Almost 15 years ago, on May 13, 2011, WFAA’s Byron Harris uttered the famous phrase, “Nobody has ever died from crooked teeth,” which ushered in the Great Texas Medicaid Fraud Debacle.
To think that today, in 2026, TDMR would still be writing about this is almost inconceivable. Yet several legal actions are still progressing, and we may be writing about them for some time yet.
Xerox whistleblower court battle
This past week, lawyers from the Office of the Attorney General told a state appellate court why three individuals who filed whistleblower claims in the Xerox case in 2012 should not receive $48 million out of the $236 million Medicaid fraud settlement the state obtained from Xerox in 2019. TDMR agrees.
Let’s outline the reasons.
Byron Harris ambushed then-ACS/Xerox dental director Dr. Jerry Felkner in the ACS parking lot, shown on WFAA on August 25, 2011. Harris reported:
“Orthodontic treatments are authorized by ACS/Texas Medicaid & Healthcare Partnership (TMHP), a private contractor in Austin. The dental director of TMHP is Dr. Jerry Felkner, a dentist. Records indicate that if state regulations were followed, Felkner personally approved 18,898 children under 12 years of age for braces under Medicaid last year. The under-twelve group requires special review because children that age may not yet have their permanent teeth. In addition to the under-12 group, TMHP approved another 60,000 children over 12 for orthodontic treatment last year… News 8 has tried to interview Dr. Jerry Felkner for weeks. He did not return our calls. In a parking lot outside TMHP facilities in Austin, Felkner refused to be interviewed. He drove away in his pickup truck saying he was on his way out of town.”
Even before that broadcast, concerns about ACS were not secret.
A former ACS/Xerox employee who worked in the dental prior authorization quality assurance division from 2005 to 2007 wrote two emails to Senator John Cornyn. According to a later lawsuit, Senator Cornyn’s office sent a letter to HHSC on February 2, 2007, requesting a response. HHSC acknowledged the concerns and opened an investigation. On February 15, 2007, HHSC assured the Senator’s office it would “vigorously monitor ACS’ performance” and would be “investigating” the matter. That investigation led to a formal published OIG audit issued in August 2008. In 2013, HHSC employees referred to her internally as “the Whistleblower.”
By 2008, the state knew there were structural issues with the ACS prior authorization system. By 2011, the approval volume and the role of ACS/Xerox were on television. Congressional hearings followed. Legislative reforms followed.
Hired to go after providers, they now come for OAG
It is karma that the lawyers now representing the 2012 relators — Waters & Kraus and Jim Moriarty — are the very same lawyers the Office of the Attorney General hired to represent the state in the 2015 SOAH case against Antoine Dental Center of Houston. That case was lost. The OAG paid those lawyers approximately $250,000 for their services.
Today, those same lawyers are seeking up to $48 million from the Xerox settlement.
Bam.
Medicaid debacle should never have occurred
For years, the enforcement spotlight focused heavily on dentists, even as the structural failures within the ACS/Xerox orthodontic prior authorization system were known, documented, and politically inconvenient. If the state had confronted that systemic breakdown directly and transparently in 2008, this fourteen-year odyssey might have ended very differently.
Instead, the state now finds itself arguing against a multimillion-dollar whistleblower payout tied to a contractor relationship it long understood was problematic.
And it may cost taxpayers another $48 million.
The public always pays.