Justice for Medicaid dentists and orthodontists, whose lives, reputations, and practices were ruined in the great Texas Ortho Debacle, appears to be coming—slowly, but surely.
Legal losses continue to mount for Conduent State Healthcare LLC, spun off from Xerox in 2017 and formerly called ACS Healthcare Services. This is the company that, from 2004 to 2011, hired high school graduates and former janitors to add up HLD scoring sheets and rubber-stamp thousands of prior authorization requests for Medicaid orthodontic treatment. These authorizations led to the state accusing the dentists of Medicaid fraud. Now, Conduent can no longer hide behind the Texas government’s coattails and claim immunity from lawsuits brought by dentists over the company’s conduct—an appeal they hoped would result in the dismissal of all lawsuits against them.
Appeals court decision comes out
This week, the Texas Third Court of Appeals issued its judgment: Conduent cannot evade the damages lawsuit brought by M&M Orthodontics, PA, Dr. Scott Malone, DDS, and Dr. Diana Malone, DDS, of San Antonio by claiming immunity. The company argued that it acted as an agent of the Texas government and, therefore, shared its immunity from lawsuits. The court disagreed.
In short, Conduent argued that, as an agent of the state, it should not be sued directly under Texas law and claimed protection under sovereign immunity, a legal doctrine that shields government entities and contractors from lawsuits. However, the court ruled against Conduent, stating that it wasn’t clear if the company was truly acting as an agent of the state. This uncertainty meant that the company wasn’t automatically protected by the legal doctrines it invoked. As a result, the Malones’ lawsuit was allowed to proceed, and Conduent’s request to dismiss the case was rejected.
One justice, Justice Theofanis, issued a dissenting opinion, but her stance didn’t favor the company either. She argued that the court didn’t have the authority to hear the appeal in the first place, as Conduent is not a “governmental unit” under Texas law. Being a private insurance company, Conduent does not qualify for the protections and privileges that governmental entities enjoy, including the right to appeal decisions about jurisdiction.
This is bad news all around for Conduent, reminiscent of being fired by Texas Health and Human Services again. The Delaware Supreme Court enforced a lower court jury decision finding that the company had committed insurance fraud in its settlement with Texas.
Case against Conduent
As previously reported, the Malones alleged that Conduent improperly approved Medicaid prior-authorization requests for orthodontic treatments without proper review, leading to severe consequences for them and their practice. They are suing for fraud, negligence, and breach of contract, claiming that Conduent’s failures in its review process were the root cause of the state’s actions against them.
Specifically:
Improper Authorization Process: Conduent approved Medicaid prior-authorization requests using employees who were not licensed dentists. The Malones argue that Conduent failed to disclose this, leading them to believe that their requests met Medicaid standards when, in fact, they did not.
Reliance on Misleading Representations: The Malones claim they relied on Conduent’s approvals, assuming their orthodontic services complied with Medicaid requirements, which led them to continue providing these services.
Resulting Investigations and Damages: The State of Texas investigated the Malones for alleged Medicaid fraud due to these faulty approvals. This led to administrative actions, a Medicaid hold on their practice, and significant reputational and financial damage.
At the heart of this case is the argument that Conduent’s mishandling of Medicaid prior authorizations directly caused the Malones’ legal and financial troubles.
Dentist to get their day in court
We look forward to seeing Texas dentists finally get their day in court against Conduent. It will be interesting to see what a jury of their peers thinks of the company’s conduct.