Back in February, the Texas Office of Attorney General and Xerox/Conduent settled the state's longstanding lawsuit against the company for $235.9 million. The original lawsuit under the Texas Medicaid Fraud Prevention Act alleged that Xerox/Conduent had committed Medicaid fraud for its lax orthodontic prior authorization process which used personnel such as high school graduates and former janitors to review and approve the medical necessity of hundreds of millions of dollars in requests primarily from 2007 to 2012.
The state knew about Xerox/Conduent's conduct as early as 2008 but did nothing about it until it fired and brought suit against the company in May 2014.
No admission of wrongdoing or penalties
The settlement contained no admission of wrong-doing by the company and appears to be primarily a settlement on breach of contract allegations rather than Medicaid fraud as there were no penalties. This happy circumstance will likely lead to Xerox/Conduent's insurers reimbursing the company for the settlement.
Qui Tam relators want large settlement
One niggly detail arising out the settlement is the dispute over qui tam relators and how much they should be paid, if anything.
A group of such relators and their lawyers claim they should get 15 to 25% of the settlement along with attorney fees since they brought qui tam cases forward against Xerox/Conduent in 2012. The OAG even acknowledged their status as relators via letters sent to them.
Then, a johnny-come-lately was relator Linda Reed. She argued that she was the rightful relator if anyone was because she informed the state back in 2008 of the problems with the Xerox/Conduent. She only wanted 5% in compensation.
No relator is qualified now
Now apparently, the state is backing out of paying anyone anything as a relator.
In a motion in July, the state said that it "will contend that each of the Remaining Claims is without merit under the TMFPA and other applicable law and must be denied."
This is because "the Remaining Claims ... are different from the State's underlying cause of action in both substance and form. The Relators' and Ms. Reed's Remaining Claims do not allege a TMFPA unlawful act, and seek neither traditional damages nor TMFPA civil remedies but rather a share of the Settlement Proceeds. The Remaining Claims do not concern whether the Defendants violated the TMFPA, but rather: (1) the roles played by the Relators and Ms. Reed in uncovering and reporting fraud; (2) whether the information provided by the Relators and Ms. Reed was already known to the State at the time it was reported; (3) how their respective reports and disclosures impacted (if at all) the State's enforcement action against the Defendants; and (4) what role (if any) the Relators and Ms. Reed played in the litigation against the Defendants."
Oddly, the state was apparently going to settle with the early relators but was balking at the amount. With the introduction of Ms. Reed's claim into the mix, everything has changed.
Intervention caused change
Once again it is sad that it took the intervention of a private party to get the state to act appropriately.
In our view, 2012 is way after the fact for any relator to get any money. After all, Byron Harris, the WFAA reporter blew the whistle on the company in 2011 when he confronted Xerox/Conduent dental director Dr. Jerry Felkner in the company's Austin parking lot.
So why was the state even considering these other relators?