Xerox Can’t Blame Dentists in State Fraud Case Rules Texas Supreme Court

The Supreme Court of Texas today rejected an attempt by Xerox/Conduent to point the finger at Texas dentists when it goes to court in an attempt to defend itself from at least $2 billion in damages and penalties stemming from its failed Medicaid orthodontic prior authorization process from 2004 to 2012.

Wanted to make dentists financially responsible for damages

The company was seeking to apportion the blame and the financial responsibility to the dentists who had filed requests and received prior approval from the company for Medicaid orthodontic work from 2004 through 2012.

In 2015, the federal government subsequently found some orthodontic services did not qualify under the State’s Medicaid guidelines for approval.

The Federal Office of Inspector General estimated that Xerox approved $191,410,707 in unallowable prior authorizations requests, and recommended that the State of Texas refund over $133,370,225 to the Federal Government. The State did not contest the audit findings, which means the State is facing the prospect of having to pay at least $133 million to the Federal Government.

The State of Texas Medicaid Fraud lawsuit is looking to Xerox/Conduent for that money, and more.

Alleged egregious conduct

Xerox, now called Conduent, instead of having qualified dental staff review the thousands of prior authorization requests received by the company as the state’s Medicaid claims administrator,  had hired low-level clerical help as “dental specialists” to “rubber stamp” the requests as approved.  Program spending increased exponentially as dentists had been fooled into relying on these approvals as meeting Medicaid medical necessity standards.

Court rules Xerox/Conduent cannot apportion blame to dentists

The Supreme Court found that Xerox/Conduent was solely responsible for any penalties arising from its conduct because the state’s case was filed under the Texas Medicaid Fraud Prevention Act and was not a regular lawsuit in which Texas law would allow the company to share financial responsibility for any damages with other concerned parties.

In legalese, the Court wrote, ‘Chapter 33 [the law that allows defendants to apportion responsibility on others] does not apply to a TMFPA [Medicaid Fraud] action because (1) the statutory remedy does not constitute “damages” subject to apportionment under Chapter 33 and (2) an irreconcilable conflict exists between the proportionate-responsibility statute and the TMFPA’s mitigation and fault-allocation scheme.”

The result is that Xerox will remain the sole defendant in the State’s Medicaid fraud lawsuit, which is scheduled to be tried next spring.  In its latest 10-Q public filing, Xerox stated, “During the first quarter of 2018, the State notified the Xerox Defendants in the litigation discovery process that its claim is in excess of two billion dollars based primarily on the assertion of treble damages and civil penalties per illegal act for almost two hundred thousand purported illegal acts.”

Attorney Jason Ray of the Austin law firm Riggs and Ray, who represents many of the dentists, commented, “The State, the dental providers, Medicaid recipients and the people of Texas trusted Xerox to do its’ job. The State says Xerox totally blew it.

“Worse, the State says Xerox knew it was breaking the law every day that it administered the Medicaid program, and the State says Xerox lied about it from the first day to the day they were fired. This Texas Supreme Court opinion says Xerox stands alone when trying to justify its’ alleged $2 billion fraud, and Xerox can’t try to blame anyone else.”

The decision in full can be read and downloaded below.

But dentists can’t counter-sue the state or Xerox

In another connected case, the court issued a 5-2 ruling that concerned dentists cannot counter-sue the state for its allegedly complicit behavior in this orthodontic fiasco.

The majority held that the state has “sovereign immunity” from any of the dentists’ complaints against the State.  Sovereign immunity means that the state cannot commit a legal wrong and is immune from civil suit or damages unless it gives its consent to be sued.  The dissenting opinion held that the dentists should be able to offset any damages that the State might prove in its case and that there is legal precedence from the Texas Supreme Court itself that would justify allowing the dentists’ complaints to proceed.


Xerox TxSCT decision

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