Xerox Corporation and several of its former subsidiaries have agreed to a $235.9 million settlement with the Texas Attorney General’s Office to resolve claims that the companies committed Medicaid fraud when they approved requests for orthodontic work that did not meet the requirements under state regulations.
In an announcement issued by Texas Attorney General Ken Paxton’s office, the state said the settlement represents the largest single resolution in a case filed by the AG’s office for Medicaid-related claims.
The settlement marks the resolution of a longstanding legal battle that began in 2012.
Xerox and its companies, including Conduent Inc., 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 met strict Medicaid program requirements are allowable. For example, the Medicaid program does not pay for braces for cosmetic purposes.
The AG’s office determined that employees of Xerox, Conduent and other affiliates rubber-stamped orthodontic prior authorization requests without assuring the required review of each request by qualified clinical personnel.
As a result, the state said, expensive, 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,” Paxton said in a statement. “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 close cooperation and support of the Texas Health and Human Services Commission in helping his office reach the settlement.
Gibson Dunn partner Rob Walters, who led the defense for Xerox, was not immediately available for comment. Xerox was also represented by Eric Nichols of Butler Snow and Andrew Weber of Kelly, Hart & Hallman and Austin lawyer and lobbyist Mike Toomey.
Lawyers for the state included Deputy Attorney General for Civil Litigation Darren McCarty and Texas HHS Chief Counsel Karen Ray.
The state launched its formal investigation into Xerox in April 2012, and filed its lawsuit against Xerox and its subsidiaries in May 2014. The case worked its way up the appellate courts, and last June, the Texas Supreme Court ruled that Xerox was responsible for its conduct and could not deflect its liability by blaming the dentists who submitted the prior authorization requests.
According to lawyers familiar with the case, the settlement is far lower than the $2 billion the state originally sought against Xerox when it filed the lawsuit in 2012.
You can read The Lawbook’s previous coverage on that decision here.