Xerox/Conduent Likely to be Reimbursed by Insurance for Texas Medicaid Fraud Settlement


It appears that Xerox/Conduent is going to come out smelling like a rose financially despite its $235.9 million Medicaid fraud settlement with Texas.

Judge rules against insurers

According to an article in Law360 by Sarah Jarvis (subscription), AIG Specialty Insurance Co. and AIG member Lexington Insurance Co. look like they will have to cover the settlement amount for the company after a Delaware judge’s ruling this week.

The insurance companies wanted to reargue a motion to dismiss Xerox/Conduent claims that the companies were financially responsible for covering the case which initially started with a civil investigative demand brought by the Texas Office of the Attorney General back in 2012.  The judge ruled yesterday that she wouldn’t rehear the arguments.

Xerox/Conduent launched lawsuit against insurers back in March

Xerox/Conduent had launched a lawsuit in March against ten insurers including AIG that they were responsible for covering the actions brought by the state and several dental providers since the insurers had an obligation to defend the company.

The insurance companies argued that the civil investigative demand notification was not a claim per their policies.

Judge Mary M. Johnston ruled in June that she sided more with the arguments of Xerox/Conduent than the insurers despite case law supporting the arguments of both. Hence, the motion to rehear which was decided yesterday.

Ultimately no financial penalty for fired former Medicaid claims administrator

So the company that was responsible for rubber stamping $1.1 billion, according to Law360,  in orthodontic prior authorization requests for Texas Medicaid without ever determining their medical necessity or ever having the trained dental staff in place to do so won’t pay a penny in penalty for their shoddy and incompetent work over eight years.

No admission of guilt obtained by the state

This situation would undoubtedly be different if there had been an admission of guilt from the company in their settlement agreement with the state.

Sadly, the state settled out of a “desire to buy peace and avoid further litigation” for $235.9 million rather than try to recover the $2 billion they said they wanted to get back from the company.

Big government and big business working together?

In a jaded world, one could speculate that the fact that Xerox/Conduent’s insurers would be on the hook for the settlement without an admission of guilt played a significant part in the settlement agreement negotiations with the state.

The state apparently didn’t want to go to court as they had refused to disclose some 17000 emails to Xerox/Conduent during the lawsuit’s discovery process.  Something to hide?

Yes, a jaded view perhaps.

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