Most Medicaid Fraud Accusations Are About Recoupment Rather Than Accountability

Medicaid fraud or fraud of any type is serious business, and something TDMR decries. Those low enough to use their position as healthcare professionals to bilk federal and state governments for personal gain that cheats the taxpayer and young underprivileged children out of the care they need are despicable. But it is one thing to allege that a healthcare professional has committed Medicaid fraud and another to prove that allegation.

TDMR began almost nine years ago for that very purpose -- to remind the public, legislators and even dentists themselves that there is such a thing as due process and innocence until proven guilty. Just because the media is braying for someone's blood doesn't mean they are guilty. The one very real lesson we learned is that it is necessary to speak up and refute things that aren't true to preserve one's reputation. Saying nothing means tacit guilt to the public and the press.

Unfortunately, it is still necessary for us to write about this and the harm to reputation and finances that still exists today to larger, successful practices from allegations of Medicaid fraud under the Texas Medicaid Fraud Prevention Act or even the federal False Claims Act.

Someone can say anything, and they can allege anything. A reporter. A government official. Even a former employee. That doesn't make it a fact.

The problem is that these allegations rarely get tested in a court of law due to various chicaneries that push a dental practice or practitioner towards a financial settlement rather than justice or fair play.

Let's look at some of the factors involved:

1. Medicaid fraud has the ring of criminality, but almost all such cases are not criminal

In the public and legislative mind, fraud is fraud. It is a criminal act. But as TDMR has researched and written about, the incidence of criminal charges against dentists for Medicaid fraud over the last eight years is almost zero, according to open records from the Office of Attorney General Medicaid Fraud Control Unit.

Almost all allegations of Medicaid "fraud" are civil in nature, based either on the Texas Medicaid Fraud Prevention Act or the federal False Claims Act and dealt with under administrative law.

To a layperson, this doesn't make sense - a crime is a crime, right? Nope. The Civil Medicaid Fraud division of the Texas Office of the Attorney General is only there to recover funds "wrongfully taken" from the Medicaid program via whistleblowers who get a hefty chunk of any award.

So the stain of criminality is used to extract funds. The state is not on the side of justice or right or wrong but the side of those making such allegations to recover monies.

2. It's only successful practices that get targeted

As Medicaid fraud is really about money, if there is no money in a practice why would anyone or the state pursue allegations of Medicaid fraud? They don't.

Back in January 2012, State Rep. Garnett Coleman had this to say in a legislative hearing on the Xerox/Conduent orthodontic debacle.

"The only thing I say is, that in a world that is becoming somebody is considered guilty before innocent, what we don't want in our program with our providers is that they be considered crooks before they are considered good providers of service to the people of the State of Texas. And when you start using a law enforcement model, unfortunately today people are profiled.

"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."

That's a pretty powerful statement.

3. The individual dentist who provides and bills Medicaid for the service is rarely accused of Medicaid fraud. It is almost always the practice he or she works for that is accused

Of course, there is no money in going after small pocket providers.

4. Dental Medicaid fraud qui tam representation is an advertised legal specialty.

A simple Google search for "Texas dental Medicaid fraud lawyers" will show any number of law firms specializing in and actively looking for qui tam cases against Medicaid dentists.

The public perception of Medicaid dentists as greedy or prone to being fraudsters only helps them.

Indeed, it appears that a number of these firms actively foment this public perception through legislative presentations, papers, websites, using self-proclaimed dental fraud experts and media contacts.

The fact that DMOs report very little Medicaid fraud on an annual basis doesn't seem to matter.

5. Like patent and copyright trolls, some cases are filed to extract maximum nuisance settlements

A copyright or patent troll is a lawyer that goes around filing lawsuits accusing companies of copyright or patent violations based on spurious evidence. The purpose is to extract a lucrative settlement by making the cost of defending the lawsuit as high as possible for the targeted company.

There are various tactics to do this.

For example, according to an American Bar Association online article, "One tactic the trolls used was to place cases in courthouses far removed from where the defending companies are based. For example, a certain federal district court in Texas has been a popular forum for patent infringement lawsuits because of its reputation for judges favorable to patent trolls and the inconvenience it presents to defendants who must travel from either coast."

We're aware of two other tactics in the Medicaid fraud qui tam game. One is to threaten a qui tam lawsuit against one dentist to force that dentist's cooperation in rolling over against another dentist. The other is to find a pliant expert with an impressive title but little actual Medicaid experience to bolster Medicaid fraud claims. Both the expert and the participating dentist are protected by the fact that they will never have to substantiate their claims in a court of law because their purpose is to make the prospect of defense more expensive to force a settlement.

The state aids and abets this fraud. Texas has it rigged under the TMFPA that a person can file a whistleblower lawsuit even though they have no personal knowledge or evidence of any wrongdoing by the provider. It can be an open fishing expedition for audacious lawyers such as in the Lafountain cases that we have written about.

This is why HB 3082 was brought forward in this past legislative session and unanimously passed by the House Committee on Judiciary & Civil Jurisprudence.

6. Settlements are the aim, not going to court to prove allegations or even seek justice

The game is rigged to make the defense of Medicaid fraud allegations so cumbersome and expensive for providers that a settlement is the only possible option.

This is done by more than legal maneuvers. These legal cases can hold up business and financing deals for the Medicaid provider. The bank or other party needs the case settled one way or another before moving forward on the deal or financing. Because going all the way to court can take years, even though the provider is willing to clear their name, the time becomes untenable because of the holdup of these business dealings. So to appease business partners and banks, the provider settles even on unflattering terms to allow their practice to move forward.

