AUSTIN (CN) - Texas claims in court that a Xerox subsidiary that handled Medicaid dental claims approved millions of dollars in illegal and medically unnecessary claims.
Texas sued Xerox Corp. and its subsidiaries Xerox State Healthcare LLC and ACS State Healthcare LLC, in Travis County Court.
Xerox was the state's Medicaid contractor from Jan. 1, 2004 until March 1, 2012. Texas Medicaid spent $1.1 billion for orthodontic services under the program during that time. A "substantial percentage" of the claims violated Medicaid policy, Texas says in the lawsuit.
"Xerox permitted an unprecedented loss of Medicaid funds to predatory and unscrupulous dental providers," the 23-page complaint states. "Although a comprehensive damage estimate has not been completed, initial reviews of those expenditures indicate that a substantial percentage was paid in violation of Medicaid policies, policies Xerox repeatedly assured Texas it was enforcing. Additionally, because of its misrepresentations, Xerox was paid tens of millions of dollars for services it was, in fact, not performing."
Texas claims that contrary to Xerox's assurances, it failed to adequately review the prior authorization requests and routinely rubber-stamped them.
"Xerox maintained that dental director review was not required by the contract, only staffing by 'medially knowledgeable analysts,'" the complaint states. "Xerox made that representation, knowing that, in fact, none of the clerical personnel processing orthodontic PA requests were medically knowledgeable. Xerox never implemented a process to sample for and confirm compliance with Medicaid policy and/or the documentation of medical necessity in applications approved by its personnel." Orthodontic services generally are not eligible for coverage under the Medicaid program, Texas Attorney General Greg Abbott's office said in a statement.
"Only the most acute cases where orthodontic disfigurement poses a health risk to a patient are eligible for Medicaid coverage," Abbott said. "The Medicaid program does not cover cosmetic orthodontics."
Xerox will vigorously defend itself against the lawsuit, the company said in a statement Friday.
"Unfortunately, this misdirected lawsuit focuses on Xerox rather than on the dentists who took advantage of the program," Xerox said. "We have never engaged in fraudulent activity and always operated with complete transparency."
Xerox said its work was always performed in good faith and that it provided the Texas Health & Human Services Commission monthly reports. It is disappointed that the commission decision to replace it as Medicaid administrator, as well.
"It has always been and continues to be our objective to reach a resolution with HHSC and the state on their concerns, and hopefully we can find a path forward to attain a reasonable result to address our difference," Xerox said. "While we're disappointed in this development, Xerox will continue to serve disadvantaged and underserved Medicaid beneficiaries in Texas during the transition."
Texas seeks actual and punitive damages and injunctive relief for violations of the Texas Medicaid Fraud Prevention Act. It is represented by Assistant Attorney General Raymond Winter, Chief of the Civil Medicaid Fraud Division in Austin.
In February, seven dentists separately sued ACS
in Travis County Court. They claimed ACS employed just one dentist to review prior authorization requests, and that such disastrous understaffing resulted in dentists being accused of fraud for working without prior authorization.
One plaintiff, Dr. Paul Dunn, DDS, claimed his dental practice was crippled when the Texas Office of Inspector General conducted audits that concluded that "most, if not almost all" of prior authorization requests deemed medically necessary from 2009 to 2012 were not "evaluated" at all by ACS.
"It is now known that ACS failed to employ adequate medical professionals for staffing and managing the orthodontic prior authorization responsibilities," Dunn's complaint states. "ACS employed only one licensed dentist from 2004 to 2011, which was far short of the manpower necessary to handle the review of tens of thousands of orthodontic prior authorization requests every year. ACS could not reasonably have expected to handle such a workload by employing only one dentist."
The dentists claim that the unqualified specialists were a breach of ACS' contracts in place and of the Dental Practice Act.
"It is believed these unlicensed ACS 'specialists' rendered tens of thousands of prior authorization approvals/medical opinions in violation of Texas law," Dunn's complaint states. "ACS was paid by the state for each prior authorization decision that was made. It is believed that ACS employed unlicensed 'specialists,' rather than licensed Texas dentists, as a profit-generating measure."