Dental Practice Victimized by OIG Actuary Should Have Settled Case for $41,000 not $323,000

Former HHSC Inspector General Doug Wilson
Former HHSC Inspector General Doug Wilson

The story about Dr. Rachel Trueblood settling in October 2014 with the Health and Human Services Commission Office of Inspector General for $39,000 after the agency was demanding $16 million in Medicaid overpayments is well-known.

However, the story of another dental practice and how it got burned by OIG for several hundred thousand dollars after this settlement is not known. But today it is going to be told.

OIG actuary “cooking the books” in Trueblood case

After the Trueblood settlement, it became public knowledge that OIG senior actuary Brad Nelson had fabricated the “random sample” and the extrapolation data used to come up with the $16 million figure. OIG, unknown to anyone else at the time, offered to settle the case based only on the charts it actually audited because of Nelson’s extrapolation work. OIG fired Nelson and the Texas Rangers are still supposed to be conducting a criminal investigation into this fiasco. Nothing has yet been heard.

Other providers want to know if actuary worked on their cases

At the time, lawyers for other dentists and providers under investigation became worried that other overpayment amounts had also been determined by Nelson and they wanted to know from OIG. However, OIG was tight lipped about the breadth of Nelson’s actions and continued to keep providers on payment hold even though it knew the statistical work in at least 18 cases was deeply and irreparably flawed.

Former IG Doug Wilson refuses to make public list of affected providers…

House Human Services Chairman Richard Peña Raymond tried to assist and requested a review of all Medicaid cases involving Brad Nelson from then-Inspector General Doug Wilson. However, Wilson wanted the information kept secret. He made Raymond sign a non-disclosure agreement before he let Raymond see the list of Medicaid providers that Nelson had touched.

But Wilson says extrapolated results won’t be used

Wilson, in response to other demands for information about Nelson’s work, wrote an email to legislators, saying that his agency would not use Nelson’s work to prosecute or settle other cases and that he would notify those concerned.

It appears that this was not true.

Dental practice settles for $323,000 without being told OIG actuary created $4 million extrapolation

Two months after the Trueblood settlement, OIG offered to settle another case with Westmoreland Dental for $323,000. This was the amount that OIG had collected from its “credible allegation of fraud” payment hold on the Westmoreland practice. OIG had been demanding $3.8 million in overpayment.

The settlement offer had appeal as it was less than 10% of the original demand and the money would come entirely from what had already been withheld. It would end the investigation and the practice could get on with serving its clients.

So Westmoreland took the deal and settled the case.

But what Westmoreland didn’t know and what OIG did not reveal at the time it made its settlement offer was that Brad Nelson was OIG’s statistical expert. It was Nelson who had selected the random sample and extrapolated the nearly $4 million overpayment allegation in Westmoreland’s case.

The attorneys for Westmoreland were never told but afterwards found out. OIG later admitted that the Westmoreland case suffered from the same extrapolation problems that had gutted the case against Dr. Trueblood.

Case should have been settled for $41,000

An attorney representing Westmoreland told TDMR that if OIG had not relied on Nelson’s extrapolation, the total amount the practice would have been responsible for would have been at most $41,400.

So by deceitfully continuing to use Nelson’s bad math, OIG extracted $280,000 more than they could possibly have proven in court.

A sad state of affairs and one hopefully being corrected by new Inspector General Stuart Bowen.

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