Incorrectly Billed $68 Fee Led to $12 Million Malouf Judgment, Not Medically Unnecessary Treatment

More information has surfaced regarding the almost $12 million summary judgment recently obtained against Dallas orthodontist Dr. Richard Malouf by the Office of the Attorney General for his practice’s Medicaid billings from 2007 to 2011. 

Background

For the record, Dr. Malouf founded All Smiles Dental Centers in 2002 and expanded the practice to 12 clinics around Dallas by 2010. The chain was serving some 60,000 Medicaid patients in 2012. He sold 72% of the company to Valor Equity Partners in 2010. In May of 2012, the chain went into bankruptcy and was ultimately bought in 2013 by South Texas Dental. 

$68 fee to blame

Here is the information TDMR obtained that came from court documents found below:

  1. The OAG agreed that orthodontic services provided to Texas Medicaid patients by All Smiles were all done by properly licensed orthodontists.
  2. The orthodontic services were pre-approved by the state’s agent, TMHP/Xerox/Conduent. 
  3. All Smiles billers sometimes incorrectly submitted requests for payment for procedures under Dr. Malouf’s provider number.
  4. Apparently, these billings were for a $68 fee that All Smiles collected from TMHP/Xerox/Conduent when its dentists periodically adjusted braces per TMHP requirements.
  5. It appears from the judge’s order that the fine levied against Dr. Malouf was $5000 per violation (1,842) plus three times the amount that was billed and collected—or a whopping 74 times the $68 adjustment fee
  6. The OAG was seeking $20.1 million from Dr. Malouf for 3,711 acts. The judge ruled he was liable for 1,842.
  7. Lawyers for Dr. Malouf had argued that the over $10 million civil penalties awarded against him personally violated the Constitution’s 8th Amendment prohibition against excessive fines.
  8.  The OAG has sought civil penalties from Dr. Malouf amounting to more than 34 times the total amount of payments the state made to All Smiles (not Dr. Malouf).

No need to prove treatment fraud

Ouch. This billing “gotcha” eliminates the need of the state to prove medically unnecessary fraudulent orthodontic services were delivered, which has been the chief accusation against Dr. Malouf for years and destroyed his reputation (the reason he attempted to sue media and others).

Case not over

In reference to the press release sent out by the Attorney General about the judgment, Law360 quoted Dr. Malouf’s lawyer Jason Snell as saying, “it is a completely inaccurate statement to tell people in the state of Texas that the Office of the Attorney General has recovered any money … It’s an interlocutory order issued by a district judge. It certainly doesn’t represent a recovery of any amount of money by the state of Texas at this point in the litigation.”

Law360 also provided this background: “Texas joined the case against Malouf in June 2012, after whistleblowers Dr. Christine Ellis and Madelayne Castillo, who formerly worked for Malouf at his clinics, brought their claims, according to court documents. They allege Malouf billed Medicaid for millions in services that were performed by a different doctor or not performed at all, or otherwise incorrectly billed.”

Financial success in Texas Medicaid is bad news

House Representative Garnet Coleman, although he wasn’t talking about Dr. Malouf, at a hearing in 2012 on this matter said:

“My father was a Medicaid provider. They put him in the newspaper because he just happened to be serving the women who were poor in the area where we lived. And because he wanted to serve them, he thought it was important that they had good OBY Gen services. He was put in the newspaper because he actually made some money out of it. But the deal was that he was actually a good doctor and they chose him. See that’s the deal and I just don’t want to see that we go down a road of immediately considering somebody a crook because they do a lot of the service.”

The moral of the story for Medicaid dentists is that “the state has no statute of limitations, and it is always hungry to recoup Medicaid dollars —even for services that it admits were pre-authorized by its agents and properly delivered by licensed dentists.”

2020 2 21 State of Texas's MPSJ
2020 3 30 Malouf's Response to State's MPSJ

 

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