Record Settlement Resolves Texas Orthodontic Medicaid Fraud Case

Dentistry Today


Xerox Corporation and several of its former subsidiaries including Conduent Inc have agreed to a $235.9 million settlement with the State of Texas over a period of three years to resolve a lawsuit brought under the Texas Medicaid Fraud Prevention Act (TMFPA) and other grounds regarding the processing of prior authorization requests by dentists to deliver orthodontic services to Medicaid patients. The announced settlement represents the largest single resolution in a case filed by the Texas attorney general’s office for Medicaid-related claims.

Xerox and its companies were responsible for reviewing and approving or denying requests by Medicaid providers to deliver orthodontic services between January 2004 and March 2012. Under Texas law, only those requests that meet strict Medicaid program requirements are allowable. The Medicaid program does not pay for braces for cosmetic purposes.

The attorney general’s office determined that employees of Xerox, Conduent, and related companies rubber-stamped orthodontic prior authorization requests without ensuring the required review of each request by qualified clinical personnel, which violated the companies’ responsibilities. As a result, the attorney general’s office reports, expensive and taxpayer-funded orthodontic work was performed on thousands of children who either didn’t meet the Medicaid standard for braces or didn’t require treatment.

“Misconduct by employees of Xerox and its related companies compromised the integrity of the Medicaid program, the very program Texas hired the Xerox defendants to safeguard through the administration of a proper prior authorization review,” said Texas Attorney General Ken Paxton. “We’re proud of this recovery of taxpayer money. My office is committed to ensuring that Medicaid dollars are preserved for those who need it most.”

Paxton credited the close cooperation, support, and assistance of the Texas Health and Human Services Commission, which runs the state Medicaid program, for helping his office achieve a final settlement.

The settlement is the culmination of investigative work and litigation by the attorney general office’s Civil Medicaid Fraud Division. In April 2012, it launched a formal investigation into Xerox. In May 2014, the office filed a lawsuit against the Xerox defendants. Last year, the Texas Supreme Court ruled that Xerox was liable for its conduct and could not deflect its liability by blaming the dentists who submitted the prior authorization requests in the first place. 

Though the settlement with the Xerox defendants is final, the attorney general’s office still has pending litigation against dental and orthodontic providers who allegedly committed unlawful acts under the TMFPA in connection with their requests for reimbursement for delivering orthodontic services. Since 2000, the Civil Medicaid Fraud Division has recovered more than $2 billion for taxpayers under the TMFPA.

Conduent notes that these claims relate to two previous contracts supporting Texas’ Medicaid program and that they relate to the 2004 to 2014 time period, when the company was owned by predecessor companies. In the settlement agreement, Conduent denied any improper actions occurred during the performance of the two contracts.

“We are pleased to put this legacy issue behind us. This settlement provides clarity on the financial impact, and we have sufficient liquidity to address it,” said Ashok Vemuri, CEO of Conduent. “Texas remains an important client for us, and we are focused on continuing to bring value to our client and its citizens.”

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