Texas OAG Changed Its Billion Dollar Medicaid Fraud Lawsuit Against Conduent to Help Company Defraud Insurer, Media Reports

The Houston Chronicle broke a bombshell story today (paywall, unfortunately). This ortho story still has legs.

OAG assisted company they were suing to defraud insurer

The Chronicle reported that the Office of the Attorney General had secretly made last-minute modifications to its lawsuit against Conduent, the remaining entity of the ACS/Xerox/Conduent trilogy that managed Texas dental Medicaid from 2004 to 2012, at the company's request, knowing that this would assist the company to defraud its insurer to help pay for its Texas settlement over the Great Texas Orthodontic Debacle.

The settlement was reached back in 2019.

Jury found Conduent defrauded insurer

This arrangement became public two weeks ago when a jury in Delaware found Conduent guilty of defrauding the insurer AIG over the settlement agreement.  The evidence apparently showed that Conduent had requested that the OAG include charges of breach of contract and negligence in the state's lawsuit against the company just before the parties settled so Conduent's insurance provisions would kick in.  The result left AIG, the insurance company, on the hook for tens of millions of dollars. AIG smelled a skunk and took Conduent to court and won.  Conduent is appealing.

The upshot of the Chronicle article is that OAG officials didn't care if AIG was defrauded as long as they got their money.

"Texas was seeking $2 billion. Conduent denied it committed fraud, but it had reason to avoid risking a bad verdict at trial. The federal government prohibits companies convicted of fraud from contract work; a jury finding against it would jeopardize  Conduent’s business in other states. The company entered a round of intensive negotiations with the attorney general’s office in late 2018, legal documents from the Delaware case show. With AIG already having denied its liability insurance claims, Conduent needed the foundation of the case against it to fundamentally change if it wanted to collect. And for that it required an assist from Paxton’s office." 


"[Raymond] Winter, the assistant attorney general, suggested that was his understanding, as well. Conduent “indicated to the state that if the state amended its pleadings, it would be helpful to [Conduent] in their efforts to recover on their insurance claims,” he wrote in response to lawyers’ questions about the deal. Texas had no intention of ever pursuing those charges, he added. But by late January, when Conduent said it was the only way it would agree to settle the case, the attorney general’s office agreed to help, documents show. In a sign of the agency’s active involvement in the deal, AIG’s lawyers pointed out how the two supposedly opposing sides worked closely together throughout January 2019, sending drafts of the new petition back and forth to hone the wording Conduent sought. Paxton announced a $236 million settlement less than a day after the new petition was filed, proving that it “did nothing except give Conduent the opportunity to hand it to insurers,” AIG attorney Michael Carlinsky said during the trail [sic]."

State-assisted fraud is okay if state gets money

While the jury in the AIG case didn't make a finding on whether the OAG and Conduent colluded to defraud AIG, according to the article, it is clear that state officials didn't care if someone else got defrauded as long as the state got its money.  In fact, Jack Stick, former disgraced chief counsel for HHS and OIG deputy director for enforcement said so when asked for comment for the Chronicle article.

“The state has an obligation to taxpayers to be a good steward of their money,” he [Stick] said.“When you’re settling a case like this, everything is on the table. Where Xerox gets the money is not the state’s concern."

3-year rule and TMFPA make sense now

Makes sense, doesn't it?  That's why the OAG backs scofflaws with no personal knowledge or evidence of fraud in qui tam cases against Medicaid dentists.  That's backing a fraud, isn't it? The Texas Medicaid Fraud Prevention Act as currently legislated gets the state a financial return even if unethical. Fits the MO (modus operandi).

The whole of the Great Texas Orthodontic Debacle was apparently a fraud run by the state.  It fits the MO too.  Accusations of provider fraud against Medicaid dentists and orthodontists were used to shield the state and HHSC so no one would find out state officials had secretly known since 2008 that ACS/Xerox/Conduent was using high school graduates and former janitors to rubber-stamp all those orthodontic prior authorizations. State officials like then-dental director Linda Altenhoff knew it and misled dental providers.  Her reward - vice presidency at MCNA.

You don't have to wonder why there is a 3-year rule.  Unethical but it's about the money, stupid.

5 Responses

  • Why is TDMR so resolute in steering blame for the failed orthodontic policy and the implementation/enforcement of that policy solely on Linda Altenhoff? I’m not excusing or defending anything that Altenhoff did or did not do, but Altenhoff was not in a position to correct or change how TMHP performed the prior authorization review. In fact, I believe testimony showed Altenhoff did try to bring this to the attention of the State staff who could do something. If TDMR is going to decimate someone’s name, why do you omit the two people, and the only two people, who absolutely had the power to do something (and did nothing). That’s Billy Milwee and Jennifer Stansbury. They had exclusive say over Medicaid policy and the contractor. Milwee is now collecting a big state pension and the head of a consulting firm and Stansbury was “relocated and hidden” in the bowels of OIG still collecting a six figure salary so she could eventually collect that same big State pension and more than likely join Milwee later at his consulting firm. No matter what testimony is on record the truth is Milwee and Stansbury knew those orthodontic prior auths were flying through with no medical review, but they had no decency to try and do the right thing.

  • The ‘state’ that TDMR refers to as if it were a top down machine with a handful of all knowing individuals running the whole show is in actuality a massive bureaucracy. Even if ‘the state’ secretly knew about the problems within ACS, that in no way makes it ok for dentists to decide that means they hold no responsibility for submitting honest HLD forms. It is unethical to lie – and that is what reporting 12 ectopically erupting teeth on every single HLD form is – a lie. Even a 6th grader could have known that scads of HLD forms with the same exact entry for every single patient seems suspicious. Yes ACS was derelict and in breach of contract and complicit with the fraud. But there are a whole lot of dentists who knew what was going on and ran as much fraud through the system as they possibly could.

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