Group, 2007-2116, p. 4 (La.10/14/08), 994 So.2d 1265, 1267 , reh'g denied, (La.11/21/08). Liquidation proceedings are designed to protect creditors, policyholders, and the general public. Id. The obvious purpose and public policy for the provisions on rehabilitation, liquidation, conservation, dissolution, and administrative supervision of HMOs in the Insurance Code is to ensure the HMOs give their enrollees the health care services contracted for, or, if not, to conserve the assets of the failing HMO as much as possible for the benefit of the enrollees.
The public policy reflected by the Louisiana constitutional provisions on insurance and the enabling legislation that has been enacted pursuant thereto reflects an extremely strong public policy to protect the basic health care needs of the people of Louisiana. This is particularly true with reference to legislation enacted to protect the health care of health insurance insureds and HMO enrollees. Lack of good health diminishes the ability of a person to enjoy life and his or her assets.
On October 7, 2002, the trial court judge rendered a judgment in the Louisiana actions that provided, in pertinent part, as follows:
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Commissioner be and hereby is granted all legal and equitable relief as may be necessary to fulfill his duties as Liquidator and for such other relief as the nature of the case and the interests of AmCare's [sic] member, enrollees, subscriber, policyholders, providers and other creditors, or the public, may require, including but not limited to the Receiver's appointment and authorization to prosecute all action which may exist on behalf of policyholders, members, stockholders or creditors of the insurer against any existing or former officer, director or employee of Am Care [sic] or any other person.
See La. R.S. 22:733 B, 22:734, 22:734.1 and 22:736 B and C. This judgment implements the strong Louisiana public policy pertaining to insurance in general and to health care matters in particular. This judgment has not been contested in this appeal.
Because the insurance industry in Louisiana is so pervasively affected by public policymaking and is so heavily regulated, Louisiana law should be applied to an action brought by a Louisiana Receiver and/or the Louisiana Commissioner in a Louisiana court "on behalf of [Louisiana] policyholders, stockholders or creditors," unless for a particular issue the totality of the circumstances in an exceptional instance *369 indicates that the policies of another state would be more seriously impaired than those of this state if the law of that state was not applied to that particular issue. We arrive at this conclusion after considering the following: (1) the laws of Louisiana, Oklahoma, and Texas; (2) the relationship of each of those states to the parties and the disputes; (3) the policies upholding the justified expectations of the parties; (4) minimizing the adverse consequences of subjecting a party to the law of more than one state; (5) the contacts of each state to the parties and the events that gave rise to the disputes; (6) the state in which a relationship between parties was centered; (7) the general policy of each state for deterring wrongful conduct; and (8) the general policy of each state for repairing the consequences of the injurious acts.
After considering La. C.C. arts. 3515, 3542, 3543-3544 and 3547, the following factors are most important in reaching this result. Public policy for regulating insurance in general, and that for regulating health insurance in particular, is state-specific. In an action instituted by a state insurance regulator against a person whose conduct is subject to the state's regulations and/or against those persons who aid, abet, counsel, or procure the person regulated, it reasonably can be expected that the law of the state imposing the regulations will be applied. This is particularly true when a person engaged in providing health care coverage chooses to conduct business operations in multiple states. Cf. Boutte v. Firemen's Fund, XXXX-XXXX, pp. 27-28 (La.App. 3 Cir. 5/10/06) , 930 So.2d 305, 322 , writs denied, XXXX-XXXX, 1484 (La.9/29/06), 937 So.2d 864 ; CXY Chemicals U.S.A. v. Gerling Global General Insurance Co., 991 F.Supp. 770, 777 (E.D.La.1998). Making a choice-of-law decision on this basis minimizes the consequences of subjecting a party to the law of more than one state in each state. Finally, this policy will tend to discourage forum shopping on state-specific issues like insurance. Official Revision Comments — 1991(c) for La. C.C. art. 3515; Marchesani v. Pellerin-Milnor Corp., 269 F.3d 481, 488 (C.A.5 (La.) 2001).
3. Law Applicable in the Oklahoma Case
We will apply Oklahoma law in the Oklahoma case in the same manner that we will apply Louisiana law in the Louisiana case. AmCare-OK was incorporated in and had its principal place of business in Oklahoma. It is alleged that Health Net, AmCareco, and the Oklahoma HMO transacted business in Oklahoma and incurred obligations from activity within that state. The unpaid claims complained of in the Oklahoma case are owing and due in Oklahoma.
A keystone of the Oklahoma legal system is that liability follows tortious conduct and remedy is afforded for every wrong. The Constitution of the State of Oklahoma provides, in pertinent part:
The courts of justice of the State shall be open to every person, and speedy and certain remedy afforded for every wrong and for every injury to person, property, or reputation; and right and justice shall be administered without sale, denial, delay, or prejudice.
OKLA. CONST, art. II, § 6.