We know of one recent case where the providers wanted to go to trial to clear their name but the legal wranglings held up a business deal worth tens of millions of dollars to the practice. What could they do but settle for a few million dollars right now?

7. Lastly, the state likes the money and can crow it is doing something about Medicaid fraud even though there is no finding or admission of guilt

Settlement agreements always state there is no admission of wrongdoing by the Medicaid provider. This doesn't stop qui tam lawyers or the state from crowing that they are mitigating Medicaid fraud or that the defendants were fraudsters.

In one recent settlement, the agreement states that both parties "mutually agree that they will not make any statements or encourage third parties to make written or oral statements or release information that may embarrass, disparage, defame, libel, or slander" the other. This clause did not stop the state from calling the provider a fraudster in a press release nor the relators' attorneys crowing about the settlement on their website.

Attorney General Ken Paxton even did it today in a press release about recovering monies from a pharmaceutical company.  The agreement states there is no admission of wrongdoing.  Read it yourself.

Pretty sad.  How can we ever know the truth?

It's about the money, not justice

In conclusion and in truth, allegations of dental Medicaid fraud are for the most part only a state recoupment or tax on the successful Medicaid practitioner rather than an indictment of fraud.

Again it echoes the words of several state legislators back in 2012 on the orthodontic debacle.

Senator Royce West told a legislative committee that "what we don't want to see; we need to do this, don't get me wrong [go after actual fraudsters], but those individuals who have been providing care, Medicaid dentists, I sure don't want to see us run them out. Then we end up having a shortage of individuals that people can go to. We need to be real sensitive."

State Rep. Garnet Coleman: "... I'm just asking you to remember that these are small businesses. There are people who, I'll say, game the system and quite frankly steal and those folks should be put into jail and we do that. But in terms of those, you know, who have in good faith, moved forward to try to provide the service, I just hope as we go through this, that we are careful about separating the wheat from the chaff."

The system still does not separate the wheat from the chaff and is only meant to recoup funds no matter how spurious the claims or evidence to the harm of successful yet honest providers.

3 Responses

  • So the solution to Medicaid fraud that TDMR proposes is what exactly? Does the editor of this website think that Medicaid patients need no protection from offices that commit fraud? Have you all never heard the term “roundhouse” or “8 pack”? Are you not aware that bonuses (not to mention jobs) given to associates are tied production goals? Do you not realize that dentists actually do intentionally defraud Medicaid? And that some of the biggest offices actually are the biggest defraud machines?

  • No. 7 on your list is the real problem and for the most part I agree this is all about trying to recover money and putting on a display so federal and state government agencies and their appointed leaders can say look what we are doing about fraud. The fact is criminal prosecutors are very reluctant to take on a dental fraud case unless it is absolutely a black and white case of billing for services not rendered. Prosecutors get notierity and promotions based on wins, not losses (again – it’s about money). Most dentists are smart enough to know that if they are willing to commit fraud, it needs to be done in a way that is not difficult to prove. Once you make it about medical necessity versus billing for services not rendered, the criminal prosecutors, civil and administrative prosecutors get very shy about pursuing these cases. OIG is paralized with fear to take action on dentists based on how the orthodontia thing turned out for them, so now all the dentists who abusively steal get a slap on the wrist and continue on. DMO’s are required to send fraud referrals to the OIG in Texas. If OIG doesn’t take any meaningful action on these referrals, how motivated would you be as a DMO to send OIG anything? How many times has OIG taken a dentist to SOAH since the orthodontial cases? I bet none and that’s because they seek settlement by all costs. Administratively, how many times does OIG settle with providers where they have proof that dentists billed for fillings but actually only performed sealants (an extremely common scheme with dentists – both Medicaid and commercial). This can be viewed as billing for services not rendered or upcoding, depending on who you are and what your goals are in the fraud and abuse world. When you “settle” a case like this with a provider and allow him/her to remain as a participating provider, you send a message this is tolerated behavior and worth pushing the envelope. Unless and until dental providers are excluded or terminated from programs and plans, there’s no deterrent factor. It does not have to be fraud to make it clear that receiving payments for abusive billing is not acceptable. If a dentist is criminally convicted, an exclusion is automatic and required, but as I said, those cases are few and far between given the very narrow requirements criminal prosecutors have for taking on these cases. With any provider there is going to be fraud, waste and abuse because it’s too easy to manipulate the system and operate in the gray areas of medical necessity. You have to have motivated and highly skilled lawyers and agency leaders not afraid of taking the heat for taking appropriate action when it’s needed. It isn’t really about the money all of the time either. For some it’s only about the appearance of doing something and never really about justice.

  • As private equity is distorting healthcare, the legal industry is distorting healthcare. And a major reason for this is the approach to Medicaid fraud. Pay and chase is still the norm, because the people assigned to Medicaid fraud are trained in investigation and prosecution. No skills in root cause analysis or process design to prevent fraud. Therefore, fraud is allowed to occur, and almost encouraged by Medicaid funding mechanisms, and the larger the headline amount of the case, the more attention comes from the torts bar. The enforcement-first complex also gets to thrill legislators with landing a big case.

    The wrong question is being asked, and the right question is not answered. Legislators should be asking “how the hell did this get to this level before somebody did something about it?”

    Part of the answer is to prevent frauds, not put them in the hands of the pay and chase crowd and the torts bar.

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