The Texas Attorney General filed a lawsuit on Friday against Xerox, alleging that one of the company's subsidiaries allowed dentists to over-bill for, potentially, hundreds of millions in questionable Medicaid dental work.
Also Friday, the Texas Heath and Human Services Commission (HHSC) cancelled its Medicaid contract with Xerox.
Beginning in 2011, an investigation by News 8's Byron Harris revealed that Texas was paying out more for Medicaid dental services than several other states combined. The investigation also showed that a company called Texas Medicaid Healthcare Partnership (TMHP), a Xerox subsidiary, only had one dentist approving thousands of Medicaid claims statewide.
State Sen. Jane Nelson (R-Flower Mound), who spearheaded reforms of the Medicaid dental program this past legislative session in response to WFAA's reporting, lauded HHSC's decision to sever ties with Xerox.
'The agency absolutely made the right call to hold this contractor accountable and recover these taxpayer dollars,' she said in a statement Friday. 'We entrusted the contractor to be responsible stewards of our taxpayer dollars. That trust has been broken, and we want our money back. Moving forward, we must closely monitor whatever entity assumes this important role.'
Earlier this month, an investigation by our content partners at the Texas Tribune found that the state continued to use Xerox to oversee its Medicaid claims despite allegations of mismanagement. In fiscal year 2013, HHSC paid $168 million to Xerox for its services.
In a statement Friday, Xerox said it would vigorously defend itself in court.
'Unfortunately, this misdirected lawsuit focuses on Xerox, rather than on the dentists who took advantage of the program,' the statement said. 'We have never engaged in fraudulent activity and always operated with complete transparency.'
According to the AG's lawsuit, filed Friday in Austin, taxpayers spent about $1.1 billion from 2004, when Xerox started its contract with the state to oversee Medicaid dental claims, to 2012, when Texas shifted Medicaid dental benefits to managed care.
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,' the suit states.
Requests for reimbursement for orthodontic work, the suit states, were 'routinely 'rubber-stamped' by Xerox employees without proper review.'
'Xerox permitted an unprecedented loss of Medicaid funds to predatory and unscrupulous dental providers,' the lawsuit states.
Dr. Kyle Janek, Texas Health and Human Services Executive Commissioner, said Friday that the state plans to recover money from 'fraudulent claims' from 'all parties involved.'
'Dentists were putting braces on children who clearly didn't meet the Medicaid standard for that care, and Xerox didn't have the processes in place to review those cases before paying them,' Dr. Janek said.
In its statement Friday, Xerox said it operated in 'good faith' and designed an oversight program with the state's blessing.
'The entire program Xerox implemented was designed by HHSC,' the company said. 'Xerox received HHSC approval on each of its processes and Xerox also provided monthly reports to HHSC from the beginning of the program and continues to do so today.
'Xerox has always collaborated with HHSC to ensure the integrity of the state's Medicaid system since the contract was first awarded in 2003, then re-awarded in 2010 and extended in 2012.
'While we are certainly disappointed HHSC has filed suit, we're committed to a smooth transition of responsibilities to ensure no disruption of services to Medicaid beneficiaries and the providers who care for them.'