The people of Oklahoma have placed regulatory supervision of the business of insurance under the jurisdiction of the Oklahoma Department of Insurance. OKLA. CONST. art. VI, § 22; 36 OKLA. STAT. § 301. The Insurance Department is charged with the execution of all law in relation to insurance and insurance companies doing business in the state. Id. The Commissioner of Insurance is a member of *370 the Executive Branch of Oklahoma state government. OKLA. CONST. art. VI § 1. The Insurance Commissioner is the chief executive officer of the Insurance Department. 36 OKLA. STAT. § 301.
The system for regulating insurance conducted within the state of Oklahoma is state-specific. 36 OKLA. STAT. § 301 et seq. Oklahoma insurance companies "have come to be looked upon as at least quasi-public in nature, subject to state control for the general benefit of not only the policyholders but of the public." Oklahoma Benefit Life Association v. Bird, 1943 OK 103, ¶ 12 , 135 P.2d 994, 997 . Oklahoma considers the insurance industry to be a unique industry in that, unlike ordinary business corporations, insurance is highly regulated by the State. Crain v. National American Insurance Co., 52 P.3d 1035, 1039-40 (Okla.Civ.App. Div. 2, 2002). Regulation of the insurance industry is contained in 36 OKLA. STAT. § 301 et seq. and reflects a strong public policy for protection of the insurance needs of the people of Oklahoma. Finally, Oklahoma has a comprehensive Health Maintenance Organization law. 36 OKLA. STAT. §§ 6901 to 6936.
After consideration of the La. C.C. art. 3515 et seq. factors in the determination of which state's law should be applied, we conclude that Oklahoma's law should be applied to the action brought by the Oklahoma Receiver. Oklahoma is the place of the alleged conduct in the Oklahoma action wherein claims by enrollees, providers and other creditors of AmCare-OK were left unpaid, and Oklahoma is the state in which the relationship between the AmCare-OK enrollees and AmCare-OK was centered. Oklahoma has a strong policy for regulating the insurance industry, deterring wrongful conduct, and repairing the consequences of injurious acts.
The Oklahoma Receiver, jointly with the Louisiana Receiver, filed a consolidated, amended, and restated petition in these proceedings. This pleading does not cite any Oklahoma law. In the Oklahoma Receiver's appellee brief, the only Oklahoma law cited is the statutory law pertaining to the right of the Oklahoma Receiver to act on behalf of Oklahoma policyholders, members, stockholders, and creditors herein. 36 OKLA STAT. §§ 1902, 1903 and 1921.
Louisiana Code of Evidence Article 202 A was enacted by Acts 1988, No. 515, effective January 1, 1989, and provides as follows:
Mandatory. A court, whether requested to do so or not, shall take judicial notice of the laws of the United States, of every state, territory, and other jurisdiction of the United States, and of the ordinances enacted by any political subdivisions within the court's territorial jurisdiction whenever certified copies of the ordinances have been filed with the clerk of that court. (Emphasis added.)
Comments (a) and (b) to Article 202 provide, in pertinent part, as follows:
(a) This Article essentially follows prior Louisiana law.
....
(b) The term "law" as used in Paragraph A of this Article includes common law as well as statutory law thus incorporating all judicial decisions that are authoritative in their respective jurisdictions, and embraces decisions that interpret or apply both the common law and statutes.[ [48] ]
*371 As previously indicated, when construing a law, the word "shall" universally is considered to mean mandatory.
Prior to enactment of Article 202, the issue of judicial notice of the laws of other states was provided for in La. C.C.P. art. 1391, which was repealed by 1988 La. Acts No. 515 § 7. In Gathright v. Smith, 368 So.2d 679, 687 (La.1978), Article 1391 was interpreted as follows:
The first two paragraphs of art. 1391, provide us with the authority to inform ourselves, on our own initiative, and take judicial notice of foreign law, even when the foreign law's applicability has not been called to the attention of the trial court. But see Cambre v. St. Paul Fire & Marine Ins. Co., 331 So.2d 585 (1st Cir.1976), writ denied, 334 So.2d 434 [, 435] ([La.] 1976) (where the foreign law was not cited or relied upon in brief or oral argument). Furthermore, we recognize that the reason often stated for demanding notice in those states which require that the foreign law be pleaded, see Annot., 23 AX.R.2d 1437, 1449, is that without such notice the opponent would not be warned beforehand that the court may take judicial notice of foreign law and might not be able to prepare himself on that law. Respondent in the instant case, although not given notice of relators' intention to rely on California law on the trial level, has been given sufficient opportunity to research the relevant law since the argument was raised in brief in the appellate court. Consequently, we may refer to California law to determine the status of funds derived from the sale of the California property.
See also Mahmud v. Mahmud, 444 So.2d 774, 776 (La.App. 4 Cir.1984); Cambre v. St. Paul Fire & Marine Insurance Co., 331 So.2d 585, 591 (La.App. 3 Cir.1976), writs denied, 334 So.2d 434 , 435 (La. 1976). [49]
In Gill v. Matlack, Inc., 94-2546, p. 3 (La.App. 1 Cir. 10/6/95), 671 So.2d 395, 398 , this Court construed Article 202 as follows:
The worker's compensation insurance policy in this case was issued to C & S Truc

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/1589402. Public record. Not legal advice.