“Will Texas Be Held Legally Liable By Dentists Falsely Accused of Medicaid Fraud – As New York State Has Been?”

The following briefing was sent to the Texas Legislature on February 13:

“Will Texas Be Held Legally Liable By Dentists Falsely Accused of Medicaid Fraud – As New York State Has Been?”

Let’s look at the facts:

1. The New York Daily News reported yesterday:
Headline: “Dentist smeared in Spitzer Medicaid fraud witch hunt wins $7.7 million from former governor’s staff”
Dr. Leonard Morse was pursued by Elliot Spitzer because Morse was one of the top Medicaid billers in the state, his suit claimed. The dentist ended up losing his practice and credibility in the field, and the verdict garnered $1.6 million more than expected.

2. Already in Texas, there is a State Office of Administrative Hearings decision that a large biller of Medicaid for orthodontia did not commit Medicaid fraud or misrepresentation.
An HHSC administrative judge upholding the decision found: “The SOAH ALJ analyzed the evidence from the hearing, including testimony from experts from both sides, and concluded that Respondent’s [OIG/HHSC] experts lacked credibility when compared to Harlingen’s witnesses. One of OlG’s experts had not treated Medicaid patients, and had no familiarity with the score sheet used to determine whether a patient had an ectopic eruption. Another OIG expert, not an orthodontist, did not know how TMHP had interpreted “ectopic eruption.” A third OIG witness, the current Medicaid director, asserted he was not an expert on the issue. He also could not explain why, in 2012, after this case arose, the rule on “ectopic eruption” had been changed. The SOAH ALJ determined that OIG expert testimony carried less weight than that of Harlingen’s expert, who was the former director of the Medicaid dental program for nine years.”

3. OIG/HHSC thinks bankrupting dentists is positive for the State. Per testimony to the House Appropriations Committee on February 4th.
R. Charles Perry: I want to clarify: if we don’t recoup, but if we do determine fraud, we still have to write that check to the feds. Is that a good statement? We don’t actually get the money back from the provider. We still owe the fed for the FMAT part. Is that correct?

Jack Stick: Yes, unless the provider goes out of business.

R. Perry: OK. I mean, realistically, the law is we’ve got to pay it. We may not be able to collect it, but we still owe the amount that we determine to be fraud.

Jack Stick: You know, historically, we’ve not run into that situation because we were […] 28 million dollars. Today, we’ve had significant and expensive discussions with CMS about that. We’re continuing to talk with elected officials on Capitol Hill about that very issue because essentially there is a built in disincentive for states to be effective. Texas right now is the national leader in identifying waste, fraud and abuse. And consequently, we’re taking the lead on this because we have the most to lose. The answer is we’ve not yet had CMS say we’re going to claw back any money, partially because we’ve got this bolus of cases that are working through the system and we haven’t reached a critical point yet.

But secondarily, the providers who are large – we had one provider in the 48 million dollar – 50 million dollar range – they’re in bankruptcy court. So when they’re in bankruptcy court, it wipes the obligation out altogether. Or if they go out of business, even if they don’t declare bankruptcy it wipes the obligation that we have.

4. OIG has only collected $1.8 million from dentists, per an article in a dental publication, yet misleads legislators that millions are there. Again per testimony from February 4th.
R. Longoria: R. Stick, I have a question. How much has actually been recovered?

Jack Stick: We calculate recovery based on actual dollars in the door plus the identified dollars that are subject or liable to recovery. So based on that, the recovery for state fiscal year 2012 is about 996 ½ million dollars. The cost avoidance, which would be the money that we never spent because of some OIG action is about 197 million dollars. I can get you the exact number of dollars that came in the door, but it’s important to note that – and this was a frustrating thing for me to understand fully – we may litigate or we may investigate a case this year and not see dollars for years, or the dollars may trickle in for 10 years. So it’s a little bit difficult to get a hold of an accurate measurement on the success of an investigation based on whether dollars have come in because the dollars from today may be based on 2005 actions. But having said that, we can get you the exact number of dollars in the door.

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