Texas Supreme Court Justice Eva M. Guzman delivered her opinion on June 22, 2018, denying Xerox’s request for the court to designate other liable parties in the state’s Medicaid fraud action against the company. Xerox is potentially fully on the hook for the entire $2 billion in dental Medicaid fraud damages claimed by the State of Texas.
The court’s opinion was based on existing Texas statutes relating to liabilities in proportional responsibility. This was clearly not exoneration of alleged abuses by Texas dentists, orthodontists, dental service organizations (DSOs), and mismanagement by the State of Texas itself.
The court found “the Texas Fraud Prevention Act is not amenable to the fault-allocation scheme in Chapter 33 of the Texas Civil Practice and Remedies Code. The act adopts a civil-penalty scheme to deter, punish, and thereby prevent fraud on the Medicaid system. This is not an ‘action for recovery of damages’ subject to appointment under the proportionate-responsibility statute. Chapter 33 is also incompatible with the unique method the Legislature chose to uncover and combat Medicaid fraud.”
Various dentists, DSOs, the State of Texas, Xerox, and the federal government are all embroiled in various lawsuits to recover damages for unnecessary dental proceedures.1,2 Between 2004 and 2012, Xerox was under contract with Texas to authorize Medicaid orthodontic treatments.
Allegedly, Xerox “rubber-stamped” and approved most cases with inadequate oversight and untrained personnel. Also allegedly, dentists and their supervising DSOs quickly recognized the company’s lack of oversight and abused the Medicaid program at an exponential pace. Texas authorities were repeatedly advised of dental Medicaid fraud and abuses over a seven-year period, yet the state took no action during that protracted time frame.
Since the Medicaid program is funded jointly by state and federal matching funds, the federal government is clawing back monies from Texas for its egregious mismanagement of these funds.3
While there is plenty of fault with all parties involved, it currently appears the entity with the “deepest pockets,” Xerox, may be the primary target to recover money defrauded from taxpayers. Disadvantaged patients who were in the process of completing orthodontic therapy with full brackets and banding also suffered, as their care was abandoned in mid-treatment. Many scrambled to find donated services from ethical concerned orthodontists to stabilize cases and remove brackets and wires. Allegedly abusing dentists left the state, clinics closed, and DSOs were sold off and changed title of beneficial ownership.
Unfortunately, dubious dental Medicaid operators in Texas will proclaim this high court’s opinion as vindication for their clinical abuses and cheating taxpayers. In reality, these “bad actors” shame the dental profession and damage the public welfare, as they laugh all the way to the bank.
Texas authorities, from the governor and state attorney general on down, also failed in their mandate as watchdogs over taxpayer money. They failed to enforce statutes relating to the unlicensed and unlawful practice of dentistry by corporate entities, which often was the driver of this form of Medicaid fraud.
These authorities also looked elsewhere as dental Medicaid rules were changed to better facilitate fraud and abuses. For example, the dental term ectopic eruption was amended to include any tooth with a tipping angulation, rotation, or slight degree of malpositioning. Dental industry whistleblowers were continually ignored by state regulators over the seven-year period.
- Dexheimer E. Texas high court say Xerox can’t blame dentists in Medicaid fraud case. Austin-American Statesman Jun 22, 2018. https://www.mystatesman.com/news/state–regional/texas-high-court-says-xerox-can-blame-dentists-medicaid-fraud-case/UI9wpIpLNMSrR4AFCPClgL/?ref=cbTopWidget
- Evans M. Texas supreme court rules Xerox responsible for fraudulent Medicaid dental payments. The Texas Tribune Jun 22, 2018. https://www.texastribune.org/2018/06/22/texas-supreme-court-rules-xerox-responsible-false-medicaid-dental-paym/
- Levinson D. Texas Paid Millions for Unallowable Dental Medicaid Orthodontic Services. US Dept of Health and Human Services Office of Inspector General; Jun 2015: https://oig.hhs.gov/oas/reports/region6/61100048.pdf
Dr. Davis practices general dentistry in Santa Fe, NM. He assists as an expert witness in dental fraud and malpractice legal cases. He currently chairs the Santa Fe District Dental Society Peer-Review Committee and serves as a state dental association member to its house of delegates. He extensively writes and lectures on related matters. He may be reached at email@example.com or smilesofsantafe.com.