Ex-Xerox Unit Pays $236M To End Texas Medicaid Fraud Row

 In False Claims Act, Recent News

Texas announced Tuesday it has reached a $235.9 million agreement with Xerox Corp. and some of its former subsidiaries over allegations a former unit of the company processed orthodontic claims for Medicaid patients that weren’t medically necessary, marking the largest Medicaid-related settlement in the state’s history.

A May 2014 suit filed by the state alleged a Xerox unit, then known as ACS State Healthcare LLC, signed off on $1.1 billion in claims for orthodontic services, a “substantive percentage” of which were allegedly paid in violation of Medicaid policies. The former subsidiary, now known as Conduent Inc., will pay the settlement amount, according to a copy of the agreement.

According to the Texas attorney general’s office, claims were being approved for kids’ braces when, under Texas law, only patients with acute cases posing a health risk receive coverage under Medicaid. The companies are alleged to have approved payments for cosmetic orthodontics that were not medically necessary.

“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,” the state’s Attorney General Ken Paxton said. “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.”

According to court documents, Texas said the Xerox defendants lied about the qualifications of the company’s personnel reviewing orthodontics reimbursement requests. The Lone Star state accused the companies of falsely reassuring the state health department that each request for orthodontia was properly reviewed by a qualified person.

According to the settlement, the state terminated its relationship with Xerox State Healthcare, saying its work, “resulted in substantial fraud by unscrupulous orthodontic providers who exploited a lax prior authorization process by seeking and receiving Medicaid reimbursement for orthodontic services that the providers knew, or should have known, were not medically necessary.”

The fight over blame for the payments made its way to the Texas Supreme Court. In June 2018, the state’s high court said Xerox can’t designate the orthodontists as “responsible third parties” under Chapter 33 of the Texas Civil Practice and Remedies Code, forcing the company to potentially face sole liability for approving the claims.

“This is not an ‘action for recovery of damages’ subject to apportionment under the proportionate-responsibility statute,” the Texas Supreme Court said in 2018. “Chapter 33 is also incompatible with the unique method the legislature chose to uncover and combat Medicaid fraud and, therefore, does not apply to actions under the [Texas Medicaid Fraud Prevention Act].”

The settlement is the end of a process that started in 2012, when the state launched its investigation into Xerox’s actions.

Conduent CEO Ashok Vemuri said in a statement, “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.”

The settlement will be paid over the course of a three-year period. According to the suit, ACS State Healthcare administered claims for Texas from 2004 until 2012.

A statement from Xerox noted that it will not be making any payments under the settlement agreement.  https://www.law360.com/governmentcontracts/articles/1130339/ex-xerox-unit-pays-236m-to-end-texas-medicaid-fraud-row?nl_pk=a3467962-dd33-4efa-a9fc-bff3c03255e8&utm_source=newsletter&utm_medium=email&utm_campaign=governmentcontracts

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